JPMorgan Chase’s Scheme To Steal Washington Mutual Mortgages Is Not Conjecture, It Can Be Proven.
(Disclaimer: This article is not to be deemed as legal advice. Please consult with a licensed attorney regarding any information provided in this article.)
After a decade of accumulating evidence involving “loans” originated and securitized by Washington Mutual Bank (WMB), the following points are now supported and can be proven with evidence:
- The mortgages, deeds, and notes were never sold and transferred. Rather, there was the intent to have securitized the debts per the certificates without any documentation perfecting any interests in the alleged underlying assets.
- No schedule of loans exists, or has ever been produced, identifying any specific WMB loan having been acquired by JPMorgan Chase via the Purchase & Assumption Agreement (PAA).
- The FDIC now has its own databases identifying what WMB loans, if any, were in fact acquired and sold through the Receivership and the PAA. These databases have yet to provide any records for any WMB loan, or any responsive documents to show the servicing rights of any WMB loan having been sold to Chase.
- The FDIC deemed all securitized loans sold by WMB prior to the Receivership as “isolated assets” outside of its reach. As such, the FDIC could not sell that which it never owned or acquired.
- WMB admitted and disclosed as a business practice that no assignments would be prepared or recorded, and no endorsements would be placed upon the notes it was purporting to sell. This was deemed an “Unsafe & Unsound” business practice.
- As outlined below, WMB admitted that is was going to “commingle collections on the mortgage loans with its own funds and may use the commingled funds for its own benefit.” (Per the FFIEC, this appears to be a tacit admission of “Mortgage Servicing Fraud.”)
- JPMorgan Chase was NOT the “successor in interest” to Washington Mutual Bank. The only successor in interest to Washington Mutual Bank was the FDIC. Because the FDIC did not acquire any WMB “loans” that were sold and securitized, including the servicing rights, WMB died without any successor in interest to the mortgages / deeds, and without any assignees to the same.
- The investors sued for countless violations of laws and breaches of representations and warranties regarding the securitization transactions that ultimately resulted in settlements. There does not appear to be any “repurchases” of the loans; a “risk factor” disclosed to investors detailed below. Neither the FDIC or Chase repurchased any of the loans and denied having any successor liabilities for the fraudulent and lawless conduct in the origination of the WMB loans.
- Because the FDIC acquired none of the securitized WMB loans, FIRREA does not apply nor does it immunize Chase from the numerous defenses to foreclosure.
- Because the FDIC acquired no loans or rights to any loans, it had no authority to grant any sort of power of attorney to Chase to assign and transfer anything.
- Most, if not all, WMB securitized “loans” were assigned the “Investor Code – AO1” which belonged to “WaMu Asset Acceptance Corporation” (WMAAC). WMAAC and the subsidiary assets were not included in the PAA. This was stipulated to by JPMorgan Chase.
- The trusts and trustees have/had full knowledge of the defects, deficiencies, and fraud related to the collateral that was never assigned and delivered, as well as the fact that the trusts’ payments for the debt were being hidden and concealed from borrowers, courts, and public land records. The sales transactions were only disclosed on a “need to know” basis, and even then, has routinely been denied through well-orchestrated obstruction. The trusts’ claims to payments existed only with the “Seller” – (typically) WMAAC. As shown in the SEC filings below, the trusts and the trustees had no recourse or claims against borrowers for loan payments having been made to the “seller” that were likely never forwarded to the trusts.
- THERE IS NO VERIFIABLE ACCOUNTING TRAIL OF ANY PAYMENTS GOING FROM THE BORROWERS TO ANY TRUST. And finally,
- CHASE UNEQUIVOCALLY LIES AND COMMITS ROUTINE PERJURY AS WELL AS DOCUMENT FABRICATIONS AND FORGERIES TO CARRY OUT THEIR SCHEME TO STEAL HOMES. CAN I PROVE THIS? YES.
In fact, one of the more egregious cases of this fraud just came to light. I was called in to a case involving a judicial mortgage foreclosure carried out by Chase over a six-year span of contentious litigation. Chase ultimately prevailed on a summary judgment motion and the foreclosure order was entered in its favor prior to my being retained. The case is currently on appeal. Chase’s position for six-years was that the WMB loan was never sold and securitized, and that Chase became the investor / owner via the PAA with the FDIC. I of course opined otherwise.
