HOW TO WIN AT THE DISCOVERY GAME WHEN LITIGATING AGAINST JPMORGAN CHASE BANK NA
Too often
litigants and their attorneys simply do not know what to request through
discovery. Homeowners deserve a fighting
chance to obtain accurate information about their home mortgages. The discovery process can become an exercise
in frustration, especially when dealing with foreclosure proceedings with
JPMorgan Chase Bank, NA. Litigants are
thus thwarted in the legal process and get little from the fees paid to their
attorneys. Different banks use systems
that vary from bank to bank.
Recently
I came across an affidavit of Michael R. Zarro, a Chase employee, on Scribd on the
internet. I offer it to my readers as an
important and valuable resource to homeowners fighting to save their homes from
foreclosure by Chase and offers valuable insight into maintenance of loan files
relative to the Discovery Process in
which Chase notoriously fails to cooperate.
"No borrower was improperly foreclosed upon," Michael R. Zarro, a servicing executive at JPMorgan Chase & Co., wrote in documents submitted to the New Jersey Supreme Court April 7 this year. "Chase has not identified or become aware of any deficiencies in its processes that caused it to pursue foreclosure actions without merit." Zarro recently left JPMorgan Chase and joined a competitor, according to Tom Kelly, a bank spokesman.
Michael
R. Zarro, Senior Vice President, in charge of Default Specialty Operations at
JPMorgan Chase Bank, N.A. [JPMC] submitted an Affidavit constitution JPMC and
Chase Home Finance LLC’s [CHF] as Chase’s Prima
Facie Showing affidavit, signed and notarized on April 7, 2011 at Denton
County, Texas, relative to a civil action in the Chancery Division General
Equity Part in the Superior Court of Mercer County, New Jersey. The following is a synopsis for information
purposes only. This affidavit was submitted in the matter of
a residential mortgage foreclosure pleading and document irregularities.
Affidavit
and Exhibits can be found at:
Zarro ,
an employee of JPMC and its predecessors since 1994, is responsible for the
support, management and disposition of assets secured by real estate, including
the foreclosure process as a senior member of Chase’s team working to analyze
and remediate issues with respect to the execution by Chase employees of
documents used in foreclosure proceedings and other related issue.
CHF is
a subsidiary of JPMC and is the third largest mortgage servicer in the
USA. CF services loans originated by
Chase as well as loans originated and/or owned by other lenders to include
Government Sponsored Enterprises [GSEs] such as Freddie Mac and Fannie Mae as
well as private investors holding pools of loans in securitized trusts. JPMC has appointed CHF as sub-servicer for
loans serviced by JPMC.
Chase
staff responsible for execution Affidavit of Indebtedness [AOI], Amount Due
Affidavit [ADA] and Certifications access Chase’s computerized systems to
verify information and prepare the documents for execution. Depending on the status of the loan, the
jurisdiction, and whether or not the foreclosure action is contested, other
documents may be submitted as well.
MORTGAGE
SERVICING PACKAGE - MSP – PRIMARY SOUCE OF DATA
·
Maintains up-to-date information concerning, among other things,
the status of the loan and
payment history.
·
Access images of the Note, Mortgage
·
Access where necessary,
other documents such as assignments and correspondence with the
borrower, through Chase's document imaging systems.
DOC LINE & WinCMSS:
·
DOC
Line tracks the location
of the loan collateral file, which typically
contains the Mortgage
and original Note.
·
Doc Line provides reports
of data maintained on Chase's custodial management system, Windows Custodial Management Service System
("WinCMSS'').
·
Doc Line reports location of the
custodial files.
·
Custodial files are tracked through barcode scanning.
·
DocLine & WinCMSS provide
real-time information on location
of the collateral file.
·
Most of the
collateral files are maintained in the secure facility, JPMorgan Chase Custody Services in Monroe, Louisiana.
·
Files
pertaining to a small percentage of loans serviced by CHF are stored with third-party custodians. However,
the location
of the collateral files is reported
on DocLine.
LISA –
CHASE’S INVESTOR ANSWERS SYSTEM:
·
Verifies information about the investors/owners of loans
·
Which entity's name
a foreclosure action should be brought in
· Whether
the investor/owner had granted Chase a power of attorney,
m Chase's Loan Investor
Servicing Answers ("LISA") system.
Chase
has developed detailed
written procedures to guide Affiants in the execution of sworn documents, and in particular Affidavits of Indebtedness,
using the systems
described above. Affiants are required to follow these procedures so that documents
submitted in foreclosure actions are properly executed
and based upon knowledge gamed through a personal review
of Chase business records.
