Representing the WAMU Chase Homeowners Action Alliance: Brenda Reed, James Kelley, Levanson Coffey & Tess Schoenbart
3:30 PM Welcome and Purpose, chairperson: Brenda Reed
3:35 PM WAMU’s lending practices and impact on foreclosure crises in CA: Brenda Reed
3:45 PM Washington Mutual Bank, FA – history and issues of legal status, standing, and fraudulent foreclosure practices: James Kelley
4:00 PM California Reconveyance Company’s foreclosure practices; JPMorgan Chase’s standing, and failure of Chase/WAMU loan modification program: Deontos
4:10 PM Testimonial : Tess Schoenbart
4:15 PM WAMU Homeowners Bottom Line: Brenda Reed
4:20 PM Questions and Commitments, Next Steps
- Engaging the National WAMU Homeowner's Support Grouop as “Party of Interest”
Goals for the meeting:
1. To address concerns with WAMU and JPMorgan Chase as to issues of fraud and the impact on Californians. Most significantly the Attorney General has the ability to convince a court that certain conduct by lenders, servicers and their agents are unfair and deceptive acts on behalf of our citizens.
2. To have California recognized as the leader of the 50 states and demonstrate that California is serious about addressing these issues. We are hoping that our Attorney General can and will act where other agencies have failed.
3. To call for sanctions as well as substantive settlements that protect the citizens of the great state of California as we move forward We pray that The Office of the Attorney General with move forward quickly and expeditiously with your investigations, sanctions, prosecutions, and settlements.
WAMU’S MOTTO -- FRIEND OF THE FAMILY.
WHAT FRIEND OF THE FAMILY DESTROYS THEIR DREAMS, DEVASTATES THEM FINANCIALLY, AND SEIZES THEIR HOME.
WHAT WE HAVE ARE BROKEN DREAMS, BROKEN LIVES, BROKEN FAMILIES, BROKEN COMMUNITIES, AND BROKEN BANKS.
WE COME TO YOU TODAY TO RIGHT THIS WRONG.
- 2005, WAMU management shifted strategy away from originating traditional fixed rate & conforming single family residential loans towards riskier nontraditional loan products and subprime loans
- Purpose – to compete with Countrywide Financial Corporation which in 2005 WAMU’s CEO saw as “arguable the strongest competitor.” & boost its bottom line.
- WAMU in 2006 estimated its internal profit margin from subprime loans could be more than 10 times for a gov’t backed loan product and more than 7 times for fixed rate loan product Subprime Loan = 150 basis points return
- Home Equity = 113 basis points return
- Option ARM = 109 basis points return
- Fixed rate = 19 basis points return
- Gov’t backed = 13 basis points return
- Liberal underwriting standards
- Inadequate risk controls.
- Created loan losses
- Borrowing limitations
- Falling stock price
- 2008, depositor withdrew significant funds after other high profile bank failures & rumors of WAMU’s problems
- OPTION ARMS made up one-half of all loan originations during 2003-2007.
- 2007, 47 % or about $59 billion were in Option ARMS
- Low introductory “teaser rate” in place.
- End of 2007 84% were negatively amortizing
- SUBPRIME LOANS2007 loan portfolio was c $16 billion or 13% of portfolio
- Underwriting policies & practices made high-risk products riskier
- Stated income loans or ”low doc” loans --- without supporting documentation. Liars loans.
- 90% of all WAMU home equity loans were "low doc" or "liar loans."
- 73% of Option ARMS
- 50% of subprime loans
- High loan to value ratios often in excess of 80% of value of underlying property
- Borrowers were not required to purchase PMI (private mortgage insurance in case of default)
- Failed to provide adequate oversight of 3rd party brokers who were compensated for originating most of WAMU mortgages but were not WAMU employees.
