Decided on November 29, 2013

3234/12

Plaintiff Attorney: McCabe, Weisberg & Conway, P.C., 145 Huguenot Street, Ste., 210, New Rochelle, NY 10801

Defendant Attorney: Jon A. Lefkowitz, Esq., 1222 Avenue M, Suite 204, Brooklyn, NY 11230

David I. Schmidt, J.

Upon the foregoing papers in this foreclosure action, U.S. Bank National Association as trustee for Morgan Stanley Mortgage Loan Trust 2006-17XS (2006-17XS) (Morgan Stanley [*2]Mortgage Trust) moves for an order (1) granting summary judgment, pursuant to CPLR 3212, against defendants Becalel Steinberg and Frida Steinberg f/k/a Frida Genuth (the Steinberg defendants or the Steinbergs) and striking the Steinberg defendants’ answer; (2) granting the Morgan Stanley Mortgage Trust a default judgment, pursuant to CPLR 3215, against the non-appearing defendants; (3) appointing a referee to compute the sum due and owing to Morgan Stanley Mortgage Trust; and (4) amending the caption to substitute Sol Steinberg in place of “John Doe #1”, and striking the names of defendants sued herein as “John Doe #2” through “John Doe No.10.”

The Steinberg Note And Mortgage

On July 19, 2006 the Steinbergs refinanced their home at 1814 58th Street in Brooklyn by executing a mortgage and a promissory note in the principal amount of $495,000.00 (Steinberg Note) in favor of Hemisphere National Bank.^[FN1] Becalel Steinberg executed the Steinberg Note and mortgage, while his wife, Frida Steinberg, is a signatory to the mortgage.The Steinberg Note states that it was made “to the order of the Lender,” Hemisphere National Bank, the originator of the Steinberg’s home loan. The Steinberg Note states that “Borrower” “understand[s] that the Lender [Hemisphere National Bank] may transfer this Note. The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the Note Holder.'” A copy of the Steinberg Note in the record reflects an undated indorsement in blank from Hemisphere National Bank.

The mortgage specifically names Mortgage Electronic Registration Systems, Inc. (MERS), as “nominee for Lender [Hemisphere National Bank]” and provides that “FOR PURPOSES OF RECORDING THIS MORTGAGE, MERS IS THE MORTGAGEE OF RECORD.” The record reflects that the mortgage was recorded in the New York City Register’s office, Department of Finance on July 31, 2006.

Defendant Becalel Steinberg allegedly defaulted under the Steinberg Note by failing to pay monthly principal and interest payments on April 1, 2010, and each month thereafter.

The MERS Mortgage Assignment

The mortgage recording documents in the record reflect that MERS “AS NOMINEE FOR HEMISPHERE NATIONAL BANK” purported to assign the mortgage to the Morgan Stanley Mortgage Trust by assignment dated May 18, 2011 (MERS Mortgage Assignment). The MERS Mortgage Assignment provides that it “ASSIGN[S] AND TRANSFER[S] . . . all right, title and interest in and to that certain Mortgage . . .” The MERS Mortgage Assignment also states that MERS “caused this instrument to be signed by its Assistant Secretary,” and reflects that “Pat Labelle” executed the document as “Assistant Secretary” on May 18, 2011 in Palm Beach, Florida. The MERS Mortgage Assignment in the record is not accompanied by any evidence of Labelle’s authority to act on behalf of MERS.

The MERS Mortgage Assignment was apparently prepared and recorded in preparation for foreclosure litigation, since it states that “[w]hen recorded mail to” the attention of plaintiff’s counsel at McCabe, Weisberg and Conway, P.C.

