Showing posts with label Washington Mutual (WAMU). Show all posts
Showing posts with label Washington Mutual (WAMU). Show all posts

Tuesday, January 28, 2014

Washington Mutual loans and Chase

Well if anyone is interested, I know now, after a long hard struggle how at least JP Morgan /Chase does business, especially concerning the so called LOANS THEY NEVER HAD FROM WASHINGTON MUTUAL. Its quite the puzzle , but when you talk to bankers , that Chase screwed over , the puzzle unravels. For those of you who went to Chase and asked them to look for your note from WAMU and were dealing with Deutsche Bank , or Archbay at the time ( or possibly another bottom feeder ) what happens is ( in my case anyway) you have a department called home-lending Dept Of recovery, which is run by Mike Boyle, who researches  your notes. They decide on which notes were forgiven  that belonged to Washington Mutual ( first and second notes) because Chase wanted them off the books and not have to deal with them and that loss was cheaper than the court cost etc( they were learning this fast due to the claims they made with other Wamu notes , in courts across the country.). Now if you were a lucky candidate , one or both were written off, unless a bottom feeder like Deutsche Bank (or DB STRUCTURED PRODUCTS, Archbay, etc) WHO sold them illegally as NPLS to Hedge Funds  and had hoped to get away with it , but Deustche bank knowing they would soon be caught,( I did the research and when the Banks lawyers found out  I was digging, suddenly Chase received  phones calls from the other banks lawyer .Chase sent us a letter stating when and with who this conversation had taken place. This was also when Chase still insisted they owned BOTH my notes and would not release any information to the lawyer)  than Deutsche Bank,   than goes to Chase and pays Chase pennies on the dollar to get one of them notes and than Chase writes off the other note. I had a second Note that after Chase claiming to own BOTH my   Notes,the second Note  was suddenly written  off  as  SATISFIED and the first  Note was  sold to Deutsche, in an under handed deal, (mind ya AFTER Chase stated for months to own the first Notes as well NOW they claim they never had it and their is no proof because the note was sold and Chase destroyed the record. ). However,It doesn't end there ,than Chase writes an assignment dated years after the purchase ( mine was over 5 years later)Now, this is where it gets sticky , because if Chase NEVER had the first note now ,( 10 months later) like they claim, how could they possibly write an assignment of mortgage on a NOTE according to them they never had , so could never see? Wouldn't that be FRAUD by Chase? Than suddenly the bottom feeder claiming to own the note (who never had the paperwork in all these years ) comes forward with it , and Chase suddenly no longer has it and states it made a mistake it never owned the first loan,( because  it has now been sold and destroyed in Chase records) than congratulations , your puzzle is now solved. Chase who believes they can get away with it and has, with I am sure thousands of people, is now gonna get caught in its own web of deceit, because I plan on making this even more public , in order for  lawyers and courts and people who were abused to know how it works.

SO ,SHARE SHARE SHARE!!!

I Also posted it  here
http://www.nationalmortgagenews.com/dailybriefing/RBS-Set-for-Biggest-Loss-Since-2008-1040872-1.html#comments
 Please share so others will know.
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Tuesday, December 3, 2013

Wamu Breaking news

Who knows what will happen when all is said and done.. Just might be that Karma will hit many, namely Deutsche Bank and JP Morgan and Chase. One can only hope.



Bloomberg News
DEC 3, 2013 12:58pm ET
Ex-WaMu CEO Said to be Near Settlement in Bank Failure


Former Washington Mutual Inc. Chief Executive Officer Kerry Killinger and two other bank officials are in settlement talks with the Office of the Comptroller of the Currency, the last chapter in the government’s probe of the largest U.S. bank failure.

The regulator is weighing a settlement with Killinger, former chief operating officer Stephen Rotella and David Schneider, former head of the home-loan division, over claims they mismanaged the Seattle-based thrift, according to a person who was briefed and spoke on condition of anonymity because the talks aren’t public.

The person, who said the talks have entered the final stage, didn’t describe the terms being discussed. The details of a deal would need the approval of senior OCC officials.

Washington Mutual, which was the nation’s largest savings and loan and one of the largest subprime lenders, became a public symbol of the excesses of the housing bubble. The thrift and its subprime arm “engaged in a host of shoddy lending practices that contributed to a mortgage time bomb,” the Senate Permanent Subcommittee on Investigations said in a 2011 report.

The bank was seized by regulators in September 2008 after reporting that it faced $19 billion in losses from soured mortgages. JPMorgan Chase & Co. bought remnants of the thrift and has since struggled to unwind itself from liability for Washington Mutual’s faults.

In 2011, Killinger, Rotella and Schneider reached a $64 million settlement with the Federal Deposit Insurance Corp., which liquidated the bank. The FDIC sued the three executives for failing to tend to the thrift’s safety while they received more than $95 million in compensation from 2005 until its collapse. Most of their payments under the settlement were covered by Washington Mutual’s insurance policy.

The OCC’s separate investigation stems from the agency’s 2011 merger with the Office of Thrift Supervision, which had supervised Washington Mutual.

Daniel W. Turbow, a lawyer at Wilson Sonsini Goodrich & Rosati who has represented Killinger, declined to comment. Rotella, now CEO of New York-based StoneCastle Cash Management LLC, didn’t immediately respond to a request for comment. Schneider, who until this year was CEO of Vericrest Financial Inc., an Irving, Texas, mortgage servicer, didn’t return a message left at a phone number listed to his name in New Jersey.

Bryan Hubbard, an OCC spokesman, declined to comment on the talks.

A Justice Department investigation into Washington Mutual ended in August 2011 without charges filed.

The report from the Senate panel, which is led by Senator Carl Levin, a Michigan Democrat, found that Washington Mutual “produced hundreds of billions of dollars of poor quality loans that incurred early payment defaults, high rates of delinquency, and fraud.”

Killinger advised his bank’s board in June 2006 that the company should be “in position to grow its market share” in high-risk lending—including subprime loans—according to an internal memo published in the Senate investigation. The report said Killinger pushed a plan to “significantly curtail” low-margin, safer loans in a shift toward higher risk.

Two months earlier, Schneider had given a presentation suggesting the bank should almost double its subprime volume by 2008, according to the Senate report. Emails between Rotella and Killinger in 2005 showed Rotella also encouraging subprime and home equity loan growth, according to the report.

Killinger said in court filings in the FDIC lawsuit that examiners from the FDIC and OTS were stationed at the bank and were aware “in real time” of business decisions the FDIC later challenged. Killinger, Washington Mutual’s CEO for 18 years, told Levin’s panel in 2010 that his bank could have survived the crisis but U.S. officials denied Washington Mutual help offered to other financial firms.

The bank—in business for 119 years—had enjoyed a string of acquisitions and explosive growth in its final years, adopting a new advertising slogan in the months before its collapse: “Whoo hoo!” In U.S. history, the scale of its bankruptcy was eclipsed only by Lehman Brothers Holdings Inc.

JPMorgan, as part of its $13 billion settlement with the government last month, agreed it wouldn’t continue to press the FDIC to cover some of the losses from defective mortgage securities sold by Washington Mutual before it was acquired.
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Wednesday, September 11, 2013

These cases could help save your homes from fraud

How to chase Chase


2. RESOURCES — Pleadings, Orders, and Exhibits

On this page you will find descriptions and links to various pleadings, orders, and exhibits filed by attorneys as well as individuals representing themselves. Where the outcome is known, that information is included. These documents are public records and are made available for your information, but their accuracy, competency, and effectiveness have not been verified. Only a judge can rule on a pleading and only an appellate court opinion that is certified for publication can be cited as precedent. That said, it can be both educational and entertaining to see how the great race is unfolding in the historic controversy of People v. Banks. For an entertaining public outing of history's all-time greatest pickpockets, go see the documentary "Inside Job."

Federal Court

Javaheri v. JPMorgan Chase, 9th Cir. Court of Appeal, No. 12-56566 (CV10-8185 ODW)

Otis D. Wright II, Judge, U.S. District Court, Central District of California, Los Angeles
Douglas Gillies, attorney for Daryoush Javaheri
Plaintiff sued to halt two foreclosures initiated by JPMorgan Chase. Judge Otis D. Wright denied Chase's motion to dismiss five causes of action - wrongful foreclosure, quiet title, violation of Cal Civ. Code Sec. 2923.5, quasi contract, and declaratory relief, but later Summary Judgment was entered in favor of Chase in the two cases. Plaintiff appealed to the Ninth Circuit.

