Hiding in plain sight, Chase may indeed have taken control of the portfolio loans of Washington Mutual. The FDIC receiver clearly stated to me that there was no assignment of mortgages. He also said that he thought Washington Mutual was servicing about $1 Trillion in loans originated by WAMU or its originators (pretender lenders). And he said that it was estimated by him and the U.S. Bankruptcy Trustee that about 1/3 of those loans were portfolio loans — I.e. Real loans paid for by WAMU. And of course, as previously reported here and elsewhere we now know that Chase acquired no loans as part of the merger with WAMU.
So the question is “What happened to the $300 Billion in loans that were real assets of WAMU?” Nobody has really asked and obviously no answer has been forthcoming — especially not from Chase who was going around the country foreclosing on loans that it said it acquired “by merger” from WAMU.
Here is my theory: the loans are technically in the WAMU “estate” from the Bankruptcy proceedings. The U.S. trustee disclaimed any interest in some WAMU subsidiaries that probably have an interest in those loans. Those subsidiaries still exist. why? Meanwhile, Chase DID acquire the servicing rights of WAMU.
As the Servicer it receives payments from Borrowers who have no idea about the status of their loan. If Chase receives a payment on a loan that is subject to claims of securitization, we assume that it makes payments to the trust beneficiaries of the REMIC trust claimed to own the loan. That is a whole other subject for forensic auditing. Our focus for today is what does Chase do with payments on loans that are still WAMU loans. I theorize that one likely possibility is that Chase keeps the money because there is nobody claiming a right to receive the payments now that the WAMU Bank has ceased to exist. That would give them an income of around $20 Billion+ per year on loans that WAMU funded and Chase never bought. But that is the tip of the iceberg.
The loans kept as WAMU portfolio loans were probably subject to underwriting that was more in line with industry standards and probably had a much lower default rate than the loans that investors funded. So those loans had a definite value on the secondary market. Hence I postulate that Chase as authorized Servicer is acting as the owner. Without anyone making a claim, they have nobody to pay. So if they sold the WAMU portfolio loans as successor Servicer for WAMU loans, the proceeds of sale went to Chase and Chase then created numerous such transactions wherein they “sold” the mortgages they didn’t own.
The sale proceeds are completely controlled by Chase. They no doubt did sell most of the loans by now and many of them were probably “assigned” to new REMIC trusts. Thus Chase, based upon estimates from those close to the WAMU estate and the Chase WAMU merger, generated more than $300 Billion in sales of loans it never owned or paid for, plus principal and interest payments received on those loans, probably totaling around $400 Billion between the merger and now. No wonder they are so eager to pay fines measured in the tens of billions, when they illegally obtained loans worth in the hundreds of Billions of dollars.
Who is the injured party? It would appear that the Bankruptcy Estate of WAMU, or the Trustee for the estate, is the injured party. They should have the $400 Billion. Why this was not apparent to the U.S. Trustee and the FDIC receiver I don’t know. But isn’t it peculiar that there is a $400 Billion hole in the deal that went entirely to Chase?
Of course this is conjecture not even an opinion, so far. I could be wrong. But in the chaos of the overnight mergers, it seems more likely that Chase found every way available to grab more money.
Filed under: CORRUPTION, foreclosure, GTC | Honor, investment banking, Investor, MBS TRUSTEE, MODIFICATION, Mortgage, securities fraud, Servicer, TRUST BENEFICIARIES, trustee | Tagged: Chase, FDIC receiver, Richard Schoppe, US bankruptcy trustee, WAMU |