May, 2010 | FORECLOSURE FRAUD | by DinSFLA

Archive | May, 2010

FORECLOSURE…THE NEW “IT” THING? FANTASTIC!

FORECLOSURE…THE NEW “IT” THING? FANTASTIC!

Can you imagine if everyone just stopped paying that thing called mortgage but kept up with homeowners/condo associations (because these can foreclose faster than you can blink)? Oh what a wonderful world!

This article really does not portray the majority. Some don’t have a job period! If you can get a great attorney and an loan audit… get the lender to the table!

Owners Stop Paying Mortgage …

and Stop Fretting About It

Chip Litherland for The New York Times Wendy Pemberton, a barber in Florida, with a customer, Howard Cook. She stopped paying her mortgage two years ago.

By DAVID STREITFELD NYTIMES
Published: May 31, 2010

ST. PETERSBURG, Fla. — For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of.

Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.

Chip Litherland for The New York Times Alex Pemberton and Susan Reboyras stopped paying the mortgage on their house in St. Petersburg, Fla., last summer.

“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying themortgage on their house here last summer. “It’s really been a blessing.”

A growing number of the people whose homes are in foreclosure are refusing to slink away in shame. They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by.

This type of modification does not beg for a lender’s permission but is delivered as an ultimatum: Force me out if you can. Any moral qualms are overshadowed by a conviction that the banks created the crisis by snookering homeowners with loans that got them in over their heads.

“I tried to explain my situation to the lender, but they wouldn’t help,” said Mr. Pemberton’s mother, Wendy Pemberton, herself in foreclosure on a small house a few blocks away from her son’s. She stopped paying her mortgage two years ago after a bout with lung cancer. “They’re all crooks.”

Foreclosure procedures have been initiated against 1.7 million of the nation’s households. The pace of resolving these problem loans is slow and getting slower because of legal challenges, foreclosure moratoriums, government pressure to offer modifications and the inability of the lenders to cope with so many souring mortgages.

The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics.

While there are no firm figures on how many households are following the Pemberton-Reboyras path of passive resistance, real estate agents and other experts say the number of overextended borrowers taking the “free rent” approach is on the rise.

There is no question, though, that for some borrowers in default, foreclosure is only a theoretical threat for a long time.

More than 650,000 households had not paid in 18 months, LPS calculated earlier this year. With 19 percent of those homes, the lender had not even begun to take action to repossess the property — double the rate of a year earlier.

In some states, including California and Texas, lenders can pursue foreclosures outside of the courts. With the lender in control, the pace can be brisk. But in Florida, New York and 19 other states, judicial foreclosure is the rule, which slows the process substantially.

In Pinellas and Pasco counties, which include St. Petersburg and the suburbs to the north, there are 34,000 open foreclosure cases, said J. Thomas McGrady, chief judge of the Pinellas-Pasco Circuit. Ten years ago, the average was about 4,000. “The volume is killing us,” Judge McGrady said.

Mr. Pemberton and Ms. Reboyras decided to stop paying because their business, which restores attics that have been invaded by pests, was on the verge of failing. Scrambling to get by, their credit already shot, they had little to lose.

“We could pay the mortgage company way more than the house is worth and starve to death,” said Mr. Pemberton, 43. “Or we could pay ourselves so our business could sustain us and people who work for us over a long period of time. It may sound very horrible, but it comes down to a self-preservation thing.”

They used the $1,837 a month that they were not paying their lender to publicize A Plus Restorations, first with print ads, then local television. Word apparently got around, because the business is recovering.

The couple owe $280,000 on the house, where they live with Ms. Reboyras’s two daughters, their two dogs and a very round pet raccoon named Roxanne. The house is worth less than half that amount — which they say would be their starting point in future negotiations with their lender.

“If they took the house from us, that’s all they would end up getting for it anyway,” said Ms. Reboyras, 46.

One reason the house is worth so much less than the debt is because of the real estate crash. But the couple also refinanced at the height of the market, taking out cash to buy a truck they used as a contest prize for their hired animal trappers.

Chip Litherland for The New York Times Mark P. Stopa is a lawyer who says he has 350 clients in foreclosure, each paying him $1,500 a year in fees.

It was a stupid move by their lender, according to Mr. Pemberton. “They went outside their own guidelines on debt to income,” he said. “And when they did, they put themselves in jeopardy.”

His mother, Wendy Pemberton, who has been cutting hair at the same barber shop for 30 years, has been in default since spring 2008. Mrs. Pemberton, 68, refinanced several times during the boom but says she benefited only once, when she got enough money for a new roof. The other times, she said, unscrupulous salesmen promised her lower rates but simply charged her high fees.

Even without the burden of paying $938 a month for her decaying house, Mrs. Pemberton is having a tough time. Most of her customers are senior citizens who pay only $8 for a cut, and they are spacing out their visits.

“The longer I’m in foreclosure, the better,” she said.

In Florida, the average property spends 518 days in foreclosure, second only to New York’s 561 days. Defense attorneys stress they can keep this number high.

Both generations of Pembertons have hired a local lawyer, Mark P. Stopa. He sends out letters — 1,700 in a recent week — to Floridians who have had a foreclosure suit filed against them by a lender.

Even if you have “no defenses,” the form letter says, “you may be able to keep living in your home for weeks, months or even years without paying your mortgage.”

About 10 new clients a week sign up, according to Mr. Stopa, who says he now has 350 clients in foreclosure, each of whom pays $1,500 a year for a maximum of six hours of attorney time. “I just do as much as needs to be done to force the bank to prove its case,” Mr. Stopa said.

Many mortgages were sold by the original lender, a circumstance that homeowners’ lawyers try to exploit by asking them to prove they own the loan. In Mrs. Pemberton’s case, Mr. Stopa filed a motion to dismiss on March 17, 2009, and the case has not moved since then. He filed a similar motion in her son’s case last December.

From the lenders’ standpoint, people who stay in their homes without paying the mortgage or actively trying to work out some other solution, like selling it, are “milking the process,” said Kyle Lundstedt, managing director of Lender Processing Service’s analytics group. LPS provides technology, services and data to the mortgage industry.  DinSFLA: WHAT AN IDIOTIC THING TO SAY! Who is exactly milking what??

These “free riders” are “the unintended and unfortunate consequence” of lenders struggling to work out a solution, Mr. Lundstedt said. “These people are playing a dangerous game. There are processes in many states to go after folks who have substantial assets postforeclosure.” DinSFLA: I invite you Mr. Lundstedt to look over this blog and see your “Free Riders”. SIR!

But for borrowers like Jim Tsiogas, the benefits of not paying now outweigh any worries about the future.

“I stopped paying in August 2008,” said Mr. Tsiogas, who is in foreclosure on his house and two rental properties. “I told the lady at the bank, ‘I can’t afford $2,500. I can only afford $1,300.’ ”

Mr. Tsiogas, who lives on the coast south of St. Petersburg, blames his lenders for being unwilling to help when the crash began and his properties needed shoring up.

Their attitude seems to have changed since he went into foreclosure. Now their letters say things like “we’re willing to work with you.” But Mr. Tsiogas feels little urge to respond.

“I need another year,” he said, “and I’m going to be pretty comfortable.”

Posted in foreclosure, foreclosure fraud, Lender Processing Services Inc., LPS, walk away0 Comments

Shares of DJSP Enterprises Get SLAMMED….FALL 25%. Are we seeing a DownTrend?

Shares of DJSP Enterprises Get SLAMMED….FALL 25%. Are we seeing a DownTrend?

Huge profits result from foreclosure procedure

By RICHARD WILNER NYPost
Last Updated: 1:03 AM, May 30, 2010
Posted: 1:03 AM, May 30, 2010

A new gold rush is sweeping the country — only this time the speculators are looking to get fat off the $4 billion home foreclosure industry by promising banks a streamlined and low-cost method to kick folks out of their homes. DinSFLA: Last time I heard the word “speculators” was in the CONDO BOOM!

In the last two years, as the mortgage meltdown intensified, four companies have gone public or filed papers to go public — each looking to get their hands on cash to help grow into a national powerhouse quickly to take advantage of the soft housing market.

Buying shares of these companies is like shorting the housing market — sort of giving the average investor a chance to be a mini-John Paulson, the hedge fund mogul who made billions betting against the housing market in 2007. There were roughly 2.9 million foreclosures in 2009 and there are currently 6 million homeowners 60 days or more delinquent on their mortgage.

The companiesDJSP Enterprises, which saw revenues grow 31 percent last year, Altisource Portfolio Solutions, which reported a 182 percent jump in profits last year, and Lender Processing Services, whose $2.4 billion in revenue was up 29 percent last year — each offer a technology platform that links mortgage lender clients on one end and law firms clients on the other.

A fourth company, Prommis Solutions, which swung to a $7.9 million profit in 2009 from a loss in 2008, recently filed papers to go public.

The four companies profit, in large part, from the high volume of mortgage defaults — collecting fees from banks for each referral and from law firms, which file the foreclosure actions. In fact, the companies warn that a turnaround in the housing market or additional mortgage-modification plans from Washington could chill their profits.

Last week, shares of DJSP Enterprises got slammed, falling 25 percent on Friday, to $6.46, a 52-week low, after the company lowered its guidance for 2010 in the wake of a drop in the number of foreclosures.

It’s a strange, new sector of the housing finance sector, where bad news for America fattens the bottom lines for these companies, and good news for beleaguered homeowners knocks the stuffing — and dollars — from their bottom lines.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in djsp enterprises, foreclosure fraud, Law Offices Of David J. Stern P.A.0 Comments

ARE FORECLOSURE MILLS Coercing Buyers for BANK OWNED homes? ARE ALL THE MILLS?

ARE FORECLOSURE MILLS Coercing Buyers for BANK OWNED homes? ARE ALL THE MILLS?

MASTER_OFFER_PACKET_03-10-2010[1][1]

In the Master Packet above go to Page 7

Below is from an ad in Trulia

fannie mae owned.bank property. property is vacant.all offers requiring financing must have preapproval letter.all cash offer require proof of fund(see attachement).this property is eligible for home path renovation mortgage-as little as 3% down.buyer must close with seller closing agent(david j. stern law offices,p.a).investors not eligible for first 15days.*for showing instr please read broker remarks* note:offers must be submitted using attachment.close by 30 june and receive extra 3.5% in closing cost

Looking further into this I noticed the following:

  • Still in the name of the owner
  • NOT named under any REO
  • Home last sold for 245K
  • Now listed at 120K

Here is the BIGGEST:

I found a Bank-owned packet for this “SPECIALLY SELECTED” Agent/BROKER in many other REO’s and in this package it states the following: (SEE ABOVE LINK PACKET)

9) Which title companies are the sellers and who do I make out the earnest money deposit to once offer is verbally accepted?

a. PLEASE LOOK ON MLX REMARKS FOR TITLE COMPANY. MLX WILL HAVE ONE OF THE FOLLOWING:
i. David Stern, P.A.
ii. Marshall C. Watson, P.A.
iii. Smith, Hiatt, & Diaz, P.A.
iv. Butler & Hosch, P.A.
v. Shapiro & Fishman, P.A.
vi. Spear & Hoffman, P.A.
vii. Adorno & Yoss, P.A.
viii. Watson Title

ix. New House Title (This is registered with FDLG address 9119 CORPORATE LAKE DRIVE, SUITE 300 TAMPA FL 33634)

10) Can the buyer use their own title company or must they use the title company selected by seller?

a. The buyer MUST HOLD ESCROW with Fannie Mae Title Company as stated on MLX.

NOW are we unleashing another dimension to this never ending SAGA?

We recently found out about WTF!!! DJSP Enterprises, Inc. Announces Agreement to Acquire Timios, Inc., Expand Presence Into 38 States , so is this a way for the Mills to Monopolize on the sales of these properties??

HERE IS same Agent/Broker for a FLORIDA DEFAULT LAW GROUP property:

THIS IS FANNIE MAE HOMEPATH PROPERTY.BANK OWNED.ALL OFFERS REQUIRING FINANCING MUST HAVE PREAPPROVAL LETTER. ALL CASH OFFERS REQUIRE PROOF OF FUNDS. THIS PROPERTY IS APPROVED FOR HOMEPATH AND HOMEPATH RENOVATION MORTGAGE FINANCING-AS LITTLE AS 3% DOWN,NO APPRAISAL OR MORTGAGE INSURANCE REQUIRED! ** FOR SHOWING INST PLEASE READ BROKER REMARKS** YOU MUST SUBMIT OFFER USING ATTACHMENT! INVESTORS NOT ELIGIBLE FOR FIRST 15DAYS.CLOSE BY JUNE 30 TO BE ELIGIBLE FOR EXTRA 3.5% SC. EMD: FL DEFAULT LAW GROUP.

Here is another same Agent/Broker for MARSHALL C. WATSON property:

FANNIE MAE OWNED.BANK PROPERTY. PROPERTY IS VACANT.ALL OFFERS REQUIRING FINANCING MUST HAVE PREAPPROVAL LETTER.ALL CASH OFFERS REQUIRE PROOF OF FUNDS(SEE ATTACHEMENT).THIS PROPERTY IS ELIGIBLE FOR HOME PATH RENOVATION MORTGAGE-AS LITTLE AS 3% DOWN.BUYER MUST CLOSE WITH SELLER CLOSING AGENT (LAW OFFICES OF MARSHALL C. WATSON).INVESTOR NOT ELIGIBLE FOR FIRST 15DAYS.*FOR SHOWING INSTR PLEASE READ BROKER REMARK* NOTE:OFFERS MUST BE SUBMITTED USING ATTACHMENT.CLOSE BY JUNE 30 TO GET 3.5% EXTRA IN CLOSING COST

Does the JUNE 30th Closing Day have any significance??

MAYBE it’s because of this? MERS May NOT Foreclose for Fannie Mae effective 5/1/2010I am just trying to make sense of this…Is there a grace period that followed?

  • What “if” the BUYER selects their own Title company? Does this eliminate their chances of ever even being considered as a buyer?
  • Why even bother to state this?
  • Is this a way for the selected Agent/ Broker to find the buyer and discourage other agents or buyers from viewing?
  • Was this at all even necessary to state?
  • Is this verbiage to coerce agents to get a higher commission rather than pass down the incentive of 3.5% towards closing cost “if” under contract by 6/30?
  • Why do investors have to refrain from buying for the first 15 days?

Coercion (pronounced /ko???r??n/) is the practice of forcing another party to behave in an involuntary manner (whether through action or inaction) by use of threats, intimidation, trickery, or some other form of pressure or force. Such actions are used as leverage, to force the victim to act in the desired way. Coercion may involve the actual infliction of physical pain/injury or psychological harm in order to enhance the credibility of a threat. The threat of further harm may lead to the cooperation or obedience of the person being coerced. Torture is one of the most extreme examples of coercion i.e. severe pain is inflicted until the victim provides the desired information.

RELATED STORY:

LENDER PROCESSING SERVICES (LPS) BUYING UP HOMES AT AUCTIONS? Take a look to see if this address is on your documents!

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in butler & hosch pa, conspiracy, djsp enterprises, fannie mae, FDLG, florida default law group, foreclosure, foreclosure fraud, foreclosure mills, hiatt & diaz PA, insider, investigation, Law Offices Of David J. Stern P.A., law offices of Marshall C. Watson pa, marshall watson, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, new house title llc, Real Estate, REO, securitization, shapiro & fishman pa, short sale, spear & hoffman4 Comments

Tracking Loans Through a Firm That Holds Millions: MERS

Tracking Loans Through a Firm That Holds Millions: MERS

Kevin P. Casey for The New York Times: Darlene and Robert Blendheim of Seattle are struggling to keep their home after their subprime lender went out of business.

By MIKE McINTIRE NYTimes
Published: April 23, 2009

Judge Walt Logan had seen enough. As a county judge in Florida, he had 28 cases pending in which an entity called MERS wanted to foreclose on homeowners even though it had never lent them any money.

Into the Mortgage NetherworldGraphicInto the Mortgage Netherworld

MERS, a tiny data-management company, claimed the right to foreclose, but would not explain how it came to possess the mortgage notes originally issued by banks. Judge Logan summoned a MERS lawyer to the Pinellas County courthouse and insisted that that fundamental question be answered before he permitted the drastic step of seizing someone’s home.

Daniel Rosenbaum for The New York Times R. K. Arnold, MERS president, said the company helped reduce mortgage fraud and imposed order on the industry.

“You don’t think that’s reasonable?” the judge asked.

“I don’t,” the lawyer replied. “And in fact, not only do I think it’s not reasonable, often that’s going to be impossible.”

Judge Logan had entered the murky realm of MERS. Although the average person has never heard of it, MERS — short for Mortgage Electronic Registration Systems — holds 60 million mortgages on American homes, through a legal maneuver that has saved banks more than $1 billion over the last decade but made life maddeningly difficult for some troubled homeowners.

Created by lenders seeking to save millions of dollars on paperwork and public recording fees every time a loan changes hands, MERS is a confidential computer registry for trading mortgage loans. From an office in the Washington suburbs, it played an integral, if unsung, role in the proliferation of mortgage-backed securities that fueled the housing boom. But with the collapse of the housing market, the name of MERS has been popping up on foreclosure notices and on court dockets across the country, raising many questions about the way this controversial but legal process obscures the tortuous paths of mortgage ownership.