Third-party mortgagees typically provide
Chase powers of attorney ("POAs'") that permit Chase to sign as attorney in fact
documents necessary to prosecute
foreclosure
s. The POAs typically grant broad powers
to execute all necessary documents for servicing the loan,
including foreclosure documents.
s. The POAs typically grant broad powers
to execute all necessary documents for servicing the loan,
including foreclosure documents.
With
respect to a Mortgage or Deed of Trust, the foreclosure, the taking of a deed in lieu of foreclosure or the completion of judicial or non-judicial foreclosure or termination, cancellation
or recession of termination,
cancellation or rescission of any such foreclosure,
including, without limitation, any and all of the following acts:
·
Substitution of Trustee(s) serving
under a Deed of Trust, in accordance with state
law and the Deed of Trust;
·
The preparation
and issuance
of statements of breach or non-performance;
·
The preparation and
filing of Notices of Default and/or Notices of Sale;
·
The cancellation rescission of notices of default and/or notices of sale;
·
Deed in Lieu of Foreclosure:
·
Preparation
and execution
of such other documents and performance of such other actions as may be necessary under the terms of the Mortgage, Deed of Trust or state law to expeditiously complete said transactions
GSE
LOANS:
Chase
services loans on behalf
of
Freddte Mac and Fannie
Mae
·
Typically, the
Notes are “endorsed in blank.”
·
At foreclosure, the servicer is the mortgagee and initiates the foreclosure action in its name.
·
Both Freddie Mac
and Fannie Mae publish guidelines and regulations which address the authority vested in servicers. These materials are publicly
available. See iihttps://www.efanniemae.com/sf/servicing/; and
·
Fannie
Mae and Freddie
Mac have also
issued POAs to Chase, which
provide Chase authority to execute certain documents.
SECURITIZED TRUSTS:
·
Chase also enters into servicing agreements.
·
When the Mortgagee is a securitized
trust, there is typically
a Pooling and Servicing Agreement
("PSA") by and among the servicer,
the trustee, and the depositor
and/or seller of assets into
the trust.
·
JPMC has appointed CHF to act as sub-serv1cer for JPMC via an agreement
between CHF and JPMC.
Thus, CHF has
authority to act where the mortgagee is JPMC.
·
Chase does not otherwise
act as a sub-servicer for other servicers.
UP-TO-DATE
INFORMATION ON PAYMENT HISTORY & LOAN STATUS:
Does the Respondent have a record keeping system
of Business Records that provides
accurate up to date information on the payment history and status of the loan?
MORTGAGING SERVICING PACKAGE -- MSP
·
Chase’s
MSP record keeping system provides
up-to-date information on payment history and status of loans.
·
MSP is a commercially available system used by
approximately 75% of the mortgage
servicing industry.
·
Monetary transactions are posted on MSP in real-time. Thus, when a borrower
makes a loan payment to Chase, the payment is promptly
recorded and the loan record
is updated
·
MSP also stores data about payments Chase makes on behalf of the borrower,
including tax payments
and hazard insurance, as well as records of communications
with borrowers.
·
Chase employs a number of internal
and external controls
to ensure that the information in MSP is accurate and reliable, including
real-time posting of transactions, daily reconciliations, control self-assessment processes, internal audit review, and testing by Chase's
external auditor,
PricewaterhouseCoopers.
·
Affiants have desktop access
to MSP, and access data in MSP to
complete AOIs
CHASE’S
PROCESSING STEPS
Chase
has developed comprehensive procedures for the review of information contained in, and the execution of, affidavit/certifications submitted in
support of foreclosure proceedings.
·
The most commonly subm1tted affidavit/certification submitted in foreclosure proceedings is the AOI --in New Jersey, the
Certification of Proof of Amount Due.
Chase has developed model
AOIs.
·
When an AOI is required, foreclosure counsel populates the caption of the AOI. leaving the remainder of the document
to be completed by the
Affiant.
·
The AOI is transmitted by counsel to Chase for execution
via
LENDER PROCESSING SERVICES (LPS) DESKTOP:
· Lender
Processing Services (''LPS") Desktop facilitates communication
between counsel
and servicers.
·
Chase does not use LPS to execute foreclosure affidavits/certifications
·
But rather as a back-office technical
solution.
AFFIDAVIT
OF INDEBTNESS (AOI):
·
The AOI is executed
pursuant to a comprehensive
written procedure. Because there are minor differences in AOIs between
states (and in some instances, there are county specific requirements) Chase provides supplemental instructions to Affiants where a
state-specific AOI differs from the standard
Chase template.
