A judge signed off Friday on Residential Capital LLC’s deal with the Federal Reserve Board to set aside $230 million for borrowers who may have had their homes improperly foreclosed upon.
The deal, approved by Judge Martin Glenn of U.S. Bankruptcy Court in Manhattan, replaces a costly and drawn-out review process that sent millions to the professionals investigating the foreclosed loans and little or nothing to most borrowers who may have been wronged.
“This settlement puts more money in the pockets of more borrowers,” said Morrison & Foerster LLP’s Lorenzo Marinuzzi, a ResCap lawyer.
Mr. Marinuzzi said in court that the review, which stemmed from an April 2011 decree from federal banking regulators for several top mortgage servicers to hire independent consultants to look for improper foreclosures, had become the costliest piece of ResCap’s already expensive bankruptcy. In court papers last month, ResCap said the review was costing $300,000 a day and could reach $459 million. While professionals still will be needed, the cost will go down substantially.
Originally, the company had estimated it would pay about $50 million for the foreclosures, to which Judge Glenn said at a March hearing, “It’s costing you $350 million to figure out who you…might pay $50 million to. That makes no sense.”
The $230 million, which is separate from another fund that also will put money in borrowers’ pockets, will be distributed among about 232,000 borrowers, regardless of whether they were improperly foreclosed upon. If they are found to have been harmed, they will get more in accordance with a so-called “waterfall” payment system.
“This settlement was a long time coming,” Mr. Marinuzzi said in court.
An attorney turned whistle-blower at Colorado’s second-largest foreclosure law firm has detailed to state investigators a pattern of abuses that stretch beyond the scope of their investigation into alleged overbilling practices.
Susan Hendrick testified at a hearing Thursday that she told the state attorney general’s office about bill-padding she witnessed while a lawyer at Aronowitz & Mecklenburg in Denver, conduct that investigators say needlessly cost homeowners facing foreclosure millions of dollars. She then laid out a number of other alleged abuses she says happened.
The abuses ranged from the padding of attorney hours to allegations that the law firm destroyed evidence that prosecutors were seeking in their investigation into billing practices by foreclosure law firms, according to testimony in Denver District Court.
SUPREME COURT OF THE STATE OF NEW YORK QUEENS COUNTY
CITIMORTGAGE, INC., Plaintiff,
-against- Date May 28, 2013
HOWARD SIROTA, ROCHELLE SIROTA, a/k/a RACHELL SIROTA, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., (MERS), as Nominee for METROPOLITAN NATIONAL MORTGAGE COMPANY, LLC, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, NEW YORK CITY TRANSIT ADJUDICATION BUREAU, and “JOHN DOE” and/or “JANE DOE” #1-10, inclusive, the last ten names being fictitious and unknown to plaintiff, the persons or parties intended being the tenants, occupants, persons or corporation, if any, having or claiming an interest, in or lien upon the premises described in the complaint, Defendants,
Upon the foregoing papers it is ordered that the motion and cross motion are determined as follows:
Plaintiff commenced this action by filing a copy of the summons and complaint on May 19, 2011. Plaintiff seeks to foreclose on a mortgage on the subject real property known as 125 Beach 128th Street, Rockaway Park, New York to secure repayment of a note, evidencing a loan in the original principal amount of $1,980,000.00, plus interest, by Metropolitan National Bank Mortgage Company, LLC (Metropolitan) to defendants Howard Sirota and Rachelle Sirota. In its complaint, plaintiff alleged it was the holder of the mortgage and underlying note, and that defendants Sirota defaulted under the terms of the mortgage and note by failing to make the monthly mortgage installment payment due on June 1, 2010, and as a consequence, it elected to accelerate the entire mortgage debt.
Defendants Howard Sirota and Rachell Sirota served a joint answer, with various affirmative defenses, but are now represented by separate counsel. Plaintiff did not cause the “John Doe” and “Jane Doe” defendants to be served with process insofar as it determined that they are not necessary party defendants. The remaining defendants are in default in the action.
By order dated December 2, 2011, the Court Attorney Referee noted that a residential foreclosure conference was held that date, but the case had not been settled, and directed plaintiff to proceed by means of motion or order of reference. The Court Attorney Referee also noted that defendant borrowers intended to proceed with short sale activity, and there was no loan modification application pending.
Defendants Rachell Sirota and Howard Sirota oppose the motion by plaintiff. Defendant Rachell Sirota cross moves for summary judgment dismissing the complaint asserted against her and directing that certain insurance proceeds be released from escrow and paid jointly to defendants Sirota. Defendant Howard Sirota cross moves pursuant to CPLR 3211(a)(10) and CPLR 3211(c) to dismiss the complaint asserted against him based upon lack of standing to sue.
In a foreclosure action, a plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced (see Bank of New York v Silverberg, 86 AD3d 274, 279 [2d Dept 2011]; Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 108 [2d Dept 2011]). However, where, as here, the answer includes a challenge to the plaintiff’s standing to bring the action, the latter must also be established in order to succeed on a motion for summary judgment (see Deutsche Bank Natl. Trust Co v Haller, 100 AD3d 680, 682 [2d Dept 2012]; GRP Loan, LLC v Taylor, 95 AD3d 1172, 1173 [2d Dept 2012]; Bank of New York v Silverberg, 86 AD3d at 279; US Bank N.A. v Collymore, 68 AD3d 752, 753 [2d Dept 2009]).
Here, plaintiff asserts it was the holder of the mortgage and note, and therefore had standing to bring this action. Although plaintiff offers a copy of a written assignment by MERS to plaintiff, its counsel explicitly acknowledges plaintiff does not rely upon such assignment to demonstrate standing. Rather, plaintiff contends the assignment 1 constitutes evidence of when the note and mortgage were acquired by it. It claims it was the holder of the note made payable to Metropolitan and endorsed over to it without recourse, and that the mortgage passed with the debt as an inseparable incident to the promissory note (see U.S. Bank, N.A. v Collymore, 68 AD3d at 754; Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674, 674 [2d Dept 2007]).