- 2007 – 14 WAMU employees were overseeing 34,000 3rd party brokers
- 2007 WAMU identified fraud losses to 3rd party brokers of $51 million for subprimes & $27 million for primes
- Source: 12/31/2007 WAMU 10-K states the following loan concentrations:
- 49% Option Arms in CA (13% in FL)
- 25% Subprimes in CA (10% in FL)
- 53% Home Equity in CA (9% in FL)
- 25% of loans were concentrated in one metropolitan statistical area
- 1991 – 2001 acquired 9 institution $137.16 billion in assets
- 1/1/2005 Merged with affiliate Washington Mutual Bank Seattle $28.77 billions in assets
- 10/1/2005 acquired Providian Nat’l Bank $13.10 billions
- 3/1/2006 merged with affiliate Long Beach Mortgage Co. $13.11 billions
- 10/1/2006 acquired Commercial Capital Banks FSB $5.67 billions
- 9/25/2008 Washington Mutual Bank merged with FDIC financial assistance and operates as part of JPMorgan Chase Bank, NA in Columbus, OH. Purchase and Acquisition Agreement has not been finalized. Pending litigation.
- 1 in 92 housing units in foreclosure in CA
- 67,072 new foreclosures in Jan 2011
- 19,357 homes in CA scheduled to be auction the week of March 14th
- Jan 2011 1 in every 200 rec’d foreclosure filing
- 5,000,000 borrowers in USA in Feb 2011 were 2 months behind
- Over 1 million homes repossessed nationally in 2010
- 1.2 million predicted for 2011
|Kerry K. Killinger, former CEO of Wamu|
- 2005 WAMU conducted an internal investigation – results were sent to David Schneider, president of Home Loans, and shared with Kerry Killinger, CEO of WAMU at that time.
- No action taken.
- Killlinger's goal was to turn WAMU into the "Wal-Mart of banking" and cater to lower and middle class patrons.
- "We hope to do to this industry what Wal-Mart did to theirs, Starbucks did to theirs, Costco did to theirs and Lowe's-Home Depot did to their industry. And I think if we’ve done our job, five years from now you’re not going to call us a bank."
- "The Power of Yes" ad campaign, introduced by WAMU during the 2003 Academy Awards k\ to promote the offering of loans to all consumers, particularly borrowers that the banks deemed too risky. Another commercial in the ad series showed WaMu representatives in casual clothes, contrasting with traditionally-dressed bankers in suits.
- "Whoo hoo!" was an advertising campaign introduced by Washington Mutual in February 2008. As fears of an economic crisis were rising, and WaMu was looking to become an "iconic brand that people love", they began courting consumers with a new slogan, designed to position WaMu as a consumer-friendly institution
- Top producing offices in CA – WAMU internal investigation found that in Southern California that Subprime lending fraud was out of control.
- One office in Downey 58% of the mortgages were fraudulent.
- One borrower was photographed as a mariachi player as his only proof of income.
- One home photographed by the appraised defaulted; it was in fact a vacant lot.
- Misled borrowers.
- Lied about income and assets.
- Fraudulent cut and pastes on documents.
- One office in Montebello the rate of fraud was 83%.
- WAMU took no steps to address the problems.
o Buyers acting as fronts for real buyers
o Phony credit histories
o Process requirements waived
o In one Long Beach Mortgage office that sales people sometimes cut and pasted borrowers' names on false bank statements.
- WAMU failure was caused by greed and more greed. Just say "Yes." Rewards to mortgage brokers and real estate brokers such as one month first-class vacations in places like Jamaica and Hawaii. Huge commissions paid out. Atmosphere of anything goes as long as the loan gets made. Too bad about the homeowner and what lies ahead.
- WAMU motto was “Friend of the Family”
- WAMU Rap at an employee retreat in Hawaii: "I like big bucks and I cannot lie/You mortgage brothers can't deny "That when the dough roles in like you're printin' your own cash/ And you gotta make a splash."
- People who had Option ARMS didn’t understand them; flagship WAMU product; Senate committee found that sales people were trained to convince borrowers that they could simply finance if they got in trouble as housing prices were soaring
- WAMU paid huge commissions to brokers & loan officers – worst the terms of the loan for the borrower, the better the commission.
