Wondering how many counties all over the US will follow? Same pattern used every where I’m sure.
South Coast Today-
The Bristol County Commissioners have sued in federal court to recover deed excise taxes they claim are owed by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).
Deed excise taxes of $4.56 per $1,000 are owed when a new deed is recorded with the county. Fannie Mae and Freddie Mac long have claimed they are exempt from these taxes, but a recent federal court ruling in Michigan found this exemption invalid, according to a news release from the county commissioners.
Another Day, Another Lawsuit…come back tomorrow and the next and so on.
Business as usual.
Bloomberg-
JPMorgan Chase & Co. (JPM) was accused in a lawsuit of manipulating clients’ foreign-exchange transactions for its own benefit.
The Louisiana Municipal Police Employees’ Retirement System filed a complaint yesterday in Manhattan federal court alleging that the bank took advantage of investors by causing them to pay what were often the worst currency rates available on a given trading day.
“JPMorgan’s scheme allowed it, in violation of its contractual and fiduciary obligations, to extract hundreds of millions of dollars in illicit risk free profits from its clients under the guise of FX trading,” according to the complaint.
The deputy secretary of the Department of Housing and Urban Development said Thursday in Atlanta that Georgia did not spend its $99.4 million share of the $25 billion National Mortgage Settlement as the federal government had intended.
Maurice Jones, who is HUD’s second most senior official, said he was “disappointed in what I’ve seen in Georgia.” Jones was the keynote speaker at a the annual meeting of, “Piece by Piece: A Regional Foreclosure Initiative,” which was held at the Carter Center.
Clayton County Commission Chairman Eldrin Bell asked Jones what the federal government was doing to respond to Georgia’s decision. Jones responded that the administration had three approaches to states that, like Georgia, had used the money for purposes other than for mortgage resolution.
It is no secret that having failed repeatedly at the trickle down aspect of QE1, QE2, Op Twist 1, Op Twist 2 (and implicitly LTRO 1 and LTRO 2) as it pertains to the man in the street (if not the man in Wall Street, who was subject to 1-2 years of subpar bonuses which have since regained their upward trendline), the last effort the central planners of the world, and the administration, have is to furiously do everything in their power to reflate housing one more time, following what is already a triple dip in home prices ever since the December 2007 start of the Second Great Depression. Which is why month after month we get seasonally fudged, conflicted and outright manipulated data from various sources how housing has bottomed, for real this time, and things are finally looking up. Remember: with any con game, the key word is confidence, and the US consumers need to regain their confidence. Sadly, as the following very simple chart and accompanying explanation, the answer to the housing question is only one: there will be no housing recovery until much more debt is eliminated. $3.2 trillion to be precise. Everything else is merely fits and spurts of upward action predicated by easy money hitting the market either directly, or via the “REO-to-Rental” stimulus program du jour, which lasts for a few months then promptly evaporates.
A company providing services to lenders and home buyers says a recent Georgia court case that tightened the enforcement of foreclosure laws will raise questions about the ownership of thousands of homes, create uncertainty in the housing market and result in many lawsuits.
The July court ruling says foreclosure documents and public foreclosure notices need clear identification of the loan owner or those legally able to negotiate for the owner, which many recent documents lacked because of the complex ways in which loans were created and sold to investors.
“…the Court of Appeals’ decision will cause great uncertainty in Georgia foreclosures as to the validity of a foreclosure, particularly those foreclosures that have occurred since 2008…” said attorney William Brown in a brief filed to encourage the Georgia Supreme Court to review the ruling.
DARA POK; LIANG POK; CHANDARAROTH POK; AND LEANGTANG,
v.
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; SOVEREIGN BANK, HARMON LAW OFFICES, PC; AND WELLS FARGO BANK, NA.
C.A. No. PC2011-2428.
Superior Court of Rhode Island, PROVIDENCE, SC.
Filed: August 24, 2012.
DECISION
RUBINE, J.
Defendants’ Mortgage Electronic Registration Systems, Inc. (“MERS”) and Wells Fargo Bank, NA (“Wells Fargo”) (collectively, “Defendants”)1 move this Court to dismiss the complaint (“Complaint”) filed by Plaintiffs Dara Pok, Liang Pok, Chandararoth Pok and Leang Tang (collectively, “Plaintiffs”) pursuant to Rule 12(b)(6) of the Rhode Island Superior Court Rules of Civil Procedure. The Complaint seeks declaratory relief to quiet title to certain real property located at 31 Cadillac Avenue, Cranston, Rhode Island (“the Property”). The Complaint alleges that due to alleged defects in the foreclosure process, the foreclosing party, Wells Fargo, had no right to exercise the statutory power of sale under Rhode Island law, thus rendering the foreclosure sale a nullity.
I
Facts & Travel
The facts gleaned from the Complaint and exhibits referred to explicitly therein are as follows: On September 12, 2008, Michael A. Moppin, Jane Moppin, and Gennaro Madonna Jr. conveyed title to the Property to Plaintiffs Dara Pok and Liang Pok by way of warranty deed. See Defs.’ Ex. A.2 That warranty deed was thereafter recorded in the land evidence records of the City of Cranston on September 18, 2008. (Compl. ¶ 10.) Thus, as of September 12, 2008, Dara Pok and Liang Pok held record title to the property.
On September 16, 2008, Plaintiffs Chandararoth Pok and Leang Tang executed a note (“Note”) in favor of lender Sovereign Bank (“Sovereign”) for $183,007. To secure the Note, Plaintiffs Chandararoth Pok and Leang Tang contemporaneously executed a mortgage (“Mortgage”) on the Property.3 At the time the mortgage was executed neither Chanderoth Pok nor Leang Tang owned title to the property purporting to secure the Note they executed. The Mortgage identified Sovereign as the “Lender.” The Mortgage provides that “[t]his Security Instrument is given to MERS, (solely as nominee for Lender, as hereinafter defined, and Lender’s successors and assigns),” the Mortgage also provides that MERS is the mortgagee. (Defs.’ Ex. B at 1.)4 The Mortgage further provides that “Borrower does hereby mortgage, grant and convey to MERS (solely as nominee for Lender and Lender’s successors and assigns) and to the successors and assigns of MERS, with Mortgage Covenants upon the Statutory Condition and with the Statutory Power of Sale.” Id. at 1-2. In addition, the clear and unambiguous language of the Mortgage provides that
“Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument; but, if necessary to comply with law or custom, MERS, (as nominee for 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.” Id. at 2.