The Instant Foreclosure Action

The Morgan Stanley Mortgage Trust commenced this foreclosure action against the Steinbergs and others on February 8, 2012, nearly two years after defendants’ alleged payment default.Plaintiff’s unverified complaint contains a single allegation regarding its standing to [*3]maintain this foreclosure action, alleging that “[p]laintiff is the holder of said note and mortgage [which] was indorsed by blank indorsement and delivered to Plaintiff prior to commencement of this action” (emphasis added). Plaintiff’s complaint presents a purported copy of the original Steinberg Note bearing an indorsement in blank from Hemisphere National Bank, which reflects that Marta Elias signed the document as “Assistant Secretary” of Hemisphere National Bank on an unspecified date.

Regarding the MERS Mortgage Assignment, plaintiff’s complaint further alleges that “[s]aid mortgage w[as] assigned from [MERS], as nominee for Hemisphere National Bank, NA to [Morgan Stanley Mortgage Trust], [p]laintiff, by Assignment of Mortgage dated May 18, 2011 to be recorded in the Office of the County Clerk of Kings County.”

The Steinberg defendants answered the complaint on or about February 27, 2012, denying the material allegations therein and asserting seven affirmative defenses, including that plaintiff “has no standing to bring this action.”

Plaintiff’s Summary Judgment Motion

The Morgan Stanley Mortgage Trust now seeks, amongst other relief, summary judgment against the Steinberg defendants. The Morgan Stanley Mortgage Trust’s moving papers consist of attorney affirmations and a May 16, 2013 affidavit from Patricia A. Labelle in her capacity as “Servicer and Attorney in Fact” of the Morgan Stanley Mortgage Trust (Labelle Moving Affidavit). The Labelle Moving Affidavit is, presumably, from the same “Pat Labelle” who executed the MERS Mortgage Assignment as “Assistant Secretary” of MERS, yet conspicuously absent from the Labelle Moving Affidavit is any reference to the MERS Mortgage Assignment.

The Labelle Moving Affidavit represents that it is based on Labelle’s familiarity with “records maintained by 1st United Bank as servicer for [the Morgan Stanley Mortgage Trust] for purpose of servicing mortgage loans.” Labelle also avers that “[i]n connection with making this affidavit, I have personally examined these business records reflecting data and information as of May 16 , 2013.” While the Labelle Moving Affidavit states that Labelle’s personal knowledge is limited to her review of 1st United Bank’s mortgage servicing business records, Labelle fails to identify, describe or annex the particular business records upon which her limited knowledge is based.

Significantly, the Labelle Moving Affidavit makes the conclusory representation that “[p]laintiff has been in continuous possession of the note and mortgage since prior to the commencement of this action,” without providing any factual details, or the source of Labelle’s knowledge. In addition to a lack of foundation, the Labelle Moving Affidavit fails to provide evidence that the originating lender, Hemisphere National Bank, indorsed and physically delivered the Steinberg Note to the Morgan Stanley Mortgage Trust.

The Steinberg defendants oppose plaintiff’s motion on the ground that the Morgan Stanley Mortgage Trust lacks standing to foreclose, citing the Appellate Division, Second Department’s holding in Bank of NY v Silverberg (86 AD3d 274 [2011]). Specifically, defendants contend that Labelle lacked actual authority to execute the MERS Mortgage Assignment.

In response to defendants’ standing challenge, the Morgan Stanley Mortgage Trust contends that “a Limited Power of Attorney was executed which granted [p]laintiff the right to assign the mortgage.” Plaintiff’s reply papers include a copy of the limited power of attorney from U.S. Bank National Association (US Bank), pursuant to which 1st United Bank was appointed “Attorney-in-Fact” for US Bank to, among other things:

“execute and acknowledge in writing or by facsimile stamp all documents customarily and reasonably necessary and appropriate [to] . . .

“4.[e]xecute bonds, notes, mortgages, deeds of trust and other contracts, agreements and instruments regarding the Borrowers and/or the Property, including but not limited to the execution of releases, satisfactions, assignments, loan modification agreements, loan assumption agreements, subordination agreements, property adjustment agreements, and other instruments pertaining to mortgages or deeds of trust, and execution of deeds and associated instruments, if any, conveying the Property, in the interest of [US Bank], as [*4]Trustee.”

