Friday, December 27, 2013

“Washington Mutual Bank, F.A.” and “Washington Mutual Bank” Were Used For Different Purposes….Primarily Fraud.


For the past few years, people have been trying to make the argument (including myself) that “Washington Mutual Bank, F.A.” (WaMu, F.A.) changed its name to ”Washington Mutual Bank” (WMB) and ceased to exist after April 4, 2005. After all, this is what WMI disclosed in its 10-K filing for fiscal 2005 and testified to in its bankruptcy proceedings.

But when challenged with this argument in foreclosure proceedings throughout the U.S., JPMorgan Chase proffers the following document in an attempt to show that both these entities did in fact merge into one, but that WMB was allowed to use the name WaMu, F.A. as a d/b/a (“doing business as.”)

wamu fa ots snip 2

Though they may have “slipped a fast one” on their comatose regulators, these entities clearly served different purposes after the filing of this document. Having investigated cases involving WaMu, F.A. and WMB for several years now, I have accumulated a substantial amount of evidence to show that they were not acting as one in the same. For example, here is a recorded mortgage assignment in 2007 from WaMu, F.A. to WMB for the “consideration” amount of “$1.00.” Notice how both entities use the same address.
FA to WMB assignment - snip


This is prime facie evidence that these entities were acting separate from one another. In addition,  I have documents produced in discovery showing that the WaMu, F.A. entity was acting as (and calling itself) a “Premiere Mortgage Broker.”

Washington Mutual increased its origination of ”Combo Loans,” also referred to as  “80/20,” “80/10,” or “90/10″ loans, from April 4, 2005 thru 2007. The first number of the combo represents the 1st position lien and its percentage of the home’s value (i.e 80 means 80% of the “LTV” [loan-to-value].) The second number represents the simultaneous 2nd position lien and percentage of the home’s value (i.e. 80/10 means the 2nd loan equals 10% of the home’s value for a “collective loan-to-value” ["CLTV"] amount of 90%.)

For those of you who took out one of these simultaneous ”Combo Loans” with Washington Mutual during this time period, you will probably notice that the first position lien states WaMu, F.A. as the “Lender” whereas the 2nd position lien shows WMB as the “Lender.” Now if these entities were in fact the same, then why the use of different names on the documents when the loans closed simultaneously? The answer is simple. WaMu, F.A. was routinely selling the first position liens into the secondary market for purposes of securitization. But, if you read any of the “Pooling & Servicing Agreements” for WaMu trusts during this period, the “Seller” is almost always named as “Washington Mutual Bank” rather than “Washington Mutual Bank, F.A.” What this means is, like the assignment above, WaMu, F.A. had to first sell the loan to WMB before WMB could sell into the securitization chain. The chain of title would go from WaMu, F.A. to WMB (then questionably) to “Washington Mutual Mortgage Securities Corp.” ………..the Trust.

The use of WaMu, F.A. was a way to collect undisclosed “Yield Spread Premiums” by calling itself a “Federal Savings Bank” rather than a broker. WaMu, F.A. could then charge additional fees when selling the loans to its alter-ego, WMB. As part of the Washington Mutual securitization fraud scheme, it is also well known and documented that misrepresentations were made to investors regarding the loans that were sold. One of the most common misrepresentations I see when analyzing the internal loan level data is the “Loan-To-Value” percentages being represented to the investors on these “Combo Loans.” For example, on a “80/20″ combo loan, the data will show the loan was originated to reflect 80% of the property’s value (LTV = 80%) with the “collective loan-to-value” (CLTV) field also showing 80% rather than 100%. This is fraudulent as the investors were lead to believe that the home had 20% equity or that the borrower put down 20% if it was a purchase loan. This is the type of fraud upon the investors that results in a 13B settlement by JPMorgan Chase with the Department of Justice.
Thus, a word to the wise – Do not fall for the presumption that “Washington Mutual Bank, F.A.” and “Washington Mutual Bank” were the same entities after April 4, 2005. They served entirely different purposes for a reason…..primarily fraud. Just because the regulators didn’t catch this, or chose to ignore this, doesn’t mean it was legal.


“Washington Mutual Bank, F.A.” and “Washington Mutual Bank” Were Used For Different Purposes….Primarily Fraud.

Time To Challenge Those Trustee’s Deeds


Time To Challenge Those Trustee’s Deeds

For the past couple of years, I have been providing clients with the internal loan level accounting data, which reveals in most instances of private securitization, that all payments “due” on the notes have been paid regularly by undisclosed “co-obligors.” Thus there becomes an issue of fact as to whether or not the “note” is actually in “default.” Word through the grapevine is that this particular argument is gaining some momentum in certain jurisdictions throughout the United States.

Well now it’s time to use the same internal accounting data to attack those dubious “Trustee’s Deeds.” In non-judicial foreclosure states, a ”Trustee’s Deed Upon Sale” or Trustee’s Deed” is recorded after the foreclosure sale. Often, the property is sold back to the supposed creditor into what is called “REO” status. In cases where the subject loans were alleged to have been securitized, the Trustee’s Deed will typically state that the Trustee for “XYZ Mortgage-Backed Trust” was the “highest bidder” at the sale and paid cash in the amount of $………..(whatever dollar figure.) There are many reasons to question the validity of these documents; such as the actual parties submitting the “credit bids,” and whether or not any actual cash exchanged hands as attested to under notary acknowledgment. However, there is a way to provide evidence and proof that no such payment ever exchanged hands.