Gillies v. JPMorgan Chase (Gillies 3), 9th Cir. No. 13-55296 (CV12-10394 GW)

George Wu, Judge, U.S. District Court, Central District of California, Los Angeles
Douglas Gillies, Plaintiff in pro per
Plaintiff sued Chase in state court (Gillies 1) to halt a foreclosure initiated by JPMorgan Chase on the grounds that he could not find a recorded Notice of Default in the County Recorder's office. Chase produced a recorded NOD with plaintiff's name misspelled. The trial court ruled that a NOD had been recorded, sustained Chase's demurrer, and dismissed the case with prejudice. Plaintiff appealed and the Court of Appeal affirmed.
Chase recorded a second Notice of Trustee’s Sale (“NOTS”) with Plaintiff’s name misspelled and Plaintiff sued again in state court (Gillies 2) alleging that the NOD and NOTS did not provide constructive notice because they could not be properly indexed. The trial court sustained a motion to strike on the basis of res judicata and the Court of Appeal affirmed. In all, California courts ruled that a NOD had been recorded and the indexing issue was barred by res judicata.
Chase recorded a third NOTS with a misspelled name on November 8, 2012. Plaintiff filed a complaint in Federal District Court against Chase for attempting to sell his property at a trustee's sale without knowing the identity of the lender, note holder, or beneficiary. He alleged that subsequent to filing the NOD, Chase had invested thousands of dollars pursuing a strategy of executing a defective foreclosure based on intentionally stating a fictitious name for the trustor in a recorded Notice of Default and three recorded Notices of Trustee’s Sale, when it simply could have requested that the lender contact Plaintiff and ask him to sign a correctly spelled document. The District Court dismissed the Complaint with prejudice on the grounds that the action was precluded by the demurrer in state court, and Plaintiff appealed to the Ninth Circuit. The key issue is the scope of the doctrine of res judicata.


Naranjo v. SBMC Mortgage, 2012 U.S. Dist. LEXIS 103735, Case No. 11-cv-2229-L(WVG)

M. James Lorenz, District Judge, U.S. District Court, Southern District of California
Penelope Bergman, Deborah Gutierrez, Los Angeles, CA, attorneys for Carmen Naranjo
"The vital allegation in this case is the assignment of the loan into the WAMU Trust was not completed by May 30, 2006 as required by the Trust Agreement. This allegation gives rise to a plausible inference that the subsequent assignment, substitution, and notice of default and election to sell may also be improper. Defendants wholly fail to address that issue. This reason alone is sufficient to deny Defendants' motion with respect to this issue."
The case was settled on June 21, 2013. Happy Solstice, Carmen.

Ansanelli v. JPMorgan Chase, 2011 WL 1134451, Case No. CV10-03892 (WHA)

William Alsup, District Judge, U.S. District Court, Northern District of California
Cotchett Pitre & McCarthy, Burlingame, CA, attorneys for Angela Ansanelli
Chase took over servicing two Ansanelli loans after it purchased WaMu's assets. Plaintiffs tried to negotiate a loan modification and landed in loan mod hell. Chase moved to dismiss the SAC, and plaintiff's lawyers prevailed on almost every count. The court refused to dismiss causes of action for breach of contract, fraud and deceit, negligent misrepresentation, RESPA, and unfair business practices (Cal. B&P Code sec. 17200).
Additional motions were filed, plaintiffs filed a Fourth Amended Complaint on May 12, 2011, and defendants filed an Answer. At a mediation session on June 22, 2011, the case was settled.

 Bakenie v. JPMorgan Chase, Case No. SACV12-0060 JVS
U.S. District Court, Central District of California (Santa Ana)
Joseph Arthur Roberts, Newport Beach, CA, attorney for Ernest Bakenie
Plaintiff alleges that Chase is engaged in the business practice of deceiving bankruptcy judges, creditors, debtors, and attorneys as to Chase's status as a secured creditor in thousands of bankruptcy cases filed nationwide.
Through fabricated assignments, endorsements and affidavits that purport to transfer Deeds of Trust, notes and the rights to money due under thousands of non-negotiable promissory notes, Chase is playing "hide-and-seek" with debtors and judges.
The 171-paragraph complaint seeks an order vacating all Bankruptcy orders, claims and awards granted based on Chase's misrepresentations and deceptive business practices.
Balderas v. Countrywide, Case No. 10-55064
Opinion by Alex Kozinski, Chief Judge, Ninth Circuit Court of Appeals
Kevin Griffin, Griffin Johnson LLP, Dana Point, CA, attorney for Victor Balderas
Plaintiffs alleged that Countrywide gave them defective copies of the TILA Notice of Right to Cancel, which remained at the bank rather than were given to Plaintiffs. Therefore they were entitled to rescind within three years, rather than three days of signing the papers.
Chief Judge Kozinski's opinion begins, "The Balderases allege that they are immigrants who were rooked by a bank that signed them up for loans it knew they couldn't afford, on terms they didn't agree to."
The opinion continues:
Webster's New International Dictionary defines "deliver" as "to give or transfer" and "to yield possession or control of." Webster's New International Dictionary 693 (2d ed. 1939). We interpret "deliver" to mean that the consumer must be allowed to keep the notice. When you have pizza delivered, you don't sign for it and let the deliveryman take it back to the restaurant. And when a newspaper boy delivers a paper, he doesn't show you the headlines and then return it to the printer.

Countrywide claims that the Balderases didn't allege enough facts to rebut the signed notice's presumption of delivery. But presumptions are not rebutted by allegations; they are rebutted by evidence. And the time for presenting evidence has not yet arrived. Complaints need only allege facts with sufficient specificity to notify defendants of plaintiffs' claims. Here, the Balderases pleaded that the notice they were given was defective...

As we've said before, "so long as the plaintiff alleges facts to support a theory that is not facially implausible, the court's skepticism is best reserved for later stages of the proceedings when the plaintiff's case can be rejected on evidentiary grounds." In re Gilead Sciences Securities Litigation, 536 F.3d 1049, 1057 (9th Cir. 2008). Here, the Balderases clearly alleged in their complaint that they were never given a Notice of Right to Cancel that complied with TILA. If they can prove up this allegation at trial, they'll win. A complaint containing allegations that, if proven, present a winning case is not subject to dismissal under 12(b)(6), no matter how unlikely such winning outcome may appear to the district court.

Carswell v. JPMorgan Chase, Dist. Ct. No. CV10-5152; 9th Circuit No. 11-55423
George Wu, Judge, U.S. District Court, Central District of California, Los Angeles
Douglas Gillies, attorney for Margaret Carswell
Plaintiff sued to halt a foreclosure initiated by JPMorgan Chase and California Reconveyance Co. on the grounds of failure to contract, wrongful foreclosure, unjust enrichment, RESPA and TILA violations, and fraud. She asked for quiet title and declaratory relief. Chase responded with a Motion to Dismiss. At a hearing on September 30, 2010, Judge Wu granted defendants' motion to dismiss with leave to amend. Plaintiff's First Amended Complaint was filed on October 18. It begins:
It was the biggest financial bubble in history. During the first decade of this century, banks abandoned underwriting practices and caused a frenzy of real estate speculation by issuing predatory loans that ultimately lowered property values in the United States by 30-50%. Banks reaped the harvest. Kerry Killinger, CEO of Washington Mutual, took home more than $100 million during the seven years that he steered WaMu into the ground. Banks issued millions of predatory loans knowing that the borrowers would default and lose their homes. As a direct, foreseeable, proximate result, 15 million families are now in danger of foreclosure. If the legions of dispossessed homeowners cannot present their grievances in the courts of this great nation, their only recourse will be the streets.
Chase responded with yet another Motion to Dismiss, Carswell filed her Opposition to the motion, and at hearing on January 6, 2011, Judge Wu asked Plaintiff for an Offer of Proof. Her Offer of Proof included written argument, 19 exhibits, and a powerpoint presentation. Judge Wu granted Chase's Motion to Dismiss, and Carswell appealed to the 9th Circuit (Case No. 11-55423).
After a hearing on November 7, 2012, the Ninth Circuit Court of Appeal affirmed the District Court's order of dismissal.


Khast v. Washington Mutual, JPMorgan Chase, and CRC, Case No. CV10-2168 IEG

Irma E. Gonzalez, Chief Judge, U.S. District Court, Southern District of California
Kaveh Khast in pro se
A loan mod nightmare where Khast did everything right except laugh out loud when WaMu told him that he must stop making his mortgage payments for 90 days in order to qualify for a loan modification. As Khast leaped through the constantly shifting hoops tossed in the air, first by WaMu, then by Chase, filing no less than four applications, Chase issued a Notice of Trustee's Sale.
Khast filed a pro se complaint in federal court which included a request for a Temporary Restraining Order. The District Court granted a TRO to stop the sale. The court wrote that the conduct by WAMU appeared to be "immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers," and thus satisfied the "unfair" prong of California's Unfair Competition Law, Cal. Bus.&Prof.Code §17200. Plaintiff stated that he possessed documents which supported his contention that Defendant WAMU instructed him to purposefully enter into default and assured him that, if he did so, WAMU would restructure his loan. Accordingly, Plaintiff demonstrated that he was likely to succeed on the merits of his claim.
The court also relied upon the doctrine of promissory estoppel, whereby a promisor is bound when he should reasonably expect a substantial change of position, either by act or forbearance, in reliance on his promise. He who by his language or conduct leads another to do what he would not otherwise have done shall not subject such person to loss or injury by disappointing the expectations upon which he acted.
At a later hearing, the court denied a preliminary injunction when Chase argued that WaMu's immoral conduct was a liability that was not assumed by Chase under the Purchase and Assumption Agreement dated September 25, 2008. The court's TRO on October 26 nevertheless provides borrowers with ammunition to raise claims of unfair competition and promissory estoppel.
Plaintiff's claims under TILA were dismissed because the 3-year Statute of Limitations had passed and Plaintiff did not allege facts in support of suspending the limitations period under the doctrine of equitable tolling. The Fair Debt Collections Practices Act did not apply because mortgagees, servicers, and trustees are not "debt collectors" subject to FDCPA. The court declined to exercise supplemental jurisdiction under 28 U.S.C. Sec. 1367 over Plaintiff's state law claims.