If MERS began as a convenience, it has, in effect, become a corporate cloak: no matter how many times a mortgage is bundled, sliced up or resold, the public record often begins and ends with MERS. In the last few years, banks have initiated tens of thousands of foreclosures in the name of MERS — about 13,000 in the New York region alone since 2005 — confounding homeowners seeking relief directly from lenders and judges trying to help borrowers untangle loan ownership. What is more, the way MERS obscures loan ownership makes it difficult for communities to identify predatory lenders whose practices led to the high foreclosure rates that have blighted some neighborhoods.

In Brooklyn, an elderly homeowner pursuing fraud claims had to go to court to learn the identity of the bank holding his mortgage note, which was concealed in the MERS system. In distressed neighborhoods of Atlanta, where MERS appeared as the most frequent filer of foreclosures, advocates wanting to engage lenders “face a challenge even finding someone with whom to begin the conversation,” according to a report by NeighborWorks America, a community development group.

To a number of critics, MERS has served to cushion banks from the fallout of their reckless lending practices.

“I’m convinced that part of the scheme here is to exhaust the resources of consumers and their advocates,” said Marie McDonnell, a mortgage analyst in Orleans, Mass., who is a consultant for lawyers suing lenders. “This system removes transparency over what’s happening to these mortgage obligations and sows confusion, which can only benefit the banks.”

A recent visitor to the MERS offices in Reston, Va., found the receptionist answering a telephone call from a befuddled borrower: “I’m sorry, ma’am, we can’t help you with your loan.” MERS officials say they frequently get such calls, and they offer a phone line and Web page where homeowners can look up the actual servicer of their mortgage.

In an interview, the president of MERS, R. K. Arnold, said that his company had benefited not only banks, but also millions of borrowers who could not have obtained loans without the money-saving efficiencies it brought to the mortgage trade. He said that far from posing a hurdle for homeowners, MERS had helped reduce mortgage fraud and imposed order on a sprawling industry where, in the past, lenders might have gone out of business and left no contact information for borrowers seeking assistance.

“We’re not this big bad animal,” Mr. Arnold said. “This crisis that we’ve had in the mortgage business would have been a lot worse without MERS.”

About 3,000 financial services firms pay annual fees for access to MERS, which has 44 employees and is owned by two dozen of the nation’s largest lenders, including Citigroup, JPMorgan Chase and Wells Fargo. It was the brainchild of the Mortgage Bankers Association, along with Fannie MaeFreddie Mac and Ginnie Mae, the mortgage finance giants, who produced a white paper in 1993 on the need to modernize the trading of mortgages.

At the time, the secondary market was gaining momentum, and Wall Street banks and institutional investors were making millions of dollars from the creative bundling and reselling of loans. But unlike common stocks, whose ownership has traditionally been hidden, mortgage-backed securities are based on loans whose details were long available in public land records kept by county clerks, who collect fees for each filing. The “tyranny of these forms,” the white paper said, was costing the industry $164 million a year.

“Before MERS,” said John A. Courson, president of the Mortgage Bankers Association, “the problem was that every time those documents or a file changed hands, you had to file a paper assignment, and that becomes terribly debilitating.”

Although several courts have raised questions over the years about the secrecy afforded mortgage owners by MERS, the legality has ultimately been upheld. The issue has surfaced again because so many homeowners facing foreclosure are dealing with MERS.

Advocates for borrowers complain that the system’s secrecy makes it impossible to seek help from the unidentified investors who own their loans. Avi Shenkar, whose company, the GMA Modification Corporation in North Miami Beach, Fla., helps homeowners renegotiate mortgages, said loan servicers frequently argued that “investor guidelines” prevented them from modifying loan terms.

“But when you ask what those guidelines are, or who the investor is so you can talk to them directly, you can’t find out,” he said.

MERS has considered making information about secondary ownership of mortgages available to borrowers, Mr. Arnold said, but he expressed doubts that it would be useful. Banks appoint a servicer to manage individual mortgages so “investors are not in the business of dealing with borrowers,” he said. “It seems like anything that bypasses the servicer is counterproductive,” he added.

When foreclosures do occur, MERS becomes responsible for initiating them as the mortgage holder of record. But because MERS occupies that role in name only, the bank actually servicing the loan deputizes its employees to act for MERS and has its lawyers file foreclosures in the name of MERS.

The potential for confusion is multiplied when the high-tech MERS system collides with the paper-driven foreclosure process. Banks using MERS to consummate mortgage trades with “electronic handshakes” must later prove their legal standing to foreclose. But without the chain of title that MERS removed from the public record, banks sometimes recreate paper assignments long after the fact or try to replace mortgage notes lost in the securitization process.

This maneuvering has been attacked by judges, who say it reflects a cavalier attitude toward legal safeguards for property owners, and exploited by borrowers hoping to delay foreclosure. Judge Logan in Florida, among the first to raise questions about the role of MERS, stopped accepting MERS foreclosures in 2005 after his colloquy with the company lawyer. MERS appealed and won two years later, although it has asked banks not to foreclose in its name in Florida because of lingering concerns.

Last February, a State Supreme Court justice in Brooklyn, Arthur M. Schack, rejected a foreclosure based on a document in which a Bank of New York executive identified herself as a vice president of MERS. Calling her “a milliner’s delight by virtue of the number of hats she wears,” Judge Schack wondered if the banker was “engaged in a subterfuge.”

In Seattle, Ms. McDonnell has raised similar questions about bankers with dual identities and sloppily prepared documents, helping to delay foreclosure on the home of Darlene and Robert Blendheim, whose subprime lender went out of business and left a confusing paper trail.

“I had never heard of MERS until this happened,” Mrs. Blendheim said. “It became an issue with us, because the bank didn’t have the paperwork to prove they owned the mortgage and basically recreated what they needed.”

The avalanche of foreclosures — three million last year, up 81 percent from 2007 — has also caused unforeseen problems for the people who run MERS, who take obvious pride in their unheralded role as a fulcrum of the American mortgage industry.

In Delaware, MERS is facing a class-action lawsuit by homeowners who contend it should be held accountable for fraudulent fees charged by banks that foreclose in MERS’s name.

Sometimes, banks have held title to foreclosed homes in the name of MERS, rather than their own. When local officials call and complain about vacant properties falling into disrepair, MERS tries to track down the lender for them, and has also created a registry to locate property managers responsible for foreclosed homes.

“But at the end of the day,” said Mr. Arnold, president of MERS, “if that lawn is not getting mowed and we cannot find the party who’s responsible for that, I have to get out there and mow that lawn.”

Posted in CitiGroup, concealment, conspiracy, fannie mae, foreclosure, foreclosure fraud, foreclosure mills, forensic loan audit, forensic mortgage investigation audit, Freddie Mac, investigation, jpmorgan chase, judge arthur schack, MERS, mortgage bankers association, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, mortgage modification, note, R.K. Arnold, securitization, wells fargo0 Comments

FULL DEPOSITION of Mortgage Electronic Registration Systems (MERS) PRESIDENT & CEO R.K. ARNOLD “MERSCORP”

FULL DEPOSITION of Mortgage Electronic Registration Systems (MERS) PRESIDENT & CEO R.K. ARNOLD “MERSCORP”

[ipaper docId=32186716 access_key=key-2dpm2dxhrtxpiyhm4e0s height=600 width=600 /]

R.K. ARNOLD Pres. & CEO Of MERS (Photo Credit) Daniel Rosenbaum for The New York Times

_______________________________________________

EXCLUSIVE | ‘MERS’ DEPOSITION of SECRETARY and TREASURER of MERSCORP 4/2010

_______________________________________________

DEPOSITION of A “REAL” VICE PRESIDENT of MERS WILLIAM “BILL” HULTMAN

_______________________________________________

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in foreclosure, foreclosure fraud, foreclosure mills, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., R.K. Arnold, securitization0 Comments

ANOTHER ONE BITES THE DUST!! IN RE BRIGID In re: MARY BRIGID, Chapter 7, Debtor. MARY ANN RABIN, Plaintiff, v. MARY BRIGID, et al., Defendants. Case No. 08-18750, Adversary Proceeding No. 09-1062. United States Bankruptcy Court, N.D. Ohio.

ANOTHER ONE BITES THE DUST!! IN RE BRIGID In re: MARY BRIGID, Chapter 7, Debtor. MARY ANN RABIN, Plaintiff, v. MARY BRIGID, et al., Defendants. Case No. 08-18750, Adversary Proceeding No. 09-1062. United States Bankruptcy Court, N.D. Ohio.

SAFE!

Via: Livinglies

More and more Judges are finding ways to destroy the entire mortgage — a message to those “lenders” who refuse to reduce principal as settlement of the dispute.

Submitted by Max Gardner

In re: MARY BRIGID, Chapter 7, Debtor.
MARY ANN RABIN, Plaintiff,
v.
MARY BRIGID, et al., Defendants
.

Case No. 08-18750.

Adversary Proceeding No. 09-1062.

United States Bankruptcy Court, N.D. Ohio.

May 21, 2010.

MEMORANDUM OF OPINION

ARTHUR I. HARRIS, Bankruptcy Judge

This matter is currently before the Court on the cross-motions for summary judgment of the plaintiff-trustee, Mary Ann Rabin, and defendant RBC Mortgage Company. At issue is whether the trustee is entitled to avoid a mortgage because the notary’s certificate of acknowledgment failed to recite the name of the party whose signature was acknowledged, notwithstanding a postpetition attempt to correct this omission. For the reasons that follow, the Court holds that the mortgage was not executed in accordance with Ohio’s statutory requirements and can be avoided by the trustee as it relates to the undivided half interest of the debtor Mary Brigid. Accordingly, the trustee’s motion for summary judgment is granted, and RBC Mortgage’s motion for summary judgment is denied.

FACTS AND PROCEDURAL BACKGROUND

Unless otherwise indicated, the following facts are not in dispute. The debtor Mary Brigid and non-debtor Susan Radbourne are joint owners of the real property located at 3000 Yorkshire Road, Cleveland Heights Ohio, 44118. The deed was recorded on September 10, 1999, and provides “Mary Brigid, unmarried and Susan M. Radbourne, unmarried remainder to the survivor of them.” On July 9, 2003, RBC Mortgage extended a loan to Radbourne. The loan was secured by a mortgage of the real property, which was recorded in the Cuyahoga County Recorder’s office, Instrument No. 20030110552 on July 11, 2003.

Page 26 of the mortgage (Docket # 38 Ex. D ) provides in pertinent part:

BY SIGNING BELOW, Borrower accepts and agrees to the terms and 
covenants contained in this Security Instrument and in any riders 
executed by Borrower and recorded with it.

WITNESSES:

X/s/ Brent A. White             /s/ Susan M. Radbourne     
 Brent A. White                Susan M. Radbourne  — Borrower

                                 /s/ Mary Brigid            
                                    — Borrower

STATE OF OHIO

COUNTY OF Cuyahoga   

 On this 9  day of July 2003 , before me, a Notary Public in and for 
said County and State, personally appeared
 Susan M. Radbourne                                             
 Unmarried                                
 ___________________________________________________________________
the individual(s) who executed the foregoing instrument and 
acknowledged that he/she/they did examine and read the same and
did sign the foregoing instrument, and that the same is 
his/her/their free act and deed.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal.

                                    /s/ Brent A. White         
                                    Notary Public

                                                          (Seal)

                                 *   *   *

On November 7, 2008, the debtor filed a petition under Chapter 7 of the Bankruptcy Code (case # 08-18750). On February 5, 2009, the trustee of the Chapter 7 estate initiated this adversary proceeding seeking to avoid the mortgage of RBC Mortgage as it relates to the debtor’s half interest pursuant to section 544 of the Bankruptcy Code and to determine the interests of all parties in the property.

The complaint named as defendants Mary Brigid, Susan Radbourne, Mortgage Electronic Registration System,  RBC Mortgage Company, Chase Home Finance, Huntington National Bank, the Cuyahoga County Treasurer, and the City of Cleveland Heights. The treasurer, City of Cleveland Heights, Mary Brigid, Susan Radbourne, and RBC Mortgage filed answers to the complaint. In its answer, the City of Cleveland Heights asserted a judgment lien in the amount of $1,316.80 at the rate of 5% interest from February 26, 2009, No. JL06258471. Radbourne asserted an undivided half interest in the property in question. She also brought a cross-claim for negligence against RBC Mortgage and requested a reservation of her right to purchase the real estate pursuant to Section 363(i). In its answer, RBC Mortgage asserted that the debtor held only bare legal title and that the trustee had constructive notice.

On June 4, 2009, all parties stipulated that the Cuyahoga County Treasurer has the first and best lien on the subject property for taxes and assessments. On December 27, 2009, the debtor’s deposition was taken, at which the debtor acknowledged signing the mortgage outlined above. On January 13, 2010, attorney David A. Freeburg filed an affidavit of facts regarding the acknowledgment of the mortgage by Mary Brigid. On January 14, 2010, the trustee filed a motion for summary judgment seeking to avoid the mortgage held by RBC Mortgage. On January 21, 2010, RBC Mortgage filed a cross-motion for summary judgment and a response. Briefing on the cross-motions for summary judgment is complete, and the Court is ready to rule.

JURISDICTION

Determinations of the validity, extent, or priority of liens are core proceedings under 28 U.S.C. section 157(b)(2)(K). The Court has jurisdiction over core proceedings under 28 U.S.C. sections 1334 and 157(a) and Local General Order No. 84, entered on July 16, 1984, by the United States District Court for the Northern District of Ohio.

SUMMARY JUDGMENT STANDARD

Federal Rule of Civil Procedure 56(c), as made applicable to bankruptcy proceedings by Bankruptcy Rule 7056, provides that a court shall render summary judgment, if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.

The moving party bears the burden of showing that “there is no genuine issue as to any material fact and that [the moving party] is entitled to judgment as a matter of law.” Jones v. Union County, 296 F.3d 417, 423 (6th Cir. 2002). See generally Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once the moving party meets that burden, the nonmoving party “must identify specific facts supported by affidavits, or by depositions, answers to interrogatories, and admissions on file that show there is a genuine issue for trial.” Hall v. Tollett, 128 F.3d 418, 422 (6th Cir. 1997). See, e.g., Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986) (“The mere existence of a scintilla of evidence in support of the plaintiff’s position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.”). The Court shall view all evidence in a light most favorable to the nonmoving party when determining the existence or nonexistence of a material fact. See Tenn. Dep’t of Mental Health & Mental Retardation v. Paul B., 88 F.3d 1466, 1472 (6th Cir. 1996).

DISCUSSION

Under the “strong arm” clause of the Bankruptcy Code, the bankruptcy trustee has the power to avoid transfers that would be avoidable by certain hypothetical parties. See 11 U.S.C. § 544(a). Section 544 provides in pertinent part:

(a) The trustee shall have, as of the commencement of the case, and without regard to any knowledge of the trustee or of any creditor, the rights and powers of, or may avoid any transfer of property of the debtor or any obligation incurred by the debtor that is voidable by —

Page 7

. . . .

(3) a bona fide purchaser of real property, other than fixtures, from the debtor, against whom applicable law permits such transfer to be perfected, that obtains the status of a bona fide purchaser and has perfected such transfer at the time of the commencement of the case, whether or not such a purchaser exists.

11 U.S.C. §544. Any transfer under section 544 is preserved for the benefit of the estate. See 11 U.S.C. § 551.

The mortgage provides that federal law and the law of the jurisdiction in which the property is located will control. Because the real property in question is located in Ohio, the Court will apply Ohio law to determine whether the trustee can avoid the mortgages using the “strong arm” clause. See Simon v. Chase Manhattan Bank (In re Zaptocky), 250 F.3d 1020, 1024 (6th Cir. 2001) (applicable state law governs determination whether hypothetical bona fide purchaser can avoid mortgage).

Under Ohio law, a bona fide purchaser is a purchaser who “`takes in good faith, for value, and without actual or constructive knowledge of any defect.'” Stubbins v. Am. Gen. Fin. Serv., Inc. (In re Easter), 367 B.R. 608, 612 (Bankr. S.D. Ohio 2007), quoting Terlecky v. Beneficial Ohio, Inc. (In re Key), 292 B.R. 879, 883 (Bankr. S.D. Ohio 2003); see also Shaker Corlett Land Co. v. Cleveland, 139 Ohio St. 536 (1942). The Bankruptcy

Code expressly provides that a bankruptcy trustee is a bona fide purchaser regardless of actual knowledge. See In re Zaptocky, 25,0 F.3d at 1027 (“actual knowledge does not undermine [trustee’s] right to avoid a prior defectively executed mortgage.”). Because actual knowledge does not affect the trustee’s strong-arm power, the Court need only determine whether the trustee had constructive knowledge of the prior interests held by the defendant RBC Mortgage.

