The dizzyingly complex securitized deals of the 2000s were alittle like polygamous marriages in which the vows-in this case,pooling and servicing agreements did not really count on facingsickness as well as health, or being poorer as well as richer. Aslong as cash flow was positive and debt was serviced, the marriageswere harmonious. But as the market turned turbulent and deals beganto run aground, the spouses began to squabble. More to the point,they hauled one another into court to assert their rights withinthe capital stack and protect their investments.

The result is an outbreak of tranche warfare: infighting amonglenders and, in some cases, investors. Arguably the highest-profileexample has stemmed from the foreclosure of the Peter CooperVillage/ Stuyvesant Town complex in Manhattan, but it's hardly anisolated incident.

Mark Edelstein, New York City based partner in the realestate/workout practice at Morrison & Foerster, tellsDistressed Assets Investor that "there are tons of litigation goingon." Although his firm, which has been involved with the ExtendedStay Hotel and General Growth Properties bankruptcy cases,predicted the advent of tranche warfare two years ago, "it's beenmore than we expected."