Decided on October 4, 2011

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE DIVISION : SECOND JUDICIAL DEPARTMENT

.

REINALDO E. RIVERA, J.P.
ANITA R. FLORIO
JOHN M. LEVENTHAL
SHERI S. ROMAN, JJ.
2010-06483
(Index No. 38303/07)

[*1]Deutsche Bank National Trust Company, etc., respondent,
v
Joell C. Barnett, appellant, et al., defendants.

Joell C. Barnett, Brooklyn, N.Y., appellant pro se.

DECISION & ORDER

In an action to foreclose a mortgage, the defendant Joell C. Barnett appeals, as limited by her brief, from so much of an order of the Supreme Court, Kings County (Jackson, J.), dated February 23, 2010, as granted those branches of the plaintiff’s motion which were to strike the answer, for summary judgment on the complaint, and for an order of reference, and denied her cross motion pursuant to CPLR 3211(a)(3) to dismiss the complaint.

ORDERED that the order is modified, on the law, by deleting the provisions thereof granting those branches of the plaintiff’s motion which were to strike the answer, for summary judgment on the complaint, and for an order of reference, and substituting therefor provisions denying those branches the motion; as so modified, the order is affirmed insofar as appealed from, with costs to the appellant.

In order to commence a foreclosure action, a plaintiff must have a legal or equitable interest in the mortgage. A plaintiff has standing where it is the holder or assignee of both the subject mortgage and of the underlying note at the time the action is commenced (see Bank of N.Y. v Silverberg, 86 AD3d 274; Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95; Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204, 207; U.S. Bank, N.A. v Collymore, 68 AD3d 752; Countrywide Home Loans, Inc. v Gress, 68 AD3d 709). An assignment of a mortgage without assignment of the underlying note or bond is a nullity, and no interest is acquired by it (see Merritt v Bartholick, 36 NY 44, 45; Bank of N.Y. v Silverberg, 86 AD3d 274; LaSalle Bank Natl. Assn. v Ahearn, 59 AD3d 911, 912). “Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation” (U.S. Bank, N.A. v Collymore, 68 AD3d at 754; see Aurora Loan Servs., LLC v Weisblum, 85 AD3d at 108). [*2]Here, the plaintiff failed to establish, as a matter of law, that it had standing to commence the action. The Supreme Court thus erred in awarding the plaintiff summary judgment.

Contrary to the contention of the defendant Joell C. Barnett, an affidavit made by the plaintiff was not required, since the plaintiff was not proceeding upon Barnett’s default (cf. CPLR 3215[f]). However, the documentation submitted failed to establish that, prior to commencement of the action, the plaintiff was the holder or assignee of both the note and mortgage. The plaintiff submitted copies of two different versions of an undated allonge which was purportedly affixed to the original note pursuant to UCC 3-202(2) (see Slutsky v Blooming Grove Inn, Inc., 147 AD2d 208, 212). Moreover, these allonges purporting to endorse the note from First Franklin, A Division of National City Bank of Indiana (hereinafter Franklin of Indiana) to the plaintiff conflict with the copy of the note submitted, which contains undated endorsements from Franklin of Indiana to First Franklin Financial Corporation (hereinafter Franklin Financial), then from Franklin Financial in blank.

The plaintiff also failed to establish that the note was physically delivered to it prior to the commencement of this action. The vice president of the plaintiff’s servicing agent and the plaintiff’s counsel both affirmed that the original note is in the possession of the plaintiff’s counsel. However, the affidavits did not state any factual details concerning when the plaintiff received physical possession of the note and, thus, failed to establish that the plaintiff had physical possession of the note prior to commencing this action (see Aurora Loan Servs., LLC v Weisblum, 85 AD3d at 108; U.S. Bank, N.A. v Collymore, 68 AD3d at 754). Finally, the Certificates of Resolution and Incumbency submitted to establish the authority of one Eileen Gonzales to execute a September 14, 2007, assignment of mortgage from Franklin Financial to the plaintiff were executed after the subject assignment and, thus, cannot establish that she had such authority at the time the mortgage assignment was made. These inconsistencies raise an issue of fact as to the plaintiff’s standing to commence this action. Thus, the Supreme Court should have denied those branches of the plaintiff’s motion which were to strike the answer, for summary judgment on the complaint, and for an order of reference; the cross motion was properly denied (see US Bank N.A. v Madero, 80 AD3d 751, 753).
RIVERA, J.P., FLORIO, LEVENTHAL and ROMAN, JJ., concur.