Ohio law provides that “an improperly executed mortgage does not put a subsequent bona fide purchaser on constructive notice.” Zaptocky, 250 F.3d at 1028. Ohio courts have refused to allow a recorded mortgage to give constructive notice when the mortgage has been executed in violation of a statute. See In re Nowak, 10,4 Ohio St. 3d 466 (2004) (listing cases). The first question, then, is whether the mortgage was executed in compliance with, or substantially conforms to applicable statutory law. A second question, if the mortgage was not executed in compliance, is whether the December 27, 2009, acknowledgment by Mary Brigid and the January 13, 2010, affidavit filed by attorney Freeburg corrected the defect. A third question, if the lien remains defective, is what interest the trustee is entitled to avoid.

The Mortgage Was Not Properly Executed in Accordance with Ohio Revised Code § 5301.01

Ohio Revised Code § 5301.01 requires four separate acts to properly execute a mortgage: (1) the mortgage shall be signed by the mortgagor; (2) the mortgagor shall acknowledge his signing in front of a notary public, or other qualified official; (3) the official shall certify the acknowledgment; and (4) the official shall subscribe his name to the certificate of acknowledgment. OHIO REV. CODE ANN. § 5301.01(A) (2004); see Drown v. GreenPoint Mortgage Funding, Inc. (In re Leahy), 376 B.R. 826, 832 (Bankr. S.D. Ohio 2007) (listing four requirements provided by Ohio Rev. Code. § 5301.01).2 At issue in this case is whether the certificate of acknowledgment, which omitted the name of Mary Brigid, satisfies the third requirement to proper execution of a mortgage.

Certification of an acknowledgment is governed by Ohio Revised Code sections 147.53-147.58. Ohio Revised Code section 147.53 provides:

The person taking an acknowledgment shall certify that:

(A) The person acknowledging appeared before him and acknowledged he executed the instrument;

(B) The person acknowledging was known to the person taking the acknowledgment, or that the person taking the acknowledgment had satisfactory evidence that the person acknowledging was the person described in and who executed the instrument.

The Ohio Revised Code further provides that a certificate of acknowledgment is acceptable in Ohio if it is in a form prescribed by the laws or regulations of Ohio or contains the words “acknowledged before me,” or their substantial equivalent. OHIO REV. CODE § 147.54. Ohio’s statutory short form acknowledgment for an individual is as follows:

      State of ________

      County of ________

      The foregoing instrument was acknowledged before me this (date) by
      (name of person acknowledged.)

      (Signature of person taking acknowledgment)
      (Title or rank) (Serial number, if any)

OHIO REV. CODE § 147.55(A).

The trustee argues that the mortgage was improperly recorded because the certification of acknowledgment does not conform to section 5301.01 of the Ohio Revised Code with respect to the debtor. Specifically, the trustee asserts that the clause fails to identify the name of the debtor. The Court agrees. Recent case law, including a 2008 decision from the Sixth Circuit BAP, supports the trustee’s position that an acknowledgment is defective if it fails to identify the person whose signature is being acknowledged. See In re Nolan, 38,3 B.R. 391 (6th Cir. B.A.P. 2008)In re Sauer, 41,7 B.R. 523 (Bankr. S.D. Ohio 2009); Daneman v. Nat’l City Mortg. Co. (In re Cornelius), 408 B.R. 704, 708 (Bankr. S.D. Ohio 2009) (“The absence of the name of the mortgagee acknowledging election is the functional equivalent of no certificate of acknowledgment and renders an acknowledgment insufficient.”); Drown v. Countrywide Home Loans, Inc. (In re Peed), 403 B.R. 525, 531 (Bankr. S.D. Ohio 2009) affirmed at No. 2:09cv347 (S.D. Ohio Feb. 18, 2010); Terlecky v. Countrywide Home Loans, Inc. (In re Baruch), No. 07-57212, Adv. No. 08-2069, 2009 Bankr. Lexis 608 at *22 (Bankr. S.D. Ohio Feb. 23, 2009) (“An acknowledgment clause containing nothing relative to the mortgagor’s identity is insufficient; rather, an acknowledgment clause must either identify the mortgagor by name or contain information that permits the mortgagor to be identified by reference to the mortgage.”); In re Leahy, 37,6 B.R. at 832. See also Smith’s Lessee v. Hunt, 13 Ohio 260, 269 (1844) (holding that court was unable to infer name of grantor when acknowledgment was blank as to the grantor and, thus, the mortgage was defective and did not convey title).

The holdings in Nolan, Smith’s Lessee, and similar cases are also supported by case law interpreting almost identical statutory provisions for acknowledgment clauses in Kentucky and Tennessee. See, e.g., Gregory v. Ocwen Fed. Bank (In re Biggs), 377 F.3d 515 (6th Cir. 2004) (affirming bankruptcy court’s decision avoiding deed of trust under section 544 and Tennessee law when deed of trust omitted names of acknowledging parties); Select Portfolio Servs. v. Burden (In re Trujillo), 378 B.R. 526 (6th Cir. B.A.P. 2007) (affirming bankruptcy court’s decision avoiding mortgage under section 544 and Kentucky law when debtor was not named or identified in certificate of acknowledgment).

Because RBC Mortgage conceded that at the time of execution the mortgage was defective, and because no argument was made regarding substantial compliance, this Court holds that the mortgage failed to substantially comply with the filing requirements. Therefore, the mortgage was improperly executed with respect to the debtor because the certification of acknowledgment failed to indicate who appeared before the notary public as required under Ohio Revised Code section 5301.01.

RBC Mortgage’s Attempt to Validate the Defective Mortgage via Section 5301.45 is Ineffective

The Court rejects the argument of RBC Mortgage that Ohio Revised Code section 5301.45 and Bankruptcy Code section 546(a)(1) allow it to correct a defective acknowledgment and defeat the trustee’s strong arm powers by using the debtor’s testimony taken at a deposition postpetition. First, section 5301.45 simply does not apply to any situation other than the correction of pagination of acknowledgment clauses. Second, even if section 5301.45 did apply, the postpetition acknowledgment by the debtor was not voluntary. These issues are discussed more fully below.

1. Section 5301.45 is meant as a mechanism to correct pagination only

While older versions of the statutes at issue in this case date back as early as the 1800’s, the Court begins its analysis with the 1910 version of the Ohio General Code. See THE GENERAL CODE OF THE STATE OF OHIO (The Commissioners of Public Printing of Ohio 1910) (“Being an Act entitled `An Act to revise and consolidate the general statutes of Ohio”). Section 8510 of the 1910 Ohio General Code provided:

A deed, mortgage, or lease of any estate or interest in real property, must be signed by the grantor, mortgagor, or lessor, and such signing be acknowledged by the grantor, mortgagor, or lessor in the presence of two witnesses, who shall attest the signing and subscribe their names to the attestation. Such signing also must be acknowledged by the grantor,

mortgagor, or lessor before a judge of a court of record in this state, or a clerk thereof, a county auditor, county surveyor, notary public, mayor, or justice of the peace, who shall certify the acknowledgment on the same sheet on which the instrument is written or printed, and subscribe his name thereto.   (Emphasis added). This 1910 statute outlined the requirements to validate a deed, mortgage, or lease, including the necessity for two witnesses and that the acknowledgment page be on the same page as the instrument, and is the precursor to Ohio Revised Code section 5301.01.

The original version of what is now Ohio Revised Code section 5301.45 is provided in Local Laws and Joint Resolutions, 57 v 10, and was titled as section 8559 of the Ohio General Code. The current version of the statute is substantially identical to its 1910 version and provides in full:

When a deed, mortgage, lease, or other instrument of writing intended to convey or encumber an interest in real estate is not printed or written on a single sheet, or when the certificate of acknowledgment thereof is not printed or written on the same sheet with the instrument, and such defective conveyance is corrected by the judgment of a court, or by the voluntary act of the parties thereto, such judgment or act shall relate back so as to be operative from the time of filing the original conveyance in the county recorder’s office.

OHIO REV. CODE § 5301.45.

Thus, the state of the law regarding the formal requirements of a valid mortgage in 1910 was that although section 8510 required the instrument and acknowledgment clause to be on the same page, section 8559 allowed for correction of this deficiency through voluntary act of the parties or judgment by the court. However, the Ohio Supreme Court held in 1939 that certificates bound to an instrument substantially complied with the statute. The Court explained that:

When the provision now found in Section 8510, General Code, was enacted, more than a hundred years ago, deeds, mortgages and leases were usually and could easily be written in their entirety on a single sheet of paper. In recent years many of such instruments are so long that to write or print them on one sheet would require a roll of paper. Often, too, the acknowledgments are so numerous as to present the same difficulty. What the Legislature sought by the enactment of the provisions now found in Section 8510 was no doubt the prevention of fraud that might be readily perpetrated if the certificate of acknowledgment were on a sheet separate from the instrument itself. With respect to the lease in litigation this danger is eliminated because the certificates are bound to the other parts by rivets so as to make a unified whole.

S.S. Kresge Co., v. Butte, 136 Ohio St. 85, 89-90 (1939).

Noticeably missing from later versions of section 8510 (now 5301.01 of the Ohio Revised Code), is the requirement that the notary certify the acknowledgment on the same sheet as the instrument. See OHIO REV. CODE § 1.01 (“All statutes of a permanent and general nature of the state as revised and consolidated into general provisions, titles, chapters, and sections shall be known and designated as the `Revised Code'”); OHIO GENERAL CODE § 8510, OHIO REV.CODE § 5301.01. In fact, the current version of section 5301.07 specifically provides that no instrument conveying real estate is defective or invalid because “the certificate of acknowledgment is not on the same sheet of paper as the instrument.”

It appears that section 5301.45 was enacted to afford an opportunity for parties to physically affix separate pages of an instrument and an acknowledgment clause to enable substantial compliance with section 5301.01. The Ohio Jurisprudence 3d contains an analysis of the interplay between these statutes.

[Section 5301.45] assumes that the certificate of acknowledgment must be printed or written on the same sheet with the mortgage, or else the mortgage is defective; but there is now no statute specifically requiring the acknowledgment to be on the same sheet. The reason for the above provision, so far as acknowledgments are concerned, undoubtedly lies in the fact that under an earlier from of RC section 5301.01, it was required that the acknowledgment be on the same sheet of paper as that on which the conveyance was written. It seems likely that the omission from the statute in this respect was due to judicial construction of the former statute, in regard to which the courts, recognizing the ever-increasing length of instruments such as mortgages, held that the instrument was valid where the sheets were securely fastened together and a certificate of acknowledgment was on the last page. In some cases, emphasis was placed upon the sheets being so fastened together that the one bearing the certificate of acknowledgment could not be removed without showing evidence of mutilation.

69 O. Jur. 3d Mortgages § 102 (1986).

The Ohio Transaction Guide, a multi-volume set that has provided

practitioners with research tools and practice tips for over thirty years is instructive and consistent with this Court’s understanding of the intention of the statute. Section 188.30 of the Ohio Transaction Guide provides that “if a deed is not printed or written on the same sheet with the instrument, the conveyance may be corrected by the judgment of a court or by the voluntary act of the parties.” It continues by providing that “[a]lthough it is not necessary to the validity of the deed that the acknowledgment appear on the same sheet of paper as the deed, the usual practice is to convey the property with the necessary acknowledgments on the same sheet.” Thus, the original and later versions of section 5301.45 were designed as a mechanism for correcting failure to adhere to a repealed requirement of section 5301.01. This Court holds that section 5301.45 was enacted to amend mortgages and deeds where the execution and acknowledgment clauses were on separate pieces of paper, at a time in history when such documents were required to appear on the same page, and the parties wished to physically bind them together. Therefore, section 5301.45 cannot be used to correct the type of acknowledgment clause defect at issue in this case.

2. The debtor’s postpetition acknowledgment was not voluntary

Even if this Court were to find that section 5301.45 can be utilized to cure a defective mortgage certification clause under section 546(b)(1), the debtor’s postpetition acknowledgment was not voluntary. Specifically, the debtor testified at a deposition after being served with process and was required to answer questions under oath. This is not the type of voluntary behavior provided for by the statute, especially because both the deposition and “re-recording” of the mortgage took place after the trustee had initiated this adversary proceeding, and served the debtor with a summons and complaint.

In summary, this Court holds that section 5301.45 can only retroactively perfect a mortgage where the instrument and acknowledgment clause are on separate pages, the parties voluntarily act to attach those pages, and the mortgage is otherwise a validly executed document. Therefore, the Court rejects RBC Mortgage’s attempt to use section 5301.45 and the debtor’s postpetition deposition testimony to correct the type of acknowledgment clause defect at issue in this case.

The Trustee May Avoid the Debtor’s Undivided Half Interest in the Subject Property

Although it is well established that a trustee may avoid a debtor’s half interest when a mortgage is found to be valid as to one co-owner and defective as to the other co-owner, RBC Mortgage asserts that the title of the tenancy held by the debtor and Radbourne somehow mandates a different result. This Court finds that Radbourne and the debtor held the property as joint tenants, as evidenced by the deed’s use of the language to “Mary Brigid, unmarried and Susan Radbourne, unmarried, remainder to the survivor of them,” (emphasis added). Section 5302.20 provides that a deed showing a clear intent to create a joint tenancy with rights of survivorship “shall be liberally construed to do so.” OHIO REV. CODE § 5302.20. This Court finds that based on the clear reading of the deed in question, the intention of the parties was to create a joint tenancy with rights of survivorship.

Further, joint tenants hold “an equal share of the title during their joint lives unless otherwise provided in the instrument creating the survivorship tenancy.” OHIO REV. CODE § 5302.20. Although this statute provides that joint tenants are subject to a proportionate share of the costs related to ownership, it also provides that when a creditor of a survivorship tenant enforces a lien against the debtor’s interest, the interest “shall be equal unless otherwise provided in the instrument creating the survivorship tenancy.” OHIO REV. CODE § 5302.20. This proposition is supported by recent case law. In Simon v. CitiMortgage, Inc., (In re Doubov), 423 B.R. 505 (N.D. Ohio 2010), the bankruptcy trustee sought to avoid the debtor wife’s half interest in property that both spouses mortgaged as joint tenants. The trustee argued that a defective acknowledgment rendered the mortgage avoidable as to the debtor wife. Judge Morgernstern-Clarren held:

When the debtors granted the mortgage, they held the property under a survivorship tenancy. See Ohio Rev. Code §§ 5302.17, 5302.20. Under this form of ownership each survivorship tenant holds an equal share of the title to the property during their joint lives (unless the instrument creating the tenancy provides otherwise, which this one does not.) Ohio Rev. Code 5302.20(B). . . .

. . . .

Under Ohio law, a person is precluded from granting a mortgage on property in which he has no interest. See Ins. Co. Of N. Am. v. First Nat’l Bank of Cincinnati, 444 N.E. 2d 456, 459 (Ohio Ct. App. 1981). Additionally “a mortgagor can only bind the estate or property he has, and a `mortgagee can take no greater title than that held by the mortgagor.'” Stein v. Creter (In re Creter), Adv. No 06-2042, 2007 WL 2615214, at *4 (Bankr. N.D. Ohio Sept. 5, 2007) (quoting 69 Ohio Jur. 3d Mortgages and Deeds of Trusts § 17); see also Stubbins v. HSBC Mortgage Servs., Inc. (In re Slack), 394 B.R. 164, 170 (Bankr. S.D. Ohio 2008). When Mr. Doubov gave the mortgage to Citifinancial, he only held title to the property under a survivorship tenancy; that one-half interest is what he mortgaged.

In re Doubov, 42,3 B.R. at 513-14.

Similarly, when the debtor and Radbourne mortgaged the property, they did so as joint tenants with rights of survivorship. The instrument creating the tenancy did not provide for other treatment of ownership, and thus the debtor, as a matter of law, held an undivided half interest in the property at the time it was mortgaged. When Radbourne gave the mortgage to RBC Mortgage, she only held a half interest, and that is what RBC Mortgage received. This conclusion is supported by the fact that both the debtor and Radbourne answered the trustee’s complaint by claiming an undivided half interest in the property, and this Court declines to consider any argument by RBC Mortgage that the debtor owes Radbourne some equitable relief as a result of her filing for a petition for bankruptcy. This Court holds that the certificate of acknowledgment is defective and the trustee can avoid themortgage as it relates to the undivided half interest of Mary Brigid.

Unresolved Matters Including Radbourne’s Cross-Claim

While it appears that this decision resolves most of the claims at issue in this adversary proceeding, one matter not yet addressed in this decision is Radbourne’s cross-claim against RBC Mortgage. In her cross-claim, Radbourne alleges that she was damaged as a result of negligence by RBC Mortgage in the preparation of the loan documentation and closing of the loan transaction that are the subject of this adversary proceeding. In its cross-motion for summary judgment, RBC Mortgage also seeks summary judgment on Radbourne’s cross-claim. Radbourne has not filed a response.

The Court is reluctant to decide the merits of Radbourne’s cross-claim absent further argument from the parties on the question of jurisdiction to hear this claim. For example, even if the parties were to consent to the undersigned judge entering a final judgment on the cross-claim, the Court has serious doubts as to whether it has “related to” subject matter jurisdiction over a non-debtor’s tort claim against another non-debtor. See 28 U.S.C. § 1334; In re Dow Corning Corp., 8,6 F.3d 482 (6th Cir. 1996).

An action is “related to bankruptcy if the outcome could alter the debtor’s rights, liabilities, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankruptcy estate.”  86 F.3d at 489 (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984)). For example, any recovery to the non-debtor Radbourne is unlikely to affect the debtor’s estate, either positively or negatively. Accordingly, any party wishing to have this Court decide the cross-claim should be prepared to address the issue of subject matter jurisdiction at a status conference at 1:30 P.M. on June 8, 2010.

