As a Lic. RE Professional, I can tell you this is the question every RE agent is asking. Where have all the foreclosures gone? There is NO inventory.

Do you think the market is going to come back anytime soon with these “synthetically pumped prices” & “hoarding of foreclosures”?

Sitting back waiting for another bank man made disaster to blow up in their face once the shadow inventory is set free again.

There is a ton….

Realtor Magazine-

Recent housing surveys are showing an uptick in home prices, particularly in cities in warm-weather “sand states” that had been hard-hit during the housing slump, such as in Phoenix, Las Vegas, Miami, and Tampa. But some housing experts worry that the lift in prices may be temporary due to banks “hoarding foreclosures.”

Some real estate professionals allege that the “synthetically pumped prices” are being caused by “banks stockpiling foreclosed properties and purposely keeping them off the market until area prices truly soar.” 

For example, in Phoenix, in the “sand state” of Arizona, home prices have been soaring the past six months.

But real estate professional Michelle Tremblay, with West USA Realty in Phoenix, tells MSNBC: “We can see on the street what’s vacant and what’s not. We’re watching these [foreclosed and non-listed] houses just sit and rot. The banks are letting these houses just deteriorate. They’re holding them and releasing them slowly to drive the value up.”

[REALTOR MAGAZINE]

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 12a0197p.06

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
BETTY WALLACE,
Plaintiff-Appellant,

v.

WASHINGTON MUTUAL BANK, F.A.;WELLS
FARGO BANK N.A.,
Defendants,

LERNER, SAMPSON & ROTHFUSS,
Defendant-Appellee.
No. 10-3694

Appeal from the United States District Court
for the Southern District of Ohio at Cincinnati.
No. 1:09-cv-481—Sandra S. Beckwith, District Judge.
Decided and Filed: June 26, 2012
Before: MERRITT and MOORE, Circuit Judges; MAYS, District Judge.*
_________________
COUNSEL

ON BRIEF: Andrew M. Engel, Moraine, Ohio, for Appellant. Rick D. DeBlasis,
Kimberlee S. Rohr, LERNER, SAMPSON & ROTHFUSS, Cincinnati, Ohio, for
Appellee.
_________________
OPINION
_________________

MERRITT, Circuit Judge. Washington Mutual foreclosed on property before
receiving an assignment and transfer of the promissory note and the delinquent home
mortgage and before recording it in the Warren County, Ohio, Recorder’s Office.

Because Washington Mutual did not own the mortgage, the homeowner and mortgagor,
plaintiff Betty Wallace, brought a lawsuit for an allegedly false claim of ownership
under the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq., against the law
firm of Lerner, Sampson and Rothfuss, acting for the purported mortgagee, Washington
Mutual, in the foreclosure action.1 Plaintiff claims that defendant law firm violated the
Act, the Ohio Consumer Sales Practices Act, and intentionally inflicted emotional
distress on her under Ohio law when the foreclosure action was filed against her
claiming that Washington Mutual was the holder of her mortgage, a fact plaintiff alleges
was completely false at the time of the foreclosure filing because, as stated above, the
mortgage had not been assigned or recorded at that time. The district court dismissed
her complaint under Federal Rule of Civil Procedure 12(b)(6), finding that she did not
state a claim under the Act. The district court then declined to exercise supplemental
jurisdiction as to the state claims. The relevant portions of the complaint at issue are as
follows:

11. On information and belief, at some point after April 2008, Wells
Fargo sold or transferred the note and mortgage to WaMu. Although it
transferred its ownership interest in the note and mortgage, Wells Fargo
still serviced the loan on behalf of WaMu. This meant that Wells Fargo
collected the payments and provided other services in managing the
mortgage loan. It also made all decisions regarding the collection of the
note and enforcement of WaMu’s rights under the mortgage. At all times
after the transfer of ownership of the note and mortgage, Wells Fargo
acted as WaMu’s agent with respect to the Plaintiff’s loan.

The complaint then alleged that the law firm filed a foreclosure action containing false
assertions when it claimed that Washington Mutual was the owner:

12. On July 11, 2008, WaMu, through its attorney, LSR, and
based on the decision of Wells Fargo, instituted the Foreclosure Case.
In the Complaint, WaMu asserted that it was the holder of the note. That
assertion was false when made. It also asserted that the mortgage had
been assigned to it and that it was the holder of the mortgage. Those
assertions were false when made. The mortgage was actually assigned
by Wells Fargo to WaMu on August 14, 2008 by an instrument recorded
at Book 4731, Page 91 [sic – the actual page is 90] of the Warren County,
Ohio Recorder’s Office. At the time the Complaint was filed in the
foreclosure case, all defendants knew that WaMu was not the holder of
the note; that WaMu was not the holder of the mortgage; and that the
mortgage had not been assigned to WaMu.

Complaint at ¶¶ 11-12 (emphasis added) (R. 2).

Plaintiff also sued other entities at the same time, but appealed the decision
below only as to defendant law firm Lerner, Sampson & Rothfuss. Lerner, Sampson
does not dispute that it is a “debt collector” under the Act. Plaintiff does not pursue her
original claims against Washington Mutual and Wells Fargo on appeal. She appeals
only the dismissal of Count III of her complaint, the claim that alleged that the law firm
used “false, deceptive or misleading representations” in connection with the collection
of any debt in violation of 15 U.S.C. § 1692e.

I.

For purposes of the motion to dismiss the complaint, we take the following facts as true.
In 1999, plaintiff purchased a home in Waynesville, Ohio, with a mortgage originating with
Norwest Mortgage. Plaintiff signed a promissory note in the amount of $66,000 and gave a
mortgage to Norwest to secure the note. Norwest and Wells Fargo later merged and plaintiff
began making her payments to Wells Fargo. In March or April 2008, Wells Fargo notified
plaintiff that she was delinquent on her mortgage, although she was not yet delinquent at that
time. Complaint at ¶ 10. (R.2). On August 14, 2008, Wells Fargo transferred and recorded
the note and the delinquent mortgage to Washington Mutual. On July 11, 2008, more than a
month before the transfer and assignment, Washington Mutual, through its attorneys, Lerner,
Sampson & Rothfuss, filed a foreclosure action against plaintiff in the Warren County Court
of Common Pleas in Ohio, asserting that Washington Mutual was the holder of the note and the
mortgage.

The problem in this case arises from the fact that the recordation and transfer of
ownership of the note and mortgage to Washington Mutual did not occur until August 14, 2008,
a little more than a month after Washington Mutual filed the foreclosure action asserting that
it owned the mortgage. An Ohio appellate court has so found. Washington Mutual Bank, N.A.
v. Wallace, 194 Ohio App. 3d 549, 559, 2011-Ohio-4174, 957 N.E.2d 92, 99 (Ohio Ct. App.)
(“[I]t is undisputed that [Washington Mutual] became the real party in interest in the
foreclosure action 34 days later on August 14, 2008, when . . . Wells Fargo executed a written
assignment of Wallace’s note and mortgage to [Washington Mutual]”.), appeal allowed by 130
Ohio St. 3d 1493, 2011-Ohio-6556, 958 N.E.2d 956 (2011) (briefing stayed pending resolution
of Fed. Home Loan Mortg. Corp. v. Schwartzwald, 194 Ohio App. 3d 644, 2011-Ohio-2681,
957 N.E.2d 790 (Ohio Ct. App.), motion to certify and appeal allowed by 129 Ohio St. 3d 1488,
2011-Ohio-5129, 954 N.E.2d 661 (Ohio Oct. 5, 2011)). Plaintiff did not respond to the
foreclosure notice, and a default judgment was entered against her on August 20, 2008.
A sheriff’s auction of her home was scheduled for December 8, 2008. When plaintiff learned
of the sale, she contacted Lerner, Sampson and tried to arrange to pay off the loan. When her
attempts to work out the loan were unsuccessful, plaintiff contacted Pro Seniors, an
organization that provides free legal services to senior citizens. She was able to get the sale
postponed. On December 15, 2008, defendants petitioned the state court to set another sale
date, which it did for late February or early March 2009. It appears from the docket sheet in
the foreclosure action that plaintiff’s home has since been sold at auction. Journal Entry
Confirming Sale in Washington Mutual Bank v. Wallace, 08-cv-71941 (Warren Cnty. [Ohio]
Ct. of Common Pleas Jan. 24, 2011) (found at http://www.co.warren.oh.us/clerkofcourt/search).

Plaintiff filed her complaint in this action in July 2009, alleging that Lerner, Sampson
and the banks violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., as well
as the Ohio Consumer Sales Practices Act, Ohio Rev. Code § 1345.01 et seq., when Lerner,
Sampson filed the foreclosure complaint against plaintiff in state court on behalf of Washington
Mutual. The district court found that plaintiff failed to state a claim under the Fair Debt
Collection Practices Act because the failure to record an Assignment of Mortgage before filing
a foreclosure action is not a deceptive practice under the Act. The single issue before us is
whether the filing of foreclosure action by the law firm claiming ownership of the mortgage by
its client Washington Mutual constitutes a “false, deceptive or misleading representation” under
the Fair Debt Collection Practices Act when the bank has not received a transfer of the
ownership documents. We hold that the complaint states a valid claim and reverse the
dismissal of the case.

II.

The Fair Debt Collection Practices Act prohibits a debt collector from the use of “any
false, deceptive, or misleading representation or means in connection with the collection of any
debt.” 15 U.S.C. § 1692e. Section 1692k of the statute allows the consumer to recover
statutory or actual damages for violations of the Act. In order to establish a claim under
§ 1692e: (1) plaintiff must be a “consumer” as defined by the Act; (2) the “debt” must arises
out of transactions which are “primarily for personal, family or household purposes;”
(3) defendant must be a “debt collector” as defined by the Act; and (4) defendant must have
violated § 1692e’s prohibitions. Whittiker v. Deutsche Bank Nat’l Trust Co., 605 F. Supp. 2d
914, 926 (N.D. Ohio 2007). Only the fourth element is at issue.