ENTER:

Matthew G. Kiernan

Clerk of the Court

Scribd

“I am glad the U. S. Attorney completed this phase of the Baum saga and that he is changing his practice,” said New York City attorney Susan Chana Lask

[...]

“I hope homeowners use the settlement to show the courts the foreclosure mill problem was real and damaged a lot of people’s lives. It’s not over.”

I’m almost certain she is referencing that although the US Attorney settled, AG Schneiderman has yet to complete his investigation.

Buffalo News-

Steven J. Baum PC, the Amherst law firm that has been under heavy fire for its foreclosure practices, agreed Thursday to pay a $2 million fine and “extensively” overhaul its practices in a settlement with the U. S. Attorney’s Office in Manhattan that has statewide implications.

The agreement with Baum resolves a federal investigation into whether the state’s largest foreclosure law firm, on behalf of lenders, filed misleading affidavits, mortgage assignments and other documents in state and federal courts.

[BUFFALO NEWS]

image: thetorchtheatre

Almost a week ago, “Quelle Surprise! “J.P. Morgan Chase “donates” $4.6 Million to NYPD” was posted up and went madly viral, as it turns out they aren’t alone.

Salon has just reported that

As it turns out, JPMorgan is not the only financial institution that has been generous to the police foundation. In the 2009-10 year, Goldman Sachs, Barclays Capital, investment bank Jeffries and Co., investor Carl Icahn, and investment firm The Renco Group each gave over $100,000 to the foundation, putting them in the top-tier of donors, according to the foundation’s website. Bank of America also gave over $75,000 that year. (Another $100,000+ donor was Rupert Murdoch’s News Corp.)

Keep in mind that’s just a single year’s worth of donations. As a private non-profit, the New York City Police Foundation does not have to release detailed donor information, so we don’t know of the the full scope of Wall Street money flowing into the NYPD.

Sound Off!

In case anyone hasn’t noticed but lately there is a PR move supporting MERS…but those moves will not help once every county in the US wakes up and begins to sue the machine.

Bloomberg-

Attorneys for the Texas county that includes Houston will seek permission Tuesday to hire outside counsel to sue Mortgage Electronic Registration Systems Inc. over unpaid mortgage-filing fees.

The plan was posted today on the agenda for the Harris County Commissioners Court, the governing body for the county. County attorneys will hire the same law firm, Malouf & Nockels, that handled a similar lawsuit filed by Dallas last month, County Attorney Vince Ryan said in an interview today.

The Dallas County District Attorney’s lawsuit claimed Merscorp Inc.’s MERS, which runs an electronic registry of mortgages, cheated the county out of tens of millions of dollars in uncollected filing fees. MERS tracks servicing rights and ownership interests …

[BLOOMBERG]

One after the next, the clever disguises of “Lets Help You Pay” seems to sprouts up in multiple forms.

Recall this for instance, not so brilliant winner, Foreclosure & Unemployed – Up to $50K Zero Interest Loans? Who does this really benefit? You guessed it…the Banks.

Do they seriously think this will reduce foreclosures and stabilize home values? Who are they kidding. How about creating jobs first. They quite obviously don’t understand economics. This will exhaust your savings and who has a secure job these days?

AJC-

Georgia legislators introduced a bill to allow Americans to pay mortgages by withdrawing retirement funds, such as a 401(k) account, without penalty.

The bill’s sponsors, Sen. Johnny Isakson, R-Ga., and Rep. Tom Graves, said they believe it would help people keep their homes in tough economic times.

“I firmly believe that economic recovery in this country will not occur until the housing market bounces back,” Isakson said. “To that end, this legislation will help strengthen the American housing market because it will lead to a reduction in foreclosures and in turn will help stabilize home values.”