The Mortgage was recorded in the land evidence records for the City of Cranston on September 18, 2008. At the time of execution of the Mortgage, Plaintiffs Chandararoth Pok and Leang Tang did not have title to the Property referred to in the Mortgage. (Compl. ¶ 12.) Thus, as a matter of law, the Mortgage was ineffective to secure the obligations under the Note.5
On December 1, 2009, MERS, as nominee for Sovereign and mortgagee, assigned the Mortgage interest to Wells Fargo. (Compl. ¶ 14.) On October 27, 2010, MERS, in its capacity as nominee of the lender executed a second assignment as nominee for Sovereign and mortgagee under the Mortgage to Wells Fargo. (Compl. ¶ 15.). This raises another issue as to whether MERS which already assigned its interest in the mortgage has any interest to assign by way of a subsequent assignment.
Thereafter, Plaintiffs Chandararoth Pok and Leang Tang failed to make timely payments under the Note, thereby committing a payment default under the terms of the Note and Mortgage. Following the default, Wells Fargo exercised the statutory power of sale which it had acquired by way of accepting an assignment of the Mortgage and commenced foreclosure proceedings, ultimately foreclosing upon the Property owned by Dara Pok and Liang Pok.
Plaintiffs then filed the instant Complaint seeking a declaration from this Court that Plaintiffs Dara Pok and Liang Pok are the record title owners of the Property. Defendants have filed this Motion to Dismiss pursuant to Rule 12(b)(6) averring that Plaintiffs have failed to state a claim entitling them to the relief they seek. At the hearing, all parties waived oral argument, thereby submitting the matter to this Court on the written memoranda of law. After the submission of all memoranda by the parties, the Court then took this matter under consideration.
II
Standard of Review
A
Conversion
Ordinarily, the court’s review of a motion to dismiss is confined to the complaint, Barrette v. Yakavonis, 966 A.2d 1231, 1234 (R.I. 2009), and if the court considers matters outside of the complaint, the court must convert the motion into a motion for summary judgment. See Coia v. Stephano, 511 A.2d 980 (R.I. 1986). These rules provide, however, where the pleading refers to attachments, “[a] copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes.” Super. R. Civ. P. 10(c). The motion justice may consider and refer to documents incorporated into a complaint by reference when ruling on a motion to dismiss, without converting the motion into one under Rule 56. Bowen Court Assoc. v. Ernst & Young, LLP, 818 A.2d 721, 725-26 (R.I. 2003) (citing Super. R. Civ. P. 10(c)); 27A Federal Procedure L. Ed. § 62:509 (2004). Such documents “must be referred to explicitly,” and be “exhibit[s] annexed to the complaint.” 1 Kent, R.I. Civ. Prac. § 10.3 at 100 (1969); see also 5B Wright & Miller, Federal Practice & Procedure, 3d § 1357 (2006).
Here, the Complaint expressly references the warranty deed to Plaintiffs Dara Pok and Liang Pok, the Mortgage deed and the two assignments of the Mortgage interest. Defendants have submitted the Mortgage and the deed with their Motion. The Plaintiffs have not contested the authenticity of these documents as true and accurate copies of the documents referred to in the Complaint. Thus, this Court must decided whether to exclude these materials and adjudicate this matter using the motion to dismiss standard of review under Rule 12(b)(6), or consider them and convert the Motion into a motion for summary judgment under Rule 56. The Court finds that all documents submitted by Defendants were explicitly referred to by Plaintiffs in the Complaint, but not annexed to the Complaint. The Court will consider “documents expressly relied upon or integral to the complaint and matters of public record, if the claims of the Plaintiffs are based upon such documents.” Rowe v. Morgan Stanley, 191 F.R.D. 398, 405 (D. N.J. 1999); see alsoKriegel v. Mortgage Electronic Registration Systems, No. PC 2010-7099, 2011 WL 4947398 at * 4 (R.I. Super. Oct. 13, 2011) (Rubine, J.); In re Burlington Coat Factory, 114 F.3d 1410, 1426 (3rd Cir. 1997). Plaintiffs’ Complaint to void the foreclosure sale expressly references and certainly finds its basis in the Mortgage and warranty deed, both of which are public record. Accordingly, this Court will consider Defendants’ Motion as a Motion to Dismiss under Rule 12(b)(6).
B
12(b)(6) Motion to Dismiss Standard of Review
“The `sole function of a motion to dismiss’ pursuant to Rule 12(b)(6) is `to test the sufficiency of the complaint.'” McKenna v. Williams, 874 A.2d 217, 225 (R.I. 2005) (quoting Rhode Island Affiliate, ACLU, Inc. v. Bernasconi, 557 A.2d 1232, 1232 (R.I. 1989)). For purposes of the motion the Court “assumes the allegations contained in the complaint to be true and views the facts in the light most favorable to the plaintiffs.” Giuliano v. Pastina, Jr., 793 A.2d 1035, 1036-37 (R.I. 2002) (quotation omitted). The motion “should be granted only when it is clear beyond a reasonable doubt that the plaintiff would not be entitled to relief under any set of facts that could be proven in support of the claim.” Siena M.D. v. Microsoft Corp., 796 A.2d 461, 463 (R.I. 2002) (citation omitted).