In addition, while not included as a separate count, the trustee does seek, in her prayer for relief, authority to sell the real property, including the interest of the non-debtor co-owner. Therefore, counsel shall be prepared to advise the Court at the status conference as to what additional steps are needed to resolve all remaining claims in this adversary proceeding. Until there is a final decision on Radbourne’s cross-claim and any other unresolved claims, this is not a final judgment for purposes of 28 U.S.C. § 158. See Bankr. Rule 7054 and Fed. R. Civ. P. 54(b).

CONCLUSION

For the reasons stated above, the Court holds that the certificate of acknowledgment is defective and the trustee can avoid the mortgage as it relates to the half interest of the debtor. Accordingly, the trustee’s motion for summary judgment is granted. While it appears that this decision is largely dispositive, until there is a final decision on Radbourne’s cross-claim, this is not a final judgment for purposes of 28 U.S.C. § 158. See Bankr. Rule 7054 and Fed R. Civ. P. 54(b). The Court will conduct a status conference at 1:30 p.m. on June 8, 2010. Counsel shall be prepared to advise the Court as to what additional steps are needed to resolve all remaining claims in this adversary proceeding.

Page 24

JUDGMENT

For the reasons stated in the separate Memorandum of Opinion, the Court holds that the certificate of acknowledgment is defective and the trustee can avoid themortgage as it relates to the half interest of the debtor. Accordingly, the trustee’s motion for summary judgment is granted. While it appears that this decision is largely dispositive, until there is a final decision on Radbourne’s cross-claim, this is not a final judgment for purposes of 28 U.S.C. § 158. See Bankr. Rule 7054 and Fed R. Civ. P. 54(b). The Court will conduct a status conference at 1:30 p.m. on June 8, 2010. Counsel shall be prepared to advise the Court as to what additional steps are needed to resolve all remaining claims in this adversary proceeding.

IT IS SO ORDERED.

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Notes:

1. This Memorandum of Opinion is not intended for official publication.

2. In Zaptocky, the Sixth Circuit identified “three major prerequisites for the proper execution of a mortgage: (1) the mortgagor must sign the mortgage deed; (2) the mortgagor’s signature must be attested by two witnesses; and (3) the mortgagor’s signature must be acknowledged or certified by a notary public.” Zaptocky, 250 F.3d at 1024. The differences between Zaptocky’s three requirements and Leahy’s four requirements are (A) the deletion in Leahy of Zaptocky’s second requirement — attestation by two witnesses — due to a change in the statute, and (B) the Leahy court’s breaking down of Zaptocky’s third requirement — certification of acknowledgment — into three separate parts.

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Posted in foreclosure, reversed court decision0 Comments

Judge ARTHUR SCHACK’s COLASSAL Steven J. BAUM “MiLL” SMACK DOWN!! MERS TWILIGHT ZONE!

Judge ARTHUR SCHACK’s COLASSAL Steven J. BAUM “MiLL” SMACK DOWN!! MERS TWILIGHT ZONE!

2010 NY Slip Op 50927(U)

HSBC BANK USA, N.A. AS TRUSTEE FOR NOMURA ASSET-BACKED CERTIFICATE SERIES

2006-AF1,, Plaintiff,
v.
LOVELY YEASMIN, ET. AL., Defendants.

34142/07

Supreme Court, Kings County.

Decided May 24, 2010.

Steven J Baum, PC, Amherst NY, Plaintiff — US Bank.

ARTHUR M. SCHACK, J.

Plaintiff’s renewed motion for an order of reference, for the premises located at 22 Jefferson Street, Brooklyn, New York (Block 3170, Lot 20, County of Kings), is denied with prejudice. The instant action is dismissed and the notice of pendency for the subject property is cancelled. Plaintiff HSBC BANK USA, N.A. AS TRUSTEE FOR NOMURA ASSET-BACKED CERTIFICATE SERIES 2006-AF1 (HSBC) failed to comply with my May 2, 2008 decision and order in the instant matter (19 Misc 3d 1127 [A]), which granted plaintiff HSBC leave:

to renew its application for an order of reference for the premises located at 22 Jefferson Street, Brooklyn, New York (Block 3170, Lot 20, County of Kings), upon presentation to the Court, within forty-five (45) days of this decision and order of:

(1) a valid assignment of the instant mortgage and note to plaintiff, HSBC . . .;

(2) an affirmation from Steven J. Baum, Esq., the principal of Steven J. Baum, P.C., explaining if both MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. [MERS], the assignor of the instant mortgage and note, and HSBC . . . the assignee of the instant mortgage and note, pursuant to 22 NYCRR § 1200.24, consented to simultaneous representation in the instant action, with “full disclosure of the implications of the simultaneous representation and the advantages and risks involved” explained to them;

(3) compliance with the statutory requirements of CPLR § 3215 (f), by an affidavit of facts executed by someone with authority to execute such an affidavit, and if the affidavit of facts is executed by a loan servicer, a copy of a valid power of attorney to the loan servicer, and the servicing agreement authorizing the affiant to act in the instant foreclosure action; and

(4) an affidavit from an officer of plaintiff HSBC . . . explaining why plaintiff HSBC . . . purchased a nonperforming loan from MERS, as nominee for CAMBRIDGE HOME CAPITAL, LLC [CAMBRIDGE].

[Emphasis added]

Plaintiff made the instant motion on January 6, 2009, 249 days subsequent to the May 2, 2008 decision and order. Thus, the instant motion is 204 days late. Plaintiff’s unavailing lateness explanation, in ¶ 16 of plaintiff’s counsel’s January 6, 2009 affirmation of regularity, states:

A previous application has been made for this or like relief but was subsequently denied without prejudice with leave to renew upon proper papers. By Decision and Order of this court dated the 2nd day of May 2008, plaintiff had 45 days to renew its application.

However on June 29, 2008 the Plaintiff permitted the mortgagor to enter into a foreclosure forbearance agreement. Said agreement was entered into with the hope that the Defendant would be able to keep her home. The agreement was not kept by the mortgagor and Plaintiff has since resumed the foreclosure action. The defects of the original application are addressed in the Affirmation attached hereto at Tab F [sic].

June 29, 2008 was 58 days subsequent to May 2, 2008. This was 13 days subsequent to the Court ordered deadline for plaintiff to make a renewed motion for an order of reference. While it’s laudatory for plaintiff HSBC to have granted defendant a forbearance agreement, plaintiff HSBC never notified the Court about this or sought Court approval of extending the 45-day deadline to make the instant motion. However, even if the instant motion was timely, the documents plaintiff’s counsel refers to at Tab F [exhibit F of motion] do not cure the defects the Court found with the original motion and articulated in the May 2, 2008 decision and order.

Background

Defendant LOVELY YEASMIN borrowed $624,800.00 from CAMBRIDGE on May 10, 2006. The note and mortgage were recorded by MERS, as nominee for CAMBRIDGE, for purposes of recording the mortgage, in the Office of the City Register, New York City Department of Finance, on May 23, 2006, at City Register File Number (CRFN) XXXXXXXXXXXXX. Then, MERS, as nominee for CAMBRIDGE, assigned the mortgage to plaintiff HSBC on September 10, 2007, with the assignment recorded in the Office of the City Register, on September 20, 2007, at CRFN XXXXXXXXXXXXX. The assignment was executed by “Nicole Gazzo, Esq., on behalf of MERS, by Corporate Resolution dated 7/19/07.” Neither a corporate resolution nor a power of attorney to Ms. Gazzo were recorded with the September 10, 2007 assignment. Therefore, the Court found the assignment invalid and plaintiff HSBC lacked standing to bring the instant foreclosure action. Ms. Gazzo, the assignor, according to the Office of Court Administration’s Attorney Registration, has as her business address, “Steven J. Baum, P.C., 220 Northpointe Pkwy Ste G, Buffalo, NY 14228-1894.” On September 10, 2008, the same day that Ms. Gazzo executed the invalid assignment for MERS, as nominee for CAMBRIDGE, plaintiff’s counsel, Steven J. Baum, P.C., commenced the instant action on behalf of purported assignee HSBC by filing the notice of pendency, summons and complaint in the instant action with the Kings County Clerk’s Office. The Court, in the May 2, 2008 decision and order, was concerned that the simultaneous representation by Steven J. Baum, P.C. of both MERS and HSBC was a conflict of interest in violation of 22 NYCRR § 1200.24, the Disciplinary Rule of the Code of Professional Responsibility entitled “Conflict of Interest; Simultaneous Representation,” then in effect. Further, plaintiff’s moving papers for an order of reference and related relief failed to present an “affidavit made by the party,” pursuant to CPLR § 3215 (f). The instant application contained an “affidavit of merit and amount due,” dated November 16, 2007, by Cathy Menchise, “Senior Vice President of WELLS FARGO BANK, N.A. D/B/A AMERICA’S SERVICING COMPANY, Attorney in Fact for HSBC BANK USA, N.A. AS TRUSTEE FOR NOMURA ASSET-BACKED CERTIFICATE SERIES 2006-AF1.” Ms. Menchise stated “[t]hat a true copy of the Power of Attorney is attached hereto.” Actually attached was a photocopy of a “Limited Power of Attorney,” dated July 19, 2004, from HSBC, appointing WELLS FARGO BANK, N.A. as its attorney-in-fact to perform various enumerated services, by executing documents “if such documents are required or permitted under the terms of the related servicing agreements . . . in connection with Wells Fargo Bank, N.A.[‘s] . . . responsibilities to service certain mortgage loans . . . held by HSBC . . . as Trustee of various trusts.” The “Limited Power of Attorney” failed to list any of these “certain mortgage loans.” The Court was unable to determine if plaintiff HSBC’s subject mortgage loan was covered by this “Limited Power of Attorney.” The original motion stated that defendant YEASMIN defaulted on her mortgage payments by failing to make her May 1, 2007 and subsequent monthly loan payments. Yet, on September 10, 2007, 133 days subsequent to defendant YEASMIN’S alleged May 1, 2007 payment default, plaintiff HSBC took the ssignment of the instant nonperforming loan from MERS, as nominee for CAMBRIDGE. Thus, the Court required, upon renewal of the motion for an order of reference, a satisfactory explanation of why HSBC purchased a nonperforming loan from MERS, as nominee for CAMBRIDGE.

Plaintiff HSBC needed “standing” to proceed in the instant action. The Court of Appeals (Saratoga County Chamber of Commerce, Inc. v Pataki, 100 NY2d 801, 912 [2003]), cert denied 540 US 1017 [2003]), held that “[s]tanding to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress.” In Carper v Nussbaum, 36 AD3d 176, 181 (2d Dept 2006), the Court held that “[s]tanding to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request.” If a plaintiff lacks standing to sue, the plaintiff may not proceed in the action. (Stark v Goldberg,297 AD2d 203 [1d Dept 2002]). “Since standing is jurisdictional and goes to a court’s authority to resolve litigation [the court] can raise this matter sua sponte.” (Axelrod v New York State Teachers’ Retirement System, 154 AD2d 827, 828 [3d Dept 1989]).

In the instant action, the September 10, 2007 assignment from MERS, as nominee for CAMBRIDGE, to HSBC was defective. Therefore, HSBC had no standing to bring this action. The recorded assignment by “Nicole Gazzo, Esq. on behalf of MERS, by Corporate Resolution dated 7/19/07,” had neither the corporate resolution nor a power of attorney attached. Real Property Law (RPL) § 254 (9) states: Power of attorney to assignee. The word “assign” or other words of assignment, when contained in an assignment of a mortgage and bond or mortgage and note, must be construed as having included in their meaning that the assignor does thereby make, constitute and appoint the assignee the true and lawful attorney, irrevocable, of the assignor, in the name of the assignor, or otherwise, but at the proper costs and charges of the assignee, to have, use and take all lawful ways and means for the recovery of the money and interest secured by the said mortgage and bond or mortgage and note, and in case of payment to discharge the same as fully as the assignor might or could do if the assignment were not made. [Emphasis added]

To have a proper assignment of a mortgage by an authorized agent, a power of attorney is necessary to demonstrate how the agent is vested with the authority to assign the mortgage. “No special form or language is necessary to effect an assignment as long as the language shows the intention of the owner of a right to transfer it [Emphasis added].” (Tawil v Finkelstein Bruckman Wohl Most & Rothman, 223 AD2d 52, 55 [1d Dept 1996]). (See Suraleb, Inc. v International Trade Club, Inc., 13 AD3d 612 [2d Dept 2004]). To foreclose on a mortgage, a party must have title to the mortgage. The instant assignment was a nullity. The Appellate Division, Second Department (Kluge v Fugazy, 145 AD2d 537, 538 [2d Dept 1988]), held that a “foreclosure of a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity.” Citing Kluge v Fugazy, the Court inKatz v East-Ville Realty Co. (249 AD2d 243 [1d Dept 1998]), held that “[p]laintiff’s attempt to foreclose upon a mortgage in which he had no legal or equitable interest was without foundation in law or fact.” Plaintiff HSBC, with the invalid assignment of the instant mortgage and note from MERS, lacked standing to foreclose on the instant mortgage. The Court, in Campaign v Barba (23 AD3d 327 [2d Dept 2005]), held that “[t]o establish a prima facie case in an action to foreclose a mortgage, the plaintiff must establish the existence of the mortgage and the mortgage note, ownership of the mortgage, and the defendant’s default in payment [Emphasis added].” (See Household Finance Realty Corp. of New York v Wynn, 19 AD3d 545 [2d Dept 2005]; Sears Mortgage Corp. v Yahhobi, 19 AD3d 402 [2d Dept 2005]; Ocwen Federal Bank FSB v Miller, 18 AD3d 527 [2d Dept 2005]; U.S. Bank Trust Nat. Ass’n v Butti, 16 AD3d 408 [2d Dept 2005]; First Union Mortgage Corp. v Fern, 298 AD2d 490 [2d Dept 2002]; Village Bank v Wild Oaks Holding, Inc., 196 AD2d 812 [2d Dept 1993]). Even if plaintiff HSBC can cure the assignment defect, plaintiff’s counsel has to address his conflict of interest in the representation of both assignor MERS, as nominee for CAMBRIDGE, and assignee HSBC. 22 NYCRR § 1200.24, of the Disciplinary Rules of the Code of Professional Responsibility, entitled “Conflict of Interest; Simultaneous Representation,” states in relevant part: (a) A lawyer shall decline proffered employment if the exercise of independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, or if it would be likely to involve the lawyer in representing differing interests, except to the extent permitted under subdivision (c) of this section. (b) A lawyer shall not continue multiple employment if the exercise of independent professional judgment in behalf of a client will be or is likely to be adversely affected by the lawyer’s representation of another client, or if it would be likely to involve the lawyer in representing differing interests, except to the extent permitted under subdivision (c) of this section. (c) in the situations covered by subdivisions (a) and (b) of this section, a lawyer may represent multiple clients if a disinterested lawyer would believe that the lawyer can competently represent the interest of each and if each consents to the representation after full disclosure of the implications of the simultaneous representation and the advantages and risks involved. [Emphasis added]

The Court, upon renewal of the instant motion for an order of reference wanted to know if both MERS and HSBC were aware of the simultaneous representation by plaintiff’s counsel, Steven J. Baum, P.C., and whether both MERS and HSBC consented. Upon plaintiff’s renewed motion for an order of reference, the Court required an affirmation by Steven J. Baum, Esq., the principal of Steven J. Baum, P.C., explaining if both MERS and HSBC consented to simultaneous representation in the instant action with “full disclosure of the implications of the simultaneous representation and the advantages and risks involved.” The Appellate Division, Fourth Department, the Department, in which both Ms. Gazzo and Mr. Baum are registered (In re Rogoff, 31 AD3d 111 [2006]), censured an attorney for, inter alia, violating 22 NYCRR § 1200.24, by representing both a buyer and sellers in the sale of a motel. The Court, at 112, found that the attorney “failed to make appropriate disclosures to either the sellers or the buyer concerning dual representation.” Further, the Rogoff Court, at 113, censured the attorney, after it considered the matters submitted by respondent in mitigation, including: that respondent undertook the dual representation at the insistence of the buyer, had no financial interest in the transaction and charged the sellers and the buyer one half of his usual fee. Additionally, we note that respondent cooperated with the Grievance Committee and has expressed remorse for his misconduct. Then, if counsel for plaintiff HSBC cures the assignment defect and explains his simultaneous representation, plaintiff HSBC needs to address the “affidavit of merit” issue. The May 2, 2008 decision and order required that plaintiff comply with CPLR § 3215 (f) by providing an “affidavit made by the party,” whether by an officer of HSBC, or someone with a valid power of attorney from HSBC, to execute foreclosure documents for plaintiff HSBC. If plaintiff HSBC presents a power of attorney and it refers to a servicing agreement, the Court needs to inspect the servicing agreement. (Finnegan v Sheahan, 269 AD2d 491 [2d Dept 2000];Hazim v Winter, 234 AD2d 422 [2d Dept 1996]; EMC Mortg. Corp. v Batista, 15 Misc 3d 1143 [A] [Sup Ct, Kings County 2007]; Deutsche Bank Nat. Trust Co. v Lewis, 4 Misc 3d 1201 [A] [Sup Ct, Suffolk County 2006]).

