Files on WaMu Appraisal Scheme Kept Sealed

(CN) – A federal judge refused to unseal files related to Washington Mutual Bank’s alleged rigging and steering of appraisals to benefit mortgage lenders before market crashed.
The case in Washington, D.C., stems from a 2008 federal class action that Felton Spears Jr. and Sidney Scholl first brought in San Jose, Calif., against Washington Mutual Bank, Lender’s Service Inc., and the Santa Ana appraisal-management firm First American eAppraiseIT.
Spears and Scholl said that back in 2006 WaMu had eAppraiseIT and Lender’s Service provide inflated mortgage-loan appraisals, so that the bank could sell the aggregated security interests in the properties at higher prices.
At WaMu’s direction, eAppraiseIT and Lender’s Service hired former bank employees as appraisal business managers who could override the values determined by third-party appraisers, the complaint alleged.
The court in San Jose, Calif., dismissed all but a claim under the Real Estate Settlement Procedures Act against eAppraiseIT in 2009, and U.S. District Judge Ronald Whyte certified the class in April 2012.
In Washington, the plaintiffs served the Office of the Comptroller of Currency (OCC) with a subpoena for documents that the U.S. Senate Permanent Subcommittee on Investigations (PSI) cited in a 2011 report on the 2007-08 financial crisis.
Though the Office of Thrift Supervision, which has since been succeeded by the comptroller’s office, gave the Senate the documents under seal and without waiver of any privileges, the comptroller objected to the subpoena, noting that many files may be privileged.

Read on.

BofA, US Bank To Settle Suit Over $3.3B WaMu Losses

Law360, New York (October 31, 2014, 8:07 PM ET) — Bank of America counsel told a New York federal judge Friday that they’ve reached a meeting of the minds with pension funds suing BofA and US Bank, which are the trustees of 19 Washington Mutual mortgage-backed securities portfolios that have allegedly experienced over $3.3 billion in recognized losses.

The funds claim that the two banks ignored the presence of loans in the trusts that they knew were backed by “incomplete or defective” files or had underwriting problems that allegedly contributed to billions in losses. After a…

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WMI Liquidating Trust, WAMU’s parent company, demands $500 Million from bankers

SEATTLE (CN) – Top officers of WMI, Washington Mutual Bank’s parent company, wasted half a billion dollars by transferring assets to the doomed bank just two weeks before it was seized by federal regulators, unsecured creditors claim in court.
WMI Liquidating Trust, representing the Official Committee of Unsecured Creditors of Washington Mutual Inc., sued 16 former WMI officers and directors for breach of fiduciary duty and corporate waste, on Tuesday in King County Court.
Washington Mutual was placed into receivership in September 2008, becoming the largest bank failure in American history.
The Trust claims that WMI officials “responded out of panic rather than reason” when they transferred, or downstreamed, $500 million to the bank on Sept. 10, 2008.
September was the height of the “financial tsunami” and there was rampant speculation that Washington Mutual would soon collapse, according to the lawsuit.
“The prudent decision would have been to preserve WMI’s assets at this critical time rather than to place them in the failing WMB [Washington Mutual Bank],” the Trust says.
Instead, the officer defendants and director defendants “responded out of panic rather than reason,” according to the complaint. “They abandoned the interests of WMI and allowed the September Downstream, despite the complete absence of any evidence of deliberation as to whether a transfer should be made at that time. Half a billion dollars of WMI’s capital, which otherwise would have been available for the benefit of WMI’s creditors and shareholders, instead was transferred outside of creditors’ reach to WMB, a distressed entity facing imminent seizure.”
Regulators seized Washington Mutual on Sept. 25, 2008. It was sold out of receivership to JP Morgan Chase Bank.
The capital infusion was “utterly irrational” and did nothing to help the bank’s liquidity, the complaint states.

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Title Insurer Owes $4.9M for Failure of Mortgages

MIAMI (CN) – A title insurer owes $4.9 million for contributing to the failure of mortgages that caused the defunct Washington Mutual Bank to lose millions of dollars, a federal judge ruled.
The Florida-based Attorneys’ Title Insurance Fund (ATIF) issues title insurance policies in real estate transactions. Agents and attorneys in its network may also act as closing agents, supervising the final transactions between buyers and sellers and overseeing the transfer of money and property.
Between 2005 and 2007, ATIF provided closing agents for 14 South Florida residential loans extended by the now-failed Washington Mutual Bank. The Federal Deposit Insurance Corporation, which took over WaMu in 2008 and investigated 500 of its defaulted loans, alleged that ATIF’s agents caused WaMu to lend money to unqualified borrowers under false pretenses, leading to more than $9 million in losses for the bank.
The FDIC claimed in a 2012 federal complaint that the title insurer refused to honor agreements in which it promised to reimburse WaMu for losses arising out of its closing agents’ fraud or their failure to follow the bank’s closing instructions.
In addressing the parties’ motions for summary judgment, U.S. District Judge Patricia Seitz ruled that the FDIC has standing to pursue damages based on the closing indemnity agreements. Even though WaMu sold the loans in question to Chase in 2008, the indemnity agreements are separate from the loans’ title insurance policies, because they protect lenders against different risks, according to the Sept. 3 ruling.
Indemnity agreements are designed “to quell a lender’s understandable fear of entrusting an unknown agent with large sums of money and important legal documents,” while title insurance protects against defects in title, the 28-page order states.

