The Re-REMIC Gimmick at JPMorgan Chase
Ever since the 2008 implosion that was created by the TBTF banks, investors have awakened to the fact that the mortgage bonds in their portfolio are worthless. They are worthless because they were issued by a nonexistent REMIC Trust that has never been activated by the receipt of cash from the sale of those securities.
So the Trusts were unable to fulfill their one basic function — acquisition of high-grade mortgages. Instead the money was used or originate mortgages without the use of the Trust as Real Estate Mortgage Investment Conduit (REMIC). And the mortgages that were originated were mostly fatally flawed in their underwriting and fatally flawed in their execution.
Caught with their giant hands in the largest cookie jar ever imagined, the banks negotiated with investors who still don’t want to tell their pensioners or investors that there isn’t enough money in the fund to pay for the retirement benefits that were promised. In some cases they offered cash payouts, but those were limited to a mere fraction of the money that was taken by the banks in the false securitization scheme.
So by late 2008, the standard operating procedure was to offer the investors a replacement for their worthless mortgage backed securities. The process is called “RE-REMIC.” The banks create new proprietary entities (REMIC Trusts on paper) that issue new mortgage bonds. The investors give up their claims to the worthless mortgage backed securities. SO the investors in the original REMIC are no longer investors in that REMIC. They are investors in a new REMIC. Both the old REMIC and the new REMIC are fictional entities that are proprietary to the investment bank that created the illusion of their existence.
The legal question is the status of the mortgages that were allegedly purchased by the old REMIC. There is no evidence in any RE-REMIC deal that there was even the pretense of transferring those over to the new REMIC. But there is also zero evidence that any REMIC, old or new, has actually entered into a purchase transaction where it paid any amount of money for any pool of mortgage loans. The absence of a cash payment from investors in the Second REMIC (RE-REMIC) process is corroboration that they were finally (perhaps) getting the benefit of the bargain they were supposed to get in the first REMIC.
And THAT is corroboration that the first REMIC was never funded and explains why the first REMIC never had a bank account or even any financial statement, because there was nothing to put on the financial statement — there was no business — even for the 90 days in which the REMIC could have acquired mortgage loans, if only they had the money.
This leaves borrowers with a trial narrative that sounds like a fairy tale but is nonetheless true. The trust never made any purchase of any of loans not because it didn’t want to but because it was never intended to make that purchase. THAT is why the exhibit with the mortgage loan schedule (MLS) is missing on virtually all Pooling and Servicing Agreements. Like the magical assignments, endorsements and powers of attorney that pop up shortly before trial, the mortgage loan schedule is not created until long after the so-called REMIC Trust was partially created on paper.
To make matters worse, the RE-REMIC process leaves the playing field with no trust, no investors and no creditor. And the really odd thing about this, as if it was not odd enough already, is that it leaves the homeowner battling ghosts who frankly don’t care what happens in their foreclosure — except for the investment bank who appointed itself “Master Servicer” and then “recovered” money from liquidation of the property to satisfy its false claim that it had paid the investors “servicer advances” which actually came from a dark pool consisting entirely of money from the same investors, along with thousands of others,
So the real basis for foreclosure is that the investment bank, masquerading as the “Master Servicer” wants to get its hands on money that should actually go back to the investors. The continuing foreclosures are actually the investment bank leveraging the fact that there is no real party in interest in the foreclosure because there was no loan contract at origination — since the origination of the loans was accomplished through the use of funds that were due to the REMIC but never made it there.
Perhaps this might help explain why the Trustees don’t know or care anything about the outcome of the foreclosure process. The Trustees simply have nothing to do. And it explains why every modification or settlement is done in the name of a subservicer working for the Master servicer with no signature from anyone representing the REMIC Trustee or the REMIC Trust.
The article below demonstrates a JPMorgan RE-REMIC:
JPMorgan is dipping into its toolbox for a type of financial engineering rarely seen these days: “re-REMIC,” or a securitization of real estate mortgage investment conduits.
The $485 million JPMCC 2016-FLRR is a securitization of the senior notes issued in other recent commercial mortgage securitizations: JPMCC 2016-FL8 and JPMCC 2016-H2FL.
In the aftermath of the financial crisis, re-REMICs were used to make soured securities look better, allowing the banks and insurers that held them to achieve better capital treatment.
Mortgage bonds that had been sharply downgraded were bundled into collateral for new bonds that were tranched according to their payment priority. Those bonds first in line to receive cash from the underlying collateral received investment grade credit ratings.