The subject note has the typical endorsement stamp of Cynthia Riley and the loan was assigned the investor code “AO1” dating back to 2006. Recently, an very unusual motion was filed in the case by an outside law firm who suddenly appeared on behalf of “U.S. Bank, N.A. as Trustee for a Lehman Brothers (LXS 2007-1) trust certifying under penalty of perjury that the trust owned the subject mortgage. When Chase self-incriminates like this, they quickly switch counsel and deny as a simple mistake. They will have a hard time denying this one because upon reviewing this motion, I ran a check of the databases in the Lehman bankruptcy as I noted in the following story, and sure enough, the loan was in fact involved in a repurchase demand.
The affidavits and filings for six-years in this case should undoubtedly convince any juror that this was a conspiracy to steal my client’s home. Chase has put my client through a living nightmare, and has exacerbated my client’s time, resources, and mental health having to defend against these now provable and knowingly false claims.
Now let me switch gears for a moment by showing this example of what the FFIEC describes as “Mortgage Servicing Fraud.” From the following FFIEC post:
https://www.ffiec.gov/exam/Mtg_Fraud_wp_Feb2010.pdf
Mortgage Servicing Fraud
Mortgage servicing typically includes, but is not limited to, billing the borrower; collecting principal, interest, and escrow payments; management of escrow accounts; disbursing funds from the escrow account to pay taxes and insurance premiums; and forwarding funds to an owner or investor (if the loan has been sold in the secondary market). A mortgage service provider is typically paid on a fee basis. Mortgage servicing can be performed by a financial institution or outsourced to a third party servicer or sub-servicer. Mortgage servicing fraud generally involves the diversion or misuse of principal and interest payments, loan prepayments, and/or escrow funds for the benefit of the service provider. Mortgage servicing fraud can take many forms, including the following:
- A mortgage servicer sells a loan it services, but fails to forward funds to the owner of the loan following the sale. The servicer continues to make principal and interest payments on the loan so the owner is not aware that the loan had been sold.
- A mortgage servicer diverts escrow payments for taxes and insurance for its own use. This action would jeopardize a financial institution’s collateral protection.
- A mortgage servicer that fails to forward principal and interest payments to an institution that holds the note and mortgage, could report that loan as past due for a short period of time, and then use proceeds from other loans to bring that loan current. This would be similar to a lapping scheme involving accounts receivable. Deliberately failing to post payments in a timely manner causes late fees to increase which directly elevates the servicers’ income.
- A mortgage servicer makes payments on loans originated for or on behalf of a financial institution as a means to avoid repurchase pursuant to first payment default provisions.
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Now look at a few of the “Risk Factor” disclosures made in a typical WMB trust prospectus for the WaMu 2006-AR1 Trust, the first of which describes the comingling of borrowers’ payments:
https://www.secinfo.com/dsvRa.v94.htm#ayd1
THE TRUST MAY NOT HAVE A PERFECTED INTEREST IN COLLECTIONS COMMINGLED BY THE SERVICER WITH ITS OWN FUNDS, WHICH COULD CAUSE DELAYED OR REDUCED DISTRIBUTIONS ON THE CERTIFICATES
The servicer will be permitted to commingle collections on the mortgage loans with its own funds and may use the commingled funds for its own benefit. The trust may not have a perfected interest in these amounts, and thus distributions on the certificates could be delayed or reduced if the servicer were to enter conservatorship, receivership, or bankruptcy, were to become insolvent, or were to fail to perform its obligations under the related pooling agreement.