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JPMorgan earns legal victory over Los Angeles in discrimination suit

In May, the City of Los Angeles sued JPMorgan Chase (JPM), alleging that the bank had pushed minority borrowers into mortgages they could not afford “since at least 2004.”

The city’s suit suggested that the bank’s lending practicescreated a wave of foreclosures that impacted property values and brought urban blight to the city.

But the bank has secured a legal victory over Los Angeles, according to a report from Reuters.

In a decision made public on Wednesday, U.S. District Judge Otis Wright said the city could not hold JPMorgan responsible for questionable lending by the former Washington Mutual Inc, under a federal law governing the wind-down of failed banks.

Wright said Los Angeles may file an amended complaint focused on JPMorgan’s, but not WaMu’s, lending practices.

RE: WAMU | HERE IS THE CONFIDENTIAL 112 PAGE PURCHASE & ASSUMPTION AGREEMENT BETWEEN FDIC, CHASE

Division of Resolutions and Receiverships Institution Numer: 10015 Insti tution Location: Henderson, NV Washington Mutual Bank Closing Book Date of Closing: September 25, 2008 Confidential Information Confidential Information Transaction Recap Washington Mutual Bank Henderson, NV In all the transactions offered by the FDIC, the Whole Bank Purchase and Assumption Agreement will be tailored to the winning bid. In all transactions, all assets are purchased by the acquirer and the preferred stock is excluded from the transaction. The legal documents will be the governing documents for this transaction. The FDIC is offering five alternative transaction structures: 1. All liabilities are assumed except the preferred stock. 2. All liabilities are assumed, except the preferred stock and the subordinated debt. 3. All liabilities are assumed except the preferred stock, the subordinated debt and the senior debt. 4. All deposits and secured liabilities are assumed by the acquirer. 5. All insured deposits and secured liabilities are assumed. The bid for alternatives 1, 2, or 3 must be at least the FDIC’s administrative costs of the closing equal to $ (amount to be provided) .

Here is the document. Click here.

Former WaMu Exec Pleads Guilty to Receiving Kickback

Former WaMu Exec Pleads Guilty to Receiving Kickback

A former Washington Mutual executive pleaded guilty in federal court in Bridgeport, Conn., Monday to accepting an illegal kickback.

Michael Gesimondo of Washington Mutual Bank received kickbacks from Oxford Collection Agency as a reward for providing Oxford with WaMu’s debt-collection business between May 2008 and May 2009,according to a Justice Department release.

The kickbacks occurred while Gesimondo was employed as collection manager of business banking at WaMu, the release said. Gesimondo, 57, of Farmingdale, N.Y., was in charge of outsourcing collection accounts to collection agencies. The release also stated that Gesimondo often received a percentage of the collected-debt amount.

Ex-WaMu CEO Killinger Said to Be Near Settlement in Bank Failure

Ex-WaMu CEO Killinger Said to Be Near Settlement in Bank Failure

Former Washington Mutual Inc. Chief Executive Officer Kerry Killinger and two other bank officials are in settlement talks with the Office of the Comptroller of the Currency, the last chapter in the government’s probe of the largest U.S. bank failure.

The regulator is weighing a settlement with Killinger, former chief operating officer Stephen Rotella and David Schneider, former head of the home-loan division, over claims they mismanaged the Seattle-based thrift, according to a person who was briefed and spoke on condition of anonymity because the talks aren’t public.

EXPLOSIVE ADMISSION: RE: JPMORGAN B SETTLEMENT | NOTHING IN EITHER THIS AGREEMENT OR THE DOJ AGREEMENT SHALL CONSTITUTE AN ADMISSION OR IMPLY THAT JPMORGAN CHASE BANK. N.A. OR ANY OF ITS SUBSIDIARIES OR AFFILIATES BECAME >> SUCCESSOR IN INTEREST TO WASHINGTON MUTUAL BANK

Nothing in either this Agreement or the DOJ Agreement shall constitute an admission or imply that JPMorgan Chase Bank. N.A. or any of its subsidiaries or affiliates became >> successor in interest to Washington Mutual Bank

Read # 13:

http://www.justice.gov/iso/opa/resources/51720131119202421482972.pdf

JPM drops opposition to WaMU legal liabilities

According to Seeking Alpha, JPMorgan Chase (JPM) has dropped opposition to shouldering all of the legal liability over Washington Mutual. The change opens the door for a $13 billion legal settlement with the Department of Justice.

Should it come, the settlement will resolve all civil federal investigations as well as state probes by NY and CA, along with a suit by the National Credit Union Administration.

The deal has been held up for weeks, reportedly by the Bank of Dimon’s insistence it preserve the right to come back at the FDIC for some of the costs associated with WAMU – a non-starter of an idea at Justice.

Source: Seeking Alpha