The following language was extracted from a typical Trustee’s Deed:
Trustees Deed language snip
In this particular case, the alleged amount owed in the “Notice of Default” was roughly $314,000.00. A check of the internal accounting for this particular loan (6-months after the sale) shows the loan in “REO” status with no such payment having ever been applied. In fact, the certificateholders (investors) are still receiving their monthly payments of P&I with the trust showing “zero” losses.

This is good hard evidence that the sale and subsequent Trustee’s Deed filed in this case was a “sham” transaction.

If your loan was alleged to have been securitized by a private mbs trust, and your home sold in similar fashion with a recorded Trustee’s Deed, contact me today (bill.bpia@gmail.com) to see if your Trustee’s Deed matches up with the internal accounting data. I will now be offering Expert Affidavits showing what was stated in the Trustee’s Deed as opposed to what has actually occurred behind the curtains. In order to evaluate your particular trustee’s deed, I need to see it, along with a copy of the note.

It’s time to challenge those Trustee’s Deeds!

Bill Paatalo -
Private Investigator – Oregon PSID# 49411
BP Investigative Agency


Time To Challange Those Trustee’s Deeds

Tuesday, December 10, 2013

What JPMorgan Chase Wants to Keep Out of the Public

THIS IS WHAT JPMORGAN IS TRYING TO KEEP THE DRAFT OUT OF PUBLIC

Hurry before it's gone!!

http://webcache.googleusercontent.com/search?q=cache:zgSQPrGHdP0J:https://dcr.alleghenycounty.us/WebMomCacheDir/vol1319000004F3.pdf+&cd=1&hl=en&ct=clnk&gl=us


Sunday, December 8, 2013

Small Town Judge – Major Ethics Issues – Plots Against Homeowner with Bank’s Attorney | Deadly Clear

Small Town Judge – Major Ethics Issues – Plots Against Homeowner with Bank’s Attorney | Deadly Clear

 wickedWitch

Have you ever felt that the judge in your case was not treating you or your attorney fairly, especially when the facts of bankster fraud were clear? Or when you have shown the judge a fabricated assignment of mortgage and an obviously fake endorsement on your so-called note? When you walk into the courtroom does your stomach sink and you imagine you hear a faint theme from the wicked witch of the west in the Wizard of Oz?

In a small Kentucky county, a homeowner just like you encountered the unthinkable – proof that his judge was prejudice and even worse – the judge was assisting the opposing counsel for the bank in a plot against him.  . . . . . .

Wednesday, November 20, 2013

Justice Department, Federal and State Partners Secure Record $13 Billion Global Settlement with JPMorgan for Misleading Investors About Securities Containing Toxic Mortgages

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Home   »  Briefing Room   »  Justice News
The Justice Department, along with federal and state partners, today announced a $13 billion settlement with JPMorgan - the largest settlement with a single entity in American history - to resolve federal and state civil claims arising out of the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS) by JPMorgan, Bear Stearns and Washington Mutual prior to Jan. 1, 2009.  As part of the settlement, JPMorgan acknowledged it made serious misrepresentations to the public - including the investing public - about numerous RMBS transactions.  The resolution also requires JPMorgan to provide much needed relief to underwater homeowners and potential homebuyers, including those in distressed areas of the country.  The settlement does not absolve JPMorgan or its employees from facing any possible criminal charges.

This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group. 

“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” said Attorney General Eric Holder.  “JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior.  The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over.  No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability.  I want to personally thank the RMBS Working Group for its tireless work not only in this case, but also in the investigations that remain ongoing.”

The settlement includes a statement of facts, in which JPMorgan acknowledges that it regularly represented to RMBS investors that the mortgage loans in various securities complied with underwriting guidelines.  Contrary to those representations, as the statement of facts explains, on a number of different occasions, JPMorgan employees knew that the loans in question did not comply with those guidelines and were not otherwise appropriate for securitization, but they allowed the loans to be securitized – and those securities to be sold – without disclosing this information to investors.  This conduct, along with similar conduct by other banks that bundled toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis.
                                   
“Through this $13 billion resolution, we are demanding accountability and requiring remediation from those who helped create a financial storm that devastated millions of Americans,” said Associate Attorney General Tony West.  “The conduct JPMorgan has acknowledged - packaging risky home loans into securities, then selling them without disclosing their low quality to investors - contributed to the wreckage of the financial crisis.  By requiring JPMorgan both to pay the largest FIRREA penalty in history and provide needed consumer relief to areas hardest hit by the financial crisis, we rectify some of that harm today.”

Of the record-breaking $13 billion resolution, $9 billion will be paid to settle federal and state civil claims by various entities related to RMBS.  Of that $9 billion, JPMorgan will pay $2 billion as a civil penalty to settle the Justice Department claims under the Financial Institutions Reform, 

Recovery, and Enforcement Act (FIRREA), $1.4 billion to settle federal and state securities claims by the National Credit Union Administration (NCUA), $515.4 million to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $4 billion to settle federal and state claims by the Federal Housing Finance Agency (FHFA), $298.9 million to settle claims by the State of California, $19.7 million to settle claims by the State of Delaware, $100 million to settle claims by the State of Illinois, $34.4 million to settle claims by the Commonwealth of Massachusetts, and $613.8 million to settle claims by the State of New York. 

