FORECLOSURE Response to JP Morgan Chase Foreclosure


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WAKE UP AMERICA! Banks are STEALING HOUSES they do not own nor did they pay a dime for! Mortgages were PRE-SOLD to Investors of Mortgage-Backed Securities. A bank CANNOT foreclose if it has NOTHING TO LOSE! The banks shifted the risk to the Investors and the banks took the PROMISSORY NOTES cashed them into the FRAUDULENT FEDERAL RESERVE, and then SOLD the exact same NOTES to MBS Trusts MULTIPLE TIMES!!!

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FORECLOSURE Response to JP Morgan Chase Foreclosure

  1. 1. IN THE CIRCUIT COURT OF THE JUDICIAL CIRCUIT, COUNTY, ILLINOISJP MORGAN CHASE BANK, NATIONAL )ASSOCIATION )Plaintiffs, ) )v. ) ) Case No. )Pro-Se Defendants ) )COUNTERCLAIM ) ) ) ) v. ) )JP MORGAN CHASE BANK, NA )CHASE HOME FINANCE LLC ) DEMAND FOR JURY TRIALWASHINGTON MUTUAL BANK NA )Counter-Defendants ) DEFENDANT’S ANSWER TO COMPLAINT FOR FORECLOSURE OF MORTGAGE, AFFIRMATIVE DEFENSES, AND COUNTERCLAIMCOMES NOW Defendants and Counterclaimants __________________________, (collectively―Owners‖), proceeding pro se hereby answer the Complaint to Foreclose Mortgage brought byJP MORGAN CHASE BANK, NA (hereinafter ―Chase‖) as partial successor in interest toWASHINGTON MUTUAL BANK NATIONAL ASSOCIATION (hereinafter ―WAMU‖) andset forth their affirmative defenses and counterclaim as follows:In regards to a Owners acting as in the capacity of a Pro Se Defendant and Counter-Plaintiff, theSupreme Court ruled that substance governs over form or technicality. See Platsky v. CIA;Haines v. Kerner; Louisville, 404 U.S. 519 (1972); N.R. v. Schmidt, 177 U.S. 230 (1900).With regard to the standard held for Pro Se litigants it is maintained that in Bell Atlantic Corp.v. Twombly and Ashcroft v. Iqbal heightened pleading standards only apply to learned counsel. Defendants Answer and Amended Counterclaim – page 1 of 104
  2. 2. Moreover, Ashcroft & Twombly overruled Conley v. Gibson. The issues within Bell AtlanticCorp. v. Twombly and Ashcroft v. Iqbal address the heightened pleading standards of learnedcounsel. In Kerns v. United States, the case addresses pro se litigants specifically. Kerns alsoaddresses Conley v Gibson, and Kerns v. United States has not been overturned. AMENDED ANSWER 1. Plaintiff files this complaint pursuant to 735 ILCS 5/15/-1101 et. seq., to foreclosethe mortgage, trust deed or other conveyance in the nature of a mortgage (hereinafter called―Mortgage‖) hereinafter described and joins the following persons as defendants: ______________________________________ Unknown Owners And Non-Record ClaimantsANSWER: Owners admit that Chase brings this action to foreclose on a Mortgage, but deniesthat Chase has the right to bring an action under the Mortgage. Owners are without sufficientinformation to admit or deny as to the remaining information in Paragraph 1.2. Plaintiff has heretofore elected to declare the whole of the principal sum remainingunpaid together with interest thereon to become immediately due and payable and by the filingof this complaint Plaintiff has confirmed said election. ANSWER: Owners admit that Chase claims that it has made an election with regard to the Mortgage signed by Owners, but denies that Chase has the right to bring an action under the Mortgage.3. Attached as ―EXHIBIT A‖ is a true copy of the Mortgage. Attached as ‖EXHIBIT B‖ isa true copy of the Note secured thereby. ANSWER: Owners lack information sufficient to form a belief as to the truth of the allegations contained in paragraph 3 of the Complaint especially as the Mortgage is labeled unofficial copy and therefore, Owners deny the allegations. Owners admit that the documents attached as Exhibit A and Exhibit B to the Complaint purport to be the Mortgage and the Note and demand that originals of the Mortgage and Note be produced. Defendants Answer and Amended Counterclaim – page 2 of 104
  3. 3. 4. Answering Paragraph 4 of the Complaint, Information concerning said mortgage:OWNERS answer as follows: a) Nature of the Instrument: Mortgage ANSWER: Owners admit. b) Date of the Mortgage: __________________ ANSWER: Owners admit. c) Name or Names of the Mortgagors: __________________________ ANSWER: Owners admit, but affirmatively state that ownership by Owners inthe Mortgage is not stated as stated on record title for the Mortgaged Premises. d) Names of the mortgagee, trustee or grantee in the Mortgage: Washington Mutual Bank, FA ANSWER: Owners deny. e) Date and place of recording: Mortgage Date and Place of recording:__________________________ County Recorder‘s Office. ANSWER: Owners admit, and affirmatively state that there were subsequent recordings which sold the Mortgage so that Chase does not have the right to proceed against Owners. f) Identification of recording: Mortgage: __________________________ ANSWER: Owners admit that the document identified in Section 4e) was recorded as dated. g) Interest subject to the mortgage: Fee simple ANSWER: Owners admit that they are fee simple owners of the mortgaged premises and deny that CHASE has the right to proceed against them. Defendants Answer and Amended Counterclaim – page 3 of 104
  4. 4. h) Amount of original Indebtedness, including subsequent advances made under the mortgage: __________________________ ANSWER: Owners deny. i) Legal description of Mortgaged premises and common address (hereinafter―Mortgaged Premises‖): __________________________ Permanent Index No__________________________ ANSWER: Owners admit. Mortgaged Premises shall also be referred to hereinas ―Property‖. j) Statement as to defaults: The Mortgage is in default due to the failure of themortgagor to pay the monthly installments of principal, interest, taxes and insurance, and anyother escrow items that may apply, for the period __________________________through thepresent. There remains an outstanding principal balance of __________________________withinterest accruing at __________________________per diem plus attorney‘s fees, foreclosurecosts, late charges, advances and expenses incurred by the Plaintiff as a result of the default. ANSWER: Owners deny that they owe Chase under the Mortgage. k) NA l) NA m) Name of defendants claimed to be personally liable for deficiency, if any: __________________________,ANSWER: Owners admit that Chase is claiming that __________________________arepersonally liable for deficiency, but deny that __________________________is liable to Chase. n) Capacity in which Plaintiff brings this foreclosure: Plaintiff is the legal holder ofthe indebtedness and owner of the mortgage given as security therefore. Defendants Answer and Amended Counterclaim – page 4 of 104
  5. 5. ANSWER: Owners deny the allegations of Section 4n). o) Facts in support of redemption period, shorter than the longer of: i) 7 monthsfrom the date the mortgagor or, if more than one, all the mortgagors (I) have been served withsummons or by publication or (II) have otherwise submitted to the jurisdiction of the Court, ifresidential real estate; (ii) 6 months from the date the mortgagor or, if more than one, all themortgagors (I) have been served with summons or by publication or (II) have otherwisesubmitted to the jurisdiction of the Court, if commercial real estate; or (iii) 3 months from theentry of the judgment of foreclosure, whichever is later. That pursuant to the terms of the 735ILCS 5/15-1603, the Court determine the length of the redemption period upon making a findingbased on the facts and circumstances available to the Court at the time of judgment that theproperty is either residential, non-residential or abandoned. ANSWER: Owners admit that Section 4o) attempts to state theprovisions of Illinois law and states that the Illinois statute speaks for itself. p) Facts in support of request for attorneys fees and of costs and expenses: Thatpursuant to the terms of the Note and Mortgage, the mortgagee is entitled to recover attorneysfees, court costs, title costs, and other expenses which plaintiff has been and will be required toexpend in the prosecution of this foreclosure. ANSWER: Owners deny the allegations of Section 4p) and affirmatively statesthat Chase is not entitled to relief in this action. q) Determination as to residential real estate: (1) That pursuant to the terms of 735 ILCS 5/15-1219, Plaintiff requests that the courtmake a finding based upon facts and circumstances available to the court at the time of Judgmentthat the subject real estate is either ―residential real estate‖ occupied as a principal residenceeither (i) if a mortgagor is an individual, by that mortgagor, that mortgagor‘s descendants, or (ii)if a mortgagor is a trustee of a trust or an executor or administrator of an estate, by a beneficiaryof that trust or estate or by such beneficiarys spouse or descendants or (iii) if a mortgagor is acorporation, by persons owning collectively at least 50 percent of the shares of voting stock of Defendants Answer and Amended Counterclaim – page 5 of 104
  6. 6. such corporation or by a spouse or descendants of such persons and subject to a 7 monthredemption period. (2) In the event that the court finds that either: (1) the real estate is residential, thenthe real estate shall be subject to a seven month redemption period, or (2) The real estate is non-residential, then the real estate is subject to a six (6) month redemption period. ANSWER: Owners deny the allegations of Section 4q) and affirmatively state that Chaseis not entitled to relief in this action. r) Facts in support of a requested for appointment of mortgagee in possession or forappointment of a receiver, and identity of such receiver, if sought: None at this time; Plaintiffreserves the right to file a separate Petition for Appointment of Mortgagee in Possession orReceiver if applicable. ANSWER: No answer is required to the provisions of Section 4r). s) Name or names of defendants whose right to possess the mortgaged real estate,after the confirmation of the foreclosure sale, is sought to be terminated and, if not elsewherestated, the facts in support thereof: __________________________ and Unknown Owners andNon-Record Claimants. ANSWER: Owners admit that Chase is seeking to take away their rights to possess theMortgaged Premises. Owners admit that there are other persons with recorded interests withrecordings with regard to the Mortgaged Property. AMENDED AFFIRMATIVE DEFENSES Further answering the Complaint, and for their affirmative defenses, Owners state asfollows: FIRST AFFIRMATIVE DEFENSES LACK OF LEGAL STANDING TO SUPPORT A FORECLOSURE COMPLAINTPURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE § 17(A)(1) AND 19 (A)AND UCC 810 § ILCS - 5 Defendants Answer and Amended Counterclaim – page 6 of 104