Whether a debt collector’s actions are false, deceptive, or misleading under § 1692e is
based on whether the “least sophisticated consumer” would be misled by defendant’s actions.
Harvey v. Great Seneca Fin. Corp., 453 F.3d 324, 329 (6th Cir. 2006). In addition, in applying
this standard, we have also held that a statement must be materially false or misleading to
violate Section 1692e. See Miller v. Javitch, Block & Rathbone, 561 F.3d 588, 596–97 (6th Cir.
2009) (applying a materiality standard to a Section 1692e claim that was based on alleged
misstatements in legal pleadings). The materiality standard simply means that in addition to
being technically false, a statement would tend to mislead or confuse the reasonable
unsophisticated consumer.

Plaintiff alleges that the statement in the foreclosure complaint that Lerner, Sampson
filed against her on behalf of Washington Mutual contained the false statement that Washington
Mutual was the holder of her mortgage. District courts have decided, and we agree, that a
clearly false representation of the creditor’s name may constitute a “false representation . . . to
collect or attempt to collect any debt” under Section 1692e. Hepsen v. J.C. Christensen and
Assocs., Inc., No. 8:07-CV-1935-T-EAJ, 2009 WL 3064865, at *5 (M.D. Fla. Sept. 22, 2009)
(imposing liability based on a statement incorrectly identifying the name of a creditor comports
with the purposes of the Act); Blarek v. Encore Receivable Mgmt., Inc., No. 06-C-0420, 2007
WL 984096, at *15 (E.D. Wis. Mar. 27, 2007) (same). Lerner, Sampson does not dispute that
the foreclosure complaint identifies Washington Mutual as the actual holder of plaintiff’s
mortgage, but claims that Ohio law permits Washington Mutual to anticipate that it would
become the title holder after the foreclosure action was initiated but before it becomes final.
We disagree that the issue of standing in Ohio, even if resolved in Lerner, Sampson’s favor, has
any bearing on whether misidentifying a creditor is materially misleading under the Fair Debt
Collection Practices Act.1

Plaintiff alleges that identifying Washington Mutual as the holder of the note caused her
confusion and delay in trying to contact the proper party concerning payment on her loan and
resolution of the problem. She alleges that she called Washington Mutual, the purported owner
of the mortgage, to try to obtain information about her home loan and was told she had to have
a ten-digit account number for her loan, not the account number she had from Wells Fargo.
Plaintiff also alleges that her daughter ultimately contacted an attorney, as well as the Ohio
Attorney General’s Office, in an attempt to stop the sale of plaintiff’s home and get the loan
reinstated. Complaint at ¶ 15. Given these allegations, plaintiff has sufficiently alleged a
material misrepresentation that would confuse or mislead an unsophisticated consumer. By
reversing the district court on the Rule 12(b)(6) motion, we, of course, do not make any
findings about the merits of plaintiff’s claim under the Act or any defenses that may be raised
by Lerner, Sampson. We hold only that plaintiff has alleged sufficient facts to survive a motion
for dismissal on the pleadings.

For the foregoing reasons, we reverse the judgment of the district court and remand for
proceedings consistent with this opinion.

____________________________________________

*The Honorable Samuel H. Mays, Jr., United States District Judge for the Western District of
Tennessee, sitting by designation.

1
15 U.S.C. § 1692e states in relevant part:
A debt collector may not use any false, deceptive, or misleading
representation or means in connection with the collection of any debt.
Without limiting the general application of the foregoing, the
following conduct is a violation of this section:
. . .
(2) The false representation of–
(A) the character, amount, or legal status of any debt; or
. . .
(10) The use of any false representation or deceptive means to collect or attempt to
collect any debt or to obtain information concerning a consumer.
Plaintiff does not specify in her complaint which subsection of Section 1692e she is invoking, but we have
included here the only two subsections relevant to her claim.

1The Ohio Supreme Court allowed an appeal and stayed briefing in plaintiff’s state case against
Washington Mutual, Wallace v. Wash. Mut. Bank, N.A., 130 Ohio St. 3d 1493, 2011-Ohio-6556, 958
N.E.2d 956 (Dec. 21, 2011), pending resolution of Fed. Home Loan Mortg. Corp. v. Schwartzwald,
194 Ohio App. 3d 644, 2011-Ohio-2681, 957 N.E.2d 790 (Ohio Ct. App.), motion to certify and appeal
allowed by 129 Ohio St. 3d 1488, 2011-Ohio-5129, 954 N.E.2d 661 (Ohio Oct. 5, 2011) (Consolidating
cases and certifying a conflict in the Ohio appellate courts on the issue of whether in order to have standing
as a plaintiff in a mortgage foreclosure action, a party must show that it owned the note and the mortgage
when the complaint was filed.). Should the Ohio courts decide that a potential mortgagee may anticipate
transfer of the note and mortgage and bring valid foreclosure proceedings in advance, the district court will
have to decide the impact of such a holding on Wallace’s claim for damages under the Fair Debt Collection
Practices Act. We do not agree, however, with the district courts of this Circuit that have treated the
debate in Ohio over standing to bring a foreclosure action as dispositive of whether a statement was
materially misleading under the Act. See, e.g., Whittiker v. Deutsche Bank Nat’l Trust Co., 605 F. Supp.
2d 914, 930-31 (N.D. Ohio 2009); Kline v. Mortg. Elec. Sec. Sys., No. 3:08cv408, 2010 WL 1133452, at
*7 (S.D. Ohio Mar. 22, 2010). Certainly, should the Ohio courts decide that Washington Mutual did not
have standing to bring the foreclosure action in the first place, the materiality of the false statement of
ownership would be patent. However, even if Ohio holds the opposite, the Act protects the unsophisticated
consumer from false statements tending to mislead or confuse—whether Washington Mutual may
ultimately succeed in an Ohio court in its foreclosure action has no bearing on whether the initial false
statements misled Wallace. The issue arises in the shadow of the recent subprime mortgage crises in which
financial institutions are charged with encouraging reckless lending standards and rapid transfer and sale
of subprime mortgages so as to profit from the mass securitization and sale of the mortgages.

William K. Black

University of Missouri at Kansas City – School of Law
March 7, 2012

Abstract:     
The incidence of fraud in stated income loans is 90 percent. It is overwhelmingly the lenders and their agents that prompted these frauds. Over two million fraudulent mortgage loans were made in 2006 alone. It was overwhelmingly fraudulent loans to borrowers who lacked any ability to repay their loans out of their income that caused the housing bubble to hyper-inflate. Endemic accounting control fraud in the origination of mortgages led to creation of ‘echo’ fraud epidemics in other contexts, including widespread appraisal fraud, endemic fraud in the sale of mortgages and mortgage derivatives, widespread predatory lending targeting Latinos, blacks and the elderly, and endemic foreclosure fraud. Fraudulent lenders use compensation to create perverse incentives in which bad ethics drives good ethics out of the marketplace. Fraud begets fraud. The federal government, California, and dozens of financial firms have sued the largest banks for fraud, yet the Justice Department refuses to even conduct a meaningful criminal investigation of the largest banks. Absent vigorous financial regulators that understand control fraud and make reducing and sanctioning such frauds their top priority the prosecutors cannot succeed against an epidemic of accounting control fraud. Financial regulators who make the necessary criminal referrals and provide the FBI with the expertise to identify and investigate accounting control fraud mechanisms are essential if we are to prevent or prosecute an epidemic of such frauds. Effective financial ‘regulatory cops on the beat’ are essential to our ability to prosecute elite white-collar criminals.

Can I see your fake courtroom?

Note: Although this occurred in 2010 and appear to have got away with this. A friendly reminder that this could play out in a similar situation. Stay on your toes and don’t get scammed.

by TheYoungTurks

image: debtorsunite.com

The criminal enterprises aren’t protecting the taxpayers best interest, they have the bankers best interest. No matter what we say the more you keep feeding the banks the more power they will have among you.

Like being MERS shareholders and wiping away with recording fees wasn’t good enough!

Credit Slips-

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION

DOCKET NO. A-4756-10T4

BAC HOME LOAN SERVICING, L.P.,
Plaintiff-Appellant,

v.

SYLVIA T. FICCO,
Defendant-Respondent.
_______________________________
Argued January 31, 2012 – Decided
Before Judges Payne and Reisner.

On appeal from the Superior Court of New
Jersey, Chancery Division, General Equity,
Morris County, Docket No. F-24872-08.

Jeanette J. O’Donnell argued the cause for
appellant (Powers Kirn, L.L.C., attorneys;
Ms. O’Donnell, on the brief).

Richard H. Kotkin argued the cause for
respondent.

PER CURIAM

In this residential foreclosure case, plaintiff BAC Home
Loan Servicing, L.P. (formerly Countrywide Home Loans, Inc.)
appeals from a February 25, 2011 order, granting a motion by
defendant Sylvia T. Ficco to enforce a loan modification, and a
May 9, 2011 order denying plaintiff’s motion for
reconsideration.

We agree with Judge Stephan C. Hansbury that defendant
mortgagor presented legally competent evidence that by letter
dated March 30, 2010, plaintiff mortgagee approved her
application for a loan modification, and that she accepted
plaintiff’s offer by continuing to make payments under the loan
modification offered to her. We also agree with the trial judge
that plaintiff failed to present legally competent evidence to
support its claim that the March 30, 2010 letter granting the
loan modification was sent in error. We therefore affirm the
orders on appeal, substantially for the reasons stated by Judge
Hansbury in the written statements he issued with those orders.

I
The relevant events can be summarized briefly as follows.

In April 2007, defendant took out a home loan of nearly $600,000
secured by a thirty-year mortgage on her home. She defaulted
and plaintiff filed a foreclosure complaint in June 2008. In
October 2009, plaintiff accepted defendant’s application for a
loan modification. As part of that process, the parties entered
into a Home Affordable Modification Trial Period Plan, and
plaintiff sent defendant an October 12, 2009 letter encouraging
her to “start your three-month trial period for your mortgage
loan modification.” The documents in the record show that as
part of that Plan, plaintiff represented to defendant that if
she provided a list of requested financial information, and if
that information was found acceptable, and she made her
payments, she would be approved for a permanent loan
modification. By letter dated March 30, 2010, plaintiff advised
defendant that she had qualified for a permanent loan
modification, and that she would shortly receive the
Modification Agreement to sign. The letter “strongly
encourage[d]” her to keep making her payments under the plan,
which she faithfully did. Plaintiff cashed her payment checks.

