NERA was retained by U.S. Bank National Association, Bank of New York Mellon, Wilmington Trust, Wells Fargo, HSBC, Deutsche Bank, and other Trustees to conduct an economic analysis of a proposed settlement of $4.5 billion on behalf of all of the investors in $295 billion worth of mortgage-backed securities. The settlement agreement is for one of the largest private settlements arising out of the credit crisis.

The Settlement Agreement required JPMorgan to pay $4.5 billion into 330 residential mortgage-backed securitizations (the Covered RMBS Trusts). It also required the implementation of, among other things, a series of loan servicing procedures and improvements.

The Settlement Agreement covered investors’ allegations of breaches of representations and warranties contained in the governing agreements (Rep and Warranty Claims) with respect to the Trusts and the repurchase provisions contained in the governing documents. It is also intended to resolve all past and future claims of alleged servicing failures by JPMorgan.

Dr. Faten Sabry and a team of NERA experts conducted financial and econometric analyses to provide estimates of the lifetime net losses of each Trust, the losses potentially attributable to breaches of representations and warranties, and the amount of each Trust’s allocable share—that is, the amount each Trust stood to receive under the proposed Settlement. Dr. Sabry filed an expert report summarizing NERA’s analysis of the $4.5 billion settlement across the 330 Covered RMBS Trusts.

On August 12, 2016, New York Supreme Court Judge Marcy S. Friedman approved the Settlement Agreement between U.S. Bank National Association, Bank of New York Mellon, Wilmington Trust, Wells Fargo, HSBC, Deutsche Bank and other Trustees, and JPMorgan, including a settlement of $4.5 billion on behalf of all of the investors in $295 billion worth of mortgage-backed securities. The Judge’s ruling considered the plausibility of the experts’ methodologies when concluding that the Trustees “exercised their discretionary power reasonably and in good faith in approving the Proposed Settlement.”