Last, the Court required an affidavit from an officer of HSBC, explaining why, in the middle of our national mortgage financial crisis, plaintiff HSBC purchased from MERS, as nominee for CAMBRIDGE, the subject nonperforming loan. It appears that HSBC violated its corporate fiduciary duty to its stockholders by purchasing the instant mortgage loan, which became nonperforming on May 1, 2007, 133 days prior to its assignment from MERS, as nominee for CAMBRIDGE, to HSBC, rather than keep the subject mortgage loan on CAMBRIDGE’s books.

Discussion

The instant renewed motion is dismissed for untimeliness. Plaintiff made its renewed motion for an order of reference 204 days late, in violation of the Court’s May 2, 2008 decision and order. Moreover, even if the instant motion was timely, the explanations offered by plaintiff’s counsel, in his affirmation in support of the instant motion and various documents attached to exhibit F of the instant motion, attempting to cure the four defects explained by the Court in the prior May 2, 2008 decision and order, are so incredible, outrageous, ludicrous and disingenuous that they should have been authored by the late Rod Serling, creator of the famous science-fiction televison series, The Twilight Zone. Plaintiff’s counsel, Steven J. Baum, P.C., appears to be operating in a parallel mortgage universe, unrelated to the real universe. Rod Serling’s opening narration, to episodes in the 1961-1962 season of The Twilight Zone (found at www.imdb.com/title/tt005250/quotes), could have been an introduction to the arguments presented in support of the instant motion by plaintiff’s counsel, Steven J. Baum, P.C. — “You are traveling through another dimension, a dimension not only of sight and sound but of mind. A journey into a wondrous land of imagination. Next stop, the Twilight Zone.” With respect to the first issue for the renewed motion for an order of reference, the validity of the September 10, 2007 assignment of the subject mortgage and note by MERS, as nominee for CAMBRIDGE, to plaintiff HSBC by “Nicole Gazzo, Esq., on behalf of MERS, by Corporate Resolution dated 7/19/07,” plaintiff’s counsel claims that the assignment is valid because Ms. Gazzo is an officer of MERS, not an agent of MERS. Putting aside Ms. Gazzo’s conflicted status as both assignor attorney and employee of assignee’s counsel, Steven J. Baum, P.C., how would the Court have known from the plain language of the September 10, 2007 assignment that the assignor, Ms. Gazzo, is an officer of MERS? She does not state in the assignment that she is an officer of MERS and the corporate resolution is not attached. Thus, counsel’s claim of a valid assignment takes the Court into “another dimension” with a “journey into a wondrous land of imagination,” the mortgage twilight zone. Next, plaintiff’s counsel attached to exhibit F the July 17, 2007 “Agreement for Signing Authority” between MERS, Wells Fargo Home Mortgage, a Division of Wells Fargo Bank NA (WELLS FARGO), a MERS “Member” and Steven J. Baum, P.C., as WELLS FARGO’s “Vendor.” The parties agreed, in ¶ 3, that “in order for Vendor [Baum] to perform its contractual duties to Member [WELLS FARGO], MERS, by corporate resolution, will grant employees of Vendor [Baum] the limited authority to act on behalf of MERS to perform certain duties. Such authority is set forth in the Resolution, which is made a part of this Agreement.” Also attached to exhibit F is the MERS corporate resolution, certified by William C. Hultman, Corporate Secretary of MERS, that MERS’ Board of Directors adopted this resolution, effective July 19, 2007, resolving:

that the attached list of candidates are employee(s) of Steven J. Baum, P.C. and are hereby appointed as assistant secretaries and vice presidents of Mortgage Electronic Registration Systems, Inc., and as such are authorized to: Execute any and all documents necessary to foreclose upon the property securing any mortgage loan registered on the MERS System that is shown to be registered to the Member . . . Take any and all actions and execute all documents necessary to protect the interest of the Member, the beneficial owner of such mortgage loan, or MERS in any bankruptcy proceedings . . . Assign the lien of any mortgage loan registered on the MERS System that is shown to be registered to Wells Fargo.

Then, the resolution certifies five Steven J. Baum, P.C. employees [all currently admitted to practice in New York and listing Steven J. Baum, P.C. as their employer in the Office of Court Administration Attorney Registry] as MERS officers. The five are Brian Kumiega, Nicole Gazzo, Ron Zackem, Elpiniki Bechakas, and Darleen Karaszewski. The language of the MERS corporate resolution flies in the face of documents recorded with the City Register of the City of New York. The filed recordings with the City Register show that the subject mortgage was owned first by MERS, as nominee for CAMBRIDGE, and then by HSBC as Trustee for a Nomura collateralized debt obligation. However, if the Court follows the MERS’corporate resolution and enters into a new dimension of the mind, the mortgage twilight zone, the real owner of the subject mortgage is WELLS FARGO, the MERS Member and loan servicer of the subject mortgage, because the corporate resolution states that the Member is “the beneficial owner of such mortgage loan.” The MERS mortgage twilight zone was created in 1993 by several large “participants in the real estate mortgage industry to track ownership interests in residential mortgages. Mortgage lenders and other entities, known as MERS members, subscribe to the MERS system and pay annual fees for the electronic processing and tracking of ownership and transfers of mortgages. Members contractually agree to appoint MERS to act as their common agent on all mortgages they register in the MERS system.” (MERSCORP, Inc. v Romaine, 8 NY3d 90, 96 [2006]). Next, with respect to Ms. Gazzo’s employer, Steven J. Baum, P.C, and its representation of MERS, through Ms. Gazzo, the Court continues to journey through the mortgage twilight zone. Also, attached to exhibit F of the instant motion is the August 11, 2008 affirmation of Steven J. Baum, Esq., affirmed “under the penalties of perjury.” Mr. Baum states, in ¶ 3, that “My firm does not represent HSBC . . . and MERS simultaneously in the instant action.” Then, apparently overlooking that the subject notice of pendency, summons, complaint and instant motion, which all clearly state that Steven J. Baum, P.C. is the attorney for plaintiff HSBC, Mr. Baum states, in ¶ 4 of his affirmation, that “My firm is the attorney of record for Wells Fargo Bank, N.A., d/b/a America’s Servicing Company, attorney in fact for HSBC Bank USA, N.A., as Trustee for Nomura Asset-Backed Certificate Series 2006-AF1. My firm does not represent . . . [MERS] as an attorney in this action.” In the mortgage world according to Steven J. Baum, Esq., there is a fine line between acting as an attorney for MERS and as a vendor for a MERS member. If Mr. Baum is not HSBC’s attorney, but the attorney for WELLS FARGO, why did he mislead the Court and defendants by stating on all the documents filed and served in the instant action that he is plaintiff’s attorney for HSBC? Further, in ¶ 6 of his affirmation, he states “Nowhere does the Resolution indicate that Ms. Gazzo, or my firm, or any attorney or employee of my firm, shall act as an attorney for MERS. As such I am unaware of any conflict of interest of Steven J. Baum, P.C. or any of its employees, in this action.” While Mr. Baum claims to be unaware of the inherent conflict of interest, the Court is aware of the conflict. ¶ 3 of the MERS “Agreement for Signing Authority,” cited above, states that “in order for Vendor [Baum] to perform its contractual duties to Member [WELLS FARGO], MERS, by corporate resolution, will grant employees of Vendor [Baum] the limited authority to act on behalf of MERS to perform certain duties. Such authority is set forth in the Resolution, which is made a part of this Agreement.” As the Court continues through the MERS mortgage twilight zone, attached to exhibit F is the June 30, 2009-affidavit of MERS’ Secretary, William C. Hultman. Mr. Hultman claims, in ¶ 3, that Steven J. Baum, P.C. is not acting in the instant action as attorney for MERS and, in ¶ 4, Ms. Gazzo in her capacity as an officer of MERS executed the September 10, 2007 subject assignment “to foreclose on a mortgage loan registered on the MERS System that is being serviced by Wells Fargo Bank, N.A.” Thus, Mr. Hultman perceives that mortgages registered on the MERS system exist in a parallel universe to those recorded with the City Register of the City of New York. While Mr. Hultman waives, in ¶ 9, any conflict that might exist by Steven J. Baum, P.C. in the instant action, neither he nor Mr. Baum address whether MERS, pursuant to 22 NYCRR § 1200.24, consented to simultaneous representation in the instant action, with “full disclosure of the implications of the simultaneous representation and the advantages and risks involved” explained to MERS. Then, attached to exhibit F, there is the June 11, 2008-affidavit of China Brown, Vice President Loan Documentation of WELLS FARGO. This document continues the Court’s trip into “a wondrous land of imagination.” Despite the affidavit’s caption stating that HSBC is the plaintiff, Mr. or Ms. Brown (the notary public’s jurat refers several times to China Brown as “he/she”), states, in ¶ 4, that “Steven J. Baum, P.C. represents us as an attorney of record in this action.” The Court infers that “us” is WELLS FARGO. Moving to the third issue that plaintiff was required to address in the instant motion, compliance with the statutory requirements of CPLR § 3215 (f) with an affidavit of facts executed by someone with authority to execute such an affidavit, plaintiff’s instant motion contains an affidavit of merit, attached as exhibit C, by Kim Miller, “Vice President of Wells Fargo Bank, N.A. as Attorney in Fact for HSBC,” executed on December 8, 2008, 220 days after my May 2, 2008 decision and order. The affidavit of merit is almost six months late. Again, plaintiff attached a photocopy of the July 19, 2004 “Limited Power of Attorney” from HSBC [exhibit D], which appointed WELLS FARGO as its attorney-in-fact to perform various enumerated services, by executing documents “if such documents are required or permitted under the terms of the related servicing agreements . . . in connection with Wells Fargo[‘s] . . . responsibilities to service certain mortgage loans . . . held by HSBC . . . as Trustee of various trusts.” Further, the “Limited Power of Attorney” fails to list any of these “certain mortgage loans.” Therefore, the Court is unable to determine if the subject mortgage loan is one of the mortgage loans that WELLS FARGO services for HSBC. The “Limited Power of attorney” gives WELLS FARGO the right to execute foreclosure documents “if such documents are required or permitted under the terms of the related servicing agreements.” Instead of presenting the Court with the “related servicing agreement” for review, plaintiff’s counsel submits copies of the cover page and redacted pages 102, 104 and 105 of the October 1, 2006 Pooling and Servicing Agreement between WELLS FARGO, as Master Servicer, HSBC, as Trustee, and other entities. This is in direct contravention of the Court’s May 2, 2008-directive to plaintiff HSBC that it provides the Court with the entire pooling and servicing agreement upon renewal of the instant motion. Thomas Westmoreland, Vice President Loan Documentation of HSBC, in ¶ 10 of his attached June 13, 2008-affidavit, also in exhibit F, claims that the snippets of the pooling and servicing agreement provided to the Court are “a copy of the non-proprietary portions of the Pooling and Servicing Agreement that was entered into when the pool of loans that contained the subject mortgage was purchased.” The Court cannot believe that there is any proprietary or trade secret information in a boilerplate pooling and servicing agreement. If plaintiff HSBC utilizes an affidavit of facts by a loan servicer, not an HSBC officer, to secure a judgment on default, pursuant to CPLR § 3215 (f), then the Court needs to examine the entire pooling and servicing agreement, whether proprietary or non-p

roprietary, to determine if the pooling and servicing agreement grants authority, pursuant to a power of attorney, to the affiant to execute the affidavit of facts.

Further, there is hope that Mr. Westmoreland, unlike Steven J. Baum, Esq., is not in another dimension. Mr. Westmoreland, in ¶ 1 of his affidavit, admits that HSBC is the plaintiff in this action. However, with respect to why plaintiff HSBC purchased the subject nonperforming loan, Mr. Westmoreland admits to a lack of due diligence by plaintiff HSBC. His admissions are straight from the mortgage twilight zone. He states in his affidavit, in ¶’s 4-7 and part of ¶ 10: 4. The secondary mortgage market is, essentially, the buying and selling of “pools” of mortgages. 5. A mortgage pools is the packaging of numerous mortgage loans together so that an investor may purchase a significant number of loans in one transaction. 6. An investigation of each and every loan included in a particular mortgage pool, however, is not conducted, nor is it feasible. 7. Rather, the fact that a particular mortgage pool may include loans that are already in default is an ordinary risk of participating in the secondary market . . . 10. . . . Indeed, the performance of the mortgage pool is the measure of success, not any one individual loan contained therein. [Emphasis added] The Court can only wonder if this journey through the mortgage twilight zone and the dissemination of this decision will result in Mr. Westmoreland’s affidavit used as evidence in future stockholder derivative actions against plaintiff HSBC. It can’t be comforting to investors to know that an officer of a financial behemoth such as plaintiff HSBC admits that “[a]n investigation of each and every loan included in a particular mortgage pool, however, is not conducted, nor is it feasible” and that “the fact that a particular mortgage pool may include loans that are already in default is an ordinary risk of participating in the secondary market.”

Cancelling of notice of pendency

The dismissal with prejudice of the instant foreclosure action requires the cancellation of the notice of pendency. CPLR § 6501 provides that the filing of a notice of pendency against a property is to give constructive notice to any purchaser of real property or encumbrancer against real property of an action that “would affect the title to, or the possession, use or enjoyment of real property, except in a summary proceeding brought to recover the possession of real property.” The Court of Appeals, in 5308 Realty Corp. v O & Y Equity Corp. (64 NY2d 313, 319 [1984]), commented that “[t]he purpose of the doctrine was to assure that a court retained its ability to effect justice by preserving its power over the property, regardless of whether a purchaser had any notice of the pending suit,” and, at 320, that “the statutory scheme permits a party to effectively retard the alienability of real property without any prior judicial review.” CPLR § 6514 (a) provides for the mandatory cancellation of a notice of pendency by: The Court, upon motion of any person aggrieved and upon such notice as it may require, shall direct any county clerk to cancel a notice of pendency, if service of a summons has not been completed within the time limited by section 6512; or if the action has beensettled, discontinued or abated; or if the time to appeal from a final judgment against the plaintiff has expired; or if enforcement of a final judgment against the plaintiff has not been stayed pursuant to section 551. [emphasis added] The plain meaning of the word “abated,” as used in CPLR § 6514 (a) is the ending of an action. “Abatement” is defined (Black’s Law Dictionary 3 [7th ed 1999]) as “the act of eliminating or nullifying.” “An action which has been abated is dead, and any further enforcement of the cause of action requires the bringing of a new action, provided that a cause of action remains (2A Carmody-Wait 2d § 11.1).” (Nastasi v Natassi, 26 AD3d 32, 40 [2d Dept 2005]). Further, Nastasi at 36, held that the “[c]ancellation of a notice of pendency can be granted in the exercise of the inherent power of the court where its filing fails to comply with CPLR § 6501 (see 5303 Realty Corp. v O & Y Equity Corp., supra at 320-321; Rose v Montt Assets, 250 AD2d 451, 451-452 [1d Dept 1998]; Siegel, NY Prac § 336 [4th ed]).” Thus, the dismissal of the instant complaint must result in the mandatory cancellation of plaintiff HSBC’s notice of pendency against the property “in the exercise of the inherent power of the court.”

Conclusion

Accordingly, it is ORDERED, that the renewed motion of plaintiff, HSBC BANK USA, N.A. AS TRUSTEE FOR NOMURA ASSET-BACKED CERTIFICATE SERIES 2006-AF1, for an order of reference, for the premises located at 22 Jefferson Street, Brooklyn, New York (Block 3170, Lot 20, County of Kings), is denied with prejudice; and it is further

ORDERED, that the instant action, Index Number 34142/07, is dismissed with prejudice; and it is further

ORDERED that the Notice of Pendency in this action, filed with the Kings County Clerk on September 10, 2007, by plaintiff, HSBC BANK USA, N.A. AS TRUSTEE FOR NOMURA ASSET-BACKED CERTIFICATE SERIES 2006-AF1, to foreclose a mortgage for real property located at 22 Jefferson Street, Brooklyn New York (Block 3170, Lot 20, County of Kings), is cancelled.

This constitutes the Decision and Order of the Court.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in case, cdo, concealment, conspiracy, corruption, dismissed, foreclosure, foreclosure fraud, foreclosure mills, forensic mortgage investigation audit, HSBC, investigation, judge arthur schack, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, note, reversed court decision, robo signer, robo signers, securitization, Supreme Court1 Comment

Bank Fails to Rebut Satisfaction’s Validity Created By Notary’s Acknowledgment; FORECLOSURE DENIED! -Wells Fargo Bank NA v. Moise

Bank Fails to Rebut Satisfaction’s Validity Created By Notary’s Acknowledgment; FORECLOSURE DENIED! -Wells Fargo Bank NA v. Moise

Via: FRAUD DIGEST

ROBO-SIGNER

The trial court opinion was published in the New York Law Journal.

KINGS COUNTY
Real Property
Bank Fails to Rebut Satisfaction’s Validity Created By Notary’s Acknowledgment; Foreclosure Denied

Wells Fargo Bank NA v. Moise

Defendants seek summary judgment based on the fact that Plaintiff has not shown a valid assignment of the mortgage and note.