  7. 7. 1. On __________________________Owners engaged WAMU to refinance theirproperty and entered into a loan agreement. The terms of the loan were memorialized in apromissory note ("the Note") which was secured by a Mortgage ―lien‖ on the Property. SaidMortgage was recorded on __________________________in __________________________County, Illinois as Document # __________________________. 2. Owners executed the Note naming WAMU as ―lender‖ and then separatelyexecuted the Mortgage naming WAMU as ―lender‖ and ―Mortgagee.‖ 3. On __________________________Chase commenced foreclosure proceedingsagainst the Owners, recording with the DuPage County Recorder, a ―Notice of Lis Pendens‖ asdocument #__________________________announcing to the world that Chase intended to seizeOwners Property. 4. In its complaint to foreclose Owners property, Chase claims that ―Plaintiff is thelegal holder of the indebtedness and owner of the mortgage given as security therefore.‖ 5. Upon information and belief, Owners allege that Chase‘s claim is untrue.OWNERS LEARN OF FLAGRANT BANK FRAUD 6. Upon learning that most mortgages in the past 10 years were sold to investors asMortgage Bank Securities (―MBS‖), Owners sent a Qualified Written Request (QWR) as thatterm is defined in RESPA, 12 U.S.C. § 2605(e)(I)(B) to Chase to learn the identity of potentialMBS Investors who might own their Note. Said QWR was sent via registered mail #__________________________on __________________________which Chase received on__________________________. Exhibit 1 7. Chase claimed that it received QWR on __________________________-24-2010in violation of RESPA. 8. Chase responded insufficiently to the questions posed in the QWR refusing todisclose information which would authenticate the identity of the owner of the Note and providean accounting which would show all money paid or received in connection with the subjectobligation. Defendants Answer and Amended Counterclaim – page 7 of 104
  8. 8. 9. Upon information and belief, Owners allege that Chase is seeking to conceal thetrue creditor and separate the borrowers from the investors by making it appear that someoneother than the true creditor had a beneficial interest.OWNERS LOAN HAS BEEN SECURITIZED 10. On _________________, Owners contracted with __________________ toperform a securitization examination of the Loan on the Property (―Securitzation Examination‖).The following fields were used to locate the specific MBS Trust Owners note was sold to: LoanId Number, Origination Date, Maturity Date, First Payment Date, Principal And SecuritizedAmount Of Loan, Term Of The Loan / Interest Rate / Type Of The Loan, Geo Location / County/ Zip Code, Servicer / Trustee Name / Trust Name, Status Of The Loan: Foreclosure, Bankruptcy,Reo, Date Of Foreclosure, Bankruptcy, Reo. 11. Said Securitization examination revealed that Owners Loan was sold to Investorsof MBS Securities as __________________Mortgage Pass-Through Certificates_______________ (the ―Trust‖) which was registered with the Securities and ExchangeCommission (―SEC‖.) Exhibit 2 12. At some point after WAMU recorded Owners Mortgage on__________________ at the __________________ County Recorder‘s Office, and before theMBS Trust cut-off date of __________________, WAMU sold and assigned, without recourse,their entire interest in the Mortgage Loan Contracts (―Receivables‖) as the Debt/Obligations,under a Transfer and Servicing Agreement, to MBS Investors, Certificate/Bondholders. TheseReceivables were then securitized as part of a large pool of Receivables. Certificates were thenregistered and issued to investors. 13. From that time on, the Trust was the only mortgagee, the only owner of the Noteand Mortgage. This Trust must abide by a set of governing documents called the Pooling andServicing Agreement (―PSA‖) according to New York law.PSA INTENTIONALLY IGNORED 14. The PSA requires that the Notes be delivered and recorded. Defendants Answer and Amended Counterclaim – page 8 of 104
  9. 9. ASSIGNMENT OF LOANS: Pg 144: At the time of issuance of a series of securities, the depositor will cause the loans and any other assets included in the related trust to be assigned without recourse to the trustee or owner trustee or its nominee, which may be the custodian, together with, unless specified in the accompanying prospectus supplement, all principal and interest received on the trust assets after the cut-off date, but not including principal and interest due on or before the cut-off date or any Excluded Spread. 15. According to the deposition of Angela Melissa Nolan VP of JP Morgan Chase inthe case styled: Deutsche Bank National Trust As Trustee For JPMAC 2007-CH5-JP MorganChase Bank NA Case# 50-2008-, Chase, in direct violation of the prospectus and PSA, kept theNotes its own vault under the pretense that it was ―safer‖ in that location. PG 19 A : Typically, we do allonges. That is ninety-nine percent of what we do because the vault--the note is in our vault. Q Okay. Do you take any steps to verify that the note, when it is extracted from the vault, is actually the original? A Extracted for what purposes? Q Well, for a foreclosure lawsuit. A Yes. I do not, but there is a team within the custodial shop that verifies the authentic- --or originality of those documents prior to releasing it to the attorneys. PG 39: A: I mean, the notes going to be in our vault, so that wouldnt be a possibility that anybody could go out and sell it, endorse it. 16. The practice of not following the PSA governing agreement appears to be routinewith the largest banks thus subjecting the Servicers or Originating banks to securities fraud bythe SEC. In riveting sworn testimony in Kemp V Countrywide, Linda De Martini, supervisor andoperational team leader for the Litigation Management Department for BAC Home LoansServicing L.P., testified that Countrywide NEVER delivered the notes to the trusts. Ms. DeMartini testified that, in her extensive career in the mortgage loan servicing business of Countrywide, ―I had to know about everything . . . .‖ She testified that Countrywide Home originated Kemp‘s loan in 2006 and transferred it to the Bank of New York as trustee for the issuing trust, but that Countrywide Servicing retained the original note in its own possession and never delivered it to the Bank of New York because Countrywide Servicing was the servicer for the loan. 17. The January 2011 Financial Crisis Inquiry Commission (FCIC) Report alsoreferred to Kemp V. Countrywide with circumstances similar to that of Owners loan in the instant Defendants Answer and Amended Counterclaim – page 9 of 104
  10. 10. case, stated that the borrowers home could not be foreclosed because it had failed to bothindorse and deliver the note to the MBS Trust. ―On November 16, 2010, a bankruptcy court ruled that the Bank of New York could not foreclose on a loan it had purchased from Countrywide, because MERS had failed to endorse or deliver the note to the Bank of New York as required by the pooling and servicing agreement. This ruling could have further implications, because it was customary for Countrywide to maintain possession of the note and related loan documents when loans were securitized.‖ 18. On November 15, 2010 an article by NAKED CAPITALISM entitled ―MoreEvidence That Mortgage Loans Were Not Properly Conveyed to Securitization Trusts” alsovalidated that large banks routinely failed to deliver borrowers notes which had been sold toMBS Trusts: ―We‘ve described in various articles how evidence is growing that the participants in mortgage securitizations sometime early in this century appear to have ignored the requirements of a variety of laws and their own contracts. We believe the most serious and difficult to remedy problem results when the parties involved in the creation of a mortgage securitization failed to take the steps necessary to convey the loans to the legal entity, a trust, which was set up to hold them. As we wrote: …. there is substantial evidence that in many cases, the notes were not conveyed to the trust as stipulated. As we have discussed, the pooling and servicing agreement, which governs who does what when in a mortgage securitization, requires the note (the borrower IOU) to be endorsed (just like a check, signed by one party over to the next), showing the full chain of title. The minimum conveyance chain in recent vintage transactions is A (originator) => B (sponsor) => C (depositor) => D (trust). The proper conveyance of the note is crucial, since the mortgage, which is the lien, is a mere accessory to the note and can be enforced only by the proper note holder (the legalese is ―real party of interest‖). .. It isn‘t simply that the notes had to go through a particular chain of parties to get to the trust. All these steps had to be accomplished by a particular date, which was generally no later than ninety days after the trust closed. And all the assets conveyed to the trust had to be ―performing‖, meaning the borrower was current on his payments. The evidence that the deal creators violated these stipulation is widespread... Another proof of the failure to adhere to these requirements is that the note are often conveyed to the trust right before the foreclosure. This fix is impermissible for three reasons: it is far too late (years after the cutoff), it is typically directly from the originator to the trust (in violation of the requirement that it go through all the intermediary parties) and it occurs after they have defaulted (contrary to the stipulation that the loan be performing).Some investigators have been trying to provide more convincing proof of their belief that these abuses were not merely widespread but pervasive...This practice is more than a little problematic. Transferring non-performing loans into a trust or making an Defendants Answer and Amended Counterclaim – page 10 of 104
