LivingLies – by Neil Garfield CHASE-WAMU MERGER CONSIDERED IN MICHIGAN COURT OF APPEALS AS NOT AN ASSIGNMENT. BOA FORECLOSURE DISMISSED AND REMANDED FOR LACK OF STANDING.
And next is an interesting favorable decision in the State of Michigan entered June 6, 2013 but not yet published. Sobh-v-Bof-A, Chase et al
Bank of America was found to LACK STANDING to Foreclose. So far so good. But the reasoning of the Court leads me to question whether the right record was in front of them. They ASSUME that the Chase-Wamu merger transferred the loans only because, as I see it, nobody read the merger agreement. The receiver, as I pointed out in prior posts, acting on behalf of the FDIC, the trustee in WAMU bankruptcy, Chase and WAMU executives were sort of playing fast and loose with the rules.
It turns out that Chase never paid for anything. While it could be argued that they assumed the liability on billions of dollars in deposits, they also got the money that was on deposit. The agreement says the consideration is zero in no uncertain language. In fact, later on in the agreement and then again outside the agreement, they slipped in a provision wherein Chase was putting up $1.9 billion, but getting more than $2 billion back out of a tax refund owed to WAMU, so they had negative consideration and there is no recital of any net loss they were taking when they assumed the deposits of WAMU.
It also turns out that, straight from the receiver’s lips, if you are looking for an assignment, you won’t find one because there isn’t one. And the merger and assumption agreement specifically does NOT include the bogus mortgage loans and other liabilities (put back) in the securitization scheme which is most of all loans originated by WAMU. Chase didn’t want to buy the loans because they correctly perceived that the liabilities on those loans and the liabilities to alleged REMIC structures that never received an interest in the loans, and the liabilities to insures, counterparties on credit default swaps and to the Federal government and Federal Reserve might vastly exceed the nominal value of mortgages originated by WAMU. Then there was also the liability for predatory or fraudulent loan practices. Altogether, Chase didn’t want to be saying it owned ALL the loans. It just wanted to be able to say it some of the time when they had an uncontested foreclosure and they could get a free house.
So Chase got an affidavit from the receiver that said that Chase owned the loans by operation of law because of the merger. That affidavit has been used hundreds if not thousands of times in foreclosures where Chase perceived the risk to be low. Thus in uncontested cases, Chase alleged it owned the loans even if they were “securitized” and got away with it because, well, there was nobody to say otherwise.
A good thing that the Michigan court said was that the Chase had the burden of proving the chain of ownership which was the history of the piece of property. A bad thing that the Court said was that Chase “acquired” the loans but that the foreclosures were voidable because the assignment was never recorded. In Michigan the absence of a recorded assignment is deadly so they ran with that idea and decided fro the borrower and against Chase who will no doubt now enter into a settlement or modification for which they have no authority to even talk about because they do not now nor did they ever own the loans.
Just because the loans were considered a hot potato and nobody wanted them doesn’t mean that anyone can claim them. But that is exactly the plan of engagement adopted by Chase. So all that happened here was that Chase was chased out of Court with permission to come back when it had the assignment recorded. tricky business there. Will they fabricate that instrument or will they simply settle with the borrower for what they can get? Whatever they get, it is free money because at no time in the history of the loan has Chase ever been at risk unless, now that they are acting as though they have control over the loan portfolio, a court decides that if you fake it or made it. Greed has no bounds. If Chase had simply left the loan portfolio to wallow in its own crud, no argument could be made against Chase for all the chicanery that went on with the borrowers and investors. Now that they have led courts to believe they have apparent authority, maybe they have apparent liability as well.