This transaction is also achieving a rating uplift. They were rated BBB- (the lowest investment grade rating) by Standard & Poor’s at issuance in March, but KBRA expects to assign an AAA rating to the senior tranche of the re-REMIC. It is not rating the four subordinate tranches.
The JPMCC 2016-FL8 class A certificates have a stated annual coupon of one-month Libor plus 222 basis points and the JPMCC 2016-H2FL class A certificates have a stated annual coupon of Libor plus 210 basis points. Each of these classes of securities, in turn, are backed by five first-lien commercial mortgages that are also index to Libor.
All of the underlying loans were originated between November 2014 and December 2015 and were structured with an initial loan term of two years with three 12-month extension options.
The 36 underlying properties are located in 11 states with four state exposures that each exceeds 10% of the resecuritization trust balance: Texas (22.4%), Virginia (14.1%), California (12.8%) and Massachusetts (10.9%). The underlying loan pool has exposure to four property types: office (43.8%), lodging (34.5%), retail (13.5%) and industrial (8.2%).
Filed under: foreclosure |
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
Case No.: 09-CV-1656-RMC
Hon. Rosemary M. Collyer
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee for the Trusts listed in Exhibits 1-A and 1-B,
Plaintiff,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION,
as receiver for Washington Mutual Bank; JPMORGAN
CHASE BANK, National Association; and
WASHINGTON MUTUAL MORTGAGE
SECURITIES CORPORATION,
Defendants.
JURY TRIAL DEMANDED
AMENDED COMPLAINT
Plaintiff Deutsche Bank National Trust Company, as trustee for the Trusts listed in
Exhibits 1-A and 1-B (“DBNTC” or the “Trustee”), for its Amended Complaint (“Complaint”)
against the Federal Deposit Insurance Corporation, as receiver for Washington Mutual Bank;
JPMorgan Chase Bank, National Association; and Washington Mutual Mortgage Securities
Corporation (collectively the “Defendants”), upon information and belief, alleges as follows:
PARTIES
1. DBNTC is a national banking association organized under the laws of the United
States of America to carry on the business of a limited purpose trust company. DBNTC’s main
office and principal place of business is located at 300 South Grand Avenue, Suite 3950, Los
Angeles, California 90071, and the principal site of its trust administration is located at 1761
East St. Andrew Place, Santa Ana, California 97025.
2. DBNTC serves as trustee and in various other related capacities for 99 trusts (the
“Primary Trusts”) created, sponsored, and/or serviced by Washington Mutual Bank, its
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subsidiaries, their predecessors-in-interest and their affiliates, including Washington Mutual
Mortgage Securities Corporation (“WMB”). See Exhibit 1-A. The Primary Trusts provide for
the issuance of residential mortgage-backed securities and certain other mortgage-related
securities. The Primary Trusts currently hold, as trust assets or collateral, mortgage loans
originated or acquired by WMB and sold into the Primary Trusts.
3. DBNTC also serves as indenture trustee or in other capacities for 28 secondary
trusts or entities through which WMB issued mortgage-backed or derivative securities whose
performance is dependent, in whole or in part, on the performance of the Primary Trusts or of
other residential mortgage-backed securities issued by WMB (the “Secondary Trusts”). See
Exhibit 1-B. The Secondary Trusts are express or implied third-party beneficiaries of the
Primary Trusts and, as such, have standing to enforce the terms and conditions thereof. See, e.g.,
Pooling and Servicing Agreement for Long Beach Mortgage Loan Trust, Series 2005-3, passim
(Issue ID No. LB0503) (voting, consent, payment and other rights of NIM Insurer, Other NIM
Notes and Holders of Class C and Class P Certificates); Indenture Agreement for Long Beach
Asset Holding Corp. CI 2005-03 (Issue ID No. LB05N5) (Granting Clause conveying LB2005-3
Class C and Class P “Underlying Certificates” as Trust Estate; § 1.01, definition of “Underlying
Agreement” and “Underlying Certificates”; Article 6, “Administration of the Trust Estate”; §
9.11, “Certain Representations Regarding the Trust Estate”). The Primary Trusts, and the
Secondary Trusts, as appropriate, are referred to herein collectively as the “Trusts.”
4. The Primary Trusts’ original principal balance outstanding was approximately
$165 billion. As of September 25, 2008, the Primary Trusts’ current principal balance
outstanding was approximately $45 billion. As of September 2, 2010, the Primary Trusts’
current principal balance outstanding was approximately $34 billion.
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5. The Trustee brings this action on behalf of the Trusts and the investors in the
Trusts.
