ED Magedson – Founder
Chase Bank/Washington MutualManaged Assets/Ohio & Fraud Specialist/AZ (Multiple cities), Ohio United States of America
DISCLAIMER: These statements are opinions, based only on limited facts as they are currently available, and are not intended to be defamatory or malicious - but rather to see if others have been impacted negatively by similar patterns and business practices and whether further investigation and legal remedies may be available once all facts can be known. In the event that any statements are shown to be factually incorrect based on new evidence presented, such statements shall be considered to be retracted immediately and in good faith until such time that they are actually retracted, even if delays should occur. The goal is achieve a resolution fair to all sides involved. Thank you.
Has anyone else run into this and want to see if there's merit for a new story, Congressional hearing followup, class action lawsuit against Chase, WaMu, etc.?
Summary regarding forgery and misrepresentations on a business line of credit, obligating borrower to repayment terms contrary to those disclosed prior to the money being borrowed, trapping borrower into subsequent agreements under false pretenses while without disclosing the forgery:
Forgery likely occurred in 2007 but was only discovered in 2010 so statute of limitations may not have yet run:
WaMu failed to disclose material repayment terms of a line of credit product they were offering, namely that minimum required monthly payments required interest to be paid each month, PLUS 1% of principal to be paid each month (not disclosed in advance of taking the loan) which nearly triples the monthly required payment. Loan officer assured borrower of interest-only minimum monthly payment requirements (lower payments essential for borrower's new business projects) and loan officer took borrower's application over the phone, got borrower approved, but failed to provide all disclosures about repayment terms to borrower prior to borrower borrowing the money.
Once the first higher-than-expected payment was due, borrower disputed the repayment terms and bank only offered a temporary interest-only grace period to correct their loan officer's "mistake" in misrepresenting the terms of the line of credit, rather than the long-term interest-only payment period promised by the loan officer prior to the money being borrowed.
Borrower did not want to sign the temporary-only interest-only Promissory Note (which is problematic itself) but was led to believe he had no other choice because there was pressure because he was now 2 months late on payments because they were so much higher than earlier agreed and the bank would be reporting negatively to the credit bureaus if he didn't either pay the higher than agreed amounts or sign the temporary interest-only Promissory Note under pressure of destroying his excellent credit rating. Borrower had already committed the borrowed funds to a long-term project in reliance upon the bank's loan officer's misrepresentation that the repayment terms were at the lower interest-only requirement each month.
There is a flaw in the WaMu paperwork. The controlling document, the "Note and Agreement" (a single document) does not have a place for the borrower to provide signature nor initials on each page to show that the borrower ever received a copy or even was given a chance to read or know about the "Note and Agreement," prior to borrowing the money. Borrower did not realize such a "Note and Agreement" existed, since the application had been taken over the phone and was being treated as a credit card revolving credit line type of product - and the loan officer had promised verballly and then confirmed in writing that the borrower would only have to pay a specific interest-only monthly payment. Yet this was a misrepresentation of the true binding terms that the borrower had been obligated into without his knowledge
The "Note and Agreement," not having any place within this document for the borrower to sign (or for the bank to prove that the borrower was ever provided with the terms prior to borrowing the money) relies only on the borrower signature from a totally separate document to be binding. It relies on the "Streamlined Credit Application" for a borrower signature.
Yet even if a borrower signs this Credit Application, it is all too easy for the borrower not to realize that the separate "Note and Agreement" could potentially be switched out and replaced with an entirely different set of terms without any proof or signature on that separate document, so that the borrower could be bound to any document titled "Note and Agreement" after the fact and without knowing it. Usually legally binding notes and agreements must be signed and initialed on every page to assure that the borrower has had a chance to review those exact terms.
The bank only recently produced a Streamlined Credit Application with a strange signature (forged?) in place of where the borrower's actual signature and initials should have been in order to obligate borrower to these terms, in 2 places on the Streamlined Credit Application.
An average person can see, even on a bad copy of the document, that it's not the same signature that matches to official "signature cards" signed by the borrower and already on file with the bank since before the time of the loan, used to verify check signatures. A more experienced handwriting analyst would be able to determine whether the same person wrote the altered signature (the borrower didn't, but just to verify this other scenario didn't occur) from a better copy showing line weights but on the surface the average person can see that there is no substantial similarity between the Credit Application signature and the official check-signing signature on file. The borrower verifies that no accidents or physical ailments in recent years would have caused substantial alterations in the borrower's signature that this dissimilarity could be attributed to.
Regardless of the separate possible felony issues related to the bank's loan officer's forgery (the bank loan officer was no doubt financially incentivized to close loans quickly to receive her bonuses), without the authentic borrower signature and initials on the "Note and Agreement" the bank had no rights to enforce the higher 1% principal+interest terms that had been misrepresented to the borrower upfront.
The bank therefore had no rights at all to force borrower to sign the subsequent temporary interest-only Promissory Note to retroactively cover up for the bank's prior forgery and inadequacy of borrower signature on the "Note and Agreement" documents that would otherwise have obligated the borrower to those terms.
