Here They Come: Thousands Of JPMorgan Home Foreclosures In Doubt After (Perjurious) Firm Exec Confirms Loan Docs Were Not Verified

Tyler Durden's picture

First one, now all. Just as we predicted - fan: meet feces.

Fresh off the presses at Bloomberg:

JPMorgan Based Foreclosures on Faulty Documents, Lawyers Claim

JPMorgan Chase & Co. faces a legal challenge next month that could cast doubt on thousands of foreclosures after a mortgage executive at the bank said she didn’t verify documents used to justify home seizures.

Lawyers for a Palm Beach County, Florida, homeowner asked a judge to throw out a foreclosure as a penalty for misleading the court, according to attorney Tom Ice of Ice Legal PA. They’re citing a May 17 deposition in which the JPMorgan executive said she signed thousands of affidavits and documents supporting the New York-based bank’s claims without personally checking loan records. The court is scheduled to hear arguments Oct. 19.

The Chase Home Finance operation supervisor, Beth Ann Cottrell, said in May she was among eight managers who together sign about 18,000 documents a month, according to a transcript of her sworn deposition provided by Ice. Asked how they were prepared, she said she relied on other people at the firm.

“My review is more or less signing the document unless it’s questionable,” she said. That means, “somebody has a question and brings it to me and says, ‘Beth, can you take a look at this?’”

Inaccurate statements by banks in foreclosure documents may give borrowers who have lost their homes a legal basis to challenge the seizures, derailing resales and casting doubts on property titles. A Florida court sanctioned Ally Financial Inc.’s GMAC Mortgage unit for faulty affidavits in 2006, and the firm suspended evictions in 23 states this month after finding employees still signing affidavits without checking the data.

Titles in Doubt

JPMorgan spokesman Tom Kelly declined requests for comment.

Cottrell didn’t return phone calls to her office requesting comment. A lawyer representing her at the deposition, Joseph Mancilla of the Florida Default Law Group PL, didn’t return calls. Cottrell isn’t named as a defendant.

Cottrell signed the affidavit at issue in the case, dated June 2009, while at her previous employer, an outside servicing firm working for JPMorgan, according to court documents. When signing documents there for the JPMorgan unit, she used the title “assistant secretary and vice president” of Chase Home Finance, according to the transcript. She became a JPMorgan employee about three months after signing the affidavit.

Document signers sometimes endorse affidavits on behalf of other firms as a way to streamline the foreclosure process, said Dustin Zacks, an attorney at Ice’s firm.

JPMorgan was the third-largest U.S. servicer of home mortgages as of June 30, with $1.35 trillion or almost 13 percent of the market, according to industry newsletter Inside Mortgage Finance. Ally is the fifth-biggest mortgage servicer, with $349.1 billion. The other three in the top five are Bank of America Corp., Wells Fargo & Co., and Citigroup Inc.

Title Insurers

“I’m sure a lot of title insurance companies are concerned about the potential liability right now,” as borrowers challenge how banks made statements, he said. “The judges could absolutely hold the bank and attorneys in contempt.”

U.S. home seizures reached a record for the third time in five months in August as lenders completed the foreclosure process for thousands of delinquent owners, according to RealtyTrac Inc.

Ice, the founding partner of his foreclosure-defense law firm in Royal Palm Beach, Florida, said some lenders are accepting voluntary dismissal of their cases.

During the deposition, Cottrell said a staff of in-house specialists scrutinize loan documents and prepare affidavits, the transcript shows. If they have difficulties or questions, they come to her. She signs in a notary’s presence, she said.

‘No Knowledge’

During questioning by Ice lawyer Zacks, Cottrell said she had worked at Chase Home Finance for about eight months, according to the transcript.

“As to everything in the affidavit, did you have personal knowledge?” Zacks asked.

“My own personal knowledge, no,” Cottrell answered.

“You stated ‘That plaintiff is entitled to enforce the note and mortgage,’” Zacks said. “Again, did you have personal knowledge of that?”

“No knowledge,” she answered.

Florida Attorney General William McCollum is investigating three law firms that represent loan servicers in foreclosures, and are alleged to have submitted fraudulent documents to the courts, according to an Aug. 10 statement. The firms handled about 80 percent of foreclosure cases in the state, according to a letter from U.S. Representative Alan Grayson, a Florida Democrat.

Judges overseeing foreclosures in the wake of the housing crisis are growing skeptical of banks, said Christopher L.
Peterson, a professor at the University of Utah’s S.J. Quinney College of Law. A surge in proceedings has helped expose a variety of paperwork lapses, he said in an interview.

“Early in the process the judges were very cavalier and they just took the financiers’ word,” Peterson said. “Now there are enough disputes out there about ownership of loans that the judges are starting to feel like they need to hold the financial institutions to the basic rules of evidence.”

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chet's picture

Please stop whoring your blog.

williambanzai7's picture

If I had the ability to post visual comments directly, I would consider it. However, I also think it would be intrusive. Robbin Byrd is waiting for you Chet...

dogbreath's picture

sorry chet

williams stuff is really good.  I want t-shirts

breezer1's picture

bill, keep it up. really cracks me up.

snowball777's picture

Agreed. Much needed levity in dark times.