JPMorgan will pay out the remaining $4 billion in the form of relief to aid consumers harmed by the unlawful conduct of JPMorgan, Bear Stearns and Washington Mutual.  That relief will take various forms, including principal forgiveness, loan modification, targeted originations and efforts to reduce blight.  An independent monitor will be appointed to determine whether JPMorgan is satisfying its obligations.  If JPMorgan fails to live up to its agreement by Dec. 31, 2017, it must pay liquidated damages in the amount of the shortfall to NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development. 

The U.S. Attorney’s Offices for the Eastern District of California and Eastern District of Pennsylvania and the Justice Department’s Civil Division, along with the U.S. Attorney’s Office for the Northern District of Texas, conducted investigations into JPMorgan’s, Washington Mutual’s and Bear Stearns’ practices related to the sale and issuance of RMBS between 2005 and 2008.

“Today’s global settlement underscores the power of FIRREA and other civil enforcement tools for combatting financial fraud,” said Assistant Attorney General for the Civil Division Stuart F. Delery, co-chair of the RMBS Working Group.  “The Civil Division, working with the U.S. Attorney’s Offices and our state and agency partners, will continue to use every available resource to aggressively pursue those responsible for the financial crisis.”

“Abuses in the mortgage-backed securities industry helped turn a crisis in the housing market into an international financial crisis,” said U.S. Attorney for the Eastern District of California Benjamin Wagner.  “The impacts were staggering.  JPMorgan sold securities knowing that many of the loans backing those certificates were toxic.  Credit unions, banks and other investor victims across the country, including many in the Eastern District of California, continue to struggle with losses they suffered as a result.  In the Eastern District of California, we have worked hard to prosecute fraud in the mortgage industry.  We are equally committed to holding accountable those in the securities industry who profited through the sale of defective mortgages.”
                               
“Today's settlement represents another significant step towards holding accountable those banks which exploited the residential mortgage-backed securities market and harmed numerous individuals and entities in the process,” said U.S. Attorney for the Eastern District of Pennsylvania Zane David Memeger.  “These banks packaged and sold toxic mortgage-backed securities, which violated the law and contributed to the financial crisis.  It is particularly important that JPMorgan, after assuming the significant assets of Washington Mutual Bank, is now also held responsible for the unscrupulous and deceptive conduct of Washington Mutual, one of the biggest players in the mortgage-backed securities market.”

This settlement resolves only civil claims arising out of the RMBS packaged, marketed, sold and issued by JPMorgan, Bear Stearns and Washington Mutual.  The agreement does not release individuals from civil charges, nor does it release JPMorgan or any individuals from potential criminal prosecution. In addition, as part of the settlement, JPMorgan has pledged to fully cooperate in investigations related to the conduct covered by the agreement.

To keep JPMorgan from seeking reimbursement from the federal government for any money it pays pursuant to this resolution, the Justice Department required language in the settlement agreement which prohibits JPMorgan from demanding indemnification from the FDIC, both in its capacity as a corporate entity and as the receiver for Washington Mutual.   

“The settlement announced today will provide a significant recovery for six FDIC receiverships.  It also fully protects the FDIC from indemnification claims out of this settlement,” said FDIC Chairman Martin J. Gruenberg.  “The FDIC will continue to pursue litigation where necessary in order to recover as much as possible for FDIC receiverships, money that is ultimately returned to the Deposit Insurance Fund, uninsured depositors and creditors of failed banks.”

“NCUA’s Board extends our thanks and appreciation to our attorneys and to the Department of Justice, who have worked closely together for more than three years to bring this matter to a successful resolution,” said NCUA Board Chairman Debbie Matz.  “The faulty mortgage-backed securities created and packaged by JPMorgan and other institutions created a crisis in the credit union industry, and we’re pleased a measure of accountability has been reached.”

“JPMorgan and the banks it bought securitized billions of dollars of defective mortgages,” said Acting FHFA Inspector General Michael P. Stephens.  “Investors, including Fannie Mae and Freddie Mac, suffered enormous losses by purchasing RMBS from JPMorgan, Washington Mutual and Bear Stearns not knowing about those defects.  Today’s settlement is a significant, but by no means final step by FHFA-OIG and its law enforcement partners to hold accountable those who committed  acts of fraud and deceit.  We are proud to have worked with the Department of Justice, the U.S. attorneys in Sacramento and Philadelphia and the New York and California state attorneys general; they have been great partners and we look forward to our continued work together.”

The attorneys general of New York, California, Delaware, Illinois and Massachusetts also conducted related investigations that were critical to bringing about this settlement.

“Since my first day in office, I have insisted that there must be accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy,” said New York Attorney General Eric Schneiderman, Co-Chair of the RMBS Working Group.  “This historic deal, which will bring long overdue relief to homeowners around the country and across New York, is exactly what our working group was created to do.  We refused to allow systemic frauds that harmed so many New York homeowners and investors to simply be forgotten, and as a result we’ve won a major victory today in the fight to hold those who caused the financial crisis accountable.”