Although defendant continued to make her payments, seven
months later, on November 22, 2010, plaintiff changed its
position and sent defendant a letter advising that she was not
eligible for a loan modification after all. The letter did not
mention any failure by defendant to submit information, sign
documents, or otherwise cooperate in the modification process.
Instead, the letter asserted that plaintiff’s calculation of the
“net present value of a modification” revealed that modifying
the loan would not be “in the financial interest of the investor
that owns your loan.”

On November 23, 2010, defendant filed a motion to enforce
the loan modification. Defendant’s motion was supported by her
November 22, 2010 certification, attesting to plaintiff’s offer
of the loan modification and the March 30 letter, attesting that
she had made “all of the required mortgage payments from
November, 2009, to the present,” and properly authenticating
copies of all of her canceled checks for those payments.
Plaintiff filed a two-page letter brief in opposition. The
judge found that plaintiff failed to submit any legally
competent evidence to support its opposition to defendant’s
motion, and that the letter from plaintiff’s counsel was
“uncertified hearsay.” Noting that defendant had made all of
her payments, pursuant to the March 30, 2010 letter telling her
that she qualified for the loan modification, the judge held
that plaintiff was bound by its March 30 offer and defendant’s
acceptance of that offer.

Plaintiff filed a motion for reconsideration, consisting of
a brief with some unauthenticated documents attached. The trial
judge denied the motion, noting once again the lack of competent
evidence to support plaintiff’s original motion opposition or
its reconsideration motion. This appeal followed.

II
In its appeal, plaintiff contends that there was no
enforceable loan modification because “there was never a meeting
of the minds,” primarily because the March 30 letter was sent
“in error.” Alternatively, plaintiff argues that the trial
period offer was conditional and not an enforceable offer until
further documents were presented and signed; and plaintiff never
offered defendant a “permanent loan modification.” At oral
argument of this appeal, plaintiff’s counsel candidly admitted
the obvious – the record contains no legally competent evidence
to support plaintiff’s central claim that the March 30 letter
was sent in error. Celino v. Gen. Accident Ins., 211 N.J.
Super. 538, 544 (App. Div. 1986) (“Facts intended to be relied
on which do not already appear of record and which are not
judicially noticeable are required to be submitted to the court
by way of affidavit or testimony” rather than by merely
attaching them to a brief.) In fact, plaintiff did not properly
authenticate any of the documents it submitted to the trial
court. Ibid. Plaintiff also improperly submitted a reply brief
to this court attaching documents it did not submit to the trial
court and asserting arguments it did not make before the trial
court. See R. 2:5-4(a); Nieder v. Royal Indem. Ins. Co., 62
N.J. 229, 234-35 (1973).

On this record, we find plaintiff’s appellate arguments are
without sufficient merit to warrant further discussion, beyond
the following comments. R. 2:11-3(e)(1)(E). The March 30 letter
constituted an offer, which defendant accepted. Whether we
consider this interchange as the modification of a contract or
as the binding settlement of litigation, the result is the same.
Plaintiff was bound to fulfill the offer that defendant
accepted. Further, even if the March 30 letter were sent in
error, we would be inclined to find that plaintiff was equitably
estopped from denying defendant the benefit of the bargain,
because she reasonably relied to her detriment on that letter in
making continued payments. Knorr v. Smeal, 178 N.J. 169, 178
(2003).

Unlike the unpublished federal court decision plaintiff has
cited to us, defendant’s claim is not based merely on her having
made payments under a trial period plan, but on plaintiff having
unequivocally notified her that she qualified for the loan
modification, and having induced her to make continued payments
based on that promise. We emphasize that the obligation we find
here, to provide defendant with a loan modification, lies with
plaintiff. If plaintiff wishes to avoid alleged problems with
the federal loan modification program, as represented to us at
oral argument (albeit with no supporting legally competent
evidence), our decision does not preclude plaintiff from
offering to directly refinance defendant’s mortgage through an
“in house” loan.

Finally, we observe that inducing debtors to continue
making mortgage payments over an extended period of time, on the
promise of a loan modification, only to eventually pull the rug
out from under them when they are unable to satisfy criteria
beyond prompt continuing payment of the mortgage, borders on
unconscionability.1

Affirmed.

1 We confess some puzzlement at why a mortgage company would
continue foreclosure proceedings against a debtor who, unlike
many, is actually paying her mortgage. The “net present value”
investment formula seems divorced from the current reality,
which is that foreclosure is unlikely to yield a higher
investment return than keeping in place a “paying” mortgage. We
emphasize, however, that our decision of this appeal does not
turn on any of those observations, but on the application of
legal and equitable principles to the evidentiary record before
us.

KING5-

If you think the foreclosure crisis is over, think again.  Delinquencies were up 7 percent in Washington State in the first quarter of 2012 and nearly one in every 1,600 homes is in foreclosure, according to RealtyTrac, a company that tracks foreclosure data nationwide. 

Under a recent government settlement, five of the country’s biggest banks agreed to provide billions of dollars of relief in the form of forgiven principal and mortgage reductions.

You might expect people would jump at any chance to get a modified loan that could help them fend off foreclosure.

That’s certainly what Bank of America expected when it began sending out the first of 5,000 letters asking Washington homeowners to apply for a loan modification program that could reduce their payments by, on average, 35 percent.  

“This is a very important program, starting with the fact that most of the customers we’re working with have a foreclosure sale date in the near future, and this is probably the last best opportunity for those customers to stay in their home,” said Dan Frahm, Bank of America senior vice president.

[KING5]

If this impacts you, please email the WSJ writer at alan.zibel@dowjones.com

WSJ-

Vacation homes and commercial properties in flood-prone areas could see their flood-insurance premiums more than double over a four-year period under a bill poised to clear the Senate this week.

The measure, which was endorsed by the Obama administration Monday, is meant to shore up the finances of a federal program that provides mandatory flood insurance. The Congressional Budget Office estimates the bill would save $4.7 billion by 2021.

The government-run National Flood Insurance Program has borrowed nearly $18 billion from the Treasury Department to pay claims resulting from the hurricane season in 2005—a particularly big year of flood losses. The Senate is expected to take up the legislation Tuesday or Wednesday.

The government pays flood-insurance claims, while private insurers sell policies and manage claims under the program, created in 1968. Flood insurance is required for federally regulated lenders and government-backed mortgages in flood-prone areas. Insurance industry groups say the program’s rates are far too low, making it hard for private competition to emerge.

[WALL STREET JOURNAL]

Abigail C. Field-

The seminal Eaton v. Fannie Mae decision by the Massachusetts Supreme Judicial Court is not a huge banking industry win going forward. In fact, if the Legislature lets it stand, it’s a huge homeowner win. Forget the part about the decision applying in the future only; while I think it is wrong, it was doctrinally reasonable and arguably protects many innocent third parties.

Going forward, the really big deal is that the Court has taken the “show me the note” defense and made it “show me the note owner.”

“Show me the note owner” is really hard to do in an era of mass securitization fail. Securitization fail means the trust doesn’t own the loans. And if the trust doesn’t own the loans, then the servicer isn’t the agent of the note owner and can’t foreclose non-judicially. Moreover, as this Court’s earlier Ibanez decision revealed, securitization fail may have occurred more often in Massachusetts than elsewhere.

By requiring the non-judicially foreclosing servicer to have authority from the note owner to foreclose, the Court is strengthening foreclosure defense in Massachusetts. See, homeowners have tried to get the courts to take securitization fail seriously, and specifically the standing problem it creates for servicers. But generally judges hate hearing about how banks screwed up securitization, fearing it leads to undeserved free houses. In fact, a bankruptcy appellate court reviewing a Massachusetts case got basic doctrine wrong to reject the argument.

Securitization fail arguments should have a lot more traction now….

[REALITY CHECK]

IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FIFTH DISTRICT JANUARY TERM 2012

GARY C. RICHARDS,
Appellant,

v.                                                            Case No. 5D10-3895

HSBC BANK USA AS TRUSTEE FOR
PHH 2007-2,
Appellee.
________________________________/
Opinion filed June 22, 2012
Appeal from the Circuit Court
for Citrus County,
Carol Falvey, Judge.
Gary C. Richards, Gainesville, pro se.
Jeffrey M. Gano, of Florida Default Law
Group, P.L., Tampa, for Appellee.
EVANDER, J.

Richards appeals the entry of a final summary judgment of mortgage foreclosure.
Because a material disputed issue of fact remained as to whether HSBC was the holder
of the note, we reverse.

The proper party with standing to foreclose a note and mortgage is the holder of
the note and mortgage or the holder’s representative. See Gee v. U.S. Bank Nat’l
Ass’n, 72 So. 3d 211, 213 (Fla. 5th DCA 2011). Thus, the party seeking foreclosure
must present evidence that it holds the note and mortgage in question in order to
proceed with its foreclosure action. Id. A plaintiff must tender the original promissory
note to the trial court or seek to reestablish the note under section 673.3091, Florida
Statutes (2010). Id. If the note does not name the plaintiff as the payee, the note must
bear an endorsement in favor of the plaintiff or a blank endorsement. Id. Alternatively,
the plaintiff may submit evidence of an assignment from the payee to the plaintiff or an
affidavit of ownership to prove its status as a holder of the note. Id.

This court reviews an order granting summary judgment de novo. Volusia
County v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000).
Summary judgment is appropriate where there is no genuine issue of material fact and
the movant is entitled to a judgment as a matter of law. Id. When reviewing a final
summary judgment, an appellate court must examine the record in the light most
favorable to the non-moving party. Gee, 72 So. 3d at 213.

In the instant case, HSBC filed an unverified complaint alleging that it owned and
held the note and mortgage. However, the copy of the note and mortgage attached to
the complaint reflected that Richards had executed the note and mortgage in favor of
Century 21 Mortgage. Throughout the proceedings below, Richards challenged the
right of HSBC to bring its foreclosure action.

Ultimately, in support of its motion for summary judgment, HSBC filed the original
note, an assignment of mortgage, and affidavits setting forth “amounts due and owing.”
However, these documents failed to establish, as a matter of law, that HSBC was the
holder of the note.