III
Analysis
Plaintiffs have properly set forth allegations in the Complaint averring that Chandararoth Pok and Leang Tang did not have title to the Property at the time they executed the Note and Mortgage. (Compl. ¶ 12.) Accepting these allegations as true, as this Court must, and viewing them in the light most favorable to Plaintiffs, Plaintiffs have properly set forth a claim for relief, in that a mortgage is a conveyance or retention of an interest in real property as security for performance of an obligation. Restatement (Third) of Property Mortgages § 1.1 (1997); see also Black’s Law Dictionary (9th ed. 2009) (defining a mortgage as a conveyance of title to property that is given as security for the payment of a debt or the performance of a duty). In the instant matter, Sovereign lent money to Chandararoth Pok and Leang Tang, accepting a Mortgage on the Property to secure the borrowers obligations under the Note. As borrowers under the Note, Chanadararoth Pok and Leang Tang executed the Mortgage to secure the Note without holding any interest in the Property described in the Mortgage. The Mortgage was designed to serve as a security for the Note, and thus to convey to Sovereign as security for their obligations under the Note. As a result, the Mortgage is a nullity, thus leaving borrowers liable to Sovereign, or the current note holder, under an unsecured Note. Chandararoth Pok and Leang Tang knew, or should have known, that they did not own the Property at the time they pledged the Property as security for the Note. Likewise, through due diligence, Sovereign should have realized its mistake. At a minimum, the Defendants should have realized that the Property described in the Mortgage was titled to persons other than the borrowers.
Accepting the allegation in the complaint as true that Chandararoth Pok and Leang Tang did not have any interest or title to the Property at the time they executed the Note and Mortgage, then the Mortgage is void and of no force or effect, as discussed supra. The invalidity of the Mortgage renders borrowers’ obligations under the Note unsecured. One cannot execute a mortgage, thereby conveying title to the Property, if they do not have an interest in the Property. Stated differently, a party cannot effectively convey by mortgage deed, that refers to Property which it does not own. See Restatement (Third) of Property Mortgages, § 1.1 (1997). It is axiomatic that if the Mortgage is ineffective, and therefore void, MERS was never properly granted the authority to exercise the statutory power of sale following Chandararoth Pok and Leang Tang’s default under the Note. Likewise, any subsequent assignments of the void Mortgage are ineffective to convey the statutory power of sale. Therefore, Wells Fargo lacked the authority to enforce the statutory power of sale following default. Accordingly, Plaintiffs have set forth allegations in the Complaint which clearly state a claim for relief, thereby the motion to dismiss must be denied.6
IV
Conclusion
Defendants’ Motion to Dismiss is denied. Counsel for the prevailing party shall prepare an Order in accordance with this Decision.
Footnotes
1. Defendant Sovereign Bank is not a party to this Motion to Dismiss. Defendant Harmon Law Offices, PC was voluntarily dismissed by Plaintiffs.
2. As discussed infra, the Complaint does not attach any exhibits, however it explicitly refers to the warranty deed granting title to Plaintiffs Dara Pok and Laing Pok. Accordingly, this Court may properly consider the deed as submitted by Defendants without converting this Motion to Dismiss under Rule 12(b)(6) to a motion for summary judgment under Rule 56. A motion justice may consider and refer to documents incorporated into a complaint by reference when ruling on a motion to dismiss. Bowen Court Assoc. v. Ernst & Young, LLP, 818 A.2d 721 (R.I. 2003) (citing Super. R. Civ. P. 10(c)). Such documents “must be referred to explicitly.” 1 Kent, R.I. Civ. Prac. § 10.3 at 100 (1969); see also 5B Wright & Miller, Fed. Prac. & Proc., 3d § 1357 at 377.
3. In the Complaint, Plaintiffs allege that the Mortgage was executed on September 18, 2009. (Compl. ¶ 11.) However, the Mortgage explicitly provides that the date of the execution of the Mortgage instrument was September 16, 2008. The Court will not accept as true “facts which are legally impossible or facts which by the record or a document attached to the [C]omplaint appear to be unfounded.” 27A Fed. Proc., L. Ed. § 62:509 (1996). “In the case of conflict between the pleading and the exhibit, the exhibit controls.” 1 Kent, R.I. Civ. Prac. § 10.3 at 100; see also 5B Wright & Miller, Federal Practice & Procedure, Civil 3d § 1357 at 555 (citations omitted).
4. As set forth supra, the Complaint does not contain any exhibits, however it explicitly refers to the Mortgage executed by Plaintiffs. Accordingly, this Court may properly consider the Mortgage as submitted by Defendants without converting this Motion to Dismiss under Rule 12(b)(6) to a motion for summary judgment under Rule 56. A motion justice may consider and refer to documents incorporated into a complaint by reference when ruling on a motion to dismiss. Bowen Court Assoc. v. Ernst & Young, LLP, 818 A.2d 721 (R.I. 2003) (citing Super. R. Civ. P. 10(c)). Such documents “must be referred to explicitly.” 1 Kent, R.I. Civ. Prac. § 10.3 at 100 (1969); see also 5B Wright & Miller, Fed. Prac. & Proc., 3d § 1357 at 377.
5. This court has previously addressed the issue of whether an assignee of the mortgage can foreclose if it is not simultaneously the holder of the Note. This case, however raises a different and novel issue, that is whether persons who are strangers to the title may pledge property owned by others to secure debt owed by the them. The response to this issue is obviously no.
6. Although Plaintiffs have suggested a number of other reasons the foreclosure was ineffective, the Plaintiffs’ memoranda failed to discuss the most obvious defect in the Mortgage, the fact that the borrowers, although signing the Mortgage deed, did not own the Property described in the Mortgage.
Where would we be today if the ACLU wasn’t watching our backs 24/7?
ACLU-
As we have seen in the failed attempts of SOPA/PIPA, and the floundering Anti-Counterfeiting Trade Agreement, intellectual property (“IP”) laws are often poorly constructed, hastily proposed and ultimately both ineffective and potentially abusive.