DaveyJones's picture

humor is nothing more than a coping mechanism: for cancer, criminals and collapse

DoChenRollingBearing's picture

While the Bearing in general has a creditor (saver) mentality, I have NO SYMPATHY for banksters who do not have their papers in order to throw a family out of their homes.

Not defending bogus buyers, NINJA homeowners, etc., but the d*#n banks should have done their homework right.

Tyler Durden's picture

The biggest stunner as a result of all this, is just how broken the US judicial system is, if such core precepts as title deeds are gratuitously taken (or rather given) for granted on behalf of the supposedly sophisticated party. It appears there is no fact checking, diligence process, and, gasp, QC checkpoints anywhere in the legal pathway, when bankers are plaintiffs, making one wonder just how many false claims the banking industry has gotten away with, when the courts have (apparently rightfully) assumed they were too dumb to challenge any of the underlying case assumptions. 

williambanzai7's picture

What is not surprising is that no one knows what perjury means anymore.

truont's picture

Jamie Dimon: "But..."perjury" surely does not apply to me, your honor!  All that "rule of law" shit only applies to the useless eaters that take up too much space anyway... How can I "perjure" myself if I am doing God's work, here!?"

Miles Kendig's picture

Nice summation of Judicial Exclusion...

DaveyJones's picture

Witness Nullification. Tyler's point is well taken, the last branch of government is collapsing as well. It's not that these people lie, it's that nothing happens to them when they do

Spalding_Smailes's picture

I take responsibility for what happened at Enron, both good and bad. But I cannot take responsibility for criminal conduct that I was unaware of.
Kenneth Lay


I don't fear jail because I know I'm not guilty. I know I did nothing wrong. I did nothing criminal and I also believe my God will get me through this.

Kenneth Lay

MarketTruth's picture

And I never had any sexual relations with that woman (countless others I had intercourse with, sure, but not that one).

I never inhaled.

Born in Hawaii, see my newly printed birth certificate... and no you can not see details of my college transcript or other matters.

The USA House/Senate totally believes in America (while many members also hold an Israel passport due to being a dual citizens).

The list can go on... and on... and on. Grab a shovel, it gets very deep.

But suck it up and tough shit you unemployed person as they had to bail out the banksters. Right Warren Buffet and gangster right hand guy?

Careless Whisper's picture

Document signers sometimes endorse affidavits on behalf of other firms

excuse me? say what?


IBelieveInMagic's picture

What bothers me is why is a person signing this document -- why has it not been automated? Or outsourced?

Clearly there is opportunity to improve this process...

DaveyJones's picture

Notice Ken said "my God" which makes sense since his God would never stoop to mingle with any of the other gods.

truont's picture

Yeah, that is pretty odd how he said that...

Things that make you go, hmmm...

Things that go bump's picture

I think they call that the Leona Helmsley defence.

Cognitive Dissonance's picture

All perjury is relative.

Relative to "National Security".

I'm taking bets that the DOJ, carrying the water for the fascist state, steps in here at some point and sweeps all, or at least most, of this away under the "National Security" banner. Now that the Military has identified the economic "crisis" as the most pressing "National Security" worry, it's only a hop, skip and jump to saying.......

"It's just paperwork. Besides, if you were patriotic, you'd pay your bills regardless of the rule of law, burden of proof, due process or due diligence. Your a terrorist."

Might makes right in the eyes of the corporate/governmental fascist mind.

williambanzai7's picture

I have some experience dealing with bureaucrats in emerging markets, who think they can do whatever the highest bidder wants them to do. If that is what America has become, there in no reason to stick around to see what else lies in store.

scatterbrains's picture

the time line of all these news events suggests a staged lead up to some nation wide mortgage rate reset to me. Can I get a 2% 30 year fixed please ?

reading's picture

I am holding out for 0%...

DaveyJones's picture

We all share your sorrow Johnny, that Pepsi truck driver should have been paying attention before he crossed into your mother's lane, but as we all know sugar water is just too intertwined with national security to allow this case to go forward

Hedge Jobs's picture

dont worry TD, new apponitees such as the brilliant legal intelectual giant Elena Kagan will restore your faith in this broken system!

weinerdog43's picture

Yeah, Scalito and his henchmen are pure as driven snow.

Ricky Bobby's picture

Well now if you are comfortable with Ceaser's Kagan and the Wise Latina women then you can fuck off.

Handle with care's picture

I think we all assumed that although the banks may have made the paper trail complicated, they wouldn't have actually lost the paper along the way.


Of course, the courts are supposed to be a little bit more diligent than bloggers watching from afar.