  11. 11. out-of-time assignment is a void act under New York trust law (and mortgage securitization trusts are organized as New York trusts).. 19. Upon information and belief, Owners allege that Chase, in concert with the largestbanks recklessly and intentionally violated both the law and their own PSA governingagreements in order to sell borrowers Notes multiple times as bearer paper to multiple MBSTrusts as suggested by Forensic auditor Charles J. Horner, of Charles J. Horner & AssociatesForensic Document Examiners, Bonita, CA., in a Foreclosure Investigation Report he conductedfor a client: Conspiracy, Deceitful Acts, Failure To Comply With 424B5 [424B5 is "A form of prospectus that discloses information, facts or events covered in both paragraphs (b) (2) and (3) shall be filed with the Commission [SEC] no later than the second business day following the earlier of the date of the determination of the offering price or the date it is first used after effectiveness in connection with a public offering or sales, or transmitted by a means reasonably calculated to result in filing with the Commission by that date."] – Pursuant to the Pooling & Servicing Agreement (PSA) as quoted above, the conduit entities must assign all mortgages at the time of the issuance of the certificates to the Trustee. I have noted that no Assignment of Deed of Trust assigning the security instruments to LaSalle Bank has ever been recorded in Nevada County where the subject property is situated. It would be safe to assume that all certificates would have been issued as of the date of this report.. Since no assignment to date has been recorded, now exists a case whereby both Washington Mutual a/k/a JP Morgan Chase and LaSalle Bank as Trustee conspired to deceive the certificate holders into thinking that all mortgages have been securitized and the security instruments have been assigned to the Trustee at the time the certificates were issued when in fact they have not. This is a deceitful and fraudulent act whereby the certificates holders are unsecured on the outset and leaves open the possibility of double selling the certificates abroad. Furthermore, this act represents a violation of the PSA and prospectus as registered with the Security Exchange Commission and IRS REMIC code possibly making any future assignments to the Trust voidable. 20. There is no evidence that the Owners Mortgage Note was ever officiallytransferred to the Trust to the now purported holder-in-due-course __________________passthrough certificates. As a result, the note was put out of eligibility under New York law. 21. According to Horace v. LaSalle Bank, Re: Alabama No. 3:08cv1019-MHT (WO),US District Court, M.D., Eastern Division, February 17, 2009, it was ruled: ―the trust failed tofollow its own pooling and servicing agreement, and did not follow applicable New York law Defendants Answer and Amended Counterclaim – page 11 of 104
  12. 12. when trying to obtain assignment of Horaces note and mortgage." Without proof the mortgagehad been assigned to the trust, the trustee lacked standing to foreclose. Furthermore: "Accordingly, the endorsement chain … does not comply with that required by the PSA," Judge Albert Johnson wrote:"The court is surprised to the point of astonishment that the trust did not comply with the terms of its own pooling and servicing agreement and further did not comply with New York law in attempting to obtain assignment of plaintiff Horaces note and mortgage."WAMU NOT TRUE LENDER 22. Upon information and belief, WAMU did not advance funds to Owners loan withany of its own assets on __________________, the closing date of the loan, and thus WAMUwas not the true creditor. Owners loan, as well as Millions of other loans across America, werepre-funded by pre-sold securities by investors of MBS. It was common practice on Wall Streetto ―forward sell‖: Investment banks on Wall Street sold Investors Mortgage-Backed Securities inadvance of the procurement of the mortgage loans thus pre-funding said loans by way of aProspectus. Each MBS prospectus defines the criteria for the types of mortgages represented inan MBS Trust. According to allegations in a Kentucky RICO Class Action suit filed against thelargest banks: ―The prospectus was created, the MBS rated and the investors money was pledged and collected before the homeowner ever even applied for a loan.‖ ―MBS investors advanced funds in a pre-funding agreement. Funds for mortgage loans remained in a Trust awaiting a loan application which spelled out the borrower and propertys data. This criteria was composed of credit scores, loan-to- value ratio [which determined how much equity/risk a borrower had], area of the country the property was located in, etc., was then matched with the underlying criteria outlined in a MBS Prospectus. When a match occurred, funds controlled by the so-called ―lender,‖ but not produced by the lender, were then directed to purchase that loan.‖ In sworn testimony by Expert Securitization Witness Neil Garfield in a bankruptcy case: Tarantola # 4:09-bk-09703-EWH in Tuscon, Arizona: ―The investor advanced the actual funds from which the financial product loan was funded, assuming these investors that purchased asset backed securities were those in which ownership of the loans were described with sufficient specificity as to at least express the intent to convey ownership of the obligation as evidenced by the promissory note and an interest in real property consisting of a security interest held by an entity that was described as the beneficiary of a trust created by an instrument entitled ―mortgage.‖ ―Investment bank underwriters created Defendants Answer and Amended Counterclaim – page 12 of 104
  13. 13. prospectus‘, went to investors and pre-sold bonds before the loans were originated.‖ 23. According to the Federal Reserve Bank of New York Staff Reports -TBA Tradingand Liquidity in the Agency MBS Market by James Vickery Joshua Wright Staff Report No.468-August 2010: ―A less widely recognized feature is the existence of a liquid forward market for trading agency MBS, out to a horizon of several months.3 The liquidity of this market raises MBS prices and improves market functioning. It also helps mortgage lenders manage risk, since it allows them to ―lock in‖ sale prices for new loans as or even before those mortgages are originated. The vast majority of agency MBS trading occurs in this forward market, which is known as the TBA market (TBA stands for ―to be announced‖). In a TBA trade, the seller of MBS agrees on a sale price, but does not specify which particular securities will be delivered to the buyer on settlement day. Instead, only a few basic characteristics of the securities are agreed upon, such as the coupon rate and the face value of the bonds to be delivered. *3 In a forward contract, the security and cash payment for that security are not exchanged until after the date on which the terms of the trade are contractually agreed upon. The date the trade is agreed upon is called the ―trade‖ date. The date the cash and securities change hands is called the ―settlement‖ date.‖ 24. When Owners submitted their loan application to Chase, the criteria on saidapplication was extrapolated and then matched with corresponding criteria from an MBS Trustas defined in its Prospectus. Once a match was made, funds provided by the Investors were thenforwarded to the so-called ―Lender‖ to create the illusion that the so-called Lender was fundingthe loan. Thus the true creditor was the Investors of the MBS Securities. 25. WAMU was never the lender of Owners Mortgage loan. Hence, Chase, in itscapacity as successor in interest to WAMU, has no standing to make its Complaint as only thetrue ―creditor‖ has standing to foreclose a mortgage.WAMU SOLD OWNERS A PREDATORY LOAN PRODUCT 26. WAMU sold Owners a known predatory Option Arm loan product with anegative amortization which according to sworn testimony by confidential witnesses in theFederal Home Finance Authority V. JP Morgan Chase lawsuit filed on September 2, 2011,earned WAMU and its employees vast sums of money at the expense of borrowers: Defendants Answer and Amended Counterclaim – page 13 of 104
  14. 14. §239. WaMu Bank pushed its Option ARM loans on borrowers regardless of their sophistication, income level, or financial stability. An Option ARM loan is typically a 30-year Adjustable Rate Mortgage (―ARM‖) that initially offers the borrower four monthly payment options: (i) a specified minimum payment (which was typically lower than the interest payment and therefore caused the loan to grow, referred to as negative amortization), (ii) an interest-only payment, (iii) a 15-year fully amortizing payment, and (iv) a 30-year fully amortizing payment. The rate of an ARM loan also adjusts monthly and if the loan rate was higher than the required interest in the payment, the balance of the loan would increase (called negative amortization). Fay Chapman, WaMu Bank‘s former Chief Legal Officer, candidly admitted to the Seattle Times in an article published on October 26, 2009, that ―[m]ortgage brokers put people into the product who shouldn‟t have been.‖ In 2003, WaMu originated $32.3 billion of Option ARM loans. By 2005, that number almost had doubled to $64.1 billion. 26. WAMU‘s predatory loan product had another consequence as Owners ―OptionArm‖ loan product had a negative amortization which pursuant to under UCC sec 3-104 renderssaid Note as non-negotiable. (a) § 3-104. NEGOTIABLE INSTRUMENT: (a) Except as provided in subsections (c) and (d), "negotiable instrument" means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order. 27. A negative amortization fails this test. Since these types of notes are notnegotiable instruments, the transfer and sale of said notes are subject to the provisions of UCCArticle 9, not Article 3. Article 9 states: ―if a note is not negotiable and the originator sells the note, then Article 9 applies as it applies to both the sale of secured instruments and secured transactions. In such a case the note must be assigned by the originator/assignor to the assignee and the assignee must pay good and valuable consideration to the assignor in exchange for the assignment.‖ (Owners emphasis) 28. Owners Note principal balance was recorded as $ ____________ on____________. By ____________, said balance had increased to $ ____________ thusrendering said note as non-negotiable. Defendants Answer and Amended Counterclaim – page 14 of 104
  15. 15. 29. No assignment was recorded at the ____________ County Recorder‘s Officewhich means that Chase could not have legally acquired Owners Note as a negotiable instrumentas Owners Note was non-negotiable.REMICS 30. Real Estate Mortgage Investment Conduits (hereinafter ―REMICS‖) were createdin 1987 as a tax avoidance measure by Investment Banks. The REMIC is referred to in the worldof finance as an SPV (Special Purpose Vehicle), or SPE (Special Purpose Entity.). 31. REMICs are investment vehicles that hold commercial and residential mortgagesin trust and issues securities, in the instant case, a Mortgage-backed security, representing anundivided interest in these mortgages. 32. The trustee for the Trust has sworn under oath with the Securities and ExchangeCommission (―SEC,‖) and the Internal Revenue Service (―IRS,‖) that as a mortgage asset ―passthrough‖ entity, it cannot own the mortgage loan assets in the MBS as it would then be taxed onthe interest earned from the Note. 33. This allows the Trust to qualify as a REMIC rather than an ordinary Real EstateInvestment Trust (―REIT‖). As long as the MBS is a qualified REMIC, no income tax will becharged to the trust. 34. To avoid double taxation, under Internal Revenue Code 860, Owners loan wasplaced in a Special Purpose Vehicle (―SPV‖) Trust so that only the shareholders would be taxedand therefore, the shareholders are the real parties in interest. 35. Moreover, because of IRS code 860, the Trust is not the real and beneficial partyin interest because the REMIC does not own the Note, the shareholders do. 36. By distributing the tax liabilities to the shareholders, the REMIC has alsodistributed the parties in interest.OWNERS LOAN IS NO LONGER A NEGOTIABLE INSTRUMENT Defendants Answer and Amended Counterclaim – page 15 of 104
