Wednesday, August 29, 2012


Too often litigants and their attorneys simply do not know what to request through discovery.  Homeowners deserve a fighting chance to obtain accurate information about their home mortgages.  The discovery process can become an exercise in frustration, especially when dealing with foreclosure proceedings with JPMorgan Chase Bank, NA.  Litigants are thus thwarted in the legal process and get little from the fees paid to their attorneys.  Different banks use systems that vary from bank to bank.

Recently I came across an affidavit of Michael R. Zarro, a Chase employee, on Scribd on the internet.  I offer it to my readers as an important and valuable resource to homeowners fighting to save their homes from foreclosure by Chase and offers valuable insight into maintenance of loan files relative to the Discovery Process in which Chase notoriously fails to cooperate.  

 "No borrower was improperly foreclosed upon," Michael R. Zarro, a servicing executive at JPMorgan Chase & Co., wrote in documents submitted to the New Jersey Supreme Court April 7 this year. "Chase has not identified or become aware of any deficiencies in its processes that caused it to pursue foreclosure actions without merit." Zarro recently left JPMorgan Chase and joined a competitor, according to Tom Kelly, a bank spokesman.

Michael R. Zarro, Senior Vice President, in charge of Default Specialty Operations at JPMorgan Chase Bank, N.A. [JPMC] submitted an Affidavit constitution JPMC and Chase Home Finance LLC’s [CHF] as Chase’s Prima Facie Showing affidavit, signed and notarized on April 7, 2011 at Denton County, Texas, relative to a civil action in the Chancery Division General Equity Part in the Superior Court of Mercer County, New Jersey.  The following is a synopsis for information purposes only.   This affidavit was submitted in the matter of a residential mortgage foreclosure pleading and document irregularities.

Affidavit and Exhibits can be found at:  

Zarro , an employee of JPMC and its predecessors since 1994, is responsible for the support, management and disposition of assets secured by real estate, including the foreclosure process as a senior member of Chase’s team working to analyze and remediate issues with respect to the execution by Chase employees of documents used in foreclosure proceedings and other related issue. 

CHF is a subsidiary of JPMC and is the third largest mortgage servicer in the USA.  CF services loans originated by Chase as well as loans originated and/or owned by other lenders to include Government Sponsored Enterprises [GSEs] such as Freddie Mac and Fannie Mae as well as private investors holding pools of loans in securitized trusts.  JPMC has appointed CHF as sub-servicer for loans serviced by JPMC.

Chase staff responsible for execution Affidavit of Indebtedness [AOI], Amount Due Affidavit [ADA] and Certifications access Chase’s computerized systems to verify information and prepare the documents for execution.  Depending on the status of the loan, the jurisdiction, and whether or not the foreclosure action is contested, other documents may be submitted as well.

·         Maintains up-to-date information concerning, among other things, the status of the loan and payment history. 
·         Access images of the Note, Mortgage
·         Access where necessary, other documents such as assignments and correspondence with the borrower, through Chase's document imaging systems.

·         DOC Line tracks the location of the loan collateral file, which typically contains the Mortgage and original Note.
·         Doc Line provides reports of data maintained on Chase's  custodial management system, Windows Custodial Management Service System ("WinCMSS'').
·         Doc Line reports location of the custodial files.
·         Custodial files are tracked through barcode scanning.
·         DocLine & WinCMSS provide real-time information on location of the collateral file.
·    Most of the collateral files are maintained in the secure facility, JPMorgan Chase Custody Services in Monroe, Louisiana.
·    Files pertaining to a small percentage of loans serviced by CHF are stored with third-party custodians.  However,  the location of the collateral files is reported on DocLine.

·         Verifies information about the investors/owners of loans
·         Which entity's  name a foreclosure action should be brought in
·      Whether the investor/owner had granted Chase a power of attorney, m Chase's  Loan Investor Servicing Answers ("LISA") system.

Chase has developed detailed written procedures to guide Affiants in the execution of sworn documents, and in particular Affidavits of Indebtedness, using the systems described above. Affiants are required to follow these procedures so that documents submitted in foreclosure actions are properly executed and based upon knowledge gamed through a personal review of Chase business records.

