According to the notice of removal dated March 06, 2009, at all relevant times herein, Wachovia was one of the nation's largest financial service providers, servicing retail, brokerage and corporate customers. The Company portrayed itself as a conservative mortgage lender that did not participate in the high-risk lending activities engaged in by its competitors. At the height of the housing boom in 2006, Wachovia acquired mortgage lender Golden West in a move that the Company assured investors would solidify Wachovia's position as a leading mortgage lender without changing the Company's commitment to originating high-credit-quality mortgages.
In truth, Golden West was a high-risk subprime lender whose flagship pay option adjustable-rate mortgage loans (known as "Option ARMs" or "Pick-A-Pay" loans) were among the most toxic loans being peddled to borrowers, and through its acquisition of Golden West, Wachovia acquired a portfolio of more than $120 billion in Pick-A-Pay loans. Owing to the risky nature of the Pick-A-Pay loans, and the failure of Golden West and Wachovia to properly underwrite the loans, the loans were inadequately collateralized and became delinquent and defaulted at very high rates. As a result, the value of Wachovia's loan portfolio was materially overstated. In addition to its portfolio of Pick-A-Pay loans, Wachovia's balance sheet carried billions of dollars in other subprime assets, included mortgage-backed securities ("MBS"), residential mortgage-backed securities ("RMBS"), asset backed securities ("ABS") and collateralized debt obligations ("CDOs"), which were similarly overvalued.
On June 22, 2009, the Court issued two orders. The first was an order instructing that all future filings in any reassigned case were to be related to 09-CV-00998. The second order transferred the case pursuant To 28 U.S.C. §1404(a).