While the assignment reflected that the mortgage had been assigned from
Century 21 to HSBC, the allonge to the note reflected that Bishops Gate Residential
Mortgage Trust was to be the note’s payee. Specifically, the undated allonge set forth
the following language:

Without Recourse
Pay to the order of: * Bishops Gate Residential
Mortgage Trust

Thus, the allonge was inconsistent with the assignment and contradicted the allegation
in the complaint that HSBC was the holder of the note. See Khan v. Bank of America,
N.A., 58 So. 3d 927, 928 (Fla. 5th DCA 2011) (“Because the exhibit to Bank of
America’s amended complaint conflicts with its allegations concerning standing, Bank of
America did not establish that it had standing to foreclose the mortgage as a matter of
law.”)

Furthermore, the affidavits filed by HSBC did not explain the relationship
between HSBC and Bishops Gate Residential Mortgage Trust, nor otherwise aver facts
conclusively showing that HSBC was the holder of the note.

REVERSED and REMANDED.

SAWAYA and LAWSON, JJ., concur.

Forbes-

Assume that you own a piece of property, and there is a mortgage against that property. Let’s further assume that the amount remaining on the mortgage exceeds the fair market value of the property — what is commonly known as a property “under water”.

Now let’s say that you either cannot or don’t want to pay the mortgage. Maybe you’ve lost your job. Or maybe the value of the property has sunk so low that you doubt that it will come back to the value of the mortgage within your lifetime. In either case, you are either evicted from the property or you voluntarily abandoned it, what is known as “walking away”.

The amount of money that the lender lost on the deal, i.e., the difference between what the outstanding balance of the mortgage and what the foreclosure sale brought, is known in legal parlance as the “deficiency”, i.e., the sale was “deficient” in making the lender whole. A judgment based on the deficiency is known as a “deficiency judgment”, and can include not just the difference in the mortgage and ultimate sale price, but also the costs of the sale, and the attorney’s fees for the foreclosure. In some states, the bank can also tack on interest and penalties.

Here is the question: If the lender forecloses on the property, can the bank then sue you for the deficiency and obtain a deficiency judgment? …

[FORBES]

Testifies Before the Veterans Affairs Subcommittee on His Bill to Expand Home Foreclosure Protections for Servicemembers and Their Families

Washington, DC  – Ranking Member Elijah E. Cummings commended the Consumer Financial Protection Bureau (CFPB) and housing regulators for issuing joint guidance yesterday to protect military homeowners who have received Permanent Change of Station orders.

The interagency guidance is intended to ensure that mortgage servicers comply with consumer laws and regulations when a servicemember is ordered by the military to relocate.

“I applaud the CFPB and the regulators for taking this important step to protect our military homeowners from mortgage discrimination and illegal foreclosure,” Cummings said.  “We must do all we can to ensure that the men and women defending our nation do not have to fight here at home just to keep a roof over the heads of their loved ones.”

For more than a year, Cummings has led Congressional investigations of the foreclosure crisis.  In July, Cummings co-hosted a forum with Senator Jay Rockefeller IV, Chairman of the Senate Committee on Commerce, Science and Transportation, and issued a report examining illegal foreclosures against U.S. servicemembers and their families.

At the Veterans Affairs Subcommittee hearing yesterday, Cummings testified in support of his bill, H.R. 5747, the Military Family Home Protection Act, which would ensure that soldiers serving in contingency operations are protected from illegal foreclosures. The legislation would also extend foreclosure protections to the surviving spouses of servicemembers who are killed in the line of duty and veterans who are 100% disabled due to a service-connected injury at the time of discharge.

“In my opinion,” said Cummings at the hearing, “nobody is more deserving of our help than our military servicemembers fighting overseas.”

The bill is co-sponsored by 11 Members, including Rep. Bob Filner, Ranking Member of the Veterans Affairs Committee, and Rep. Adam Smith, Ranking Member of the Armed Services Committee.  Senator Rockefeller introduced the Senate companion bill Wednesday.

Last month the House overwhelmingly passed by a vote of 394 to 27 an amendment to the National Defense Authorization Act (NDAA) introduced by Cummings and Reps. Bob Filner and Adam Smith. 

###

source: http://democrats.oversight.house.gov

The measure, part of the Homeowner Bill of Rights package, has rankled bankers and mortgage servicers.

LA TIMES-

After six months of wrangling, California lawmakers put the finishing touches on what they hope will be compromise foreclosure-prevention legislation.

The measure is part of a larger Homeowner Bill of Rights package of bills sponsored by state Atty. Gen. Kamala D. Harris aimed at helping borrowers who are behind on mortgage payments avoid foreclosures. A draft of the bill was made public late Friday.

The bill would lock into California law many of the terms of a national foreclosure lawsuit settlement with five big banks.

California has been hit hard by a wave of foreclosures that started in the recession of 2007-09. Last year, 38 of the nation’s 100 most foreclosure-prone ZIP Codes were in the state.

“The California Homeowner Bill of Rights will help ensure that struggling California borrowers with the means and desire to stay in their homes will have real access to a process that will allow them to do so,” Harris said in a statement.

A two-house legislative conference committee is expected to approve the bill, SB 900, next week and send the package to the floors of both the state Assembly and Senate for final debates and votes.

[LA TIMES]

image: La Times

FEDERAL HOUSING FINANCE AGENCY

Statement by Federal Housing Finance Agency on FHFA
Lawsuit Against Illinois Tax Officials

For Immediate Release

Contact: Corinne Russell (202) 649-3032
Stefanie Johnson (202) 649-3030

June 22, 2012

“The Federal Housing Finance Agency recognizes the difficulties faced by local officials that are
struggling with shrinking tax bases. However, FHFA must resist when local governments
impose unlawful tax-raising programs on Fannie Mae and Freddie Mac that, in turn, create a
cost for taxpayers across the country.

“Longstanding federal statutes and Supreme Court rulings preclude states, counties and
municipalities from imposing real estate transfer taxes on Fannie Mae and Freddie Mac, yet,
several counties in Illinois are requiring or threatening to require them to pay such taxes.
Federal law does provide for Fannie Mae and Freddie Mac to pay real estate taxes on the value
of properties they hold, but does not sanction taxes tied to the transfer of properties.

“As conservator of Fannie Mae and Freddie Mac, FHFA must protect taxpayers from local
taxation that clearly runs counter to long-established federal law. This lawsuit asserts that
Fannie Mae and Freddie Mac are exempt from the Illinois transfer taxes and asks the court to
block this improper taxation.”

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
WESTERN DIVISION

THE FEDERAL NATIONAL MORTGAGE
ASSOCIATION (“FANNIE MAE”); THE
FEDERAL HOME LOAN MORTGAGE
CORPORATION (“FREDDIE MAC”); and,
THE FEDERAL HOUSING FINANCE
AGENCY, in its capacity as an agency of the
federal government and in its capacity as
Conservator of Fannie Mae and Freddie Mac,
Plaintiffs,

v.

BRIAN HAMER, in his official capacity as
Director of the Illinois Department of Revenue;
JOHN J. ACARDO, in his official capacity as
DeKalb County Clerk and Recorder; KAREN
A. STUKEL, in her official capacity as Will
County Recorder; NANCY MCPHERSON, in
her official capacity as Winnebago County
Recorder; DAWN YOUNG, in her official
capacity as Whiteside County Recorder;
DEBBIE GILLETTE, in her official capacity as
Kendall County Recorder; SANDY WEGMAN,
in her official capacity as Kane County
Recorder,
Defendants.

[ipaper docId=98061953 access_key=key-2o12pqvwyasiavmmyd2t height=600 width=600 /]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

Bill Moyers-

JPMorgan Chase CEO Jamie Dimon’s appearances in the last two weeks before Congressional committees — many members of which received campaign contributions from the megabank — beg the question: For how long and how many ways are average Americans going to pay the price for big bank hubris, with our own government acting as accomplice?

On this week’s Moyers & Company, Rolling Stone editor Matt Taibbi and Yves Smith, creator of the finance and economics blog Naked Capitalism, join Bill to discuss the folly and corruption of both banks and government, and how that tag-team leaves deep wounds in our democracy.  Taibbi’s latest piece is “The Scam Wall Street Learned from the Mafia.” Smith is the author of ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism.

[BILL MOYERS]

Credit Slips-

The Massachusetts Supreme Judicial Court finally issued its long-awaited ruling in Eaton v. Fannie Mae. This case involved the question of whether a “naked mortgagee”–a mortgagee that was not also the holder of the promissory note–had standing to foreclose. (Full disclosure:  I submitted a pair of amicus briefs in the case arguing that foreclosure required the mortgage and the note to be united.)

The SJC held that in Massachusetts a foreclosing party must have both the mortgage and the note or be acting on behalf of a party with the note. Critically, however, the SJC restricted the ruling to a prospective application. That means that past foreclosures cannot be reopened because of this case, so the financial services industry just dodged billions in liability for wrongful foreclosures and evictions, and the title insurance industry did as well. (Note that Massachusetts has a public option title insurer–a Torrens system of land registration that covers perhaps a third of the properties in the state. If the whole state were covered, there’d be no problem.)

In the immediate term, I’d score the case as a major victory for the financial services industry, which avoided liability for its failure to comply with state law foreclosure requirements. Going forward, however, things are more complicated…

[CREDIT SLIPS]

re-published by permission

Written by  Fr. Emmanuel Lemelson

On June 22nd, 2012 the Massachusetts supreme court ruled on a very simple principle, that is to say a foreclosure by sale requires the foreclosing mortgagee, at the time of the sale, to hold both the mortgage and the underlying mortgage note.  the Case is Henrietta Eaton vs. Federal National Mortgage Association.

This may seem simple enough to the casual reader, except virtually no entities foreclosing on securitized mortgages in Massachusetts or elsewhere in the last five years (when the question has been especially relevant) possessed both of these items.

 A Look Back to October 2011

 On October 10th, 2011 the article Eaton – Dividing the Mortgage Loan and Affirming the Consequent was published, although much was said in the article there is one part which now seems particularly prescient:

“However, the impasse for banks is the fact, that even if the court recognizes the authority of MERS to assign the mortgage to the foreclosing entity (usually the servicer), the following conditions still must be met:

a) The assignment must still be a valid assignment (most are not)

b) There must also be a valid assignment of the note to establish who exactly owns the debt.