Saxon Mortgage v. Hillery, Case No. C-08-4357
Edward M. Chen, U.S. Magistrate, Northern District of California
Thomas Spielbauer, attorney for Ruthie Hillery Hillery obtained a home loan from New Century secured by a Deed of Trust, which named MERS as nominee for New Century and its successors. MERS later attempted to assign the Deed of Trust and the promissory note to Consumer. Consumer and the loan servicer then sued Hillery. The court ruled that Consumer must demonstrate that it is the holder of the deed of trust and the promissory note. In re Foreclosure Cases, 521 F. Supp. 2d 650, 653 (S.D. Oh. 2007) held that to show standing in a foreclosure action, the plaintiff must show that it is the holder of the note and the mortgage at the time the complaint was filed. For there to be a valid assignment, there must be more than just assignment of the deed alone; the note must also be assigned. "The note and mortgage are inseparable; the former as essential, the latter as an incident...an assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity." Carpenter v. Longan, 83 U.S. 271, 274 (1872).
There was no evidence that MERS held the promissory note or was given the authority by New Century to assign the note to Consumer. Without the note, Consumer lacked standing. If Consumer did not have standing, then the loan servicer also lacked standing. A loan servicer cannot bring an action without the holder of the note. In re Hwang, 393 B.R. 701, 712 (2008).

Serrano v. GMAC Mortgage, Case No. 8:09-CV-00861-DOC
David O. Carter, Judge, U.S. District Court, Central District of California, Los Angeles Moses S. Hall, attorney for Ignacio Serrano
Plaintiff alleged in state court that GMAC initiated a non-judicial foreclosure sale and sold his residence without complying with the notice requirements of Cal. Civil Code Sec. 2923.5 and 2924, and without attaching a declaration to the 2923.5 notice under penalty of perjury stating that defendants tried with due diligence to contact the borrower. Defendants removed the case to federal court on the basis of diversity jurisdiction. The District Court granted defendants' motion to dismiss without prejudice, and described in detail the defects in the Complaint with directions how to correct the defects. Plaintiff filed his Second Amended Complaint on 4/01/2010.

Sharma v. Provident Funding, Case No. 3:2009-cv-05968
Vaughn R Walker, Judge, U.S. District Court, Northern District of California
Marc A. Fisher, attorney for Anilech and Parma Sharma
Defendants attempted to foreclose and plaintiffs sued in federal court, alleging that defendants did not contact them as required by Cal Civ Code § 2923.5. In considering plaintiffs' request for an injunction to stop the foreclosure, the court found that plaintiffs had raised "serious questions going to the merits" and would suffer irreparable injury if the sale were to proceed. Property is considered unique. If defendants foreclosed, plaintiffs' injury would be irreparable because they might be unable to reacquire it. Plaintiffs' remedy at law, damages, would be inadequate. On the other hand, defendants would not suffer a high degree of harm if a preliminary injunction were ordered. While they would not be able to sell the property immediately and would incur litigation costs, when balanced against plaintiffs' potential loss, defendants' harm was outweighed.
The court issued a preliminary injunction enjoining defendants from selling the property while the lawsuit was pending.


Federal Bankruptcy Court

In re Salazar, No. 10-17456 (Bankr. S.D. Cal. Apr. 12, 2011) Chap. 13
Margaret M. Mann, U.S. Bankruptcy Judge, San Diego, CA
Francisco J. Aldana, attorney for Eleazar Salazar
600 B Street, Suite 2130, San Diego, California 92101
Cal Civil Code 2932.5 applies to Deeds of Trust as well as mortgages. It requires that if the foreclosing beneficiary has acquired its claim by assignment, it must record its assignment of the Deed of Trust before the trustee's sale.
MERS was not the beneficiary at the time of the foreclosure, even if it was initially the nominal beneficiary under the DOT. The DOT does not grant MERS any authority apart from a nominal role. MERS is not an extra-judicial commercial alternative to California's exhaustive nonjudicial foreclosure law (Civil Code sections 2020-2955). This Court joins the courts in other states that rejected MERS' offer of an alternative to the public recording system (citing In re Agard, below)
"The Court rejects the claim that MERS' limited role in the DOT provides it carte blanche authority over the nonjudicial foreclosure process."


In re Agard, No. 10-77338, 2011 Bankr. LEXIS 488, at *58-*59 (Bankr. E.D.N.Y. Feb. 10, 2011) Chap. 7
Robert E. Grossman, U.S. Bankruptcy Judge, Central Islip, NY
George Bassias, Astoria, NY, attorney for Ferrel Agard
21-83 Steinway, Astoria, NY 11105
gbassias@yahoo.com
The membership rules of Mortgage Electronic Registration Systems, or MERS, don't make it an agent of the banks that own the mortgages. "MERS's theory that it can act as a 'common agent' for undisclosed principals is not supported by the law," Grossman wrote. "MERS did not have authority, as 'nominee' or agent, to assign the mortgage absent a showing that it was given specific written directions by its principal."
"MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage-recording process," Grossman wrote. "The court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law."
"Without more, this court finds that MERS's 'nominee' status and the rights bestowed upon MERS within the mortgage itself, are insufficient to empower MERS to effectuate a valid assignment of mortgage," the judge wrote. "MERS's position that it can be both the mortgagee and an agent of the mortgagee is absurd, at best."
Grossman said parties coming to him to seek to lift the automatic ban on legal claims in cases involving MERS will have to show they own both the mortgage and the note.
MERS appealed Judge Grossman's order on March 8, 2011.


In re: Hwang, 396 B.R. 757 (2008), Case No. 08-15337 Chapter 7
Samuel L. Bufford, U.S. Bankruptcy Judge, Los Angeles
Robert K. Lee, attorney for Kang Jin Hwang
As the servicer on Hwang's promissory note, IndyMac was entitled to enforce the secured note under California law, but it must also satisfy the procedural requirements of federal law to obtain relief from the automatic stay in a Chapter 7 bankruptcy proceeding. These requirements include joining the owner of the note, because the owner of the note is the real party in interest under Rule 17, and it is also a required party under Rule 19. IndyMac failed to join the owner of the note, so its motion for relief from the automatic stay was denied.
Reversed on July 21, 2010. District Court Judge Philip Gutierrez reversed the Judge Bufford's determination that IndyMac is not the real party in interest under Rule 17 and that Rule 19 requires the owner of the Note to join the Motion.

In re: Vargas, Case No. 08-17036 Chapter 7
Samuel L. Bufford, U.S. Bankruptcy Judge, Los Angeles
Marcus Gomez, attorney for Raymond Vargas

In re: Walker, Case No. 10-21656 Chapter 11
Ronald H. Sargis, Judge, U.S. Bankruptcy Court, Sacramento
Mitchell L. Abdallah, attorney for Rickie Walker
MERS assigned the Deed of Trust for Debtor's property to Citibank, which filed a secured claim. Debtor objected to the claim. Judge Sargis ruled that the promissory note and the Deed of Trust are inseparable. An assignment of the note carries the mortgage with it, while an assignment of the Deed of Trust alone is a nullity. MERS was not the owner of the note, so it could not transfer the note or the beneficial interest in the Deed of Trust. The bankruptcy court disallowed Citibank's claim because it could not establish that it was the owner of the promissory note.

Washington Mutual Inc. Bankruptcy, Case No. 08-12229 Chapter 11
Mary F. Walrath, Judge, U.S. Bankruptcy Court, Delaware
The Washington Mutual, Inc. Chapter 11 Voluntary Bankruptcy Petition was filed by WaMu on September 26, 2008 in Deleware. The filing fee was $1,039. As of the end of February 2012, 11,050 documents had been filed.