Third-party mortgagees typically provide Chase powers of attorney ("POAs'") that permit Chase to sign as attorney in fact documents necessary to prosecute foreclosures. The POAs typically grant broad powers to execute all necessary documents for servicing the loan, including foreclosure documents.   

With respect  to a Mortgage or Deed of Trust,  the foreclosure, the taking of a deed  in lieu of foreclosure or the completion of judicial or non-judicial foreclosure or termination, cancellation or recession  of termination, cancellation or rescission  of any such foreclosure, including, without  limitation, any and all of the following acts:

·         Substitution of Trustee(s) serving  under a Deed of Trust, in accordance with state law and the Deed of Trust;
·         The preparation  and issuance  of statements of breach or non-performance;
·         The preparation and filing of Notices of Default and/or  Notices  of Sale;
·         The cancellation rescission of notices  of default and/or  notices  of sale;
·         Deed in Lieu of Foreclosure:
·         Preparation  and execution of such other documents and performance of such other actions as may  be necessary under the terms of the Mortgage,  Deed of Trust or state law to expeditiously complete  said transactions

Chase services loans on behalf of  Freddte Mac and Fannie  Mae   
·         Typically, the Notes areendorsed in blank.”
·         At foreclosure, the servicer  is the mortgagee and initiates  the foreclosure action in its name.
·         Both Freddie  Mac and Fannie  Mae publish  guidelines and regulations which address the authority vested  in servicers. These  materials are publicly available. See  ii; and
·         Fannie  Mae and Freddie  Mac have also issued POAs to Chase, which  provide Chase  authority  to execute  certain  documents.

·         Chase also enters into servicing agreements.   
·         When the Mortgagee is a securitized  trust, there is typically a Pooling and Servicing Agreement ("PSA")  by and among the servicer, the trustee, and the depositor and/or seller of assets into the trust.  
·         JPMC has appointed CHF to act as sub-serv1cer for JPMC via an agreement between CHF and JPMC.  Thus, CHF has authority to act where the mortgagee is JPMC.
·         Chase does not otherwise act as a sub-servicer for other servicers.


Does the Respondent have a record keeping system of Business Records that provides accurate up to date information on the payment history and status of the loan?  

·         Chase’s MSP record keeping system provides up-to-date information on payment history and status of loans.  
·         MSP is a commercially available system used by approximately 75% of the mortgage servicing  industry.
·         Monetary transactions are posted on MSP in real-time. Thus, when a borrower makes a loan payment to Chase, the payment is promptly recorded and the loan record is updated   
·         MSP also stores data about payments Chase makes on behalf of the borrower, including tax payments and hazard insurance, as well as records of communications  with borrowers.
·         Chase employs a number of internal and external controls to ensure that the information in MSP is accurate and reliable, including real-time posting of transactions, daily reconciliations, control self-assessment processes, internal audit review, and testing by Chase's  external auditor, PricewaterhouseCoopers.  
·         Affiants have desktop access to MSP, and access data in MSP to complete AOIs

Chase has developed comprehensive procedures for the review of information contained in, and the execution of, affidavit/certifications submitted in support of foreclosure proceedings.
·         The most commonly subm1tted affidavit/certification submitted in foreclosure proceedings is the AOI --in New Jersey, the Certification of Proof of Amount Due.  Chase has developed model AOIs.
·         When an AOI is required, foreclosure counsel populates the caption of the AOI. leaving the remainder of the document to be completed by the Affiant.
·         The AOI is transmitted by counsel to Chase for execution via

·    Lender Processing Services (''LPS") Desktop facilitates communication  between counsel and servicers.  
·         Chase does not use LPS to execute foreclosure affidavits/certifications
·         But rather as a back-office technical solution.