Now, the latest threat to free speech in guise of IP reform is a multilateral trade agreement currently being negotiated (in secret) by the Office of the United States Trade Representative (“USTR”). That agreement—the Trans-Pacific Partnership, or “TPP”—would reportedly include dramatic changes to intellectual property laws, changes that could potentially permit the patenting to plants, animals, and medical procedures.
And, while some of the proposed changes run contrary to enacted federal law, the USTR is not only pushing for TPP, it is doing its best to avoid congressional oversight. For instance, they recently rebuffed a request from the staff director on the Senate Finance Committee’s international trade subcommittee to review documents pertaining to the negotiations. Senator Wyden, chairman of the subcommittee, wrote:
[M]y office is responsible for conducting oversight over the USTR and trade negotiations. To do that, I asked that my staff obtain the proper security credentials to view the information that USTR keeps confidential and secret. This is material that fully describes what the USTR is seeking in the TPP talks on behalf of the American people and on behalf of Congress. More than two months after receiving the proper security credentials, my staff is still barred from viewing the details of the proposals that USTR is advancing.
“The Chief of Police Stepped On Me and Then He Charged Me With Rioting”: Activists Face Jail Time for Defending Homes
AlterNet-
The police came at four in the morning with a battering ram to the Cruz home in Minneapolis, Minnesota. And that was only one of the five eviction attempts required to finally claim the home for the banks.
“After we had been peacefully occupying this house for over a month without any incidents, then they come in with a battering ram and blame us for disturbing the peace,” said Nick Espinosa, one of the organizers with Occupy Homes Minnesota, which has taken the lead in saving local families from being put out on the street.
The battering ram was just adding insult to injury—the Cruz family was being evicted through no fault of their own, because PNC bank had made a mistake in processing their payments. The Occupy Homes crew moved into the house to try and defend it while the sheriff’s department came once and then twice to evict.
The close relationship between Wall Street and Washington belies their 200 mile separation and theoretically differing goals.
By spending money on campaigns and lobbyists, The financial industry has managed to give itself something of a voice in the halls of Congress, regulators’ offices and even the White House. Of the top ten firms with employees donating to Romney’s campaign, eight are big banks, according to Federal Election data cited by Bloomberg. In addition, Wall Street spent more than $100 million last year on lobbying while the provisions for the Dodd-Frank financial reform law were being finalized, according to The New York Times.
But it’s not just money that Wall Street is sending to Washington. It’s people too, with major officials like President Obama’s chief of staff Jacob Lew and top regulators like Commodity Futures Trading Commission chairman Gary Gensler having spent time working at a big bank at some point in their careers.
A JPMorgan Chase & Co. unit refused to give mortgage trust investors more than 500,000 loan files that would show them how many of the loans are bad and must be repurchased, a trustee said in a court filing.
A unit of Deutsche Bank AG said it has a right to the files as trustee for the investors. The investors own 99 mortgage- backed-securities trusts that were built on loans made by Washington Mutual Bank before it was seized by regulators and sold to JPMorgan in 2008 for $1.9 billion.
“These access rights are unqualified and have been unequivocally breached by JPMC,” Deutsche Bank said in court papers filed in federal court in Washington on Jan. 14.
Mortgage-bond investors and bond insurers have accused loan sellers like WaMu and JPMorgan or bond underwriters of often misrepresenting the quality of the underlying debt. Those misrepresentations can trigger contractual or legal provisions requiring repurchases, investors claim. So-called mortgage putbacks may cost banks and lenders as much as $90 billion, JPMorgan bond analysts said in October.
Meanwhile, one of only two of Romney’s lobbyist-bundlers to reach the ‘Stars’ level is T. Martin Fiorentino Jr., of the Fiorentino Group. By May, he had raised over $325,000 for Romney.
One of Fiorentino’s most notorious clients is Lender Processing Services, a foreclosure mill that, as Matt Viser of the Boston Globenoted, was reprimanded in April for “unsound practices related to residential mortgage loan serving and foreclosure processing.” Viser went on:
[A]s he [Romney] has built his fund-raising machine, he has relied heavily on a man who has lobbied Congress on mortgage reform and anti-predatory lending legislation that contained strict rules aimed at preventing another subprime mortgage collapse.Fiorentino’s Jacksonville, Fla.-based firm, the Fiorentino Group, has been paid $180,000 by Lender Processing Services since late 2009, according to lobbying disclosure forms. The firm lobbied the House and Senate on the Mortgage Reform and Anti-Predatory Lending Act.
The legislation…came in response to the subprime mortgage crisis and was meant to prevent lenders from making loans that borrowers would have difficulty repaying. It was approved by the House in May 2009, but wasn’t taken up that year by the Senate.
Much of the legislation ended up being included last year in the Dodd-Frank Act, a larger overhaul of national financial regulations.
Lender Processing Services is one of the country’s largest mortgage service providers, claiming to handle more than half of all foreclosures and providing services for more than 1,000 financial institutions. The company came under scrutiny after admitting last year that one of its subsidiaries, DocX, had been improperly preparing some of the foreclosure documents.
This only makes sense if you have one of these extremely low 3.66~% interest rates of today.
Read on to understand.
Cleveland-
The impulse to pay off your mortgage more quickly than you need to is understandable, especially these days.
Interest rates are near historic lows, so it’s possible to replace a 30-year mortgage with a 15-year loan and still afford the monthly payments. Or, if you’ve already refinanced at a dirt cheap rate, you can take those savings and pay down your principal faster.
But the allure is more emotional than financial. Mortgage debt provides great financial flexibility, and paying it down fast probably isn’t the best way to grow your nest egg.
“Generally speaking, there’s no advantage to paying down a mortgage earlier than you need to,” says Greg McBride, senior financial analyst at Bankrate.com
Hosted by twice Oscar nominated actor and activist Woody Harrelson, Ethos lifts the lid on a Pandora’s Box of systemic issues that guarantee failure in every aspect of our lives, from the environment to our democracy and our own personal liberty.
