Having investigated the WaMu/FDIC/Chase fact pattern for nearly seven-years now, and having investigated hundreds of foreclosure cases where JPMorgan Chase claims sole ownership of specific Washington Mutual Bank loans by virtue of the “Purchase & Assumption Agreement” (PAA) with the FDIC, one fact is now well established – no schedule or inventory of assets listing any specific WMB mortgage loan acquired by JPMC exists, or has ever been produced or disclosed. The reason for this fact is that the vast majority of residential mortgage loans were securitized through WaMu’s “Off-Balance Sheet Activities,” meaning WMB sold their loans prior to the FDIC Receivership. Many of these prior sales transactions by WMB to private investors went undocumented, and were kept outside the prevue of regulators, the borrowers, and the general public. For roughly the past 8-years, Chase has been foreclosing on thousands of these previously sold WMB loans in its own name as mortgagee and beneficiary of the security instruments, when by Chase’s own admissions to numerous borrowers, the loans were sold to private investors.
Chase Admits, Then Denies
In cases I have reviewed all across the country, borrowers have made and continue to make, inquiries to their servicer “Chase” for the identity of the beneficial owners / investor(s) of their WaMu loan(s) only to be told,
“Your loan was sold into a public security managed by JPMorgan Chase Bank, N.A. and may include a number of investors. As the servicer of your loan, Chase is authorized by the security to handle any related concerns on their behalf” (See: Chase Private Investor Letters ).
In both cases involving these two disclosure letters, after having made these admissions to the borrowers, JPMorgan Chase reversed itself in court by taking the position that it was the sole owner of the loans by virtue of the PAA, and there were no investors associated with these loans because “WaMu never sold or securitized the loans.”
But now Chase has tripped itself by disclosing an actual investor in complete contradiction of its publicly recorded assignment. (See: Chase Discloses Investor WaMu 2007-FLX1 but assigns deed to itself in 2012.)
Here, Chase executes this self-serving assignment to itself from the FDIC declaring beneficial rights to the deed of trust even though they disclosed to the borrower that the owner of the loan is “Deutsche Bank Nat Trust Co as Trustee for WAMU 2007-FLEX1.” This particular investor trust was the subject of litigation within the Washington Mutual, Inc. bankruptcy proceeding (See: WaMu Inc Investor Complaint 2010.)
According to the complaint, the WAMU 2007-FLEX1 was a part of three asset trusts set up by Washington Mutual Preferred Funding, LLC (WMPF), who purchased the assets from WMB in 2006 and 2007. The following asset trusts were labeled “Preferred Trust Securities”:
ASSET TRUST I, ASSET TRUST II, & ASSET TRUST III
(Washington Mutual Home Equity Trust I)
Per the Complaint:
16. On September 26, 2008, as a result of the FDIC’s takeover of Washington Mutual Bank and the bankruptcy of Washington Mutual, Inc., Plaintiffs’ investments in the Preferred Trust Securities automatically converted into preferred stock of Washington Mutual, Inc., and thereby rendered worthless.
260. Upon seizing WaMu, the FDIC immediately sold off WaMu’s assets and bank deposits to the highest bidder. (WaMu’s debt and preferred equity securities obligations, such as those owned by Plaintiff, were not part of the transaction.)
Very little information is available regarding these “Preferred Trust Securities” outside of this “Confidential Offering Circular.” (See: Asset Trusts Offering Circular.)
However, one thing is crystal clear. WMB sold “67,529” of these toxic loans totaling “$10,947,602,313.00” to WMPF, and was reimbursed for the sale of these assets. WMPF then sold all assets backing these “67,529” loans to investors in these securities. (See: “Appendix E” of Offering Circular.)
These loans were some of the worst, fraud-laced loans originated by WMB, yet my initial investigation has yet to find a single foreclosure action (judicially or non-judicially) in the name of any of these investor trusts. How can this be, you ask? Simple, because JPMorgan Chase has decided to claim ownership of these loans, and continues to foreclose and harvest these assets in its own name by concealing these facts, and denying in Courtrooms that WMB ever sold or securitized these loans. This fraud story, which Chase and its attorneys continue to stick to, is no longer believable or sustainable based on the cumulative evidence compiled in the public domain. I can pretty much assure that all 67,529 of these loans have a non-existent and fatally defective chains of title.
But here’s something even more dubious and suspicious. In “JP Morgan Chase & Co.’s” 10-K filings with the SEC for fiscal years 2009-2013, “Washington Mutual Home Equity Trust I,” “WaMu 2006-OA1,” and “WaMu 2007-FLEX1” are all listed as subsidiaries of the company, but vanished as subsidiaries beginning in 2014. What I suspect is that these 67,529 loans, or whatever is left of them, were sold by Chase in hedge fund debt purchases in 2014, along with the non-existent chains of title. I’ll save that for another article.
These trusts were set-up as Delaware Statutory Trusts with REMIC status. In virtually all PSA agreements for DST’s that are visible, to which the DST’s are irrevocable and elect REMIC status, they are required to maintain complete separateness from any other person or entity. Chase’s naming of these trusts as subsidiaries certainly smells “fishy.” At best, Chase acquired servicing rights to these loans, but even this should not be assumed. How a servicer can take control of a REMIC Trust and claim it as a subsidiary on its 10-K is beyond me, but I’d sure like to see the documentation granting this authority.
In the meantime, someone explain to me how tens of thousands of foreclosures have been conducted in the names of private MBS REMIC trusts since the crash in 2008, and not one foreclosure appears to have occurred within this toxic group of 67,529 loans in the name of Deutsche Bank as Trustee for these trusts. The odds are virtually impossible.
Bill Paatalo – Private Investigator – OR PSID# 49411