·         The AOI is executed pursuant to a comprehensive  written procedure.  Because there are minor differences in AOIs between states (and in some instances, there are county specific requirements) Chase provides supplemental  instructions to Affiants where a state-specific AOI differs from the standard Chase template.
·         The AOI procedure requires the Affiant to verify all of the facts set forth m the AOI, and to write by hand key facts such as the amount of indebtedness.  For example, the Affiant must:
o    Verify property address and borrower name on the AOI match the information contained in MSP and loan documentation;
o     Confirm the loan is in default, and the foreclosure action has not been suspended;
    Match information on MSP concerning terms of the loan with loan documentation;
   o  Confirm that the action has been commenced in the proper name, and where the Plaintiff is a third party. that the third party has issued Chase a POA: and
   o          Identify the amounts due, including principal,  interest. escrow, and corporate advances. and record those amounts by hand on the AOJ.
·         Once all information  in an AOI is confirmed.  the Affiant prints out certain screenshots from MSP that reflect the amount due data and appends the screen shots to the AOI.
·         Chase has also developed similar procedures for other documents that may be submitted in foreclosure actions (e g, lost document affidavits).
·         Chase's  affidavit procedures provide for the signer to reject a document that contains errors. and Chase employees have been specifically trained not to complete any affidavit or certification if they have any questions about the content or do not understand any portion of the document.
·         Supervisors are available on-site to answer any questions.
·         Once all information in an affidavit/certification is verified, Affiant executes the affidavit/certification.   (In states other than New Jersey. execution is completed in the presence of a notary.)
·         The affidavit/certification is then passed along to quality-check processing described  in detail below.
·         Once an affidavit/certification passes the quality checks. it is imaged and then returned to foreclosure counsel for filing.

Chase  has established specific  procedures for its Affiants to complete affidavits/certifications submitted  in foreclosure proceedings based on a personal  review of Chases business  records by the Affiant.  All affidavits/certifications executed in the ordinary  course of a foreclosure proceeding are completed and signed  pursuant  to written procedures which have been drafted  by Chase,  vetted by outside  counsel  and, for certain  core documents including  the AOI assessed  by Deloitte & Touche. The AOI procedures. and more generally, the other affidavit execution procedures implemented by Chase require the Affiant to personally review Chase's system of record. MSP, as well as other Chase systems such as DocLine  (which reflects real-time  data concerning the location  of the collateral  file). LISA (which  reflects information about the foreclosing party and POAs);  and Chase's imaging systems.

ln response  to questions concerning the amount  of tune spent preparing  an AOI, Chase asked a supervisor  to time the execution of six AOIs.  She determined that it took her between 13 and 45 minutes to execute an AOI, and the average  time to complete  an AOI was 25 minutes that does  not include  the amount  of time spent to quality-check the AOI.  There are no quotas or guidelines provided  to the Affiants concerning how long it should take to complete  an AOI.   Chase's purports that the focus  is on process and accuracy, not speed.  Chase has implemented comprehensive  quality control and quality assurance programs.

The quality-check analyst performs each of the same steps as did the signer to confirm  that the factual information  in the affidavit or certification  matches the information  contained in Chase's electronic  business record systems.  If a document fails the quality check, the quality-check  analyst and the foreclosure analyst will work together to reconcile the two results so that an accurate document will be filed.

Chase attests that the review of 100% of affidavits and certifications will continue until Chase management determines that quality levels are consistently  high and support a more streamlined review going forward.  At that point, the quality-check analysis will continue with random samplings of affidavits and certifications.

Chase states further that it has processes to help insure the effective and timely communication  with foreclosure counsel in connection with the completion and execution of foreclosure affidavits/certifications.  Chase communicates  with foreclosure counsel through LPS Desktop, a commercially available application designed for this purpose Counsel uploads affidavits/certifications  into LPS Desktop for execution, and allows Chase to maintain an audit trail on communications and document execution.  Chase also routinely communicates with counsel by phone and email. Once uploaded to LPS Desktop. the affidavit/certifications arc then assigned to Affiants  for verification and execution.
As soon as an affidavit/certification is executed, it is then passed on to quality control and then quality assurance.   Affidavits executed m the ordinary course are imaged and 1cturned to counsel.

Chase claims that it is continuously  working to reduce the time it takes to complete this process. Chase is also assisting specific Affiants to work with each outside law firm in order to facilitate communication with counsel and foster the development of state-specific expertise by Affiants.

My prayer for my readers is that this information will be instrumental is helping to save the homes of victims of the predatory lending and horrific foreclosure irregularities of JPMorgan Chase Bank NA, Chase Home Finance, LLC, Washington Mutual Bank, and their affiliates.

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