“JP Morgan Chase profited by giving California’s pension funds incomplete information about mortgage investments,” California Attorney General Kamala D. Harris said. “This settlement returns the money to California’s pension funds that JP Morgan wrongfully took from them.”

“Our financial system only works when everyone plays by the rules,” said Delaware Attorney General Beau Biden.  “Today, as a result of our coordinated investigations, we are holding accountable one of the financial institutions that, by breaking those rules, helped cause the economic crisis that brought our nation to its knees.  Even as the American people recover from this crisis, we will continue to seek accountability on their behalf.”

“We are still cleaning up the mess that Wall Street made with its reckless investment schemes and fraudulent conduct,” said Illinois Attorney General Lisa Madigan.  “Today’s settlement with JPMorgan will assist Illinois in recovering its losses from the dangerous and deceptive securities that put our economy on the path to destruction.”

“This is a historic settlement that will help us to hold accountable those investment banks that played a role in creating and exacerbating the housing crisis,” said Massachusetts Attorney General Martha Coakley.  “We appreciate the work of the Department of Justice and the other enforcement agencies in bringing about this resolution and look forward to continuing to work together in other securitization cases.”

The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis.  The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. attorney’s offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state attorneys general offices around the country.
The RMBS Working Group is led by five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Acting Assistant Attorney General for the Criminal Division Mythili Raman, Co-Director of the SEC’s Division of Enforcement George Canellos, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.

Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at: www.stopfraud.gov
Related Material:

JPMorgan Chase Admission that it Misled US Courts regarding its Capacity as Successor to WAMU

 Contributed by Deontos
 
 
And now we have a "point blank" ADMISSION in an official document that
JPMC misled US Courts regarding its "Capacity" in THOUSANDS of lawsuits across the United States. Comments anyone?

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USDOJ: Justice Department, Federal and State Partners Secure Record $13 Billion Global Settlement with JPMorgan for Misleading Investors About Securities Containing Toxic Mortgages



Exhibit D
Claims resolved by the Federal Deposit Insurance Corporation

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And how many times can a man turn his head,
and pretend that he just doesn't see?

And how many ears must one man have,
before he can hear people cry ?

Monday, October 28, 2013

Glaski v Bank of America -- Davies Seeks Clarificatiion by New York State Court of Appeals

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The Glaski Report

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A California Appeals Court determined that a Plaintiff [non-party to the PSA] has standing to challenge a securitized trust's ownership. See Glaski v. Bank of America.....

Pursuant to Article VI Section 3(b)(9) of the New York State Constitution, the Plaintiff and Appellant, Brian Davies... hereby moves before this Court for an Order certifying the following questions to the New York State Court of Appeals. . . . .
________________________________________

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__________________________________

<EXCERPT>

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Friday, October 25, 2013

Tentative JPMorgan Pact Said to Hit Snag Over FDIC Funds - Bloomberg

JPMorgan Chase & Co.’s (JPM) tentative agreement to pay a record $13 billion to end civil claims over its sales of mortgage bonds has hit a snag because of the bank’s bid to make the Federal Deposit Insurance Corp. liable for part of the payment, a person familiar with the talks said.
The U.S. Justice Department is opposing JPMorgan’s request that the FDIC assume liability for investors’ losses stemming from Washington Mutual Inc., the person, who sought anonymity to discuss the private negotiations, said today. JPMorgan acquired Washington Mutual’s assets in 2008.






The tentative agreement was described last weekend by two people with knowledge of the situation. It would mark the largest amount paid by a financial firm in a settlement with the U.S. The payment would amount to more than half of JPMorgan’s profit last year. Only seven companies in the Dow Jones Industrial Average earned more than $13 billion in 2012, according to data compiled by Bloomberg.


Tentative JPMorgan Pact Said to Hit Snag Over FDIC Funds - Bloomberg

JPM Could Lose Its Charter for Criminal Responsibility in Madoff PONZI Scheme | Livinglies's Weblog

JPM Could Lose Its Charter for Criminal Responsibility in Madoff PONZI Scheme | Livinglies's Weblog

Saturday, October 12, 2013

Bravo! JPMorgan Chase Reports $380 Million Loss As Legal Costs Jump

JPMorgan Chase Reports $380 Million Loss As Legal Costs Jump

California Supreme Court: Depublication Request in Glaski v. Bank of America

CALIFORNIA SUPREME COURT


Court data last updated: 10/12/2013 10:05 AM
Case Summary

Supreme Court Case: S213814
Court of Appeal Case(s): Fifth Appellate District
F064556
Case Caption: GLASKI v. BANK OF AMERICA
Case Category: Depublication Request - Civil
Start Date: 10/04/2013
Case Status: case initiated
Issues: none
Case Citation: none
 
Cross Referenced Cases: No Cross Referenced Cases Found
Click here to request automatic e-mail notifications about this case.
Docket (Register of Actions)
GLASKI v. BANK OF AMERICA
Case Number S213814

Date Description Notes
10/04/2013 Request for depublication filed (initial case event) Defendant and Respondent: JP Morgan Chase Bank, N.A.
Attorney: Mikel Allison Glavinovich     (publication order filed on August 8, 2013)
10/04/2013 Case start date (depublication request)    
10/04/2013 Application to appear as counsel pro hac vice (pre-grant)     submitted by Theodore Bacon, counsel for respondent on behalf of Noah Levine.
10/07/2013 Request for depublication filed (another request pending) Pub/Depublication Requestor: Deutsche Bank National Trust Company     Bernard Garbutt, III
10/11/2013 Response in support of depublication request filed     by California Bankers Association and Wells Fargo Bank, N.A.