Hephasteus's picture

"making one wonder just how many false claims the banking industry has gotten away with, when the courts have (apparently rightfully) assumed they were too dumb to challenge any of the underlying case assumptions. "

All of them. But that get's us into... How congress works.

johngaltfla's picture

Tyler, it's not that shocking. If you've ever had dealings with the civil court system or the bankruptcy trustees you begin to understand just how corrupted the entire process is. Until the American people understand that we have a three tiered legal system as outlined here:

1. Us schmucks who might get lucky and win

2. The indigent who we pay for their legal actions and problems

3. The JPM's and other super wealthy who buy justice and change decisions llke we change our underwear.

then there is no hope of reform. In the mean time people blindly accept the reality that there is nothing wrong with our political or judicial system and go blindly into their chemically induced phramaceutical bliss while enjoying their microwave dinners while watching American Idol or the idiocy of the day on cable or DishTV. No one understands it until they have to deal with it, like those retirees who attempted to seek justice against their brokers who illegally churned and burned their accounts and all they got was a lousy 20% of their prinicple back and a pat on the head from the arbitor.

The United States is broken, every branch of government, almost every institution inside of it and that is why this financial crisis will not heal until it is repaired.

blindfaith's picture

Why on earth would anyone be surprised. 

Every administration for the last 50 years has had it eyes on the judicial arm of the government.  That is where the immediate and legacy power is.  That is where you transform history, where you change the direction of the nation.  Like the Titanic, is slow to respond at first and even harder to correct a bad course with out a new captain and hand picked crew.

The peoples will is not with the Judiciary, but perhaps now and for the last 10 years the power over the Judiciary has been the will of the administration in power and the one just exiting.

The Judiciary is just reflecting the same shoulder shrugging indifference that nearly every bureaucrat shows.  The same loading up on people who thing like you or are easy to dictate philosophy to.

But perhaps the biggest problem is to many cases for to few judges to properly review, especially when it comes to what should have been a cut and dry matter of honest fiduciary trust of the banks by the judges.

Perhaps when the Rebublicians win the elections in November, they can cut more judges out of the system to save money for all of taxpayers.

QQQBall's picture

Tyler, yes zactly.


How is it possible for WFC to attach an Addendum to a sale which basically says: "We are selling this property to you, but if it turns out we never owned it in the first place, its your tough shit". Is that what its come to?

caconhma's picture

You people are pathetic:

  • The entire real estate legal system is one big fraud to provide lawyers with good jobs and fleece consumers out of their money.
  • So, you think it is OK for people live in houses "rent" free? If some can live rent-free then soon all will live rent-free.
  • In any business, managers sign tons of documents without checking each and everyone. It is a common practice. It is the absolute business necessity. You trust your people, otherwise, no business can function at all.
  • The entire foreclosure business is very fishy, especially 6 weeks before the coming national elections.
FischerBlack's picture

Thing is, they get away with it because borrowers rarely show up for forclosure proceedings, never mind hire counsel (with what extra money?) to protect their rights.

knukles's picture

Decline of Civilisation

Now there's a novel concept.  One must hire counsel to protect ones rights. 
"Transactions in Justice, the New Rule of Law."

ZackAttack's picture

They tried to save a penny on both the front end (MERS) and the back end (rubber-stamping foreclosure documents) by bulk-executing processes that simply cannot be treated that way.

I still think there's far too much money involved here for an exception in the laws not to be bought. Silly rabbit, moral hazard is reserved for banksters.

sushi's picture

And a good Gretchen NYT article on the TBTFs knowingly repackaging garbage in MBS.

Smells like a RICO case to me.

anonnn's picture

This sit could enable FannieM et al to return fraudulent loans to JPM etc in a clawback maneuver. Quite justified as response to fraud, albeit long overdue.

Could be a BlackSwan morphing to silver.

tom a taxpayer's picture

sushi - BINGO! You said the magic word "RICO". You win $100 and a front row seat for the RICO trial of the century, featuring the bosses from the rating agencies, JPMorgan, GMAC, Countrywide, Goldman Sachs and every other part of the overlapping criminal enterprises, including the mortgage industry, the appraisers, Freddie and Fannie, Citi and the big banksters, the Wall Street investment banks, AIG, the federal co-conspirators at U.S. Treasury, SEC, OTS, and the Federal Reserve, especially FRBNY, and the members of Congress who aided and abetted the greatest financial crimes in U.S. history.

Bringin It's picture

I wanna see a perp walk.  Lots and lots.

Widowmaker's picture

Money has no legs.  The rest of the fraud epidemic are corporations which have no legs either.

Too bad for you citizen, hopefully you got yours until they are made illegal to protect the fraud and systemic corruption.

Miss Expectations's picture

How about a ticker tape parade?  How about JP Morgan, Ally, Bank of America, Wells Fargo and Citigroup all marching down 5th Avenue.  They will be identifiable by the balloons they are holding.


williambanzai7's picture

The pragmatic answer is they, the government, are not going to bring down the edifice that finances the circus.

sushi's picture

The pragmatic response is that you are 110% correct.

But then there are all those dumb Euro/Deutsch folk who bought these products. My hunch is that some out of the money PIG organization will file a complaint and it will be hard for the US courts to completely ignore the application of US law.

This is an epic fail.