The copy of the note submitted by plaintiff in support of its motion was made payable to Metropolitan, and includes an endorsement on the note by Metropolitan to plaintiff, and two separate allonges. The endorsement on the note and the allonges are undated. To the extent plaintiff offers the affidavit of Justin Wenk, a vice president of BSI Financial Services, Inc. (BSI), the servicing agent for Newbury, the affidavit is conclusory and insufficient to establish that plaintiff had standing to bring this action. Mr. Wenk states that “based upon [his] review of BSI’s [s]ervicing [r]ecords, [plaintiff] was the owner of the note and mortgage at the time of commencement of this action.” He, however, does not indicate that BSI was the servicing agent for plaintiff. He merely states that BSI is responsible for servicing the mortgage account as “attorney-in-fact for the owner and holder of the subject mortgage and is authorized to make this affidavit as the servicer of the loan,” without identifying the owner and holder. Mr. Wenk also fails to indicate whether his knowledge regarding the ownership of the note and mortgage on the date of commencement is based upon business records maintained by plaintiff, or that he has personal knowledge of the business practices or procedures of plaintiff, including with respect to plaintiff’s keeping of business records (see Unifund CCR Partners v Youngman, 89 AD3d 1377 [4th Dept 2011]). In addition, Mr. Wenk’s affidavit lacks any factual details as to the physical delivery of the note to plaintiff, and whether the endorsement of the note was effectuated prior to the commencement of the action (see HSBC Bank USA v Hernandez, 92 AD3d 843 [2d Dept 2012]), or when the execution of the allonge evidencing the transfer of the note from plaintiff into MCM Homeowners Advantage Trust X took place. Plaintiff does not submit a copy of any power of attorney, indicating BSI is the attorney in fact for it.
Under such circumstances, plaintiff has failed to establish, prima facie, that it had standing to commence the action, and that branch of the motion by plaintiff for summary judgment against defendants Howard Sirota and Rachell Sirota is denied (HSBC Bank USA v Hernandez, 92 AD3d 843 [2d Dept 2012]; see also Deutsche Bank Nat. Trust Co. v Haller, 100 AD3d 680 [2d Dept 2012]; Deutsche Bank Natl. Trust Co. v Rivas, 95 AD3d 1061 [2d Dept 2012]).
With respect to that branch of the cross motion by defendant Rachell Sirota for summary judgment dismissing the complaint asserted against her based upon lack of standing and the cross motion by defendant Howard Sirota to dismiss the complaint asserted against him based upon lack of standing, the submissions by the parties do not establish as a matter of law that plaintiff lacked standing to commence the action (see HSBC Bank USA, 92 AD3d 843; Deutsche Bank Natl. Trust Co., 95 AD3d 1061). The note bears an endorsement into plaintiff and the assignment dated May 3, 2011 indicates assignment of the mortgage and note to plaintiff, thereby raising questions of fact as to when the endorsement was made and when the note was delivered to plaintiff.
With respect to that branch of the motion by plaintiff to strike the affirmative defenses raised by defendant Howard Sirota in his answer, plaintiff bears the burden of demonstrating that the defenses are without merit as a matter of law (see Butler v Catinella, 58 AD3d 145, 157-148 [2d Dept 2008]; Vita v New York Waste Servs., LLC, 34 AD3d 559, 559 [2d Dept 2006]).
That branch of the motion by plaintiff to dismiss the first affirmative defense asserted by defendant Howard Sirota in his answer based upon failure to state a cause of action is denied (see Butler, 58 AD3d 145).
That branch of the motion by plaintiff to strike the second affirmative defense asserted by defendant Howard Sirota in his answer based upon lack of standing is denied. With respect to the branch of the motion by plaintiff to strike the affirmative defense asserted by defendant Howard Sirota in his answer based upon lack of standing, plaintiff has failed to establish such defense is without merit as a matter of law (see Vita v New York Waste Servs., LLC, 34 AD3d 559, 559 [2d Dept 2006]) (see supra at plaintiff 2-4).
That branch of the motion by plaintiff to dismiss the third and fourth affirmative defenses asserted by defendant Howard Sirota in his answer based upon lack of subject matter jurisdiction and “lack of jurisdiction” is granted. The Supreme Court is a court of original, unlimited and unqualified jurisdiction (see Kagen v Kagen, 21 NY2d 532, 537 [1968]; NY Const., art VI, § 7) and is competent to entertain all causes of action unless its jurisdiction has been specifically proscribed (Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 166 [1967]). The court has the competence to adjudicate the claim asserted by plaintiff for the foreclosure of the mortgage. To the extent defendant Howard Sirota asserts lack of personal jurisdiction, he failed to move to dismiss the complaint upon such ground within 60 days of service of a copy of his answer, and has made no application to extend the period of time upon the ground of undue hardship (CPLR 3211[e]). As a consequence, such defense is deemed waived (CPLR 3211[e]; see Dimond v Verdon, 5 AD3d 718 [2d Dept 2004]).
That branch of the motion by plaintiff to dismiss the fifth and sixth affirmative defenses asserted by defendant Howard Sirota in his answer is denied. Although the language contained in the letter dated August 2, 2010 (see plaintiff’s Exhibit “F”) allegedly sent to defendants Sirota satisfied the requirements expressed in the mortgage agreement at paragraph 22, and the filing of the summons and complaint constituted a proper acceleration of the mortgage (see Franklin Socy. Fed. Sav. & Loan Assn. v Far-Pap Corp., 57 AD2d 607 [2d Dept 1977]), plaintiff’s submissions, including an attorney’s affirmation containing conclusory assertions that notice was given, are insufficient to establish that plaintiff served on defendants Sirota, in accordance with paragraph 15 of the mortgage, the requisite notice to cure their default as expressly required in the mortgage agreement at paragraph 22 (see Norwest Bank Minn. v Sabloff, 297 AD2d 722 [2d Dept 2002]).
