Sunday, December 11, 2011
In-House Counsel’s Role in the Structuring of Mortgage-Backed Securities, by Shaun Barnes, Duke University - School of Law; Kathleen G. Cully, Kathleen G. Cully PLLC; and Steven L. Schwarcz, Duke University - School of Law, was recently posted on SSRN. Here is the abstract:
We briefly introduce the financial crisis and the role played by mortgage-backed securities. Then we describe the controversy at issue: whether, in order to own and enforce the mortgage loans backing those securities, a special-purpose vehicle “purchasing” mortgage loans must take physical delivery of the notes and security instruments in the precise manner specified by the sale agreement. Focusing on this controversy, we analyze (i) the extent, if any, that the controversy has merit; (ii) whether in-house counsel should have anticipated the controversy; and (iii) what, if anything, in-house counsel could have done to avert or, after it arose, to mitigate the controversy. Finally, we examine how the foregoing analysis can help to inform the broader issue of how in-house counsel should address complex legal transactions.