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This sure fits the description of “Mortgage Servicing Fraud.” What happened with the funds sent to WMB from the homeowners? Chase has already admitted that no such verifiable accounting exists to show any payments going from WMB to the trust investors, so clearly the trusts had “no perfected interests.” Here is another “Risk Factor” admitting that no assignments would be prepared, the Depositor would be hidden in the chain of title, and the investors will have no claims against borrowers without the assignments:
ASSIGNMENTS OF MORTGAGES TO THE TRUSTEE OR THE TRUST WILL NOT BE PREPARED OR RECORDED
FOR TRANSACTIONS IN WHICH WMB FSB HOLDS SOME OR ALL OF THE MORTGAGE NOTES AND MORTGAGES AS CUSTODIAN ON BEHALF OF THE TRUST, INVESTORS SHOULD CONSIDER THE FOLLOWING:
With respect to each mortgage held by WMB fsb as custodian on behalf of the trust, an assignment of the mortgage transferring the beneficial interest
under the mortgage to the trustee or the trust will not be prepared or recorded. In addition, an assignment of the mortgage will not be prepared or recorded in connection with the sale of the mortgage loan from the mortgage loan seller to the depositor. In many states, the recording of a separate assignment of the mortgage is not required to validly transfer ownership of the mortgage loan. However, at any time until an assignment of the mortgage with respect to a mortgage loan is recorded in the name of the trustee or the trust in the appropriate jurisdiction, ….
(c) the trustee or the trust may not have a claim against the mortgagor for payments made to the mortgage loan seller, as the existing mortgagee of record, but instead may be required to proceed against the mortgage loan seller to recover the amount of any such payment made, (d) the trustee or the trust may not be able, acting directly in its own name, to enforce the mortgage against the related mortgaged property or mortgagor and may be required to act indirectly through the mortgage loan seller, as the existing mortgagee of record, and (e) the mortgage loan seller, and not the trustee or the trust, would be entitled to receive any notice with respect to any mortgage required to be given to the mortgagee of record. The occurrence of any of these could result in delays or reductions in distributions on the certificates.
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In layman’s terms, the trust, trustee, and Depositor (WMAAC), agreed to hide in the weeds and allow WMB to collect borrower payments while falsely pretending to be the mortgagee / investor, and to allow WMB to comingle those funds in its own account for its own benefit. With all this fraud and deception taking place, does anyone believe that a rescission under TILA would ever be complied with or acknowledged?
The problem for the trusts and trustees is the fact that WMB died before having executed any assignments and left no successor in interest with any authority to cure the incurable defects (assignments and note endorsements). As such, and per the disclosed risk factors, the trusts and trustees may not have a claim against the mortgagors “until an assignment of the mortgage with respect to a mortgage loan is recorded in the name of the trustee or the trust in the appropriate jurisdiction[n.”] Okay, this seems logical. The party seeking rights to enforce a mortgage and the note/debt, if not the named payee on the note, needs an assignment of BOTH the mortgage and the note before it can stake any claim(s) against a borrower. But again, therein lies the problem. One cannot memorialize an event that never happened. If your rich old grandpa failed to execute a will at the time of his passing, you cannot create and execute his intention to will you his fortune once he’s in the ground.
But subparagraph “(c)” to me is the most telling. This is an admission that the trust and trustee may not have a claim against a mortgagor for payments made to the “mortgage loan seller,” while it is acting as the “existing mortgagee of record.”
If the investors have no claims against the borrowers, and WMB can keep the loan payments for itself, the trusts never owned the mortgages and notes at the time the trusts were created, and they knew it. Though the PSA’s were completely inapposite with the prospectus’ “Risk Factors,” the investors would clearly have a hard time making any sort of repurchase demands when they knowingly acquiesced and allowed their interests in the assets to go unperfected. Here is yet another “Risk Factor” that explains what happens in the event there is no repurchase of the defective loans by the Seller of Originator:
FAILURE OF THE MORTGAGE LOAN SELLER OR ORIGINATOR TO REPURCHASE OR REPLACE A MORTGAGE LOAN MAY RESULT IN LOSSES ALLOCATED TO THE RELATED SECURITIES
Generally, each mortgage loan seller will have made representations and warranties in respect of the mortgage loans sold by the mortgage loan seller and related to a series of securities. If the mortgage loan seller did not originate the mortgage loans that it sold, the representations and warranties may in some cases instead have been made by the originator. In the event of a breach of a mortgage
loan seller’s or originator’s representation or warranty that materially adversely affects the interests of the securityholders or the trust in a mortgage loan, the mortgage loan seller or originator will be obligated to cure the breach or repurchase or, if permitted, replace the mortgage loan as described under ‘Description of the Securities–Representations and Warranties Regarding the Mortgage Loans; Remedies for Breach.’ However, there can be no assurance that a mortgage loan seller or originator will honor its obligation to cure, repurchase or, if permitted, replace any mortgage loan as to which a breach of a representation or warranty arises. A mortgage loan seller’s or originator’s failure or refusal to honor its repurchase obligation could lead to losses that, to the extent not covered by credit support, may adversely affect the yield to maturity of the securities issued by the trust.