That branch of the motion by plaintiff to dismiss the seventh affirmative defense asserted by defendant Sirota in his answer is granted. Contrary to the claim by defendant Howard Sirota, the failure by plaintiff to attach a copy of the alleged note to the complaint is not an affirmative defense to foreclosure. There is no statutory requirement that a note be annexed to a complaint for foreclosure and he has not cited any mortgage provision requiring such annexation.
That branch of the motion by plaintiff to dismiss the eighth affirmative defense asserted by defendant Howard Sirota in his answer based upon the doctrines of waiver, estoppel, laches and unclean hands is granted. Defendant Howard Sirota has failed to allege any facts supporting these conclusions of law (see Moran Enterprises, Inc. v Hurst, 96 AD3d 914 [2d Dept 2012]).
That branch of the motion by plaintiff to dismiss the ninth affirmative defense asserted by defendant Howard Sirota in his answer based upon failure to join necessary parties is granted. Defendant Howard Sirota has failed to identify which party has not been joined, and the manner in which it is necessary.
That branch of the motion by plaintiff to substitute Newbury for the named plaintiff is denied. The determination to substitute a party pursuant to CPLR 1018 lies within the discretion of the court (see NationsCredit Home Equity Servs. v Anderson, 16 AD3d 563, 564 [2d Dept 2005]). In this instance, it is unclear whether plaintiff had standing to commence this action. Furthermore, plaintiff admits the first allonge identifies the acquiring entity as “MCM Homeowners Advantage Trust X,” and not “MCM Capital Homeowner Advantage Trust X.” Steven Trowern, a member and employee of MCM Capital Homeowner Advantage Trust X, merely states in his affidavit dated April 15, 2013, that “upon information and belief” the allonge was delivered in blank, and then was erroneously completed by an employee of MCM Capital Homeowner Advantage Trust X, who excluded the word “Capital” when filling in the specific endorsement. Under these circumstances, substitution is unwarranted.
That branch of the motion by plaintiff for leave to amend the caption deleting reference to defendants “John Doe” and “Jane Doe” #1-10 is granted. It is ORDERED that the caption shall read as follows:
SUPREME COURT OF THE STATE OF NEW YORK QUEENS COUNTY
CITIMORTGAGE, INC. Plaintiff Index No. 12243/2011
-against-
HOWARD SIROTA, ROCHELLE SIROTA A/K/A RACHELL SIROTA, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (MERS), AS NOMINEE FOR METROPOLITAN NATIONAL MORTGAGE COMPANY, LLC, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, NEW YORK CITY TRANSIT ADJUDICATION BUREAU, Defendants —————————————————————-X. That branch of the motion by plaintiff for leave to appoint a referee is denied. That branch of the cross motion by defendant Rachell Sirota to direct the release of insurance proceeds from escrow as proposed is denied. Defendant Rachell Sirota did not assert any counterclaim in the answer, and therefore, cannot seek affirmative relief on an unpleaded claim for which issue has not been joined (CPLR 3212[a]).
Dated: July 22, 2013 J.S.C.
footnote
1 Plaintiff presumably does not do so because the subject mortgage does not specifically give Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for Metropolitan, the authority to assign the note and plaintiff lacks any evidence that MERS was actually in possession of the note at the time of that assignment (see Bank of New York v Silverberg, 86 AD3d 274, 281-283 [2d Dept 2011]; Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 109 [2d Dept 2011]). Under such circumstances, the assignment, at the most, effected an assignment of the mortgage without the underlying note. An assignment of a mortgage without the underlying debt is a nullity (see Deutsche Bank Natl. Trust Co. v Barnett, 88 AD3d 636, 637 [2d Dept 2009]; Bank of New York v Silverberg, 86 AD3d at 280), and thus, plaintiff’s standing may not be established by virtue of the MERS assignment alone.
The Federal Reserve Board on Friday released an amendment to the enforcement action against GMAC Mortgage requiring approximately $230 million in cash payments to mortgage borrowers.
The amendment is similar to those announced in early 2013 between 13 mortgage servicing companies and the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board. Like the other institutions, GMAC Mortgage was subject to an enforcement action for deficient practices in mortgage loan servicing and foreclosure processing.
More than 232,000 borrowers whose homes were in any stage of foreclosure in 2009 and 2010 with GMAC Mortgage will receive cash compensation under the amendment. Information about payments to borrowers whose mortgages were serviced by GMAC Mortgage will be announced in the near future.
The bankruptcy court that is overseeing the bankruptcy proceedings involving GMAC Mortgage approved GMAC Mortgage’s entry into the amended enforcement action Friday. As a result of this amendment, the independent foreclosure reviews will conclude for GMAC Mortgage borrowers.
Previously, the OCC and the Federal Reserve entered into amendments with Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. With the addition of GMAC Mortgage, approximately 4.4 million borrowers will receive a total of more than $3.8 billion in cash compensation while an additional $5.8 billion will be provided by the servicers in commitments for loss-mitigation assistance, such as loan modifications and forgiveness of deficiency judgments.
The $230 million to be paid by GMAC Mortgage includes $32 million that will satisfy GMAC Mortgage’s obligation to provide loss-mitigation assistance. GMAC Mortgage will satisfy its requirement for loss-mitigation assistance with direct borrower payments because it no longer owns a significant residential mortgaging portfolio.
As is the case with the previous amendments, borrowers whose mortgages were serviced by GMAC Mortgage who accept a payment will not be prevented from taking any action related to their foreclosure. Servicers are not permitted to ask borrowers to sign a waiver of any legal claims they may have against their servicer in connection with accepting these payments. In addition, the servicer’s internal complaint process will remain available to borrowers.
Federal Reserve examiners continue to closely monitor the servicers’ implementation of plans required by the enforcement actions previously issued against the servicers to correct the unsafe and unsound mortgage servicing and foreclosure practices.
Borrowers with all 14 servicers can call 1-888-952-9105 to update their contact information, verify that they are covered by the agreement, or to ask further questions.
St. Clair County Circuit Judge Vincent Lopinot has denied a motion to dismiss Mortgage Electronic Recording System (MERS) and 20 lenders from a suit that alleges the defendants conspired in a shadow mortgage system set up to avoid transparency and evade county recording fees.
