Six victories that clients of ours had won over Lehman and Aurora in the U.S. District Court for the District of Colorado got affirmed on January 27 by the Tenth Circuit Court of Appeals in Denver after hotly-contested rounds of appellate briefing and oral argument. In a 37-page written opinion, the appellate panel unanimously affirmed the loan originators/sellers’ victories on statute of limitations grounds.
In so doing, the federal appeals court rejected, among other arguments, Lehman and Aurora’s contentions that their claims were really “indemnification” claims that did not accrue until they paid Fannie Mae or Freddie Mac with respect to the loans at issue. The court agreed with our argument that the claims in fact accrued as soon as the loans were sold (in 2006 and 2007).
This has potentially significant implications for loan originators and sellers across the country facing buyback or “indemnification” claims from their investors. Though case precedents vary from jurisdiction to jurisdiction, we have always strongly believed that claims of damage related to a loan seller’s alleged misrepresentations when they sold a loan must, as a matter of logic and common sense, accrue at the time the alleged misrepresentation was made: on the date of the sale. It is nice to see this assessment further vindicated by the Tenth Circuit Court of Appeals in its detailed and well-considered opinion.