But sticky or not, cards are coming for people who often make use of check cashing stores like RiteCheck. Starting in March 2013, the government will stop issuing paper checks, including ones for Social Security, disability or other benefits. Recipients will receive payments through direct deposit into a bank account or a prepaid card, including the government’s own GoDirect card, issued by Comerica Bank. By 2033, the paper check may be extinct altogether, according to a paper published by the Federal Reserve of Philadelphia.
[…]
To hear bankers, entrepreneurs, and even policymakers tell it, cash is unsafe and expensive. The move to electronic payments will bring millions of people onto the financial grid, provide greater financial security, and improve economic mobility and opportunity for those who are unbanked, or typically those who are too poor to qualify for a checking account. It will also provide a massive cost savings to the government.
“As long as the roots are not severed, all is well. And all will be well in the garden.”
– Chance the Gardener, Being There (1979)
The Subprime Shakeout-
With Judge Barbara Kapnick announcing earlier this month that the approval hearing in Bank of New York Mellon’s (BNYM) proposed $8.5 billion Article 77 settlement over Countrywide bonds will take place in May 2013, this next year will be truly one of reckoning for mortgage investors and the U.S. mortgage market as a whole. Though Her Honor’s proposed timetable may be a bit ambitious, what is clear is that the window of opportunity for investors be made whole for the toxic waste they were sold is finite and rapidly shrinking.
In the case of Countrywide, the end game will depend on the evidence that objecting investors can uncover prior to the approval hearing that might demonstrate that BNYM was conflicted or that its assumptions were unreasonable, both of which would suggest that the settlement number is too low. For example, the Steering Committee of objecting investors has now sought to intervene in MBIA v. Countrywide to persuade Judge Bransten to remove Countrywide’s confidentiality designations from evidence that MBIA will be presenting to support its summary judgment motions. Should these documents become public, they would not only encourage Bank of America to settle its 4-year battle with the bond insurer, but they would provide objecting investors in the separate Article 77 action with evidence that might undermine Bank of New York’s assumptions that BofA could ring fence Countrywide.
Sorry to have to say that the homeless are not a priority to politicians but I know who is… WALL STREET!
HuffPO-
The young couple I met on Skid Row today, who was kind enough to be in this video, looked exhausted and broken. They had been walking from mission to mission trying to find a place to stay. Most homeless services just offer referrals that do not show availability. This couple was given phone numbers to places that were full so now they were walking until their feet were blistered trying to find help.
The other big issue is many homeless people are not informed. Street homeless obviously have less availability to the internet and television. Sheltered homeless have more access, but computers have time limits and many shelters restrict computer use just to job searches. Normally in a shelter there is one group TV for everyone. Usually movies are played. Television news is rare so forget any political convention coverage.
The more I look at this foreclosure fraud settlement report, and the reliance on short sales for the allegedly positive results, the angrier I get.
Let’s first understand what the numbers refer to, when the Office of Mortgage Settlement Oversight lists $8.67 billion in short sales. That number does not refer to the sale price of the home, but the difference between the sale price and the amount owed on the mortgage. This unpaid principal balance is then forgiven by the bank. According to the OMSO, 74,614 borrowers took advantage of a short sale that qualified under the settlement, with an average of around $116,200 per borrower. This includes first and second lien remaining balances, on both short sales or “deeds-in-lieu,” where the borrower deeds the residents to the servicer or investor instead of a foreclosure (basically the same thing, only the “buyer” is the servicer or investor, instead of an outside third party).
Citigroup Inc has reached a $590 million settlement of litigation accusing the bank of fraudulently concealing tens of billions of dollars of exposure to risky collateralized debt obligations heading into the global financial meltdown.
The settlement is one of the largest arising from the 2007-2008 crisis. It resolves claims that Citigroup failed to take timely writedowns on the CDOs, many of which were backed by subprime mortgages, and that shareholders suffered billions of dollars of losses once the risks were realized.
Citigroup in a statement called the accord “a significant step toward resolving our exposure to claims arising from the period of the financial crisis.” It said the $590 million is covered by existing litigation reserves.
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
No. 42265-4-II
PUBLISHED OPINION
TAMARA FRIZZELL,
Appellant,
v.
BARBARA MURRAY and GREGORY MURRAY, wife and husband, d/b/a SOUND BROKERS,
Respondents.
Johanson, A.C.J. — Despite her relatively low income, Tamara Frizzell received a loan
secured by her home from lenders Gregory and Barbara Murray.1 She quickly defaulted and the
Murrays foreclosed on her home. But before the trustee’s sale, Frizzell sought and obtained an
order restraining the sale, conditioned on Frizzell depositing a $15,000 payment and $10,000
bond into the court registry by the following morning. Frizzell failed to meet this condition, and a
trustee sold her home the next day. Frizzell then sued the Murrays on various common law and
statutory grounds, but the trial court granted the Murrays’ summary judgment motion, reasoning
that Frizzell waived her right to post-sale relief because she failed to actually restrain the
trustee’s sale. On appeal, Frizzell claims that the trial court erred in granting summary judgment
because (1) she did not waive her right to post-sale relief, and (2) genuine issues of material fact
existed in her original complaint regarding (a) her capacity to contract, (b) the loan’s purpose, (c)
whether the loan amounted to a de facto sale, and (d) other statutory-based claims. We reverse
the trial court’s summary judgment order because Frizzell did not waive her right to post-sale
relief, and we do not reach Frizzell’s other claims.
FACTS
Frizzell owned real estate, and her friend, Douglas Baer, had a power of attorney signed
by Frizzell authorizing him to engage in financial transactions on her behalf.2 In 2008, Frizzell
told Baer that she wanted a $20,000 loan to pay some past-due bills. Baer called a phone number
from a newspaper advertisement for a business that loans money against real estate and spoke
with Gregory about a $20,000 loan. Gregory offered Baer a better interest rate on a larger loan,
and, according to Baer, “[t]he amount of the loan increased over time,” to $100,000. Clerk’s
Papers (CP) at 146.
