Sunday, October 9, 2011

State Racketeering Law Invoked By Multiple Homeowners In Suit Alleging Chase Illegally Foreclosed On Mortgage Loans Once Held By WaMu

In West Palm Beach, Florida, the Daily Business Review reports:

  • Most lawyers who represent homeowners in foreclosures use defensive strategies in their efforts to hold off the lender, but not W. Jeffrey Barnes. The Boca Raton lawyer has launched an offensive against JPMorgan Chase using state racketeering law.

  • Barnes filed a state civil RICO action in Palm Beach Circuit Court against Chase claiming the lender engaged in a national pattern of "fraudulent foreclosure proceedings based on false and fraudulent misrepresentations."


  • The latest lawsuit, Linda Zimmerman et al v. J.P. Morgan Chase and Chase Home Finance, represents his alliance with the Washington Mutual Homeowners Support Group, a grassroots organization of former WaMu mortgage customers.

  • The lawsuit is not intended to save anyone's home, Barnes explained. It is a counter-punch intended to hurt the bank by exposing its alleged fraud. "This was never intended to be arm-twisting to get the bank to do loan modifications," he said. "These are damages claims."

    Foreclosure Rights

    The alliance had its genesis in how Chase claimed the right to foreclose on the defunct WaMu's home loans. When WaMu failed in 2008, the Federal Deposit Insurance Corp. sold certain assets to Chase. But in filings submitted in Deutsche Bank v. FDIC and Chase, Chase said it "did not become WaMu's successor in interest," Barnes cited in the lawsuit.

  • Despite that admission, Barnes said Chase — through its servicer Chase Home Finance — instituted foreclosure proceedings nationally on WaMu mortgages, listing itself as successor in interest to carry forward WaMu's ownership interests.

  • The lawsuit claims Chase and Chase Home used the electronic clearinghouse Mortgage Electronic Registration Systems and bogus assignments to improperly pursue foreclosures. The bank also allegedly ignored state laws, such as required certifications in New Jersey and mandatory good faith pre-foreclosure resolution efforts in California.

  • "This pattern of filing false declarations ... and failure to provide proof of legal ownership in Florida and other jurisdictions is consistent with Chase's pattern of falsely misrepresenting the legal scope of the FDIC affidavit," Barnes said. Chase has received a 30-day filing extension, delaying its answer to the Palm Beach Circuit lawsuit, Barnes said. Chase representatives did not respond to calls for comment by deadline.

  • The lawsuit seeks an injunction to stop to all Chase foreclosure activity in eight states: California, Florida, Massachusetts, New Jersey, New York, Tennessee, Washington and Wisconsin. They are home to the 32 homeowners suing Chase individually, not as a class. "We expect that there are going to be more," Barnes said.

  • One of the reasons the suit was filed in Florida is the operations of the servicer, Chase Home Finance, he said. "I termed it nationalized mail fraud in the lawsuit because of the generation of documents out of (Chase Home's) nerve center in Jacksonville," he said.

For more, see Boca lawyer goes on offensive against Chase.

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