Did JP Morgan Chase have the right to foreclose on Wamu loans while the JPM-Wamu sale was pending?

Good question. A blast from the past. Reported by Puget Sound Business Journal last year:

Note: FDIC spokesperson Andrew Gray said to me this morning that JPMorgan Chase & Co. acquired WaMu’s assets when it signed the purchase and assumption agreement (Sept. 25, 2008), not the day the sale was finalized (Sept. 1, 2010). According to him, Chase did have a legal right to foreclose on WaMu mortgage holders in default, despite the fact the sale was still pending up until late last year.

Did JPMorgan Chase & Co. have the legal right to foreclose on homeowners with Washington Mutual mortgages?

That’s one of the questions to arise from the continuing uncertainty about when the sale of WaMu to JPMorgan actually closed.

According to the latest statements from the Federal Deposit Insurance Corp., the sale closed on Sept 1, 2010, nearly two years after the sale was agreed to on Sept. 25, 2008.

And though now I have received extension documents (PDF) from the FDIC from a Freedom of Information Act request, there is still lots of uncertainty surrounding the $1.9 billion sale.

The federal regulator confirmed to the Puget Sound Business Journal last Augustthe sale was still pending because it was a large transaction and the kinks were still being worked out. Then the FDIC said again in September the sale had been pushed back, from a scheduled closing date of Aug. 30, 2010 to Sept. 30, 2010. In October, the FDIC said for a third time the sale had been extended.

Last month, FDIC spokesman Andrew Gray said a statement in October the sale was held up was incorrect. The transaction officially closed on Sept. 1, 2010, and the terms of thepurchase and assumption agreement remained the same.

 

This raises the questions such as: Who owned the assets of failed WaMu in the interim? Was JPMorgan Chase able to foreclose on homeowners with Washington Mutual mortgages before the sale of the assets was complete? 

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