- Mastered the art of the “liar’s loan."
- Most popular subprime loans used low “teaser” rates for first 1 to 3 years when rates shot up dramatically when the teaser expired. Borrowers caught in loans on which they could not make their payments unless they refinanced into another teaser rate; were told up front that this was the solution.
- People selling the mortgages received huge bonuses and trips to Hawaii for high volume lending.
- WAMU’s chief risk officer (hired to control risk) had 35% of her pay tied to growth & only 25% to risk Management.
NO ONE HAS GONE TO JAIL.
NOT KERRY KILLINGER.
NOT DAVID SCHNEIDER.
NOT JAMIE DIMON.
NOT THE WAMU BROKERS OR EMPLOYEES.
WAMU was certainly NO FRIEND OF THE FAMILY. The impact on our society is devastating.
- Families ripped from their homes.
- Belongings tossed into the streets.
- Families living in their cars, on the streets, or in seedy motels in one room.
- Children going to school hungry and forced to live in unsafe neighborhoods where they cannot enjoy being children.
- Children falling behind in school.
- Creating blights in our communities.
- Lost revenues of $5,000 - $35,000 per foreclosed home.
- Suicides and attempted suicides. Violent crimes.
- A failed banking system that rewards fraud & greed while the lives of Californians are devastated and from which they may never recover.
MAKING LOANS IN THE NAME OF A NON-EXISTENT BANK - WASHINGTON MUTUAL BANK, FA
"Washington Mutual Bank, FA” ceased to exist April 4, 2005, yet continued to make loans as such. Are these loans legitimate? Or are they a product of fraud?
On January 1, 2005, the Company’s state savings bank, the former Washington Mutual Bank merged into Washington Mutual Bank, FA, and ceased to exist; subsequently, changed its name to Washington Mutual Bank, FA changed its name to Washington Mutual Bank (“WMB”). Consequently, the Company no longer owns a state savings bank that is subject to regulation and supervision by the Director of Financial Institutions of the State of Washington. Its non-bank financial subsidiaries are subject to various federal and state laws and regulations.
Scope of the Problem
From April 2005 - September 2008 tens of thousands of Loans were made in the name of a non-existent bank -- Washington Mutual Bank, FA
- Fraud on Federal and State Courts in foreclosure cases by Chase.
- Concealed fraud on the unwitting Borrower.
- FDIC and Chase bank are both practicing fraud on the courts.
Benefits of the Washington Mutual Bank, FA Fraud
Loans that are brokered are required to disclose the Yield Spread Premiums
Making a brokered loan in the dead name of the “Washington Mutual Bank, FA” allowed the Yield Spread Premium to be treated as a unreportable “Service Release Premium”.The fraud evades the fiduciary duty between the “Broker” by claiming the dead bank as a Loan Originator.
This makes it difficult (if not impossible) for the Borrower to later recover damages if Borrower sues the non-existent bank.
The FDIC and Chase have been coordinating their efforts to suppress this fraud because it voids tens of thousands of loans.
"A broker who arranges a covered loan owes this fiduciary duty to the consumer regardless of whom else the broker may be acting as an agent for in the course of the loan transaction."
Assessment of California Reconveyance Company
1. Trustee (California Reconveyance Company) has not signed on the Notices of Default as required. A Trustee must be a signatory to the Trust.
- How can a Trustee be party to the note if they have not signed it?
- How do they even know they are Trustee? They never accepted the authority.
- This is in violation of the Uniform Trust Code-Probate Code : A Trustee has to be a signatory to the Trust.
3. Notice of Default states in the second to the last paragraph:
That by reason thereof, the present beneficiary under such Deed of Trust, has executed and delivered said Trustee, a written Declaration and Demand for Sale, and has deposited with said duly appointed Trustee, such Deed of Trust and all documents evidencing the obligations secured thereby, and has declared and does hereby declare all sums secured thereby immediately due and payable and has elected and does hereby elect to cause the trust property to be sold to satisfy the obligations secured thereby.
