Must a lender waive the borrower's obligations if the lender received funds through loan securitization or credit default swap? No. Federal courts have repeatedly rejected precisely that theory, as a matter of law.
- Flores v. Deutsche Bank Nat'l Trust Co., 2010 WL 2719848, (D. Md. July 7, 2010) - the borrower argued that his lender "already recovered for [the borrower's] default on her mortgage payments, because various 'credit enhancement policies,'" such as "a credit default swap or default insurance," "compensated the injured parties in full." The court rejected the argument, explaining that the fact that a "mortgage may have been combined with many others into a securitized pool on which a credit default swap, or some other insuring-financial product, was purchased, does not absolve [the borrower] of responsibility for the Note."
- See also Fourness v. Mortg. Elec. Registration Sys., 2010 WL 5071049, (D. Nev. Dec. 6, 2010) (dismissing claim that borrowers' obligations were discharged where "the investors of the mortgage backed securities were paid as a result of . . . credit default swaps and/or federal bailout funds);
- Warren v. Sierra Pac. Mortg. Servs., 2010 WL 4716760, (D. Ariz. Nov. 15, 2010) ("Plaintiffs' claims regarding the impact of any possible credit default swap on their obligations under the loan . . . do not provide a basis for a claim for relief").