  16. 16. 37. Once the REMIC containing Owners loan was formed, Owners loan wasconverted into a security owned by thousands of shareholders throughout the world and wastraded on Wall Street. 38. When Owners note became a securitized instrument, it forever lost its identity as aNegotiable Instrument and was no longer enforceable as a Mortgage Note. A negotiableinstrument can only be in one of two states after undergoing securitization, not both at the sametime. It can either be a loan or a stock. 39. Once the instrument is traded as a stock, it is forever a stock and thereforeregulated, as this loan was, by the SEC as a stock. 40. Chase, in its capacity as successor in interest to WAMU can no longer claim thatit is a real party in interest, or even that the loan stills exists as a loan, since double dipping is aform of securities fraud. 41. Since WAMU sold Owners loan to a REMIC and Owners loan was securitizedinto stock, WAMU forever lost the ability to enforce, control or otherwise foreclose on Ownersproperty, including the right to assign the Mortgage or endorse the Note. It was no longer the realparty of interest. 42. By way of a prospectus, the MBS investors agreed to an operating plan thatdefined the functions of the SPV conduit which was used to funnel funds to the investor from thepool. Since the words ―conduit‖ and ―vehicle‖ convey the fact that no actual business events oftaxable or monetary significance takes place in the REMIC, the investors are the creditors,having been the only parties to advance funds from which the Owners loan was funded. 43. The Servicer, first WAMU and then Chase, in its capacity as successor in interestto WAMU, were merely administrative entities which collected the mortgage payments andescrow funds. 44. Moreover, if Chase were to have a financial stake in the mortgage loan, the MBSTrust would lose its REMIC pass-through tax status.THE BANKS GAME THE SYSTEM THEY CREATED Defendants Answer and Amended Counterclaim – page 16 of 104
  17. 17. 45. Banks do not use their own funds to make loans. Banks issue money obtainedfrom the Federal Reserve (―Fed‖) through signatures on promissory notes. The bank convertsthese signatures into money and registers the value of the mortgage loan in its ledger as an Assetof the Federal Reserve. Pursuant to the Uniform Commercial Code 1-201(24) and 3-104: it is thesignature on the promissory note which creates the ―money.‖ The bank then establishes anaccount containing the ―money‖ the loan just created and thereby becomes the source of fundsthat a borrower receives as a ‗loan‘. ―Credit or promissory notes become money when banks deposit promissory notes with the intent of treating them like deposits of cash.” See, 12 U.S.C. Section 1813 (l)(1) (definition of ―deposit‖ under Federal Deposit Insurance Act). ―A deposit created through lending is a debt that has to be paid on demand of the depositor, just the same as the debt arising from a customers deposit of checks or currency in the bank. Of course they [the banks] do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers transaction accounts.‖ — Federal Reserve Bank Chicago, Modern Money Mechanics, p. 6 46. Upon information and belief, Owners allege that the Insiders on Wall Street, thelargest banks and the privately-owned Federal Reserve, (the ―Conspirators‖), gamed their ownsystem. The so-called Lenders established funding warehouses which were nothing more than―money-laundering‖ facilities. Once the Note was signed by the Owners in the instant case, andmillions of others similarly situated across America, Borrowers Promissory Notes becamenegotiable instruments or cash. 47. The so–called Lender then went to the Federal Reserve and was ―credited‖ 10times the amount of the Note. Under normal mortgage loan circumstances, the Lender wouldcredit the borrower 10% of the money it received to fund the borrowers loan, retain 10% asreserves and then use 80% to fund loans to others as demonstrated in the Federal ReservePublication ―Modern Money Mechanics‖ on page 8: ―Carried through to theoretical limits, the initial $10,000 of reserves distributed within the banking system gives rise to an expansion of $90,000 in bank credit (loans and investments) and supports a total of $100,000 in new deposits under a 10 percent reserve requirement.‖ Defendants Answer and Amended Counterclaim – page 17 of 104
  18. 18. 48. However, because the mortgage loans had been pre-funded by Investors of theMBS‘s, Chase, in concert with other large banks, committed fraud as they used the Owners Notein the instant case, and the notes of millions of others borrowers similarly situated acrossAmerica, to obtain funds from the Fed, while simultaneously being paid for said Note by theMBS Trust thereby collecting more than ten times the amount of each mortgage loan. 49. According to Generally Accepted Accounting Principles (―GAAP‖) rules, theborrowing bank must post collateral to the Fed in return for the loan. Such collateral includes:mortgages, consumer loans, and commercial loans. But because the Conspirators own andcontrol the system, they could manipulate it with devastating consequences. 50. The money drawn from the Fed is a liability to the Bank and is registered on thepublic side of the Bank‘s books. According to the Generally Accepted Accounting Practices(GAAP) which every bank must abide by, this liability must then be offset by registering theNote as collateral, or an asset held by the Fed. To game the system, the Conspirator banks usedPublic Funds obtained through the Fed, but registered the asset/collateral on the private side oftheir books in direct violation of the GAAP. In other words, the banks ledgered the asset to thePrivate side of their ledgers and the liability to the Public side, thus increasing the National Debt,money owed to the Fed, by Billions. 51. Furthermore, borrowers mortgage payments were also supposed to be paid to theFed in order to properly discharge the liabilities created by the mortgage loans, but instead thesepayments were funneled to the MBS Trusts. 52. Upon information and belief, Chase, and other large banks, used the Fed toconvert the mortgage notes into money, took the money and converted it into profits.SERVICER IS DEBT COLLECTOR 53. Since Owners loan went into default, it was written off by the REMICsubsequently, the Trust received tax credits from the IRS. Therefore, the debt was dischargedand settled. Defendants Answer and Amended Counterclaim – page 18 of 104
  19. 19. 54. After securitization, the Note cannot be re-attached to the Mortgage throughadhesion. 55. Under the UCC, the Promissory Note is a one-of-a-kind instrument and anyassignment must be as a permanent fixture onto the original Note, much like a check. 56. The original Promissory Note has the only legally binding chain of title, otherwisethe instrument is faulty. 57. The original Note had to be either destroyed, or in the case of Chase, fraudulentlyretained in its own vault, upon securitization because the Note and the stock cannot exist at thesame time. 58. Under the terms of the Pooling and Servicing Agreement, the Servicer can buyback the Note as a non-performing non-secured debt like collection agencies that buy non-performing credit card debts. 59. This purchase is of a discharged asset and cannot be re-adhered to the originalMortgage, since the original Note was a one-of-a-kind instrument, not part of the dischargedasset. 60. Therefore the purchaser of the discharged asset can never be the holder-in-due-course of the original Note and the debt is, at best, un-secured. 61. The attempt by CHASE to claim ownership of the original Note by the purchaserof the discharged asset is fraudulent and characterized as ―reverse engineering.‖ 62. There is no perfection of title.TRUSTEE MUST HAVE POSSESSION OF ORIGINAL BLUE INK NOTES 63. In order to retain its tax status, fund the Trust and legally collect money frominvestors who bought into the REMIC, the Trustee of the REMIC must have possession of all theoriginal blue ink Promissory Notes, original allonges and assignments of the Notes, showing acomplete paper chain of title. As demonstrated in the earlier deposition of a VP of Chase at Defendants Answer and Amended Counterclaim – page 19 of 104
  20. 20. paragraph 15, Chase kept the notes in their own vault for a variety of reasons, all designed todefraud the American public in accordance with their Conspiracy.BANKS SOLD THE SAME NOTES MULTIPLE TIMES 64. The January 2011 Financial Crisis Inquiry Commission (FCIC) report stated thatthe investment banks sold the notes as securities multiple times to multiple trusts simultaneously,notes the Conspirators kept in their vaults and under their control. On pages 24 and 25 of theFCIC Report‘s preface, the following statement corroborates that fact: ―Synthetic CDO‘s [collateralized debt obligations] created by Goldman [Sachs] referenced more than 3,400 mortgage securities, and 610 of them were referenced at least twice. This is apart from how many times these securities may have been referenced in synthetic CDOs created by other firms.‖ (Owners emphasis)TRANSFER INTO MBS TRUST REQUIRES AN ASSIGNMENT 65. At the moment of the Note‘s transfer to investors, WAMU was paid in fullwithout recourse for Owners note and as such, had no further authority as ―Lender.‖ ThusWAMU could not legally transfer any interest in the Owners Note or Mortgage to any partyaccording to the Pooling and Servicing Agreement (PSA) of the MBS Trust: POOLING AND SERVICING AGREEMENT PG 115 OF 271: The depositor will cause the trust assets constituting each pool to be assigned without recourse to the trustee named in the accompanying prospectus supplement, for the benefit of the holders of all of the securities of a series. The master servicer or servicer, which may be an affiliate of the depositor, named in the accompanying prospectus supplement will service the loans, either directly or through subservicers or a Special Servicer, under a servicing agreement and will receive a fee for its services.CREDIT DEFAULT SWAPS – LAS-VEGAS STYLED “INSURANCE”Upon information and belief, Owners allege that in another facet of the Conspirators scheme, thebest, brightest, and most sinister on Wall Street, together with the largest banks, robbed untoldTrillions from the American public by their use of unregulated ―insurance‖ policies taken out onMBS bonds called Credit Default Swap‘s, which were and still are, as Author Charles Davistated: ―the destroyer of economies‖*. Credit default swaps are ―Casino-styled ―bets,‖ and the Defendants Answer and Amended Counterclaim – page 20 of 104