- This is a false document because they can and have not done this because they can not produce these documents.
- Compare this document to the first paragraph of the Deed of Trust. “Lender” is Washington Mutual. . . .Lender is the beneficiary under this Security Instrument.
- This constitutes a violation of California Criminal Code 115 as a false note and under California Criminal Code 115.5 a fine for each violation can collect up to $75,000 per action which the AG office could collect for the benefit of California and Californians.
- Where is the Declaration of Beneficiary?
4. Deed of Trust Paragraph 24 states that only the Lender can Substitute the Trustee.
- Washington Mutual owned California Reconveyance Company. Now Chase owns California Reconveyance.
- CRC has a fiduciary relationship with the Trustor/Borrower.
- This constitutes a conflict of interest when they move to foreclose.
- Once the Note was securitized, WAMU (by any name) ceased to be the Lender.
- The PAA does not replace the Assignment of Deed of Trust.
- This results in issues as to Continuity of Title. This affects all homeowners in California, not just those in foreclosure.
- According to The Rules of Deed of Trust, this problem can only cured through an Assignment of Deed of Trust.
- a) Assessor's Parcel Number;
- b) Name of Grantor and/or Grantee in ORIGINAL Deed of Trust and/or Security Instrument;
- c) Nominal Street Address, City, State, ZIP of The Property in Question.
- The Subject Parties appear to deliberately EXCLUDE these indices ---rendering the recorded documents as "electronically irretrievable" by the distressed borrower and parties attempting to expose MERS, LPS and Servicer Lies!
- Documents demonstrate countless inconsistencies with the signature of one Deborah Brignac, who is variously an officer of California Reconveyance, WAMU, and JPMorgan Chase.
- One participants on the teleconference call has 2 signatures that do not match on two separate Notices of Trustee Sale.
- These signatures do not match signatures where she has signed with a notary as witness.
- Deborah Brignac signs as VP of CRC, VP JPM Chase, VP Deutsche Bank, and VP Mers.
- Even if CRC were an Affiliate of these companies, Deborah Brignac cannot sign for those entities; she can only sign for the company for whom she works.
9. Evidence has been found to indicate that California Reconveyance Company does not have possession of the original note and without it cannot legally foreclose.
- An organization sent a homeowner into the offices of California Reconveyance Company in Chatsworth, California, to inspect their alleged original note.
- CRC representatives presented the homeowner with a Double sided color copy.
- The original note signed by the homeowner was single sided.
1. Immediate moratorium on foreclosures for six months.
2. Cessation of trial modification programs.
- Restitution to homeowner for all trial modification payments without penalty.
- Low fixed interest rates (2 – 4 % maximum)
- Long term mortgages (40 years)
- No balloon payments
- Waiver of missed payments and foreclosure fees
- Rescission of all Notices of Default and Notices of Trustees Sales
5. Restitution for fraudulent foreclosures
6. Cessation of parallel foreclosure practices
7. Proof of beneficial interest in a property prior to foreclosure in the form of a wet-in note
- If a loan was securitized and most were, documentation must be provided to homeowners before foreclosure proceedings can be implemented.
9. The level of documentation needed to proceed to foreclose should:
- Identify the current "real party in interest" and document unequivocally how that occurred through a RECORDED chain of title.
- NO NOMINEES
- NO AGENTS.
- NO LOST NOTE AFFIDAVITS.
- NO EXCEPTIONS.
- NO TRICKS.
- Consider AZ 1259. || Consider the Ibanez Decision. Consider actions by Judicial in Oregon.\
- The "officer of the court" should be HELD directly accountable. || As in the RECENT procedures enacted in New York state.
- This is desperately needed because of the failure of the Executive, Legislative and Judicial branches of our government to protect it own citizens.