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RMBS Litigation Support

The Oakleaf Group has been retained by Korein Tillery and Wollmuth Maher and Deutsch, counsel for various Plaintiffs, to offer an opinion regarding losses incurred by the Plaintiffs in connection with their purchase of residential mortgage-backed securities (“RMBS”) certificates.


Starting 2005, plaintiffs had invested over $4 billion in these certificates and have lost approximately $1.6 billion as of August 31, 2016.  The project entails providing data, analytics and subject matter expertise for end-to-end litigation expert services that includes performing loss analysis, understanding the Pooling and Servicing Agreements (PSAs).  PSAs are essentially a contract that governs the rights and obligations of multiple parties, including Plaintiffs and the Defendants, involved in the transaction. This effort included building a “unique-to-each” transaction cashflow model per the PSA, collecting monthly collateral performance and bond administration data for the past 12 years, building a Monte Carlo Alternate Scenario Simulation Engine, responding to interrogatories, formulating depositions and providing expert affidavits, authoritative declarations on subject matter and expert testimony at trial.


Given its strong network and a database of over 10,000 resources within the financial services and regulatory industry, Oakleaf Group has been able to provide senior to expert level RMBS securities data, analytics and risk modeling resources to meet client’s business needs and schedule. 


To support its clients effectively and efficiently, Oakleaf Group has developed a Financial Data and Analytics Execution Framework that helps it manage full end-to-end model development and execution.  To develop these models, Oakleaf Group interprets statistical data reported in the trustee reports to model various cashflow triggers.  Oakleaf Group utilizes modern econometric methods such as sensitivity analysis, time series, etc. in the models.


Within these models, Oakleaf Group has designed and implemented instantaneous report generating capabilities that can generate damages estimate reports from client request to completion in a few minutes.  Once ready, due to the sensitivity of these reports and data, Oakleaf Group sends encrypted emails and uses sftp to transmit data files and reports.


To delivery tasks effectively, Oakleaf Group has an established communication and collaboration plan.  As part of the data collection and QC process, if Oakleaf Group confirms a data quality or completeness issue, the Task Lead contacts the client and works with the client to resolve the data quality issue.  This is a component of the 4-Square Management Reporting Chart used for weekly update sessions with client.


Oakleaf Group developed complex cashflow models incorporating up to 20 variables and up to 200 data fields based on the terms of the Pooling and Servicing Agreement.  Once developed, Oakleaf Group performs cashflow model validations against industry standard models (INTEX).  As a superior aspect of our service Oakleaf Group submitted corrections to INTEX's model, which they have implemented for the mutual benefit of the entire RMBS industry.  Oakleaf Group also developed tool that came to be called then “MC1000 Tool” that would execute 1000 Monte Carlo simulations and apply statistical methods to affect alternate scenarios for the cashflow models. 


Oakleaf Group has a defined configuration control process where all modifications, enhancements, versions with respective documentation supporting those changes are stored.  As part of the data QC process, Oakleaf Group uses SQL routines and procedures based on business rules to automate data review.  Results from these automated data reviews are stored in an audit log and each error is either resolved or accepted to ensure data accuracy and completeness. 


Materials developed by Oakleaf Group are based on reusable templates and articulated in layman terms.  For example, to illustrate the damages estimate, Oakleaf Group developed graphs that overlaid alternate scenario cash flows over the actual scenario cash flows, to visually highlight an area of the graph that depicts damages.  This allowed the attorneys and the Judge to see how plaintiffs were damaged over time.


Oakleaf Group helps its clients to proactively assess the risk of engaging in protracted and expensive litigation.  This is to ensure that the cost of litigation to recover losses from their investments in RMBS securities will yield them a net positive return on investment (ROI).  Oakleaf Group's Breakeven Analysis model uses metrics and reports to help clients assess the risk if they are not able to breakeven.


Oakleaf Group conceptualizes each legal case as a project to deliver an expert report.  As requirements, this entails understanding the plaintiffs’ complaint and keeping up to date on legal proceedings.  Oakleaf Group collects all the damages modeling data from trustee website, interprets and analyzes the data, and develops, tests, and validates the models, including model documentation.