While the limited power of attorney between US Bank and 1st United Bank states that it was “issued in connection with [1st United Bank’s] responsibilities to servicecertain mortgage loans (the Loans’) held by U.S. Bank in its capacity as Trustee,” plaintiff provides no evidence that the Steinberg’s loan was amongst the “Loans” referenced therein. Regardless, plaintiff’s production of the limited power of attorney regarding 1st United Bank’s servicing rights does not obviate the need for plaintiff to produce admissible testimonial and/or documentary evidence proving that Hemisphere National Bank physically delivered the Steinberg Note to the Morgan Stanley Mortgage Trust prior to commencement.

Summary judgment is a drastic remedy that should only be granted when no triable issues of fact exist (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). The moving party bears the initial burden of establishing its prima facie entitlement to summary judgment, as a matter of law, with admissible evidence demonstrating the absence of material facts (see CPLR 3212 [b]; Giuffrida v Citibank Corp., 100 NY2d 72 [2003]). Failing to make that showing requires denying the motion regardless of the adequacy of the opposition (see Vega v Restani Constr. Corp., 18 NY3d 499, 502 [2012]; Ayotte v Gervasio, 81 NY2d 1062 [1993]). “The court’s function on a motion for summary judgment is to determine whether material factual issues exist, not resolve such issues” (Ruiz v Griffin, 71 AD3d 1112, 1115 [2010] [internal quotation marks omitted]). Thus, issue-finding and not issue-determination is key in deciding a summary judgment motion (see Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395, 404, [1957], rearg denied 3 NY2d 941 [1957]).

(2)

Plaintiff’s Standing To Foreclose

Plaintiff is not entitled to the relief it seeks because it has failed to proffer any evidence of its standing to foreclose under the Steinberg Note at the time of commencement. As discussed below, there are triable issues of fact regarding delivery of the Steinberg Note from the originating lender and indorser, Hemisphere National Bank, to the Morgan Stanley Mortgage Trust, requiring denial of the instant motion in its entirety.

“To establish a prima facie case in an action to foreclose a mortgage, the plaintiff must establish the existence of the mortgage and the mortgage note, ownership of the mortgage, and the defendant’s default in payment” (Campaign v Barba, 23 AD3d 327, 327 [2005] [emphasis added]). Where, as here, standing to commence a foreclosure action is raised by the defendant as an affirmative defense to the complaint, the burden shifts to the foreclosing party and “it is incumbent upon the plaintiff to establish its standing to be entitled to relief” (Deutsche Bank Natl. Trust Co. v Rivas, 95 AD3d 1061, 1061 [2012]; see also Citimortgage, Inc. v Stosel, 89 AD3d 887, 888 [2011] [same]; U.S. Bank, N.A. v Collymore, 68 AD3d 752, 753 [2009] [holding “(w)here, as here, standing is put into issue by the defendant, the plaintiff must prove its standing in order to be entitled to relief”]).

The Court of Appeals has held that “[s]tanding to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. “The plaintiff who has standing, however, may cross the threshold and seek judicial redress” (Saratoga County Chamber of Commerce v Pataki, 100 NY2d 801, 812 [2003], cert denied 540 US 1017 [2003]). In Caprer v Nussbaum (36 AD3d 176, 182 [2006]), the Appellate Division, Second Department explicitly held that “[s]tanding to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request.” Similarly, the Appellate Division, First Department has held that “standing is an element of the larger question of justiciability and is designed to ensure that a party seeking relief has a sufficiently cognizable stake in the outcome so as to present a court with a dispute that is [*5]capable of judicial resolution” (Security Pac. Natl. v Evans, 31 AD3d 278, 279 [2006]).

In GRP Loan, LLC v Taylor (95 AD3d 1172 [2012]), the Appellate Division, Second Department summarized the threshold evidentiary showing that is necessary in order to establish a foreclosing party’s standing:

“[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 prior to commencement of the action with the filing of the complaint . . . Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident” (id. at 1173[internal quotation marks and citations omitted] [emphasis added]).