  21. 21. Insiders who took out these bets, wagered that the mortgages they themselves originated,mortgages which the Owners allege were ―designed to fail,‖ would do just that thus allowing thebanks to collect on the bets they placed. It appears that the bets placed by the largest banks, mostnotably Goldman Sachs, were paid off at 100 cents on the dollar in the wake of the economiccrisis by Insurance giant AIG with American taxpayer TARP funds. *How to Understand TheDerivatives Market By Charles Davi The Atlantic Jul 16 2009, 66. In a February 7, 20110 New York Times article by Gretchen Morgenson andLouse Story entitled ―Testy Conflict With Goldman Helped Push A.I.G. to Edge,‖ thefollowing corroborates that allegation: ―Some financial analysts have argued that in calculating Goldman Sachs‘ government bailout, the total should include the $12.9 billion in government funds that flowed from the New York Federal Reserve through AIG to Goldman Sachs. Goldman Sachs was paid full-value for collateral calls on debt swaps it had made with AIG, and received more of AIG‘s bailout money than any other firm. It also received AIG bailout money through deals it had with Societe Generale, a French bank that received $11 billion of the AIG bailout. According to a New York Times analysis, before the government was forced to bail out AIG ―Goldman‘s demands for billions of dollars from the insurer helped put it in a precarious financial position by bleeding much-needed cash.‖ AIG analysts believed that Goldman Sachs had pushed other banks, including Societe Generale, to demand collateral payments, an accusation Goldman Sachs denies. AIG disagreed that the securities in dispute had fallen as much as Goldman Sachs claimed, but Goldman Sachs refused to allow third parties to set a value on these securities. The Times reported that ―The federal bailout locked in the paper losses of those deals for A.I.G. The prices on many of those securities have since rebounded.‖ 67. In a Kentucky RICO class action suit against the largest banks, AttorneyMcKeever alleges that the largest banks also collected Trillions on derivative Contracts. The Double and Triple Dip and Derivative Contracts: Most MBS/Trusts were covered by an insurance policy, commonly referred to as a Derivative or Collateral Contract. These Derivative Contracts are not recorded or regulated by the SEC. Upon information and belief, the Defendants have attempted to receive distribution, fees or proceeds or have received distributions from the liquidation of the borrower‘s homes, when the actual beneficiaries under the homeowners‘ loans, the shareholder/investors have been made whole by a Derivative Contract. In other instances, the MBS has been ―closed‖ months or years prior. Funds collected from the loans allegedly within the MBS, are no longer being paid to the investors, but are an unearned windfall to the servicer. Additionally, there is no contract between the investors and the foreclosing entity which would allow them so act as a Plaintiff in a Foreclosure even when the MBS is not shut down. Defendants Answer and Amended Counterclaim – page 21 of 104
  22. 22. Likewise, the MBS/Trusts themselves became parties to Derivative Contracts. Most times, the actual Derivative contract is for more, up to ten times (10x), the face value of the MBS. More often than not, multiple insurance policies were taken and traded on the MBS. The ―double dip‖ or double compensation of the MBS/Trustee, or Servicer is improper in its own right. The offense is patently egregious when it is viewed in light of the fact that the Servicer has no standing to foreclose, yet they came and continue to come to the Courts with the fabricated and forged documents.REAL PARTY IN INTEREST 68. Chase‘s lack of ownership of the mortgage and promissory note in the instant casegoes to the very heart of any claim of standing, permeates the entire proceeding and subverts theintegrity of the instant case. Beyond the Article 3 requirements of injury in fact, causation and redressability, the creditor must have prudential standing, which is a judicially-created set of principles that places limits on the class of persons who may invoke the court‘s powers. Warth v. Seldin, 422 US 490, 499, 95 S.Ct 2197, 45 L.Ed.2d 343(1975)) as a prudential matter, a plaintiff must assert ―his own legal interests as the real party in interest.‖ (Dunmore v. United States, 358 F 3d 1107, 1112 (9th Cir 2004), as found in Fed. R. Civil P. 17, which provides ―(a)n action must be prosecuted in the name of the real party in interest.‖) 69. Chase is not a ‗party in interest‘. The real parties in interest of Owners note arethe investors for the GMACM-2003J MBS Trust. Chase which is proceeding here as the allegedmortgagee, which has no standing to so proceed. 70. Chase does not have the authority to make presentments without dishonor onbehalf of the Real Parties in Interest under F.R.C.P. 17 (a) Real Party in Interest. and 19 (a) forlack of joinder. In re Gavin, 319 B.R. 27, 31 (1st. BAP 2004). The court ruled that Indy MacFederal was not the real party in interest pursuant to Rule 17 of the Federal Rules of CivilProcedure, and the joinder of the owner of the note is required by Rule 19. “[A]n action must beprosecuted in the name of the real party in interest.” See also, In re Jacobson, 402 B.R. 359, 365-66 (Bankr. W.D. Wash. 2009); In re Hwang, 396 B.R. 757, 766-67 (Bankr. C.D. Cal. 2008). ―A party lacks standing to invoke the jurisdiction of a court unless he has, in an individual or a representative capacity, some real interest in the subject matter of Defendants Answer and Amended Counterclaim – page 22 of 104
  23. 23. the action.‖ Lebanon Correctional Institution v. Court of Common Pleas 35 Ohio St.2d 176 (1973). ―A party lacks standing to invoke the jurisdiction of a court unless he has, in an individual or a representative capacity, some real interest in the subject matter of an action.‖ Wells Fargo Bank, v. Byrd, 178 Ohio App.3d 285, 2008-Ohio-4603, 897 N.E.2d 722 (2008). It went on to hold, ―If plaintiff has offered no evidence that it owned the note and mortgage when the complaint was filed, it would not be entitled to judgment as a matter of law.‖HOLDER IN DUE COURSE 71. Based on the Securitization of the Mortgage, Promissory Note as Receivable andthe Mortgage Loan Installment Contract, Chase has no enforceability rights as owner, holder orholder in due course (―HDC‖) under §17(A)(1) AND §19 (A) and UCC 810 ILCS 5. 72. According to UCC (810 ILCS 5/): The holder of a note must be a Holder In DueCourse: A party who acquires possession of an instrument (usually a check, promissory note, orinstallment sale contract) after giving value for it, in good faith, and without notice that there areany defenses; the holder in due course takes free of any claims.FORECLOSING PARTY MUST SUFFER LOSS 73. Standing requires that a party will suffer financial loss derived from non-performance (i.e., nonpayment) of the subject contract. Since the MBS Investors purchasedOwners note, the investors are the creditors. 74. Because WAMU sold Owners note and was thus paid in full for subject Loantransaction, Chase, in its capacity as successor in interest to WAMU, does not stand to suffer anyloss or harm should they be enjoined from foreclosing on Owners Property. Constitutional standing under Article 3 requires, at a minimum, that a party must have suffered some actual or threatened injury as a result of the defendant‘s conduct, that the injury be traced to challenged action, and that it is likely to be redressed by a favorable decision. (Valley Forge Christian Coll. V.Am. United for Separation of church and State, 454 US 464, 472, 102 S. Ct. 752, 70 L.Ed. 2d 700 (1982) (citations and internal quotations omitted)).NOTE MUST BE INDORSED FOR CHASE TO MAKE CLAIM Defendants Answer and Amended Counterclaim – page 23 of 104
  24. 24. 75. Under Illinois law, only the entity entitled to enforce the note may bring acomplaint to foreclose the mortgage against the mortgagor. See Bayview Loan Servicing, LLC v.Nelson, 890 N.E.2d 940, 943 (Ill. App. Ct. 2008). 76. In order for Chase to be entitled to enforce Owners note, Chase must demonstratethat it is a ―party in interest‖ by showing that it is a creditor with a security interest in the subjectreal property. See Mims, 438 B.R. at 57 (finding that as movant ―failed to prove it owns the Note,it has failed to establish that it has standing to pursue its state law remedies with regard to theMortgage and Property‖). Cf. Brown Bark I L.P. v. Ebersole (In re Ebersole), 440 B.R. 690, 694(Bankr. W.D. Va. 2010) (finding that movant seeking relief from stay must prove that it is theholder of the subject note in order to establish a ‗colorable claim‘ which would establish standingto seek relief from stay). 77. For Chase to ―prove‖ that it has the right to enforce Owners note, said note mustbe indorsed either to Chase directly, or in blank. 78. Illinois Attorney and author, Kevin Hudspeth, stated in a legal article entitled―Murky MERS‖: ―If the plaintiff claims to be the holder of the note, it must demonstrate that thenote is indorsed—either specifically to the plaintiff or in blank— and that the plaintiff is inpossession of the note.‖ He cites the following law to corroborate that statement: (810 ILCS 5/3-201) (from Ch. 26, par. 3-201) Sec. 3-201. Negotiation. (a) "Negotiation" means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder. (b) Except for negotiation by a remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder. If an instrument is payable to bearer, it may be negotiated by transfer of possession alone. (Source: P.A. 87-582; 87-1135.) Sec. 3-205. Special indorsement; blank indorsement; anomalous indorsement. (b) If an indorsement is made by the holder of an instrument and it is not a special indorsement, it is a "blank indorsement". When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed. Compare 810 ILL. COMP. STAT. 5/3-301 (2010) (naming a holder as a party entitled to enforce) with 810 ILL. COMP. STAT. 5/3-201(b)(21)(A) (2010) Defendants Answer and Amended Counterclaim – page 24 of 104