The vast majority of these loans were sold into securitization trusts and are merely endorsed “in blank” (if they can even be found in the trust at all). Most schedules attached to the trust documents include little or no information on the details of the particular loans (as was the case in Ibanez), or sometimes include the address of particular properties, but no information on the borrowers, or curiously the loan amounts. Other failures include post-dated or otherwise invalid notarizations, and fraudulent signatures etc., which are all suggestive of fraud.

Given this, to speak of Eaton merely as a question over the validity of MERS and its assignments is incorrect. Even if Eaton is not affirmed by the SJC, the issue of validly conveyed notes, remains of vital importance.

That having been said, we believe the Appellants chances of prevailing are precisely zero, or maybe less. Taken together with Ibanez, this means serious problems for the bond holders in these securitization trusts and their bank administrators. With all the nuance of every day speak we could muster, we think it is put best by saying just; “some of the debt-servants might escape”. That isn’t to say that all measures won’t be taken to try to prevent this outcome.”

 In the ruling, the SJC affirmed that a) past assignments were in fact invalid in so far as they did not conform to statutory requirements that the foreclosing party also be the holder of the loan or an assignee thereof and b)  that there must be a valid assignment of the note.

In Their Own Words

The SJC specifically commented in the ruling:

“The defendants argue that by its plain, unambiguous terms, this section authorized Green Tree, as the assignee of MERS, to foreclose because Eaton’s mortgage identified MERS, its successors and assigns as the “mortgagee” with the “power of sale.” We disagree that § 14 is unambiguous. The section is one in a set of provisions governing mortgage foreclosures by sale, and that set in turn is one component of a chapter of the General Laws devoted generally to the topic of foreclosure and redemption of mortgages. The term “mortgagee” appears in several of these statutes, and its use reflects a legislative understanding or assumption that the “mortgagee” referred to also is the holder of the mortgage note.”

 And further:

“In accordance with these principles, and against the background of the common law as we have described it in the preceding section, we construe the term “mortgagee” in G.L. c. 244, § 14, to mean a mortgagee who also holds the underlying mortgage note. The use of the word “mortgagee” in § 14 has some ambiguity, but the interpretation we adopt is the one most consistent with the way the term has been used in related statutory provisions and decisional law, and, more fundamentally, the one that best reflects the essential nature and purpose of a mortgage as security for a debt… (“The function of a mortgage is to employ an interest in real estate as security for theperformance of some obligation…. Unless it secures an obligation, a mortgage is a nullity”).

Needless to say the defendants in Eaton complained loudly about the possibility of a retroactive ruling, why? Because there have been an average of 1.6 million nationwide foreclosure starts per year for the past five years –  the vast majority of which in all likelihood began with an invalid notice of foreclosure sale (and subsequently an invalid sale) under the Eaton ruling.

To quote the SJC decision:

“The defendants and several amici argue, to varying degrees, that an interpretation of “mortgagee” in the statutes governing mortgage foreclosures by sale that requires a mortgagee to hold the mortgage note will wreak havoc with the operation and integrity of the title recording and registration systems by calling into question the validity of any title that has a foreclosure sale in the title chain. This follows, they claim, because although a foreclosing mortgagee must record a foreclosure deed along with an affidavit evidencing compliance with G.L. c. 24, § 14, see G.L. c. 244, § 15; see also G.L. c. 183, § 4, there are no similar provisions for recording mortgage notes; and as a result, clear record title cannot be ascertained because the validity of any prior foreclosure sale is not ascertainable by examining documents of record. They argue that if this court requires a mortgagee to have a connection to the underlying debt in order to effect a valid foreclosure, such a requirement should be given prospective effect.

In the exceptional circumstances presented here, and for the reasons that we have discussed, we exercise our discretion to hold that the interpretation of the term “mortgagee” in G.L. c. 244, § 14, and related statutory provisions that we adopt in this opinion is to apply only to mortgage foreclosure sales for which the mandatory notice of sale has been given after the date of this opinion.”

 Can the importance of this one line be overstated?

 “…clear record title cannot be ascertained because the validity of any prior foreclosure sale is not ascertainable by examining documents of record.”

This is the same as saying, the banks are the arbiters of land ownership for disputed transactions through June 22nd, 2012, not the judiciary, because the most vital records involving debt ownership were privatized without democratic process sometime ago.

The good news for the banks is that they got what they wanted, sort of.  They are “off the hook” for up to 9 M bad foreclosure notices and related sales that had either taken place, or that will take place and were noticed before June 22nd, 2012.  However, in their comments the SJC also has implicated the problem of MERS, a private registry for land records.

The banks can get away with this fraud and the transfer of perhaps trillions in land wealth because they followed a few smart steps, here they are summary form:

a. Privatize the transfers of legal title (different than “record title” in title theory states) – i.e. mortgage security instruments (MERS)

b. Separate the Mortgage from the Note at real estate closings

c. Assign the mortgage to the “black-box” MERS, owned by the banks

d. Send the Note to the Bermuda Triangle where it can be bought, sold, traded, rehypothecated or shredded in a beautiful low tax jurisdiction

e. Destroy five years of public land records in the process so the problem is so big, the judiciary will have to conclude that the “circumstances” are “exceptional”

Even if you are just a bitter “dead-beat” homeowner, you have to concede those American bankers are enterprising. If they can take down entire country like Greece using something as complex as currency swaps, do you think they can’t take down your local country recorder with something as simple as a private database?

If bankers were the athletic type, you could think of them celebrating the decision sort of like “Chuck Liddell” celebrates in the “Octagon”.

The reasoning the SJC provided for making the ruling “prospective” which in their own admission is unusual, is that:

“..we recognize there may be significant difficulties in ascertaining the validity of a particular title if the interpretation of “mortgagee” that we adopt here is not limited to prospective operation…”

10 words which cannot be overlooked nor overstated, they are “judge speak” for “property rights have been destroyed”, aka the foundation upon which our entire modern US economy rests, they are worth contemplating:

“…significant difficulties in ascertaining the validity of a particular title…”

Ok, ok, the banks won, they got away with fraud, the party is over, everyone can go home (or to their car, or the shelter, or the park bench or wherever they sleep at night) – right?

Not quite – there are two small data points that appear to also matter:

1) 2.8 million Americans are 12 months or more behind on their mortgages.

2) Since 2007, 19% of all borrowers (~9 million borrowers) have gone >90 days delinquent on their mortgages, or have had their mortgage liquidated.

In other words, one in five people who held a mortgage since 2007 have defaulted in varying degrees on those obligations.

It may be relevant that these 9 M folks (who defaulted between 2007 and June 22nd, 2012) probably did not fully understand that they had been paying their monthly mortgage payments (before they defaulted) to a party that had absolutely no interest in the debt they committed to repaying.  In other words, their cash was depleted through payments to a stranger to the loan transaction.  This mysterious party (usually called a “sub-servicer”) that they had been previously paying had no legal interest in their property and parenthetically no legal right to foreclosure either.  Finally it is far from clear that this group understood that they had purchased their largest investment and asset at a radically inflated value as a result of securitization schemes which were rehypothecated time and again – most had no hope of knowing the financial alchemy that can cause home prices to rise by double digits for some many years.

The result: the largest decline in real estate prices in US history, that even Nobel laureates in economics couldn’t forecast, and that caused one of the greatest shifts in wealth to only the smallest percentage of society’s members.

Even if these people had the money and the will to pay their mortgages, they would not have known fully, prior to the Eaton ruling that is, that doing so would get them no closer to the goal of a clear title.

9 Million Down 50 Million to Go (give or take a few million)

Eaton is part of a trifecta that includes also the recent Ibanez and Bevilacqua rulings, and which make the Massachusetts SJC a beacon of light for other state Supreme courts to follow in what otherwise has seemed at times an indifferent, nescient, or corrupt judiciary.

What about the other 50 M homeowners who assigned their mortgages to MERS (overwhelmingly not knowing or understanding that they had done) that now have bifurcated mortgage loans that can likely never be recoupled thanks to the complexities of the securitization schemes and the desire of the banks to make the (tax exempt) Trusts entirely bankuptcy remote?  These homeowners will find out about Eaton directly or indirectly.  These 50 M souls may begin to ask important and valid questions about where exactly their mortgage checks go every month and whether or not they will ever obtain clear title to their home sometime between June 22nd, 2012 and the next thirty years.

re-published by permission from

Fr. Emmanuel Lemelson

Greek Orthodox Priest – Assigned to the Albanian Orthodox Diocese of America – Ecumenical Patriarchate

Credit Slips-

The wheels of litigation move slowly, but there are a couple of recent securitization fail litigation decisions that are worthy of note. First, in the Congress case, a wrongful foreclosure action in Alabama (see my previous blogging on it here), the Alabama appellate court reversed and remanded, a victory for the homeowner. The reversal and remand was on a rather narrow ground, namely that the trial court applied too demanding a standard when evaluating the homeowner’s argument that the allonge in the case had been fabricated. Yet this means that this securitization fail case is still alive. It’s also interesting to see how suspicious some courts have become about mysteriously appearing allonges and the like.

[CREDIT SLIPS]

Henrietta EATON vs. FEDERAL NATIONAL MORTGAGE ASSOCIATION & another. [FN1]

SJC-11041.

October 3, 2011. – June 22, 2012.

Mortgage, Foreclosure, Assignment, Real estate. Real Property, Mortgage, Record title, Sale. Negotiable Instruments, Assignment, Note. Notice, Foreclosure of mortgage. Practice, Civil, Preliminary injunction, Summary process. Summary Process. Statute, Retroactive application. Words, “Mortgagee.”

CIVIL ACTION commenced in the Superior Court Department on April 8, 2011.

A motion for a preliminary injunction was heard by Frances A. McIntyre, J.

A petition for interlocutory review pursuant to G.L. c. 231, § 118, first par., was considered in the Appeals Court by Judd J. Carhart, J., and a decision denying the petition was reported by him to a panel of that court.

The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.

Richard E. Briansky (Joseph P. Calandrelli with him) for the defendants.

Samuel Levine (David A. Grossman & H. Esme Caramello with him) for the plaintiff.

The following submitted briefs for amici curiae:

Adam J. Levitin, pro se.

Max Weinstein, Stuart Rossman, & Paul Collier for WilmerHale Legal Services Center & others.

Marie McDonnell, pro se.

