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Chase’s fraudulent foreclosure: Court finds for plaintiffs

Bank committed fraud in order to show ownership

Fraud definition
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JPMorgan Chase (JPM) created and recorded false documentation that showed the bank owned the mortgage of two California residents in order to foreclose on their home, the California Court of Appeals stated in a ruling Monday.

In 1998, Jan and Rosalind Kalicki obtained a mortgage loan from Headlands Mortgage Company for a home in San Marcos, California. Headlands originated the loan and Washington Mutual became the servicer of the loan. When WaMu was placed in receivership in 2008, Chase purchased “certain interests” of WaMu in the Kalicki’s loan, according to court documents.

The Kalickis sued WaMu in 2009, alleging that the bank wrongfully foreclosed on their property in 2008. In 2010, Chase was granted a motion to intervene because it had purchased WaMu’s assets and held the interests in the loan.

The Kalickis amended their complaint to add Chase as a defendant and dismissed WaMu from the suit. In the complaint, the Kalickis alleged that Chase claimed ownership of their loan based on fraudulent documents.

In September 2012, a trial court in California ruled in favor of the Kalickis, stating that they owned the property and quieted the title in their favor.

The court also found that Chase had executed and recorded false documentation that showed that the ownership of the Kalickis' mortgage was transferred to Chase. The court also ruled that a Chase executive created a document that “fraudulently represented that a prior assignment had been lost and that Chase owned the Kalickis' mortgage.” 

The lower court ruling voided all of the fraudulent documents and prohibited Chase from recording any false or misleading documents representing that it owned the Kalickis' mortgage.

Having won the case against Chase, the Kalickis also filed a motion for reimbursement of their attorney fees and costs. The Kalickis' attorneys sought to reclaim attorney fees in the amount $258,060.

The court later found in the Kalickis' favor and awarded them “reasonable” attorney fees in the amount of $255,135, stating the amount included feeds for reviewing and replying to Chase’s opposition briefs. Chase appealed that ruling, which led to the ruling Monday in the California Court of Appeals.

In an unpublished unanimous decision from Fourth District Judges James McIntyre, Richard Huffman, and Joan Irion, the appeals court agreed with the lower court’s ruling and upheld the attorney fee awarded to the Kalickis.

“Chase's arguments are misleading,” the ruling states. “The judgment against Chase established that Chase created false documents purporting to give it an ownership interest in the Kalickis' loan and deed of trust. Accordingly, when Chase purchased WaMu, the Kalickis' claims against WaMu became intertwined with Chase. Although the WaMu Conduct Claims were ultimately dismissed, this did not occur until after Chase admitted it did not hold an ownership interest in the loan and deed of trust.”

Somewhat ironically, Chase claimed that the Kalickis were billed excessively because they had multiple attorneys working on their case. “Chase's complaint that the Kalickis had multiple attorneys working on the same tasks rings hollow given the statement of the Kalickis' counsel that ‘Chase had at least four attorneys involved’ and it was ‘not unusual to have several attorneys work on more complicated cases such as this one,’” the ruling states.

HousingWire attempted to contact JPMorgan Chase and has not received a response. Unsuccessful contact attempts were also made to the Kalickis' legal representation. 

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