6. The Trusts are “express trusts” created by written instruments manifesting the
express intention to create a trust and setting forth the subject, purpose and beneficiaries of the
Trusts. The Trustee therefore brings this action pursuant to Federal Rule of Civil Procedure
17(a)(1)(E) as the trustee of an express trust for the benefit of the Trusts and the investors in the
Trusts.
7. The Federal Deposit Insurance Corporation (“FDIC”) is an independent agency of
the United States created by the Federal Deposit Insurance Act (the “FDI Act”), 12 U.S.C. §
1811 et seq., and related laws and regulations. The FDIC acts, from time-to-time and among
other things, as a receiver for and/or conservator of banking institutions. The Trustee brings this
action against the FDIC solely in its capacity as receiver for WMB.
8. JPMorgan Chase Bank, National Association (collectively, with its affiliates,
including but not limited to Washington Mutual Mortgage Securities Corporation, “JPMC”) is a
national banking association under the provisions of federal law, pursuant to the National Bank
Act, 12 U.S.C. § 21 et seq., with its principal place of business in Columbus, Ohio. JPMC
maintains an office at 800 Connecticut Avenue NW, Washington, DC 20006. JPMC is a whollyowned
subsidiary of JPMorgan Chase & Co., a corporation organized under the laws of the state
of Delaware.
9. Washington Mutual Mortgage Securities Corporation (“WMMSC”) is a Delaware
corporation. WMMSC was a wholly-owned subsidiary of WMB, and is currently a whollyowned
subsidiary of JPMC.
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10. WMB was the United States’ largest savings and loan association with total assets
of over $300 billion as of June 30, 2008. On September 25, 2008, the Director of the Office of
Thrift Supervision (“OTS”), by Order Number 2008-36, shut down WMB and appointed the
FDIC as receiver for WMB.
11. On September 25, 2008, JPMC entered into a Purchase and Assumption
Agreement dated as of the same day (the “PAA”) with the FDIC, under which JPMC agreed to
purchase substantially all of WMB’s assets and assume substantially all of its liabilities
(including WMMSC). The PAA was facilitated by the FDIC and the FDIC was a party to the
PAA in both its corporate capacity and as receiver for WMB. The PAA is incorporated herein
by reference and attached hereto as Exhibit 2.
12. In connection with JPMC’s purchase of WMB, JPMC conducted a due diligence
review of WMB, including a review of WMB’s loan tapes and data and discussions with WMB
employees.
13. The Trustee originally brought this action against the FDIC, as receiver for WMB.
The FDIC now asserts that all of the liabilities with respect to the claims asserted by the Trustee
on behalf of the Trusts have been assumed by JPMC. JPMC denies that it has assumed these
liabilities. The Trustee thus brings this action against WMB and its successors or successors-ininterest,
whoever they are adjudicated to be (collectively, “WaMu”).
THE PROOF OF CLAIM AND ORIGINAL COMPLAINT
14. On December 30, 2008, the Trustee timely filed with the FDIC a Proof of Claim
on behalf of the Trusts and the Trustee pursuant to 12 U.S.C. § 1821(d). The Proof of Claim,
which is incorporated herein by reference and attached hereto as Exhibit 3, sets forth various
claims against the FDIC relating to the Trusts.
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15. Pursuant to 12 U.S.C. § 1821(d)(5)(A)(i), the FDIC should have determined
whether to allow or disallow the Trustee’s Proof of Claim within 180 days of December 30,
2008.
16. Pursuant to 12 U.S.C. § 1821(d)(5)(A)(iv), the FDIC was further required to give
the Trustee notice of disallowance of its claims, which notice was required to contain “a
statement of each reason for the disallowance” and “the procedures available for obtaining
agency review of the determination to disallow the claim or judicial determination of the claim.”
17. The FDIC failed to respond to the Proof of Claim and failed to issue any notice of
disallowance to the Trustee.
18. Pursuant to 12 U.S.C. § 1821(d)(6)(A)(i), the FDIC’s failure to respond timely to
the Proof of Claim triggered the Trustee’s right to “file suit on such claim in the district or
territorial court of the United States for the district within which the depository institution’s
principal place of business is located or the United States District Court for the District of
Columbia (and such court shall have jurisdiction to hear such claim)” within 60 days thereafter.
19. On August 26, 2009, the Trustee timely filed this action against the FDIC as
receiver for WMB.