Diane C. Tillotson, Robert J. Moriarty, Jr., & Thomas O. Moriarty for Real Estate Bar Association & another.

John L. O’Brien, Jr., pro se.

Steven A. Ablitt & James L. Rogal for Ablitt Scofield, P.C.

Mark B. Johnson & Michael A. Klass for American Land Title Association.

Richard A. Oetheimer for Mortgage Bankers Association.

Suchand Reddy Pingli, pro se.

Katherine McDonough, pro se. Robert P. Marley, pro se.

Howard N. Cayne & David D. Fauvre, of the District of Columbia, & Asim Varma & Douglas M. Humphrey for Federal Housing Finance Agency.

Robert Napolitano, pro se.

Present: Ireland, C.J., Spina, Cordy, Botsford, Gants, Duffly, & Lenk, JJ.

BOTSFORD, J.

In this case, we address the propriety of a foreclosure by power of sale undertaken by a mortgage holder that did not hold the underlying mortgage note. A judge in the Superior Court preliminarily enjoined the defendant Federal National Mortgage Association (Fannie Mae) from proceeding with a summary process action to evict the plaintiff, Henrietta Eaton, from her home, following a foreclosure sale of the property by the defendant Green Tree Servicing, LLC (Green Tree), as mortgagee. The judge ruled that Eaton likely would succeed on the merits of her claim that for a valid foreclosure sale to occur, both the mortgage and the underlying note must be held by the foreclosing party; and that because Green Tree stipulated that it held only Eaton’s mortgage, the foreclosure sale was void, and the defendants therefore were not entitled to evict Eaton. Pursuant to G.L. c. 231, § 118, first par., the defendants petitioned a single justice of the Appeals Court for relief from the preliminary injunction. The single justice denied the petition and reported his decision to a panel of that court. We transferred the case to this court on our own motion.

For the reasons we discuss herein, we conclude as follows. A foreclosure sale conducted pursuant to a power of sale in a mortgage must comply with all applicable statutory provisions, including in particular G.L. c. 183, § 21, and G.L. c. 244, § 14. These statutes authorize a “mortgagee” to foreclose by sale pursuant to a power of sale in the mortgage, and require the “mortgagee” to provide notice and take other steps in connection with the sale. The meaning of the term “mortgagee” as used in the statutes is not free from ambiguity, but we now construe the term to refer to the person or entity then holding the mortgage and also either holding the mortgage note or acting on behalf of the note holder. [FN2] Further, we exercise our discretion to treat the construction announced in this decision as a new interpretation of the relevant statute, only to apply to foreclosures under the power of sale where statutory notice is provided after the date of this decision. We vacate the preliminary injunction and remand the case to the Superior Court for further proceedings consistent with this opinion. [FN3]

1. Background. [FN4] On September 12, 2007, Eaton refinanced the mortgage on her home in the Roslindale section of Boston (Roslindale property) by executing a promissory note payable to BankUnited, FSB (BankUnited, or lender) for $145,000. That same day, she also executed a mortgage, referred to in the mortgage itself as a “[s]ecurity [i]nstrument.” The mortgage is separate from, but by its terms clearly connected to, the promissory note. The parties to the mortgage are Eaton as the “[b]orrower,” BankUnited as the “[l]ender,” and Mortgage Electronic Registration Systems, Inc. (MERS) [FN5] as the “mortgagee.” [FN6]

Under the mortgage executed by Eaton, MERS as mortgagee (or its assignee) holds legal title to the Roslindale property with power of sale “solely as nominee” of the lender BankUnited (or its assignee). However, “if necessary to comply with law or custom, MERS (as nominee for Lender and Lender’s successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender….” [FN7]

The mortgage also contains a series of covenants that run exclusively between BankUnited as lender and Eaton. The final covenant, entitled “Acceleration; Remedies,” empowers the lender, on default by Eaton, to “invoke the STATUTORY POWER OF SALE and any other remedies permitted by applicable law.” In this regard, the covenant obligates the lender, in invoking the statutory power of sale, to mail a copy of a notice of sale to Eaton.

On April 22, 2009, MERS assigned its interest as mortgagee to Green Tree and recorded the assignment in the Suffolk County registry of deeds. The record contains no evidence of a corresponding transfer of the note. The note was indorsed in blank by BankUnited on an undetermined date. [FN8]

Later in 2009, after Eaton failed to make payments on the note, Green Tree, as assignee of MERS, moved to foreclose on her home through exercise of a power of sale contained in the mortgage. A foreclosure auction was conducted in November, 2009; Green Tree was the highest bidder. The identity of the note holder at the time of the foreclosure sale is not known from the record. On November 24, 2009, Green Tree assigned the rights to its bid to Fannie Mae, and a foreclosure deed was recorded in the Suffolk County registry of deeds.

On January 25, 2010, Fannie Mae commenced a summary process action in the Boston division of the Housing Court Department to evict Eaton. Eaton filed a counterclaim, arguing that the underlying foreclosure sale was invalid because Green Tree did not hold Eaton’s mortgage note at the time of the foreclosure sale and therefore lacked the requisite authority to foreclose on her equity of redemption in the Roslindale property. A Housing Court judge subsequently granted a sixty-day stay of the summary process action to give Eaton an opportunity to seek relief in the Superior Court. [FN9] The Housing Court judge also ordered Eaton to make use and occupancy payments during the pendency of her action. On April 8, 2011, Eaton filed a complaint in the Superior Court for injunctive and declaratory relief. The complaint sought a declaration that the foreclosure sale of Eaton’s home and the subsequent foreclosure deed were null and void, and that Eaton was the owner in fee simple of the Roslindale property; a preliminary injunction to stay the summary process action in the Housing Court; and a permanent injunction barring Fannie Mae from taking steps to obtain possession of or convey the Roslindale property. For the purposes of Eaton’s motion for a preliminary injunction only, the defendants stipulated that Green Tree did not hold Eaton’s mortgage note at the time of the foreclosure. After hearing, the Superior Court judge (motion judge) allowed the motion and preliminarily enjoined Fannie Mae from proceeding with Eaton’s eviction.

2. Standard of review. We review the grant or denial of a preliminary injunction for abuse of discretion. Commonwealth v. Fremont Inv. & Loan, 452 Mass. 733, 741 (2008). The conclusions of law of the judge below are “subject to broad review and will be reversed if incorrect.” Packaging Indus. Group, Inc. v. Cheney, 380 Mass. 609, 616 (1980), quoting Buchanan v. United States Postal Serv., 508 F.2d 259, 267 n. 24 (5th Cir.1975). In considering a request for a preliminary injunction the judge evaluates the moving party’s chance of success on the merits and its claim of injury. Packaging Indus. Group, Inc. v. Cheney, supra at 617. Because the defendants do not dispute the likelihood of irreparable harm to Eaton if Fannie Mae proceeds to seek her eviction through the summary process action, we confine our discussion to evaluating Eaton’s likelihood of prevailing on the merits of her claim.

3. Discussion. As indicated, the motion judge determined that a foreclosure by sale requires the foreclosing mortgagee, at the time of the sale, to hold both the mortgage and the underlying mortgage note; and that if the mortgagee does not hold the note, the foreclosure sale is void. Based on this view, she concluded that because Green Tree, the assignee of the mortgage, had stipulated that it did not hold the mortgage note executed by Eaton when the sale took place, Eaton was likely to succeed in proving that the foreclosure sale was void and that the defendants had no authority to evict her and take possession of her home. See Bank of N.Y. v. Bailey, 460 Mass. 327, 333 (2011) (challenging evicting party’s entitlement to possession “has long been considered a valid defense to a summary process action for eviction where the property was purchased at a foreclosure sale”). The defendants argue that in reaching this conclusion, the judge misread the Massachusetts common law, and that, in any event, the statutory scheme applicable to exercise of a power of sale gave Green Tree absolute authority, as “mortgagee,” to foreclose. They also claim that Green Tree, as the assignee, had a contractual right to foreclose pursuant to the express terms of the mortgage. We begin with a brief overview of the common law of mortgages and then address the statutes governing exercise of a power of sale in a mortgage. Finally, we review the preliminary injunction in light of the relevant principles discussed and the terms of Eaton’s mortgage.

a. Common law. A real estate mortgage in Massachusetts has two distinct but related aspects: it is a transfer of legal title to the mortgage property, and it serves as security for an underlying note or other obligation–that is, the transfer of title is made in order to secure a debt, and the title itself is defeasible when the debt is paid. See U.S. Bank Nat’l Ass’n v. Ibanez, 458 Mass. 637, 649 (2011) (Ibanez ) (Massachusetts is a “title theory” State in which “a mortgage is a transfer of legal title in a property to secure a debt”); Perry v. Miller, 330 Mass. 261, 263 (1953), and cases cited (legal title held by mortgagee is “defeasible upon the payment of money or the performance of some other condition”); Goodwin v. Richardson, 11 Mass. 469, 475 (1814) (mortgage deed “purports to convey to the mortgagee a present estate in fee simple, defeasible on the performance of a certain condition by the mortgagor”). See also Negron v. Gordon, 373 Mass. 199, 204 (1977) (“[T]he mortgagee holds bare legal title to the property subject to defeasance on the mortgagor’s performance of the obligation secured by the mortgage. It is only for the purpose of securing the debt that the mortgagee is to be considered owner of the property” [citations omitted] ); Young v. Miller, 6 Gray 152, 153 (1856) (“The true character of a mortgage is the pledge of real estate to secure the payment of money, or the performance of some other obligation”); Maglione v. BancBoston Mtge. Corp., 29 Mass.App.Ct. 88, 90 (1990) (“So it is that the mortgagor retains an equity of redemption, and upon payment of the note by the mortgagor or upon performance of any other obligation specified in the mortgage instrument, the mortgagee’s interest in the real property comes to an end” [citations omitted] ).