State’s Attorney Brendan Kelly sued in May 2012 alleging the defendants’ recording system effectively eliminates the ability to track the purchase and sale of properties through the traditional public records system, in violation of state statute. The five-count complaint also alleges unjust enrichment, civil conspiracy, deceptive trade practices and consumer fraud.
Kelly hailed Lopinot’s decision.
“Banks are an essential part of our system of credit that sustains the economy, but they shouldn’t be above the law,” he said in a statement. “A line has to be drawn and if this is where it must be drawn so be it.”
(Specifically, the complaint alleges: When a MERS member makes a home loan to a borrower, the MERS member obtains from the borrower a promissory note naming the lender as promisee and a mortgage instrument naming MERS as the mortgagee. In the mortgage, the borrower assigns his right, title and interest in the property to MERS, and the mortgage instrument is then recorded in the local land records office with MERS as the named mortgagee. When the promissory note is sold (and possibly re-sold) in the secondary mortgage market, the MERS database purports to track that transfer. As long as the parties involved in the sale are MERS members, MERS remains the mortgagee of record. Designating MERS as the mortgagee of record purportedly excuses MERS members from publicly recording mortgage assignments between themselves and, thus, from paying recording fees required by statute).
CUOMO ADMINISTRATION PROPOSES NATION-LEADING REFORMS TO PROTECT CONSUMERS AGAINST ABUSIVE AND DECEPTIVE DEBT COLLECTION PRACTICES
DFS Issues New Consumer Protections through First Use of ‘Gap Authority’ under New York Financial Services Law
NEW YORK, NY – Benjamin M. Lawsky, Superintendent of Financial Services, today announced a set of nation-leading reforms to help protect consumers against abusive and deceptive debt collection practices. These reforms will help cut down on repeated, harassing phone calls from debt collectors; guard against the collection of ‘zombie debts’ that have already expired; prevent situations where companies try to collect debts from the wrong consumer for the wrong amount of money due to shoddy recordkeeping, as well as address other widespread abuses in the debt collection industry.
The reforms are included in a new proposed regulation that the New York State Department of Financial Services (DFS) is issuing through the first use of its ‘gap authority.’ This ‘gap authority,’ which was included in the law that Governor Cuomo signed in 2011 creating DFS, gives the Department the ability to regulate and enforce rules against previously unregulated providers of financial products and services that could otherwise fall through the cracks and hurt consumers.
“Far too often, the debt collection industry has used despicable, high-pressure practices to intimidate struggling New Yorkers who have fallen on hard times,” said Governor Cuomo. “These nation-leading reforms will help make sure that consumers are protected and know their rights.”
Benjamin M. Lawsky, Superintendent of Financial Services said: “Debt collectors frequently use abusive scare tactics to try to stack the deck against struggling families and squeeze outsized profits out of their financial misery. These reforms will help level the playing field for consumers so they have a fighting chance as they work hard to put their financial life back in order.”
Complaints about deceptive and abusive debt collection practices are among the most frequent financial complaints filed by consumers nationally and in New York. In the last eighteen months alone, New Yorkers filed more than 13,000 complaints about debt collection practices.
Consumers complain frequently that debt collectors make harassing calls to collect debts, and many times, are contacting the incorrect person for the incorrect amount of money. Problems are especially frequent in the rapidly growing debt buying industry, where companies purchase defaulted debts for pennies on the dollar and work to earn exponential returns through aggressive, often harassing, collection tactics. To keep costs down, debt buyers often maintain shoddy records and do little to verify that they are contacting the correct debtor or for the correct amount of money.
To address these and other serious abuses in the debt collection industry, DFS’s new proposed regulation includes the following key reforms:
Better Disclosures and Transparency.The regulation sets high standards for the information that must be provided to a consumer when debt collection activities begin. These disclosures go beyond current federal requirements, ensuring that collectors are maintaining and reviewing basic information, such as a breakdown of each charge and fee added to the debt and each payment made after charge off. This will help empower consumers with knowledge about where the debt came from and what additional fees the collector may have added to their debt, which is especially important when debts are sold and resold to collectors the alleged debtor has never heard of.
Protections against Collection of ‘Zombie Debts.’ Oftentimes, debt collection companies will try to collect on “zombie debts” for which the statute of limitations has already expired. Under this new regulation, if a debt collector tries to collect on a debt after the statute of limitations has expired, the collector will need to inform the consumer, in every communication, that the statute of limitations has expired and the consumer can use that as a defense against a collection lawsuit. Most consumers are not represented by counsel and debt collectors can take advantage of this by threatening to sue, or actually suing, without the consumer knowing he or she has this defense. This reform will help prevent companies from bringing expired zombie debts back from the dead.
Verifying the Debt Is Actually Owed.This regulation would put in place groundbreaking procedures to make a debt collector verify the debt is actually owed if a consumer disputes its validity. Currently, consumers must dispute the debt in writing and request verification within 30 days of the first collection effort. Under the Cuomo Administration’s reforms, anytime a consumer disputes the validity of the debt, even on the phone, debt collectors will need to provide documentation proving that the debt is valid, including a copy of the signed contract and final account statement, and that the collector has “chain-of-title,” proving that the collector has the right to collect on the debt.
Making Sure You Get It in Writing.To ensure that creditors honor any settlement agreements, including those made with debt buyers earlier in the chain-of-title, consumers will receive written confirmation of any debt settlement agreement. Consumers will also receive written confirmation and acknowledgement that the debt has been satisfied to stop consumers from being pursued for debts that they already paid off.
Cutting Down on Harassing Phone Calls. Consumers will also have the right to communicate with collectors through their email, if they choose to do so. This will help reduce harassing phone calls and allow consumers to easily keep better records of their interaction with creditors.
DFS will aggressively investigate and pursue those firms that violate the consumer protections included in this regulation.