Plaintiff originally submitted an assignment of the mortgage dated April 30, 2009. The assignment was signed by Yolanda Williams, Assistant Secretary of Mortgage Electronic Systems, Inc..  However, the notary public’s acknowledgement states that she witnessed and acknowledged the signature of Herman John Kennerty, whose name does not appear anywhere on the document.

Plaintiff acknowledges that there was a mistake on the assignment and argues the mistake was de minimis not curat lex.  It also argues that the Court should simply replace the defective assignment with the correction assignment, and proceed with its action.  In fact, the error was not de minimis as the signature of the purported assignor was not acknowledged, rendering the assignment a nullity.

A simple typographical error can be amended, but a failure to properly acknowledge the signature of a person who signed the instrument cannot be. No affidavit is submitted either Yolanda Williams or the notary Lisa Rhyne explaining what the alleged error was or how it occurred. In fact, the so called “correction” assignment in fact is acknowledged by a different notary on a different date.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in conspiracy, dismissed, foreclosure, foreclosure fraud, forensic loan audit, forensic mortgage investigation audit, Lynn Szymoniak ESQ, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, reversed court decision, robo signer, robo signers, wells fargo1 Comment

No Penalties for Mortgage Company with Worst Loan Mod Backlog

No Penalties for Mortgage Company with Worst Loan Mod Backlog

by Paul Kiel, ProPublica – May 28, 2010 1:53 pm EDT

Jeanenne Longacre said she received a letter from Saxon Mortgage saying she was approved for a loan mod, but the final terms never came. She says she lost her home because of Saxon's errors.
Jeanenne Longacre said she received a letter from Saxon Mortgage saying she was approved for a loan mod, but the final terms never came. She says she lost her home because of Saxon’s errors.

Last week, the government released data [1] showing that there’s a big problem at Saxon Mortgage, a subsidiary of Morgan Stanley. Of all the mortgage companies participating in the administration’s mortgage modification program, Saxon has the largest proportion of homeowners caught in modification limbo.

The program, which provides incentives for mortgage companies to modify loans to an affordable level, has been plagued by delays and disappointing results. About 1.2 million homeowners have begun a “trial” modification, which is supposed to last three months. But less than a quarter of them have emerged with a real, lasting modification. (Here’s our backgrounder on the program and problems with it [2].)

As of April, about 265,000 homeowners [3] were caught in trials that had lasted more than six months. Nowhere is that backlog worse than at Saxon, a mid-sized subprime servicer based in Texas that was acquired [4] by Morgan Stanley in 2006 and has had long-running customer service problems [5].

Few of Saxon’s trials have converted into lasting modifications. As of the end of April, Saxon had put 40,000 homeowners into trials, but only about 11,000, or 27 percent, had received a permanent modification. Far more had either been dropped from the program (16,000) or were still waiting for a final answer after being in the trial for longer than six months (10,000).

The Four Mortgage Servicers with The Biggest Trial Backlogs

Servicers Est. # “Aged” Trials % of Active Trials that are “Aged”
Saxon Mortgage Services 9,839 76%
JPMorgan Chase 85,678 72%
U.S. Bank 2,064 58%
CitiMortgage 26,375 48%
Total for Program 265,015 42%

A close look at Saxon provides a window into problems with the program itself, in particular a glaring lack of oversight from Washington. While the government set up the program, it relies on mortgage companies to actually perform modifications. So far Washington has shied away from penalizing those servicers that have failed to follow the program’s rules or underperformed. Indeed, despite widespread problems [3] among mortgage servicers and frequent tough talk [6] from Treasury officials, who have often threatened penalties, the government has yet to issue a single one.

A spokeswoman for Saxon said that the company has been regularly audited, as have other participants in the government’s program, and that the reviews had uncovered no “material issues.”

For homeowners, on the other hand, the consequences of servicer problems can be all-too-real. Some homeowners say they lost their home because of errors by Saxon.

The country’s largest mortgage servicers are attached to the biggest banks like Bank of America, JPMorgan Chase and Wells Fargo, but a number of mid-sized servicers like Saxon are stand-alone companies or subsidiaries of other banks. As of 2008, Saxon serviced over 340,000 loans.

According to the Better Business Bureau, Saxon Mortgage Services requests that consumers with a complaint contact Robin Chrostowski, Assistant Vice President of the Customer Solutions and Innovation Team, at 817-665-7862 or email CSIteam@saxonmsi.com to resolve the issues prior to filing a complaint with the Better Business Bureau.

 

The company already had problems before the administration launched its mortgage modification program in April 2009. As the Wall Street Journal reported last July [7], Saxon ranked last among 20 servicers in a Credit Suisse analysis of how many subprime loans each had modified. The Better Business Bureau had given the company an “F” [5] rating, based on a profusion of consumer complaints.

But the company was among the first to sign up for the government program when it launched in April, 2009. In the first few months, Saxon put tens of thousands of homeowners into trial modifications. In a November press release, Saxon CEO Anthony Meola boasted [8] that Saxon was leading all other servicers in the number of trials it had begun.

The Treasury Department had set the rules of the program [9] to encourage servicers to rapidly enroll homeowners. Servicers were allowed to accept homeowners on the basis of their “stated” income, what a Treasury official described [9] as “a wing and a prayer.” The financial information would be verified later, after the trial began. While well-intentioned, the policy resulted in an enormous backlog of trials—homeowners who had been given temporary modifications and were waiting months for a final answer — and Treasury changed the program rules this spring to require verified income information up front.

Consumer advocates say that homeowners who are denied modification after making several months of trial payments are often worse off than if they’d never started the trial at all [9], because the process damages their credit and they’re prevented from saving for the possibility of foreclosure.

At Saxon, many homeowners seem to be caught in that limbo because of mistakes and delays at the company. John Riggins, the CEO of the Fort Worth Better Business Bureau, said that the biggest complaints about Saxon are that the company has misapplied payments or lost documents sent as part of the modification process. Saxon employees often blame computer problems or a lack of staffing, according to the complaints, which number 208 in the past year.

Jennifer Sala, a spokeswoman for Saxon, said the backlog was not caused by a lack of capacity, but resulted from a “careful review process” that “can take a considerable amount of time.” She added, “We want to afford our customers every opportunity to avoid foreclosure.”

Saxon has hired about 330 new full-time employees in the past year, she said, increasing the staff by 50 percent. Riggins of the Better Business Bureau said that the complaint volume had improved since last year, but that major problems remained. Saxon has improved only from an “F” to a “D-.” rating [10].

There are other signs Saxon has been struggling to handle the volume. In April, it transferred the servicing rights [11] for about 38,000 loans to Ocwen, which specializes in servicing troubled loans. “Normally the reason for selling loans to Ocwen is you don’t want to hassle with them anymore and they’re delinquent,” said Guy Cecala, the publisher of Inside Mortgage Finance. Some of the loans transferred were in the middle of the modification process.

Sometimes the communications from Saxon can be bewildering. Barbara Niederstein of Fayetteville, Ga., said she has twice received letters saying she was being dropped from the program. Both letters cited missing documentation as a reason, but she says she was never told it was missing. Saxon has threatened to pursue foreclosure. Niederstein says that hours spent on the phone with a housing counselor and Saxon employees has at least postponed that for a month, even if the confusion has yet to be cleared up.

 Jeanenne Longacre and her husband Robert.

Jeanenne Longacre and her husband Robert.

Jeanenne Longacre says she lost her home because of Saxon’s errors. She says Saxon wrongly set the trial payments at a level Longacre and her husband could only muster for a few months, and then booted her from the program when she couldn’t keep up the payments. Her house was ultimately sold out from under her after she says she received an assurance the sale would be delayed.

For months, her husband had been struggling to find steady employment when Longacre lost her job with California Blue Cross in February 2009. They were behind on their mortgage payments and faced foreclosure.

The pair, in their 50s with grown children, had been in the house for 10 years, but had refinanced in 2006 into an adjustable-rate loan with New Century, the now-defunct subprime lender. The Longacres were underwater on their mortgage, with their Los Angeles home worth about half as much as they owed.

Longacre says Saxon’s first error with her modification came with the level of the couple’s payments. The modified mortgage payment was set at $3,400, about $1,400 lower than the couple’s payments had been, but at a level they could maintain only with the help of temporary severance she was receiving. That severance would run out in August, just two months after her trial began in June.

Sala, the spokeswoman for Saxon, said she could not discuss Longacre’s case because company policy prohibited discussing customer information.

Trials are supposed to test the homeowner’s ability to make the reduced payments for a prolonged period of time. But Longacre says she always knew they would be able to make the payments only for a few months. By the time August, September came around, we started struggling,” she said. “It’s ridiculous paying that kind of money when you don’t have it.”

Still, Longacre kept paying. After August, the third month of the trial, came and went with no news, Longacre began calling Saxon regularly to find out what was happening. For months, she says she couldn’t get an answer. She was occasionally asked to send in a new document, but then the wait would continue.

Finally, she spoke to a negotiator in January this year, the eighth month of her trial. He told her she’d be approved for a permanent modification and that the payment, based on her family’s verified income, would be much lower, just $1,300 a month.

“I was so excited,” Longacre said. “I thought a miracle had happened.”

But her excitement was short-lived. She received a letter from Saxon in early February [12] saying she’d been approved for the modification, but the final terms never came. When she called to ask about that, she says she was told she had to make the trial payments for January and February or she’d face foreclosure.

The couple had missed those payments because their money had finally run out, she says. But even though Saxon had set their permanent modification at a level far below her trial payments, she was dropped from the program for not making all of her trial payments.

In March, she received a notice that Saxon would auction her home on April 1. She hired a lawyer to negotiate on her behalf, and it seemed like foreclosure had been temporarily avoided when a Saxon employee said the sale would be postponed until May in order to provide more time to work out another solution.

Longacre thought the auction had been deferred until a man knocked on her door in early April, saying that he represented the new owners of her home and was offering her money to vacate. The home had sold for $302,000, less than half of what the Longacres owed on the mortgage.

“That home was the only thing we had. I put it everything that I own into that home.” She currently lives in an apartment with her husband.

As we reported earlier this month, mistaken foreclosures can result from a lack of communication within the servicer itself [13]. In Longacre’s case, she says she was not provided a denial letter or given an opportunity to otherwise avoid foreclosure, as the federal program’s guidelines require.

Consumers advocates say the program does not offer an effective recourse for homeowners to redress servicer wrongs. Treasury officials say [13] that homeowners in Longacre’s position should call the HOPE Hotline, which is staffed with housing counselors, for help. Advocates say that’s been ineffective, and have long complained [14] about the lack of a formal appeals process for homeowners.

Longacre’s case also reflects on a problem faced by the hundreds of thousands of homeowners who’ve been caught in prolonged trials: whether they must keep paying after the three-month period expires, and whether mortgage companies can deny modifications if homeowners miss payments while they’re in limbo.

The Treasury Department has given conflicting answers for that question.

The program’s guidelines say [15] that borrowers remain eligible for a permanent modification “regardless of whether the borrower failed to make trial period payments following the successful completion of the trial period.”

Despite that apparently clear meaning, a Treasury spokeswoman told ProPublica homeowners were required to continue the payments “even if the period was extended to allow additional processing.”

Cohen, of the National Consumer Law Center, said that’s not how consumer advocates have understood the program’s rules. “The program rules are clear: a homeowner is required to make trial payments only until the effective date of the permanent modification, which is three months after the beginning of the trial period.”

Four other Saxon customers told ProPublica that they’d been disqualified for missing the extended trial payments. Sala, Saxon’s spokeswoman, said the company follows the program’s guidelines. It’s unclear if there will be any consequences for Saxon for any errors or rule violations. The Treasury has hired [16] Freddie Mac [17] to audit the servicers participating in the program, and so far, as Saxon’s spokeswoman has said, auditors have not flagged any “material issues” at the company. The Treasury spokeswoman said some information from the compliance reviews will eventually be made public, but none was available now.

 Write to Paul Kiel at paul.kiel@propublica.org

Posted in forensic loan audit, forensic mortgage investigation audit, Mortgage Foreclosure Fraud, mortgage modification, saxon mortgage, scam0 Comments

CASH OUT BEFORE YOU DASH OUT…34 Items To MAKE $30K B4 GIVING BACK THE HOUSE!

CASH OUT BEFORE YOU DASH OUT…34 Items To MAKE $30K B4 GIVING BACK THE HOUSE!

THIS IS A JOKE

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in foreclosure fraud1 Comment

BETH COTTRELL step right up …your the next ROBO-SIGNER on STOP FORECLOSURE FRAUD!

BETH COTTRELL step right up …your the next ROBO-SIGNER on STOP FORECLOSURE FRAUD!

Folks there is just way too many. Eventually this will all be released.

Every Foreclosure/REO/Short Sale out there is virtually like this!

via ForeclosureHamlet.org & 4closurefraud.org

The attached documents are almost always the sole “evidence” showing the right of a foreclosing entity/servicer (or their shell National Bank Cover ie: US Bank) to foreclose on an American family’s home, evicting them from the only shelter that may be available to them.

Millions of examples of this and other “robo-signers” available upon request.

Of note, please see the last attachment; her deposition where she denies any “personal knowledge” or even a cursory glance at the facts of the case.

America………..what a heartache……….

ANOTHER POINT IS THEY seem to be different signatures. Some have loops and some do not.


DEPOSITION_OF_BETH-COTTRELL-CHASE-HOME-FINANCE

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in ben-ezra, concealment, conspiracy, corruption, FDLG, florida default law group, foreclosure, foreclosure fraud, foreclosure mills, hamleteers, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., REO, robo signer, robo signers, short sale, stop foreclosure fraud, stopforeclosurefraud.com0 Comments

After foreclosure: How long until you can buy again? CNNMoney

After foreclosure: How long until you can buy again? CNNMoney

Again, FAIR ISAAC CORPORATION aka FICO: Now Worthless……It’s another scam taken over by wallstreet/mba to make us *think* we are worth a number!

By Les Christie, staff writerMay 28, 2010: 7:58 AM ET

NEW YORK (CNNMoney.com) — Walking away from a mortgage you can still afford to pay has consequences; everyone knows that. Your credit score is shot and it can be impossible to get credit.

Some homeowners, no doubt, believe that the credit score hit is worth getting out from a deeply underwater mortgage. They may owe, say, $500,000 when their house value is only valued at $350,000. And, they figure, there’s no way it will ever be worth what they owe so it’s better to get out from underneath the burden.

After default, they reason, they can raise their FICO scores by paying all their bills on time and eventually finance another home purchase.

Don’t count on it.

While homeowners who default due to economic hardship, such as a job loss or divorce, normally must wait two to five years before buying a home again, walkaways may face double that time.

“It could be well over seven or eight years before [walkaways] are able to obtain a mortgage to buy a home again,” said Jay Brinkmann, chief economist for the Mortgage Bankers Association.

How foreclosure impacts your credit score
“Credit scores are only one component of a complete credit decision,” Brinkmann said. “[In these cases] credit scores are not a good indicator of their willingness to continue to pay their mortgage.”

But future underwriters will scrutinize their records very closely, and if they find no precipitating factors leading to the defaults — no job loss, no health issues –the repaired credit score won’t overshadow the black mark of a walkaway.

“If you made a strategic decision to default on paying your mortgage, it will work against you,” said Bill Merrell of the National Association of Review Appraisers and Mortgage Underwriters.

Merrell, who teaches underwriting, said banks are looking at several factors in determining whether to grant mortgages: the amount of money borrowers have in the bank; employment histories; payment history.

However, banks may be far more lenient if the default resulted from factors somewhat beyond the borrower’s control, such as from local economic problems. “They’ll give you more consideration if it’s job related,” he said. But, he added, banks look at strategic defaults “very negatively.”

That said, it’s not impossible to get a loan. Banks still want to make interest payments, so they might be willing to gamble with a walkaway.

“It might be a little more difficult for them to borrow, but [banks’] drive for market share — to profit from making loans — will trump that caution,” said Keith Gumbinger, of the mortgage information publisher HSH Associates. “I don’t think we’ll see a full denial.”

It’s hard to foresee the state of mortgage lending six or seven months from now, let alone seven or eight years into the future. So lenders may look at applications from one-time strategic defaulters and say, “Yes, they walked away but it’s a whole different market now,” according to Gumbinger.

Even so, lenders may require more from borrowers who walked away than those who didn’t.

“To the extent they could get a mortgage,” said Brinkmann, “they can count on needing a heavy down payment.”

The lenders may ask for 30% down or more. That would provide enough collateral cushion that the bank could get all or most of its money back in a foreclosure.

Strategic defaulters might also be charged higher interest rates, even above the levels other borrowers with similar credit scores would receive.

Posted in fico, foreclosure fraud, mortgage bankers association0 Comments

State Group Estimates 37% of California Foreclosures Involved Renters

State Group Estimates 37% of California Foreclosures Involved Renters

If Dorthy was here today and reading this…

She would definitely click her heels and say there’s no place like NO home!

BY: CARRIE BAY DSNEWS.com

The foreclosure crisis in California has taken a toll on not only homeowners, but a large number of tenants in the state.

