Two years ago, the Nation’s five largest loan servicers admitted to using “robosigning” practices in pushing foreclosures through the court system in their rush to foreclose. Those servicers, Bank of America, JP Morgan Chase, Citibank, Wells Fargo and GMAC (now out of the servicing business), fessed up to their indiscretions by agreeing to pay $25 Billion in mortgage relief to homeowners victimized by their fraudulent practices. Robosigning entered the poplar lexicon of terms when it was discovered that the Wall Street Banks regularly manufactured false and fraudulent documents in foreclosure cases. These documents, necessary to establish the banks’ right to foreclose, were lost or destroyed in the loan securitization process occurring in the first eight years of this Century. Private loan securitization, a process which allowed the Wall Street Banks to bundle thousands of mortgage loans into a pool or trust, typically consisting of $1 Billion, and sell those stock certificates in the trust for $10-20 Billion, was legalized only in 1999. Because of the enormous profits to be made, the paperwork process became contaminated, to the extent that in most foreclosure cases contain fraudulent documents.
Enter U.S. Bank, a major player in the loan securitization process, into Rick’s case. Consider the facts; Rick signed his $100,000 mortgage note in 1999 in favor of Option One Mortgage Corporation. At some undetermined date after that, the Note was indorsed in blank, converting it into bearer paper, by JP Mortgage Chase. There is no explanation how Chase had the authority to negotiate the Note on behalf of Option One. To add further intrigue, Option One, under very suspicious circumstances, purportedly assigned the Mortgage to an outfit called WM Specialty Mortgage in 2005. Then in an unbelievably convoluted series of transactions, WM changed its name to JPMC Specialty Mortgage. Next, JP Morgan Chase, as Attorney-in-Fact for WM Specialty Mortgage, assigned the Mortgage from WM to JP Morgan Chase. Not surprisingly, there is no recorded Power of Attorney to evidence that WM ever granted Chase the authority to sign its name to this Assignment. To complete the circle, Chase then assigned the Mortgage to U.S. Bank, the party suing Jack for foreclosure.
This is one of the most flagrant cases of robosigned documents we’ve seen. Both the Note and Mortgage were passed along to U.S. Bank, without any apparent authority, from the loan originator, Option One, by Chase Bank. Many courts might look at the documents attached to the foreclosure complaint and concede U.S. Bank’s authority to foreclose. But the judicial system, like a sleeping giant, is waking up to the pervasive fraud by the likes of U.S. Bank and Chase; questioning these sort of documents. The documents attached to Rick’s foreclosure complaint will not hold water after careful scrutiny. When the leaks become apparent, U.S. Bank will change its aggressive, foreclosure-bent tune. In the meantime, we will press it to substantiate the legitimacy of those documents. Given the obvious fraud involved, we can honestly wish it good luck in its effort. Right now, however, it is not too early to say; “ U.S. Bank, shame on you for joining the robosigning crowd!
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Kate Eyster and Lauren McGookey contributed to this article.
Copyright 2014 Daniel L. McGookey