[AJC]

Mortgage Fraud

Mortgage Electronic Registration Systems
Pillar Processing, LLC
Steven J. Baum, P.C.

Action Date: October 7, 2011
Location: New York, NY

On October 6, 2011, a settlement agreement was signed regarding the practices of one of the largest foreclosure mills in the country, Steven J. Baum, P.C., a law firm operating from Amherst, New York. The settlement was obtained by Preet Bharara, the U.S. Attorney for the Southern District of NY. The investigation was conducted by the Civil Frauds Unit of the United States Attorney’s Office for the Southern District of New York which investigated under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA).

Under the settlement, the Baum Firm is required to pay $2 million and make significant reforms, but is still allowed to say (paragraph 4): “This Agreement does not constitute a finding by any Court or Agency that Baum has engaged in any unlawful practice or wrongdoing of any kind.”

Most significantly, Baum employees – including the very prolific robo-signing associate, Elpiniki Bechakas, may no longer sign mortgage assignments as officers of Mortgage Electronic Registration Systems, Inc. (“MERS”). (Bechakas is not specifically named in the Agreement, but has been singled out by NY judges, including the Honorable (and very savvy) Arthur Schack of Brooklyn, as a Baum attorney with very questionable practices.)

The relief provided in the Settlement Agreement is very much prospective relief, and in that regard, is very comprehensive.

For those pending cases, however, the relief in paragraph 15(a) may seem grossly inadequate:

“Baum shall provide the following notification:

a. In any pending foreclosure action where an application for a judgment of foreclosure has not been submitted to a court, if Baum has filed an assignment of mortgage as a corporate officer of MERS, Baum shall disclose that fact to the court in the application for the judgment of foreclosure, or earlier. Such disclosure shall not be required if the Baum firm does not file a proposed judgment of foreclosure (e.g. because another law firm has been substituted as counsel for the matter prior to the filing of a proposed judgment of foreclosure, because the action is dismissed, etc.)”

All that the banks need to do under this settlement in pending cases is to sub in another law firm that may use the Baum assignments to foreclose, without even making any further disclosure to the courts such as “the signers are really employees of the Baum Law Firm who previously represented the banks in this matter.”

While it is true that most defense attorneys will no doubt raise this point, it is also true that most homeowners in foreclosure proceed pro se and are likely to be completely unaware of this Settlement Agreement, and the actual employer of Elpiniki Bechakas and other Baum signers.

Then there is the matter of the tens of thousands of homeowners who have lost their homes in cases where Baum employees signed mortgage assignments as officers of MERS. Most often, they assigned mortgages to mortgage-backed trusts so that the trusts could foreclose, even though such transfers did not take place on the dates and in the manner set forth on the Baum assignments. These Baum Assignments appear throughout the New York courts, but often in the Courts of other states as well.

Two million seems to be the magic number. This is also the amount paid by the Law Offices of Marshall Watson in Florida whose associates engaged in similar practices of signing as MERS officers, assigning mortgages after foreclosure actions were initiated, etc.

Further relief may be forthcoming, from both criminal prosecutions, the NY Bar, and most certainly from private class action and RICO lawsuits brought by private litigants.

Investors in mortgage-backed securities must ask for reports from the Trustees of how much they have paid for these Baum Assignments in the last five years, how much they have lost and how much more they will lose when foreclosures are successfully defended because the loan documents relied on by the trustees were “Baum-made.”

This is a first-of-its-kind settlement with one significant party in the foreclosure fraud morass.

Now you know why people Occupy Wall Street, They are pissed and sick and tired of all the fraud. Bloomberg warned that US unemployment will lead to RIOTS, I think he needs to broaden this statement.

NY POST-

The largest foreclosure mill in New York, under investigation for years by federal authorities for allegedly filing misleading paperwork, affidavits and mortgage documents, yesterday agreed to pay a $2 million fine to settle a probe by Manhattan US Attorney Preet Bharara.

Steven J. Baum PC, which has filed tens of thousands of foreclosure actions across the state over the past several years, promised to change the way it did business and admitted to “occasionally” making “inadvertent errors.”

The Buffalo-based firm, which was used by every major bank in the country, did not admit any wrongdoing in the settlement deal.