The standard set forth in the Taylor case is premised on the court’s prior holdings that “a promissory note [is] a negotiable instrument within the meaning of the [New York] Uniform Commercial Code [UCC]” (Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674, 674 [2007]). In Slutsky v Blooming Grove Inn (147 AD2d 208 [1989]), the court confirmed that Article 3 of the UCC is applicable to foreclosure actions, wherein the Second Department specifically held:

“[t]he note secured by the mortgage is a negotiable instrument (see, UCC 3-104) which requires indorsement on the instrument itself or on a paper so firmly affixed thereto as to become a part thereof’ (UCC 3-202[2]) in order to effectuate a valid assignment’ of the entire instrument (cf., UCC 3-202 [3], [4])” (id. at 212).

UCC § 3-202 (1) provides, in pertinent part, that “[i]f the instrument is payable to order it is negotiated by delivery with any necessary indorsement” (emphasis added). UCC § 3-204 (2) further provides that “[a]n indorsement in blank specifies no particular indorsee and may consist of a mere signature. A note payable to order and indorsed in blank becomes payable to bearer and may be negotiated by delivery alone until specially indorsed” (UCC § 3-204 [2] [emphasis added]).

In sum, a party has standing to foreclose under a “pay to the order” promissory note that was indorsed in blank — like the Steinberg Note at issue here — by evidencing that the note was negotiated by the indorser’s physical delivery of the note to the foreclosing party. A party cannot prove prima facie standing to foreclose by claiming mere possession of a note, since UCC “holder” status and standing to foreclose is premised on negotiation by means of the lender’s (or prior note holder’s) indorsement and physical delivery of the negotiable instrument (see Bank of NY Mellon v Deane, 41 Misc 3d 494 [Sup Ct, Kings County 2013] [discussing application of the UCC and the foreclosing plaintiff’s “misunderstanding of the general law of negotiable instruments in its equation of the status as holder’ to mere possession of the instrument”]).

Delivery Of The Steinberg Note

Plaintiff’s reliance on the conclusory statement in the Labelle Moving Affidavit that plaintiff has had “continuous possession” of the Steinberg Note to establish the Morgan Stanley Mortgage Trust’s standing is misplaced. Plaintiff’s unverified complaint similarly alleges, in conclusory fashion, that “[p]laintiff is the holder of said note and mortgage [which] was indorsed by blank indorsement and delivered to [p]laintiff prior to commencement of this action” (emphasis added). Plaintiff’s attempt to equate “possession” of the note with the UCC’s requisite delivery is unavailing.

Plaintiff has failed to establish that it became a “holder” of the Steinberg Note, within the meaning of the UCC, by evidencing the physical delivery of the Steinberg Note from Hemisphere National Bank to the Morgan Stanley Mortgage Trust. The Labelle Moving Affidavit is patently insufficient to establish plaintiff’s standing because it contains no specific factual details (i.e., when, who, what, where and how) evidencing Hemisphere National Bank’s delivery of the Steinberg Note to the Morgan Stanley Mortgage Trust.

In addition, the Labelle Moving Affidavit fails to describe or provide any evidence of the [*6]scope or nature of Labelle’s authority, if any, to act or speak on plaintiff’s behalf. Significantly, the Labelle Moving Affidavit does not identify Labelle’s actual employer or Labelle’s affiliation, if any, with the Morgan Stanley Mortgage Trust. Instead, Labelle vaguely represents that “[i]n the regular performance of my job functions, I am familiar with business records maintained by 1st United Bank as servicer for [the Morgan Stanley Mortgage Trust] for the purpose of servicing mortgage loans.” While the Labelle Moving Affidavit seemingly implies that Labelle is currently employed, in some capacity, by 1st United Bank, US Bank’s mortgage servicing agent, Labelle also executed the MERS Mortgage Assignment as the “Assistant Secretary” of MERS. Therefore, Labelle wears at least two hats in the context of this foreclosure action, neither of which is that of the foreclosing party here.