It appears the loan officer misrepresented the terms to borrower, failed to provide required disclosures that would have alerted the borrower to the misrepresentation PRIOR to borrower borrowing the money, then went back in to sign the paperwork obligating the borrower to those undisclosed higher-than-promised payments to cover their tracks.
When the first payment was due it was substantially larger than what the loan officer had committed to in writing prior to the money being borrowed and borrower was unable to make this substantially larger payment amount.
Borrower immediately disputed the higher-than-promised repayment terms, and the bank - rather than admit the forgery and mistakes, instead had the borrower sign a NEW Promissory Note under pressure because borrower was now late on payments and unable to make the full substantially higher amount.
Significantly, borrower would also never have agreed to these higher terms in the first place had the true terms been disclosed before the money was borrowed - so the loan would have to be cancelled (but borrower could not yet repay the entire loan to cancel it since borrower had relied upon the loan officer's written assurance that the payment would be acertrain lower amount). Alarmingly, rather than correct this matter the bank used pressure to get the borrower to sign a new Promissory Note that obligated the borrower into terms with a short-term lower payment period but terms still far worse than what had originally been promised by the loan officer. Borrower could not afford an attorney and signed the new Promissory Note obligating him to the new terms, without realizing the bank was now covering their tracks just to keep the loan performing, but while still keeping secret their earlier forgery, misrepresentations and mistakes.
Now the bank had the borrower's authentic signature on a document that tried to retroactively validate the earlier forged and missing documents, and could ostensibly continue to obligate the borrower - and the borrower was never made aware of the forgery or the rights therein, nor the fact that the borrower had been obligated through forgery, failures of proper disclosure prior to the money being borrowed and fraudulent means.
If the true terms of the line of credit had been properly disclosed to the borrower prior to any money being borrowed, borrower would NOT have taken this loan and no profit or interest or fees, or bonuses to the loan officer, or any benefits to that branch of the bank for having originated the line of credit, would ever have existed. If this case were to be won, aside from any forgery issues, the possible cause of action of Unjust Enrichment or benefit derived from an illegal transaction (the forgery, the misrepresentation) would seemingly be included in possible damages.
So the bad bank went out of business and went away. But the debt obligation remains, and the borrower is stuck paying for something that was created fraudulently.
Because of the temporary lower monthly payments and financial upheaval elsewhere in trying to save a house from foreclosure, the borrower didn't have resources to hire an attorney and just kept paying each month, letting the bank autodeduct the monthly payments trusting that this was all good. Chase took over the WaMu servicing of the loan and autodeducting from the borrower's account each month.
Recently the temporarily lower payment arrangement under the new Promissory Note expired and Chase began demanding the interest PLUS 1% principal repayment each month, nearly tripling the minimum amount due each month and putting the borrower again at risk of defaulting but now in an even worse economy.
Chase has made it clear through tone and attitude that it regards it's adopted Washington Mutual customers with disdain, putting them in a separate category in a separate collections/handling department and bouncing them around, and Chase reps indicating that due to lost documents from WaMu that Chase reps disliked having to deal with former WaMu customer inquiries.
It appears that Chase is missing many essential documents it should have to be able to enforce these debts and refuses to admit this, instead refusing to show the documentary proof and in the meantime, causing repetitious delays and intimidating borrowers into paying even though Chase may not have the legal standing to do so.
Yes, WaMu is out of business (at least the bank division is) so now who's liable for the forgery and fraud? According to the FDIC website document, "Washington Mutual Purchase and Assumption Agreement" section 2.4, in assuming WaMu's assets, Chase Bank is not legally liable for borrower claims. Upon a quick read it would appear that the FDIC (as receiver for WaMu) indemnified Chase against borrower claims. So borrowers cannot sue Chase for claims related to WaMu, even while Chase is taking stiff measures to make these borrowers pay up without proving that Chase the legal right to do so.
As such, would the FDIC be a likely defendant for the forgery committed by the loan officer and by association, Washington Mutual? The FDIC likely intends to go after WaMu executives with lawsuits to recover once the banking industry has been better stabilized, so insurance policies are likely going to pay for any awards, judgments, settlements.
Chase bank most likely acquired borrower's line of credit as an asset at a severely discounted rate of the face value. Under normal business, that would be acceptable practice, they buy the note at a discount and because of the time-value of money get to collect the entire face value of the note even though they bought it for less.
However, if Chase acquired a (for example only) $100k face value "Note and Agreement"/"Promissory Note" plus interest and fees etc., from the FDIC for a tiny fraction of the cost (it's said that the Chase assumption of WaMu assets was ridiculously cheap because it needed to be a rushed deal, otherwise the risk was of WaMu customers fighting to take their deposits out and a run on the bank etc. which is why the FDIC had to shut WaMu down so suddenly), so if Chase then collects the entire face value on a steeply discounted note, that would be Chase benefiting from an illegal transaction (WaMu's forgery that obligated the borrower into a line of credit that NEVER would have been agreed to had WaMu not misrepresented the terms then forged the signature to cover up for it.)