California State Court

Mabry v. Aurora Loan Services
185 Cal.App.4th 208, 110 Cal. Rptr. 3d 201 (4th Dist. June 2, 2010)
California Court of Appeal, 4th District, Division 3
California Supreme Court, Petition for Review denied August 18, 2010.
Moses S. Hall, attorney for Terry and Michael Mabry
The Mabrys sued to enjoin a trustee's sale of their home, alleging that Aurora's notice of default did not include a declaration required by Cal. Civil Code §2923.5, and that the bank did not explore alternatives to foreclosure with the borrowers. The trial court refused to stop the sale. The Mabrys filed a Petition for a Writ of Mandate and the Court of Appeal granted a stay to enjoin the sale. Oral argument was heard in Santa Ana on May 18, 2010.
Aurora argued that a borrower cannot sue a lender that fails to contact the borrower to discuss alternatives to foreclosure before filing a notice of default, as required by §2923.5, because §2923.5 does not explicitly give homeowners a "private right of action." Aurora also argued that a declaration under penalty of perjury is not required because a trustee, who ordinarily files the notice of default, could not have personal knowledge of a bank's attempts to contact the borrower. Nobody mentioned that the trustee is not authorized by the statute to make the declaration. §2923.5 states that a notice of default "shall include a declaration from the mortgagee, beneficiary, or authorized agent that it has contacted the borrower..."
The Court of Appeal ruled that a borrower has a private right of action under § 2923.5 and is not required to tender the full amount of the mortgage as a prerequisite to filing suit, since that would defeat the purpose of the statute. Under the court's narrow construction of the statute, §2923.5 merely adds a procedural step in the foreclosure process. Since the statute is not substantive, it is not preempted by federal law. The declaration specified in §2923.5 does not have to be signed under penalty of perjury. The borrower's remedy is limited to getting a postponement of a foreclosure while the lender files a new notice of default that complies with §2923.5. If the lender ignores the statute and makes no attempt to contact the borrower before selling the property, the violation does not cloud the title acquired by a third party purchaser at the foreclosure sale. Therefore §2923.5 claims must be raised in court before the sale. It is a question of fact for the trial court to determine whether the lender actually attempted to contact the borrower before filing a notice of default. If the lender takes the property at the foreclosure sale, its title is not clouded by its failure to comply with the statute. Finally, the case is not suitable for class action treatment if the lender asserts that it attempted to comply with the statute because each borrower will present "highly-individuated facts."
In a petition for review to the California Supreme Court, the Mabrys noted that more than 100 federal district court opinions have considered §2923.5 and an overwhelming majority have rejected a private right of action under the statute. The petition for review was denied.
After the case was remanded to the trial court, Mabry's motion for preliminary injunction was granted. The trial court found that the Notice of Default contained the form language required by the statute, i.e. that the lender contacted the borrower, tried with due diligence to contact the borrower, etc. However, the declaration on the Notice of Default was not made under panalty of perjury, and therefore had no evidentiary value to show whether the defendant satisfied §2923.5


Lange v. JP Morgan Chase, Washington Mutual, Alta Community Investment, and Seaside Capital Fund
California Court of Appeal, 2nd District   Case #B233670
Roger Senders, trial attorney
Douglas Gillies, appellate attorney for Susan Lange
Susan Lange was paying Chase $6384 per month to stay in her home under a trial loan modification agreement when she came home to find a Notice to Quit posted on her front door. Without giving notice to Susan, Chase had conducted a Trustee's Sale. The property was purchased by Alta Community Investment, founded by Todd Kaufman, and Seaside Capital Fund, owned by Luke McCarthy. However, Todd Kaufman was not your typical bona fide purchaser of distressed properties. He had designed and managed WaMu's securitization division. He left WaMu during the mortgage meltdown and founded Alta Community Investment so he could buy and sell distressed houses.
Two days later, Lange received a knock on the door from Nancy Mura, who was sent to Lange's home to persuade the residents to move immediately. Mura told Lange that if she didn't get out right away, Luke McCarthy would pay her a visit and he would be "very unpleasant" if he had to come. "He never loses these things."
The trial court sustained demurrers filed by Chase, Alta, and Seaside. Susan Lange appealed. The California Court of Appeal affirmed, stating, "Alta and Seaside sent someone to her door asking her to vacate after the foreclosure sale, but this is not extreme and outrageous."
Susan Lange's hearing in the Cal.
Court of Appeal on 12/12/2012 (31 min.)



Herrera v. Deutsche Bank
California Court of Appeal, 196 Cal.App.4th 1366, 3rd District (May 31, 2011)
Herrera was originally an unpublished opinion, but after receiving a request from the public, the Court ordered on June 28, 2011, that the opinion would be published in part.
A trial court errs in taking judicial notice of disputed facts contained within recorded documents.
A matter ordinarily is subject to judicial notice only if the matter is reasonably beyond dispute. "Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning." Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374. While courts take judicial notice of public records, they do not take notice of the truth of matters stated therein. Love v. Wolf (1964) 226 Cal.App.2d 378, 403. "When judicial notice is taken of a document . . . the truthfulness and proper interpretation of the document are disputable." StorMedia, Inc. v. Superior Court (1999) 20 Cal.4th 449, 457, fn. 9.
In Herrera, the Substitution of Trustee recited that Deutsche Bank "is the present beneficiary under" the 2003 deed of trust. This fact was hearsay and disputed. Therefore, the trial court could not take judicial notice of it. Poseidon Development, Inc. v. Woodland Lane Estates, (2007) 152 Cal.App.4th 1106. Nor would taking judicial notice of the Assignment of Deed of Trust establish that the Deutsche Bank was the beneficiary under the deed of trust. A recitation that JPMorgan Chase Bank is the successor in interest to Long Beach Mortgage Company, through Washington Mutual, is hearsay. Plaintiffs disputed the truthfulness of the contents of all of the recorded documents.
A supporting declaration must be made on personal knowledge and "show affirmatively that the affiant is competent to testify to the matters stated." Code Civ. Proc., § 437c, subd. (d). Deborah Brignac's declaration did not affirmatively show that she can competently testify that the bank is the beneficiary under the deed of trust. At most, her declaration shows she can testify as to what the Assignment of Deed of Trust "indicates." The factual contents of the assignment were hearsay and defendants offered no exception to the hearsay rule to make these factual matters admissible.
At oral argument, defendants contended that the recorded documents were actually business records and admissible under the business record exception. However, Brignac did not provide any information in her declaration establishing that the sources of the information and the manner and time of preparation would indicate trustworthiness. (Evid. Code, § 1271 (d).
A declaration that the Substitution of Trustee by Deutsch Bank made CRC trustee would require admissible evidence that the bank was the beneficiary under the 2003 deed of trust and thus had the authority to substitute the trustee. Because defendants failed to present facts to establish that the bank was beneficiary and CRC was trustee under the 2003 deed of trust, and therefore had authority to conduct the foreclosure sale, triable issues of material fact remain.

Gillies v. California Reconveyance Co. and JPMorgan Chase (Gillies 1)
California Court of Appeal, Case # B224995, 2nd District, Division 6
Douglas Gillies, Appellant in pro per
Gillies sued on November 25, 2009, to enjoin a trustee's sale, alleging that CRC's Notice of Default (NOD) did not include a declaration required by Cal. Civil Code §2923.5, the NOD mailed to the homeowner was not a copy of the recorded NOD, and the Notice of Default was not recorded in the County Recorder's Office. Defendants filed a Demurrer and attached a recorded NOD in which the name of the trustor was misspelled. The trial court sustained the demurrer without leave to amend and the case was dismissed. Gillies appealed.
The Court of Appeal affirmed the trial court's demurrer, and wrote, "Gillies points out that the notice of default misspells his first name Dougles, instead of the correct Douglas. But no reasonable person would be confused by such a minor error. Gillies last name is spelled correctly and the notice contains the street address of the property as well as the assessor's parcel number."
Gillies filed a second lawsuit against CRC on July 13, 2011 (Gillies 2).

Gillies v. California Reconveyance Co. (Gillies II)
California Court of Appeal, Case # B237562, 2nd District, Division 6
Douglas Gillies, Plaintiff in pro per
Gillies sued CRC a second time to enjoin a trustee's sale, alleging that the Deed of Trust did not correctly state the name of trustor, as required by Cal. Civil Code §2924, and that CRC did not attempt to contact the borrower to explore alternatives to foreclosure before filing the Notice of Default. The court granted a Temporary Restraining Order to stop the sale but declined to issue a preliminary injunction.
CRC filed a Motion to Strike the Complaint on the grounds of res judicata and collateral estoppel. Gillies opposed the motion arguing that res judicata does not apply because the Complaint alleges new facts and new theories and the earlier dismissal following a demurrer was not a judgment on the merits. When Judge de Bellefeuille dismissed the complaint in Gillies II, she suggested that it should be resolved by the court of appeal.
Plaintiff filed an appeal on November 16, 2011, Case # B237562. The Second Appellate District, Div. 6, ruled in an unpublished opinion that the action was barred by the doctrine res judicata.

Gillies filed a third lawsuit against Chase in Federal District Court on December 5, 2012 (Gillies 3) alleging that Chase could not identify the Lender and was therefore not authorized to commence foreclosure. Chase's wholly owned subsidiary, CRC, had recorded a Deed of Trust that did not correctly state the name of trustor, followed by a Notice of Default and three Notices of Trustee's Sale. A spelling discrepancy is a clerical error. CRC's remedy could be found in the Adjustable Rate Note, which states in Paragraph 12 that in the event of a clerical error, "I agree, upon notice from the Note Holder, to reexecute any Loan Documents that are necessary to correct any such Errors." The Note Holder can request that the Trustor amend the Deed of Trust to correct a clerical error. Chase and CRC did not follow this simple remedy because they cannot identify or located the Note Holder.