Also, the Labelle Moving Affidavit avers that “[i]n connection with making this affidavit, I have personally examined [1st United Bank’s] business records[,]” yet Labelle fails to identify, describe or annex the records upon which her limited knowledge is based. Regardless, Labelle’s review of mortgage servicing records is entirely irrelevant to the factual circumstances under which the Steinberg Note was delivered from the lender, Hemisphere National Bank, to the Morgan Stanley Mortgage Trust prior to commencement.

In Homecomings Fin., LLC v Guldi (108 AD3d 506[2013]), an analogous case, the Second Department reversed an order granting the plaintiff summary judgment because Homecomings failed to establish its prima facie standing to foreclose. In that case, Homecomings failed to submit probative evidence of the Note’s physical delivery prior to commencement of the action. The only proof of physical delivery of the note submitted by Homecomings was an affidavit from its servicing agent, claiming that the note was delivered to the servicer as custodian of Homecoming’s business records.

The Second Department held that Homecoming’s submission of the mortgage servicer’s affidavit was “insufficient to establish that the plaintiff had physical possession of the note at any time” because it “did not give factual details as to the physical delivery of the note” (id. at 508-09; see also HSBC Bank USA v Hernandez, 92 AD3d 843, 844 [2012] [holding that “(t)he affidavit from the plaintiff’s servicing agent did not give any factual details of a physical delivery of the note and, thus, failed to establish that the plaintiff had physical possession of the note prior to commencing this action”]; Deutsche Bank Natl. Trust Co. v Barnett, 88 AD3d 636, 638 [2011] [holding that affidavit of plaintiff’s servicing agent without any factual details failed to establish that the note was physically delivered to plaintiff prior to commencement]).

Here, as in Homecomings, the Morgan Stanley Mortgage Trust has failed to satisfy its burden of establishing that it had the requisite standing to commence this foreclosure action. The Labelle Moving Affidavit does not establish that the Steinberg Note was duly negotiated within the meaning of the UCC. While the Labelle Moving Affidavit makes the conclusory assertion that plaintiff has been in “continuous possession” of the Steinberg Note, Labelle fails to address the physical delivery of the Steinberg Note from Hemisphere National Bank to the Morgan Stanley Mortgage Trust. Further, the Labelle Moving Affidavit is admittedly based on Labelle’s general review of 1st United Bank’s mortgage servicing business records, rather than her own personal knowledge. Accordingly, plaintiff’s conclusory assertions that the Morgan Stanley Mortgage Trust is the “holder” or in “possession” of the Steinberg Note without producing any probative, admissible evidence of delivery is insufficient, as a matter of law.

The MERS Mortgage Assignment

Plaintiff’s reliance on the MERS Mortgage Assignment executed by “Pat Labelle” as evidentiary proof of Morgan Stanley Mortgage Trust’s standing to foreclose is similarly misplaced, since MERS was merely a “nominee” of the originating lender, Hemisphere National Bank, for purposes of recording the mortgage instrument. MERS was never a “holder” of the Steinberg Note, and thus, could not confer any interest in the Steinberg Note to plaintiff.

Contrary to plaintiff’s contentions, it failed to demonstrate its prima facie entitlement to [*7]judgment, as a matter of law, because “it did not submit sufficient evidence to demonstrate its standing as the lawful holder or assignee of the subject note on the date it commenced this action” (see Collymore, 68 AD3d at 754). In the seminal Silverberg case, the Second Department rejected a MERS mortgage assignment as evidence of standing, holding that “MERS was without authority to assign the power to foreclose to the plaintiff” since “MERS was never the lawful holder or assignee of the notes” (86 AD3d at 283).

