Monday, April 21, 2014

If WaMu Admits To Destroying The Chain Of Title, How Can Chase Retroactively Correct?


If WaMu Admits To Destroying The Chain Of Title, How Can Chase Retroactively Correct?

A common fact pattern I see when investigating loans that were alleged to have been securitized by Washington Mutual Bank, is that the WaMu entities admit to the investors that the chain of title was
deliberately going to be destroyed, and that the perfection of the trust’s interests in the Notes and Mortgages/Deeds of Trust was not going to occur. Take the following language from the “Washington Mutual Mortgage Pass-Through Certificate Series 2006-AR5 Trust” Prospectus which can be found on the SEC’s website at:  http://www.secinfo.com/dsvRa.v2an.htm#1stPage.


The Bankruptcy or Insolvency of  WMMSC Could Result In Delayed or Reduced Distributions on the Certificates For transactions in   which WMMSC is a mortgage loan seller, investors should consider the   following:

WMMSC sells mortgage loans to the depositor. WMMSC will represent and warrant in the mortgage loan sale agreement that the transfer ofthe mortgage loans to the depositor is an   absolute sale, so that the depositor is the sole owner of each mortgage loan.



Some Interests Could   Have Priority Over the  Trust’s Interest In the Mortgage Loans, Which Could   Cause Delayed or Reduced Distributions on the Certificates For transactions in which WMB fsb holds some or all of the mortgage notes and mortgages as custodian on behalf of the trust,investors should consider the following:
The trustee will not physically possess some or all of the mortgage notes and mortgages related to the  mortgage loans owned by the Trust. Instead, WMB fsb will hold some or all of   the mortgage notes and mortgages as custodian on behalf of the trust. The mortgage
notes and mortgages held by WMB fsb will not be endorsed or otherwise marked to reflect the transfer to the trust, and assignments of the mortgages to the trust will not be prepared or recorded.
As a result, if   a third party were to obtain physical possession of those mortgage notes or   mortgages without actual knowledge of the prior transfer to the trust, the   trust’s interest in those mortgage notes and mortgages could be defeated,   thereby likely resulting in delays or reductions in distributions on the   certificates.
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Assignments of Mortgages to the Trustee
or the Trust Will Not Be Prepared or Recorded
For transactions in   which WMB fsb holds some or
all of the mortgage notes and mortgages as   custodian on behalf of the
trust, investors should consider the following:
With respect
to each mortgage held by WMB fsb as custodian on behalf of the trust, an
assignment of the mortgage transferring the beneficial interest under
the mortgage to the trustee or the trust will not be prepared or
recorded. In addition, an assignment of the mortgage will not be
prepared or recorded in connection   with the sale of the mortgage loan
from the mortgage loan seller to the   depositor.
In many states,
the recording of a separate assignment of the mortgage is not required
to validly   transfer ownership of the mortgage loan. However, at any
time until an   assignment of the mortgage with respect to a mortgage
loan is recorded in the   name of the trustee or the trust in the
appropriate jurisdiction,   (a) the mortgage loan seller, as the
existing mortgagee of record, could   execute another assignment of
mortgage to any party with respect to such   mortgage, which assignment
of mortgage could be recorded prior to any   recording of an assignment
of the mortgage to the trustee or the trust and   which would support an
adverse claim of such other party with respect to the   mortgage loan
and/or result in delay in enforcing the mortgage, (b) the   mortgage
loan seller, as the existing mortgagee of record, could execute and  
deliver to the mortgagor an instrument of discharge and satisfaction
with   respect to the mortgage, which would generally be effective upon
recording to   release the lien of such mortgage loan, (c) the trustee
or the trust may   not have a claim against the mortgagor for payments
made to the mortgage loan   seller, as the existing mortgagee of record,
but instead may be required to   proceed against the mortgage loan
seller to recover the amount of any such   payment made, (d) the trustee
or the trust may not be able, acting   directly in its own name, to
enforce the mortgage against the related   mortgaged property or
mortgagor and may be required to act indirectly through   the mortgage
loan seller, as the existing mortgagee of record, and   (e) the mortgage
loan seller, and not the trustee or the trust, would be   entitled to
receive any notice with respect to any mortgage required to be   given
to the mortgagee of record. The occurrence of any of these could result
in delays or reductions in distributions on the certificates.
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In almost all Washington Mutual securitized trusts, the custodian and
servicer was initially WMB, fsb. Now combine this information with the
WMMSC Servicer Guide snippet as follows:





The documents were allowed to be stored in electronic format,
provided however (Section 2), that “The copies or electronic media are
made by a process that accurately reproduces or forms a durable medium
for reproducing the original.” DID YOU CATCH THAT? How does one
“reproduce an original?”


Okay, so what does this mean? It means that the WaMu securitization
entities admit they did not endorse or mark the notes or execute any
assignments to document the sales transactions. Yet, JPMorgan Chase
shows up in foreclosure proceedings, as servicer for the WaMu trusts,
holding a note with a blank endorsement from a WaMu officer. How could
this happen if, at the time the FDIC seized WaMu, none of the notes that
WaMu was servicing on behalf of the trusts were endorsed? This goes
right along with the storyline of the Wells Fargo’s “Attorney
Foreclosure Procedures Manual” that has recently made the headlines.


Folks, the language in the public SEC filings above is a tacit
admission that the chain of title was deliberately destroyed, and
further evidence that the notes being presented as “originals” are very
likely to be bogus counterfeits with forged endorsements.


Bill Paatalo


Private Investigator – OR PSID# 49411


BP Investigative Agency

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