Are false foreclosures more widespread than banks will admit?

Chase CEO Jamie Dimon has publicly stated that despite the foreclosure paperwork problems, no one is loosing their home that doesn’t deserve to.  Is it possible that JPMorgan Chase’s CEO doesn’t have a clue how bad the problem really is?

According to Diane Thompson of the National Consumer Law Center, who testified before the Senate Banking Committee this week, 10% of the foreclosure related cases her office handles involve borrowers that weren’t even default on their loans.  She believes that lost paperwork and other issues are causing homeowners who are current on their loans to be brought to court for foreclosure.

If that is a fair representation of all foreclosure activity, this is a HUGE problem waiting to see the light of day.

Given that Chase is one of the largest mortgage servicers, it seems unlikely that it alone would have a perfect record of never foreclosing on people who were current on their loans while it was a widespread problem at other banks.

Perhaps Jamie Dimon is in for a real surprise when he finds out what is really going on with his bank.

Time to short Chase?

WaMu loans issued under false name?

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.

State AGs pressuring banks to fix loan modifications

The Wall Street Journal reports (New Pressure on Loan Modifying, 11/17/10) that state attorneys general are said to be putting pressure on lenders, including JP Morgan Chase, to fix the loan modification system, largely seen as not offering a sufficient number of loan modifications and performing too many foreclosures, as a condition of settling the lawsuits on the false foreclosure paperwork brought by the states.

Additionally Senators of both parties are urging banking regulators to increase scrutiny of foreclosure operations.

The lead attorney general in the probe, Iowa’s Tom Miller, claims that part of the issue with loan modifications “lies with servicers who see it as more profitable to foreclose on homeowners than to undertake modifications.”

This seems clearly to be the case with Chase, who practices parallel foreclosure and seems to put up every impediment possible to people seeking loan modifications.

Chase home lending chief fibs to Congress on a grand scale

Here are David Lowman’s comments before a Senate committee looking into the foreclosure problems:

Tuesday, November 16th, 2010, 1:47 pm

Foreclosure is always the last resort and least desired option for delinquent mortgages, and JPMorgan Chase uses all possible remedies prior to starting any foreclosure process, according to an executive in the bank’s home loan office. And in most cases, no one is even living in the property any longer.

Testifying before the Senate Committee on Banking, Housing and Urban Affairs Tuesday, David Lowman, chief executive for home lending, said the banking giant seeks to rectify all past-due mortgages but sometimes it isn’t feasible.

Just read a few of the foreclosure stories on this site and you will know his statement simply isn’t true, especially considering Chase has admitted it practices parallel foreclosure when someone applies for a loan modification.

How to keep Chase in court for 13 years

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.

Chase trying to weasel out of WaMu lawsuits

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.

Chase’s foreclosure “experts” did a great piece on the want ads found by various lenders for foreclosure experts, presumably to staff up their operations in light of all the attention they have been getting and the impetus to actually have to review documents rather than just sign them.

But was was interesting about this piece was the comparison of the experience necessary for the positions being advertised.

Moon: So what types of qualifications does one need to be a specialist in foreclosures?

Wang: The types are varied, depending on who’s hiring. We looked at, for instance, GMAC — now Ally Financial — and that bank for instance was hiring a foreclosure specialist and wanted a college degree and three to four years of experience. But then Chase for instance was hiring a quality specialist, someone who would make sure that foreclosures were processed correctly and they were only asking for high school diplomas. So it really depended.

A high school diploma Chase?  Really?

Does someone with a high school diploma have even the most basic understanding of what a mortgage is, much less the experience necessary to review mortgage related paperwork for accuracy?

Banks desire to reduce documentation fees created a huge liability

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.

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