Matter of Wells Fargo Bank v HBK Master Fund L.P.

Holding The Appellate Division affirmed the lower court’s determination that payments of previously deferred principal under HAMP modifications should be treated as Subsequent Recoveries under the Pooling and Servicing Agreements. Although the payments did not fit squarely within the contractual definition, the court held they should be treated as such based on the PSAs’ structure and the parties’ course of performance.

The court’s words

the deferred principal payments should be treated as Subsequent Recoveries considering the structure of the PSAs and, more importantly, the parties' course of performance

2026 NY Slip Op 05368, at the official text

The record reflects that the Trustee consistently treated deferred principal payments as Subsequent Recoveries — although it applied the resulting write-ups to the wrong class of certificates

2026 NY Slip Op 05368, at the official text

the deferred principal payments fit within the spirit, but not the letter, of the PSAs' Subsequent Recoveries definitions

2026 NY Slip Op 05368, at the official text