Wednesday, January 19, 2011

Wells Fargo Sues J.P.Morgan Chase for Mortgage Documents in REMIC

which, as the trustee of the REMIC, Wells Fargo should have verified when the trust was created.

Bloomberg reports:

JPMorgan Chase & Co.’s EMC Mortgage, facing homeowner lawsuits over foreclosures, was sued by the trustee of a mortgage portfolio for refusing to turn over documents detailing the quality of loans bought by the trust.

Wells Fargo & Co., the trustee, is seeking access to files for more than 2,000 underlying mortgages in the Bear Stearns Mortgage Funding Trust 2007-AR2, according to the complaint filed today in Delaware Chancery Court in Wilmington.

“The trustee has repeatedly requested that EMC provide access to the subject documents,” Wells Fargo said in the complaint. “EMC has played proverbial ‘rope a dope’ and otherwise continued to drag its feet, and has produced nothing.”

Rope a dope? Now that's funny. Isn't that how Wells, J.P.Morgan Chase, Bank of America, et al has been dealing with frustrated homeowners who try to save their homes over the past 2, 3 years?

According to the article, it was one of the suckers who complained to Wells Fargo after having bought a significant chunk of the certificates issued by this particular trust, under Wells Fargo's loving care. The certificates, or mortgage-backed securities, are most likely not backed by mortgages at all, if the industry practice of the past decade is followed.

An investor in the trust, who owns 42 percent of the outstanding face amount of the portfolio’s certificates, questioned the condition of underlying loans

, Wells Fargo said in the complaint, citing an August letter it received from David Grais, the investor’s attorney.

Grais, a partner at New York-based Grais & Ellsworth LLP, represents the federal Home Loan Banks of Seattle and San Francisco and Charles Schwab Corp. in litigation seeking to force banks including Bank of America Corp. and JPMorgan to repurchase mortgage-backed securities because they allegedly misrepresented the quality of the loans.

42 percent. Ouch.

As to the Bear Stearns Mortgage Funding Trust 2007-AR2, here's the last 10-D filing, in January 2008. The trust issued three classes of securities, A-1, 2, 3, B-1, 2, 3, 4, 5, B-IO, XP, R, R-X (the last three did not have initial certificate balance). The underlying mortgages are Alt-A, short-reset hybrid and/or negative amortization - in other words, junk.

Just out of curiosity, I checked to see if there's any info on the securities.

Here's one, A-1 (CUSIP 07401TAA4), as of August 20, 2008, by Standard & Poor loss assessment: Projected loss = 18.84%.

Here's another A-class, A-3 (CUSIP 07401TAC0), downgraded on August 19, 2009 by S&P from B to CCC, and put on a negative watch.


Post a Comment