Chris Whalen On JPM And Fraudclosure (IMPORTANT!)

The Market Ticker – Chris Whalen On JPM And Fraudclosure (IMPORTANT!)

Heh heh heh….

What is really interesting is that the legal complaint filed by Schneiderman talks about sloppy procedures for loan selection, but still does not get to the real fun, namely multiple pledges of loans for different RMBS. And you can be sure that Schneiderman does not really want to go that far because it might force him to ask the same question about the other, far larger issuers of RMBS.

Remember, the whole point of the Robo-signing settlement is not consumer protection, but rather fraud. The key question: Who’s got the note? If you don’t have to deliver the note into an RMBS trust, then the door is wide open for securities fraud.

What’s being talked about here is the NY lawsuit against JPM (really Bear Stearns, but now JPM since they bought it) for securities fraud.

I have long maintained (since this crap begain to become public in 2007 and 2008) that the 900lb Gorilla in the room was going to come about when someone managed to bring the following argument before a Judge in a foreclosure action:

Your Honor, defendant moves that the plaintiff be required to show a full and complete accounting of all activity of the subject claimed note, including but not limited to:

    • Where the actual funds came from to fund the loan he entered into, and whether they ever actually existed or were fabricated out of thin air. 
    • The chain of custody of the note he signed, including the consideration paid for its negotiation each time it was negotiated, and that it was pledged and negotiated exactly once into one trust, and that this occurred in a lawful manner on or prior to the closing date of said trust. 
    • All financial events at a line-item level of detail, identifying each payee and payor along with each event from the date of origination to the averred default being sued under, including not only payments made and alleged payments missed along with penalties and interest but also any and all swaps collected upon or other transactions that acted as insurance or in any other way mitigated the plaintiff’s or any other party at interest’s damages.

The intent here is quite simple — not only is there a judicial interest in guaranteeing that the person who is standing before the judge is really the assignee of the note (or his lawful agent) and there is only one of them out there (who is the one standing before the bar) in addition you can only collect on a loss via lawsuit or other payment once!

If you get into a car accident and your auto insurance pays your $20,000 in damage you cannot then sue the person who hit you, as you were made whole and you can only collect once. In point of fact the insurance company will almost-certainly force you to sign over your right to sue to them before they pay you, but if they don’t you still can’t sue the person who hit you as you have no economic harm as you were already paid!

Recovery by lawsuit, including foreclosure, requires economic harm. If there was no economic harm there is no foul and your judgment, which you may well be entitled to, is for $0.00. Further, if the person who actually suffered the harm isn’t the one in court he can’t recover anything because the wrong person is suing and only a real party at interest with economic harm can sue.

So if the bondholder was made whole via a credit default swap or any other act, including rescission, his claim on you is extinguished. The person who sold him the swap may have a legal claim via lawsuit or the person who was forced to buy back the bogus loan may have a right of recovery but he cannot foreclose unless he obtained possession of the defaulted instrument through that process of payment and if he does then he had better be the person standing in the courtroom before the judge.

This is really basic stuff here folks — you don’t get sue because you’re “butt-hurt” by someone’s acts; you can only sue to recover actual economic injury, whether your requested remedy is foreclosure or simple money damages.

Chris is onto this but this rabbit hole goes a lot further than many people think it does.

If — and this is a big if — we can get just one honest judge to hear these arguments and force that accounting to take place in his courtroom then the game is up.

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8 Responses to “Chris Whalen On JPM And Fraudclosure (IMPORTANT!)”
  1. Apple says:

    Chris Whalen’s comments are just the tip of the iceberg. More fraud than you can even dream of, if you know the questions to ask.

  2. Mary says:

    As to the last post when is it time for the Foreclosure Mills like one Phelan Hallinana and Schmieg llp to go down since they were invovled and do the same kind of pratices that Howard Sterm associates did and Baum and the Fact is clear now that Mr Phelan has a brother who was clearly working for Fannie Mae as VP and Risk management officier Every one can clearly see the evident line of the exchanges of private documents being moved under the scope for illegal fabricatios along with the fact Mers does not have the authority to do all that they have been doing for years (misrepresentations all along the way makes room for the people to continue to fight for thier Property even after the sale for it to be returned to give it back to rightful owner ,but clerly again the system makes out by deceptive theft . all these places very clearly need shut down. the fines each county and state would be entitly to would be a very substancial amount that would clearly help each and every community.

  3. stripes says:

    Yes, they were loan swapping and they hid alot of it in MERS. There was even loan swapping going on at the closing table and I have proof of that. They most certainly do not want to produce any General Accounting Ledgers of their crimes or reveal who were parties to their crimes..and that they were all insured on this massive fraud.

  4. Alabama John says:

    Until there is punishment instead of rewards for the wrongs being done, there will be no reason to stop.
    That is the thinking today and so far, its been very accurate..

  5. johnrdJohnR says:

    I both agree and disagree with what “davellforge says” when he states “You failed to mention the real culprit in the matters of Fraudclosures, and that happens to be the Fraudclosure Mills.” And I disagree only in that the REAL culprit, it seems to me, are all of the Attorney’s who, under oath and threat of loss of license, have brought fraudulent and forged documents (made by the above mentioned Mills) and then submitted them into the Courts as if they were valid AND the Judges who, even after being informed that those same doc’s were in fact fraudulent and forged documents that, because of the terms within the foreclosing Trusts controlling doc’s (PSA), could not possibly be legal, foreclosed on the homeowners anyway. The Fraudclosure Mills are bad… very, very, very bad (and genuinely stupid too!) but our Legal System is proving itself to be nothing but cheap, ignorant puppets for the financial elite… and that makes them, in my own mind, many times worse.

  6. elexquisitor says:

    Guess what. Had a recent hearing in CA Inferior Court where I pointed out reason for JPM not being a holder in due course, and therefore had to prove its claim to possession of the note per UCC-3, citing statutes, case law, and requesting a statement of decision. Judge blew me off.

  7. Ken Hansen says:

    Other blogs maintain “this wasn’t an issue” especially one Naked outlet – if the general public understands just a lil’ bit more ’bout how the game is rigged this would be harmful to certain interests. Naturally, there are “lawyers” who will say this isn’t a big issue. Depends on whether ” multiple pledges of loans for different RMBS” is made an issue. Can’t rely on any politician however, since they are hopeless until forced into action.

  8. daveleforge says:

    You failed to mention the real culprit in the matters of Fraudclosures, and that happens to be the Fraudclosure Mills. Those greedy bast@#@s are suppose to have complete knowledge of foreclosure law. One would only think they should know that each foreclosure suit filled is fraud before filling them. They should be held to a higher accountability. How fast do you think the Banks will react when they have no foreclosure mills willing to take on the fraud when the mills know they will be held 150% accountable??? COMMON SENSE STUFF HERE.

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