Furthermore, the Second Department has repeatedly and consistently held that “[a]n assignment of a mortgage without assignment of the underlying note or bond is a nullity, and no interest is acquired by it” (HSBC Bank USA v Hernandez, 92 AD3d 843, 843 [2012]; see also Collymore, 68 AD3d at 754[holding that “[w]here a mortgage is represented by a bond or other instrument, an assignment of the mortgage without assignment of the underlying note or bond is a nullity”]; Kluge v Fugazy, 145 AD2d 537, 538 [1988] [holding that “foreclosure of a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity”]). Consequently, the MERS Mortgage Assignment does not constitute evidence of the Morgan Stanley Mortgage Trust’s prima facie standing to foreclose, as a matter of law. Accordingly, it is

ORDERED that plaintiff’s motion is denied in its entirety.

This constitutes the decision and order of the court.

E N T E R,

__________________________

J. S. C.

Footnote 1:In February 2007, Hemisphere National Bank changed its name to Republic Federal Bank. Republic Federal Bank was subsequently closed by the Office of the Comptroller of the Currency (OCC) and put into receivership on December 11, 2009. The OCC appointed the Federal Insurance Deposit Company (FDIC) as receiver (see http://www.fdic.gov/news/news/press/2009/pr09225.html; http://www.occ.gov/news-issuances/news-releases/2009/nr-occ-2009-155.html).

SUPREME COURT- STATE OF NEW YORK
I.AS. PART 34 – SUFFOLK COUNTY

US BANK NATIONAL ASSOCIATION, AS
TRUSTEE, ON BEHALF OF THE HOLDERS
OF THE CSMC TRUST 2006-CF2 CS
MORTGAGE PASS THROUGH
CERTIFICATES, SERIES 2006-CF2,
Plaintiffs,

– against –

KAREN CICCARELLI, T&V CONSTRUCTION
CORP., “John Doe”,
Defendants.
—————————————————————-

EXCERPT:

Here, plaintiff failed to establish the validity of the assignment by submitting evidence showing
that the note was either physically delivered to MERS or assigned to MERS by Mortgagelt (see
Homecomings Fin., LLC v Guldi, 108 AD3d 506). The affidavit of Jason T. Baker, a Document Control
Officer at Select Portfolio Servicing, plaintiff’s servicer, does not give factual details as to the physical
deli very of the note and, thus, is insufficient to establish that plaintiff had physical possession of the note
at any time (see Homecomings Fin., LLC v Guidi, 108 AD3d 506; Deutsche Bank Nat. Trust Co. v
Haller, 100 AD3d 680 [2 Dept 2012]). Moreover, it is not clear whether the endorsement in blank on the
last page of the note by the assistant secretary of Mortgagelt, Inc. was effectuated prior to plaintiffs
substitution in this action (see Deutsche Bank Nat. Trust Co. v Haller, 100 AD3d 680). Thus, plaintiff
failed to establish, prima facie, that it has standing to prosecute this action to foreclose the Ciccarelli
mortgage (see Homecomings Fin., LLC v Guidi, 108 AD3d 506; Bank of New York v Silverberg, 86
AD3d 274 [2d Dept 2011]). Therefore, its request to strike Tubens’ affirmative defense of lack of
standing is denied. Tubens’ submissions in opposition failed to establish as a matter oflaw that plaintiff
lacked standing to commence this action (see HSBC Bank USA v Hernandez, 92 AD3d 843 [2d Dept
2012]). It so follows that his request for summary judgment dismissing the complaint on said basis is
denied.