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Murder of Crows: Wells Fargo and California Bankers Association Attempt to Depublsh Glaski v. Bank of America

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Glaski v. Bank of America, N.A.
Case Number F064556


10/11/2013 Received copy of     Letter to Supreme Court dated 10/10/13 from atty Little obo Inline image 1 and Inline image 2, N.A Requesting to depublish opinion (JAA)

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Wednesday, October 9, 2013

California Rules for Requesting Depublication of Published Opinions

2013 California Rules of Court

Rule 8.1125. Requesting depublication of published opinions
(a) Request
(1)Any person may request the Supreme Court to order that an opinion certified for publication not be published.
(2)The request must not be made as part of a petition for review, but by a separate letter to the Supreme Court not exceeding 10 pages.
(3)The request must concisely state the person's interest and the reason why the opinion should not be published.
(4)The request must be delivered to the Supreme Court within 30 days after the decision is final in the Court of Appeal.
(5)The request must be served on the rendering court and all parties.
(b) Response
(1)Within 10 days after the Supreme Court receives a request under (a), the rendering court or any person may submit a response supporting or opposing the request. A response submitted by anyone other than the rendering court must state the person's interest.
(2)A response must not exceed 10 pages and must be served on the rendering court, all parties, and any person who requested depublication.
(c) Action by Supreme Court
(1)The Supreme Court may order the opinion depublished or deny the request. It must send notice of its action to the rendering court, all parties, and any person who requested depublication.
(2)The Supreme Court may order an opinion depublished on its own motion, notifying the rendering court of its action.
(d) Effect of Supreme Court order to depublish
A Supreme Court order to depublish is not an expression of the court's opinion of the correctness of the result of the decision or of any law stated in the opinion.
Rule 8.1125 renumbered effective January 1, 2007; repealed and adopted as rule 979 effective January 1, 2005.

SPECIAL REPORT ON CALIFORNIA APPELLATE JUSTICE: Depublication Deflating: The California Supreme Court's Wonderful Law-Making Machine Begins to Self-Destruct

SPECIAL REPORT ON CALIFORNIA APPELLATE JUSTICE: Depublication Deflating: The California Supreme Court's Wonderful Law-Making Machine Begins to Self-Destruct

Tuesday, October 8, 2013

VICTORY OVER CHASE: CHASE'S LETTER TO DEPUBLISH THE COURT'S DECISION -...

VICTORY OVER CHASE: CHASE'S LETTER TO DEPUBLISH THE COURT'S DECISION -...: October 4, 2013 Chief Justice Tani G, Cantil-Sakauye and the Associate Justices Supreme Court of California 350 McAllister Street San ...

CHASE'S LETTER TO DEPUBLISH THE COURT'S DECISION -- GLASKI v BANK OF AMERICA

October 4, 2013

Chief Justice Tani G, Cantil-Sakauye
and the Associate Justices
Supreme Court of California
350 McAllister Street
San Francisco, California 94102-4797

Re: Request for Depublication

Glaski v. Bank of America, N.A., et at.,

California Court of Appeal, Fifth Appellate District
Case No. F064556

To: The Honorable Chief Justice and Associate Justices of the California Supreme Court

JPMorgan Chase Bank, N.A, as successor by merger to Chase Home Finance, LLC; JPMorgan
Chase Bank, N.A.; and California Reconveyance Company, Defendants-Respondents in the
above-mentioned appeal (together, "Respondents"), respectfully request that this Court depublish
the opinion of the Fifth District Court of Appeal in Glaski v, Bank ofAmerica, NA" et aI., No,
F064556, issued July 31,2013 and certified for publication on August 8, 2013 (the "Opinion"),
This request is made pursuant to Rule 8,1125 of the California Rules of Court,

INTRODUCTION

Respondents' interest in this appeal derives not only from the present case, but also from the
broad disruptive impact that the Court of Appeal's published ruling will have on nonjudicial
foreclosures in this State, California Civil Code §§ 2924 et seq, furnishes an "exhaustive" and
"comprehensive framework for the regulation of a nonjudicial foreclosure sale pursuant to a
power of sale contained in a deed of trust," such that courts should not "read any additional
requirements into the nonjudicial foreclosure statute." Gomes v, Countrywide Home Loans, Inc"
121 Cal. Rptr. 3d 819, 823-824 (Cl. App. 2011), Nevertheless, the Court of Appeal has done just
that, upending a previously consistent string of appellate decisions in the process, The Court of
Appeal held for the first time that a plaintiff has standing to challenge the nonjudicial foreclosure
on an undisputedly defaulted mortgage, based on an alleged breach of a loan securitization
agreement to which a plaintiff was neither a party nor an intended third-party beneficiary-and
which in no way relates to his payment obligations or to Respondents' authority to foreclose,

