From Neil Garfield Living Lies Weblog:
http://livinglies.wordpress.com/2013/01/04/chase-reliance-on-bogus-affidavit-and-operation-of-law/
Chase clearly has a problem, as set forth in the recent Michigan Supreme Court decision. There is
no “operation of law” by which the loan could have been transferred. The purchase and assumption
agreement do not transfer the loans —- especially and obviously the loans that WAMU had already
sold. The FDIC receiver has stated that no document exists assigning the loans. And no document
exists that gives Chase the right to service the loans, but that would probably not be a strong point.
If they assert agency for servicing and everyone accepted the assertion by conduct, it would be hard
to achieve anything attacking their status as a servicer. But that doesn’t mean they are a creditor.
Without an assignment, the loan, even if the loan documents are valid (highly questionable), would
still be in the estate of WAMU, which technically doesn’t exist unless something is reopened — the
receivership, the bankruptcy etc. What is required here is clarity on who the principal is since Chase
cannot claim subrogation without showing proof of payment, which they don’t have.
Perhaps there should be some discussion as to a declaratory action seeking injunctive and
supplemental relief. The homeowner is in doubt as to who is on first: Chase asserts ownership but
has produced neither an assignment nor proof of payment. WAMU doesn’t exist any more but we
don’t have any evidence that the loan was transferred. The FDIC receiver has stated that more than
2/3 of all loans originated by WAMU were sold into the secondary market where they were subject to
claims of securitization.
The documents for securitization, if they exist, may well follow the standard operating procedure of
the securitization participants of attempting to assign a loan in default in violation of the prospectus
and PSA. And the attempted transfer is generally far outside the 90 day window allowed by the PSA
and the REMIC statute, both of which prohibit acquisition of new mortgages.
Hence the probabilities, as per the FDIC receiver is that the loan was packaged for sale and
“Securitization” but neither the sale nor the securitization occurred, thus leaving the loan within the
WAMU estate, which has been closed.
Nonetheless the REMIC trust that could be asserted to own the loan has not been disclosed, leaving
three potential claimants — Chase, which has neither assignment nor proof of payment, the WAMU
estate which has been closed, and the REMIC trust that was in all probability used to assert claims
of sale, transfer and securitization of the loan.
A fourth category of claimant, the investors who advanced money to purchase fractional shares in
the REMIC trust would emerge if the securitization claims were unsupported.
Arguments of standing apply for jurisdictional purposes because there is no proof or evidence (or
even an allegation) on record that the owner of the loan receivable (one of the possibilities
mentioned above) was not paid by a party waiving subrogation (a standard provision in all insurance
contracts and credit default swaps) protecting the value of the bond.
Standing aside, the identity of the principal owning the loan receivable as evidenced by origination,
assignment and proof of payment must be established before any party can submit a “credit bid.” in
lieu of cash at auction. Further, a complete accounting from WAMU, Chase and any parties involved
in securitization or sale into the secondary market especially including the Master Servicer who
would know the actual balance of the receivable after deduction for insurance and credit default
swaps receipts.
This would have an effect on the redemption rights of the borrower, the ability of the borrower to
modify, and whether a default actually existed at the time of the notice of default and notice of sale
which in all likelihood contained a demand for an amount far in excess of the loan receivable after
proper allocation of deductions are made.
The review process, as farcical as it is turning out to be is thus corrupted from the start. Although
Chase is communicating with the borrower on the review process, there is no evidence that they
have any right to do so. A letter should be sent back to Chase saying that based upon the
information available thus far, there is a question as to whether they are the authorized servicer, and
if so, how that happened.
Secondly, there is a question as to the party for whom they are performing the review process as the
creditor. They should be asked in the letter, for the identity of the creditor — i.e., the party who can
show assignment and proof of payment.