Cabalu v. Mission Bishop Real Estate
Superior Court of California, Alameda County
Brian A. Angelini, attorney for Cecil and Natividad Cabalu

Davies v. NDEX West, Case No. INC 090697
Randall White, Judge, Superior Court of California, Riverside County
Brian W. Davies, in pro per

Edstrom v. NDEX West, Wells Fargo Bank , Case No. 20100314
Superior Court of California, Eldorado County
Richard Hall, attorney for Daniel and Teri Anne Edstrom
A 61-page complaint with 29 causes of action to enjoin a trustee's sale of plaintiffs' residence, requesting a judicial sale instead of a non-judicial sale, declaratory relief, compensatory damages including emotional and mental distress, punitive damages, attorneys' fees, and rescission.
Moreno v. Ameriquest
Superior Court of California, Contra Costa County
Thomas Spielbauer, attorney for Gloria and Carlos Moreno
Complaint for declaratory relief and fraud against lender for misrepresenting the terms of the loan, promising fixed rate with one small step after two years both orally and in the Truth In Lending Statement. Loan was actually variable rate with negative amortization. Morenos would have qualified for fixed rate 5% for 30 years, but instead received an exploding 7% ARM. Notary rushed plaintiffs through signing of documents with little explanation. Complaint requests a declaration the note is invalid, unconscionable and unenforceable and the Notice of Trustees Sale is invalid.

Other State Courts

Niday v. GMAC, Case No. CV10020001
Oregon Court of Appeals
July 18, 2012
Jeff Barnes, attorney for Rebecca Niday
In sum, we conclude that the "beneficiary" of a trust deed for purposes of the OTDA is the person named or otherwise designated in the trust deed as the person to whom the secured obligation is owed--in this case, the original lender. We further conclude that, because there is evidence that the beneficiary assigned its interest in the trust deed without recording that assignment, there is a genuine issue of material fact on this summary judgment record as to whether ORS 86.735(1), a predicate to nonjudicial foreclosure, has been satisfied. We emphasize, however, that our holding concerns only the requirements for nonjudicial foreclosure. Cf. ORS 86.710 (beneficiary of the trust deed retains the option of judicial foreclosure). And the import of our holding is this: A beneficiary that uses MERS to avoid publicly recording assignments of a trust deed cannot avail itself of a nonjudicial foreclosure process that requires that very thing--publicly recorded assignments.
  • Opinion decided 7/18/2012 that if evidence indicates the beneficiary assigned its interest through MERS without recording the transfer, nonjudicial foreclosure is not available.

JPMorgan Chase Bank v. George, Case No. 10865/06
Arthur M. Schack, Supreme Court Judge, Kings County, New York
Edward Roberts, attorney for Gertrude George

Florida Judge tosses foreclosure lawsuit

Homeowners dispute who owns mortgage by Steve Patterson
St. Augustine Record
June 15, 2010
Changing stories about who owns a mortgage and seemingly fresh evidence from a long-closed bank led a judge to throw out a foreclosure lawsuit. It's the second time in as many months that Circuit Judge J. Michael Traynor has dismissed with prejudice a foreclosure case where homeowners disputed who owns the mortgage. Lawyers representing New York-based M&T Bank gave three separate accounts of the ownership, with documentation that kept changing.
"The court has been misled by the plaintiff from the beginning," the judge wrote in his order. He added that documents filed by M&T's lawyers seemed to contradict each other and "have changed as needed to benefit the plaintiff."
The latest account was that Wells Fargo owned the note, and M&T was a servicer, a company paid to handle payments and other responsibilities tied to a mortgage. To believe that, the judge wrote, the "plaintiff is asking the court to ignore the documents filed in the first two complaints." He added that Wells Fargo can still sue on its own, if it has evidence that it owns the mortgage.
More and more foreclosure cases are being argued on shaky evidence, said James Kowalski, a Jacksonville attorney who represented homeowners Lisa and Larry Smith in the fight over their oceanfront home. "I think it's very representative of what the banks and their lawyers are currently doing in court," Kowalski said.
He said lawyers bringing the lawsuits are often pressed by their clients to close the cases quickly. But it's up to lawyers to present solid evidence and arguments. "We are supposed to be better than that," Kowalski said. "We are supposed to be officers of the court."

Exhibits

Department of Treasury and FDIC Report on WaMu, 4/16/2010
The Offices of Inspector General for Department of the Treasury and Federal Deposit Insurance Corporation released its evaluation of the regulatory oversight of Washington Mutual on April 16. The table of contents tells the story. WaMu pursued a high-risk lending strategy which included systematic underwriting weaknesses. They didn't care if borrowers could pay back their loans. WaMu did not have adequate controls in place to manage its reckless "high-risk" strategy. OTS examiners found weaknesses in WaMu's strategy, operations, and asset portfolio but looked the other way.

OCC Advisory Letters
How could the regulators allow this breakdown to happen? Was it really fraud when banks arranged loans for homeowners who would inevitably go into defrault, sold them to Wall Street to be bundled into securities, then purchased insurance so that the bank would collect the unpaid balances when the borrowers lost their homes? Did anybody really know that repealing Glass-Steagall and permitting Wall Street banks to get under the covers with Main Street banks would cause so many borrowers to lose their homes? The Glass-Steagall Act, enacted in 1933, barred any institution from acting as any combination of an investment bank, a commercial bank, and an insurance company. It was repealed in 1999, and the repercussions have been immense.
The Office of the Comptroller of the Currency (OCC) issued Advisory Letter 2000-7 only months after Glass-Steagall was repealed. It warned regulators to be on the lookout for indications of predatory or abusive lending practices, including Collateral or Equity Stripping - loans made in reliance on the liquidation value of the borrower's home or other collateral, rather than the borrower's independent ability to repay, with the possible or intended result of foreclosure or the need to refinance under duress. Proving fraud is a painstaking process. Getting inside the mind of a crook requires a careful foundation, and admissable evidence is not always easy to obtain. Many courts will take judicial notice of official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States. See Cal Evidence Code Sec. 452(c).
Here is a set of smoking guns in the form of a series of Advisory Letters issued by OCC:
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Tuesday, September 10, 2013

JPM: The Washington Mutual Story


by Josh Rosner - March 13th, 2013, 8:00am
Josh Rosner (@JoshRosner) is co-author of the New York Times Bestseller “Reckless Endangerment” and Managing Director at independent research consultancy Graham Fisher & Co. He advises regulators, policy-makers and institutional investors on banking and financial services (a more complete bio appears at the end of this column).
This is part 2 of 5; Yesterday evening, we published the Introduction. We will be releasing a different part each evening and morning culminating in the release of Rosner’s complete report on Friday morning. On that date, the Senate Permanent Subcommittee on Investigations will release their final report on JPM’s CIO Group (aka the London Whale).
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We will address under-appreciated but material fundamental issues in a forthcoming report. Consistent with the purpose of this report we felt it important to consider outstanding internal control, headline and other extraordinary items that could materially impact JPM’s profitability and potentially highlight further breakdowns in controls.
Washington Mutual: a Story of Opacity and Impunity

Perhaps no other example illustrates JPMorgan’s scorched-earth legal approach better than the disputes over the estate of Washington Mutual (WaMu), which the firm acquired from the FDIC in September 2008. JPMorgan portrays its purchase of WaMu during the depths of the financial crisis as a patriotic act performed by a well-run bank. Its public statements and regulatory filings tell a different tale.
In August 2009, Deutsche Bank, as trustee for about $92 billion of notional WaMu securitizations, filed suit against the FDIC demanding the repurchase of billions of dollars of mortgages that they argued violated representations and warranties in the pooling agreement. The FDIC moved to dismiss the complaint, arguing that JPMorgan had assumed the liabilities in the WaMu purchase. Consequently, Deutsche Bank amended its complaint to add JPMorgan[i]. JPMorgan is protected by a broad gag order that has sealed away, from public view, any internal communications on Washington Mutual. We have had to rely on public information and information provided as a result of freedom of information requests.
After several years of agreeing with the FDIC’s position and acknowledging that it acquired the mortgage liabilities of Washington Mutual[ii], JPMorgan appears to have changed its mind when it realized the enormity the industry’s mortgage putback risks[iii]. JPMorgan is now boldly demanding indemnification from the FDIC Insurance Fund.
JPMorgan, which in the aftermath of the financial crisis, accepted more than $391 billion of government emergency program support[iv], is seeking to shift losses on over $190 billion of Washington Mutual-related mortgage securities onto the FDIC – claiming that for a mere $1.9 billion it bought nearly all of the positive value of WaMu and was able to stick the public with essentially all of the ongoing losses. If the firm fails in these efforts it could be stuck with settlement costs on claims of between $3 and $5 billion. Unfortunately, a continued lack of clarity about the firm’s reserves coupled with recent plaintiff-friendly court rulings that may increase putback settlement costs make it difficult to assess whether JPMorgan is adequately reserved.
Since it began to deny its obligation, JPMorgan has repeatedly tried getting the FDIC to agree that it has approval to settle and then send the FDIC the bill.  The arrogance, impunity and extent to which lengths JPM’s lawyers go in attempts to saddle the FDIC with its own losses are amazing. In a strongly worded letter of response to JPM’s repeated attempts to fool the FDIC into stating or implying it accepted consent, the FDIC strongly states that it has not consented to any actions or inactions by JPM and that “insomuch as these assertions may have become boilerplate language in correspondence from this firm, please consider this letter to be the FDIC’s standing rebuttal” [v]. Still, recent press reports suggest that JPMorgan and Deutsche Bank are engaged in settlement talks and that JPM’s strategy may be to settle with the Deutsche Bank (Trustee) investors, indemnify those investors and have them file a claim against the FDIC for indemnification.
Even beyond losses on the $92 billion of original principal balance for which Deutsche Bank is trustee, there are losses associated with another $100 billion of WaMu mortgage securities over which either JPMorgan or the FDIC will ultimately be required to settle.
The Acquisition