Tubens submits his affidavit in opposition to the motion and in support of his cross motion
attesting that when he purchased the subject premises at auction he understood that the T & V mortgage
was a first lien and that he would own the premises free of any other liens or mortgages. His basis of
understanding was a “preliminary ‘due diligence’ of the foreclosure” at the time of the auction that
included reviewing the T & V mortgage, notice of sale, terms of sale and judgment of foreclosure and
sale, “none of which gave any indication that the mortgage being foreclosed was in a secondary position
or that the sale would be subject to any senior liens or mortgages.” According to Tubens, “[i]t was only
after the auction that [he] was advised by [his] title company that there was another mortgage on the
premises held by US Bank National Trust … and that it was dated after the mortgage being foreclosed
(although recorded prior to the mortgage being foreclosed) and that there was pending litigation
surrounding the priorities of the two mortgages.” He indicates that he is “a real estate investor of
foreclosed properties for over 10 years,” that it was his practice to rely solely on the language contained
in documents presented at the auction sale, and that he relied on the fact that the T & V mortgage and the
judgment of foreclosure and sale lacked the boilerplate language indicating that it was subject to a prior
lien or mortgage and the T & V mortgage’s recitation that it was a “First Mortgage.” Tubens claims that
Pratti and Rasmussen engaged in several fraudulent transactions prior to the recording of the T & V
mortgage, which included transferring said properties to bona fide purchasers or obtaining new mortgage
loans without satisfying or disclosing the existence of the T & V mortgage. According to Tubens,
Ciccarelli obtained the subject mortgage loan without disclosing to Mortgagelt the existence of the T &
V mortgage

“‘Under New York’s Recording Act (Real Property Law§ 291), a mortgage loses its priority to a
subsequent mortgage where the subsequent mortgagee is a good-faith lender for value, and records its
mortgage first without actual or constructive knowledge of the prior mortgage'” (2 Lisa Ct. Corp. v
Licalzi, 89 AD3d 721 , 722 [2d Dept 2011], quoting Washington Mut. Bank, FA v Peak Health Club,
Inc., 48 AD3d 793, 797 [2d Dept 2008]; see Mortgage Electronic Registration Sys., Inc. v Rambaran, 97
AD3d 802, 803-804 [2d Dept 2012]). “[W]here a purchaser has knowledge of any fact, sufficient to put
him on inquiry as to the existence of some right or title in conflict with that he is about to purchase, he is
presumed either to have made the inquiry, and ascertained the extent of such prior right, or to have been
guilty of a degree of negligence equally fatal to his claim, to be considered as a bona fide purchaser”
(Williamson v Brown, 15 NY 354, 362 [1857]; see Lucas v J & W Realty and Constr. Mgt., Inc., 97
AD3d 642, 643 [2d Dept 201 2]; Maiorano v Garson, 65 AD3d 1300, 1303 [2d Dept 2009]; Ward v
Ward, 52 AD3d 919, 920-921 [3d Dept 2008]). If the purchaser fai ls to use due diligence in examining
the title, he or she is chargeable, as a matter of law, with notice of the facts which a proper inquiry would
have disclosed (see People v Luhrs, 195 NY 377 [1909); Cambridge Valley Bank v Delano, 48 NY 326
[1872]; Astoria Fed. Savings & Loan Assn. v June, 190 AD2d 644 [2d Dept 1993); see also Fairmont
Funding, Ltd. v Stefansky, 301 AD2d 562 [2d Dept 2003]). Similarly, a mortgagee is under a duty to
make an inquiry where it is aware of facts “that would lead a reasonable, prudent lender to make
inquiries of the circumstances of the transaction at issue” (LaSalle Bank Natl. Assn. v Ally, 39 AD3d
597, 600 [2d Dept 2007]; see Lucas v J & W Realty and Constr. Mgt., Inc., 97 AD3d at 643). “A
mortgagee who fails to make such an inquiry is not a bona fide encumbrancer for value” (Booth v
Ameriquest Mtge. Co., 63 AD3d 769, 769 [2d Dept 2009]; see JP Morgan Chase Bank v Munoz, 85
AD3d 1124, 1126 [2d Dept 2011]; Thomas v LaSalle Bank N.A., 79 AD3d 1015, 1017 [2d Dept 2010];
see also Mortgage Electronic Registration Sys., Inc. v Rambaran, 97 AD3d at 804). Further, “[a]n
assignee stands in the shoes of the assignor and takes the assignment subject to any preexisting
liabilities” (Arena Constr. Co. v Sackaris Sons, 282 AD2d 489, 489 [2d Dept 2001]; see TPZ Corp. v
Dabbs, 25 AD3d 787, 789 [2d Dept 2006]; see also Mortgage Electronic Registration Sys., Inc. v
Rambaran, 97 AD3d at 804).

