The subprime mortgage crisis has spread like wildfire through the credit market, creating the potential for a surge of regulatory investigations and litigation affecting every participant in the mortgage industry chain.

Heller Ehrman is in the unique position of having lawyers with decades of experience in virtually every area touched by the crisis. With a well-established multidisciplinary approach, we have a long and successful record representing clients in the transactional, regulatory, litigation, insurance and insolvency issues that already are emerging in the mortgage-backed securities “MBS” sector. We are one of the few firms that already are handling several credit-related cases arising from the subprime fallout.

Our lawyers have more than 20 years of experience representing commercial banks, federal savings banks and mortgage companies in a wide variety of corporate, transactional and litigation matters.  We represent many leading financial institutions, including Washington Mutual, Wells Fargo, Countrywide Financial, Bank of America, IndymacBank, Home Street Bank, Union Bank of California, Household International (now HSBC), JP Morgan Chase, Citibank, Bank of the West, PMI, Trans-Union, and Bank of New York.

We represent issuers, servicers and underwriters in hundreds of transactions involving the purchase and sale of loan portfolios, service agreements and reviews, warehouse lines and repurchase agreements, and numerous innovations in securitization of non-conforming loans. We also have been involved in some of the most significant class action cases in recent years, including activities relating to loan-loss reserve issues.

Heller Ehrman has one of the most successful litigation practices, with lawyers representing major industry participants in consumer class actions and regulatory matters challenging the fairness and legality of mortgage loans. Our insolvency lawyers represent leading creditors in bankruptcy proceedings relating to recovery and repurchase claims. We have one of the preeminent insurance recovery practices, with lawyers who have recouped large losses and established key precedents, setting the framework for future recoveries. We have also represented indenture trustees in complex litigations involving servicer defaults.

Mortgage Banking Experience

Heller Ehrman has extensive experience representing financial institutions in all aspects of their businesses, from regulatory matters and corporate governance to corporate finance, mergers and acquisitions and dispute resolution. We have done a variety of work in the subprime area, representing issuers in securitizations of both prime and subprime portfolios, purchases and sales of mortgage loan portfolios and purchases and sales of servicing rights. We also have represented both borrowers and lenders in numerous warehouse financing transactions.

Because of the volume of securitizations and whole loan purchases and sales we have handled, we have expertise in the relevant accounting and legal issues, from FAS 140 and FAS 133 issues to anti-predatory lending laws. We also regularly deal with the regulatory issues facing financial institutions doing business in the subprime market, including compliance with guidances regarding reputational risk, implicit recourse and suitability of certain mortgage loan products. 

Complex Litigation

Heller Ehrman knows the MBS sector and the challenges facing companies in that market. We have represented companies in "bet the company" litigation over business practices, giving us detailed knowledge of how this particular market operates.

For the past decade, we have represented one of the leading lenders in this segment, defending the institution in nationwide class claims alleging various "predatory lending" practices in the marketing and handling of mortgage-secured loans. We also defended the leading credit card lender to the MBS segment in nationwide class claims alleging improper conduct in marketing and handling subprime credit card loans. In both engagements, our understanding of the businesses and close working relationship with the clients enabled us to obtain creative and cost-saving settlements. We also represented the indenture trustee in one of the largest servicer failures in history, involving student loan back bonds.

Securities Litigation

For more than three decades, Heller Ehrman has achieved outstanding results on behalf of defendants in securities class actions, derivative suits, professional liability cases, SEC and other regulatory investigations, and white-collar prosecutions. Our attorneys have defended major players in the highest profile securities lawsuits, including JDS Uniphase, Cendant, AOL TimeWarner, Parmalat, Qwest Communications Corporation, McKesson Corporation, HBOC, Healthsouth, Cisco Systems, Inc. and Metropolitan Mortgage. We have tried securities and accountants' liability cases and obtained complete defense verdicts, including cases involving accounting for residential mortgage derivatives. Our firm offers extensive experience defending each of the Big Four accounting firms and their professionals. We also defended mortgage companies and their officers and directors charged with securities fraud.  

Restructuring and Insolvency

Heller Ehrman's Restructuring and Insolvency Practice Group has experience representing both lenders and MBS investors in the insolvency and bankruptcy matters.  This background helps us protect our clients’ valuable portfolio rights, structure both back- and front-end transactions, and confirm the status of ownership if challenged under a true sale or a lack of perfection theory.  Our secured creditor experience helps protect the rights of secured warehouse lenders to cash collateral and resisting cram-down in regard to plan confirmation.  We also assist clients in monitoring and enforcing the rights of financial institutions or investment banks as unsecured repo creditors, including their pursuit of post-petition liquidation rights.

Insurance Coverage Issues

Heller Ehrman has one of the world's largest and most successful policyholder insurance recovery practices. We represent policyholders in litigation and non-litigation insurance disputes and have provided risk management counseling and insurance advice in some of the world's most challenging matters, including the World Trade Center and Hurricane Katrina insurance cases.  We have been working on insurance issues embedded in the subprime mortgage area for several years on behalf of variety of clients, including banks, other financial institutions, and officers and directors.  Our experience in this area includes litigation and successful resolution of insurance claims under E&O, D&O, Crime and Fidelity insurance policies, as well as mortgage insurance and related risk transfer products.  We also serve policyholder clients throughout the world in all major industries, including financial services and banks and professional services and accounting firms.