A local man who is trying to save his home after a bank foreclosed on it contends the financial institution does not have a clear chain of title to the residence and that the federal bailout of banks should have paid his loan.
Jean Paul Jallifer filed a complaint for declaratory and injunctive relief against Capital One in Pitkin County District Court on May 11. The filing says that in March 2008, he obtained a $920,000 mortgage through Chevy Chase Bank (CCB) for the home in the 1700 block of Juniper Hills Road outside of Snowmass Village.
In January, Capital One, which bought CCB in 2009, began foreclosure proceedings and obtained a court order that authorized the property’s sale. The company claimed Jallifer had defaulted on the loan originated by CCB.
At a hearing to determine whether the lender is entitled to foreclose on the property and have it sold at public auction, Capital One officials produced what they said was the original promissory note for the mortgage, Jallifer’s filing says.
With the note was a photocopy of an alleged endorsement — which allows a bank to list it as a deposit — that had a stamped “signature,” wrote Jallifer’s attorney, W. Jeffrey Barnes of Beverly Hills, Calif.
“However, there is no date on the endorsement; there are no witnesses to the endorsement; and there is no evidence that the person whose name and stamped signature appears on the alleged endorsement was” an officer of CCB, or otherwise had the authority to take such action, the filing says.
Jallifer, in other words, is a victim of the robo-signing scandal that involved lenders employing suspect legal documents, according to court documents. In 2010, some major U.S. lenders suspended their foreclosure processes after it came to light that they were falsely signing en masse mortgage papers, according to affidavits and other legal documents.
Barnes also mentions mortgage-backed securities, another facet of the recession.
The head of CCB “admitted in writing, in 2000 to the Office of Thrift Supervision, that it was active in securitizing mortgage loans since 1988,” the filing says.
The process of securitizing mortgage loans involves selling the loans to a third party that then pools them for “partial collateral for one or more series of mortgage-backed securities,” Barnes wrote.
Insurance is required on the deals to insure against the risk of loss through a default in payments on the mortgage loans. It is “a matter of public knowledge” that as of 2009 CCB had such insurance, Jallifer’s filing says.
Because there was insurance on Jallifer’s loan, and because Capital One received more than $3.5 billion from the U.S. government in bailout funds, the “loan was paid in whole or in part” and “thus the amount of the default claimed by Capital One is either incorrect or nonexistent,” the filing says.
If the loan documentation produced by Capital One for the foreclosure was suspect, it’s unclear why the proceeding was approved. Messages left with Barnes were not returned, and there was no answer at the listed phone number for Jallifer. A Capital One spokeswoman said the company doesn’t comment on pending litigation.
Barnes wrote that Capital One itself “has raised serious questions as to whether it has any legal right to seek the remedy of foreclosure,” and Jallifer sought a preliminary injunction to stop the potential sale of the home.
Judge Gail Nichols of the 9th Judicial District on May 14 denied the motion, writing that Jallifer has not established that he will suffer immediate and irreparable injury.
“Plaintiff has not indicated by affidavit or otherwise that his property will be sold within 21 days,” Nichols’ ruling says.