“Debt collection practices are ripe for reform,” said Carolyn E. Coffey, Supervising Attorney, MFY Legal Services, Inc. “We commend DFS for acting on behalf of vulnerable New York consumers to help level the playing field with new regulations.”
“The DFS rules will bring welcome relief to working people, low-income persons, and senior citizens across New York who are harmed every day by the unfair practices of debt collectors and debt buyers,” said Robert Martin, Associate Director of DC 37 Municipal Employees Legal Services.
“For years, debt collectors have been riding roughshod over the rights of low income New Yorkers, harassing them for debts they don’t even owe,” said Claudia Wilner, Senior Staff Attorney at New Economy Project. “These new rules will go a long way toward curbing these abuses, and will especially benefit New York’s low-income communities and communities of color, which have borne the brunt of unlawful debt collection.”
The proposed regulation will be published in the state register shortly and will be subject to a 45-day notice and comment period.
To view a copy the proposed regulation, please visit, link.
Whoever said “What you don’t know can’t hurt you” doesn’t know much about economics. That goes double for the nomination of Lawrence Summers to head the Federal Reserve. For all the ink that’s been spilled on the topic, there’s at least one surprise ending people don’t seem to be considering.
Remember the last time Summers was strapped to a trial balloon and exposed to this kind of a public dart-throwing contest? It was back when Obama was searching for his first Treasury Secretary. There was a public outcry against Summers then, too, and guess what happened:
We got Tim Geithner instead.
I’m against the Summers nomination too, but as they say: Be careful what you wish for.
What did you expect? Throwing money to very bad characters!
Do you ever see a rehab center throwing more drugs to the addicts? This is no different.
Charlotte Observer-
Bank of America and Wells Fargo serviced home loans that received more than $200 million in taxpayer funds as an incentive to modify them, only to have those mortgages go into redefault, according to a report slated for release Wednesday by a federal watchdog.
“It’s lost taxpayer money,” Christy Romero, the special inspector general for the federal bailout of the financial system, said Tuesday in an interview with the Observer.
The report, which heads to Congress, details how much in taxpayer incentives has been awarded to reduce mortgage payments through the federal Home Affordable Modification Program. The report also gives examples of homeowner complaints – some from as recently as this month – about their HAMP servicers.
According to the report, $102 million in incentive payments went to loans that were serviced by Charlotte-based Bank of America and that ended up back in default. The amount is equal to 16 percent of all the incentive payments awarded for loans that Bank of America has serviced under HAMP.
A U.S. housing regulator on Thursday said it reached an $885 million settlement with UBS over allegations the bank misrepresented mortgage-backed bonds that were sold to Fannie Mae and Freddie Mac between 2004 and 2007.
Edward DeMarco, the acting director of the Federal Housing Finance Agency, said in a statement the resolution provides “greater clarity” and helps preserve the assets of the two companies. Fannie Mae and Freddie Mac were taken over by the government in 2008 and have been kept afloat with taxpayer dollars.
An Ohio bank is refusing to reimburse a Vinton County woman whose house they unjustly repossessed while she was out of town.
Katie Barnett recently returned home after being away for two weeks to find that the lock on her door had been changed. She crawled in through the window to find all of her stuff missing.
Barnett suspected she had been robbed — and she wasn’t too far off.
It seems that, while Barnett was gone, the First National Bank of Wellston arrived at her place of residence, broke in, and took possession of all her belongings, including the house.
Except, as it later turned out, they had the wrong address.
Like millions of Americans who tried to stave off foreclosure in recent years, Lanette Worles says her bank repeatedly lost vital paperwork she submitted, scuttling her chance at saving her home.
Now, as Worles attempts to collect on a legal settlement intended as a remedy to just this type of practice, she confronts a depressingly familiar predicament: The check for her share of the settlement has gone missing, too.
“It’s been a total nightmare,” Worles, who lives in the Detroit suburb of Allen Park, Mich., said of her effort to track down the check. It was apparently mailed months ago to the wrong address, despite her attempts to correct the mistake in advance. “It seems like such a simple fix,” she said.
Worles is one of 4.2 million homeowners who qualify for a share of the $3.6 billion in cash payouts as part of the foreclosure abuse deal. And she’s one of 400,000 whose checks could not be delivered because they were sent to the wrong address, according to the Office of the Comptroller of the Currency.
If only Obama could only help homeowners as it has helped the bankster gangsters over and over and over again.
HuffPO-
A government auditor has warned that the U.S. Treasury Department doesn’t understand why distressed homeowners are re-defaulting at an “alarming” rate on government-aided mortgages, costing taxpayers more than $800 million and renewing questions over the administration’s efforts to help troubled borrowers.
The troubling report by the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP, comes as President Barack Obama is set to deliver Wednesday what aides describe as a major address on the economy and the middle class. By detailing the administration’s shortcomings in aiding homeowners, the report may undercut Obama’s message.
The Home Affordable Modification Program — the White House’s signature effort to assist struggling borrowers in the wake of the financial crisis and Great Recession — was initially promised to help up to 4 million homeowners avoid foreclosure. Through May, fewer than 880,000 borrowers were making payments on their new HAMP mortgages. The $50 billion commitment to the program has shrunk to about $38 billion. Less than $9 billion has been spent so far on housing programs under the bank bailout program known as TARP.
After a marathon markup session, the House Financial Services Committee approved legislation to wind down Fannie Mae and Freddie Mac over five years and rely on the private sector to provide a secondary market for residential real estate mortgages.
The committee approved the Protecting American Taxpayers and Homeowners Act on a party-line vote this morning after working on the bill 11 hours on Tuesday. Democrats offered numerous amendments to the bill, but all were defeated.
Besides winding down Fannie Mae and Freddie Mac, the PATH Act would limit the Federal Housing Administration’s role in housing finance to first-time homebuyers and people with low and moderate incomes.