·
The AOI procedure requires
the Affiant to verify all of the facts set forth m the AOI, and to write by hand key facts such as the amount of indebtedness.
For
example, the Affiant must:
o Verify
property address and borrower name on
the AOI match the information contained in MSP and loan documentation;
o Confirm the loan is in default,
and the foreclosure action has not been suspended;
• Match information on MSP concerning
terms of the loan with loan documentation;
o Confirm that the action has been commenced
in the proper name, and where
the Plaintiff is a third party. that the third party has issued Chase a POA: and
o Identify the amounts due, including principal, interest. escrow,
and corporate advances. and record those amounts by hand on the AOJ.
·
Once all information
in an AOI is confirmed.
the Affiant
prints out certain
screenshots from MSP that reflect
the amount due data and appends the screen shots
to the AOI.
·
Chase has also developed
similar procedures for other documents
that may be submitted in foreclosure actions
(e g,
lost document affidavits).
·
Chase's
affidavit procedures provide for the signer to reject a document that contains
errors. and Chase employees have been specifically trained not to
complete any affidavit or certification if they have any questions
about the content
or do not understand
any portion of the document.
·
Supervisors are available on-site
to answer any questions.
·
Once all information in an affidavit/certification is verified, Affiant executes
the affidavit/certification. (In states other than New Jersey. execution
is completed in the presence
of a notary.)
·
The affidavit/certification is then passed along to quality-check processing described in detail below.
·
Once an affidavit/certification passes the quality
checks. it is imaged and then returned
to foreclosure counsel
for filing.
Chase has established specific
procedures for its Affiants to complete affidavits/certifications submitted in foreclosure proceedings based on a personal
review of
Chase’s business records by the Affiant.
All affidavits/certifications executed
in the ordinary course
of a foreclosure proceeding are
completed and signed pursuant
to written
procedures which have been drafted by Chase,
vetted by outside
counsel
and, for certain
core documents
including the AOI
assessed by Deloitte & Touche.
The AOI procedures. and more generally, the other affidavit execution procedures implemented by Chase require the Affiant to personally
review Chase's system of record. MSP, as well as other Chase systems such as DocLine (which
reflects real-time data
concerning the location of the collateral file). LISA (which
reflects information about the foreclosing party and POAs);
and Chase's imaging systems.
ln response
to questions concerning
the amount of tune spent preparing an AOI, Chase asked a supervisor to time the execution of
six AOIs. She determined that it took her between
13 and 45 minutes to execute an AOI, and the average
time to complete
an AOI was 25 minutes that does not
include the amount of time spent to quality-check the AOI. There
are no quotas or guidelines provided to the Affiants concerning how long it should take to complete an AOI. Chase's purports that the focus is on process and accuracy, not speed. Chase
has implemented comprehensive quality control
and quality assurance programs.
The quality-check analyst
performs each of the same steps as did
the signer to confirm that the factual information in the affidavit or certification
matches the
information contained in Chase's electronic business record
systems. If a document
fails the quality
check, the quality-check analyst and the
foreclosure analyst will work together
to reconcile the two results
so that an accurate document will be filed.
Chase attests that the review
of 100% of affidavits
and certifications will continue until Chase management
determines that quality levels are consistently high and support a more streamlined review
going forward. At that point, the quality-check analysis
will continue with random samplings of affidavits and certifications.
Chase
states further that it has processes to help insure
the effective and timely
communication with foreclosure counsel
in connection with the completion and execution of foreclosure affidavits/certifications. Chase
communicates with
foreclosure counsel through LPS Desktop, a commercially available
application designed for this purpose Counsel uploads
affidavits/certifications into
LPS Desktop for execution, and allows Chase to maintain an audit trail on communications and document execution. Chase also routinely communicates with counsel by phone and email. Once
uploaded to LPS Desktop. the affidavit/certifications
arc then assigned to Affiants for verification and execution.
As soon as an affidavit/certification is
executed, it is then passed on to quality control
and then quality
assurance. Affidavits executed m the ordinary
course are imaged and 1cturned
to counsel.
Chase
claims that it is continuously working to reduce the time it takes to complete this process. Chase is also assisting specific Affiants to work with each outside law firm in order to facilitate communication with counsel and foster the development of state-specific expertise by
Affiants.
My
prayer for my readers is that this information will be instrumental is helping
to save the homes of victims of the predatory lending and horrific foreclosure irregularities
of JPMorgan Chase Bank NA, Chase Home Finance, LLC, Washington Mutual Bank, and
their affiliates.
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