In a potential twist to the Chase theft purchase of Washintgon Mutual’s assets that were seized by the FDIC, according to documents recently uncovered and confirmed by the FDIC, that purchase hasn’t actually closed yet.
Next month will mark two years since federal regulators seized Washington Mutual and sold it to JPMorgan Chase for $1.9 billion. Now a document that appears to be from the Federal Deposit Insurance Corporation suggests the deal still hasn’t closed.
“Everyone is saying the sale is finalized,” said the shareholder, Farokh Lam, of Woburn, Mass. “It is not.”
Lam noticed that on pages 7 and 9, the original WaMu purchase and sale agreement allows the FDIC to extend the settlement date. He says he asked about it, and the FDIC confirmed in phone calls and emails that the settlement date was set for Aug. 30, 2010, and could be extended further.
“Settlement Date” means the first Business Day immediately prior to the day which is one hundred eighty (180) days after Ban Closing, or such other date prior thereto as may be agreed upon by the Receiver and the Assuming Bank. The Receiver, in its discretion, may extend the Settlement Date.
It says: “The purpose of this amendment is to extend the time period for Final Settlement to August. 30, 2010.”
WaMu’s final days were chronicled in depth by Puget Sound Business Journal Staff Writer Kirsten Grind in an award-winning series.
Does this mean that all the WAMU foreclosures being pushed through the courts by JPMorgan Chase using the FDIC Purchase and Sale Agreement are invalid?
Does it mean if they haven’t closed the deal THEY DO NOT OWN THE LOANS OR THEIR SERVICING RIGHTS?
Where are the windfall profits going after the foreclosure sale?
What if the agreement changes before it is finalized?
It looks like the examiner appointed to look into the seizure and sale of WaMu’s assets is actually taking this seriously, as he recently submitted an estimate of the cost of his work ($4 million) and requested subpoena power to be able to request documents from JP Morgan Chase and others.
Update: The examiner was awarded subpoena powers as requested.
I am still seeing lots of articles about unclaimed WaMu assets, which were transferred to the states rather than to Chase bank after Chase bought Washington Mutual; a total of $251 million. So go to your states unclaimed property website (search Google on ‘state name unclaimed property’) to see if any of that money is yours.
NEW YORK (Reuters) – Joshua Hochberg, a former top official in a U.S. Department of Justice criminal fraud unit, has been appointed to examine the bankruptcy of Washington Mutual Inc , the largest U.S. banking failure.
The appointment was announced six days after U.S. Bankruptcy Judge Mary Walrath in Wilmington, Delaware, directed that an examiner be named to review a recent settlement designed to help Washington Mutual reorganize, as well as related claims.
Hochberg is a partner at McKenna Long & Aldridge LLP in Washington, D.C. In a court filing he said that prior to joining the firm in 2005, he was chief of the fraud section, criminal section, of the Justice Department.
The appointment requires court approval, and was announced by the Office of the U.S. Trustee, which is part of the Justice Department.
Shareholders of Washington Mutual had long sought an examiner, believing they have been shortchanged in Washington Mutual’s nearly 2-year-old bankruptcy.
Read more …
After much persistence and many outright rejections by the bankruptcy judge assigned to the Washington Mutual bankruptcy case, WaMu shareholders have finally won the right to an investigation, with the court agreeing to appoint a special examiner to investigate the role of the FDIC and JP Morgan Chase in WaMu’s seizure and, and the value of WaMu’s current assets.
Read more about this @Bloomberg here.
As of a few weeks ago:
1. The WaMu bankruptcy Judge denied shareholders request to appoint an investigation into WaMu’s seizure/failure.
2. Said just did though order WaMu (the holding company) to share with shareholders results from its own investigation and told them to talk with shareholders to work this out.
So where are we at now? As this update from Business Week summarizes:
1. Shareholders still have a change to ask for an investigation if they can show the judge that WaMu’s investigation wasn’t good enough
2. Shareholders still have a shot at forcing an annual meeting and forcing out the current directors to get their own crew on board to better direct WaMu’s bankruptcy.
I’m a little confused about who they actually settled with, but a couple recently settled a lawsuit originally filed against Washington Mutual in 2008, before WaMu’s seizure and sale to Chase.
What is interesting though is the description of how they were treated by WaMu:
Lori Pestana contacted Washington Mutual, based on its public statements that the bank was interested in assisting distressed borrowers through its Homeowners Assistance Program. The lawsuit states that a company representative told her that to qualify, the couple had to be 50 days delinquent. So, she said, they didn’t pay.
When the Collections Department contacted her in the first week of September 2007, the agent explained that they would need to fill out a form for the program and return it. Lori Pestana offered to mail partial payments, but she was told that would disqualify her from the program.
Instead, on June 30, 2008, the couple were served with a summons and complaint by the Federal National Mortgage Association seeking to evict them.
Sounds familiar, right? This is exactly the kind of thing that Chase is accused of doing, telling homeowners to stop paying their mortgage and then foreclosing on them. Seems like this behavior isn’t new with Chase after all.
The judge in the Washington Mutual bankruptcy ordered WaMu’s former holding company to talk with shareholders about their request for documents to investigate the seizure of Washington Mutual in 2008.
The parties are set to report back to the bankruptcy judge on June 17th.
WaMu failure | admin August 18, 2010 | 
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