In early 2008, JPMorgan began to do due diligence on Washington Mutual with an eye to acquiring the troubled but still solvent firm, but because of the potential for big losses at WaMu, JPMorgan CEO Jamie Dimon chose not to move forward with an acquisition[vi]. Three months later, WaMu was bankrupt. As the FDIC began to plan for the closing and sale of WaMu, it offered bidders five possible transaction structures[vii], each with different levels of acquired liabilities.
On September 23 and 24, 2008, the FDIC negotiated over JPMorgan’s bid, which was for the acquisition of all of WaMu’s assets and liabilities except for the preferred stock, subordinated debt and senior debt of the bank[viii]. The deal structure that JPMorgan chose also required that the winning bid come at the least cost to the FDIC.

During the talks, JPMorgan sent an e-mail[ix] to the FDIC expressing concerns and seeking clarity about the “liabilities assumed by the assuming bank”[x] and expressed concern over the broadness of the provision[xi]. In a Q&A document released during the initial invitation to bid process, the FDIC made it clear that the obligations associated with mortgage securitizations would pass to the buyer[xii], their position did not change and JPMorgan did not receive the desired changes to the standard indemnification to protect itself against the liabilities associated with Washington Mutual’s mortgage securitizations. It couldn’t have been clearer that JPMorgan understood the liabilities it was accepting.
The FDIC did make limited changes to the standard bidding form, indemnifying the bank for up to $500 million for damages brought by Washington Mutual or third parties.[xiii] The agency also agreed to provide JPMorgan indemnification against mortgage-borrower (but not investor) claims[xiv], a frequent cause for concern in the fall of 2008.
On September 25, 2008, the FDIC announced that JPMorgan acquired the banking operations of Washington Mutual at no cost to the FDIC’s insurance fund [xv].  In an SEC filing that evening, JPMorgan said it “acquired all deposits, assets and certain liabilities of Washington Mutual’s banking operations from the Federal Deposit Insurance Corporation (FDIC), effective immediately. Excluded from the transaction are the senior unsecured debt, subordinated debt, and preferred stock of Washington Mutual’s banks. JPMorgan Chase will not be acquiring any assets or liabilities of the banks’ parent holding company (WM) or the holding company’s non-bank subsidiaries. As part of this transaction, JPMorgan Chase will make a payment of approximately $1.9 billion to the FDIC”[xvi].
Clearly, the FDIC and JPMorgan both intended and believed that all liabilities not specifically excluded were transferred. Had the FDIC believed otherwise it would have considered its potential exposures to retained liabilities in its announcement and, if there were other bidders, in its decision to award Washington Mutual to JPMorgan. After all, the FDIC has a statutory obligation to approve the least costly resolution.
Acknowledgment of WaMu Liabilities
When JPMorgan announced its earnings for the fourth quarter of 2008, Dimon proudly claimed that JPMorgan was “doing its part” to help stabilize the financial markets and hasten recovery. We assumed risk and expended resources to assimilate Bear Stearns and Washington Mutual.”[xvii] The comments make for a great patriotic sound-bite but deserve further scrutiny in light of the bank’s subsequent claim that it never acquired WaMu’s mortgage liabilities. After all, since the bank bought WaMu’s assets at book value and wrote the loan book down by $31 billion, it is hard to understand what risk it took if it didn’t acquire the liabilities relating to Washington Mutual’s securitization activities.
In a Jan. 9, 2009, SEC filing, Freddie Mac disclosed that “JPMorgan Chase will assume Washington Mutual’s recourse obligations to repurchase any of such mortgages that were sold to Freddie Mac with recourse. With respect to mortgages that Washington Mutual sold to Freddie Mac without recourse, JPMorgan Chase has agreed to make a one-time payment to Freddie Mac with respect to obligations of Washington Mutual to repurchase any of such mortgages that are inconsistent with certain representations and warranties made at the time of sale[xviii].” This filing, like several filings made by JPMorgan, demonstrate that the firm had recognized its obligations to repurchase WaMu-related mortgages sold to the GSEs[xix]. If, as JPMorgan now contends, these repurchase obligations were the rightful liabilities of the FDIC, then one must ask how the firm could legally have settled them on behalf of the FDIC. In fact, section 12.2(f) of the Purchase Agreement specifically protects the FDIC from paying for liabilities it did not assume by requiring that it consent to any settlement that would result in an indemnification obligation. 
Further supporting the argument that JPMorgan acquired the WaMu liabilities are SEC filings and presentations to shareholders by JPMorgan. In connection with 2010 earnings, the bank warned that “we and certain of our subsidiaries, as well as entities acquired by us as part of the Bear Stearns, Washington Mutual and other transactions, have made such representations and warranties in connection with the sale and securitization of loans (whether with or without recourse… Our obligations with respect to these representations and warranties are generally outstanding for the life of the loan, and relate to, among other things, compliance with laws and regulations; underwriting standards; the accuracy of information in the loan documents and loan file; and the characteristics and enforceability of the loan…. if a loan that does not comply with such representations and warranties is sold, we may be obligated to repurchase the loan and bear any associated loss directly, or we may be obligated to indemnify the purchaser against any such loss. Accordingly, such repurchase and/or indemnity obligations …acquired by us as part of the Bear Stearns, Washington Mutual and other transactions…could materially and adversely impact our results of operations and financial condition.” The essence was repeated in other filings as well[xx].
In November 2011, Judge Denise Cote[xxi]of the Southern District of New York  found that “JPMorgan does not directly contest the Amended Complaint’s detailed allegations that it has assumed WaMu Bank’s liabilities with respect to the securitizations at issue here.  Indeed, as the plaintiff points out, JPMorgan itself has publicly referenced its liability for ‘repurchase and/or indemnity obligations arising in connection with sale and securitization of loans’ by, among others, WaMu.  The FDIC has likewise opined that ‘the liabilities and obligations’ arising from WaMu’s sale of mortgage-backed securities ‘were assumed in their entirety by JPMC [(JPMorgan Chase)] under the P&A Agreement, thereby extinguishing any potential liability by FDIC Receiver.’ Thus, for the purposes of this motion, there is no dispute that JPMorgan is a proper defendant with respect to FHFA’s WaMu- related claims.” Did this finding cause JPMorgan to increase its litigation reserves? We do not know because their disclosures are inadequate.
Lack of Clarity on Reserving Policy
On the first quarter of 2010 earnings call, JPMorgan’s Michael Cavanagh noted that the bank had put up representation and warranty reserves for WaMu exposures related to both GSEs but acknowledged that the reserves were difficult to decipher, were in several pockets and he then informed investors that JPM would not give any more meaningful guidance or detail[xxii]. In a November 2010 presentation at a Bancanalysts Association of Boston Conference, a JPMorgan senior executive provided details of the Company’s “Private Label  Repurchase Risk Exposure” broken out by Chase, Bear and WaMu and by product type. Nowhere in this presentation did the firm disavow the liabilities or suggest that they were the liabilities of the FDIC[xxiii].
In January 2010, recognizing that JPMorgan’s disclosures were inadequate for investors’ ability to analyze its risks, the SEC sent a letter to Michael Cavanagh directing the bank to provide greater detail[xxiv] of their repurchase obligations. Again, rather than providing investors with the class-leading transparency JPMorgan often claims, the bank responded to the letter, in redacted form[xxv], requesting confidential treatment of certain portions of their response.
While, in the past the bank repeatedly acknowledged its acquisition of WaMu repurchase liabilities and initially included those in discussions of repurchase reserves, it appears those policies have not been consistent over time. Where earlier WaMu-related repurchase liabilities appear to have resulted in increased repurchase reserves it seems that once JPMorgan decided to assert that the WaMu repurchase liabilities as the FDIC’s obligation, the comparability of their already weak disclosures became even less analyzable.
New Mortgage Suits
In the past few months, a new round of mortgage-related suits were filed against the firm. investors, regulators, prosecutors, and insurers have filed a new round of claims against the bank related to billions of dollars’ worth of securities backed by residential mortgages.
On February 5, 2013, in the matter of Assured Guaranty v. Flagstar[xxvi], U.S. Southern District Court Judge Jed Rakoff appears to have created precedent by handing down a decision to allow staistical analysis provided by Assured’s independent auditor, rather than loan-by-loan analysis, to be a basis for findings of breaches to PSAs and Reps and Warranties in pooled mortgage loans. The auditor found that 606 of the sample of 800 loans across the trusts were found to have material breaches. While the ruling will likely be appealed, the reality is that it significantly heightens the risks to JPM and other defendants in putback litigations. It may also lead JPM to determine that they need to increase reserves.
In November 2012, CIFG Assurance sued JPM over more than $100 million of losses it sustained in CDOs. U.S. Bank, as Trustee, also filed suit[xxvii], claiming breaches of certain terms and conditions of the Pooling and Servicing Agreements (defining the parties’ obligations to each other) of an RMBS with $698 million of original principal balances suffered losses of $358 million. In a sample of the loans that defaulted, the plaintiffs claim that 74% had one or more breaches. Mortgage insurer Syncora Guarantee also filed suit[xxviii] claiming that, as a result of misrepresentations on almost 85% of the loans involved in the deal, Syncora has had to pay more than $94 million in claims to investors on losses of more than $111 million. The National Credit Union Administration Board filed suit against JPM on WaMu-related losses on almost 50 RMBS deals. In the filing, the NCUA demonstrates the massive difference between the expected losses and the actual losses in these deals[xxix]. This follows an NCUA suit filed against JPM relating to $3.6 billion of “faulty” securities related to JPM’s Bear Stearns acquisition.
In October 2012, the New York Attorney General, Eric Schneiderman, filed suit against JPM related to alleged misrepresentations in RMBS securities offerings, which are claimed to have resulted in $22.5 billion losses of the $87 billion in original principal value[xxx].
On February 4, 2013, related to a suit filed against JPMorgan by Dexia, Dexia released hundred of e-mails and employee interview transcripts suggesting that JPM received independent underwriter reports showing that between 8% and 20% of the loans sampled for inclusion in pools did not meet underwriting guidelines. Rather than disclose these defects to investors, JPM overrode the independent determinations to create a “final, sanitized version.”[xxxi]