Though Frizzell and Baer agreed that Baer would control the money, and though Baer
presented to Gregory and Barbara his power of attorney to act on Frizzell’s behalf, Barbara
refused to loan the money to Baer and, instead, desired to loan the money directly to Frizzell.
Frizzell had no involvement in the loan negotiation or lending process, but she did meet with
Barbara for a half hour to sign the final loan papers, securing the loan with a deed of trust on her
house.
The $100,000 loan required Frizzell to pay a $1,000 monthly payment, which covered the
interest only — and full repayment was due in three years. Gregory also explained to Baer that the
Murrays only offered loans for “business purposes” and not for personal uses. CP at 89. He
provided Baer loan paperwork and explained that Frizzell needed to complete it before the
issuance of any loan. Frizzell had no business to operate, but Baer stored between 40 and 50
wheelchairs and scooters at Frizzell’s house and suggested they start a wheelchair and scooter
business. Neither Frizzell nor Baer had business experience or business knowledge generally, but
the Murrays never requested that Frizzell supply them a business plan or business proformas.
Barbara did note Baer’s collection of wheelchairs and scooters, and she understood that Baer
“was good at fixing things” and “had a connection in Bellevue or Redmond” with whom he
planned to do business. CP at 207. Barbara did not ask how, specifically, Frizzell and Baer
would use the loan proceeds.
On August 26, 2008, Frizzell submitted to the Murrays a completed “Business Real Estate
Loan Application,” a declaration of purpose, and other paperwork. CP at 255. In her completed
application, Frizzell explained that the loan would be used for a “wheelchair/scooter business,”
and, when prompted to list any liabilities, Frizzell wrote “Hard Cash Loan[.] This Info. Should
Not Matter.” CP at 100, 101 (some capitalization omitted). She listed the loan’s uses on the
declaration of purpose as “wheelchair + scooter business.” CP at 105 (some capitalization
omitted). Frizzell also signed a disclosure form that warned, “the borrower is encouraged to seek
there [sic] own legal advice in all maters [sic] with regard to this loan prior to signing.” CP at
109.
After the Murrays subtracted the loan’s fees, Frizzell received just under $88,000. Frizzell
used the loan to pay bills, and then she bought roughly $60,000 in oil industry stocks on
eTrade — stocks that plummeted, and Frizzell lost her investment. Frizzell made the first three
scheduled $1,000 payments, and the Murrays received the last payment on December 3, 2008.
Then, Frizzell stopped making any payments. Barbara initiated the foreclosure process on
Frizzell’s home through a non-judicial sale under the deed of trust, and a trustee’s sale was
scheduled for February 19, 2010.
Procedural History
Before the trustee’s sale, Frizzell filed a civil action against the Murrays. Her complaint
alleged a number of legal and equitable grounds for relief that would provide a basis for
restraining the trustee’s sale, and she sought relief in the form of money damages for statutory
violations, invalidation of the promissory note and deed of trust, and an injunction “barring
enforcement of the deed of trust through foreclosure sale.” CP at 8.
During her deposition, Frizzell explained that she did not understand what the “business
loan” meant, expressing, “I can’t say, because I don’t understand what went on.” CP at 259
(emphasis omitted). When asked if she understood that she was “borrowing [the] funds from the
Murrays[,]” Frizzell responded, “I’m not sure.” CP at 262 (emphasis omitted). Baer opined that
offering a loan to Frizzell “was like giving the money to a small child who had no conception of
how to spend the money, what would be required to pay it back, and what would happen if it
were not paid back.” CP at 146. Frizzell acknowledged that she suffered from a learning
disability, and a clinical psychologist, Dr. Mark Whitehill, stated that, after observing and testing
Frizzell, he believed she “is characterologically disposed to conform to what she believes others
want, and to keep her own feelings suppressed. Had she believed that the Murrays wanted her to
sign the loan agreement, in all likelihood she would have felt compelled to do so.” CP at 197. He
added that Frizzell suffers severe memory deficits, strongly suggestive of “incipient dementia” that
affects her ability to remember what she would have been told about the “nature, effect, and
terms” of the loan, as well as the ability to make rational decisions based on that memory. CP at
197. Ultimately, he expressed significant concerns about Frizzell’s capacity to contract.
Frizzell also sought to enjoin the trustee’s sale, and on February 18, 2010, the trial court
entered an order enjoining the trustee’s sale scheduled for the following day, “conditioned upon
plaintiff’s payment into the registry of the court the sum of $15,000 representing arrearages on
the deed of trust and a bond in the sum of $10,000 on or before February 19, 2010 at 9:45 a.m.”
CP at 125. The injunction lapsed when Frizzell failed to remit the $15,000 and post the bond by
the following morning. The trustee foreclosed on the home, and Barbara purchased the property
at the sale and ejected Frizzell from the property. Following discovery, the Murrays moved to
dismiss all of Frizzell’s claims on summary judgment. First, the Murrays moved that the trial
court dismiss Frizzell’s claim on summary judgment because she failed to restrain the trustee’s
sale and thus waived all claims and defenses relating to the deed of trust and promissory note.
Second, in the alternative, the Murrays moved that the trial court enter partial summary judgment
regarding Frizzell’s competency to contract, as well as the propriety of the transaction under
various state statutes. The trial court granted the Murray’s motion for summary judgment on all
of Frizzell’s claims “based on the Plaintiff’s failure to obtain pre-sale injunctive relief.” CP at 305.
Frizzell timely appeals.
ANALYSIS
We review summary judgment orders de novo. York v. Wahkiakum Sch. Dist. No. 200,
163 Wn.2d 297, 302, 178 P.3d 995 (2008). Under CR 56(c), summary judgment is appropriate if
the record presents no genuine issue of material fact and the moving party is entitled to a
judgment as a matter of law. Oltman v. Holland Am. Line USA, Inc., 163 Wn.2d 236, 243, 178
P.3d 981, cert. dismissed, 129 S. Ct. 24 (2008).