JURISDICTION AND VENUE
20. This action arises under the FDI Act, 12 U.S.C. § 1811 et seq., as amended. The
claims raised herein include, without limitation, an appeal from the FDIC’s rejection, pursuant to
12 U.S.C. § 1821(d)(6), of the Proof of Claim by virtue of the FDIC’s failure to respond to the
Proof of Claim. The statutorily-prescribed proper forum for jurisdiction and venue for such an
appeal expressly includes the United States District Court for the District of Columbia. 12
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U.S.C. § 1821(d)(6). This Court has jurisdiction over the subject matter of this action pursuant
to 12 U.S.C. §§ 1819(b)(2)(A), 1821(d)(6) and 28 U.S.C. § 1331.
21. The FDIC takes the position in its motion to dismiss the initial complaint (docket
entry 20) that, pursuant to the PAA, the FDIC transferred to JPMC, and JPMC expressly agreed
to assume, all of WaMu’s “Trust-related” liabilities and obligations, including “liability for all
Trust-related claims” asserted in this action by the Trustee. The PAA was entered into pursuant
to and in furtherance of the federal statutory provisions governing the FDIC’s administration of
the receivership of WMB. Determination of the relative rights and responsibilities of the FDIC
and JPMC under the PAA is therefore a federal question pursuant to 12 U.S.C. §§ 1819(b)(2)(A),
1821(d)(6) and 28 U.S.C. § 1331.
22. This Court also has jurisdiction over the subject matter of this action pursuant to
28 U.S.C. § 1332.
23. This Court also has jurisdiction over the state law claims in this action pursuant to
28 U.S.C. § 1367.
24. Venue is proper in this Court pursuant to 12 U.S.C. § 1821(d)(6) and 28 U.S.C.
§ 1391(e).
BACKGROUND
A. The Trusts
25. WaMu sponsored and/or otherwise participated in the issuance of mortgagebacked
securities pursuant to which WaMu sold investors interests in residential mortgage loans
originated by WaMu or by third party loan originators from whom WaMu had acquired loans.
These securities are commonly referred to as “Residential Mortgage-Backed Securities” or
“RMBS.”
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26. Many RMBS, including most of the securities issued by the Trusts, are
established under a provision of the Tax Code allowing for the creation of a Real Estate
Mortgage Investment Conduit (a “REMIC”), which allows the issuance of multiple classes of
securities in trust certificate form, with monthly payments and no residual equity, that are treated
as debt for tax purposes (plus an equity-like class called the “residual interest”). See Internal
Revenue Code §§ 860A-860G.
27. Securitization is a common financing tool used to pool and convert financial
assets such as residential mortgages into financial instruments that can be sold in the capital
markets. Between 2000 and 2007, WaMu securitized approximately $77 billion in principal
amount of subprime home mortgage loans.
28. Although the exact structures of RMBS transactions are varied and can be fairly
complex, the structure of the Primary Trusts, as well as most RMBS transactions, involves the
following parties:
a. Depositor and Seller: The depositor is the entity that acquires the pool of
mortgage loans and deposits the loans in a trust formed by the depositor pursuant to the
governing documents for the transaction. The depositor assigns the legal and beneficial
interest in the mortgage loans, including related collateral, to the trust. In many RMBS
transactions, the depositor purchases the mortgage loans from another entity, referred to
as the seller, and deposits the pool of loans into the trust. As set forth in Exhibit 1-A,
with respect to the Primary Trusts, WaMu served as the Depositor and/or Seller for 97 of
the 99 Primary Trusts. Through a series of assignments and other agreements, WaMu
indirectly undertook responsibilities substantially similar to those of a Depositor or Seller
for the remaining two Primary Trusts. See Exhibit 1-A, n.1.
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b. The Trust: The trust purchases the mortgage loans from the depositor
and issues RMBS, which represent specific interests in and entitlements to the cash flows
derived from the trust’s assets (i.e., the mortgage loans). The governing documents
forming the trust typically appoint an independent trustee and specify the trustee’s rights,
responsibilities and powers in respect of the RMBS transaction.
c. Investors: By purchasing RMBS, investors acquire the right to receive
monies from the cash flows of the underlying mortgage loans held as trust assets or
collateral by the trust (in the form of borrower payments of principal and interest and
proceeds from the liquidation of loan collateral). Those cash flows are applied to
payment of the RMBS pursuant to a contractually specified distribution plan and
schedule.
d. Servicer: The servicer is the day-to-day administrator of the mortgage
loan assets held by the trust. Under the governing documents forming the trust, the
servicer is required to administer the mortgage loans in the best interests of RMBS
investors. The servicer’s responsibilities include collecting payments due from the
borrowers, remitting those payments to the trust for ultimate payment to the investors,
and furnishing the trustee or a securities administrator with performance data regarding
the mortgage loans in the pool. The servicer-generated data is used to calculate the
distribution of funds and report pool performance to investors. The servicer also
conducts all remedial activity on behalf of the trust when borrowers default on their
loans. Such remedial servicing activity requires the servicer to review relevant loan files,
act as the trust’s sole source of contact with the borrower, and inquire into the status of
the borrower and the mortgage loan collateral. As set forth in Exhibit 1-A, WaMu is the
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Servicer or Master Servicer for the mortgage loans included in the Primary Trusts, in
addition to serving as the Depositor and Seller as set forth above.