[ii] http://files.shareholder.com/downloads/ONE/2289737617x0xS950123-10-102689/19617/filing.pdf J P MORGAN CHASE & CO, “FORM 10-Q (Quarterly Report).” Last modified 2010. http://files.shareholder.com/downloads/ONE/2289737617x0xS950123-10-102689/19617/filing.pdf. “From 2005 to 2008, Washington Mutual sold approximately $150 billion of loans to the GSEs subject to certain representations and warranties. Subsequent to the Firm’s acquisition of certain assets and liabilities of Washington Mutual from the FDIC in September 2008, the Firm resolved and/or limited certain current and future repurchase demands for loans sold to the GSEs by Washington Mutual, although it remains the Firm’s position that such obligations remain with the FDIC receivership. Nevertheless, certain payments have been made with respect to certain of the then current and future repurchase demands, and the Firm will continue to evaluate and pay certain future repurchase demands related to individual loans. In addition to the payments already made, the Firm has a remaining repurchase liability of approximately $250 million as of September 30, 2010, relating to unresolved and future demands on the Washington Mutual portfolio. After consideration of this repurchase liability, the Firm believes that the remaining GSE repurchase exposure related to the Washington Mutual portfolio presents minimal future risk to the Firm’s financial results.”
[iv] http://www.gao.gov/assets/330/321506.pdf p.131 United States Government Accountability Office, “FEDERAL RESERVE SYSTEM Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance.” Last modified 2011. http://www.gao.gov/assets/330/321506.pdf .  p. 131.
[v] Federal Deposit Insurance Corporation, “Identification Claims Letter.” Last modified 2012. http://www.scribd.com/doc/127203581/Fdic-Letter-to-Jpm-05-011-2012.
[vi]http://wmish.com/joshua_hochbergs_joke/epic_fail/4366/JPM_EX00004075.PDF Morgan Chase and Company, “Letter: (Fw: Meeting with Emilio Botin).” Last modified 2008. http://wmish.com/joshua_hochbergs_joke/epic_fail/4366/JPM_EX00004075.PDF.  (See: “Asked why did JP Morgan not buy Wamu and instead TPG injected the capital Jamie replied he thinks the potential losses are higher than TPG estimating plus their losses are limited to their initial equity investment unlike for JPMorgan or any other USA bank which has to mark to market and assign/inject additional capital accordingly”)
[vii] http://wmish.com/joshua_hochbergs_joke/epic_fail/4405/JPMCD_000001550.00001.pdfWashington Mutual Bank, “Various Documents.” http://wmish.com/joshua_hochbergs_joke/epic_fail/4405/JPMCD_000001550.00001.pdf.
All liabilities are assumed except the preferred stock.
All liabilities are assumed, except the preferred stock and the subordinated debt.
All liabilities are assumed except the preferred stock, the subordinated debt and the senior
 debt.
The acquirer assumes all deposits and secured liabilities.
All insured deposits and secured liabilities are assumed.

