The Neil Garfield Radio Show Tonight 6 pm Eastern: Foreclosure Settlements and Negotiations

The JPMorgan Paper Chase Live at 6 pm

The JPMorgan Paper Chase Live at 6 pm

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At a time when approximately two percent of legal disputes are ended by a trial, the walk-up to trial itself is often a game of negotiation and posturing. The strategy is to stick with an improbable “we’ll see you in court” message for as long as possible in order to bring the other side around to your settlement demand.  However, this is often a mistake and creates resistance and a stale-mate.

A better strategy is to conduct your pre-trial research. What are typical settlement values for similar cases?  Evaluate what the strengths and weaknesses are of your case and lay out a realistic window regarding what you are willing to settle for prior to litigation.

California Attorney Charles Marshall joins us this evening and can be contacted at:

415 Laurel Street, Suite 405 San Diego CA 92101 US

+1. 619.807.2628.

Email:       Charles@MarshallLawCa.com

Website:  http://www.marshalllawca.com/home.html

2 Responses

  1. Great show, I thought… Marshall spoke about Sciarratta and lots of settlements that are under the radar. He said now only 1 in 5 judges are still using the “free house” excuse for the banks.. Not as fast as we want but bedda than before….

    Xx

    Sent from my iPhone

    >

  2. 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
    2
    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.
    3
    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.
    4
    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.
    5
    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
    6
    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.”
    7
    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.
    8
    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
    9
    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.

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