IN THE COURT OF APPEALS ELEVENTH APPELLATE DISTRICT GEAUGA COUNTY, OHIO
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. f.k.a. THE BANK OF NEW YORK TRUST COMPANY, N.A., AS SUCCESSOR IN INTEREST TO JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, f.k.a. JPMORGAN CHASE BANK, AS TRUSTEE-SURF-BC2, Plaintiff-Appellee,
– vs –
THERESA A. SHAFFER a.k.a. THERESA MCFAUL, et al., Defendant-Appellant,
GEAUGA COUNTY TREASURER, et al., Defendants-Appellees.
Civil Appeal from the Geauga County Court of Common Pleas, Case No. 09F000648.
Judgment: Reversed and remanded.
CYNTHIA WESTCOTT RICE, J.,
{¶1} Appellant, Theresa A. Shaffer, appeals the default judgment of foreclosure entered in favor of Appellee, The Bank of New York Mellon Trust Company, N.A. (“New York Mellon”), by the Geauga County Court of Common Pleas. At issue is whether New York Mellon’s lack of standing when it filed this action could be cured by the assignment of the mortgage prior to the entry of final judgment. For the reasons that follow, the trial court’s judgment is reversed, and this matter is remanded for the trial court to dismiss the complaint without prejudice.
{¶2} On June 8, 2009, New York Mellon filed a complaint in foreclosure in the Geauga County Court of Common Pleas against appellant.
{¶3} New York Mellon alleged it was “the holder of a note, a copy of which is unavailable at this time.” New York Mellon further alleged that the note and the mortgage securing the note were in default. The mortgage attached to the complaint identifies “Wilmington Finance” as the lender. That mortgage was recorded on January 21, 2004.
{¶4} On September 11, 2009, New York Mellon filed an affidavit in which it stated that the principal balance owed by appellant was $178,505.91; “[t]he Creditor does hold the Debtor[’]s note by assignment;” and “[a]n assignment of mortgage was recorded with [the] Geauga County Recorder on June 22, 2009.” As noted above, New York Mellon filed its complaint two weeks earlier on June 8, 2009.
{¶5} Also, on September 11, 2009, New York Mellon filed a motion for default judgment against appellant.
{¶6} On December 9, 2009, appellant filed a motion for leave to plead, which the trial court granted until January 4, 2010.
{¶7} On January 5, 2010, appellant filed a motion for extension of time to respond to the complaint, which the trial court granted until February 8, 2010.
{¶8} On February 8, 2010, appellant filed another motion for extension of time to respond to the complaint, which the trial court denied.
{¶9} On February 25, 2010, the trial court entered a default judgment in foreclosure. The court found appellant was “in default of * * * Answer;” “that the allegations contained in the Complaint are true;” and “that the conditions of [the] Mortgage have been broken and plaintiff is entitled to have the equity of redemption of the defendant-titleholders foreclosed.”
{¶10} Later that same date, appellant, appearing pro se, filed her answer.
{¶11} On March 2, 2010, appellant filed a “motion to vacate order for sale and withdraw property from sale” in which she requested mediation “to prevent foreclosure sale.”
{¶12} On March 19, 2010, the trial court ordered the case stayed and the parties to attend mediation.
{¶13} On July 9, 2010, appellant filed a motion to dismiss on the grounds that New York Mellon did not have standing to file the action. She also asked that the mediation scheduled for that day (July 9) be cancelled.
{¶14} On July 15, 2010, the trial court denied the motion to dismiss.
{¶15} On September 2, 2010, appellant filed a motion for summary judgment. She argued she was entitled to judgment because New York Mellon “has no legal title to the mortgage and failed to prove ownership of the mortgage.”
{¶16} On September 13, 2010, the trial court entered an order vacating the mediation stay, noting that such efforts were unsuccessful.
{¶17} On October 28, 2010, the trial court denied appellant’s motion for summary judgment.
{¶18} On November 22, 2010, appellant filed another motion to dismiss based on New York Mellon’s alleged lack of standing.
{¶19} On December 7, 2010, the trial court denied appellant’s November 22, 2010 motion to dismiss.
{¶20} On September 26, 2011, appellant, now represented by counsel, filed a motion for relief from judgment, seeking to have the default judgment in foreclosure vacated. Again, appellant argued that New York Mellon lacked standing to invoke the trial court’s jurisdiction. New York Mellon did not attach or reference any evidence showing it had standing when it filed this action. Instead, New York Mellon argued that standing is not necessary to invoke the trial court’s subject-matter jurisdiction and that appellant waived any challenge to standing by not raising it within the time limits specified in Civ.R. 60(B).
{¶21} On November 29, 2011, the trial court entered judgment denying appellant’s motion for relief from judgment. The court found that the motion was filed over 18 months after the default judgment was entered and that appellant “has offered no reason why the motion was filed so long after the entry of judgment.” The court continued: “Even had Ms. Shaffer filed her Motion for Relief from Judgment within a reasonable time, she has not demonstrated entitlement to such relief. Her motion offers no explanation as to why she failed to file an answer or responsive pleading within the time provided by the Rules of Civil Procedure and the extensions granted by the Court.”
{¶22} Appellant appealed the trial court’s default judgment to this court. Appellant argued that New York Mellon lacked standing and failed to vest the trial court with subject-matter jurisdiction to enter its default judgment. Further, appellant argued that the trial court erred in denying her motion for relief from judgment. In Bank of New York Mellon Trust Co., N.A. v. Shaffer, 11th Dist. Geauga No. 2011-G-3051, 2012-Ohio- 3638, this court affirmed the trial court’s judgment, holding that there was no defect in New York Mellon’s standing and that appellant failed to show entitlement to relief from judgment under Civ.R. 60(B).
{¶23} Appellant appealed this court’s decision to the Supreme Court of Ohio. In Bank of New York Mellon Trust Co., N.A. v. Shaffer, 134 Ohio St.3d 1435, 2013-Ohio- 161, the Supreme Court of Ohio accepted jurisdiction of this case and remanded the matter to this court for application of the Supreme Court’s recent decision in Fed. Home Loan Mortg. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017.