[viii] Insert link to p. 31 of Deutsche Bank Response to FDIC and JPM Motions (See: “Under this transaction, the Purchase and Assumption (Whole Bank), the Potential Acquirer whose Bid is accepted by the Corporation assumes the Assumed Deposits of the Bank and all other liabilities but specifically excluding the preferred stock, non-asset related defensive litigation, subordinated debt and senior debt, and purchases all of the assets of the Bank, excluding those assets identified as excluded assets in the Legal Documents and subject to the provisions thereof.”)
[ix] p. 31 of Deutsche Bank Response.
[x] http://www.fdic.gov/about/freedom/Washington_Mutual_P_and_A.pdf
(See p.8) Whole Bank, “PURCHASE AND ASSUMPTION AGREEMENT.” Last modified 2008. http://www.fdic.gov/about/freedom/Washington_Mutual_P_and_A.pdf . (See: p. 8)
[xi] See p. 32 Deutsche Bank Response (See: ” Let’s say there is a contract between the thrift and the Parent and that is included in the Books and Records (not something like “accrued for on the books of the Failed Bank,” which probably would fix the problem) of the thrift at the time of closing. Any liability under that contract is then arguably a liability reflected in the Books and Records. Therefore one would most likely conclude that liabilities under that contract are assumed under 2.1. . . . In a normal P&A between commercial parties this is not something a buyer would ever assume and it really doesn’t make sense (nor frankly is it fair) here.”)
[xii] Deutsche response p. 33 (See: “9. Are the off-balance sheet credit card portfolio and mortgage securitizations included in the transaction? Do you expect the acquirer to assume the servicing obligations? If there are pricing issues associated with the contracts (e.g., the pricing is disadvantageous to the assuming institution), can we take advantage of the FDIC’s repudiation powers to effect a repricing?
Answer: The bank’s interests and obligations associated with the off-balance sheet credit card portfolio and mortgage securitizations pass to the acquirer. Only contracts and obligations remaining in the receivership are subject to repudiation powers.”)
[xiii] http://www.fdic.gov/about/freedom/Washington_Mutual_P_and_A.pdfWhole Bank, “PURCHASE AND ASSUMPTION AGREEMENT.” Last modified 2008. http://www.fdic.gov/about/freedom/Washington_Mutual_P_and_A.pdf.  (See: Section 12.1(a)(9) )
[xiv] Ibid. (See: “any liability associated with borrower claims for payment of or liability to any borrower for monetary relief, or that provide for any other form of relief to any borrower . . . related in any way to any loan or commitment to lend made by the Failed Bank prior to failure, or to any loan made by a third party in connection with a loan which is or was held by the Failed Bank, or otherwise arising in connection with the Failed Bank’s lending or loan purchase activities”)
[xv] http://www.fdic.gov/news/news/press/2008/pr08085.html Gray, Andrew. Federal deposit Insurance Corporation, “JPMorgan Chase Acquires Banking Operations of Washington Mutual.” Last modified 2008. http://www.fdic.gov/news/news/press/2008/pr08085.html .
[xvii] http://files.shareholder.com/downloads/ONE/2313711404x0x264159/4c69348f-3ee3-4117-bc1b-45a61e2963a4/4Q08-Earnings-Press-Release-Final.pdf  JP Morgan Chase and Company, “JPMORGAN CHASE REPORTS FULL-YEAR 2008 NET INCOME OF $5.6 BILLION, OR $1.37 PER SHARE, ON REVENUE OF $67.3 BILLION; FOURTH-QUARTER 2008 NET INCOME OF $702 MILLION, OR $0.07 PER SHARE.” http://files.shareholder.com/downloads/ONE/2313711404x0x264159/4c69348f-3ee3-4117-bc1b-45a61e2963a4/4Q08-Earnings-Press-Release-Final.pdf .
[xviii] http://www.sec.gov/Archives/edgar/data/1026214/000102621409000005/f71045e8vk.htm  US Securities and Exchange Commission, “FORM 8-K, CURRENT REPORT, Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 .” Last modified 2009. http://www.sec.gov/Archives/edgar/data/1026214/000102621409000005/f71045e8vk.htm .
[xix] http://www.sec.gov/Archives/edgar/data/19617/000095012310016029/e82150e10vk.htm (See p5 US Securities and Exchange Commission, “Form 10-K, Annual report pursuant to section 13 or 15(d) ofThe Securities Exchange Act of 1934 (JPMorgan Chase & Co.).” Last modified 2009. http://www.sec.gov/Archives/edgar/data/19617/000095012310016029/e82150e10vk.htm . (See p.5 “If a loan does not comply with such representations or warranties is sold or securitized, we may be obligated to repurchase the loan and bear any associated loss directly, or we may be obligated to indemnify the purchaser against any such losses. In 2009, the costs of repurchasing mortgage loans that had been sold to government agencies such as Freddie Mac and Fannie Mae increased substantially, and could continue to increase substantially further. Accordingly, repurchase and/or indemnity obligations to government-sponsored enterprises or to private third-party purchasers could materially and adversely affect our results of operations and earnings in the future.”) and p14 and P18 http://files.shareholder.com/downloads/ONE/0x0x419854/b4dfc42d-8093-4e2e-a3cb-5fb51c17216b/BAC-ML%20Presentation_FINAL_11.17.10.pdf and p.14, p.18 and JP Morgan Chase and Company, “BAC-ML Banking and Financial Services Conference.” Last modified 2010. http://files.shareholder.com/downloads/ONE/0x0x419854/b4dfc42d-8093-4e2e-a3cb-5fb51c17216b/BAC-ML Presentation_FINAL_11.17.10.pdf .
(example: “The Firm resolved and/or limited repurchase risks associated with certain WaMu GSE loan sales ― minimal future risk”)
[xx] http://www.sec.gov/Archives/edgar/data/19617/000119312509249391/d424b7.htm  (See:P. JP Morgan Chase and Company, “PRELIMINARY PROSPECTUS SUPPLEMENT (October 16, 2007).” Last modified 2007. http://www.sec.gov/Archives/edgar/data/19617/000119312509249391/d424b7.htm .  (See: p. S -7 “We and certain of our subsidiaries, as well as entities acquired by us as part of the Bear Stearns, Washington Mutual and other transactions, have made such representations and warranties in connection with the sale and securitization of loans (whether with or without recourse), and we will continue to do so as part of our normal Consumer Lending business. Our obligations with respect to these representations and warranties are generally outstanding for the life of the loan, and relate to, among other things, compliance with laws and regulations; underwriting standards; the accuracy of information in the loan documents and loan file; and the characteristics and enforceability of the loan.
A loan that does not comply with such representations and warranties may take longer to sell, or may be unsaleable or saleable only at a significant discount. More importantly, if a loan that does not comply with such representations and warranties is sold, we may be obligated to repurchase the loan and bear any associated loss directly, or we may be obligated to indemnify the purchaser against any such loss. Accordingly, such repurchase and/or indemnity obligations arising in connection with the sale and securitization of loans (whether with or without recourse) by us and certain of our subsidiaries, as well as entities acquired by us as part of the Bear Stearns, Washington Mutual and other transactions, could materially increase our costs and lower our profitability, and could materially and adversely impact our results of operations and financial condition.”) and http://files.shareholder.com/downloads/ONE/847571171x0x415409/c88f9007-6b75-4d7c-abf6-846b90dbc9e3/BAAB_Presentation_Draft_11-03-10_FINAL_PRINT.pdf(JP Morgan Chase and Company, “BANCAN LYSTS ASSOCIATION OF BOSTON CONFERENCE.” Last modified 2010. http://files.shareholder.com/downloads/ONE/847571171x0x415409/c88f9007-6b75-4d7c-abf6-846b90dbc9e3/BAAB_Presentation_Draft_11-03-10_FINAL_PRINT.pdf .  (See: P24-26 “Private label Repurchase risk exposure.”)
[xxii] http://seekingalpha.com/article/198755-jp-morgan-chase-amp-co-q1-2010-earnings-call-transcript?part=single Seeking Alpha, “JP Morgan Chase & Co. Q1 2010 Earnings Call Transcript.” Last modified 2010. http://seekingalpha.com/article/198755-jp-morgan-chase-amp-co-q1-2010-earnings-call-transcript?page=1. (See: “Let me make this simple. In the investment bank, retail and corporate we have put up rep and warranty reserves and litigation reserves for GSEs and all other mortgages including private securities. We have tried to do it diligently. Some of those numbers ran through the investment bank this quarter. We have broken out the numbers in retail and we have put the numbers in corporate. A lot of the numbers in corporate relate to WaMu. We are not going to give any other information. We think we properly accrued for reps and warranties whether they come through on the rep and warranty line or the litigation line. There are legitimate claims that some of these mortgages were [properly] done. It is going to be done mortgage by mortgage. Other than that we think we have done a pretty good job recognizing the problem early.”)
[xxiii] http://files.shareholder.com/downloads/ONE/847571171x0x415409/c88f9007-6b75-4d7c-abf6-846b90dbc9e3/BAAB_Presentation_Draft_11-03-10_FINAL_PRINT.pdf(See: P24-26 “Private label ― Repurchase risk exposure”) Scharf, Charlie. JPMorgan Chase & Co, “BANCANALYSTS ASSOCIATION OF BOSTON CONFERENCE.” Last modified 2010. http://files.shareholder.com/downloads/ONE/847571171x0x415409/c88f9007-6b75-4d7c-abf6-846b90dbc9e3/BAAB_Presentation_Draft_11-03-10_FINAL_PRINT.pdf .  (See: p.24-26 “Private label ― Repurchase risk exposure.”)
[xxiv] http://www.scribd.com/doc/33507476/SEC-Letter-to-JPM-Re-More-Disclosure-on-Buybacks-Jun-17-2010 Security and Exchange Commission, “SEC Letter to JPM, Re More Disclosure on Buybacks.” Last modified 2010. http://www.scribd.com/doc/33507476/SEC-Letter-to-JPM-Re-More-Disclosure-on-Buybacks-Jun-17-2010.  (See: The specific methodology employed to estimate the allowance related to various representations and warranties, including any differences that may result depending on the type of counterparty to the contract; Discuss the level of allowances established related to these repurchase requests and how and where they are classified in the financial statements; Discuss the level and type of repurchase requests you are receiving, and any trends that have been identified, including your success rates in avoiding settling the claim; Discuss your methods of settling the claims under the agreements. Specifically, tell us whether you repurchase the loans outright from the counterparty or just make a settlement payment to them. If the former, discuss any effects or trends on your nonperforming loan statistics. If the latter, discuss any trends in terms of the average settlement amount by loan type; and Discuss the typical length of time of your repurchase obligation and any trends you are seeing by loan vintage”)
[xxv] http://www.sec.gov/Archives/edgar/data/19617/000095012310020146/filename1.htm Rauchenberger, Louis. JPMorgan Chase & Co., “Mr. Amit Pande, Accounting Branch Chief Division of Corporation Finance United States Securities and Exchange Commission Letter.” Last modified 2010. http://www.sec.gov/Archives/edgar/data/19617/000095012310020146/filename1.htm.  The Firm informed the SEC that:
Their potential rep and warranties violations generally surface and are resolved within approximately 24 – 36 months of the loan’s origination date.
After the Firm’s acquisition of certain residential loan assets and liabilities of Washington Mutual Bank from the FDIC in September 2008, the Firm reached agreements with the Agencies to limit the Agencies’ repurchase demands with respect to certain Washington Mutual Bank loan repurchase liabilities.
As of December 31, 2009, the Firm’s allowance related to breaches of reps and warranties (the “Allowance”) was $1.7 billion. [Redacted]
[xxvii] http://www.structuredfinancelitigation.com/files/2012/11/US-Bank-Summons.pdf  “SACO I Trust 2006-3, issuer of the SACO I TRUST 2006-3 MORTGAGE-BACKED CERTIFICATES, SERIES 2006-3, v. EMC Mortgages.” Last modified 11/8/12. http://www.structuredfinancelitigation.com/files/2012/11/US-Bank-Summons.pdf.
[xxix] http://www.ncua.gov/News/Press/NW20130104MorganComplaint.pdf p.36-50 NATIONAL CREDIT UNION ADMINISTRATION BOARD v. J.P. Morgan Chase. Last modified 2013. http://www.ncua.gov/News/Press/NW20130104MorganComplaint.pdf.   p. 36-50
[xxx] McLaughlin, David, and Chris Dolmetsch . Bloomberg BusinessWeek, “NY Attorney General Says More Suits Will Follow JPMorgan.” Last modified 2012.  http://www.businessweek.com/news/2012-10-01/jpmorgan-sued-by-n-dot-y-dot-for-fraud-over-mortgage-securities.
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