According to a new study from Tenants Together, California’s statewide organization for renters’ rights, at least 37 percent of residential units in foreclosure in the Golden State last year were rentals, directly affecting over 200,000 tenants – most of whom were displaced.

Tenant Together’s research is based on California property records for every foreclosure in 2009, and the organization says its estimates are “conservative.”

The report – California Tenants in the Foreclosure Crisis Report- California Renters in the Foreclosure Crisis- final.pdf – concludes that while the largest percentage of renter-occupied foreclosed properties were single-family homes, the percentage of renter-occupied, multi-unit buildings is growing at a faster pace.

The organization says this trend is likely to increase as more loan modification programs target owner-occupied properties, which are primarily single-family homes and condominiums, while multi-unit rental properties continue to fall by the wayside and into foreclosure.

Since Tenants Together’s previous annual report was issued, the most significant develop for renters in foreclosure situations has been the enactment of the federal Protecting Tenants at Foreclosure Act.

The new federal law increased the eviction notice period for tenants to 90 days, assured that existing leases survive foreclosure, and clarified that banks and other post-foreclosure owners of property step into the shoes of the pre-foreclosure owner and have the obligations of landlords.

Tenants Together says that while the new federal law is a step in the right direction, it comes short of providing long-term security for tenants and has been mired by implementation problems arising from banks’ non-compliance with the new law.

According to Gabe Treves, program coordinator at Tenants Together and author of the group’s latest report, “Tenants are innocent and hidden victims of a foreclosure crisis they did nothing to create. As this report shows, the unfair and unnecessary displacement at tenants at the hands of banks is affecting communities across the state at a devastating scale.”

Tenants Together concludes its annual report with a checklist of recommended actions to mitigate the impact of the foreclosure crisis on renters. Among the various proposals, the report notes that ‘just cause for eviction’ laws are a particularly effective and cost-free way to stop the displacement of tenants whose lenders have been foreclosed on and provide greater stability to California communities.

Posted in foreclosure fraud, renters, tenant0 Comments

AN ASSIGNMENT OR A FORMALIZATION OR A MEMORIALIZATION? By LYNN E. SZYMONIAK, ESQ.

AN ASSIGNMENT OR A FORMALIZATION OR A MEMORIALIZATION? By LYNN E. SZYMONIAK, ESQ.

AN ASSIGNMENT OR A FORMALIZATION OR A MEMORIALIZATION?

The standard language in most of the mortgage assignments being signed by employees of Lender Processing Services (most recently, Kathy Smith, Joseph Kaminsky) has changed in one significant respect.

The effective date of the transfer from grantor to grantee is now not stated as a specific date. Instead, we have the following:

“This document has been executed and is being recorded in order to formalize and memorialize an assignment of the subject mortgage which took place prior to December 17, 2009.”

A copy of this particular “assignment” is attached.  It is signed by Kathy Smith “Assistant Secretary, MERS as nominee for American Home Mortgage.”

This language is easy enough to locate on the document because a different type font is used.

How this prior assignment took place without a document is left unexplained.

IN THE PAST MONTHS, THIS CHANGE HAS BEEN MADE BY MANY OF THE FORECLOSURE MILL LAW FIRMS DIRECTED BY LENDER PROCESSING SERVICES, SO,

THERE MUST BE A MEMO DIRECTING THIS.


This is really an acknowledgment that the document is NOT the original assignment – but a replacement.  Who will recognize this shoddy attempt to “create” standing to foreclose?  No doubt, the state court judges in Brooklyn, the federal court judges in Ohio, a few bankruptcy judges, a few Massachusetts land court judges (Keith Long) and many bankruptcy trustees.

In Florida, the scheme will perhaps be first be exposed by state court judges Bailey, Traynor or Rondolino.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in foreclosure, foreclosure fraud, foreclosure mills, fraud digest, kahane, Lender Processing Services Inc., LPS, Lynn Szymoniak ESQ, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC.1 Comment

Indymac depositors get another shot at retroactive deposit insurance

Indymac depositors get another shot at retroactive deposit insurance

Ryan Carter
Posted: 05/27/2010 04:23:20 PM PDT

Local lawmakers Thursday introduced an amendment to financial reform that would allow depositors at failed Pasadena-based Indymac Bank to recoup a collective $233 million in lost savings.

The amendment, called the Indy Act, would make a federal deposit insurance cap of $250,000 retroactive to the time IndyMac failed in July of 2008. At the time, deposit insurance was set for deposits up to $100,000. But as the financial crisis grew Congress only a few months later approved the heightened cap.

But the cap did not extend to institutions that failed before October 2008.

“The whole thing is about fairness,” said Rep. David Dreier, R-San Dimas, who along with Rep. Jane Harman, D-Venice, introduced the bill Thursday.

Source: www.pasadenastarnews.com

Posted in foreclosure fraud, indymac0 Comments

SmarTrend’s Trend Spotter Sees Continued Downward Momentum on Shares of Lender Processing Services (LPS)

SmarTrend’s Trend Spotter Sees Continued Downward Momentum on Shares of Lender Processing Services (LPS)

May 27, 2010 (SmarTrend(R) Spotlight via COMTEX) —-SmarTrend identified a Downtrend for Lender Processing Services (NYSE:LPS) on May 07, 2010 at $35.31. In approximately 3 weeks, Lender Processing Services has returned 5.8% as of today’s recent price of $33.27.

Lender Processing Services is currently below its 50-day moving average of $37.60 and below its 200-day moving average of $38.92. Look for these moving averages to decline to confirm the company’s downward momentum.

SmarTrend will continue to scan these moving averages and a number of other proprietary indicators for any changes in momentum for shares of Lender Processing Services.

Write to Chip Brian at cbrian@tradethetrend.com

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in Chip Brian, Lender Processing Services Inc., LPS1 Comment

DJSP Enterprises, Inc. Reports Revenue of $71.6 Million and Adjusts Its 2010 Guidance AKA Law Offices of DAVID J. STERN

DJSP Enterprises, Inc. Reports Revenue of $71.6 Million and Adjusts Its 2010 Guidance AKA Law Offices of DAVID J. STERN

PLANTATION, Fla., May 27 /PRNewswire-FirstCall/ — DJSP Enterprises, Inc. (Nasdaq: DJSP, DJSPW, DJSPU), one of the largest providers of processing services for the mortgage and real estate industries in the United States, today announced financial results for the three months ending March 31, 2010.

First Quarter Financial Highlights

Total revenue for the quarter increased 30.1% to $71.6 million from $55.0 million in last year’s comparable period.
Excluding client costs, revenue from the quarter increased to $30.8 million from $30.0 million compared to same period last year.
Adjusted Net Income was $8.7 million for the first quarter or $0.35 per share.
– the adjusted net income would have increased by $732 thousand but for one time
interest on bridge financing and other expenses related to the transaction in which
the company acquired its processing operations
Adjusted EBITDA for the first quarter was $14.4 million.

Continue here …

RELATED STORY:

NASDAQ, DJSP Enterprises Major Shareholders David J. Stern (Law office Foreclosure Mill) and Kerry S. Propper Subject of Department of Justice Investigation And SBA Law Suit.

Posted in djsp enterprises, Law Offices Of David J. Stern P.A.0 Comments

With Banks Under Fire, Some Expect a Settlement: NYTimes.com

With Banks Under Fire, Some Expect a Settlement: NYTimes.com

From left, Chester Higgins Jr./The New York Times; Andrew Harrer/Bloomberg News; Ramin Talaie for The New York Times

From left, Andrew Cuomo, the New York attorney general; Robert Khuzami, of the S.E.C.; and Preet Bharara, of the United States attorney’s office. The agencies are investigating Wall Street.

By NELSON D. SCHWARTZ and ERIC DASH

Published: May 13, 2010

It is starting to feel as if everyone on Wall Street is under investigation by someone for something.

News on Thursday that New York State prosecutors are examining whether eight banks hoodwinked credit ratings agencies opened yet another front in what is fast becoming the legal battle of a decade for the big names of finance.

Not since the conflicts at the center of Wall Street stock research were laid bare a decade ago, eventually resulting in a $1.4 billion industrywide settlement, have so many investigations swirled across the financial landscape.

Nearly two years after Washington rescued big banks with billions of taxpayer dollars, half a dozen government agencies are still trying, with mixed success, to peel back the layers of the collapse to determine who, if anyone, broke the rules.

The Securities and Exchange Commission, the Justice Department, the United States attorney’s office and more are examining how banks created, rated, sold and traded mortgage securities that turned out to be some of the worst investments ever devised.

Virtually all of the investigations, criminal as well as civil, are in their early stages, and investigators concede that their job is daunting. The S.E.C. has been examining major banks’ mortgage operations since last summer, but so far, it has filed a civil fraud claim against just one big player: Goldman Sachs. Goldman has vowed to fight.

But legal experts are already starting to handicap potential outcomes, not only for Goldman but for the broader industry as well. Many suggest that Wall Street banks may seek a global settlement akin to the 2002 agreement related to stock research. Indeed, Wall Street executives are already discussing among themselves what the broad contours of such a settlement might look like.

“I would be stunned if any of these cases go to trial,” said Frank Partnoy, a professor of law at the University of San Diego. “I think Wall Street needs to put this scandal behind it as quickly as possible and move on.”

As part of the 2002 settlement, 10 banks paid $1.4 billion total and pledged to change the way their analysts and investment bankers interacted to prevent conflicts of interest. This time, the price of any settlement would probably be higher and also come with a series of structural reforms.

David Boies, chairman of the law firm Boies, Schiller & Flexner, represented the government in its case against Microsoft and is now part of a federal challenge to California’s same-sex marriage ban. He said a settlement by banks might be painful but would ultimately be something Wall Street could live with. “The settlement may be bad for everyone, but not disastrous for anyone,” he said.

A settlement also would let the S.E.C. declare victory without having to bring a series of complex cases. The public, however, might never learn what really went wrong.

“The government doesn’t have the personnel to simultaneously prosecute several investment banks,” said John C. Coffee, a Columbia Law School professor.

The latest salvo came on Thursday from Andrew M. Cuomo, the New York attorney general. His office began an investigation into whether banks misled major ratings agencies to inflate the grades of subprime-linked investments.

Many Americans are probably already wondering why this has taken so long. The answer is that these cases are tricky, like the investments at the center of them.

But regulators also concede that they were reluctant to pursue banks aggressively until the financial industry stabilized. The S.E.C., for one, is now eager to prove that it is on its game after failing to spot the global Ponzi scheme orchestrated by Bernard L. Madoff, or head off the Wall Street excesses that nearly sank the entire economy.

The stakes are high for both sides. At a minimum, the failure to secure a civil verdict, or at least a mammoth settlement, would be another humiliation for regulators.

Wall Street wants to put this season of scandal behind it. That is particularly so given the debate over new financial regulations that is under way on Capitol Hill. The steady flow of new allegations could strengthen calls for tougher rules.

Even worse would be a criminal charge, which could put a firm out of business even if that firm were ultimately found not guilty, as was the case with the accounting giant Arthur Andersen after the fraud at Enron.

“No firm in the financial services field has the stomach for a criminal trial,” Mr. Coffee said.

Bankers have been reluctant until now to take their case to the public. But that is changing as Wall Street chieftains like Lloyd C. Blankfein of Goldman take to the airwaves and New York politicians warn that the city’s economy will be endangered by the attack on some of the city’s biggest employers and taxpayers.

“In New York, Wall Street is Main Street,” Gov. David A. Paterson has said. “You don’t hear anybody in New England complaining about clam chowder.”

There are broader political consequences as well. At the top, there is President Obama, who was backed by much of Wall Street in 2008. Many of those supporters now privately say they are disillusioned and frustrated by his attacks on their industry, which remains a vital source of campaign contributions for both parties.

Closer to home, the man who hopes to succeed Mr. Paterson, Mr. Cuomo, is painting himself as the new sheriff of Wall Street. Another attorney general, Eliot Spitzer, rode a series of Wall Street investigations to the governor’s mansion in 2006.

But ultimately, it is what Wall Street does best — making money — that is already on trial in the court of public opinion.

Put simply, the allegations against Wall Street were prompted by evidence that the firms may have devised and sold securities to investors without telling them they were simultaneously betting against them.

Wall Street firms typically play both sides of trades, whether to help buyers and sellers of everything from simple stocks to complicated derivatives complete their transactions, or to make proprietary bets on whether they would rise or fall.

These activities form half of the four-legged stool on which Wall Street’s profits and revenue rest, the others being advising on mergers and acquisitions and helping companies issue stocks, bonds and other securities.

“This case is a huge deal. It has the potential to be the mother of all Wall Street investigations,” said Mr. Partnoy of the University of San Diego. “The worry is that the government will go after dealings that Wall Street thought were insulated from review.”

Even some Wall Street executives concede that all the scrutiny makes proprietary trading a bit dubious. “The 20 guys in the room with the shades drawn are toast,” one senior executive of a major bank said.

Posted in conspiracy, foreclosure fraud, goldman sachs, investigation, S.E.C., securitization0 Comments

Deutsche Bank National Trust Co. YOU HAVE NO STANDING: YOUR DISMISSED! Deutsche v. Stevens NY SLIP OP 50909(U) 5/18/2010

Deutsche Bank National Trust Co. YOU HAVE NO STANDING: YOUR DISMISSED! Deutsche v. Stevens NY SLIP OP 50909(U) 5/18/2010

2010 NY Slip Op 50909(U)

DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE UNDER THE POOLING AND SERVICING AGREEMENT DATED AS OF FEBRUARY 1, 2007, GSAMP TRUST 2007-FM2, Plaintiff,
v.
WILHELMENA STEVENS, Defendant.

15862/08.

Supreme Court, Kings County.

Decided May 18, 2010.

Jeffrey A Kosterich & Assoc, Plaintiff Attorney.

Wilhelmena Stevens Pro se, Defendant Attorney.

YVONNE LEWIS, J.

The plaintiff, Deutsche Bank National Trust Company moves for an order granting it summary judgment, appointing a referee to compute, deleting from the caption the remaining defendants sued herein as “JOHN DOE ONE” through “JOHN DOE TEN” and awarding plaintiff costs and sanctions for frivolous conduct pursuant to 22 NYCRR § 130.

Plaintiff commenced this action on June 2, 2008 to foreclose a mortgage executed by defendant Wilhelmena Stevens on October 26, 2006 and encumbering the property at 517 Christopher Street in Brooklyn. The mortgage was given to secure a loan from Fremont Investment & Loan (Fremont) in the amount of $225,000.00. The plaintiff became the holder of the mortgage by assignment from MERS (as nominee of Fremont) dated June 11, 2008.

In response to the summons and complaint, Ms. Stevens sent the plaintiff’s counsel a handwritten letter, dated June 16, 2008, wherein she stated, in sum and substance, that her loan originated with Fremont, that The plaintiff’s name was not mentioned anywhere in the loan documents and that she desired proof as to The plaintiff’s status as the mortgagor.

When a court is deciding a motion for summary judgment, it can search the record and, even in the absence of a cross motion, may grant summary judgment to a non-moving party (CPLR 3212[b]; Dunham v Hilco Constr. Co., Inc., 89 NY2d 425 [1996]).

“Where the plaintiff is the assignee of the mortgage and the underlying note at the time the foreclosure action was commenced, the plaintiff has standing to maintain the action” (Federal Natl. Mtge. Assn. v Youkelsone, 303 AD2d 546, 546-547 [2003]; see Natl. Mtge. Consultants v Elizaitis, 23 AD3d 630, 631 [2005]). On the other hand, “foreclosure of a mortgage may not be brought by one who has no title to it” (Kluge v Fugazy, 145 AD2d 537, 538 [1988]) and an assignee of such a mortgage does not have standing to foreclose unless the assignment is complete at the time the action is commenced (see Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204 [2009]Lasalle Bank Nat. Assn. v Ahearn, 59 AD3d 911 [2009]).

Since it is clear from the face of the summons that this action was commenced on June 2, 2008, which is prior to the date of the mortgage assignment, and the record contains no proof demonstrating that there was a physical delivery of the mortgage prior to June 2, 2008, this court finds that The plaintiff has no standing to maintain this action.

Accordingly, The plaintiff’s motion is denied in all respects, and this action is dismissed without prejudice (see Citigroup Global Markets Realty Corp. v Randolph Bowling, 25 Misc 3d 1244[A], 2009 NY Slip Op 52567[U] [2009]).

The foregoing constitutes the decision and order of the court.

Posted in case, concealment, conspiracy, dismissed, foreclosure, foreclosure fraud, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, reversed court decision0 Comments

MERS DOUBLE ASSIGNMENT AMNESIA? Oh MS. BAILEY!! IN RE MORENO, Bankruptcy Court, D. Massachusetts, Eastern Div. 2010

MERS DOUBLE ASSIGNMENT AMNESIA? Oh MS. BAILEY!! IN RE MORENO, Bankruptcy Court, D. Massachusetts, Eastern Div. 2010

In re: SIMEON MORENO, Chapter 13, Debtor

Case No. 08-17715-FJB.

United States Bankruptcy Court, D. Massachusetts, Eastern Division.

May 24, 2010.

MEMORANDUM OF DECISION ON MOTION OF PROPERTY ASSET MANAGEMENT, INC. FOR RELIEF FROM THE AUTOMATIC STAY

FRANK J. BAILEY, Bankruptcy Judge

In the Chapter 13 case of debtor Simeon Moreno, Property Asset Management, Inc. (“PAM”), claiming to be the assignee of a mortgage originally given by the debtor to Mortgage Electronic Registration Systems, Inc. (“MERS”) as nominee for lender GE Money Bank, moved for relief from the automatic stay to foreclose the mortgage. Moreno initially opposed the motion but then withdrew his objection, whereupon the Court granted the relief requested. Months later, at Moreno’s request, the Court vacated the order granting relief from stay and scheduled an evidentiary hearing on the Motion for Relief from Stay for the limited purpose of reconsidering whether PAM had an interest in the mortgage it sought to foreclose and, to that extent, standing to seek relief from stay.[1] Having held the evidentiary hearing and received proposed findings and conclusions, the Court now enters the following findings of fact and conclusions of law.

Findings of Fact and Procedural History

On January 23, 2007, Moreno executed a promissory note in the principal amount of $492,000, payable to lender GE Money Bank. GE subsequently endorsed the note in blank, whereupon possession of the note was transferred through a series of holders and ultimately to Lehman Brothers Holdings, Inc. (“LBHI”), who held the note when PAM filed its Motion for Relief from Stay and continues to hold it now.[2] LBHI, through one of its employees and through LBHI’s attorney, who not coincidentally also is PAM’s attorney in the present matter, produced the original note at the evidentiary hearing. PAM is not now a holder of the note or an entity for whose benefit another has held the note.

To secure the promissory note, Moreno gave a mortgage on the real property at 5 Maple Street, West Roxbury, Massachusetts (the “Property”) to MERS as nominee for GE (the “Mortgage”). The Mortgage specifies that MERS “is a separate corporation that is acting solely as a nominee for [GE] and [GE’s] successors and assigns. MERS is the mortgagee under this security instrument.” The Mortgage further provides that Moreno does hereby mortgage, grant and convey to MERS (solely as nominee for [GE] and [GE’s] successors and assigns) and to the successors and assigns of MERS, with power of sale, the [Property]. . . . Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for [GE] and [GE’s] successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of [GE] including, but not limited to, releasing and canceling this Security Instrument.

The Mortgage was duly recorded.

MERS administers an electronic registry to track the transfer of ownership interest and servicing rights in mortgage loans. With respect to certain loans of which its members are the beneficial owners, MERS also serves as mortgagee of record and holds legal title to the mortgages in a nominee capacity. MERS remains the mortgagee of record when beneficial ownership interests or servicing rights are sold from one member of the MERS system to another. When the beneficial interest in a mortgage loan is transferred from one member of the MERS system to another, MERS tracks the transfer through its internal records. When rights are transferred from a member of the MERS system to a non-member, MERS executes and records an assignment from MERS to the non-member.

To facilitate the execution of the assignments from MERS, MERS designates “certifying officers,” who are typically employees of MERS member firms. MERS authorizes these employees, through formal corporate resolutions, to execute assignments on behalf of MERS. On or about January 6, 2005, MERS, through a document entitled Corporate Resolution and issued by its board of directors, authorized Denise Bailey, an employee of Litton Loan Servicing L.P. (“Litton”), a member of MERS, to execute such assignments on behalf of MERS. In the language of the authorizing document (the “MERS Authorization”),[3] Ms. Bailey was authorized to, among other things, “assign the lien of any mortgage loan naming MERS as the mortgagee when the Member [Litton] is also the current promissory note-holder, or if the mortgage loan is registered on the MERS System, is shown [sic] to be registered to the Member”[4]; and Ms. Bailey was further authorized to “take any such actions and execute such documents as may be necessary to fulfill the Member’s servicing obligations to the beneficial owner of such mortgage loan (including mortgage loans that are removed from the MERS System as a result of the transfer thereof to a non-member of MERS).” In each instance, Bailey’s authority to act is dependent on the existence of a specified relationship of Litton, the MERS member for whom she is employed, to the loan in question.

The Moreno loan was entered into the MERS tracking database in the ordinary course of business. Thereafter, MERS tracked the beneficial interest in the loan. The beneficial interest was transferred from G.E. Money Bank to WMC Mortgage Corporation; then, on September 19, 2007, from WMC Mortgage Corporation to Aurora Bank FSB (formerly known as Lehman Brothers Bank FSB), and then, on July 30, 2008, from Aurora Bank FSB to LBHI. Aurora Bank was at all relevant times a wholly-owned subsidiary of LBHI.

With respect to the Moreno Mortgage, MERS remained the mortgagee of record until, on or about April 30, 2008, MERS, acting through Denise Bailey, assigned the Mortgage to PAM. At the time, Aurora Bank FSB was the beneficial owner of the loan. In executing the MERS assignment to PAM, Ms. Bailey purported to be acting under her MERS Authorization.

The MERS Authorization limited Ms. Bailey’s authority to act for MERS to matters with respect to which Litton was involved in at least one of the ways specified in the above-quoted language from the MERS Authorization. There is evidence, and I find, that Aurora Bank FSB had requested that Litton transfer the loan from MERS to PAM in anticipation of foreclosure. However, PAM has adduced no evidence that Litton had any specified connection to this loan at the time it executed this assignment. There is no evidence that Litton was then (or at any time) the servicer of the loan for Aurora Bank or that Litton was registered as servicer of the loan in the MERS system.[5] (PAM does not contend that Litton was the holder of the promissory note or the owner of the beneficial interest in the loan.)

Scott Drosdick, a vice-president of LBHI and witness for PAM at the evidentiary hearing, testified that Aurora Bank’s instruction to Litton to transfer the mortgage to PAM was later “ratified by LBHI.” Drosdick did not explain what he meant by this, precisely how and when this ratification occurred. Absent such evidence and clarification, this testimony is too vague to have any definite meaning; accordingly I give it no weight.

By a master servicing agreement dated February 1, 1999, LBHI engaged Aurora Loan Services, Inc., now known as Aurora Loan Services LLC (“ALS”), as master servicer of certain loans, including eventually the present Moreno loan. In turn, ALS engaged Litton to service certain loans, including eventually this same loan.

After Bailey executed the MERS assignment to PAM, Bailey executed another assignment of the same mortgage from MERS to LBHI. This second assignment was never recorded; nor is there evidence that it was ever delivered by MERS to LBHI.

Moreno filed a petition for relief under Chapter 13 of the Bankruptcy Code on October 13, 2008, commencing the present bankruptcy case. On November 13, 2008, LBHI, acting through its servicer Litton Loan Servicing, LP, filed a proof of claim in this case; the proof of claim asserts a claim, secured by real estate, in the total amount of $530,168.04, the same secured claim as PAM now seeks relief from stay to enforce by foreclosure. On the proof of claim form itself, Litton actually identifies the creditor claimant as simply “Litton,” but on an explanatory document attached to the proof of claim form, Litton states that the claim is filed by “Litton Loan Servicing, LP, as Servicing Agent for Lehman Brothers Holdings Inc.” The proof of claim does not mention PAM or indicate in any way that the mortgage securing the claim is held by anyone other than LBHI.

On March 31, 2009, and at LBHI’s direction, PAM filed the present motion for relief from the automatic stay, seeking relief from the automatic stay to foreclose and to preserve its rights as to a potential deficiency. PAM intends and is obligated to remit the proceeds of the intended foreclosure sale to Aurora Loan Services LLC, as servicer for LBHI. Regarding ownership of the note and Mortgage, PAM stated in the motion only that it was the holder of a mortgage originally given by Moreno to MERS, that the mortgage secured a note given by Moreno to GE, and that MERS had assigned the mortgage to PAM. PAM did not indicate that LBHI was the current holder of the note or that it held the mortgage as nominee for the benefit of LBHI or of any other entity. The motion did not mention LBHI.

Moreno filed a response to the motion, in essence an objection, in which he expressly admitted PAM’s allegation that his prepetition arrearage was $39,442.49 and, by lack of denial, tacitly admitted that Moreno was some four months in arrears on his postpetition payments under the mortgage. By these allegations and admissions, PAM has established that Moreno is in default on his mortgage loan obligations; the Court rejects Moreno’s request for a finding that PAM has not established a default. The response made no issue of PAM’s standing to foreclose or to seek relief from stay and did not dispute PAM’s allegations regarding ownership of the note and Mortgage. In any event, before a hearing was held on the motion, Moreno, through counsel, withdrew his objection. Consequently, on April 28, 2009, and without a hearing or any review of apparent inconsistencies in the bankruptcy record concerning ownership of the mortgage and note, the court granted PAM relief from the automatic stay to foreclose and to preserve its rights as to a potential deficiency.

PAM had not yet foreclosed when, on December 2, 2009 and by new counsel, Moreno filed an adversary complaint against PAM and, with it, a motion for preliminary injunction. The complaint sought among other things (i) an order invalidating the mortgage on account of irregularities in its origination and (ii) a declaration that PAM was not the holder of the mortgage and note. In the motion for preliminary injunction, Moreno asked that the foreclosure be stayed, or that the automatic stay be reimposed, pending disposition of the adversary proceeding. On December 7, 2009, after a hearing on the motion for preliminary injunction, the Court found that the motion was, in part, essentially one to vacate the order granting relief from the automatic stay, vacated that order, and scheduled an evidentiary hearing on the motion for relief. The order specified that the sole issue at the evidentiary hearing would be PAM’s standing to seek relief from the automatic stay, all other issues under 11 U.S.C. § 362(d) being deemed established. After discovery, the evidentiary hearing was held on April 8, 2010, and, with the submission of proposed findings and conclusions, the matter was then taken under advisement.

Discussion

As the party seeking relief from stay to foreclose a mortgage on the debtor’s property, PAM bears the burden of proving that it has authority under applicable state law to foreclose the mortgage in question and, by virtue of that authority, standing to move for relief from the automatic stay to foreclose. PAM contends that it has such authority and standing because, although it does not hold the promissory note that the mortgage secures, it does have title to the mortgage itself; and it holds that title as nominee of and for the benefit of the note holder, LBHI, and is foreclosing for LBHI. In these circumstances, PAM contends, a mortgagee has a right under Massachusetts law to foreclose for the benefit of the note holder and therefore standing to move for relief from stay to foreclose. The Debtor objects, arguing (among other things) that Massachusetts law prohibits foreclosure by one who holds only the mortgage and not the note it secures. I need not address the merits of this and other objections because, even if the theory is a valid one, it requires proof that PAM is the present title holder of the mortgage, and PAM has not carried its burden in this regard.

To show that it presently holds the mortgage, PAM must show a valid assignment of the mortgage from MERS to itself. PAM contends that it holds the mortgage by assignment from MERS. Accordingly, PAM must show that the assignment, which was executed for MERS by Denise Bailey, was within the scope of Bailey’s limited authority to act for MERS.

Ms. Bailey’s authority to act for MERS is defined in the MERS Authorization in seven enumerated paragraphs. In each, Ms. Bailey’s authority to act is dependent on the existence of a specified relationship of Litton, the MERS member by whom she is employed, to the loan in question. PAM has submitted no evidence of the existence of any such relationship. The beneficial owner of the loan at the time of the assignment was Aurora Bank FSB, but there is no evidence that Litton was at the time the servicer of the loan for Aurora Bank FSB or was registered with MERS as such. The Court does not find that Aurora Bank FSB had not retained Litton as its servicer; there is simply no evidence on the issue. But the burden is on PAM to prove that it had, and PAM has not adduced evidence to that effect.

Accordingly, by a separate order, the Court will deny PAM’s motion for relief from the automatic stay without prejudice to renewal upon proper proof.

[1] All other issues were resolved upon entry of the original order granting relief from stay. No cause has been adduced to revisit any but the narrow issue of standing.

[2] Moreno contends that LBHI, which is in bankruptcy proceedings of its own, may have sold its interest in the note through a court-approved sale in its bankruptcy case. However, Moreno does not contend that possession of the note has passed from LBHI to the alleged purchaser (or any nominee of the purchaser), and therefore the alleged possible sale is irrelevant, as possession undisputedly remains in LBHI. In any event, Moreno attempted to establish the fact of the alleged sale by designating certain documents on the docket of the LBHI case and asking the Court to take judicial notice of these and then to find them on its own and to determine from them whether the promissory note in question was among the assets transferred. Having found the alleged sale to be irrelevant, the Court declined to take judicial notice of the bankruptcy documents. However, the proffer also failed for two additional reasons: first, that Moreno did not take a position as to whether a sale did occur, only that the Moreno note may have been among those transferred in the sale; and second, even if the court had taken judicial notice as requested, it remained Moreno’s obligation, which he has not fulfilled, to produce the documents in question and to explain in the first instance how one would conclude from them that the asset in question was among those transferred.

[3] MERS Corporate Resolution, attached to Bailey Affidavit as Exhibit 1.

[4] The grammatical difficulty in this second clause is native to the authorizing document.

[5] The original affidavit of Scott Drosdick includes the following two sentences:

By Master Servicing Agreement dated February 1, 1999, LBHI engaged Aurora Bank FSB (f/k/a Lehman Brothers Bank FSB), to master service, among other things, the Loan [the Moreno loan]. In turn, Aurora Bank FSB engaged Litton pursuant to a Flow Subservicing Agreement dated October 1, 2007, to service the loan.”

By an amendment to the affidavit and in testimony, Drosdick later amended his affidavit to correct this passage by striking Aurora Bank FSB from the first sentence and in its place inserting Aurora Loan Services LLC. Drosdick did not expressly change the second sentence, but that sentence, which begins with the critical words “in turn,” would be nonsensical unless the same substitution—Aurora Loan Services LLC for Aurora Bank FSB—were also made in the second sentence. Therefore, though the second sentence might perhaps be read in isolation as evidence that Litton was servicing the loan for Aurora Bank FSB at the time when Bailey executed the assignment, that sentence cannot credibly be so construed.

Posted in bankruptcy, case, concealment, conspiracy, corruption, foreclosure, foreclosure fraud, forensic loan audit, lehman brothers, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, note, reversed court decision, robo signer, robo signers0 Comments

FLORIDA JUDGE DISMISSES FORECLOSURE COMPLAINT FILED BY BANK OF NEW YORK AS TRUSTEE FOR A SECURITIZED MORTGAGE LOAN TRUST FOR FAILURE TO COMPLY WITH SUPREME COURT RULES REQUIRING FORECLOSURE COMPLAINTS TO BE VERIFIED AND FOR FAILURE TO PROPERLY ALLEGE CHAIN OF TITLE FROM ORIGINAL LENDER TO FORECLOSING PLAINTIFF

FLORIDA JUDGE DISMISSES FORECLOSURE COMPLAINT FILED BY BANK OF NEW YORK AS TRUSTEE FOR A SECURITIZED MORTGAGE LOAN TRUST FOR FAILURE TO COMPLY WITH SUPREME COURT RULES REQUIRING FORECLOSURE COMPLAINTS TO BE VERIFIED AND FOR FAILURE TO PROPERLY ALLEGE CHAIN OF TITLE FROM ORIGINAL LENDER TO FORECLOSING PLAINTIFF

May 27, 2010

In an extremely significant ruling, a Florida Circuit Judge today dismissed a residential foreclosure Complaint filed by the Bank of New York as trustee for a securitized mortgage loan trust for failure to comply with the Supreme Court of Florida Order amending the Rules of Civil Procedure to require that all residential mortgage foreclosure Complaints be verified and as the Plaintiff also failed to properly allege the chain of title from the original lender to the foreclosing Plaintiff as required by recent Florida case law. The Supreme Court of Florida rule amendment and the recent case law requiring proof of chain of title in order to be able to foreclose were both previously reported on this website.

The original lender was Taylor Bean & Whitaker, which failed and was taken over by the government for fraudulent lending practices. There was no assignment or other evidence showing how the loan went from TBW to the Bank of New York. The Complaint was filed on February 12, 2010, the day after the effective date of the Supreme Court Order requiring verification of all residential foreclosure Complaints.

The ruling is extremely significant, as it ratifies the effect of the Supreme Court Order requiring that ALL residential mortgage foreclosure complaints filed in Florida after February 11, 2010 be verified and that such Complaints also allege the proper chain of title of the note and mortgage from the original lender to the foreclosing Plaintiff, and that if the Complaint does not do both, the Complaint is subject to dismissal.

The borrower is represented by Jeff Barnes, Esq., who filed the Motion to Dismiss and argued the matter at a hearing this morning.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

Posted in bank of new york, concealment, conspiracy, dismissed, foreclosure, foreclosure fraud, note0 Comments

VIDEO: What does LENDER PROCESSING SERVICES (LPS) exactly do: LPS CEO JEFF CARBIENER

VIDEO: What does LENDER PROCESSING SERVICES (LPS) exactly do: LPS CEO JEFF CARBIENER

Date of Video: 7/2/2008

[youtube=http://www.youtube.com/watch?v=uddq3NJ3n7Q]

Posted in FIS, foreclosure fraud, Lender Processing Services Inc., LPS0 Comments

GARY DUBIN LAW OFFICES FORECLOSURE DEFENSE HAWAII and CALIFORNIA
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Kenneth Eric Trent, www.ForeclosureDestroyer.com

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