What would it mean to Chase if it were forced to take back $65 billion in securitized mortgages that it sold between 2005 and 2007? This is one of the nightmare scenarios hanging over the bank, according to The Economist:
Worse, investors in mortgage-backed securities (MBSs) are trying to make the banks that underwrote the deals buy them back at par. They have to do this if they breached assurances about the quality of the mortgages in the pool. So shoddily were these securities cobbled together in 2005-07 that analysts at Compass Point Research & Trading, a broker, reckon loan “putbacks” could cause more than $130 billion in losses, almost half of them to be borne by JPMorgan Chase and Bank of America (BofA), whose purchase of Countrywide greatly increased its exposure.
A recent lawsuit has accused Chase, among others, of scheming to take out life insurance policies on employees and former employees without their consent or knowledge. While this sounds unethical, apparently it is also illegal and the people so insured or their heirs can sue the banks for the life insurance proceeds and for misappropriation of their identity.
Many of the world’s largest banks have purchased “bank-owned life insurance” or “BOLI” for years, including Bank of America, JP Morgan Chase, Bear Stearns, Citigroup, Wachovia, Washington Mutual, Wells Fargo and many others.
“We are investigating banks that insure the lives of employees without their knowledge or consent,” says class-action attorney Scott Clearman of The Clearman Law Firm. “These types of policies benefit only the banks, not their employees.”
I’ve argued for some time now that Chase’s foreclosure and loan modification tactics include denying people loan modifications they’ve agreed to provide under the governments HAMP program that people are entitled. I would go so far as to say that legally, they have a huge exposure to quite a few wrongful (parallel) foreclosures for people that qualified for a loan modification under HAMP, but were told by Chase that they did not qualify.
Here is one such case where they attempted to get the testimony of an expert on loan modifications, especially HAMP loan modifications, stricken. They were denied.
Another paperwork screw up? I found this statement here.
“Washington Mutual Bank, FA” ceased to exist by that legal name in April 2005 after merging with “Washington Mutual Bank”. The Surviving legal corporate name was “Washington Mutual Bank”.
Nevertheless, loans and deeds of trust continued to be made in that legally non existent name until 9/25/2008 when the FDIC took over.
That means that there are tens of thousands of loans made in the name of a non existent federal savings bank. The loans are objectively fraudulent.
FDIC and Chase know this and are making strenuous efforts to stifle discovery in Federal and State court.
Loans made in that name prior to April 2005 may be properly made but not after that date.
This is a fraud on the borrower and a fraud on the court.
If someone wanted to write a novel with defaults, foreclosure, and lawsuits as the main story line, they would do well to start with this particular case.
It story starts with a loan made to a Chase predecessor in 1993. The homeowner first defaulted in 1997 and managed to stay in the property until 2006; he kept the litigation going until now and at one point was awarded almost $100,000 in damages for wrongful foreclosure and what he could have earned renting the property out.
In the end, the borrower lost, but he sure made Chase work for its foreclosure. Here is just a tidbit of the story to give you an idea.
The default prove-up hearing took place on April 18, 2007, after the trial court denied Chase’s oral motion to set aside the default. Plaintiff presented his evidence, and the trial court took the matter under submission. In the ruling, which the trial court issued on April 24, 2007, the trial court found on plaintiff’s first cause of action for declaratory relief that (1) Chase is bound by the judgment in the unlawful detainer action that the first foreclosure sale was conducted improperly, and (2) Chase breached the forbearance agreement by improperly declaring plaintiff in default on that agreement. On plaintiff’s second cause of action seeking to quiet title to the property, the trial court found it did not have the necessary parties before the court to grant that relief because Proper T View, not Chase, was the current owner of record. The trial court awarded plaintiff damages of $98,795.50 on the third cause of action for breach of contract, a sum that represents the rental value of the Rancho Mirage property minus the payments plaintiff owed to Chase on the mortgage for the 50 months between November 1999 and December 2003. On the fourth cause of action for slander of title, the trial court found in favor of plaintiff but also found the claim does not support an award of general damages. The trial court denied plaintiff recovery on his remaining causes of action. The trial court purported to enter judgment against Chase on August 31, 2007.
The latest lawsuits filed against Chase related to WaMu can be described like this:
WaMu is being sued by large investors who say the banking giant sold securities full of mortgages but misrepresented how risky they were.
Apparently Chase wants all the good from WaMu without any of the bad, because it is trying to throw these lawsuits back to the FDIC lock, stock, and barrel by claiming it only agreed to accept liabilities specifically named at the time it purchased WaMu and securitzation lawsuits weren’t mentioned.
When I think of how much Chase ripped off WaMu shareholders and taxpayers with the WaMu deal, I feel dirty. I’m not sure if I am more mad at the FDIC for taking seizing a bank that probably would have survived and writing one of the dumbest most one-sided deals with Chase in history, or Chase for continuing to aggressively pursue more profit from the deal by denying responsibility for liabilities and going after WaMu tax credits for which it is not entitled.
Banks thought they were being smart when the got together and formed MERS, a system to record mortgage transactions so banks could avoid paying the county recording fees. But the system is blowing up in their faces in a number of ways.
The first problem is that the information in the MERS system appears in many cases to be grossly incomplete, making it hard or impossible to prove the chain of title on mortgages. This problem is made worse by the fact that many of the original documents were lost or intentionally destroyed. This has spurred investors who bought soured mortgages to sue the banks claiming the mortgages were never properly transferred to them.
The next problem is that some judges and jurisdictions are refusing to accept registration in the MERS system as adequate proof of the title on a mortgage. And with many of the original documents gone, it may prove impossible for banks either as mortgage holders or servicers to prove they have the right to foreclose.
The latest headache that has come to light is that states and counties may decide to sue banks to recover the lost filing fees. Some laws on the books in some states dictate pretty stiff penalties for failure to pay the required fees when the ownership of a mortgage is transferred. For banks not to have realized this liability seems an awfully large oversight and some are claiming that damages and penalties could run into the many tens or hundreds of billions.
If your counting the number of class action lawsuits filed against Chase for fraud in filing false documents related to foreclosures, scratch a couple of marks into your bed post; two new class action lawsuits were filed this week.
Nov 10 2010. JP Morgan Chase bank’s foreclosure fraud process.
In a regulatory filing submitted yesterday, November 9, JPMorgan Chase & Co. acknowledged that two separate class action lawsuits have been filed against their company, alleging fraud related to its decision to temporarily stop foreclosure proceedings.
Two months ago, Chase had placed a moratorium on foreclosure proceedings, while it launched an internal investigation into the possibility of discrepancies in its foreclosure documents.
Last week, Chase announced it would start refilling foreclosure documents within a few weeks.
One of the class action lawsuits was filed in the US District Court for the Northern District of Illinois, charging Washington Mutual Bank and JPMorgan Chase & Co. with knowingly filing false documentation.
A separate suit against Chase Home Finance was filed in California state court as well.
JPMorgan also acknowledged a class action lawsuit filed on behalf of Charles Schwab and Cambridge Place Investment Management, a hedge fund company. That suit was related to mortgage backed securities sold to the investors with the demand that the bank buy back the securities due to their faulty foreclosure documents.
Bank of America and Citigroup had already disclosed that similar suits were filed against them as well.
In both class action lawsuits, they allege “common law fraud and misrepresentation, as well as violations of state consumer fraud statutes.”
No dates have been announced as to when the proceedings will begin.
While JPMorgan has fared better on Wall Street than most of its competitors, consumer confidence is definitely fading, as shares in the bank dropped 0.3% in early trading on Tuesday.
Lawsuits | admin December 15, 2010 | 
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