{¶24} In Schwartzwald, the Supreme Court held that standing is required to present a justiciable controversy and is a jurisdictional requirement. Id. at ¶21-22. The Court held that, because standing is required to invoke the trial court’s jurisdiction, standing is determined as of the filing of the complaint. Id. at ¶24. Further, the Court held that a mortgage holder cannot rely on events occurring after the complaint is filed to establish standing. Id. at ¶26. Thus, the plaintiff cannot cure its lack of standing by obtaining an interest in the subject of the litigation after the action is filed. Id. at ¶36. Further, because standing is jurisdictional, it can never be waived and may be challenged at any time. See Pratts v. Hurley, 102 Ohio St.3d 81, 2004-Ohio-1980, ¶11. Finally, the Court in Schwartzwald held that when the evidence demonstrates the mortgage lender lacked standing when the foreclosure action was filed, the action must be dismissed without prejudice. Id. at ¶40. This court followed the Supreme Court’s holding in Schwartzwald in Fed. Home Loan Mortg. Corp. v. Rufo, 11th Dist. Ashtabula No. 2012-A-0011, 2012-Ohio-5930.
{¶25} This court in Rufo held that, pursuant to Schwartzwald, courts of common pleas have subject-matter jurisdiction over justiciable matters and that standing to sue is required to make a justiciable case. Rufo at ¶28. Thus, without standing, a case is not justiciable and the court lacks subject-matter jurisdiction. Id. When the trial court lacks subject-matter jurisdiction, its final judgment is void. Id. at ¶15.
{¶26} Applying the foregoing jurisprudence to this case, while New York Mellon filed its complaint on June 8, 2009, the record does not demonstrate that as of that date it held the note or mortgage. The mortgage attached to the complaint shows that Wilmington Finance, not New York Mellon, was the holder of the mortgage. Further, the affidavit filed by New York Mellon demonstrates that the assignment of the mortgage was recorded on June 22, 2009, two weeks after the complaint was filed. Thus, there is no evidence that New York Mellon held the mortgage on the date the complaint was filed.
{¶27} Further, while the complaint alleges that New York Mellon is “the holder of a note,” New York Mellon did not attach a copy of the note to the complaint, as required by Civ.R. 10. Instead, it alleged a copy of the note was “unavailable at this time” without offering any reason for its unavailability. Thereafter, New York Mellon never filed a copy of the note. New York Mellon’s allegation in the complaint that it holds a note is conclusory without any detail concerning when New York Mellon obtained the note. Likewise, while New York Mellon stated in its affidavit that it holds the note by assignment, it did not state when or by whom the note was assigned to it. Thus, there is no evidence in the record that New York Mellon held the note on the date it filed the complaint.
{¶28} Because New York Mellon failed to establish it held either the note or mortgage as of the date it filed the complaint, it lacked standing. As a result, this case is not justiciable; the trial court lacked subject-matter jurisdiction to enter its judgment of foreclosure; its judgment was void; and the court’s lack of subject-matter jurisdiction was subject to challenge at any time.
{¶29} Further, the fact that Shaffer was in default of an answer does not mean she admitted New York Mellon held the note on the date it filed the complaint, thus conferring subject-matter jurisdiction on the court. As noted above, the allegation in the complaint that New York Mellon holds a note is merely conclusory, and does not include any detail as to when or how it obtained the note. In any event, it is well settled that “[p]arties may not, by stipulation or agreement, confer subject-matter jurisdiction on a court, where subject-matter jurisdiction is otherwise lacking.” Fox v. Eaton Corp., 48 Ohio St.2d 236, 238 (1976), overruled on other grounds by Manning v. Ohio State Library Bd., 62 Ohio St.3d 24, 29 (1991). Further, this court has held that the lack of subject-matter jurisdiction can be raised at any stage of the proceedings and can be raised for the first time on appeal. Smith v. Dietelbach, 11th Dist. Trumbull No. 2011-T- 0007, 2011-Ohio-4308, ¶14.
{¶30} While this court in Self Help Ventures Fund v. Jones, 11th Dist. Ashtabula No. 2012-A-0014, 2013-Ohio-868, held that the assignment of a mortgage is sufficient to transfer a contemporaneous note, id. at ¶39, this court in Jones held that for standing to exist, the mortgage or note must have been assigned to the mortgagee-plaintiff prior to the filing of the complaint. Id. at ¶26. Because the only evidence offered by New York Mellon in its affidavit regarding the mortgage assignment was that it was recorded two weeks after the complaint was filed, the mortgage assignment was insufficient to confer standing on New York Mellon or to vest the trial court with subject-matter jurisdiction.
{¶31} Further, since the trial court lacked subject-matter jurisdiction and its default judgment was therefore void, Shaffer was not required to comply with the time requirements of Civ.R. 60(B) in order to be entitled to an order vacating the judgment. A court’s authority to vacate a void judgment is not derived from the Rules of Civil Procedure, but rather is an inherent power possessed by courts. Hoffman v. New Life Fitness Centers, Inc. 116 Ohio App.3d 737, 739 (3d Dist.1996), appeal not allowed by Supreme Court of Ohio at 78 Ohio St.3d 1464 (1997). Further, a judgment rendered by a court lacking subject matter jurisdiction is void ab initio, and may be vacated by virtue of the court’s inherent power independent of the grounds for vacation of judgments set forth in Civ.R. 60(B). Falk v. Wachs, 116 Ohio App.3d 716, 721 (9th Dist.1996). Thus, a motion to vacate a void judgment need not comply with the requirements of Civ.R. 60(B). Id.
{¶32} We note that, prior to appellant’s motion for relief from judgment, she repeatedly brought to the trial court’s attention New York Mellon’s lack of standing. She asserted the issue in her answer, filed February 25, 2010; in her motion to dismiss, filed July 9, 2010; in her second motion to dismiss, filed November 22, 2010; and in her motion for summary judgment, filed September 2, 2010. While Shaffer’s answer was out of rule by 13 days, thereafter, she diligently attempted to bring the issue of New York Mellon’s lack of standing to the trial court’s attention.
