About That Chase-WAMU Deal

Imagine my surprise when I recently went to the FDIC website, clicked on FOIA at the bottom of the page, then went to Reading Room and looked again at the Chase-WAMU-FDIC-US Trustee Purchase and Assumption Agreement. Having previously read and studied it I was attempting to direct someone to the language that showed that no loans were purchased from WAMU basically because there were no loans in WAMU’s inventory. Staring me in the face was an entirely different document bearing the same date as the one that I had previously seen. Anyone who has an explanation of this is invited to write to me at neilfgarfield@hotmail.com.

In the interim between my first reading of the agreement and now, I had several conversations including the FDIC receiver who was appointed to “resolve” the WAMU bankruptcy. The receiver (Schoppe) told me that no loans had been purchased or listed as part of the Purchase and Assumption Agreement. He also told me that an assignment did not exist and that no other document from the Trustee in the WAMU bankruptcy or the FDIC receiver existed showing the purchase of any loan. And he told me that the effective consideration paid by Chase was less than zero because Chase received around $2 billion in tax refunds due WAMU, which more than offset the purchase price. In fact, in the version I previously read, the consideration was stated as “Zero.”

With that in hand I disseminated information and used it in court to show that Chase had not in fact purchased loans but had instead purchased servicing rights. As the plot thickened, it turned out that those servicing rights were granted by Pooling and Servicing Agreements for REMIC Trusts that never acquired any loans. With no loans in the trust, the PSA grant of servicing rights was meaningless.

And if you look at the statements from Chase to their shareholders and press releases there is no evidence they acquired the loans. Nonetheless tens of thousands of people, perhaps hundreds of thousands of people, lost their homes on the presumption that Chase was in fact the creditor. They were threading a nonexistent needle with nonexistent facts. And in litigation it became apparent that this was the case because they tried to introduce “Powers of Attorney” in lieu of the PSA to support their contention that SPS was now the servicer of most of those loans. But they didn’t quite make out their case when it came to determining whether the Plaintiff in the foreclosure action was ever a creditor. So they lost. But for every one they lost, less astute judges were granting them foreclosures by the thousands.

And if you look at articles like the one in the link below you will see that while it looks like they are talking about loans they are actually talking about securities from “securitizations” that do not exist — i.e., the loans were never acquired by the REMIC Trusts.

And THAT leaves us with the question of where did the alleged loans go? The trust doesn’t have it, the certificate holders in the empty trust don’t have it and neither does Chase. Judges have been inclined to simply say that all this complexity is irrelevant, in an attempt to clear their docket. But they have done both the borrowers and the investors a disservice. And they did the government a big disservice. My answer to the question I pose is that the loans didn’t go anywhere because, in the legal sense, they never got started in the first place. (No consummation). If the party who funded the “loan” was not present in the documents or by proxy, then the party who funded the loan is not “in privity” (i.e., part of the loan contract) with the borrower. And since the party whose name appears on the loan documents was neither a lender or a creditor of the borrower, they were merely the “holder” of the document subject to borrower’s defenses to the “transaction” — namely no consideration.

And THAT my friends is the reason for all the fabricated, forged, back-dated and “found” documents and notes. The banks had to invent what the courts wanted to see.

So the overall answer is that Chase is neither a creditor nor the authorized servicer of anyone because nobody actually “owns” the loan. Pension funds and other investors clearly have a right of action against the Investment banks that sold them bogus mortgage backed securities that were neither securities nor mortgage backed. And those investors might have some action in equity against borrowers, but not a right of enforcement of the mortgage which never should have been recorded in the first place. Of course that probably will never happen because the investment bank pocketed the money that was supposed to go into the REMIC Trusts. Huge groups of investors in multiple “REMIC Trusts” had their money commingled by the investment bank who now has no way of figuring out whose money is in what “loan.” Thus there is no loan contract, and there could never be standing by anyone other than either a true creditor, which does not appear to exist, or a holder in due course, which cannot exist.

The reason why the banks are doing everything to resist proof of payment is that there was no payment anywhere in their chain. In a word, there was nobody to pay because nobody in their chain had anything to sell. Hence there were no purchases and there were no sales, making the assignments and endorsements fraudulent documents. If they had evidence of a purchase they would claim to be holder in due course which enables the holder to enforce against the party who signed the note and mortgage regardless of any defenses the borrower might have had against the “lender” or the “successors.”

And THAT, my friends, is why nobody from Wall Street is filing a lawsuit to vacate rescissions that might be years past the three year limitations. They have no standing — i.e., they don’t have a credible party who can claim to be a creditor and they can’t use the note and mortgage because they are void by operation of law. It is the absence of such lawsuits that corroborates what I am saying. In a flash they could easily vacate the rescission if they could only show that they had any right to be in court by reference to real transactions instead of the fake ones they are using in foreclosures.

The correction for this is simple to say: create new servicers that have full authority to interact with the defrauded investors and the hapless borrowers who were pawns in the securitization scam that was eventually dubbed “Securitization Fail” by Adam Levitin.

Just look at the following article and see how Chase twisted itself and the government into a mental pretzel:

see http://www.ritholtz.com/blog/2013/03/jpm-wamu/

Tags: Chase, Purchase and Assumption Agreement, WAMU
Posted in Uncategorized |