Page 2

The Court's decision threatens to unsettle thousands of completed and ongoing foreclosures
carried out lawfully under the State's statutory nonjudicial foreclosure regime. More to the
point, the Court's ruling thwarts the California legislature's clear purpose in enacting California
Civil Code §§ 2924 et seq. By conferring on defaulted borrowers a basis for challenging a
nonjudicial foreclosure, the Court's opinion has the effect of converting a streamlined, efficient
and comprehensive nonjudicial process into full-blown judicial foreclosure. Indeed, the effects
of the decision already are being seen, in the short time since the opinion was published, in both
newly filed complaints and existing cases in the California courts-where the Court of Appeal's
published opinion is now precedent. The Court's unwarranted broadening of standing law may
well have unfortunate repercussions in other contract cases as well.

THE COURT OF APPEAL'S DECISION

Ruling on grounds that were neither raised in the trial court (and which the trial court thus had no
occasion to address), nor briefed by the parties on appeal, the Court of Appeal held that
petitioner Thomas A. Glaski ("Glaski") had standing to maintain a wrongful-foreclosure action
based on allegations related to a loan securitization agreement to which he is a complete stranger.
Specifically, the Court of Appeal found standing based on Glaski's allegation that the assignment
of his mortgage to a securitization trust allegedly occurred after the trust closing date set forth in
the Pooling & Servicing Agreement ("PSA"). Relying on New York law, even though the PSA
that Glaski invoked states that Delaware law governs, the Court found that a belated assignment
to the trust would be void. The Court then held that California law recognizes a borrower's
standing to challenge an assignment that is void rather than voidable. The Court appeared to
believe that there was no California case law on point (Slip. Op. 17), and accordingly relied on
four non-California cases, all of which held that the borrower had, on similar allegations, failed
to state a claim for wrongful foreclosure (id.).

The Court of Appeal did not originally certify its opinion for publication. Glaski petitioned the
Court to publish the opinion, arguing that the standing rule announced by the Court "is a first
under California law." Antognini Aug. 2, 2013 Ltr. 2. The Court of Appeal then ordered the
opinion published on August 8, 2013. Respondents petitioned for rehearing; the Court of Appeal
denied that petition by order dated August 29, 2013.

REASONS FOR DEPUBLICATION

I.
The Court of Appeal's Decision Threatens to Severely Disrupt California's
Nonjudicial Foreclosure Regime, and to Generate a Flood of Meritless Litigation
Before the Court of Appeal, Glaski emphasized that "public policy" counseled in favor of
publishing the opinion because of the high number of mortgages assigned to securitization trusts,

Page 3

and the need for courts to ensure that lenders "do proper loan assignments." Antognini Aug. 2,
2013 Ltr. 4. In fact, the public policy concerns weigh in exactly the opposite direction, and
warrant depublication of the Court's opinion.

California Civil Code section 2924 establishes a "comprehensive statutory framework .., to
govern nonjudicial foreclosure sales [that] is intended to be exhaustive." Moeller v. Lien, 30 CaL
Rptr. 2d 777, 785 (Ct. App. 1994). 'The purposes of this comprehensive scheme are threefold:

(1) to provide the creditor/beneficiary with a quick, inexpensive and efficient remedy against a
defaulting debtor/trustor; (2) to protect the debtor/trustor from Wrongful loss of the property; and
(3) to ensure that a properly conducted sale is final between the parties and conclusive as to a
bona fide purchaser." Id at 782. Section 2924 permits "[t]he trustee, mortgagee, or beneficiary,
or any of their authorized agents"-for example, the loan servicer-to foreclose. Cal. Civil
Code § 2924(a)(I); see also id. § 2924b(b )(4) ("person authorized to record the notice of default
or the notice of sale" includes "an agent for the mortgagee or beneficiary, an agent of the named
trustee, any person designated in an executed substitution of trustee, or an agent of that
substituted trustee"). The statute does not require a foreclosing party to "produce the promissory
note or otherwise prove it holds the note" to non-judicially foreclose. Jenkins v. JP Morgan
Chase Bank, N.A., 156 Cal. Rptr. 3d 912, 925 eCI. App. 2013). Nor does it require a foreclosing
party to establish a chain of ownership in order to nonjudicially foreclose. DenniS v. Wachovia
Bank, FSB, 2011 WL 181373, *7-8 (N.D. Cal.Jan. 19,2011). That is because requiring a
foreclosing party to establish its interest in the note "would fundamentally undermine the
nonjudicial nature of the process[.]" Gomes, 121 Cal. Rptr. 3d at 824. "Because of the
exhaustive nature oft his scheme, California appellate courts have refused to read any additional
requirements into the nonjudicial foreclosure statute." Id. at 823-824.
The Court of Appeal's published ruling threatens to upend the settled law and expectations in
this area of California law. If followed by the lower courts, the now-published Glas/d decision
will allow borrowers-in circUMstances where there is no dispute among any assignor or
assignee o fthe note-to preclude mortgagees, trustees, or mortgage servicers who are statutorily
authorized to nonjudicially foreclose from doing so, on mortgages that are indisputably in default
(and which the mortgagor does not allege he can satisfy). That is plainly inconsistent with the
California statutory provisions governing the nonjudicial foreclosure process, none of which
"suggests that such a judicial proceeding is permitted or contemplated." Gomes, 121 Cal. Rptr.
3d at 824.

