What changed in this filing

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Item 3. Legal Proceedings

2022-03-31 compared with 2021-03-31 · 46 added, 22 removed, 6 unchanged (92% of the section changed)

Legal Proceedings

Settlement Agreement and Mutual Release with Lehman Brothers Holdings Inc.

From 2004 to early 2008, SecurityNational Mortgage Company (“SecurityNational Mortgage”), a wholly owned subsidiary of the Company, originated “limited documentation” or “reduced documentation” loans which were sold to certain affiliates of Lehman Brothers Holdings Inc.

Settlement Agreement and Mutual Release with Lehman

Brothers Holdings Inc.

From 2004 to early 2008, SecurityNational Mortgage

Company (“SecurityNational Mortgage”), a wholly owned subsidiary of the Company, originated “limited documentation”

or “reduced documentation” loans which were sold to certain affiliates of Lehman Brothers Holdings Inc.

(“Lehman Holdings”).

Certain of these loans became the subject of disputes between SecurityNational Mortgage and Lehman Holdings and certain Lehman Holdings affiliates.

Certain of these loans became the subject of disputes between SecurityNational Mortgage and Lehman Holdings and certain Lehman Holdings

Lehman Holdings filed a Petition for Relief under Chapter 11 of the United States Bankruptcy Code in 2008.

In May of 2011, SecurityNational Mortgage filed a complaint in U.S.

In May of 2011,

SecurityNational Mortgage filed a complaint in U.S.

District Court against certain Lehman Holdings affiliates.

In June of 2011, Lehman Holdings filed a complaint in Federal District Court against SecurityNational Mortgage, both of which were later resolved.

In 2016, certain other pending loan disputes between SecurityNational Mortgage and Lehman Holdings became the subject of an unsuccessful, non-binding alternate dispute resolution mediation proceeding.

Thereafter, in 2016, Lehman Holdings filed an adversary proceeding complaint against approximately 150 mortgage loan originators, including SecurityNational Mortgage, in the U.S.

Bankruptcy Court of the Southern District of New York, which included seeking damages relating to the alleged obligations of the defendants under indemnification provisions of alleged agreements, in amounts to be determined at trial, including interest, attorneys’

fees and costs incurred by Lehman Holdings in enforcing the obligations of the defendants.

The complaint was later amended with the latest amended complaint filed against SecurityNational Mortgage on December 27, 2016, seeking damages to be determined at trial, including interest, attorneys’ fees and costs.

This complaint involved approximately 135 mortgage loans, there being millions of dollars allegedly in dispute.

These claims against SecurityNational Mortgage were asserted as a result of Lehman Holdings’ earlier settlements with the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Corporation (“Freddie Mac”).

In 2018, Lehman Holdings filed a separate adversary proceeding complaint against SecurityNational Mortgage.

This adversary proceeding allegedly involved approximately 577 mortgage loans relative to private securitization trusts (“RMBS Loans”) and millions of dollars in damages.

Thereafter, Lehman Holdings made a filing that effectively reduced the number of RMBS Loans to 248.

This proceeding was in addition to the above-referenced proceeding involving the Fannie Mae and Freddie Mac mortgage loans.

As with the above-referenced proceeding, damages were sought including interest, costs, and attorneys’ fees.

SecurityNational Mortgage, as well as other defendants, have been involved in written discovery, and production of documents relative to the cases, and the filing of motions.

The deposition phase of the cases was yet to begin, as well as the later expert witness phase.

Those phases would require substantial expenditures of legal fees and costs.

On February 1, 2021, SecurityNational Mortgage executed a settlement agreement with Lehman Holdings in relation to these two adversary proceedings wherein all mortgage loan related claims were resolved, thereby ending all liabilities asserted by Lehman Holdings and conclusively ending all proceedings between SecurityNational Mortgage and Lehman Holdings.

In accordance with GAAP, the full amount of SecurityNational Mortgage’s settlement payment has been accounted for in the Company’s loan loss reserve as of December 31, 2020.

In June of 2011, Lehman

Holdings filed a complaint in Federal District Court against SecurityNational Mortgage, both the complaint filed in May 2011 and that

filed in June 2011 were later resolved.

In 2016, certain other pending loan disputes between SecurityNational Mortgage and Lehman Holdings

became the subject of an unsuccessful, non-binding alternate dispute resolution mediation proceeding.

Thereafter, in 2016, Lehman Holdings filed an adversary

proceeding complaint against approximately 150 mortgage loan originators, including SecurityNational Mortgage, in the U.S.

Court of the Southern District of New York, which included seeking damages relating to the alleged obligations of the defendants under

indemnification provisions of alleged agreements, in amounts to be determined at trial, including interest, attorneys’ fees and

costs incurred by Lehman Holdings in enforcing the obligations of the defendants.

The complaint was later amended with the latest amended

complaint filed against SecurityNational Mortgage on December 27, 2016, seeking damages to be determined at trial, including interest,

attorneys’ fees and costs.

This complaint involved approximately 135 mortgage loans, there being millions of dollars allegedly in

These claims against SecurityNational Mortgage were asserted as a result of Lehman Holdings’ earlier settlements with the

Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Corporation (“Freddie Mac”).

In 2018, Lehman Holdings filed a separate adversary

proceeding complaint against SecurityNational Mortgage.

This adversary proceeding allegedly involved approximately 577 mortgage loans

relative to private securitization trusts (“RMBS Loans”) and millions of dollars in damages.

Thereafter, Lehman Holdings made

a filing that effectively reduced the number of RMBS Loans to 248.

This proceeding was in addition to the above-referenced proceeding

involving the Fannie Mae and Freddie Mac mortgage loans.

As with the above-referenced proceeding, damages were sought including interest,

costs, and attorneys’ fees.

SecurityNational Mortgage, as well as other defendants,

have been involved in written discovery, and production of documents relative to the cases, and the filing of motions.

The deposition

phase of the cases was yet to begin, as well as the later expert witness phase.

Those phases would require substantial expenditures of

legal fees and costs.

On February 1, 2021, SecurityNational Mortgage executed

a settlement agreement with Lehman Holdings in relation to these two adversary proceedings wherein all mortgage loan related claims were

resolved, thereby ending all liabilities asserted by Lehman Holdings and conclusively ending all proceedings between SecurityNational

Mortgage and Lehman Holdings.

The full amount of SecurityNational Mortgage’s settlement payment was accounted for in the Company’s

loan loss reserve as of December 31, 2020 and was paid during the first quarter 2021.

Mine Safety Disclosures

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings