October, 2010 | FORECLOSURE FRAUD | by DinSFLA

Archive | October, 2010

S.E.C. SAMPLE LETTER TO CFO’S: DISCLOSE MORTGAGE AND FORECLOSURE RISKS

S.E.C. SAMPLE LETTER TO CFO’S: DISCLOSE MORTGAGE AND FORECLOSURE RISKS

Sample Letter Sent to Public Companies on Accounting and Disclosure Issues Related to Potential Risks and Costs Associated with Mortgage and Foreclosure-Related Activities or Exposures

In October 2010, the Division of Corporation Finance sent the following illustrative letter to certain public companies as a reminder of their disclosure obligations to consider in their upcoming Form 10-Qs and subsequent filings, in light of continued concerns about potential risks and costs associated with mortgage and foreclosure-related activities or exposures.

October 2010

Name
Chief Financial Officer
ABC Company
Address

Dear Chief Financial Officer:

The purpose of this letter is to remind you of disclosure obligations that you should consider for your upcoming Form 10-Q and subsequent filings in light of continued concerns about potential risks and costs associated with mortgage and foreclosure-related activities or exposures.

Items that should be considered include, without limitation, the impact of various representations and warranties regarding mortgages made to purchasers of the mortgages (or to purchasers of mortgage-backed securities) including to the government-sponsored entities (GSEs), private-label mortgage-backed security (MBS) investors, financial guarantors and other whole loan purchasers. While not an exhaustive list, these representations and warranties may include the following:

  • ownership of the loan;
  • validity of the lien securing the loan;
  • the absence of delinquent taxes or liens against the property;
  • the process used to select the loan for inclusion in a transaction;
  • the loan’s compliance with any applicable loan criteria established by the buyer, including underwriting standards;
  • delivery of all required documents to the trust; and
  • the loan’s compliance with applicable federal, state and local laws.

In addition, we understand that some issuers are undertaking reviews of their loan documentation and foreclosure practices, and, in some cases, have suspended foreclosures pending completion of such reviews.

Item 303 of Regulation S-K requires you to discuss, in your Management’s Discussion and Analysis of your Forms 10-Q or Form 10-K, any known trends or any known demands, commitments, events or uncertainties that you reasonably expect to have a material favorable or unfavorable impact on your results of operations, liquidity, and capital resources. Item 103 of Regulation S-K requires disclosure of legal proceedings, including proceedings known to be contemplated by governmental authorities. Item 1 of Part II of Form 10-Q requires you to address legal proceedings when they first become a reportable event and in subsequent quarters when there have been material developments.

In addition, ASC Subtopic 450-20 (SFAS 5) requires you to establish accruals for litigation and other contingencies when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. When a loss is not both probable and estimable, an accrual is not recorded, but disclosure of the contingency is required to be made when there is at least a reasonable possibility that a loss or an additional loss has been incurred. The disclosure should indicate the nature of the contingency and give an estimate of the possible loss or range of loss or state that such an estimate cannot be made. Rule 10-01(a)(5) of Regulation S-X requires the disclosure of material contingencies in interim financial statements.

As appropriate, you should provide clear and transparent disclosure regarding your obligations relating to the various representations and warranties that you made in connection with your securitization activities and whole loan sales. In addition, you should discuss any implications of any foreclosure review, including potential delays in completing foreclosures, if applicable. These disclosures should address your role as an originator, securitizer, servicer, and investor, as applicable. Depending on your circumstances, please consider the following points as you prepare your Form 10-Q and subsequent filings:

  • Risks and uncertainties associated with potentially higher repurchase requests as a result of any foreclosure review process and any changes to the methodology or processes you use to estimate any repurchase reserve;
  • Litigation risks and uncertainties related to any known or alleged defects in the securitization process, including any potential defects in mortgage documentation or in the assignment of the mortgages;
  • Litigation risks and uncertainties related to any known or alleged breach of the pooling and servicing criteria, including any potential defects in the foreclosure process;
  • Risks and uncertainties associated with any agreements or understandings, including for indemnification and settlement, with title, mortgage, and bond insurers regarding coverage;
  • Potential effects of defects in the securitization process or improper application of the pooling and servicing criteria on the valuation and any possible impairment of your mortgage servicing rights (MSR);
  • Potential effects of defects in the securitization process or improper application of the pooling and servicing criteria on the recognition or impairment of servicing advances, and related effects to your liquidity; and
  • Potential effects of changes in the timing of sales of loans, other real estate owned, and mortgage-backed securities resulting from such issues to your liquidity and any related effects on the valuation and impairment of these assets.

In addition, if you have established a reserve relating to representations and warranties attributable to loans that you have sold, you should consider providing a roll-forward of this reserve presenting separate amounts for increases in the reserve due to changes in estimate and new loan sales and decreases attributable to utilizations/realization of losses.

This is not an exhaustive list of the disclosures you should consider. It is your responsibility to determine the disclosures that should be provided in your particular circumstances.

Some of these issues are not limited to financial institutions that sold or securitized mortgages or mortgage-backed securities. Issuers that engage in mortgage servicing, title insurance, mortgage insurance, and other activities relating to residential mortgages should also consider the impact of these and similar issues for their disclosures.

Please contact me if you have any questions.

Sincerely,

Senior Assistant Chief Accountant

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Posted in STOP FORECLOSURE FRAUD1 Comment

[NYSC] JUDGE SCHACK TAKES ON ROBO-SIGNER ERICA JOHNSON SECK: ONEWEST BANK v. DRAYTON (3)

[NYSC] JUDGE SCHACK TAKES ON ROBO-SIGNER ERICA JOHNSON SECK: ONEWEST BANK v. DRAYTON (3)

STRIKE 1, STRIKE 2,

STRIKE 3…below

.

2010 NY Slip Op 20429

ONEWEST BANK, F.S.B., Plaintiff,
v.
COVAN DRAYTON, ET AL., Defendants.

15183/09.Supreme Court, Kings County.

Decided October 21, 2010.Gerald Roth, Esq., Stein Wiener and Roth, LLP, Carle Place NY, Defendant did not answer Plaintiff.

ARTHUR M. SCHACK, J.

In this foreclosure action, plaintiff ONEWEST BANK, F.S.B. (ONEWEST), moved for an order of reference and related relief for the premises located at 962 Hemlock Street, Brooklyn, New York (Block 4529, Lot 116, County of Kings), upon the default of all defendants. The Kings County Supreme Court Foreclosure Department forwarded the motion papers to me on August 30, 2010. While drafting this decision and order, I received on October 14, 2010, in the midst of the present national media attention about “robo-signers,” an October 13, 2010-letter from plaintiff’s counsel, by which “[i]t is respectfully requested that plaintiff’s application be withdrawn at this time.” There was no explanation or reason given by plaintiff’s counsel for his request to withdraw the motion for an order of reference other than “[i]t is our intention that a new application containing updated information will be re-submitted shortly.”

The Court grants the request of plaintiff’s counsel to withdraw the instant motion for an order of reference. However, to prevent the waste of judicial resources, the instant foreclosure action is dismissed without prejudice, with leave to renew the instant motion for an order of reference within sixty (60) days of this decision and order, by providing the Court with necessary and additional documentation.

First, the Court requires proof of the grant of authority from the original mortgagee, CAMBRIDGE HOME CAPITAL, LLC (CAMBRIDGE), to its nominee, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (MERS), to assign the subject mortgage and note on March 16, 2009 to INDYMAC FEDERAL BANK, FSB (INDYMAC). INDYMAC subsequently assigned the subject mortgage and note to its successor, ONEWEST, on May 14, 2009.

Second, the Court requires an affidavit from Erica A. Johnson-Seck, a conflicted “robo-signer,” explaining her employment status. A “robo-signer” is a person who quickly signs hundreds or thousands of foreclosure documents in a month, despite swearing that he or she has personally reviewed the mortgage documents and has not done so. Ms. Johnson-Seck, in a July 9, 2010 deposition taken in a Palm Beach County, Florida foreclosure case, admitted that she: is a “robo-signer” who executes about 750 mortgage documents a week, without a notary public present; does not spend more than 30 seconds signing each document; does not read the documents before signing them; and, did not provide me with affidavits about her employment in two prior cases. (See Stephanie Armour, “Mistakes Widespread on Foreclosures, Lawyers Say,” USA Today, Sept. 27, 2010; Ariana Eunjung Cha, “OneWest Bank Employee: Not More Than 30 Seconds’ to Sign Each Foreclosure Document,” Washington Post, Sept. 30, 2010).

In the instant action, Ms. Johnson-Seck claims to be: a Vice President of MERS in the March 16, 2009 MERS to INDYMAC assignment; a Vice President of INDYMAC in the May 14, 2009 INDYMAC to ONEWEST assignment; and, a Vice President of ONEWEST in her June 30, 2009-affidavit of merit. Ms. Johnson-Seck must explain to the Court, in her affidavit: her employment history for the past three years; and, why a conflict of interest does not exist in the instant action with her acting as a Vice President of assignor MERS, a Vice President of assignee/assignor INDYMAC, and a Vice President of assignee/plaintiff ONEWEST. Further, Ms. Johnson-Seck must explain: why she was a Vice President of both assignor MERS and assignee DEUTSCHE BANK in a second case before me, Deutsche Bank v Maraj, 18 Misc 3d 1123 (A) (Sup Ct, Kings County 2008); why she was a Vice President of both assignor MERS and assignee INDYMAC in a third case before me, Indymac Bank, FSB, v Bethley, 22 Misc 3d 1119 (A) (Sup Ct, Kings County 2009); and, why she executed an affidavit of merit as a Vice President of DEUTSCHE BANK in a fourth case before me, Deutsche Bank v Harris (Sup Ct, Kings County, Feb. 5, 2008, Index No. 35549/07).

Third, plaintiff’s counsel must comply with the new Court filing requirement, announced yesterday by Chief Judge Jonathan Lippman, which was promulgated to preserve the integrity of the foreclosure process. Plaintiff’s counsel must submit an affirmation, using the new standard Court form, that he has personally reviewed plaintiff’s documents and records in the instant action and has confirmed the factual accuracy of the court filings and the notarizations in these documents. Counsel is reminded that the new standard Court affirmation form states that “[t]he wrongful filing and prosecution of foreclosure proceedings which are discovered to suffer from these defects may be cause for disciplinary and other sanctions upon participating counsel.”

Background

Defendant COVAN DRAYTON (DRAYTON) executed the subject

mortgage and note on January 12, 2007, borrowing $492,000.00 from CAMBRIDGE. MERS “acting solely as a nominee for Lender [CAMBRIDGE]” and “FOR PURPOSES OF RECORDING THIS MORTGAGE, MERS IS THE MORTGAGEE OF RECORD,” recorded the instant mortgage and note on March 19, 2007, in the Office of the City Register of the City of New York, at City Register File Number (CRFN) XXXXXXXXXXXXX. Plaintiff DRAYTON allegedly defaulted in his mortgage loan payment on September 1, 2008. Then, MERS, as nominee for CAMBRIDGE, assigned the instant nonperforming mortgage and note to INDYMAC, on March 16, 2009. Erica A. Johnson-Seck executed the assignment as a Vice President of MERS, as nominee for CAMBRIDGE. This assignment was recorded in the Office of the City Register of the City of New York, on March 24, 2009, at CRFN XXXXXXXXXXXX. However, as will be discussed below, there is an issue whether MERS, as CAMBRIDGE’s nominee, was authorized by CAMBRIDGE, its principal, to assign the subject DRAYTON mortgage and note to plaintiff INDYMAC. Subsequently, almost two months later, Ms. Johnson-Seck, now as a Vice President of INDYMAC, on May 14, 2009, assigned the subject mortgage and note to ONEWEST. This assignment was recorded in the Office of the City Register of the City of New York, on May 22, 2009, at CRFN XXXXXXXXXXXXX. Plaintiff ONEWEST commenced the instant foreclosure action on June 18, 2009 with the filing of the summons, complaint and notice of pendency. On August 6, 2009, plaintiff ONEWEST filed the instant motion for an order of reference. Attached to plaintiff ONEWEST’s moving papers is an affidavit of merit by Erica A. Johnson-Seck, dated June 30, 2009, in which she claims to be a Vice President of plaintiff ONEWEST. She states, in ¶ 1, that “[t]he facts recited herein are from my own knowledge and from review of the documents and records kept in the ordinary course of business with respect to the servicing of this mortgage.” There are outstanding questions about Ms. Johnson-Seck’s employment, whether she executed sworn documents without a notary public present and whether she actually read and personally reviewed the information in the documents that she executed.

July 9, 2010 deposition of Erica A. Johnson-Seck in the Machado case

On July 9, 2010, nine days after executing the affidavit of merit in the instant action, Ms. Johnson-Seck was deposed in a Florida foreclosure action, Indymac Federal Bank, FSB, v Machado (Fifteenth Circuit Court in and for Palm Beach County, Florida, Case No. 50 2008 CA 037322XXXX MB AW), by defendant Machado’s counsel, Thomas E. Ice, Esq. Ms. Johnson-Seck admitted to being a “robo-signer,” executing sworn documents outside the presence of a notary public, not reading the documents before signing them and not complying with my prior orders in the Maraj and Bethley decisions. Ms. Johnson-Seck admitted in her Machado deposition testimony that she was not employed by INDYMAC on May 14, 2009, the day she assigned the subject mortgage and note to ONEWEST, even though she stated in the May 14, 2009 assignment that she was a Vice President of INDYMAC. According to her testimony she was employed on May 14, 2010 by assignee ONEWEST. The following questions were asked and then answered by Ms. Johnson Seck, at p. 4, line 11-p. 5, line 4:

Q. Could you state your full name for the record, please.

A. Erica Antoinette Johnson-Seck.

Q. And what is your business address?

A. 7700 West Parmer Lane, P-A-R-M-E-R, Building D, Austin, Texas 78729.

Q. And who is your employer?

A. OneWest Bank.

Q. How long have you been employed by OneWest Bank?

A. Since March 19th, 2009.

Q. Prior to that you were employed by IndyMac Federal Bank, FSB?

A. Yes.

Q. And prior to that you were employed by IndyMac Bank, FSB?

A. Yes.

Q. Your title with OneWest Bank is what?

A. Vice president, bankruptcy and foreclosure.

Despite executing, on March 16, 2009, the MERS, as nominee for CAMBRIDGE, assignment to INDYMAC, as Vice President of MERS, she admitted that she is not an officer of MERS. Further, she claimed to have “signing authority” from several major banking institutions and the Federal Deposit Insurance Corporation (FDIC). The following questions were asked and then answered by Ms. Johnson-Seck, at p. 6, lines 5-21:

Q. Are you also an officer of Mortgage Electronic Registration Systems?

A. No.

Q. You have signing authority to sign on behalf of Mortgage Electronic Registration Systems as a vice president, correct?

A. Yes.

Q. Are you an officer of any other corporation?

A. No.

Q. Do you have signing authority for any other corporation?

A. Yes.

Q. What corporations are those?

A. IndyMac Federal Bank, Indymac Bank, FSB, FDIC as receiver for Indymac Bank, FDIC as conservator for Indymac, Deutsche Bank, Bank of New York, U.S. Bank. And that’s all I can think of off the top of my head.

Then, she answered the following question about her “signing authority,” at page 7, lines 3-10:

Q. When you say you have signing authority, is your authority to sign as an officer of those corporations?

A. Some.

Deutsche Bank I have a POA [power of attorney] to sign as attorney-in-fact. Others I sign as an officer. The FDIC I sign as attorney-in-fact. IndyMac Bank and IndyMac Federal Bank I now sign as attorney-in-fact. I only sign as a vice president for OneWest. Ms. Johnson-Seck admitted that she is not an officer of MERS, has no idea how MERS is organized and does not know why she signs assignments as a MERS officer. Further, she admitted that the MERS assignments she executes are prepared by an outside vendor, Lender Processing Services, Inc. (LPS), which ships the documents to her Austin, Texas office from Minnesota. Moreover, she admitted executing MERS assignments without a notary public present. She also testified that after the MERS assignments are notarized they are shipped back to LPS in Minnesota. LPS, in its 2009 Form 10-K, filed with the U.S. Securities and Exchange Commission, states that it is “a provider of integrated technology and services to the mortgage lending industry, with market leading positions in mortgage processing and default management services in the U.S. [p. 1]”; “we offer lenders, servicers and attorneys certain administrative and support services in connection with managing foreclosures [p. 4]”; “[a] significant focus of our marketing efforts is on the top 50 U.S. banks [p. 5]”; and, “our two largest customers, Wells Fargo Bank, N.A. and JP Morgan Chase Bank, N.A., each accounted for more than 10% of our aggregate revenue [p. 5].”LPS is now the subject of a federal criminal investigation related to its foreclosure document preparation. (See Ariana Eunjung Cha. “Lender Processing Services Acknowledges Employees Allowed to Sign for Managers on Foreclosure Paperwork,” Washington Post, Oct. 5, 2010). Last week, on October 13, 2010, the Florida Attorney-General issued to LPS an “Economic Crimes Investigative Subpoena Duces Tecum,” seeking various foreclosure documents prepared by LPS and employment records for various “robo-signers.” The following answers to questions were given by Ms. Johnson-Seck in the Machado deposition, at p. 116, line 4-p. 119, line 16:

Q. Now, given our last exchange, I’m sure you will agree that you are not a vice president of MERS in any sense of the word other than being authorized to sign as one?

A. Yes.

Q. You are not —

A. Sorry.

Q. That’s all right. You are not paid by MERS?

A. No.

Q. You have no job duties as vice president of MERS?

A. No.

Q. You don’t attend any board meetings of MERS?

A. No.

Q. You don’t attend any meetings at all of MERS?

A. No.

Q. You don’t report to the president of MERS?

A. No.

Q. Who is the president of MERS?

A. I have no idea.

Q. You’re not involved in any governance of MERS?

A. No.

Q. The authority you have says that you can be an assistant secretary, right?

A. Yes.

Q. And yet you don’t report to the secretary —

A. No.

Q. — of MERS. You don’t have any MERS’ employees who report to you?

A. No.

Q. You don’t have any vote or say in any corporate decisions of MERS?

A. No.

Q. Do you know where the MERS’ offices are located?

A. No.

Q. Do you know how many offices they have?

A. No.

Q. Do you know where they are headquartered?

A. No.

Q. I take it then you’re never been to their headquarters?

A. No.

Q. Do you know how many employees they have?

A. No.

Q. But you know that you have counterparts all over the country signing as MERS’s vice-presidents and assistant secretaries?

A. Yes.

Q. Some of them are employees of third-party foreclosure service companies, like LPS?

A. Yes.

Q. Why does MERS appoint you as a vice president or assistant secretary as opposed to a manager or an authorized agent to sign in that capacity?

A. I don’t know.

Q. Why does MERS give you any kind of a title?

A. I don’t know.

Q. Take me through the procedure for drafting and — the drafting and execution of this Assignment of Mortgage which is Exhibit E.

A. It is drafted by our forms, uploaded into process management, downloaded by LPS staff in Minnesota, shipped to Austin where we sign and notarize it, and hand it back to an LPS employee, who then ships it back to Minnesota, up uploads a copy and mails the original to the firm.

Q. Very similar to all the other document, preparation of all the other documents.

A. (Nods head.)

Q. Was that a yes? You were shaking your head.

A. Yes.

Q. As with the other documents, you personally don’t review any of the information that’s on here —

A. No.

Q. — other than to make sure that you are authorized to sign as the person you’re signing for?

A. Yes.

Q. Okay. As with the other documents, you signed these and took them to be notarized just to a Notary that’s outside your office?

A. Yes.

Q. And they will get notarized as soon as they can. It may or may not be the same day that you executed it?

A. That’s true. Further, with respect to MERS, Ms. Johnson-Seck testified in answering questions, at p. 138, line 2-p. 139, line 17:

Q. Do you have an understanding that MERS is a membership organization?

A. Yes, yes.

Q. And the members are —

A. Yes.

Q. — banking entities such as OneWest?

A. Yes.

Q. In fact, OneWest is a member of MERS?

A. Yes.

Q. Is Deutsche Bank National Trust Company a member of MERS?

A. I don’t know.

Q. Most of the major banking institutions in the Untied States, at least, are members of MERS, correct?

A. That sounds right.

Q. It’s owned and operated by banking institutions?

A. I’m not a big — I don’t, I don’t know that much about the ins and outs of MERS. I’m sorry. I understand what it’s for, but I don’t understand the nitty-gritty.

Q. What is it for?

A. To track the transfer of doc — of interest from one entity to another. I know that it was initially created so that a servicer did not have to record the assignments, or if they didn’t, there was still a system to keep track of the transfer of property.

Q. Does it also have a function to hold the mortgage separate and apart from the note so that note can be transferred from entity to entity to entity, bank to bank to bank —

A. That sounds right.

Q. — without ever having to rerecord the mortgage?

A. That sounds right.

Q. So it’s a savings device. It makes it more efficient to transfer notes?

A. Yes.

Q. And cheaper?

A. Yes. Moreover,

Ms. Johnson-Seck testified that one of her job duties was to sign documents, which at that time took her about ten minutes per day [p. 11]. Further, she admitted, at p. 13, line 11-p. 14, line 15, that she signs about 750 documents per week and doesn’t read each document.

Q. Okay. How many documents would you say that you sign on a week on average, in a week on average?

A. I could have given you that number if you had that question in there because I would brought the report. However, I’m going to guess, today I saw an e-mail that 1,073 docs are in the office for signing. So if we just — and there’s about that a day. So let’s say 6,000 a week and I do probably — let’s see. There’s eight of us signing documents, so what’s the math?

Q. Six thousand divided by eight, that gives me 750..

A. That sounds, that sounds about right.

Q. Okay. That would be a reasonable estimate of how many you sign, you personally sign per week?

A. Yes.

Q. And that would include Lost Note Affidavits, Affidavits of Debt?

A. Yes.

Q. What other kinds of documents would be included in that?

A. Assignments, declarations. I can sign anything related to a bankruptcy or a foreclosure.

Q. How long do you spend executing each document?

A. I have changed my signature considerably. It’s just an E now.

So not more than 30 seconds.

Q. Is it true that you don’t read each document before you sign it?

A. That’s true. [Emphasis added]

Ms. Johnson-Seck, in the instant action, signed her full name on the March 16, 2009 MERS, as nominee for CAMBRIDGE, assignment to INDYMAC. She switched to the letter E in signing the May 14, 2009 INDYMAC to ONEWEST assignment and the June 30, 2009 affidavit of merit on behalf of ONEWEST. Additionally. she testified about how LPS prepares the documents in Minnesota and ships them to her Austin office, with LPS personnel present in her Austin office [pp. 16-17]. Ms. Johnson-Seck described the document signing process, at p. 17, line 6-p. 18, line 18:

Q. Take me through the procedure for getting your actual signature on the documents once they’ve gone through this quality control process?

A. The documents are delivered to me for signature and I do a quick purview to make sure that I’m not signing for an entity that I cannot sign for. And I sign the document and I hand it to the Notary, who notarizes it, who then hands it back to LPS who uploads the document so that the firms know it’s available and they send an original.

Q. “They” being LPS?

A. Yes.

Q. Are all the documents physically, that you were supposed to sign, are they physically on your desk?

A. Yes.

Q. You don’t go somewhere else to sign documents?

A. No.

Q. When you sign them, there’s no one else in your office?

A. Sometimes.

Q. Well, the Notaries are not in your office, correct?

A. They don’t sit in my office, no.

Q. And the witnesses who, if you need witnesses on the document, are not sitting in your office?

A. That’s right.

Q. So you take your ten minutes and you sign them and then you give them to the supervisor of the Notaries, correct?

A. I supervise the Notaries, so I just give them to a Notary.

Q. You give all, you give the whole group that you just signed to one Notary?

A. Yes. [Emphasis added]

Ms. Johnson-Seck testified, at p. 20, line 1-p. 21, line 4 about notaries not witnessing her signature:

Q. I’m mostly interested in how long it takes for the Notary to notarize your signature.

A. I can’t say categorically because the Notary, that’s not the only job they do, so.

Q. In any event, it doesn’t have to be the same day?

A. No.

Q. When they notarize it and they put a date that they’re notarizing it, is it the date that you signed it or is it the date that they’re notarizing it?

A. I don’t know.

Q. When you execute a sworn document, do you make any kind of a verbal acknowledgment or oath to anyone?

A. I don’t know if I know what you’re talking about. What’s a sworn document?

Q. Well, an affidavit.

A. Oh. No.

Q. In any event, there’s no Notary in the room for you to

A. Right.

Q. — take an oath with you, correct?

A. No there is not.

Q. In fact, the Notaries can’t see you sign the documents; is that correct?

A. Not unless that made it their business to do so?

Q. To peek into your office?

A. Yes. [Emphasis added]

As noted above, I found Ms. Johnson-Seck engaged in “robo-signing” in Deutsche Bank v Maraj and Indymac Bank, FSB, v Bethley. In both foreclosure cases I denied plaintiffs’ motions for orders of reference without prejudice with leave to renew if, among other things, Ms. Johnson-Seck could explain in affidavits: her employment history for the past three years; why she was a Vice President of both assignor MERS and assignee Deutsche Bank National Trust Company in Maraj; and, Vice President of INDYMAC in Bethley. Mr. Ice questioned Ms. Johnson-Seck about my MarajMaraj decision as exhibit M in the Machado deposition. The following colloquy at the Maraj deposition took place at p. 153, line 15-p. 156, line 9. decision and showed her the

Q. Exhibit M is a document that you saw before in your last deposition, correct?

A. Yes.

Q. It’s an opinion from Judge Schack up in New York —

A. Yes.

Q. — correct? You’re familiar with that?

A. Yes.

Q. In it, he says that you signed an Assignment of Mortgage as the vice president of MERS, correct —

A. Yes.

Q. — just as you did in this case? Judge Schack also says that you executed an affidavit as an officer of Deutsche Bank National Trust Company, correct?

A. Yes.

Q. And is that true, you executed an affidavit for Deutsche Bank in that case?

A. That is not true.

Q. You never executed a document as an officer of Deutsche Bank National Trust Company in that case, Judge Schack’s case?

A. Let me just read it so I can — I have to refresh my memory completely.

Q. Okay.

A. I don’t remember. Most likely.

Q. That you did?

A. It sounds reasonable that I may have. I don’t remember, and since it’s not attached, I can’t say.

Q. And as a result, Judge Schack wanted to know if you were engaged in self-dealing by wearing two corporate hats?

A. Yes.

Q. And the court was concerned that there may be fraud on the part of the bank?

A. I guess.

Q. I mean he said that, right?

A. Oh, okay. I didn’t read the whole thing. Okay.

Q. Okay. The court ordered Deutsche Bank to produce an affidavit from you describing your employment history for the past three years, correct?

A. That’s what this says.

Q. Did you do that?

A. No, because we were never — no affidavit ever existed and no request ever came to produce such a document. The last time we spoke, I told you that in-house counsel was reviewing the whole issue and that’s kind of where — and we still haven’t received any communication to produce an affidavit.

Q. From your counsel?

A. From anywhere.

Q. Well, you’re reading Judge Schack’s opinion. He seems to want one. Isn’t that pretty clear on its face.

A. We didn’t get — we never even got a copy of this.

Q. Okay. But now you have it —

A. And —

Q. And you had it when we met at our deposition back in February 5th.

A. And our in-house counsel’s response to this is we were never — this was never requested of me and it was his recommendation not to comply.

Q. What has become of that case?

A. I don’t know.

Q. Was it settled?

A. I don’t know. After a break in the Machado deposition proceedings, Mr. Ice questioned Ms. Johnson-Seck about various documents that were subpoenaed for the July 9, 2010 deposition, including her employment affidavits that I required in both Maraj and Bethley. Ms. Johnson-Seck answered the following questions at p. 159, line 19-p. 161, line 9:

Q. So let’s start with the duces tecum part of you notice, which is the list of documents. No. 1 was: The affidavit of the last three years of deponent’s employment provided to Judge Schack in response to the order dated January 31st, 2008 in the case of Deutsche Bank National Trust Company vs. Maraj, Case No. 25981-07, Supreme Court of New York. We talked about that earlier. There is no such affidavit, correct?

A. Correct.

Q. By the way, why was IndyMac permitted to bring the case in Deutsche Bank’s name in that case?

A. I don’t — I don’t know. Now, errors have been made.

Q. No. 2: The affidavit of the deponent provided to Judge Schack in response to the order dated February 6th, 2009 in the case of IndyMac Bank, FSB vs, Bethley, New York Slip Opinion 50186, New York Supreme Court 2/5/09, “explaining,” and this is in quotes, “her employment history for the past three years; and, why a conflict of interest does not exist in how she acted as vice president of assignee IndyMac Bank, FSB in the instant action, and vice president of both Mortgage Electronic Registrations Systems, Inc. and Deutsche Bank in Deutsche Bank vs. Maraj,” and it gives the citation and that’s the case referred to in item 1 of our request. Do you have that affidavit with you here today?

A. No.

Q. Were you aware of that second opinion where Judge Schack asks for a second affidavit?

A. Nope. Where is Judge Schack sending these?

Q. Presumably to your counsel.

A. I wonder if he has the right address. Maybe that’s what we should do, send Judge Schack the most recent, and I will gladly show up in his court and provide him everything he wants.

Q. Okay. Well, I sent you this back in March. Have your or your counsel or in-house counsel at IndyMac pursued that?

A. No. [Emphasis added] Counsel for plaintiff ONEWEST has leave to produce Ms. Johnson-Seck in my courtroom to “gladly show up . . . and provide [me] . . . everything he wants.”

Discussion

Real Property Actions and Proceedings Law (RPAPL) § 1321 allows the Court in a foreclosure action, upon the default of the defendant or defendant’s admission of mortgage payment arrears, to appoint a referee “to compute the amount due to the plaintiff.” In the instant action, plaintiff ONEWEST’s application for an order of reference is a preliminary step to obtaining a default judgment of foreclosure and sale against defendant DRAYTON. (Home Sav. of Am., F.A. v Gkanios, 230 AD2d 770 [2d Dept 1996]). Plaintiff’s request to withdraw its application for an order of reference is granted. However, to allow this action to continue without seeking the ultimate purpose of a foreclosure action, to obtain a judgment of foreclosure and sale, makes a mockery of and wastes the resources of the judicial system. Continuing the instant action without moving for an order of reference is the judicial equivalent of a “timeout.” Granting a “timeout” to plaintiff ONEWEST to allow it to re-submit “a new application containing new information . . . shortly” is a waste of judicial resources. Therefore, the instant action is dismissed without prejudice, with leave granted to plaintiff ONEWEST to renew its motion for an order of reference within sixty (60) days of this decision and order, if plaintiff ONEWEST and plaintiff ONEWEST’s counsel can satisfactorily address the various issues previously enumerated. Further, the dismissal 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 been settled, 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 as “the act of eliminating or nullifying.” (Black’s Law Dictionary 3 [7th ed 1999]). “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 Nastasi, 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 ONEWEST’s notice of pendency against the subject property “in the exercise of the inherent power of the court.”

Moreover, “[t]o 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.” (HSBC Bank, USA v Yeasmin, 27 Misc 3d 1227 [A], *3 [Sup Ct, Kings County 2010]). “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]). MERS, as described above, recorded the subject mortgage as “nominee” for CAMBRIDGE. The word “nominee” is defined as “[a] person designated to act in place of another, usu. in a very limited way” or “[a] party who holds bare legal title for the benefit of others.” (Black’s Law Dictionary 1076 [8th ed 2004]). “This definition suggests that a nominee possesses few or no legally enforceable rights beyond those of a principal whom the nominee serves.” (Landmark National Bank v Kesler, 289 Kan 528, 538 [2009]). The Supreme Court of Kansas, in Landmark National Bank, 289 Kan at 539, observed that: The legal status of a nominee, then, depends on the context of the relationship of the nominee to its principal. Various courts have interpreted the relationship of MERS and the lender as an agency relationship. See In re Sheridan, 2009 WL631355, at *4 (Bankr. D. Idaho, March 12, 2009) (MERS “acts not on its own account. Its capacity is representative.”); Mortgage Elec. Registrations Systems, Inc. v Southwest,La Salle Nat. Bank v Lamy, 12 Misc 3d 1191 [A], at *2 [Sup Ct, Suffolk County 2006]) . . . (“A nominee of the owner of a note and mortgage may not effectively assign the note and mortgage to another for want of an ownership interest in said note and mortgage by the nominee.”) The New York Court of Appeals in MERSCORP, Inc. v Romaine (8 NY3d 90 [2006]), explained how MERS acts as the agent of mortgagees, holding at 96: In 1993, the MERS system was created 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. [Emphasis added] 2009 Ark. 152 ___, ___SW3d___, 2009 WL 723182 (March 19, 2009) (“MERS, by the terms of the deed of trust, and its own stated purposes, was the lender’s agent”);

Thus, it is clear that MERS’s relationship with its member lenders is that of agent with principal. This is a fiduciary relationship, resulting from the manifestation of consent by one person to another, allowing the other to act on his behalf, subject to his control and consent. The principal is the one for whom action is to be taken, and the agent is the one who acts.It has been held that the agent, who has a fiduciary relationship with the principal, “is a party who acts on behalf of the principal with the latter’s express, implied, or apparent authority.” (Maurillo v Park Slope U-Haul, 194 AD2d 142, 146 [2d Dept 1992]). “Agents are bound at all times to exercise the utmost good faith toward their principals. They must act in accordance with the highest and truest principles of morality.” (Elco Shoe Mfrs. v Sisk, 260 NY 100, 103 [1932]). (See Sokoloff v Harriman Estates Development Corp., 96 NY 409 [2001]); Wechsler v Bowman, 285 NY 284 [1941]; Lamdin v Broadway Surface Advertising Corp., 272 NY 133 [1936]). An agent “is prohibited from acting in any manner inconsistent with his agency or trust and is at all times bound to exercise the utmost good faith and loyalty in the performance of his duties.” (Lamdin, at 136). Therefore, in the instant action, MERS, as nominee for CAMBRIDGE, is an agent of CAMBRIDGE for limited purposes. It can only have those powers given to it and authorized by its principal, CAMBRIDGE. Plaintiff ONEWEST has not submitted any documents demonstrating how CAMBRIDGE authorized MERS, as nominee for CAMBRIDGE, to assign the subject DRAYTON mortgage and note to INDYMAC, which subsequently assigned the subject mortgage and note to plaintiff ONEWEST. Recently, in Bank of New York v Alderazi,Lippincott v East River Mill & Lumber Co., 79 Misc 559 [1913]) and “[t]he declarations of an alleged agent may not be shown for the purpose of proving the fact of agency.” (Lexow & Jenkins, P.C. v Hertz Commercial Leasing Corp., 122 AD2d 25 [2d Dept 1986]; see also Siegel v Kentucky Fried Chicken of Long Is. 108 AD2d 218 [2d Dept 1985]; Moore v Leaseway Transp/ Corp., 65 AD2d 697 [1st Dept 1978].) “[T]he acts of a person assuming to be the representative of another are not competent to prove the agency in the absence of evidence tending to show the principal’s knowledge of such acts or assent to them.” (Lexow & Jenkins, P.C. v Hertz Commercial Leasing Corp., 122 AD2d at 26, quoting 2 NY Jur 2d, Agency and Independent Contractors § 26). Plaintiff has submitted no evidence to demonstrate that the original lender, the mortgagee America’s Wholesale Lender, authorized MERS to assign the secured debt to plaintiff. Therefore, in the instant action, plaintiff ONEWEST failed to demonstrate how MERS, as nominee for CAMBRIDGE, had authority from CAMBRIDGE to assign the DRAYTON mortgage to INDYMAC. The Court grants plaintiff ONEWEST leave to renew its motion for an order of reference, if plaintiff ONEWEST can demonstrate how MERS had authority from CAMBRIDGE to assign the DRAYTON mortgage and note to INDYMAC. Then, plaintiff ONEWEST must address the tangled employment situation of “robo-signer” Erica A. Johnson-Seck. She admitted in her July 9, 2010 deposition in the Machado case that she never provided me with affidavits of her employment for the prior three years and an explanation of why she wore so-many corporate hats in Maraj and Bethley. Further, in Deutsche Bank v Harris, Ms. Johnson-Seck executed an affidavit of merit as Vice President of Deutsche Bank. If plaintiff renews its motion for an order of reference, the Court must get to the bottom of Ms. Johnson-Seck’s employment status and her “robo-signing.” The Court reminds plaintiff ONEWEST’s counsel that Ms. Johnson-Seck, at p. 161 of the Machado deposition, volunteered, at lines 4-5 to “gladly show up in his court and provide him everything he wants.” Lastly, if plaintiff ONEWEST’S counsel moves to renew its application for an order of reference, plaintiff’s counsel must comply with the new filing requirement to submit, under penalties of perjury, an affirmation that he has taken reasonable steps, including inquiring of plaintiff ONEWEST, the lender, and reviewing all papers, to verify the accuracy of the submitted documents in support of the instant foreclosure action. According to yesterday’s Office of Court Administration press release, Chief Judge Lippman said: We cannot allow the courts in New York State to stand by idly and be party to what we now know is a deeply flawed process, especially when that process involves basic human needs — such as a family home — during this period of economic crisis. This new filing requirement will play a vital role in ensuring that the documents judges rely on will be thoroughly examined, accurate, and error-free before any judge is asked to take the drastic step of foreclosure. 28 Misc 3d at 379-380, my learned colleague, Kings County Supreme Court Justice Wayne Saitta explained that: A party who claims to be the agent of another bears the burden of proving the agency relationship by a preponderance of the evidence (

(See Gretchen Morgenson and Andrew Martin, Big Legal Clash on Foreclosure is Taking Shape, New York Times, Oct. 21, 2010; Andrew Keshner, New Court Rules Says Attorneys Must Verify Foreclosure Papers, NYLJ, Oct. 21, 2010).

Conclusion

Accordingly, it is

ORDERED, that the request of plaintiff ONEWEST BANK, F.S.B., to withdraw its motion for an order of reference, for the premises located at 962 Hemlock Street, Brooklyn, New York (Block 4529, Lot 116, County of Kings), is granted; and it is further

ORDERED, that the instant action, Index Number 15183/09, is dismissed without prejudice; and it is further

ORDERED, that the notice of pendency in the instant action, filed with the Kings County Clerk on June 18, 2009, by plaintiff ONEWEST BANK, F.S.B., to foreclose a mortgage for real property located at 962 Hemlock Street, Brooklyn, New York (Block 4529, Lot 116, County of Kings), is cancelled; and it is further

ORDERED, that leave is granted to plaintiff, ONEWEST BANK, F.S.B., to renew, within sixty (60) days of this decision and order, its motion for an order of reference for the premises located at 962 Hemlock Street, Brooklyn, New York (Block 4529, Lot 116, County of Kings), provided that plaintiff, ONEWEST BANK, F.S.B., submits to the Court: (1) proof of the grant of authority from the original mortgagee, CAMBRIDGE CAPITAL, LLC, to its nominee, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., to assign the subject mortgage and note to INDYMAC FEDERAL BANK, FSB; and (2) an affidavit by Erica A. Johnson-Seck, Vice President of plaintiff ONEWEST BANK, F.S.B., explaining: her employment history for the past three years; why a conflict of interest does not exist in how she acted as a Vice President of assignor MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., a Vice President of assignee/assignor INDYMAC FEDERAL BANK, FSB, and a Vice President of assignee/plaintiff ONEWEST BANK, F.S.B. in this action; why she was a Vice President of both assignor MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. and assignee DEUTSCHE BANK in Deutsche Bank v Maraj, 18 Misc 3d 1123 (A) (Sup Ct, Kings County 2008); why she was a Vice President of both assignor MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. and assignee INDYMAC BANK, FSB in Indymac Bank, FSB, v Bethley, 22 Misc 3d 1119 (A) (Sup Ct, Kings County 2009); and, why she executed an affidavit of merit as a Vice President of DEUTSCHE BANK in Deutsche Bank v Harris (Sup Ct, Kings County, Feb. 5, 2008, Index No. 35549/07); and (3) counsel for plaintiff ONEWEST BANK, F.S.B. must comply with the new Court filing requirement, announced by Chief Judge Jonathan Lippman on October 20, 2010, by submitting an affirmation, using the new standard Court form, pursuant to CPLR Rule 2106 and under the penalties of perjury, that counsel for plaintiff ONEWEST BANK, F.S.B. has personally reviewed plaintiff ONEWEST BANK, F.S.B.’s documents and records in the instant action and counsel for plaintiff ONEWEST BANK, F.S.B. confirms the factual accuracy of plaintiff ONEWEST BANK, F.S.B.’s court filings and the accuracy of the notarizations in plaintiff ONEWEST BANK, F.S.B.’s documents.

This constitutes the Decision and Order of the Court.

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KENTUCKY, KENTON COUNTY ORDER REQUIRES COMPLETE CHAIN OF TITLE AND OWNERSHIP TO FORECLOSE

KENTUCKY, KENTON COUNTY ORDER REQUIRES COMPLETE CHAIN OF TITLE AND OWNERSHIP TO FORECLOSE

COMMONWEALTH OF  KENTUCKY

KENTON CIRCUIT COURT

GENERAL ORDER

Pursuant to CR 8.01(1) and CR 17.01, plaintiff in foreclosure complaints filed in Kenton County, Kentucky, must show that it is the holder of the note and mortgage at the time the complaint is filed. Effective with the foreclosure complaints filed November 15, 2010, and thereafter, the complaint at the time of the filing must be accompanied by all of the following:

(1)   a copy of the promissory note with all endorsements;

(2)   a copy of the recorded mortgage;

(3)   an affidavit by the plaintiff, it’s representative, it’s attorney or it’s servicer (a) documenting that the named plaintiff is the owner of the note and mortgage at the time the complaint is filed, and (b) identifying plaintiff as either the original note and mortgage holder, or as an assignee, trustee or successor-in-interest of the original note and mortgage holder;

(4)   a copy of all the assignments of the note and mortgage, if plaintiff is not the original mortgage holder, evidencing the complete chain of assignments. The assignment of the note and mortgage to the named plaintiff must be executed prior to the filing of the foreclosure complaint;

(5)   documentation establishing plaintiff as a successor-in-interest if plaintiff is a successor-in-interest.


Date Oct 14, 2010

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THEODORE “THEO” SCHULTZ CORPORATE BANK TITLES

THEODORE “THEO” SCHULTZ CORPORATE BANK TITLES

Mr. Schultz and his various Corporate Hats. These sensitive documents are part of homes being sold today in a county near you.

Vice President of:

  • MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC.,
  • Aurora Loan Servicing,
  • Household Bank,
  • Decision One Mortgage Company,
  • Nations Home Funding,
  • First National Bank of Arizona,
  • Pinnacle Financial,
  • First Magnus Financial
  • Lehman Brothers

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The States Attorneys Take On Foreclosures Mess

The States Attorneys Take On Foreclosures Mess

The States Take On Foreclosures

By JOE NOCERA
Published: October 29, 2010

Have you noticed that the lead dogs investigating the mortgage foreclosure mess are not any federal prosecutors or national bank regulators, but rather the state attorneys general? I sure have. I can’t think of a more encouraging development.

Yeah, yeah, a handful of federal investigations have also been announced, but we all know that they’re not going to amount to a hill of beans. Ever since the financial crisis began two years ago, the federal overseers of the banking industry have been consistently unwilling to take the rod to the institutions they regulate. The robo-signing scandal — and it is, unquestionably, a scandal — hasn’t changed that attitude one iota.

The Treasury Department and the Federal Reserve have made it clear that they are more concerned about keeping the foreclosure mill going full speed than they are about determining whether the banks broke the law. Somehow throwing people out of their homes quickly is supposed to help the economy. Or so they keep telling us.

Ah, but the states. They’re a different story. Soon after tales of robo-signing began making headlines, the state attorneys general, led by Tom Miller of Iowa, mobilized their forces. Practically overnight, all 50 of them agreed to conduct a joint investigation into the bank practices that led to the scandal.

Unlike the feds’ tepid efforts, this will be a serious investigation, led by a handful of assistant attorneys general who’ve worked together for years, and who see this as their chance to finally do something for beleaguered homeowners. They’ve got resources, subpoena power and a justifiable suspicion that the robo-signing shenanigans are just the tip of a very ugly iceberg.

And best of all, they have a very clear idea of what they are trying to accomplish. They don’t want to merely reform the foreclosure system (though that would be nice, wouldn’t it?). Nor do they particularly want a big financial settlement, which would be meaningless for a giant like Bank of America.

Rather, they hope to use their investigation as a cudgel to force the big banks and servicers to do something they’ve long resisted: institute widespread, systematic loan modifications. “Instead of paying a huge fine,” Mr. Miller posited to me the other day, on his way to an election rally, “maybe have the servicers adequately fund a serious modification process.” Getting the banks and servicers to take loan modification seriously is another in a series of areas where the Obama Treasury Department has failed miserably.

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MERS Response to D.C. Attorney General’s Nickles Statement

MERS Response to D.C. Attorney General’s Nickles Statement

MERS Response to D.C. Attorney General’s Oct. 28, 2010 Statement of Enforcement

RESTON, Va., Oct. 28, 2010—In response to the Statement of Enforcement by the Attorney General for the District of Columbia, we agree that no homeowners should be subjected to deceptive practices during the foreclosure process. To ensure that homeowners readily have necessary information available to them, the MERS® System provides free access to any member of the general public to identify the current servicer and the note owner, if the note-owner has agreed to be disclosed, on their loan. Ninety-seven percent of MERS members agree to be disclosed. The MERS® System is the only comprehensive publicly available source of servicing and ownership of more than 64 million mortgage loans.

Mortgage Electronic Registration Systems, Inc. (MERS) holds the security interest in the deed of trust when MERS is identified as the beneficiary of record, as nominee for the lender and the lender’s successors and assigns. At closing, the lender and borrower name MERS as the beneficiary. The deed of trust is recorded with the Recorder of Deeds in compliance with the District of Columbia’s laws. MERS executes an assignment if the security interest is transferred from MERS to another entity and the assignment is recorded. For example, if the mortgage loan goes into default, and MERS is not the foreclosing entity, then MERS will execute an assignment showing the transfer of the security interest from MERS to the note-holder who will be foreclosing. The assignment is recorded as required under DC’s laws.

When MERS forecloses, MERS is already recorded in the land records as the security interest holder and requires under its membership rules to be in possession of the note in order to be the note-holder. Under either option, in compliance with DC’s laws, the notice of foreclosure sale represents to the homeowner the identity of the note-holder and that the note-holder’s security interest has been recorded.

Any MERS member who experiences a problem related to the recent Statement from the Attorney General for the District of Columbia is asked to immediately notify MERS. We will take steps to protect the lawful right to foreclose that the borrower contractually agreed to if the borrower defaults on their mortgage loan.

###

Source: MERS

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D.C. Attorney General Peter Nickles Names MERS In Statement On Foreclosures

D.C. Attorney General Peter Nickles Names MERS In Statement On Foreclosures

October 27, 2010

Attorney General Issues Statement on Foreclosures in DC

Attorney General Peter Nickles issued an enforcement statement today describing when the notices used to commence foreclosures in DC may mislead homeowners and violate the District’s consumer protection law. The statement clarifies that a foreclosure may not be commenced against a DC homeowner unless the security interest of the current noteholder is properly supported by public filings with the District’s Recorder of Deeds.

A noteholder’s security interest in a DC home should normally be reflected in the public land records maintained by the District’s Recorder of Deeds. Under District law, in contrast to the laws of many states, each deed or other document transferring a mortgage interest must be recorded with the Recorder of Deeds within 30 days of execution. This requirement is not satisfied by private tracking of mortgage interests through the Mortgage Electronic Registration Systems (MERS).

The District has a non-judicial foreclosure process that begins with a Notice of Foreclosure on a form prescribed by the Recorder of Deeds. The form requires identification of a “Holder of the Note” and a “Security Instrument recorded in the land records of the District of Columbia.” According to today’s enforcement statement: “The homeowner who receives such a notice is entitled to presume that the recordation of the security interest complies with District law, and that each intermediate transfer of the security interest between the original maker of the note and the current holder of the note is documented in the public record.”

When a foreclosure sale notice misrepresents to a homeowner that the foreclosing noteholder has a recorded security interest, the homeowner may fail to seek legal help in determining whether there may be a good basis for challenging the foreclosure in court. Misrepresentations of material facts, when made to homeowners or other consumers, violate the District’s Consumer Protection Procedures Act, which is enforced by the attorney general.

The enforcement statement invites “homeowners or their advocates” to inform the Office of the Attorney General (OAG) if foreclosures “continue to be commenced or pursued with deceptive foreclosure sale notices” so that the Office may consider bringing enforcement actions to stop foreclosure proceedings and seek restitution for consumers.

A homeowner should not be misled into believing that a threatened foreclosure is supported by the District’s public records when it is not,” Nickles said.

Continued use of deceptive foreclosure sale notices may be reported to the attorney general’s consumer hotline at 202-442-9828.

Foreclosure Statement*

Source: Office of D.C. Attorney General

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LENDERS TURNING TO OLD FASHION WAY OF “PAPER”, TURN AWAY FROM MERS

LENDERS TURNING TO OLD FASHION WAY OF “PAPER”, TURN AWAY FROM MERS

Thanks to a tip from California’s hero Brian Davies:

Lenders Turning Their Backs on MERS, Going Back to Paper

With more borrowers filing legal challenges to foreclosure, many mortgage lenders have turned their back on using MERSCORP Inc., which operates an electronic loan registry, to bring foreclosure actions. Some lenders are even returning to the old-fashioned, paper-based system of physically recording mortgage assignments at county recorder offices to ensure an unbroken chain of title.

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FLORIDA VICTORY: DAVID J. STERN FIRM SANCTIONS GRANTED! US BANK v. GARNER

FLORIDA VICTORY: DAVID J. STERN FIRM SANCTIONS GRANTED! US BANK v. GARNER

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RHODE ISLAND: One judge to hear all MERS-related cases in the state

RHODE ISLAND: One judge to hear all MERS-related cases in the state

One judge to hear all MERS-related cases in the state

01:00 AM EDT on Sunday, October 31, 2010

By Christine Dunn

Journal Staff Writer

PROVIDENCE –– One Providence Superior Court judge, Allen P. Rubine, has been assigned to hear all cases in Rhode Island that are related to the Mortgage Electronic Registration System.

Alice B. Gibney, presiding justice of the Superior Court, issued an administrative order in September directing the courts in Kent, Washington and Newport counties to transfer all their MERS-related cases to Justice Rubine.

Formed by the mortgage finance industry, MERS was created to increase profits and efficiency by eliminating the need to record changes in mortgage ownership at local government property registries when loans are sold multiple times and/or bundled and sold together in pools. MERS is a corporation that also acts as a nominee for lenders and their successors.

An Aug. 25, 2009, decision by Providence Superior Court Judge Michael A. Silverstein upheld the right of MERS to foreclose in Rhode Island.

The case, brought by Anthony and Stephanie Bucci, of Cranston, through their lawyer, George E. Babcock, of Providence, has been appealed to the Rhode Island Supreme Court. The defendants in the case are Lehman Brothers Bank, FSB, a federal savings bank, MERS, and Aurora Loan Services, LLC.

Judge Silverstein ruled that Rhode Island law “does not prohibit MERS from invoking the Statutory Power of Sale [foreclosure]” because “statutes should not be construed to reach an absurd result.”


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Ambac Sues Bank of America Over Countrywide Bonds, CEO Gets A Warning Letter

Ambac Sues Bank of America Over Countrywide Bonds, CEO Gets A Warning Letter

Ambac Sues Bank of America Over Countrywide Bonds

Ambac Assurance Corp. sued Bank of America Corp. over $16.7 billion of mortgage-backed securities, saying the bank’s Countrywide Financial Corp. unit fraudulently induced Ambac to insure bonds backed by improperly made loans.

Ambac found that 97 percent of 6,533 loans it reviewed across 12 securitizations sponsored by Countrywide didn’t conform to the lender’s underwriting guidelines, according to the complaint filed yesterday in New York state Supreme Court. Many of the loans were made to borrowers with limited or no ability to meet their payment obligations, Ambac said.

The lawsuit follows negotiations between Bank of America, which acquired Countrywide in 2008, and Ambac over mounting losses caused by loans made during the early 2000s as U.S. housing prices soared. Ambac has paid $466 million in claims from more than 35,000 Countrywide home-equity loans that have defaulted or been charged off, according to the lawsuit.

“Bank of America probably didn’t settle because they didn’t want to swallow the amount of money that it’s going to take to satisfy Ambac,” said Alan White, a law professor at Valparaiso University who specializes in housing industry issues. “Nobody wants to be left holding the bag.”

Shirley Norton, a spokeswoman for the Charlotte, North Carolina-based lender, and Ambac spokesman Pete Poillon, declined to comment on the lawsuit.

Repurchase of Billions

Repurchases of home loans from buyers and insurers of mortgage securities have already cost the four biggest U.S. lenders $9.8 billion, according to Credit Suisse Group AG. Bank of America has said it faces $11.1 billion of unresolved claims.

MBIA Insurance said it paid more than $459 million in claims stemming from losses on Countrywide-sponsored mortgage- backed bonds, according to a 2008 lawsuit in New York State Supreme Court.

The Ambac case involves 12 Countrywide-sponsored pools of home loans that were created from 2004 to 2006, including nine involving home equity lines of credit and three that involve fixed-amount second-lien loans.

Bank of America should repurchase as much as $20 billion in home loans that were based on wrong or missing information, the Association of Financial Guaranty Insurers said in a Sept. 2 letter to Bank of America Chief Executive Officer Brian Moynihan. More than half of the soured home-equity credit lines and residential mortgages created from 2005 through 2007 that insurers examined were candidates for repurchase, the group said.

Letter Below:

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TAG YOUR IT! LPS: no defects in related foreclosures, no fee-splitting

TAG YOUR IT! LPS: no defects in related foreclosures, no fee-splitting

Just a few weeks ago Wells Fargo made an announcement that there were no problems at all blah blah blah…and now they have passed the baton to Lender Processing Services…

Wells Fargo has found fraud errors… sigh.

LPS: no defects in related foreclosures, no fee-splitting

by JACOB GAFFNEY
Friday, October 29th, 2010, 7:30 am

Lender Processing Services (LPS: 28.69 +4.33%) began reducing its foreclosure signing services back in 2008 and stands by its mortgage processing services. Further, when the firm caught a manager robo-signing foreclosure documents, the only such case it says it found, that manager was immediately dismissed and documents remediated.

“We believe we have taken appropriate steps and we do not believe it resulted in any wrongful foreclosures,” said LPS CEO Jeff Carbiener in a third-quarter conference call to investors Friday. “We no longer provide foreclosure document services.”

Carbiener also said that his company does not participate in fee-splitting or revenue-sharing with lawyers, another recent charge against the company.

“We are not an equity owner in any law firm,” he said.

LPS, a mortgage and real estate technology and services provider, reported net earnings of $78.7 million or 85 cents per share, in the third quarter of 2010, up from $75.5 million or 78 cents per share, in last year’s quarter.

JPMorgan Chase (JPM: 37.605 +0.25%), Bank of America (BAC: 11.4301 -0.87%) and Wells Fargo (WFC: 25.85 -0.35%) also now use LPS desktop management software for dealing with clerical issues when it comes to mortgages, the CEO said.

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VICTOR PARISI ROBO-SIGNER CALLED OUT BY [NBKDC] JUDGE LINDA B. RIEGLE: MITCHELL v. MERS 2009 (4)

VICTOR PARISI ROBO-SIGNER CALLED OUT BY [NBKDC] JUDGE LINDA B. RIEGLE: MITCHELL v. MERS 2009 (4)

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEVADA

In re JOSHUA & STEPHANIE MITCHELL)

Case No. BK-S-07-16226-LBR ) Chapter 7 )
Debtor(s).)

Excerpt:

In Hawkins the motion was brought by MERS “solely as nominee for Fremont Investment
& Loan, its successors and/or assigns.
” However, in his affidavit at ¶ 6, Victor Parisi states 45 46
that the beneficial ownership interest in the Hawkins note was sold by Fremont Investment &
Loan and ownership was transferred by endorsement and delivery. While the affidavit goes on to
the say that MERS was a holder at the time the motion was filed, it is obvious that MERS has no
rights to bring the motion as nominee of Fremont given that Fremont no longer had any interest
in the note.

[ipaper docId=40410866 access_key=key-22eoddwqf0r1xwydpksl height=600 width=600 /]

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VICTOR PARISI ROBO-SIGNER CALLED OUT BY [NYSC] JUDGE JEFFREY ARLEN SPINNER: JPMORGAN v. MUNOZ 2009 (3)

VICTOR PARISI ROBO-SIGNER CALLED OUT BY [NYSC] JUDGE JEFFREY ARLEN SPINNER: JPMORGAN v. MUNOZ 2009 (3)

SUPREME COURT – STATE OF NEW YORK I.A.S. PART 21 – SUFFOLK COUNTY

JPMORGAN CHASE as Trustee of Equity One

against

ALBA MUNOZ

EXCERPTS:

the affidavit of its Vice President, Victor Parisi, who alleges that Premium, its
signor. paid valuable consideration for the mortgage. Mr. Parisi points to a copy of the HUD
Settlement Statement from the Premium closing, which indicates that
out of the $315,000.00 loan
proceeds~ $222.S62.63 was paid to Washington Mutual to satisfy a prior mortgage, $237.00 was paid to
satisfy an obligation to CBUSASears, and $71,228.07 was disbursed to Munoz. Additionally, Mr. Parisi
asserts that Premium did not know or have reason to know about O’Connor’s claim. He argues that at
the time of the mortgage, O’Connor’s judgment had not yet been docketed and there was nothing in the
property records that disclosed Zambrano’s liability to O’Connor. Thus, alleges Mr. Parisi, having
paid valuable consideration and having taken without knowledge or notice of O’Connor’s claims,
Premium and Chase are bona fide mortgagees ofthe premises and are entitled to protection under Real
Property Law 266 and Debtor and Creditor Law $278(1).
In addition, Mr. Parisi alleges that even if
O’Connor was able to show that Premium was on notice of Zambrano’s liability or alleged fraudulent
conveyance. pursuant to Debtor and Creditor Law $278(2), Chase would be entitled to retain and enforce

<SNIP>

Chase has failed to make such a prima facie showing. The affidavit of Victor Parisi is not in
admissible form because it was signed and notarized in the State of New Jersey, and is not accompanied by the required certificate of conformity with the laws of the State of New Jersey.
For an out-of-state affidavit to be admissible, it must comply with CPLR 2309 [c] which requires that an out-of-state
affidavit accompanied by a certificate of Conformity (see Real Property Law $ 299-a [l]; PRA ZU,
b , L ( ’ 1 4 CoitialeZ. 54 AD3d 917, 864 NYS2d 140 [2008]). In the absence ofa certificate of conformity,
the affidavit, is, effect, unsworn (see Worldwide Asset Purchasing, LLC v Simpson, 17 MiscSd
’ ISA. 851 YYS2d 75 [ 20071). Consequently, Mr. Parisi’s affidavit cannot be considered by the Court.

[ipaper docId=40409315 access_key=key-1zj1occa7x6s18kbp2mt height=600 width=600 /]

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VICTOR PARISI ROBO-SIGNER CALLED OUT BY [NYSC] JUDGE ARTHUR SCHACK: HSBC Bank USA v. Perboo 2008 (2)

VICTOR PARISI ROBO-SIGNER CALLED OUT BY [NYSC] JUDGE ARTHUR SCHACK: HSBC Bank USA v. Perboo 2008 (2)

New York Supreme Court, Kings County

HSBC BANK USA, NATIONAL ASSOCIATION AS INDENTURE TRUSTEE FOR PEOPLE’S CHOICE HOME LOAN SECURITIES TRUST SERIES 2006-1, PLAINTIFF,
v.
MARCIE PERBOO ET. AL., DEFENDANTS.

Excerpt:

Plaintiff’s moving papers for an order of reference fails to present an “affidavit made by the party,” pursuant to CPLR § 3215 (f). The application contains an “affidavit of merit and amount due,” by Victor F. Parisi, who states that he is “the Vice-President of, EQUITY ONE, INC. [EQUITY ONE] AS AUTHORIZED SERVICER FOR HSBC BANK USA, NATIONAL ASSOCIATION AS INDENTURE TRUSTEE FOR PEOPLE’S CHOICE HOME LOAN SECURITIES TRUST SERIES 2006-1, Plaintiff.” For reasons unknown to the Court, plaintiff HSBC has failed to provide any power of attorney authorizing EQUITY ONE to proceed on HSBC’s behalf with the instant foreclosure action. Therefore, the proposed order of reference must be denied without prejudice. Leave is granted to plaintiff HSBC to 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.

Further, plaintiff must address a second matter if it renews its application for an order of reference upon compliance with CPLR § 3215 (f). In the instant action, as noted above, Victor F. Parisi, in his affidavit, dated December 14, 2007, states he is Vice President of EQUITY ONE. Yet, the September 28, 2007 assignment from MERS as nominee for PEOPLE’S CHOICE to HSBC is signed by the same Victor F. Parisi, as Vice President of MERS. In my November 20, 2007 decision and order in HSBC BANK USA, NATIONAL ASSOCIATION AS TRUSTEE FOR NOMURA HOME EQUITY LOAN, INC. ASSET-BACKED CERTIFICATES SERIES 2006-FM2 v SANDOVAL, Index Number 8758/07, the same Victor F. Parisi assigned the underlying mortgage and note as Vice President of MERS to HSBC on March 13, 2007, and then signed the affidavit of merit as Vice President of EQUITY ONE, authorized servicer for HSBC, the next day, March 14, 2007. Did Mr. Parisi change his employment from March 13, 2007 to March 14, 2007, and again from September 28, 2007 to December 14, 2007? The Court is concerned that Mr. Parisi might be engaged in a subterfuge, wearing various corporate hats. Before granting an application for an order of reference, the Court requires an affidavit from Mr. Parisi describing his employment history for the past three years.

Also, while MERS served as nominee for PEOPLE’S CHOICE, the mortgage servicer for the PERBOO mortgage was POPULAR MORTGAGE SERVICING, INC. [POPULAR], [exhibit B of application – July 24 default letter to PERBOO], whose address is 121 Woodcrest Road, Cherry Hill, New Jersey 08003. The MERS as nominee for PEOPLE’S CHOICE to HSBC assignment lists HSBC’s address as 121 Woodcrest Road, Cherry Hill, New Jersey 08003. The instant verified complaint [part of exhibit B of application] states that EQUITY ONE’S address is 121 Woodcrest Road, Cherry Hill, New Jersey 08003. How convenient to have the assignor’s servicer, the assignee’s servicer and the assignee all at the same address. This makes for one-stop shopping! The Court needs to know what corporate chicanery is being played at 121 Woodcrest Road, Cherry Hill, New Jersey 08003. Is the building large enough to house POPULAR, EQUITY ONE, MERS and HSBC under the same roof? Is there enough closet space to store Mr. Parisi’s various corporate hats?

Last, the verified complaint notes, in ¶ 6, that defendant PERBOO defaulted with her February 1, 2007 principal and interest payment. The first sentence in the July 24, 2007-POPULAR default letter to defendant PERBOO states “[p]lease be advised that your account is presently in default.” On September 28, 2007, 240 days after the instant mortgage loan ceased to perform, and 72 days subsequent to the POPULAR default letter to PERBOO, plaintiff HSBC accepted the assignment of the instant non-performing loan from MERS as nominee for PEOPLE’S CHOICE. The Court needs a satisfactory explanation of why HSBC, whose directors have a fiduciary responsibility to HSBC’s shareholders, purchased a non-performing loan from MERS as nominee for PEOPLE’S CHOICE, in an affidavit by an officer of HSBC.

<SNIP>

Plaintiff has failed to submit “proof of the facts” in “an affidavit made by the party.” The “affidavit of facts” is submitted by Victor F. Parisi, “Vice-President of, EQUITY ONE, INC. AS AUTHORIZED SERVICER FOR HSBC.” Mr. Parisi, must have, as plaintiff’s agent, a valid power of attorney from HSBC to EQUITY ONE for that express purpose. Additionally, if a power of attorney is presented to this Court and it refers to pooling and servicing agreements, the Court needs a properly offered copy of the pooling and servicing agreements, to determine if the servicing agent may proceed on behalf of plaintiff. (EMC Mortg. Corp. v Batista, 15 Misc 3d 1143 (A) [Sup Ct, Kings County 2007]; Deutsche Bank Nat. Trust Co. v Lewis, 14 Misc 3d 1201 (A) [Sup Ct, Suffolk County 2006]).

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VICTOR PARISI ROBO-SIGNER CALLED OUT BY [NYSC] JUDGE LAURA JACOBSON: Equity One v. James 2006 (1)

VICTOR PARISI ROBO-SIGNER CALLED OUT BY [NYSC] JUDGE LAURA JACOBSON: Equity One v. James 2006 (1)

At an I AS Term, Part 2 1 of the Supreme
Court of the State of New York, held in and
for the County of Kings, at the Courthouse,
at the Oivic Center, Brooklyn, New York on
the 4th (Lay of December, 2006
1 —-X Index No.: 16705/2006

PRESENT:

HON. LAURA L. JACOBSON
Justice
—————-L————————————-
EQUITY ONE AS SERVICER FOR NOMURA
HOME EQUITY LOAN INC. HOME EQUIl’Y
LOAN TRUST SERIES 2006-FM1, ASSET
BACKED PASS-THROUGH CERTIFICATE S,
SERIES 2006-FM1
,
,
-against-

JANICE JAMES, MERS, INC. AS NOMINEE FOR
FREMONT INVESTMENT & LOAN
; PEOPLE OF
THE STATE OF NEW YORK; NEW YORK CITY
PARKING VIOLATIONS BUREAU; NEW YORK
CITY ENVIRONMENTAL CONTROL BOARD;
TRANSIT ADJUDICATION BUREAU, “JOHN DOE 1
to JOHN DOE 25”, said names being fictitiouh, the
persons or parties, corporations or entities, if any,
having or claiming an interest in or lien upon the
mortgaged premises described in the complaint,

excerpt:

The Affidavit of Merit submitted by the plaintiff appears to have been prepared by one Victor F. Parisi. The signor or the assignment of the mortgage, on behalf of MERS, Inc. as nominee for Fremont Investment & Loan, is also named Victor F. Parisi. Are these two signators the same people? If so, movant must submit an affidavit/affirmation advising the Court as to whether the assignment is a valid transfer or simply a paper one.

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OneWest’s Servicer Rating May Be Downgraded on Foreclosures

OneWest’s Servicer Rating May Be Downgraded on Foreclosures

October 28, 2010, 7:50 PM EDT

By Dakin Campbell

Oct. 28 (Bloomberg) — OneWest Bank, formed in the aftermath of IndyMac Bancorp’s failure, may have its mortgage- servicing ratings downgraded by Moody’s Investors Service, which cited “potential irregularities” in the foreclosure process.

The ratings of IndyMac Mortgage Services, a division of OneWest, may be downgraded if faulty foreclosures increase the time it takes to sell bank-owned homes or boost legal costs, Moody’s said today in a statement. OneWest is resubmitting affidavits in certain cases after a review, Moody’s said.

“Employees signing affidavits may not have had full personal knowledge of every item in the affidavit,” Linda Stesney and Cecilia Lam, analysts at New York-based Moody’s, said in the statement. “Notaries may not always have been physically present at the time of signing.”

Court documents surfaced this year showing employees of the largest U.S. lenders signed paperwork without ensuring accuracy. Attorneys general in all 50 states started a probe into those practices and Bank of America Corp., JPMorgan Chase & Co. and Ally Financial Inc. suspended some foreclosure sales or evictions, pending reviews.

Moody’s assigns a rating of SQ3, or average, to IndyMac as a primary servicer of prime home loans, and SQ3- as a primary servicer of subprime home loans or as a special servicer, or overseer of distressed debt.

IndyMac had a servicing portfolio of more than 565,000 loans with an unpaid balance of $133.5 billion at the end of June, Moody’s said. The company is the ninth-largest U.S. home- loan servicer, according to Barclays Capital Inc

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JUDGE SCHACK’S CLASSIC CALLING OUT ROBO SIGNERS SCOTT ANDERSON & JESSICA DYBAS 2008 Edition

JUDGE SCHACK’S CLASSIC CALLING OUT ROBO SIGNERS SCOTT ANDERSON & JESSICA DYBAS 2008 Edition

P RESEN T:
HON. ARTHUR M. SCHACK

HSBC BANK USA, N.A., AS INDENTURE TRUSTEE
FOR THE REGISTERED NOTEHOLDERS OF
RENAISSANCE HOME EQUITY LOAN TRUST
2005-3, RENAISSANCE HOME EQUITY LOAN
ASSET-BACKED NOTES, SERlES 2005-3,
Plaintiff,

– against –

CANDIDA VALENTIN, CANDIDE RUIZ, et. al.,

Excerpts:

Additionally, plaintiff HSBC must address, a third matter if it renews its application for an order of reference. In the instant action, as noted above, Scott Anderson, as Vice President of MERS, assigned the instant mortgage to HSBC on May 1, 2007. Doris Chapman, the Notary Public, stated that on May 1,2007, “personally appeared Scott Anderson, of 1661 Worthington Road, Suite 100, West Palm Beach, Florida 33409.” In HSBC Bank, N.A. v Cherry, 4t 3, I observed that:

Scott Anderson, in his affidavit, executed on June 15,2007, states he is Vice President of OCWEN. Yet, this June 13,2007 assignment from MERS to HSBC is signed by the same Scott Anderson as Vice President of MERS. Did Mr. Anderson change his employer between June 13,2007 and June 15,2007. The Court is concerned that there may be fraud on the part or HS I E , or at least malfeasance. Before granting an application for an order of reference, the Court requires an affidavit from Mr. Anderson describing his employment history for the past three years.

Plaintiff has failed to submit “proof of the facts” in “an affidavit made by the party.” The affidavit is submitted by Jessica Dybas, “a Foreclosure Facilitator of OCWEN LOAN SERVICING, LLC, servicing agent and attorney in fact to the holder of the bond and mortgage sought to be foreclosed herein.” There must be an affidavit by an officer of HSBC or a servicing agent, possessing a valid power of attorney from HSBC for that express purpose. Additionally, if a power of attc mey is presented to this Court and it refers to pooling and servicing agreements, ihe Court needs a properly offered copy of the pooling and servicing agreements, to determine if the servicing agent may proceed on behalf of plaintiff. (EMC Mortg. Corp. v Batistu, 15 Misc 3d 1143 (A) [Sup Ct, Kings County 20071; Deutsche Bank Nut. Trust Co. v Lewis, 14 Misc 3d 1201 (A) [Sup Ct, Suffolk County 20061).

[ipaper docId=40355076 access_key=key-h33dousswq2l193q8gh height=600 width=600 /]

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[VIDEO] OHIO AG CORDRAY “BANKS OPERATING ON A BUSINESS MODEL BUILT ON FRAUD”

[VIDEO] OHIO AG CORDRAY “BANKS OPERATING ON A BUSINESS MODEL BUILT ON FRAUD”

“Defrauded Our Courts”

“Sanctions” & Penalties”

“Fraudulent Evidence”

“Refiling an Insult”

“Business Model Based On Fraud”

Oct. 28 (Bloomberg) — Ohio Attorney General Richard Cordray talks about the probe by attorneys general in all 50 states into mortgage foreclosure practices and the disclosure by Wells Fargo & Co. that it found flaws in court documents. Wells Fargo, the biggest U.S. home lender, said it will file supplemental foreclosure affidavits to courts in about 55,000 proceedings after finding some statements “did not strictly adhere to the required procedures.” Cordray speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)?

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Victory in Arizona Federal Court

Victory in Arizona Federal Court

Hat tip to a reader:

ADRIENNE FRAZER, Plaintiff,
v.
MILLENNIUM BANK, N.A., et al., Defendants.

No. 2:10-cv-01509 JWS.

United States District Court, D. Arizona.

October 27, 2010.

ORDER AND OPINION

JOHN W. SEDWICK, District Judge.

I. MOTION PRESENTED

At docket 18, defendant Millennium Bank, N.A. (“Millennium) moves to dismiss plaintiff’s claims pursuant to Federal Rule of Civil Procedure 12(b)(6) on the grounds that they are barred by the applicable statutes of limitations. At docket 21, plaintiff Adrienne Frazer opposes the motion. Millennium replies at docket 22. Oral argument was requested, but it would not assist the court.

II. BACKGROUND[1]

Adrienne Frazer is the owner of a house located at XXXXXXXXXXXX, Scottsdale, Arizona XXXXX. On August 18, 2006, Ms. Frazer re-financed the house by borrowing $497,250 from Millennium. Ms. Frazer used the broker services of Family Home Lending Corporation (“FHL”).

As part of the loan application process, Ms. Frazer was required to state her yearly income. Ms. Frazer stated her accurate yearly income. Millennium and FHL then filled out the loan application for Ms. Frazer. Millennium and FHL used an inflated income amount on the application in order to fraudulently qualify Ms. Frazer for the loan. Ms. Frazer was unable to qualify for the loan based on her actual income. Millennium and FHL did not disclose that they had used an inflated income figure, and Ms. Frazer was not shown the exact yearly income that was used in the loan application.

Based on the loan she received, Ms. Frazer’s debt to income ratio “ended up being 121.71%, excessively above the recommended industry standard of 35%.”[2] During the loan closing, Ms. Frazer was “presented with loan documents reflecting that she only qualified for the above described loan.”[3] “At all times, [Ms. Frazer] believed she qualified for her loan based on her actual income.”[4]

Ms. Frazer learned that FHL received a kickback of $4,972.50 from Millennium after a forensic review of her loan documents on January 7, 2010. Millennium gave FHL the kickback in exchange for steering Ms. Frazer into the loan. In addition, the loan documents indicated the finance charge was $1,452,712.24, whereas the actual finance charge was $1,464,950.27. The disclosed finance charge understated the finance charge by $12,238.03.

Not surprisingly, Ms. Frazer had difficulty paying her mortgage. In April 2009, Ms. Frazer received a letter stating that foreclosure proceedings would begin on July 8, 2009, if payment was not received for the stated default amount before that date. Millennium and FHL did not attempt a loan modification “work out” plan with Ms. Frazer, although she had pursued and was willing to participate in such a plan. Ms. Frazer discovered the false representations made by Millennium and FHL when she consulted with an attorney and had her loan documents reviewed on January 7, 2010.

On July 16, 2010, Ms. Frazer filed a complaint against Millennium, FHL, Mortgage Electronic Registration Systems, Inc., BAC Home Loan Servicing, LP, Bank of America NA, and Specialty Underwriting and Residential Finance Trust Mortgage Loan Asset Backed Certificates Series 2006-BC 5. Ms. Frazer’s complaint alleges claims of intentional misrepresentation, fraudulent concealment, consumer fraud, accounting, breach of fiduciary duty, constructive fraud, and quiet title. The complaint names Millennium in only two claims — intentional misrepresentation and consumer fraud. Millennium now moves to dismiss Ms. Frazer’s intentional misrepresentation and consumer fraud claims as barred by the applicable statutes of limitations.

III. STANDARD OF REVIEW

A motion to dismiss for failure to state a claim made pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims in the complaint.[5] In reviewing a Rule 12(b)(6) motion to dismiss, “[a]ll allegations of material fact in the complaint are taken as true and construed in the light most favorable to the nonmoving party.”[6][7] To avoid dismissal under Rule 12(b)(6), plaintiffs must aver in their complaint “sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'”[8] “Conclusory allegations of law, however, are insufficient to defeat a motion to dismiss.”

A statute of limitations defense may be raised by a motion to dismiss “[i]f the running of the statute is apparent on the face of the complaint.”[9] “When a motion to dismiss is based on the running of the statute of limitations, it can be granted only if the assertions of the complaint, read with the required liberality, would not permit the plaintiff to prove that the statute was tolled.”[10]

IV. DISCUSSION

Pursuant to A.R.S. § 12-543, “[a] claim for intentional misrepresentation must be brought within three years after the cause of action accrues.”[11] The statute of limitations for intentional misrepresentation begins to run when a plaintiff “knew or by reasonable diligence should have known of the misrepresentation.”[12]

Ms. Frazer’s intentional misrepresentation claim alleges that Millennium and FHL completed the loan application for her using an inflated income figure made up by Millennium and FHL in order the qualify her for the loan. The complaint further alleges that Millennium did not disclose to Ms. Frazer either that it had used an inflated income figure or the amount of income she would need to actually qualify for and afford the loan. The complaint also alleges that during the loan closing Ms. Frazer was given loan documents indicating that she only qualified for the presented loan. Ms. Frazer maintains that she is entitled to equitable tolling because she was in no position to discover and did not discover the alleged intentional misrepresentations until a forensic review of her loan documents was conducted on January 7, 2010, three and a half years after she received the loan.

Millennium contends that the complaint’s allegations that Ms. Frazer was approved for a loan that she could not afford and had difficulty paying her mortgage preclude her contention that she could not have learned of the alleged fraud until January 7, 2010. Millennium further argues that the fact the loan was not a good fit for her income was enough to put her on inquiry notice.

Under A.R.S. § 12-543(3), a cause of action “shall not be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud.” Thus, the relevant issue is when Ms. Frazer knew or should have known that the statements in the loan application and other loan documents were false. Construing the facts in the light most favorable to Ms. Frazer, as the court must on a Rule 12(b)(6), it appears that Ms. Frazer did not learn of the inflated income level used on her loan application and the fact that she would not have qualified for the loan with her actual income until January 2010. Moreover, nothing on the face of the complaint indicates when Ms. Frazer, with reasonable diligence, should have known of the alleged misrepresentations.

Millennium next contends that Ms. Frazer admits in her complaint that the alleged fraud was discoverable on the face of the loan document because her claim for intentional misrepresentation states in pertinent part, “Because the fraud is discoverable on the face of the instrument, Defendants Certificate and [Bank of America], as assignee[s] of Millennium, are also liable to [Ms. Frazer].”[13] Millennium’s argument is not persuasive, because the complaint alleges that Millennium and FHL filled out Ms. Frazer’s loan application and concealed the fact that they used an inflated income figure to qualify her for the loan. The complaint further alleges that Ms. Frazer, who is not a mortgage professional, would have been unable to determine whether material information was concealed or misstated. Because the running of the statute limitations on Ms. Frazer’s intentional misrepresentation claim is not apparent on the face of the complaint, the court will deny Millennium’s motion to dismiss based on their statute of limitations defense.

Ms. Frazer’s complaint also alleges a claim of consumer fraud against Millennium pursuant to Consumer Fraud Act, A.R.S. § 44-1521. Because a consumer fraud claim is created by statute, a consumer fraud action must be initiated within one year after the cause of action accrues pursuant to A.R.S. § 12-541(3).[14] The discovery rule also applies to an action for consumer fraud.[15] As such, the statute of limitations begins running “when the defrauded party discovers or with reasonable diligence could have discovered the fraud.”[16]

Ms. Frazer’s consumer fraud claim essentially mirrors the allegations in her intentional misrepresentation claim. Ms. Frazer argues that she is entitled to equitable tolling of the one-year statute of limitations because she “was in no position to discover the aforementioned concealed and/or false information until a forensic review of her loan documents was conducted on January 7, 2010.”[17]

Again construing the facts in the light most favorable to plaintiff, her consumer fraud claim is timely because she alleges she first knew of the misrepresentations in January 2010 and filed her complaint in July 2010, and nothing on the face of the complaint indicates when Ms. Frazer, with reasonable diligence, should have known of the alleged misrepresentations. Because the running of the statute limitations is not apparent on the face of the complaint, the court will deny Millennium’s motion to dismiss Ms. Frazer’s consumer fraud claim.

V. CONCLUSION

For the reasons set out above, defendant’s motion to dismiss at docket 18 is DENIED.

[1] For purposes of this Rule 12(b)(6) motion, the background facts are taken from the factual allegations in plaintiff’s compliant, which are taken as true and construed in the light most favorable to plaintiff.

[2] Id.

[3] Doc. 1-1 at p. 8.

[4] Id.

[5] De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978).

[6] Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1997).

[7] Lee v. City of Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001).

[8] al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009) (quoting Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (internal citation omitted)).

[9] Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980).

[10] Id.

[11] Bank of the West v. Estate of Leo, 231 F.R.D. 386, 390 (D.Ariz. 2005);.

[12] Bank of the West, 231 F.R.D. at 390; Coronado Development Corp. v. Superior Court of Ariz., 678 P.2d 535, 537 (Ariz.App. 1984)(“The statute of limitations in a fraud case begins to run when the plaintiff by reasonable diligence could have learned of the fraud, whether or not he actually learned of it.”)

[13] Doc. 1-1 at p. 9 ¶ 46.

[14] Alaface v. National Inv. Co., 892 P.2d 1375, 1380 (Ariz.App. 1994).

[15] Id. at 1379.

[16] Id. (quoting Mister Donut of Am., Inc. v. Harris, 723 P.2d 670, 672 (1986).

[17] Doc. 1-1 at p. 11.

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TAM DOAN: I was a robo-signer for Bank Of America

TAM DOAN: I was a robo-signer for Bank Of America

I was a robo-signer

By Tami Luhby, senior writerOctober 28, 2010: 11:51 AM ET

NEW YORK (CNNMoney.com) — It only took him a second to sign each foreclosure document.

That’s how good Tam Doan got at his job in Bank of America’s pre-sale foreclosure department in Southern California.

Of course, he didn’t have time to actually read the paperwork he was signing, he said, and in some cases, he didn’t even know what documents he was putting his pen to.

“I had no idea what I was signing,” said Doan. “Either you were in or you were out.”

The recent revelation that loan servicers had employees sign thousands of documents a month without verifying the information has thrown the foreclosure system into chaos. Judges are increasingly questioning whether the servicers have their paperwork in order.

Several of the largest servicers, including Bank of America (BAC, Fortune 500) and JPMorgan Chase (JPM, Fortune 500), have halted foreclosures while they review their paperwork and processes. They want to ensure that the documents at the heart of the concerns — proof of the note, or debt — were signed properly.

Doan approached CNNMoney after the so-called robo-signing scandal came to light last month. After 18 months at Bank of America, he was terminated in early September for failing to follow policy, according to the servicer.

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Testimony of Katherine M. Porter Before the Congressional Oversight Panel

Testimony of Katherine M. Porter Before the Congressional Oversight Panel

Please visit her website at MortgageStudy.org

The Mortgage Study is an empirical study of homeowners in financial distress. The co-principal investigators, Tara Twomey and Katherine Porter, began the project in 2004 to explore the intersection of homeownership and bankruptcy. With funding from the Endowment for Education of the National Conference of Bankruptcy Judges, they constructed a sample of over 1700 chapter bankruptcy cases, coding over 100 data points for each case on each homeowner’s mortgage obligations. The first paper to use Mortgage Study data, Misbehavior and Mistake in Bankruptcy Mortgage Claims, was published in the Texas Law Review in 2008 and was featured in a front-page story in the New York Times. Porter and Twomey are frequent speakers on mortgage issues and continue to release new research using the Mortgage Study data.

[ipaper docId=40330531 access_key=key-212m96obszij55y33ghd height=600 width=600 /]

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