What is more, if followed by the lower courts, Glaski will permit borrowers to bring wrongful foreclosure claims that do nothing to further the foreclosure statute's purpose of"protect[ing] the
debtor/trustor from wrongful loss of the property," Moeller, 30 Cal. Rptr. 2d at 782 (emphasis
added), because the allegedly late assignment of a borrower's mortgage to a trust has nothing to
do with whether a borrower is in default or whether the foreclosing entity authorized by statute to

Page 4

foreclose in fact has that authority. See, e.g., Siliga v. Mortgage Elec. Registration Sys., Inc.,
161 Cal. Rptr. 3d 500, 508 (Ct. App. 2013) ("The assignment of the deed of trust and the note
did not change [plaintiffs'] obligations under the note, and there is no reason to believe that ...
the original lender would have refrained from foreclosure in these circumstances."). Such a fact finding detour is particularly unwarranted where the borrower knows from which entity he has
been receiving monthly statements and notices. See Jenkins, 156 Cal. Rptr. 3d at 926-927
(servicer has standing to foreclose).

There are tens of thousands of California mortgages that have been lawfully assigned to
securitization trusts, absent any objections by the actual parties to those agreements, and the
California nonjudicial foreclosure statute expressly permits several entities involved with the
mortgage to foreclose when a borrower defaults-as undisputedly occurred here. If the lower
courts follow Glaski, borrowers will flood the State's trial courts (and, eventually, its courts of
appeal) with wrongful-foreclosure lawsuits challenging their foreclosures based on allegations
about the assignments of their mortgages to securitization trusts or any number of other alleged
defects relating to an entity's authority to foreclose. They will do so regardless ofwhether they
are in default (as Glaski undisputedly was), and regardless of whether they intend to, or are able
to, make the required payments on their mortgage (as Glaski undisputedly was not). Indeed, the
flood already has commenced, with increasing numbers of Glaski-like complaints being filed
since the date the Court of Appeal's decision was published. The legislature enacted the
nonjudicial foreclosure statute precisely to avoid this sort of burden on the state's court system
and to avoid races to the courthouse in circumstances of foreclosure, especially where there was
no legitimate cause to stop or unwind a proper foreclosure. Because the Court of Appeal's
decision threatens to undermine the legislature's careful balancing of borrower and lender
interests, and to deluge the courts with meritless wrongful-foreclosure actions, this Court should
depublish the opinion.

II. The Court of Appeal's Unprecedented Application Of California Standing Law
As Glaski recognizes, the Court of Appeal's decision is the "first under California law" to hold
that a borrower has standing to challenge an entity's authority to foreclose based on assignment
of his mortgage into a securitization trust in alleged violation of the trust's PSA. Antognini Aug.
2,2013 Ltr. 2. The Court's novel ruling as to California law departs from a "judicial consensus
[that] has developed holding that a borrower lacks standing to (I) challenge the validity of a
mortgage securitization or (2) request a judicial determination that a loan assignment is invalid
due to noncompliance with a pooling and servicing agreement, when the borrower is neither a
party to nor a third party beneficiary of the securitization agreement." In re Walker, 466 B.R.
271,285 (E.D. Pa. 2012) (emphasis added). Thus, in an area where the decisional law has
induced long settled expectations, Glask; (if it remains published) threatens to inject substantial
uncertainty into the foreclosure arena.

Page 5

There is no justification for allowing that uncertainty to be sowed, or to permit a proliferation of
new, meritless challenges to foreclosure, as the Glaski Court's decision is contrary to
foundational principles of California common law. California courts adhere to the well established
rule that "someone who is not a party to a contract has no standing to enforce the
contract" except "where the contract is made expressly for that person's benefit." 14A Cal. Jur.
3d Contracts § 310; see, e.g, Rodriguez v. 010, 151 Cal. Rptr. 3d 667,673 (Ct. App. 2013). The
Court of Appeal did not discuss this well-established rule of California common law, instead
basing its holding on a negative inference in a California Jurisprudence citation stating only that,
as to assignments, a borrower cannot challenge a voidable assignment. From this statement the
Court of Appeal arrived at the conclusion that a borrower could challenge an allegedly void
assignment. See Slip Op. 18 (citing 7 Cal. Jur. 3d Assignments § 43). Whatever California
Jurisprudence says about standing to challenge a voidable assignment, it does not suggest that a
borrower could challenge a void assignment, nor do any of the cases it cites.

Instead, California courts (both state and federal) have repeatedly invoked the principle that only
intended third-party beneficiaries can sue to challenge a breach by a party to the contract, and
therefore have repeatedly held that borrowers like Olaski may not pursue wrongful foreclosure
claims premised on a breach of a PSA because borrowers are not parties to these agreements and
the agreements are not made expressly for the borrowers' benefit. See, e.g, Jenkins, 156 Cal.
Rptr. 3d at 927 ("As an unrelated third party to the alleged securitization ... Jenkins lacks
standing to enforce any agreements, including the investment trust's pooling and servicing
agreement, relating to such transactions."); Sami v. Wells Fargo Bank, 2012 U.S. Dist. LEXIS
38466, at *15 (N.D. Cal. Mar, 21, 2012) (,,[T]he court finds that she lacks standing to do so
because she is neither a party to, nor a third party beneficiary of, [the PSA]."). These courts have
done so notwithstanding the fact that a borrower alleged that the defect in the assignment
rendered it "void," see, e.g., Almutarreb v. Bank olN. Y Trust Co., 2012 WL 4371410, at *2 n.l

(N.D. Cal. Sept. 24, 2012), and they have done so where the alleged voidness sprung from the
fact that the mortgage was transferred to the trust after the closing date of the trust, see, e.g,
Jenkins, 156 Cal. Rptr. 3d at 923-924; Sabherwal v. Bank olN. y. Mellon, 2013 WL 101407, at
*7 (S.D. Cal. Jan. 8, 2013).

The super-majority rule-that a borrower cannot base a challenge on an assignment contract if
the borrower is not a third-party beneficiary of the assignment contract-is correct and conforms
to the purposes of the nonjudicial foreclosure process. Because Glaski undermines that
consensus, and threatens settled expectations, the decision ought to be depublished.

3692020.1--ALl09WB37


/8JALVARADOSMITH

Chief Justice Tani G. Cantil-Sakauye

and the Associate Justices
Supreme Court of California
October 4, 2013
Page 6

III. The Court Of Appeal's Unnecessary and Questionable Application of New York
Trust Law

A final reason for depublication is that the Court of Appeal reached its holding only because of
an unnecessary detour into and conclusion about New York trust law. The detour was
unnecessary because the trust agreement in this case states that it is governed by Delaware law.
Glaski's allegation that the Trust is governed by New York law contradicts the publicly filed
document that he invoked in his complaint and that the Court of Appeal relied upon in its
opinion. The PSA states explicitly that the Trust is a Delaware Statutory Trust, organized under
the Delaware Statutory Trusts Statute, 12 Del. Code Ann. §§ 3801 et seq., and governed by
Delaware law. See, e.g., PSA § 10.05 (governing law). There is no provision of the Delaware
statute, however, that would render an allegedly belated assignment to a trust void. Indeed, more
generally, Delaware courts reject the proposition that borrowers may challenge the allegedly
improper assignment oftheir mortgage. See, e.g., Branch Banking & Trust Co. v. Eid, 2013 WL
3353846, at *4 (Del. Super. Ct. June 13,2013) ("[AJ debtor is not a party to a mortgage
assignment, is not a third party beneficiary to the assignment and cannot show legal harm as a
result of the assignment. As such, the debtor has no legally cognizable interest in an assignment
and therefore is not in a position to complain about it. Thus, it is not plaintiff who lacks standing
to sue, but defendants who lack standing to contest the assignment.").

Accordingly, had the Court of Appeal limited its decision to only the law that actually governs
the trust agreement in this case, there would have been no need for the Court ever to opine on the
question whether California law ought to provide for a previously-unheard-of exception for void
(as opposed to voidable) assignments. Moreover, trial courts following Glaski will be put in the
awkward position of reaching disparate results in nonjudicial foreclosure cases based on their
interpretation of the foreign law under which a given securitized loan trust was formed. That is
hardly consistent with the purpose behind California Civil Code § 2924: to enact an exhaustive,
streamlined, and efficient nonjudicial foreclosure regime.

Having determined to venture into inapplicable New York law, the Court of Appeal compounded
the precedential problems with its now-published decision by declining to follow the majority of
courts that have construed New York trust law. See Bank of Am., Nat'! Assocs. v. Bassman FBT,
LLC, 981 N.E.2d 1, 8-9 (Ill. App. Ct. 2012) (collecting and discussing New York appellate
cases applying New York trust law and following cases that treat ultra vires acts as voidable
rather than void); see also Deutsche Bank Nat 'I Trust Co. v. Stefiej, 2013 WL 1103903, at *3-4

(N.D. Ill. Mar. 15,2013) ("After reviewing the pertinent New York authority on section 7-2.4,
this Court agrees with the analysis in Bassman and holds that section 7-2.4 only makes an act by
the trustee in contravention to the irust instrument voidable, not void."). Depublication is thus
also appropriate to avoid an unnecessary conflict with the New York appellate courts on an issue
ofNew York law. See Simmons v. Superior Ct. in &for L.A. County, 214 P.2d 844,852 (Cal.
3692020.1--ALI09.W837

Page 7

Dist. Ct. App. 1950) ("unseemly controversy between courts of different states should be
frowned upon and avoided ifpossible").

For the foregoing reasons, Respondents respectfully request that this Court depublish the
decision of the California Court of Appeal.

Respectfully,

ALVARADOSMITH
A Professional Corporation

Mikel Glavinovich

WILMER CUTLER PICKERING
HALE AND DORR LLP
Noah Levine [Pro Hac Vice pending]
7 World Trade Center
250 Greenwich Street
New York, New York 10007

Attorneys for Defendants and Respondents
JPMorgan Chase Bank, N.A. as successor by
merger to Chase Home Finance, LLC;
JPMorgan Chase Bank, N.A.; and California
Reconveyance Company

MG:je

3692020.1··ALl09W837