Econontersect: While everyone is watching the looming fiscal cliff the Michigan Supreme Court has presented a $3.75 billion cliff to JP Morgan Chase (NYSE:JPM). The ruling, handed down on 21 December 2012, upheld a previous ruling by the Michigan Court of Appeals. The lower court ruling was based on a Michigan law that states a party foreclosing who is not the originator of a mortgage has no standing unless they provide a record chain of the mortgage. The mortgages in question were obtained by JPM from the FDIC (Federal Deposit Insurance Corp) after Washington Mutual (WaMu) failed in 2008.
JPM had argued that they had standing to file foreclosures because they had obtain them “by operation of law.” The Michigan courts have ruled that the “operation of law” applied to the transfer from WaMu to the FDIC but the subsequent purchase of the mortgages by JPM was subject to third party transfer laws and each mortgage had to be individually processed through the local deed registration offices where the properties were located.
Millions of mortgage transfers have not gone through the requisite filing transactions but have exchanged hands accompanied by what are known as robo-signed documents in lieu of actual deed registry filings. These mass-produced documents attested that the proper deed registrations had occurred. In most circles that is called felony fraud, but the big banks have not had to suffer the indignity of facing such charges.
Read more about foreclosures at GEI Analysis, Opinion and News.
Sources:
- Michigan Supreme Court Rules $3.75 Billion Of JPM Chase Held Mortgages Are Voidable (Steve Dibert, Mortgage Fraud Investigations – Miami, 30 December 2012)
- Michigan Court of Appeals Rules Chase Loans Acquired From The FDIC Must Be Recorded (Steve Dilbert, Mortgage Fraud Investigations – Miami, 16 January 2012)
Hat tip to Roger Erickson.