Frizzell argues that the trial court erred in granting summary judgment because she did not
waive her right to seek post-sale relief when she sought and obtained an order restraining the
trustee’s sale. We agree. Waiver is the intentional and voluntary relinquishment of a known
right, or such conduct as warrants an inference of relinquishment of such right, and it may result
from an express agreement or may be inferred from circumstances indicating an intent to waive.
Lande v. S. Kitsap Sch. Dist. No. 402, 2 Wn. App. 468, 474, 469 P.2d 982 (1970) (citing
Bowman v. Webster, 44 Wn.2d 667, 669, 269 P.2d 960 (1954)). Waiver is also an equitable
principle that defeats someone’s legal rights where the facts support an argument that a party
relinquished its rights by delaying in asserting or failing to assert an otherwise available adequate
remedy. Albice v. Premier Mortg. Servs. of Wash., Inc., 174 Wn.2d 560, 569, 276 P.3d 1277
(2012).
The three goals of Washington’s Deed of Trust Act (WDTA)3 are (1) to provide an
efficient and inexpensive nonjudicial foreclosure process, (2) to provide adequate opportunities
for interested parties to prevent wrongful foreclosures, and (3) to promote stability of land titles.
Plein v. Lackey, 149 Wn.2d 214, 225, 67 P.3d 1061 (2003). And the WDTA provides the only
means by which a grantor may preclude a sale once foreclosure has begun. Cox v. Helenius, 103
Wn.2d 383, 388, 693 P.2d 683 (1985). Under the WDTA,
Anyone having any objection to the sale on any grounds whatsoever will be afforded an opportunity to be heard as to those objections if they bring a lawsuit to restrain the sale pursuant to RCW 61.24.130. Failure to bring such a lawsuit may result in a waiver of any proper grounds for invalidating the Trustee’s sale.
RCW 61.24.040(1)(f) (emphasis added). The legislature’s use of “may” in this statute neither
requires nor intends us to strictly apply waiver rules; so under this statute, we apply waiver only
where it is equitable under the circumstances and serves the WDTA’s goals. Albice, 174 Wn.2d
at 570.
The trial court here erred when it found that Frizzell waived her right to post-sale relief
and dismissed her claim on summary judgment. For instance, the Murrays cite RCW
61.24.040(1)(f) in their argument that Frizzell’s failure to actually enjoin the trustee’s sale resulted
in her waiving her right to pursue all post-sale relief. But, RCW 61.24.040(1)(f) simply addresses
how one may challenge a trustee’s sale or seek to invalidate a trustee’s sale. It expressly states
that failure to bring a lawsuit to restrain a trustee’s sale may result in waiving the right to
invalidate the trustee’s sale. Frizzell’s claims, however, extend beyond her attempt to invalidate
the trustee’s sale. Here, Frizzell alleged a Consumer Protection Act violation and monetary
damages, claims that are distinct from the trustee’s sale, and forms of relief that RCW
61.24.040(1)(f) does not portend to preclude seeking post-sale relief by failing to bring a lawsuit
restraining a trustee’s sale.
Next, the Murrays cite Plein and Brown v. Household Realty Corp., 146 Wn. App. 157,
189 P.3d 233 (2008), review denied, 165 Wn.2d 1023 (2009), to support their argument that
Frizzell’s failure to actually obtain injunctive relief waived her right to any post-sale claims. These
cases, though, are distinguishable from the present matter.
Plein involved a corporate officer who brought an action for nonjudicial foreclosure on a
deed of trust on real property after the corporation defaulted on a promissory note. Plein, 149
Wn.2d at 220. A junior lienholder, Plein, brought his own action against the corporate officer
seeking to permanently enjoin the trustee’s sale and to obtain a declaration voiding the deed of
trust. Plein, 149 Wn.2d at 220. But the trial court dismissed Plein’s complaint on summary
judgment, and the Supreme Court affirmed the trial court, holding that Plein had waived his right
to contest nonjudicial foreclosure and the trustee’s sale because he did not seek a preliminary
injunction or any other order to restrain the sale. Plein, 149 Wn.2d at 229. The Supreme Court
stated, “We hold that by failing to obtain a preliminary injunction or other restraining order
restraining the trustee’s sale, as contemplated by RCW 61.24.130, Plein waived any objections to
the foreclosure proceedings.” Plein, 149 Wn.2d at 229. Here, unlike Plein, Frizzell not only
sought a preliminary injunction to restrain the trustee’s sale, but she also obtained a restraining
order.4 Accordingly, Plein is distinguishable from the present matter.
In Brown, the borrowers under deeds of trust, the Browns, brought an action against their
lender, Household Realty, two years after a foreclosure on the Browns’ property, alleging
multiple common law and statutory claims. Brown, 146 Wn. App. at 160. The trial court granted
summary judgment in Household’s favor and Division One of this court affirmed, holding that the
Browns waived their claims by failing to request a preliminary injunction or restraining order
enjoining the sale under the WDTA. Brown, 146 Wn. App. at 171.
Again, Brown is distinguishable. There, Division One held that a borrower waives claims
against a lender by failing to timely request a preliminary injunction or restraining order enjoining
nonjudicial foreclosure sale at least five days before the sale date. Brown, 146 Wn. App. at 163,
170. But the court left unanswered whether “a party who files a lawsuit after the initiation of the
foreclosure process and unsuccessfully attempts to obtain a preliminary injunction restraining the
sale could prevail at trial yet be barred from obtaining relief.” Brown, 146 Wn. App. at 170.
Unlike the Browns, Frizzell filed a complaint seven days before the sale seeking an injunction
barring enforcement of the deed of trust through the trustee’s sale, as well as a motion to enjoin
the trustee sale three days before the scheduled foreclosure; and the trial court enjoined the
trustee sale, provided that Frizzell post a bond and pay arrearages. Therefore, Brown differs from
the present matter.