When a mortgage loan seller or originator is unable, or disputes its obligation, to repurchase affected mortgage loans from the trust, the servicer or, if multiple servicers, a designated servicer, or the depositor may negotiate and enter into one or more settlement agreements with the mortgage loan seller or originator that could provide for the purchase of only a portion of the affected mortgage loans. Any settlement could lead to losses on the mortgage loans which would be borne by the related securities. The depositor will not be obligated to purchase a mortgage loan if a mortgage loan seller or originator defaults on its obligation to do so, and no assurance can be given that the mortgage loan sellers or originators will carry out their repurchase obligations. In no event will any other person be obligated to purchase any mortgage loan. A default by a mortgage loan seller or originator is not a default by the depositor or by the servicer. Any mortgage loan not so repurchased or substituted for will continue to be held by the trust and any related losses will be allocated to the related credit support, to the extent available, and otherwise to one or more classes of securities issued by the trust.
So, in a nutshell –
WMB sold the debt and rights to cash-flows from the borrower loan payments, not the mortgages and notes. The trusts and trustees wanted nothing to do with the ticking time bomb of liabilities for fraud and consumer lending violations associated with the toxic mortgages. It is undeniable that the investors’ funds were used to purchase certificates, and those funds paid off the WMB loans that WMB continued to service and “act” as the mortgagee of record.
When the music stopped on 9/25/2008, there was no documentation evidencing any sale of the tens of thousands of mortgage loans securitized and sold by WMB (no assignments of mortgages and no endorsements upon notes), only worthless certificates held by the investors. No mortgage assignees existed. There were no successors in interest to WMB outside of the FDIC. And, the FDIC deemed the securitized loans as “isolated” and outside its reach. As such, Chase did not purchase anything from the FDIC, including the servicing rights because the continued servicing of these securitized loans required consent from the trustees.
Chase is, and always has been, a stranger to title. The only connection Chase ever had with any WMB loan was the ambiguous and self-serving “umbilical cord” called the “Purchase & Assumption Agreement,” along with (powerless) “Limited Power of Attorney” documents granted to Chase from the FDIC (a story of negligence and complicity for another day). After a decade + investigating this scheme, the “cord” that provided the lifeblood for the Chase scheme can now be severed between WMB, Mother FDIC, and Chase.
There have been no known repurchases of these WMB loans by WMAAC, Chase, or the FDIC post-receivership, only cash settlements that admit to nothing. Everyone denied liability with homeowners and investors left without recourse. With WMB dead, and the trusts having no claims against borrowers without the requisite legal assignments of the mortgages and the endorsed notes, the trusts are stuck holding the bag of fatally defective and unenforceable mortgages. These investors deserve no sympathy however, as they were not only aware of the incurable defects and unenforceability of the underlying assets, they consented to it and looked the other way to avoid the liabilities. Ultimately, they settled and walked away, many agreeing to a release of all liens. These concealed facts result in there being no party left who stands in the shows of any “creditor” to whom any debt is owed.
As an investigator and expert in this area, the chains of title to these WMB mortgages and deeds began with WMB and died with WMB and are fatally defective and “clouded.”
The WMB fiasco has been a gargantuan windfall to Chase via their white-collar “looting” of the WMB data. Chase resembles a band of drunken pirates gleefully peering into a treasure chest of over $300B worth of gold bullion traceable to the crown of England. All they need to do is melt them into bars. Only in this WMB scheme, Chase’s smelting and refining consists of document fabrications, forgeries, and perjury to launder their booty.
Bill Paatalo
Private Investigator – OR PSID# 49411
Bill.bpia@gmail.com
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