  25. 25. (defining holder, in part, as a person in possession). See also In re Wilhelm, 407 B.R. 392, 401 (Bankr. D. Idaho 2009). 810 ILL. COMP. STAT. 5/3-205(b) (2010). See Joslyn v. Joslyn, 54 N.E.2d 475, 478 (Ill. 1944) (―[P]ossession of bearer paper is prima facie evidence of title thereto, and sufficient to entitle the plaintiff to a decree of foreclosure.‖) (emphasis added) (citations omitted); see also Foreman Trust and Sav. Bank v. Cohn, 174 N.E. 419, 421-22 (Ill. 1930); Rago v. Cosmopolitan Nat‘l Bank, 232 N.E.2d 88, 92 (Ill. App. Ct. 1967); First Secs. Co. of Chi. v. Schroeder, 114 N.E.2d 426, 427 (Ill. App. Ct. 1953). Though these cases officially deal with enforcing bearer paper, 97. 79. Mr. Hudspeth continues: ―the note‘s indorsement will presumably be clear fromthe copy attached to the plaintiff‘s complaint. Thus, assuming the plaintiff establishes that it is inpossession of the note in some way, the indorsement alone should suffice to demonstrate theplaintiff‘s right to enforce. (Owners emphasis)THE ALLEGED INDORSEMENT 80. Chase attached to its complaint to foreclose Owners property, a copy of Ownersnote as its Exhibit B. On page 6 of Owners Note, there appears an undated indorsement whichreads: ―Pay to the Order of ______(blank) WITHOUT RECOURSE, Washington Mutual Bank,FA. Said indorsement was allegedly signed by Jess Almanza, as Vice President for WAMU. Saidunauthenticated indorsement in blank serves to memorialize the sale/transfer of Owners loanwhich had previously taken place. As such, if WAMU had recorded the required assignment ontheir non-negotiable negative amortized loan, said blank indorsement would constitute ―bearerpaper‖ thus providing Chase the requisite evidence it required to claim that it was the holder ofOwners note. 81. Owners allege that Chase does not have the requisite evidence needed to claim itis the holder of Owners Note as Chase falsely created the indorsement needed to ―prove‖ it hadthe ability to enforce Owners note. 82. An ever-increasing quantity of lawsuits filed on behalf of homeowners,governmental agencies and MBS investors have accused Chase of fraudulently creatingdocuments in order to justify legal entitlement to institute foreclosure proceedings. As such,Owners conducted an Internet search on the so-called ―indorser‖ of Owners note and discovered Defendants Answer and Amended Counterclaim – page 25 of 104
  26. 26. that other documents allegedly indorsed by Jess Almanza as VP of WAMU (and Long BeachMortgage Company) bore an exact replica of the so-called indorsement which appears on page 6of Owners promissory note. When said indorsement on Owners note is transposed directly overother alleged indorsed documents by Jess Almanza found on the Internet, the signature andstamp are precisely and absolutely identical. EXHIBIT 3 83. Upon information and belief, Owners allege that Chase intentionally falsifiedOwners Note by utilizing a computerized ―photo-shopped‖ stamp, or some other device to createsaid blank indorsement allegedly signed by WAMU VP Jess Almanza. 84. For Owners note to be considered ―bearer paper‖, Ms. Almanza must havepersonally indorsed Owners note and her signature must have been authenticated by a notary. 85. Owners allege that Ms. Almanza did not personally indorse Owners Note, nor washer signature authenticated by a legal notary, thus rendering said document as fraudulent. 86. Chase‘s pattern of deceit has become blindingly conspicuous when one simplyconducts an Internet query on ―Chase, fraud,‖ for 1,540,000 hits appear instantaneously. Thepractice of Chase fraudulently preparing the necessary foreclosure documents needed to provestanding appears to be widespread: 9-2010 NY TIMES - JPMorgan Suspending Foreclosures: ―In a sign that the entire foreclosure process is coming under pressure, a second major mortgage lender said that it was suspending court cases against defaulting homeowners so it could review its legal procedures. The lender, JPMorgan Chase, said on Wednesday that it was halting 56,000 foreclosures because some of its employees might have improperly prepared the necessary documents. All of the suspensions are in the 23 states where foreclosures must be approved by a court, including New York, New Jersey, Connecticut, Florida and Illinois. ...GMAC and Chase say that their lapses were technical and will soon be remedied with new filings. But defense lawyers are seizing on these revelations and say they will now work to have their cases thrown out... Potentially, hundreds of thousands of cases could be in doubt....―I don‘t want to say that every one of these cases is wrong and a fraud on the court, but it is a big concern for us,‖ J. Thomas McGrady, chief judge of the Sixth Judicial Circuit in Florida, said in an interview last week after GMAC‘s announcement. ―Everyone is going to have to look at these cases more closely,‖ whose circuit includes St. Petersburg...‖ Defendants Answer and Amended Counterclaim – page 26 of 104
  27. 27. A Pew Mortgage Investigations Report On the Predatory Servicing Practice of False & Forged Signatures Employed by Ocwen & Others -2008 - by Nye Lavalle: ―Another common trade practice is to create pre-dated, backdated, and fraudulent assignments of mortgages and endorsements before or after the fact to support the allegations being made by the foreclosing party. Foreclosing parties are most often the servicer or MERS acting on the servicer‘s behalf, not the owners of the actual promissory note. Often, they assist in concealing known frauds and abuses by originators, prior servicers, and mortgage brokers from both the borrowers and investors by the utilization of concealing the true chain of ownership of a borrower‘s loan.‖ 87. In an article entitled ―Chase Accused of Brazen Bankruptcy Fraud‖ written byMatt Reynolds of Courthouse News Service on January 17, 2012, the author reports thatalthough previously warned, Chase has not abandoned its practice of creating fraudulentdocuments: LOS ANGELES (CN) – ―JPMorgan Chase routinely fabricated documents to deceive bankruptcy judges, going so far as to Photoshop documents to "create the illusion" of standing "in tens of thousands of bankruptcy cases," according to a federal class action. Lead plaintiff Ernest Michael Bakenie claims that Chases "pattern and practice of playing hide-and-seek with debtors, judges and other bankruptcy players" bore rich fruit: that Chase secured motions for relief of stay and proofs of claim in 95 percent of its cases. "Through the use of fabricated assignments, endorsements and affidavits that purport to transfer deeds of trust, notes and the rights to all monies due under the terms of tens of thousands of non- negotiable promissory notes (the MLNs); Chase has demonstrated a pattern and practice of playing hide-and-seek with debtors, judges and other bankruptcy players," the complaint states. "Chase intentionally conceals the identity of the true parties in interest entitled to enforce the tens of tens of thousands of residential non-negotiable promissory notes (the MLNs) for its own financial benefit, at the expense of the class and to the detriment of the integrity of the bankruptcy system." Bakenie says Chase used a network of attorneys to file more than 7,000 motions for relief from automatic stay in bankruptcy cases in the Central District of California, "wherein they falsely claim to be the party entitled to monies due under the terms of MLNs." 88. An article written on February 28th, 2012 entitled ―Banks Steal Homes, And IHave Proof‖, Foreclosure Defense Attorney Mark Stopa offers more validation of widespreadfraudulent indorsements: ―...I defend foreclosure cases. In that role, I look closely at every promissory note and every indorsement on those notes that come across my desk. I‘ve encountered the name ―Danielle Sterling‖ a fair number of times as an indorser on Defendants Answer and Amended Counterclaim – page 27 of 104
  28. 28. Notes... it made me wonder … ―why is Danielle Sterling signing so many indorsements on promissory notes, transferring millions of dollars?‖ According to this Affidavit, Danielle Sterling did not endorse a promissory note entered by Daniel and Christine Hunk. Ms. Sterling is very unequivocal about this – she never endorsed the Note. Yet the Note has an endorsement bearing her signature. ...It doesn‘t take Sherlock Holmes to figure out what happened here. A bank wanted to foreclose on the Note and Mortgage entered by Daniel and Christine Hunk, but needed an endorsement from American Home Mortgage. But American Home Mortgage was out of business. So Citimortgage took the endorsement stamp that had been used by Danielle Sterling (from when she worked at American Home Mortgage), stamped it on the Note, and forged her signature.... Foreclosure cases turn on endorsements like this. Having a Note, endorsed in blank (or specially indorsed to the plaintiff) is almost always what a foreclosure plaintiff asserts as its standing to foreclose. In other words, endorsements like this are what gives the bank the right to foreclose on a homeowner. With an endorsement, the bank is probably going to win (and foreclose). Without it, they‘re probably going to lose. Hence, if these endorsements are forged, as this one clearly seems to be, then banks are, quite literally, stealing homes that don‘t belong to them. In my view, courts cannot take an endorsement at face value... There‘s a legitimate reason to question the veracity of every endorsement, not just by Danielle Sterling, but every endorsement.... we‘re experiencing the biggest fraud in the history of mankind, [but being told that] we all need to sweep it under the rug to improve the economy. Because throwing homeowners on the streets for the benefit of banks that committed widespread fraud will help.... Foreclosures are littered with fraud … billions of dollars in wealth are changing hands in fraudulent ways … The issue here is that it‘s time for everyone to stop treating an original note with an endorsement as gospel. Clearly, endorsement fraud is pervasive in the foreclosure industry, and it‘s about time we all put a stop to it.‖ 89. Fischer and Shapiro, the law firm prosecuting the instant lawsuit on Chase‘sbehalf, have openly admitted to altering foreclosure documents in a manner similar to what wasnecessary to falsify the Indorsement on Owners Note in the instant case. On a front pageChicago Tribune article dated Saturday March 26, 2011 entitled ―Altered Documents Stay1,700 Foreclosures‖ it was stated: ―Fisher and Shapiro LLC, one of the top three law firms used by mortgage servicers to handle their local foreclosure actions, reported to the court that, in a breach of protocol, affidavits in the cases were changed...the admission to the court by Fisher and Shapiro does not involve rubber-stamping of documents but rather removing the signature page, altering the affidavits content and reattaching the content page, the (Cook County Circuit Court) said. Defendants Answer and Amended Counterclaim – page 28 of 104