Moreover, in Albice the Supreme Court clarified how waiver applies under the WDTA.
The court held that we should not rigidly apply the WDTA’s waiver rule but instead apply it as an
equitable tool only where, for example, the facts support an argument that a party relinquished its
rights by delaying in asserting or failing to assert an otherwise available adequate remedy. See
Albice, 174 Wn.2d at 570. And, ultimately, a party must intentionally or voluntarily waive its
legal rights to effectuate a valid waiver; but here, Frizzell never intended or volunteered to
relinquish her right to raise claims against the Murrays. Unlike the borrowers in Plein and Brown,
Frizzell pursued her claims before the trustee’s sale and actually obtained an order restraining the
trustee’s sale, though on the condition that she pay a sizeable sum of money and bond by the
following morning. Albice dictates that waiver applies only when equitable where, for example,
the facts support an argument that Frizzell relinquished her rights by delaying in asserting or
failing to assert an otherwise available adequate remedy. See Albice, 174 Wn.2d at 570. Such
was not the case here.
Frizzell did not delay or fail to assert an available adequate remedy. Accordingly, it would
be inequitable to apply waiver under these facts.5 We hold that the trial court erred in determining
that Frizzell waived her right to relief by failing to obtain pre-sale relief and in granting the
Murray’s summary judgment motion. Therefore, we remand to the trial court for action
consistent with our decision.
Johanson, A.C.J. We concur:
Quinn-Brintnall, J.
1 For clarity, we refer to Gregory Murray as “Gregory” and Barbara Murray as “Barbara.”
2 Baer believed Frizzell’s property — a house with a fish pond, front deck, fruit trees, and a yard — was worth roughly $250,000. The property value had been assessed at $225,000, and Frizzell estimated its market value at $300,000.
3 Ch. 61.24 RCW.
4 Frizzell did not restrain the looming trustee’s sale because the trial court conditioned its restraining order on Frizzell’s paying $15,000 in arrearages and a $10,000 bond into the court registry by the following morning. Frizzell did not meet these conditions.
5 In addition, we also agree with Frizzell that if she lacked the capacity to contract, it would be inequitable to conclude that she voluntarily relinquished known rights related to that contract. But the trial court did not reach Frizzell’s other issues because it granted summary judgment on an alternative ground.
On April 5, 2012, the Settlement1 went into effect when the United States District Court for the District of Columbia entered five separate consent judgments (the “Consent Judgments”)2 that settled claims of alleged improper mortgage servicing practices against five major mortgage servicing organizations. Those claims had been brought by a number of independent agencies.
The governments and government agencies participating in the Settlement (the “government parties”) were:
• The U.S. Department of Housing and Urban Development • The U.S. Department of Justice • Attorneys general from 49 states and the District of Columbia • Various state mortgage regulatory agencies • Other releasing parties, including the Consumer Financial Protection Bureau and the U.S. Department of Treasury
These claims had been brought against five mortgage servicers as defendants (the “Servicers”):
• Bank of America, N.A. (“Bank of America”) • CitiMortgage, Inc. (“Citi”) • Ally Financial, Inc., Residential Capital LLC, and GMAC Mortgage, LLC (“Ally”) • J.P. Morgan Chase Bank, N.A. (“Chase”) • Wells Fargo & Company and Wells Fargo Bank, N.A. (“Wells”)3
In the Settlement, the government parties released claims against the Servicers in exchange for the Servicers’ agreement to:
• Make direct payments to governments of approximately $5 billion.4 • Provide relief, including principal forgiveness, refinancing, and other forms of relief (“Consumer Relief”) to distressed borrowers.5 • Change the servicing practices that they follow in their dealings with borrowers by the adoption of more than 300 servicing standards (the “Servicing Standards”).6 • Implement various protections for military personnel.7
The Settlement also created the position of Monitor. Shortly after Judgmentsreaching agreement on the terms of the Settlement, the parties appointed me to serve in that role.8 My appointment as Monitor was confirmed when the U.S. District Court for the District of Columbia entered the Consent Judgments on April 5, 2012.
As the Monitor, I am responsible for reviewing and certifying the discharge of the Servicers’ Consumer Relief obligations and overseeing the implementation of the Servicing Standards.9 I do not have any authority or responsibilities that relate to the direct payments previously mentioned.
As Monitor, I am subject to oversight by a Monitoring Committee that comprises representatives of the U.S. Department of Housing and Urban Development, the U.S. Department of Justice, and representatives of 15 states.10 My office operates under a budget I prepare annually in consultation with the Monitoring Committee and Servicers and is paid for by the Servicers out of their corporate funds. My budget for the fiscal year beginning July 1, 2012 was so prepared and is in effect. At the end of this fiscal year, I will make publicly available a report with audited financial statements covering my work.
Under the Settlement, I am to carry out my responsibilities by negotiating and then implementing Work Plans that describe in detail the performance to be measured and the procedures by which such measurement will be undertaken. The Servicers and I have agreed upon these Work Plans and have submitted them to the Monitoring Committee for review. They will take effect if the Monitoring Committee does not object to them.11 As we move forward through the Settlement process, the Servicers and I can jointly amend the Work Plans if the Monitoring Committee does not object.12
The five largest U.S. mortgage servicers say they have provided about $10.6 billion in relief to troubled borrowers under the terms of a $25 billion legal settlement over abusive foreclosure practices, according to a report released today by a court-appointed monitor.
Most of that aid, $8.7 billion, came in the form of short sales, according to the Office of Mortgage Settlement Oversight. Lenders including JPMorgan Chase & Co. (JPM), Wells Fargo & Co. (WFC), also forgave $749.4 million in mortgage debt.
“There’s some evidence from this report that the banks are beginning to do some significant work on consumer relief,” Joseph A. Smith Jr., the settlement monitor, said in a telephone interview. “I’m not declaring victory, but I do think we’ve made a solid start.”
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