{¶33} Whether a trial court has subject-matter jurisdiction is a question of law that we review de novo. Dietelbach, supra. Since the trial court lacked subject-matter jurisdiction in entering default judgment, the court erred in denying appellant’s motion to vacate the judgment. Further, since appellant was not required to comply with Civ.R. 60 in her efforts to vacate the court’s void judgment, the court erred in finding that, because she did not comply with the time requirement of Civ.R. 60(B), she was not entitled to relief from judgment.
{¶34} For the reasons stated in this opinion, it is the judgment and order of this court that the judgment of the Geauga County Court of Common Pleas is reversed, and this matter is remanded for the trial court to dismiss this action without prejudice.
When he left his role as Wall Street’s top federal enforcer, Robert S. Khuzami began a long courtship with a who’s who of the legal world.
The calls rolled in from financial giants like Visa and Bridgewater, and from white-shoe law firms, like WilmerHale. Some offered outsize paydays, others promised an office not only in New York but also in Washington, where his family lives. They all wanted the benefit of his experience as a terrorism prosecutor and enforcement chief at the Securities and Exchange Commission.
Six months later, lawyers briefed on the matter say, Mr. Khuzami has accepted a job that pays $5 million a year at Kirkland & Ellis, one of the nation’s biggest corporate law firms. In doing so, he is following the quintessential Washington script: an influential government insider becoming a paid advocate for industries he once policed.
With a handful of foreclosure lawyers listening intently from the back of the courtroom, a Denver District Court judge Thursday ordered one of their colleagues to comply with a state investigation into their billing practices — after denying efforts to close the case from the public.
Judge Edward Bronfin said lawyer Robert Hopp Jr. must gather the paperwork subpoenaed by Attorney General John Suthers’ office in its investigation of lawyers specializing in foreclosures and provide it within 60 days.
Before that, Bronfin denied Hopp’s request to keep the case from the public, saying the investigation had an “overriding public interest” that superseded Hopp’s privacy rights.
Hopp had complied somewhat with attorney general subpoenas issued months ago but has held back some of the most critical documents investigators said they need to determine whether the lawyer was padding his bills, Assistant Attorney General Erik Neusch said in court.
Hopp said the investigation covers “about 10,000 files” going back at least five years.
BANK VAULT FIRE in the basement level of JP Morgan’s original Chase Headquarters.The FDNY has confirmed via tweet that they were responding to a COMMERCIAL VAULT FIRE IN THE BASEMENT of JPM’s headquarters at 15 Broad St.! Interesting timing after that 66% plunge in metals the day before on Friday, July 19th. Conflicting reports about whether this was a minor ‘electrical fire’ at this point, but statistically, what are the chances. Better odds on a force-majeure…
Supreme Court of Florida ____________ No. SC12-600 ____________
NICHOLAS ARSALI,
Petitioner,
vs.
CHASE HOME FINANCE LLC, et al., Respondents.
[July 11, 2013]
PERRY, J.
This case is before the Court for review of the decision of the Fourth District Court of Appeal in Arsali v. Chase Home Finance, LLC, 79 So. 3d 845 (Fla. 4th DCA 2012). In its decision the district court posed the following question, which the court certified to be of great public importance:
DOES THE TEST SET FORTH IN ARLT V. BUCHANAN, 190 So. 2d 575, 577 (Fla. 1966), FOR VACATING A FORECLOSURE SALE APPLY WHEN ADEQUACY OF THE BID PRICE IS NOT AT ISSUE?
Id. at 849. We have jurisdiction. See art. V, § 3(b)(4), Fla. Const.
For the reasons we explain below, we approve the results of the decision on review insofar as it affirms the judgment of the trial court that vacated the judicial foreclosure sale and the certificate of sale issued by the clerk of the circuit court, and dismissed its final judgment of foreclosure in favor of Chase Home Finance, LLC (“Chase”). We further approve the Fourth District’s decision to the extent it affirms the trial court’s order for the return of all monies paid by the third-party purchaser in the ill-fated judicial foreclosure sale of the residential property at issue. However, we clarify that inadequacy of the bid price is not necessary to be alleged and proven when a litigant is seeking to set aside a judicial foreclosure sale.
United States Court of Appeals FOR THE SECOND CIRCUIT
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 19th day of July, two thousand thirteen.
Present: José A. Cabranes, Reena Raggi, Richard C. Wesley, Circuit Judges.
In re Federal Housing Finance Agency. 13-1122 ————————————————– UBS Americas Inc., et al., Petitioners,
v.
Federal Home Loan Mortgage Corporation, et al., Respondents.
Petitioners, through counsel, have filed a petition for a writ of mandamus seeking reversal of certain discovery rulings made by the district court in these coordinated cases. Upon due consideration, it is hereby ORDERED that the mandamus petition is DENIED because Petitioners have not demonstrated that they lack an adequate, alternative means of obtaining the relief they seek – i.e., an appeal from a final judgment. See Linde v. Arab Bank, PLC, 706 F.3d 92, 107, 117-18 (2d Cir. 2013).
A Washington County jury on Thursday rebuked JPMorgan Chase’s handling of a foreclosure case, ruling the nation’s second largest bank likely had broken promises it made to borrowers Bela and Eva Lengyel, resulting in the seizure of their home.
The case is believed to be the first wrongful foreclosure suit to go before a jury in Oregon since the beginning of the housing crash, though many cases have gone before judges in the state. It offers a glimpse into how juries may deal with fallout from the mortgage crisis and the way the nation’s leading banks reacted.
“If I were a transnational bank, I would be very concerned about facing juries in this state,” said attorney Terry Scannell, who represented the couple.
Bela Lengyel said he contacted the bank in November 2008 seeking to lower the monthly mortgage payments he and his wife, Eva, were making on the home where they also operate an adult foster care business. The bank told him it would help, but he had to first default on his payments, he said.
![[VIDEO] JP MORGAN Chase Bank HQ Basement Vault Fire](https://stopforeclosurefraud.com/wp-content/themes/gazette/thumb.php?src=wp-content/uploads/2013/07/JPM-Chase-fire1.png&w=100&h=57&zc=1&q=90)
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