  29. 29. 90. For Chase, or their attorneys, Fischer and Shapiro, to falsify the indorsement onOwners Note, the signature page had to be removed, the indorsement printed or affixed, and thecontent page reattached, in the exact same process Fischer and Shapiro admitted to. 91. According to the deposition of Angela Melissa Nolan VP of JP Morgan Chase inthe case styled: Deutsche Bank National Trust As Trustee For JPMAC 2007- CH5-JP MorganChase Bank NA Case# 50-2008, Chase, in direct violation of the law, routinely produced theallonges, assignments and indorsements needed to create the illusion of a legal foreclosure: pg 22: Q Okay. First, who determines when you need to file an allonge? Is that the custodial shop or is that someone else? A The custodial shop is notified by private investors groups or a loan delivery group of pending sales, and at that point the custodial shop determines-- would--if an allonge or an endorsement is not currently there, they would create the allonge at that point. A Correct. And then the authenticity of the signature, I believe, is on the other document. You looked at that earlier, where the image--signatures were actually scanned in. Pg 99 Q Okay. When you send it to the Law firm, would that include the assignments? A It would include anything that was in the file at the time it was released. Q If an assignment was later created, would it first get sent to you and then-- A And it would go in the holding area. It would get sent to the imaging process and it would get sent to the sort team and eventually research, and they would determine the file was released and it would go to the holding area that we had discussed earlier until we received the file back or foreclosure is actually initiated and completed. Q Do you usually prepare-- And by "you," I mean, your company. Do you usually prepare the assignments of mortgages? A It really depends on deals. It just depends. Sometimes they do, sometimes they--its a--an outsourced vendor prepares them. 92. Chase is attempting to justify legal entitlement to institute foreclosure proceedingsby fraudulently falsifying Owners Note in order to claim ownership of the Owners indebtednessand literally steal the Owners home. 93. By falsifying the Indorsement on Owners Note, Chase has committed criminalfraud thus voiding Owners note ab initio. Criminal fraud voids a contract, ab initio, both at law and in equity, whether the object be to deceive the public, third persons or one party endeavor thereby to Defendants Answer and Amended Counterclaim – page 29 of 104
  30. 30. cheat the other. Antle v. Sexton, 137 III. 410, 27. N. E. 691 [affirming 32 III. App. 437]; Crocker v. Manley, 164 III. 282, 56 Am. St. Rep. 196, 45 N. E. 577; Prentice v. Crane, 234 111. 302, 84 N. E. 916; Gillespie v. Fulton Oil & Gas Co., 236 III. 188. 86 N. E. 210; Prout v. Hoy Oil Co., 263 111. 54, 105 N. E. 26; Wachsmuth v. Martini, 45 111. App. 244. ―The contract is void if it is only in part connected with the illegal transaction and the promise single or entire.‖ Guardian Agency v. Guardian Mut. Savings Bank, 227 Wis. 550, 279 NW 79 (1938). 94. Moreover, Chase‘s falsification of Owners documents is subject to fine andimprisonment pursuant to 18 U.S.C. § 1341: Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation occurs in relation to, or involving any benefit authorized, transported, transmitted, transferred, disbursed, or paid in connection with, a presidentially declared major disaster or emergency (as those terms are defined in section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5122)), or affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both. In US v. Robinson 03-4136 March 2004 App sc--2004 U.S. App. Lexis 3910,*;88 Fed. Appx. 660--United States of America, Plaintiff-Appellee, v. Kevin Ryan Robinson, Defendant-Appellant.--o. 03-4136 --United States Court of Appeals for The Fourth Circuit --88 fed. Appx. 660; 2004 U.S. App. Lexis 3910 –Def Robinson was an employee of CSRA INC. which sold manufactured housing. To sell more homes, Robinson participated in a fraudulent scheme where he provided falsified financial information such as inflating both income and down payment. This information was sent via facsimile to out of state lenders who relied upon this information when considering a loan application. Fifty fraudulent transactions resulted in buyers defaulting on the loan and the home being repossessed and sold Defendants Answer and Amended Counterclaim – page 30 of 104
  31. 31. at a loss of $993,792.16. Robinson was sentenced to 57 months in prison for participating in this fraud. 95. If Chase argues that its crimes and violations of the law have exceeded theStatute of Limitations, according to the Doctrine Of Fraudulent Concealment, said Statuteis subject to being tolled: ―If a lender conceals wrongdoing, thereby preventing a borrower from discovering a cause of action, the statute of limitation will be tolled until the date the plaintiff, through due diligence, would have learned of the existence of a claim. The doctrine of fraudulent concealment operates to toll the statute of limitations, when a plaintiff has been injured by fraud and remains in ignorance of it, without any fault or want of diligence or care on his part. Holmberg v. Arnlbrecht , 327 U.S. 392, 397 (1946) (quoting Bailey v. Glover, 88 U.S. (21 Wall.) 342, 348 (1874); see Maggio v. Gerard Freezer & Ice Co. , 824 F.2d 123, 127 (1 st Cir. 1987).‖ 96. Owners allege that said Indorsement is defective and was meant to facilitate afraudulent foreclosure; a practice routinely not caught by defense attorneys nor the courts. ―Computer-generated bank records or testimony based thereon are often offered without proper foundation, or are summarized without being introduced.‖ Manufacturers & Traders Trust Co. v. Medina, supra, 01 C 768, 2001 WL 1558278 (N.D.Ill., Dec. 5, 2001); FDIC v. Carabetta, 55 Conn. App. 369, 739 A.2d 301 (1999).CHASE MISREPRESENTS ITS CAPACITY AS SUCCESSOR IN INTEREST TOWAMU 97. In its complaint to foreclose Owners property, Chase claims that it is the holder ofthe beneficial interest under Owners Mortgage in the capacity of successor in interest to theassets of WAMU. 98. Owners are informed and believe and thereon allege that Chase‘s claim is false. 99. On September 25, 2008, the Director of the OTS, by Order Number 2008-36,closed WAMU and subjected it to Receivership by the Federal Deposit Insurance Corporation(FDIC). Defendants Answer and Amended Counterclaim – page 31 of 104
  32. 32. 100. On September 25, 2008, a proposed Purchase and Assumption Agreement(―PAA‖) was entered into by and among: the FDIC as receiver of WAMU; the FDIC in itscorporate capacity; and JP Morgan Chase bank, NA upon which final settlement and amendedPAA took place on September 30, 2010. (the proposed PAA is published at _Mutual_P and _A.pdf; 101. Upon information and belief, Owners allege that their specific loan which Chaseis seeking to foreclose, was in fact, never sold by the FDIC to Chase or otherwise legallyacquired. 102. Chase has admitted, in filings by its counsel in the Federal matter of DeutscheBank National Trust Company, etc. v. Federal Deposit Insurance Corporation and JPMorganChase Bank National Association et al, Case No. 1:09-CV-1656 (RMC) that: ―Under the plain terms of that agreement [the PAA], Chase did not become WAMU‘s successor in interest. Since its closure, the FDIC as receiver has controlled WAMU.‖ [emphasis in original] 103. Despite this record admission which is binding upon Chase, Chase, both directlyand indirectly through its Servicer Chase Home Finance LLC, has instituted a foreclosureproceeding where it claims, in official court filings and documents filed in the public record andsent to the Owners herein through the mails, to be the ―successor in interest to WashingtonMutual Bank‖ for purposes of attempting to justify legal entitlement to institute foreclosureproceedings, doing so based upon nothing more than an unsworn allegation supported byfraudulent documents.CHASE’s ROLE IS THAT OF SERVICER 104. The Owners loan was sold to MBS Investors without recourse sometime betweenits recording date of ______________ and the ______________ Trust cut-off date of______________. Therefore, at the time of WAMU‘s acquisition by the FDIC in September2008, WAMU would have been the Servicer of Owners loan, not the Lender. Hence, Chasecould have only acquired the servicing rights on Owners loan as the governing PAA states: Defendants Answer and Amended Counterclaim – page 32 of 104
  33. 33. ―Schedule 3.2 of the P&A Agreement specifically identified the ‗rights of [WAMU] to provide mortgage servicing for others...and related contracts‘ as assets purchased by Chase. (P&A at 36). The P&A Agreement also provided that ‗notwithstanding section 4.8,‘ Chase specifically ‗assumes‘ (under 2.1) and purchases (under 3.1) ―all mortgage servicing rights and obligations of the failed bank [WAMU]. Id §§ 2.1, 3.1.‖ 105. Chase, as the Servicer of Owners loan, does not have standing to forecloseOwners property. ―The servicing agent does not have standing, for only a person who is theholder of the note has standing to enforce the note.‖ See, e.g., In re Hwang, 2008 WL 4899273 at8. 106. In Bayview Loan Servicing, 382 Ill. App. 3d at 1188., the record reflected that theplaintiff at most, serviced the mortgage payments. Mar 12, 2009 Bankruptcy, Idaho, Sheridan Case#08-20381-TLM “Jacobson notes that its moving party, who claimed to be a servicer for the holder of the note, ―neither asserts beneficial interest in the note, nor that it could enforce the note in its own right.‖ 2009 WL 567188 at *4. It concluded that Fed. R. Civ. P. 17 applied, requiring the stay relief motion to be brought in the name of the real party in interest. Id. (citing In re Hwang, 396 B.R. 757, 767 (Bankr. C.D. Cal. 2008)); see also In re Vargas, 396 B.R. 511, 521 (Bankr. C.D. Cal. 2008). As Jacobson summarized: ―Even if a servicer or agent has authority to bring the motion on behalf of the holder, it is the holder, rather than the servicer, which must be the moving party, and so identified in the papers and in the electronic docketing done by the moving party‘s counsel.‖CHASE PURCHASES PARTIAL ASSETS FROM FDIC 107. The FDIC sold defined assets of WAMU to Chase as set forth within the PAA,hence, Chase did not acquire the firm ―in toto‖ but instead acquired specifically defined assetsand liabilities on a strict and written schedule from the FDIC. (page 10 PAA) 3.5 Assets Not Purchased by Assuming Bank. The Assuming Bank does not purchase, acquire or assume, or (except as otherwise expressly provided in this Agreement) obtain an option to purchase, acquire or assume under this Agreement the assets or Assets listed on the attached Schedule 3.5. 108. In order to determine if Owners Note was included in said assets, Chase mustproduce the written schedule from the FDIC. Defendants Answer and Amended Counterclaim – page 33 of 104
  34. 34. CONCLUSION 109. Owners are informed and believe and thereon allege that by the securitization andsale of this Receivable, the enforceability of the original Receivable, or Note, was lost and Chaseis not the holder of the Note. Chase cannot hold the note which was sold to another partywithout recourse. 110. As Chase is not the holder of the Note, it has no standing to proceed on theMortgage which secures the Note. 111. Therefore, when Chase commenced foreclosure proceedings against the Ownersto seize their property on ______________, it did so wholly without color of authority and wascommitting slander of title. When Chase recorded its Lis Pendens notice with the______________County Recorder‘s Office, it intentionally recorded a false document. 112. Chase has not nor cannot now claim to be the ―real party in interest.‖ 113. The doctrine of standing is designed to ensure that only those parties with a realinterest in the outcome of the controversy bring suit. Glisson v. City of Marion, 188 Ill. 2d 211,221 (1999). Accordingly, a plaintiff in a mortgage foreclosure action must have a beneficialinterest in the mortgage. Winkelman v. Kiser, 27 Ill. 20, 21 (1861). 114. Chase has no right to foreclose on behalf of unknown investors because of a lackof agency, lack of authority and lack of knowledge of whether the note has been discharged.Thus, Chase does not have the right to request possession of the property claimed. 115. There is no chain of title to prove that Chase holds the note. 116. Chase falsified an unauthenticated indorsement on Owners note to make it appearthat Chase had a claim to Owners indebtedness. Chase filed and pursued a foreclosure suitagainst Owners using a fraudulent Mortgage Indorsement. 117. The actions taken by Chase constitutes false, misleading, deceptive, fraudulent,criminal or otherwise illegal conduct under the law. 118. In re Landmark v. Kesler (Kansas Supreme Court); LaSalle Bank v. Lamy (a New Defendants Answer and Amended Counterclaim – page 34 of 104