Approximately $___k has been paid by the borrower in interest-only payments, some additional in principal. In addition to Unjust Enrichment, Forgery and other claims, it would seem that the $___k or so paid thus far could be recharacterized as principal repayment on the note. However, since Chase did not lend the borrower the full $100k since it bought the note at steep discount, and the illegality likely involved, it would seem important to find out what Chase acquired that $100k note for and whether the $___k has already paid them off for their actual purchase price. If so, because of the illegal potential of the line of credit, Chase might already be considered to have been paid off in full for what they paid on a note, and should not be allowed to benefit further from an illegal transaction committed by WaMu.
Would the defendant be the FDIC (as the receiver that indemnified Chase in the assumption of WaMu) and if so, is there an insurance fund to pay for WaMu claims given the mortgage forgery issues covered in the April 2010 Senate hearings on WaMu fraud? Borrower likely knows how to find the loan officer for personal criminal charges to be brought; however, if loan officer was incentivized by the bank to close loans more quickly and even if not, as an employee of WaMu, this would still be binding on WaMu (now the FDIC or Chase) and not the individual.
This is a business line of credit. Is there some way to join a class action suit with WaMu mortgage holders who have had similar internal bank forgeries on their loan applications, to show that this pattern of behavior did not just occur in mortgages? Borrower is still locked into a long-term triple-sized payment due to Chase now enforcing the terms of the WaMu note.
The borrower has filed a police report to at least get the forgery on official record and has already tried for over 2 months to resolve this directly with Chase.
Chase's Fraud Specialist has flatly denied the Fraud Claim the same day as receiving it without even talking with the borrower to confirm which documents had the forged signature on them, saying that "signatures appear to match" but refusing to provide to the borrower which signatures he used for matching purposes, since independent witnesses have confirmed that the signatures clearly do not match.
Chase's Fraud Specialist's refusal to even provide which borrower signatures he used for the sake of comparison in his cursory determination that "no forgery occurred" (his denial of the claim lifts the courtesy "freeze" of payment requirements on the borrower's account and triggers late penalties and negative reporting) also would seem to show lack of good faith in working with the borrower to resolve the question of the forgery.
There is an obvious conflict of interest if Chase is in sole custody and control of the forgery evidence and refuses to provide it for law enforcement investigation, and instead Chase's Fraud Specialist claims that no forgery has occurred, even though he is obviously motivated NOT to investigate a forgery by the bank's predecessor if it risks invalidating the bank's current and future right to enforce the note.
And in the meantime, Chase continues to demand payments even under the shadow of this forgery issue, refuses to provide the paper-and-ink original note as evidence to law enforcement to begin the investigation, and risks the borrower's good credit score as it likely procedurally intends to report negatively to the credit bureaus, damaging decades of responsible and careful credit management by the borrower.
Because it is unclear whether Chase would be a defendant in any suit against WaMu/the FDIC, borrower questions whether any money paid to Chase under this note would be recoverable from Chase even if the WaMu note is confirmed to be forged, and meantime borrower is trying to ethically preserve cashflow in not paying as-yet-unjustifiable triple-sized payments to Chase each month while it has caused unreasonable delays and refused to prove that it is even the legal assignee of the borrower's specific note despite multiple requests.
Without that proof of that assignment document showing that Chase specifically has the right to enforce the note against borrower (assuming the note had been legal and not associated with forged origination documents), then Chase has failed to prove on several levels that it is entitled to enforce the note against borrower at all.
But Chase continues to delay for over 2 months and counting while still requiring borrower to make payments or get penalized with late penalties and negative credit reporting. Chase's pattern of delays benefits Chase alone and harms the borrower who owes money every month.
Can a Temporary Injunction be filed until the forgery matter and any consequences related to the earlier misrepresentation of the terms of the line of credit can be examined and cleared up, so that borrower is not trashed in the credit reporting realm meantime?
Because the borrower is possibly not allowed to sue Chase under the terms of the Washington Mutual Purchase and Assumption agreement, the borrower cannot even request a temporary injunction to stop payment requirements until the case can be investigated and is stuck in limbo between the 3 entities, or is that not correct?
Are there other possible plaintiffs to justify a class action suit against WaMu, FDIC, Chase etc. for the forgery, misrepresentation, and reversal of the terms of the misrepresented line of credit, unjust enrichment and benefiting from an illegal transaction?
Any and all legal suggestions and leads welcome in this time-sensitive matter, as any upcoming negative reporting by Chase could trigger universal default among all of borrower's other credit resources, which have all been kept current to maintain an excellent credit report for many years up to this point - thank you!
This report was posted on Ripoff Report on 12/22/2010 10:40 PM and is a permanent record located here: http://www.ripoffreport.com/reports/chase-bankwashington-mutual/multiple-cities-ohio-/chase-bankwashington-mutual-jp-morgan-chase-forgery-and-written-misrepresentations-fraud-674506. The posting time indicated is Arizona local time. Arizona does not observe daylight savings so the post time may be Mountain or Pacific depending on the time of year.
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