Following from these principles, a mortgage separated from the underlying debt that it is intended to secure is “a mere technical interest.” Wolcott v. Winchester, 15 Gray 461, 465 (1860). See Morris v. Bacon, 123 Mass. 58, 59 (1877) (“That the debt is the principal and the mortgage an incident, is a rule too familiar to require citations in support of it”). However, in contrast to some jurisdictions, in Massachusetts the mere transfer of a mortgage note does not carry with it the mortgage. See Barnes v. Boardman, 149 Mass. 106, 114 (1889). See also 1 F. Hilliard, Mortgages 221 (2d ed. 1856) (“The prevailing doctrine upon this subject undoubtedly is, that an assignment of the debt carries the mortgage with it. This rule, however, is by no means universal, and is subject to various qualifications in the different States of the Union”). As a consequence, in Massachusetts a mortgage and the underlying note can be split. See Lamson & Co. v. Abrams, 305 Mass. 238, 245 (1940) (“The holder of the mortgage and the holder of the note may be different persons”).

Under our common law, where a mortgage and note are separated, “the holder of the mortgage holds the mortgage in trust for the purchaser of the note, who has an equitable right to obtain an assignment of the mortgage, which may be accomplished by filing an action in court and obtaining an equitable order of assignment.” Ibanez, 458 Mass. at 652, citing Barnes v. Boardman, 149 Mass. at 114. See Wolcott v. Winchester, 15 Gray at 465 (“The party holding such legal estate [i.e., mortgagee holding only mortgage without underlying note] no doubt holds the same in trust for the party owning the debt, where the entire debt secured by a mortgage has been parted with”); Young v. Miller, 6 Gray at 154 (where indorsee of note is without assignment of mortgage securing the note, “the law may well imply the intention of the parties that the mortgage is thenceforth to be held by the mortgagee in trust for the indorsee. In other words, such a transaction might manifest a resulting trust”); Sanger v. Bancroft, 12 Gray 365, 367 (1859) (“A mortgage cannot be made available without connecting it with the debt or duty secured thereby. To one who has not the debt, it is of no value as property, as it could at most be only resorted to as a trust for the benefit of the holder of the note”). See generally 1 F. Hilliard, Mortgages at 216 n.(c) (“The assignment of a mortgage, without the debt, creates at most a naked trust ” [emphasis in original] ); id. at 217 (“[The mortgage] has no determinate value. If it should be assigned, the assignee must hold the interest at the will and disposal of the creditor who holds the bond”). [FN10]

Consistent with the principles just described–that is, the basic nature of a mortgage as security for an underlying mortgage note, and the role of a “bare” mortgagee as equitable trustee for the note holder–it appears that, at common law, a mortgagee possessing only the mortgage was without authority to foreclose on his own behalf the mortgagor’s equity of redemption or otherwise disturb the possessory interest of the mortgagor. See Howe v. Wilder, 11 Gray 267, 269-270 (1858) (former assignee of mortgage note and mortgage who had retransferred note and canceled unrecorded mortgage assignment might still hold technical legal title to mortgage property as mortgagee but has no equitable right to disturb mortgagor’s possessory interest and cannot bring action to foreclose mortgagor’s equity of redemption because no money is due from mortgagor to him; only mortgagee with interest in underlying debt can so enforce mortgage). See also Wolcott v. Winchester, 15 Gray at 465 (“As a purchaser [of a mortgage without the underlying note], [defendant] must have known that the possession of the debt was essential to an effective mortgage, and that without it he could not maintain an action to foreclose the mortgage”). [FN11] Cf. Weinberg v. Brother, 263 Mass. 61, 62 (1928).

b. Statutory provisions. The defendants take issue with the applicability of decisions such as Wolcott v. Winchester, 15 Gray at 465, Crowley v. Adams, 226 Mass. 582, 585 (1917), andHowe v. Wilder, 11 Gray at 269-270, to this case. They argue that in any event, G.L. c. 244, § 14, expressly authorized MERS (and its assignee) to foreclose because the mortgage in this case contained a power of sale. Accordingly, we turn to this statute, as well as related statutory provisions that together govern mortgage foreclosures under a power of sale.

It has long been recognized that statutes are a key source of authority generally governing mortgages. See Fay v. Cheney, 14 Pick. 399, 400-401 (1833) (“The law of mortgage in this [C]ommonwealth, is a mixed system, derived partly from the common law in regard to real property, partly from the rules and maxims of the English [C]ourts of [C]hancery, but principally from various statutes”). Statutes play an especially significant role in connection with mortgage foreclosures effected under a power of sale. See Ibanez, 458 Mass. at 646, quoting Moore v. Dick, 187 Mass. 207, 211 (1905) (“one who sells under a power [of sale] must follow strictly [statutory] terms”).

The “statutory power of sale” is set out in G.L. c. 183, § 21. [FN13] Under this statute, if a mortgage provides for a power of sale, the mortgagee, in exercising the power, may foreclose without obtaining prior judicial authorization [FN14] “upon any default in the performance or observance” of the mortgage, id., including, of course, nonpayment of the underlying mortgage note. [FN15], [FN16] Section 21 provides, however, that for a foreclosure sale pursuant to the power to be valid, the mortgagee must “first comply[ ] with the terms of the mortgage and with the statutes relating to the foreclosure of mortgages by the exercise of a power of sale.” See Moore v. Dick, 187 Mass. 207, 211-213 (1905) (where notice of foreclosure sale was given in newspaper other than one named in mortgage agreement’s power of sale, foreclosure was void, and plaintiffs were entitled to redeem mortgaged property approximately twenty years after sale; laches is no defense to void sale). See also Tamburello v. Monahan, 321 Mass. 445, 446-447 (1947) (where foreclosure sale conducted in bank office nine-tenths of one mile from mortgaged premises, sale was not “on or near the premises” as required by G.L. c. 183, § 21; sale held void).

In addition to G.L. c. 183, § 21, itself, the “statutes relating to the foreclosure of mortgages by the exercise of a power of sale,” id., are set out in G.L. c. 244, §§ 11-17C. See Ibanez,458 Mass. at 645-646. Principal among these is c. 244, § 14 (§ 14), which provides in relevant part: 

“The mortgagee or person having his estate in the land mortgaged, or a person authorized by the power of sale, … may, upon breach of condition and without action, do all the acts authorized or required by the power; but no sale under such power shall be effectual to foreclose a mortgage, unless, previous to such sale, [the notice provisions set forth in this section are followed [FN17]]” (emphasis added).

The defendants argue that by its plain, unambiguous terms, this section authorized Green Tree, as the assignee of MERS, to foreclose because Eaton’s mortgage identified MERS, its successors and assigns as the “mortgagee” with the “power of sale.” We disagree that § 14 is unambiguous. The section is one in a set of provisions governing mortgage foreclosures by sale, and that set in turn is one component of a chapter of the General Laws devoted generally to the topic of foreclosure and redemption of mortgages. The term “mortgagee” appears in several of these statutes, and its use reflects a legislative understanding or assumption that the “mortgagee” referred to also is the holder of the mortgage note. Thus, G.L. c. 244, § 17B, one of the foreclosure by sale sections closely related to § 14, deals with the notice required to be given as a condition to seeking a deficiency owed on a note after a foreclosure sale, and reads in part: 

“No action for a deficiency shall be brought … by the holder of a mortgage note or other obligation secured by mortgage of real estate after a foreclosure sale by him … unless a notice in writing of the mortgagee’s intention to foreclose the mortgage has been mailed, postage prepaid, by registered mail with return receipt requested, to the defendant sought to be charged with the deficiency at his last address then known to the mortgagee, together with a warning of liability for the deficiency, in substantially the form [set out in this section] …” (emphasis added).

By its terms, § 17B assumes that the holder of the mortgage note and the holder of the mortgage are one and the same; the section’s drafters appear to have used the terms “holder of a mortgage note” and “mortgagee” interchangeably.

“Where the Legislature uses the same words in several sections which concern the same subject matter, the words ‘must be presumed to have been used with the same meaning in each section.’ ” Commonwealth v. Wynton W., 459 Mass. 745, 747 (2011), quoting Insurance Rating Bd. v. Commissioner of Ins., 356 Mass. 184, 188-189 (1969). See Booma v. Bigelow-Sanford Carpet Co., 330 Mass. 79, 82 (1953) (“It is a familiar canon of construction, that when similar words are used in different parts of a statute, the meaning is presumed to be the same throughout”). Furthermore, we “construe statutes that relate to the same subject matter as a harmonious whole and avoid absurd results.” Connors v. Annino, 460 Mass. 790, 796 (2011), quoting Canton v. Commissioner of the Mass. Highway Dep’t, 455 Mass. 783, 791-792 (2010). See Adoption of Marlene, 443 Mass. 494, 500 (2005), quoting Ciardi v. F. Hoffmann-La Roche, Ltd., 436 Mass. 53, 62 (2002) (“Statutes addressing the same subject matter clearly are to be construed harmoniously so as to give full effect to all of their provisions and give rise to a consistent body of law”).

In accordance with these principles, and against the background of the common law as we have described it in the preceding section, we construe the term “mortgagee” in G.L. c. 244, § 14, to mean a mortgagee who also holds the underlying mortgage note. [FN20], [FN21] The use of the word “mortgagee” in § 14 has some ambiguity, but the interpretation we adopt is the one most consistent with the way the term has been used in related statutory provisions and decisional law, and, more fundamentally, the one that best reflects the essential nature and purpose of a mortgage as security for a debt. [FN22] See Negron v. Gordon, 373 Mass. at 204, and cases cited; Maglione v. BancBoston Mtge. Corp., 29 Mass.App.Ct. at 90, and cases cited. See generally Restatement (Third) of Property (Mortgages) § 1.1 comment (1997) (“The function of a mortgage is to employ an interest in real estate as security for theperformance of some obligation…. Unless it secures an obligation, a mortgage is a nullity”). [FN23], [FN24]

Contrary to the conclusion of the motion judge, however, we do not conclude that a foreclosing mortgagee must have physical possession of the mortgage note in order to effect a valid foreclosure. There is no applicable statutory language suggesting that the Legislature intended to proscribe application of general agency principles in the context of mortgage foreclosure sales.

The defendants and several amici argue, to varying degrees, that an interpretation of “mortgagee” in the statutes governing mortgage foreclosures by sale that requires a mortgagee to hold the mortgage note will wreak havoc with the operation and integrity of the title recording and registration systems by calling into question the validity of any title that has a foreclosure sale in the title chain. This follows, they claim, because although a foreclosing mortgagee must record a foreclosure deed along with an affidavit evidencing compliance with G.L. c. 24, § 14, see G.L. c. 244, § 15; see also G.L. c. 183, § 4, there are no similar provisions for recording mortgage notes; and as a result, clear record title cannot be ascertained because the validity of any prior foreclosure sale is not ascertainable by examining documents of record. [FN27] They argue that if this court requires a mortgagee to have a connection to the underlying debt in order to effect a valid foreclosure, such a requirement should be given prospective effect.