  35. 35. York case); and In Re Foreclosure Cases (the "Boyko" decision from Ohio Federal Court). Thecourt concluded: ―Since the claimant, Citibank, has not established that it is the owner of thepromissory note secured by the trust deed, Citibank is unable to assert a claim for payment in thiscase.‖ (The following court case was unpublished and hidden from the public) Wells Fargo, Litton Loan v. Farmer, 867 N.Y.S.2d 21 (2008). ―Wells Fargo does not own the mortgage loan… Therefore, the… matter is dismissed with prejudice.‖ 119. Standing is founded "in concern about the proper-and properly limited-role of thecourts in a democratic society." Warth, 422 U.S. at 498. When an individual seeks to availhimself of the federal courts to determine the validity of a legislative action, he must show thathe "is immediately in danger of sustaining a direct injury." Ex parte Levitt, 302 U.S. 633, 634(1937). 120. Owners allege that Chase cannot hide behind the simplistic notion that ―It justdidn‘t have its paperwork in order‖ as suggested by those who have not taken the time toresearch what is really going on in our country, for the evidence is both overwhelming andindisputable: Chase, and other banks have no rights to the mortgages they are foreclosing on, norare they holders in due course. This is a sham being perpetrated under our very noses and thetragedy is that few are doing anything about it. 121. Therefore, this Court is urged in the strongest possible way to apply apresumption of falsity when reviewing any documentary evidence filed by Chase. Such apresumption is not just warranted, it is compelled by the extent to which Chase has acted in amalicious and wanton manner evincing complete contempt for the judicial process and the rightsof persons having interests contrary to their own. This is particularly true because Chase‘scontempt for due process is compounded by their specific intention to obviate the requirementthat documents prepared for legal use be truthful, authentic, and legitimate. SECOND AFFIRMATIVE DEFENSE (FRAUD) 122. Chase by its predecessor, WAMU, committed fraud with regard to the Loan toOwners related to the Property as set forth in the Counterclaim. Defendants Answer and Amended Counterclaim – page 35 of 104
  36. 36. THIRD AFFIRMATIVE DEFENSES (UNCLEAN HANDS) 123. In light of Chase‘s fraud and lack of standing, Chase is proceeding with uncleanhands and should be barred from seeking relief from Owners. ―In determining whether the plaintiffs come before this Court with clean hands, the primary factor to be considered is whether the plaintiffs sought to mislead or deceive the other party, not whether that party relied upon plaintiffs misrepresentations.‖ Stachnik v. Winkel, 394 Mich. 375, 387; 230 N.W.2d 529, 534 (1975).WHEREFORE, Owners, ______________, respectfully request that this Court grant judgment intheir favor and against Chase and for such other and further relief that this Court deemsnecessary and proper.& COUNTER-CLAIM FOR: COUNT I: COMMON LAW FRAUD, FRAUD AND MISREPRESENTATION COUNT II: SLANDER OF TITLE, COUNT III: CIVIL CONSPIRACY COUNT IV: CONSPIRACY TO DEFRAUD COUNT V: VIOLATIONS OF THE FAIR DEBT COLLECTIONS PRACTICES ACT ("FDCPA") 15 USC § 1692 COUNT VI: UNFAIR BUSINESS PRACTICES - VIOLATION OF ILLINOISCONSUMER FRAUD AND DECEPTIVE BUSINESS PRACTICES ACT 815 ILCS 505/1 TO 515 COUNT VII: WRONGFUL FORECLOSURE COUNT VIII : BREACH OF CONTRACT COUNT IX : RICO-18 U.S.C.§§1961 et seq ___________ ___as Owners, counterclaim against JP MORGAN CHASE, NA (“CHASE”) as follows: THE PARTIES Defendants Answer and Amended Counterclaim – page 36 of 104
  37. 37. 1. Counter-plaintiff Owners, ______________ (collectively ―Owners‖) are, and atall times mentioned herein are the title holders to the property that is the subject of thisCounterclaim, the location of which is commonly known as 6581 ______________ (―theProperty‖) which they custom built and purchased in ______________. 2. Owners request that this court take judicial notice of the Secretary of State‘sofficial records wherein many of these parties are not registered to engage in any business in theState of Illinois and there is no evidence of their legal standing capacity to maintain any lawsuitsin this state. 3. Owners are informed and believe and thereon allege that at all times mentioned inthis Complaint, JP Morgan Chase NA (hereinafter ―Chase‖), is a New York corporation notlicensed to do business in the state of Illinois. Chase was, and is, in the business of being a"servicer" of "federally related mortgage loans" as those terms are defined in RESPA, 12 U.S.C.§§ 2602(1) and 2605(i) (2). Owners are informed and believe and thereon allege that Chase wasand is in the business of the collection of consumer debts, either on behalf of itself or others andit is therefore subject to the Illinois Consumer and Deceptive Practices Act, 815 ILCS 505. 4. Owners are informed and believe and thereon allege that at all times mentioned inthis Complaint, Chase was and is in the business of purchasing and otherwise taking assignmentof consumer credit transactions described in the Federal Truth in Lending Act ("TILA"), 15U.S.C. §§ 1601, et seq., originated by others. OTHER PARTIES 5. Owners are informed and believe and thereon allege that Chase Home FinanceLLC (Hereinafter CHF) is a wholly owned subsidiary of JP Morgan Chase which acquiredWAMU Home Loans Servicing, LP (―WAMU‖) an Ohio corporation not licensed to do businessin the state of Illinois. CHF was, and is, in the business of being a "servicer" of "federally relatedmortgage loans" as those terms are defined in RESPA, 12 U.S.C. §§ 2602(1) and 2605(i) (2).Owners are informed and believe and thereon allege that CHF was and is in the business of thecollection of consumer debts, either on behalf of itself or others and it is therefore subject to theIllinois Consumer and Deceptive Practices Act, 815 ILCS 505. Defendants Answer and Amended Counterclaim – page 37 of 104
  38. 38. 6. Chase is a wholly-owned subsidiary of JP Morgan Chase which purchasedspecific assets of WAMU which, upon information and belief, is a partial successor in interest toWAMU. In the event that Chase responds to the counterclaim that it is not responsible for theactions of WAMU or the other related and affiliated entities to WAMU, Owners reserve the rightto add additional parties to this counterclaim. Chase has brought its Complaint against Ownersand it specifically alleges that it was a ―Successor In Interest‖ to WAMU and thus Chase isreferenced herein with regard to the actions of WAMU Servicing, and the actions of its affiliates,CHF. 7. Owners are informed and believe and thereon allege that at all times mentionedherein, WASHINGTON MUTUAL BANK, NA (―WAMU‖), is a California corporation notlicensed to do business in the state of Illinois; and was and is an entity in the business oforiginating, purchasing and otherwise taking assignment of consumer credit transactions.Owners entered into a loan with WAMU (―Loan‖ and in reference to all of the Loan Documents―Loan Documents‖) pursuant to a promissory note (―Note‖) and secured by a mortgage(―Mortgage‖) on the Property. 8. Owners are informed and believe and thereon allege, that at all times mentionedherein ______________TRUST (hereinafter ―______________‖); is a _____________corporation not licensed to do business in the state of Illinois and was the ―depositor‖ for loansoriginated by WAMU into Mortgage backed Securities Collateralized Debt Obligations(―CDO‘s‖) In Trust For Registered Holders Of Mortgage Pass-Through Certificates, Series______________ of which Owners Loan is a part of Securitized Asset Backed Receivables for______________. 9. Owners reserve the right to add additional parties to this counterclaim. Chase hasbrought its Complaint against Owners and it specifically alleges that it is the successor in interestto WAMU Servicing‖) and thus Chase is referenced herein with regard to the actions of WAMUServicing, and the actions of its affiliates, WAMU. 10. Upon information and belief, Owners allege that the actions of WAMU and itsaffiliates are the actions of Chase and that Chase is liable to Owners for their actions. Defendants Answer and Amended Counterclaim – page 38 of 104
  39. 39. JURISDICTION AND VENUE 11. This Counterclaim arises out of a foreclosure proceeding replete with fraud byChase related to the Property of Owners. It is brought by Owners who are being sued forforeclosure by Chase which lacks standing as a real party in interest to the underlying Note. 12. The Property which is the subject of this complaint is located within______________ County. 13. Venue is proper in the Circuit Court of the ______________ Judicial Circuit ofthe State of Illinois. OVERVIEW 14. The allegations contained in paragraphs 1 through ___ of the first AffirmativeDefenses are realleged and incorporated herein by reference. 15. Owner ______________ has conducted extensive research on the topic offoreclosure as it relates to the anomalous events now unfolding in our country in ___ quest todiscover what is really happening ―beneath the covers.‖ _____ extensive research revealed thatthe so-called Economic Crisis was intentionally engineered by Insiders on Wall Street, thelargest Banks and the Federal Reserve (―the Conspirators‖). 16. The matters raised by Owners in their affirmative defenses and counterclaimscannot be viewed in a vacuum and need to be viewed in the larger context of what the―Conspirators‖ were doing. Thus, Counter-Plaintiff Owners are also submitting ―SupplementalEvidence‖, a chronological synopsis of the events which comprise this Conspiracy. 17. Upon information and belief, Chase is attempting to foreclose on Owners‘Property without standing to do so and has taken the following improper actionable wrongsagainst Owners. a.) WAMU sold Owners a known predatory Option Arm loan product with a negative amortization promising that if rates increased Owners could refinance; Defendants Answer and Amended Counterclaim – page 39 of 104