Have there been cases with different endorsements on a note posted here? Anyone have any?
UNIFORM TRUST CODE
(Last Revised or Amended in 2010)
Drafted by the
NATIONAL CONFERENCE OF COMMISSIONERS
ON UNIFORM STATE LAWS
and by it
APPROVED AND RECOMMENDED FOR ENACTMENT
IN ALL THE STATES
Copies of this Code may be obtained from:
NATIONAL CONFERENCE OF COMMISSIONERS
ON UNIFORM STATE LAWS
211 E. Ontario Street, Suite 1300
Chicago, Illinois 60611
312/915-0195
http://www.nccusl.org
Reblogged this on Deadly Clear.
Anon, the trusts are express trusts created under NY or DE trust law. Until the recent decision in Aurora v. Taylor, NY Court of Appeals, the appellate courts and supreme courts pretty much held, you are not a third party beneficiary under the assignment, psa, etc…
As such the foreclosure defendant has no right to challenge the assignment or non-compliance with the psa. However, the Taylor Court actually reviewed the assignment chain and compared it to the conveyance chain set forth in the PSA and Prospectus Supplement, therefore the defendant does have a right to challenge the plaintiffs succession theory and endorsement chain on the note… forget about mortgage assignment, ownership means NOTE.
This is silly, these are CDO Trusts that do not include residential MBS. Anon, your statement is silly and gives people false hope. NY Courts could not give a rats ass when the mortgage was assigned. The lender submits a PDF copy of the note, endorsed in blank, or slaps an allonge, and sends in a bullshit affidavit from the loan service agent alleging deliver prior to commencement of the foreclosure, and it’s “honey pack the Chevy” within 14 months.
If you unwind the PLMBS, you must unwind the agency trusts, and the government is making some hefty coin off the former GSE slush funds.
@ Rhody good idea w all the Wells Fargo publicity but drop in the bucket compared to what they did to us
Great pic says it all with all the pretender Chase’s
WHY is no one in our judiciary recognizing all this securitization as the crime it is? Do they not realize they are aiding and abetting the crime? Judges, lawyers, etc.
Anon we had the Aom well brief right from complaint to appellate with your argument. The appellate stayed clear of that analysis and instead found standing by affidavit of servicer. We even cited slorp case and the person who signed assignment was an employee of previous servicer. Fraudulent document. A note not indorsed until summary judgement. This was in New Jersey 10 days ago. They said it didn’t matter if they found them a holder or nonholder. Didn’t even rule on holder in due course. Said rest of my defenses didn’t warrant a discussion in a written opinion. How’s that for justice
Please tell me where did you get this information so that I could pass it onto the State Senators.
The following is the story of the fatally flawed assignment of our alleged mortgage.
The Assignment of Mortgage was received in the Town for recording on August 11, 2011 by the Town Clerk. as clearly stamped on the assignment document. The content of the Assignment of Mortgage reads that it was recorded on 3/13/2007. This shows a deliberate attempt to defraud as the closing date of the CWABS, INC., Asset backed certificates, series 2007-4 Trust was on March 29, 2007. One could get a copy of the Pooling and Servicing Agreement and the Prospectus of the Trust from the SEC website by entering the name of the trust n their EDGAR search engine.
If the assignment was done after the closing date, it would become void by New York Trust Laws and in particular by New York Law EPTL §7-2.4 on which trust was created. This could also defraud the IRS as well by having adverse tax consequence resulting from the trustee violating the governing trust documents and loosing Real Estate Mortgage Investment Conduit (REMIC) status. The attempted transfer by defective assignment was a schemed to protects the beneficiaries of the CWABS Securitized Trust from the potential tax fraud consequence of the trust losing its status as a REMIC trust under the Internal Revenue Service Codes.
Back dating of an Assignment of Mortgage is invalid as it is just like back dating a check six months or years for making a payment. Conveyances of interests in, or ownership of, real estate or any assets are present tense transactions only.
We are telling this to many authorities and hope one day they would understand it.