In general, when we construe a statute, we do not engage in an analysis whether that interpretation is given retroactive or prospective effect; the interpretation we give the statute usually reflects the court’s view of its meaning since the statute’s enactment. See McIntyre, petitioner, 458 Mass. 257, 261 (2010), cert. denied, 131 S.Ct. 2909 (2011). However, there are several considerations that compel us to give the interpretation of “mortgagee” we announce here only prospective effect. As the previous discussion reflects, the use of the term “mortgagee” in the statutory scheme governing mortgage foreclosures was not free of ambiguity, and while the decisions of this court in years and centuries past provide support for the general proposition that, under our common law, a mortgage ultimately depends on connection with the underlying debt for its enforceability, none of our cases has considered directly the question whether a mortgagee must also hold the note or act on behalf of the note holder in order to effect a valid foreclosure by sale. It has been represented to us by the defendants and several amici that lawyers and others who certify or render opinions concerning real property titles have followed in good faith a different interpretation of the relevant statutes, viz., one that requires the mortgagee to hold only the mortgage, and not the note, in order to effect a valid foreclosure by sale. We have no reason to reject this representation of prior practice, and in that context, we recognize there may be significant difficulties in ascertaining the validity of a particular title if the interpretation of “mortgagee” that we adopt here is not limited to prospective operation, because of the fact that our recording system has never required mortgage notes to be recorded.

This court traditionally has given prospective effect to its decisions in very limited circumstances, but those have included circumstances where the ruling announces a change that affects property law. See Papadopoulos v. Target Corp., 457 Mass. 368, 385 (2010); Payton v. Abbott Labs, 386 Mass. 540, 565 (1982). In the property law context, we generally apply our decisions prospectively out of “concern for litigants and others who have relied on existing precedents.” Id. See Powers v. Wilkinson, 399 Mass. 650, 662 (1987). In addition, there may be particular reason to give a decision prospective effect where–as the argument is made here–“prior law is of questionable prognosticative value.” Blood v. Edgar’s, Inc., 36 Mass.App.Ct. 402, 407 (1994). Where a decision is not grounded in constitutional principles, but instead announces “a new common-law rule, a new interpretation of a State statute, or a new rule in the exercise of our superintendence power, there is no constitutional requirement that the new rule or new interpretation be applied retroactively, and we are therefore free to determine whether it should be applied only prospectively.” Commonwealth v. Dagley, 442 Mass. 713, 721 n. 10 (2004), cert. denied, 544 U.S. 930 (2005). In the exceptional circumstances presented here, and for the reasons that we have discussed, we exercise our discretion to hold that the interpretation of the term “mortgagee” in G.L. c. 244, § 14, and related statutory provisions that we adopt in this opinion is to apply only to mortgage foreclosure sales for which the mandatory notice of sale has been given after the date of this opinion. [FN28]

c. Preliminary injunction. Although we apply the rule articulated in this case prospectively, we nonetheless apply it to Green Tree’s appeal because it has been argued to this court by Eaton. See Bouchard v. DeGagne, 368 Mass. 45, 48-49 (1975) (party seeking relief may be entitled to benefit from rule announced in case, even when other “somewhat similarly situated [parties] are not afforded the benefit of retroactive application of the principles established by that first appellate determination”). Cf. Tucker v. Badoian, 376 Mass. 907, 918-919 (1978) (Kaplan, J., concurring) (suggesting that when newly announced rule is given prospective effect, that rule may still apply to the case at bar if parties raised issue; declining to apply new rule, however, where parties appeared to accept that old rule would apply to them). See generally Powers v. Wilkinson, 399 Mass. at 663-665 (Abrams, J., concurring in part and dissenting in part) (discussing reasons in favor of applying new rule given general prospective application to particular litigants involved).

The motion judge granted the preliminary injunction based on her determination that as a matter of still applicable common law, for a foreclosure by sale to be valid, the mortgage and the mortgage note must be unified physically in the possession of the foreclosing mortgagee. We have focused principally on the statutes governing mortgage foreclosure by sale and have concluded that where a mortgagee acts with the authority and on behalf of the note holder, the mortgagee may comply with these statutory requirements without physically possessing or actually holding the mortgage note. Eaton’s verified complaint alleges that at the time of foreclosure in this case, Green Tree, as assignee of MERS, was neither in possession of Eaton’s mortgage note nor “authorized by the holder of the note to carry out the foreclosure.” However, Eaton makes this allegation solely on “information and belief.” As a general rule, anallegation that is supported on “information and belief” does not supply an adequate factual basis for the granting of a preliminary injunction. See Alexander & Alexander, Inc. v. Danahy,21 Mass.App.Ct. 488, 493-494 (1986), and cases cited (noting that although preliminary injunction may be based on affidavits and verified complaint, allegations based only on information and belief would be insufficient to support preliminary injunction). See also M.G. Perlin & S.H. Blum, Procedural Forms Annotated § 106:1 (6th ed.2009).

The motion judge’s decision on the preliminary injunction does not consider the question of Green Tree’s (or MERS’s) authority to act on behalf of BankUnited or an assignee of BankUnited in initiating foreclosure proceedings, and our examination of the Superior Court record suggests that this issue was not raised below. In the circumstances, we conclude that Eaton’s allegation on information and belief that Green Tree was not authorized by the note holder to carry out the foreclosure sale did not offer an adequate factual basis to support the preliminary injunction that was issued. Consequently, the order granting the preliminary injunction must be vacated. On remand, Eaton may renew her request for a preliminary injunction, and in that context seek to show that she has a reasonable likelihood of establishing that, at the time of the foreclosure sale, Green Tree neither held the note nor acted on behalf of the note holder. [FN29]

4. Conclusion. We vacate the grant of the preliminary injunction, and remand the case to the Superior Court for further proceedings consistent with this opinion.

So ordered.

“But upon any default in the performance or observance of the foregoing or other condition, the mortgagee or his executors, administrators, successors or assigns may sell the mortgaged premises or such portion thereof as may remain subject to the mortgage in case of any partial release thereof, either as a whole or in parcels, together with all improvements that may be thereon, by public auction on or near the premises then subject to the mortgage, or, if more than one parcel is then subject thereto, on or near one of said parcels, or at such place as may be designated for that purpose in the mortgage, first complying with the terms of the mortgage and with the statutes relating to the foreclosure of mortgages by the exercise of a power of sale, and may convey the same by proper deed or deeds to the purchaser or purchasers absolutely and in fee simple; and such sale shall forever bar the mortgagor and all persons 
claiming under him from all right and interest in the mortgaged premises, whether at law or in equity.” 
The language of this section is discussed further in note 23, infra.

H/T Victory Over Chase

Taken From The Sworn Testimony of   Jeffrey Thorne

Currently I am employed as an asset manager for the FDIC . . .  When Washington Mutual failed, I was involved in the takeover of Washington Mutual by FDIC . . . 
Pursuant to the public part of the agreement with the FDIC,  of  which were approximately 39 pages, the balance of the contract and the complete agreement with the FDIC and Chase bank is 118 pages long which has not been made public.

Excerpt:

Q. BY MR. BRADLEY: Okay. Now, this 118-page
14 document, can you again describe to me what its contents
15 was?
16 A. There’s two documents. They’re the same
17 document. And it is the right to purchase a financial
18 institution. That’s the purchase agreement. One of
19 them is 35 pages long that is recorded and made public
20 by the FDIC, and the other is a continuation of the 35
21 pages up to the 118 pages that spells out an agreement
22 between the purchasing institution and the FDIC as to
23 how they are to handle the customers upon the purchase
24 of the bank; i.e., how the foreclosures are to be
25 handled, work out agreements that they’re supposed to
1 make. Are they supposed to make an offer? They have to
2 make certain offers in writing. They have to present
3 them to the FDIC to Show that they’re working with them
4 In good faith. They just can’t go in and just start
5 foreclosing on everybody that’s not paying.
6 Q. And it’s your testimony that there was such an
7 agreement that Chase Signed with the FDIC when it took
8 over WaMu, this document?
9 A. Yeah, at the facility that I was at, that was
10 one qf the documents I had access to through my system,
11 and I saw that document.
12 Q. Okay. And then where would a copy of that
13 document be? The first 32 pages, I think you said, were
14 made public, but the balance of them were withheld from
15 the public.
16 A. Right. It would be at FDIC.
17 Q. Okay. And could those be subpoenaed?
18 A. I’m sure they could.
19 Q. And you would refer to it as the right to
20 purchase document?
21 A. Right.
22 MR. BRADLEY: All right. I have happily no
23 more questions. But we will –I’m sure they’ll want to
24 take your expert deposition. They like two bites at the
25 apple.

[…]

Believe me this is a must read depo …

Documents That Must be Received
by Counsel/Trustee
Within 2 Business Days of Referral

Each state has their own requirements but this is a sample of what’s needed per file:

• Copy of the original title policy (if not available, a copy of the title insurance commitment)
• Originals or complete copies of Note and any endorsements or allonges thereto, Mortgage and all Assignments thereof  any Loan Modification Agreements, and non-military affidavits
• Documentation showing borrower(s) last known mailing address(es), if different from the property address  and contact phone number, the borrower’s current work address  and contact phone number (if applicable), and/or information relating to occupants of the property, if different from the borrower(s)
• Copies of the breach/acceleration/demand letter(s)
• 1–4 Unit Property Inspection Report (Form 1013) , the first three pages of the appraisal, and mobile home documentation, if applicable
• Itemized total debt and reinstatement figures as of the referral date to include the amount of the current principal balance and default date
• Name of party entitled to enforce the indebtedness secured by the Mortgage (most commonly the holder of the Promissory Note; a/k/a “Action in the Name Of”)
• Bankruptcy documentation, if applicable
• Social Security Number(s) for all borrower(s)
• Servicer and Freddie Mac loan numbers

[ipaper docId=97882644 access_key=key-1tdrxyhgoduwne1prdac height=600 width=600 /]