Mass. Mut. Life Ins. Co. v. DB Structured Prods., Inc.
Documents evidencing a residential mortgage loan are contained in a loan file. The loan file is relied on by all entities involved in residential mortgage-backed securitizations. For example, originators use the loan file to approve or deny the loan. Securitization sponsors and underwriters use the loan file to decide whether to purchase the loan for securitization or to verify information about a loan. And servicers use the loan file to collect payments on the loan. Loan files are therefore admissible as business records, as Judge Denise Cote recently confirmed in the FHFA action. Dozens of third parties that have produced loan files in this action have agreed—and have produced business records certifications that allow the loan files they produced to be admitted into evidence. Despite this overwhelming recognition that loan files are business records, however, Defendant Deutsche Bank and its affiliated originator, MortgageIT, have refused to stipulate to the admissibility of the 157 loan files they produced or to provide business records certifications for those files.
Deutsche Bank and MortgageIT have no legitimate basis to block the admissibility of the loan files they produced. MortgageIT, an originator, created the loan files it produced, and it relied on those files in approving millions of dollars in loans. Deutsche Bank obtained the loan files it produced from the originators that created them, and it relied on those files for the
information included in the offering materials it filed with the SEC and distributed to investors. Both MortgageIT and Deutsche Bank placed their trust in the loans files to conduct their own businesses. Indeed, Deutsche Bank’s own defenses in this case, including its due diligence defense, depend on the trustworthiness of these loan files. The loan files therefore fall squarely within two separate exceptions to the hearsay rule. First, the loan files are business records under Federal Rule of Evidence 803(6). To qualify as business records, it is irrelevant whether MortgageIT or Deutsche Bank created every document in the file; what matters is that the documents were integrated into the file and that these entities relied on the file for their businesses. Second, the loan files are the best available evidence of the documents collected at origination and have circumstantial guarantees of trustworthiness, as required for the hearsay exception set forth in Federal Rule of Evidence 807.
Because Deutsche Bank and MortgageIT have no legitimate basis to oppose the admissibility of the 157 loan files they produced, the Court should order that the loan files are admissible at trial. In the alternative, if Deutsche Bank and MortgageIT continue to refuse to provide business records certifications, the Court should order them to produce qualified custodians for deposition to testify regarding the creation and maintenance of the loan files. If Deutsche Bank and MortgageIT insist on depositions, they should be required to pay all costs associated with the depositions because there is no reason to incur these costs in light of the availability of the business records certification procedure under the Federal Rules of Evidence.