Here, plaintiffs mortgage lien was recorded and indexed at the Suffolk County Clerk’s Office
under District 0100 Section 023.00 Block 04.00 and Lot 072.000 three years prior to the purchase of the
subject property by Tubens, whose deed described the property as District 0100 Section 023 .000 Block
04.00 and Lot 072.000. Contrary to Tubens’ assertions concerning lack of notice of any prior mortgages,
the Judgment of Foreclosure and Sale granted on January 17, 2008 (Sgroi, J.) expressly provided that
“Ordered, Adjudged and Decreed that the premises be sold subject to … (g) Prior mortgages and
judgments, if any, now liens of record;” The notice of sale indicated that the premises would be sold
subject to the provisions of the filed judgment and terms of sale. A review of the Suffolk County
Clerk’s Office records prior to purchase would have revealed the existence of plaintiff’s interest in the
subject property. Unfortunately, Tubens had a title search performed after he purchased the subject
property at auction. Thus, Tubens had constructive notice of plaintiff’s mortgage lien and was
chargeable with the duty to make further inquiry to determine whether the lien had been satisfied or
released (see Andy Assoc. v Bankers Trust Co., 49 NY2d 13; see also Real Property Law§ 291;
Congregation Beth Medrosh of Monsey, Inc. v Rolling Acres Chestnut Ridge, LLC, 101 AD3d 797 [2d
Dept 2012]). Under the circumstances, Tubens cannot claim to be a bona fide purchaser for value
without notice of plaintiff’s prior encumbrance and, therefore, is not entitled to the protection of the
recording statutes (see Real Property Law§ 291; Fairmont Funding, Ltd. v Stefansky, 301 AD2d 562;
see also HSBC Mtge. Services, Inc. v Alphonso, 58 AD3d 598 [2d Dept 2009]).

[…]

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ENFORCEMENT INFORMATION FOR DECEMBER 17, 2013

Information concerning the civil penalties process is discussed in OFAC regulations governing the various sanctions programs and in 31 CFR part 501. On November 9, 2009, OFAC published as Appendix A to part 501 Economic Sanctions Enforcement Guidelines. See 74 Fed. Reg. 57,593 (Nov. 9, 2009). The Economic Sanctions Enforcement Guidelines, as well as recent final civil penalties and enforcement information, can be found on OFAC’s Web site at http://www.treasury.gov/ofac/enforcement.

ENTITIES – 31 CFR 501.805(d)(1)(i)

HSBC Bank USA, N.A. Settles Potential Civil Liability for Apparent Violations of the Global Terrorism Sanctions Regulations: HSBC Bank USA, N.A. (“HBUS”) has agreed to remit $32,400 to settle potential civil liability for three apparent violations of the Global Terrorism Sanctions Regulations, 31 C.F.R. part 594.
The Office of Foreign Assets Control (“OFAC”) determined that HBUS voluntarily self-disclosed the apparent violations to OFAC and that the apparent violations constituted a non-egregious case. OFAC concluded that the apparent violations described below were not the result of willful or reckless conduct. The total base penalty amount for the apparent violations was $20,083.

On December 9, 2010, OFAC designated Husayn Tajideen (also known as Hussein Tajideen) and Tajco as Specially Designated Global Terrorists (“SDGTs”) and added them to the Specially Designated Nationals and Blocked Persons List (“SDN List”). That same day, HBUS updated its interdiction software to reflect these designations. On December 10, 2010, HBUS received an $11,492.86 funds transfer originated by a third-country financial institution on behalf of that institution’s customer, Tajco, destined for the HSBC Bank Middle East Limited (“HBME”) account of a food production and distribution company. HBUS’ interdiction software identified the payment’s originator as a potential match to the SDGT Tajco and routed the payment into a suspense queue for manual review.

In response to an HBUS request for additional information regarding the originator’s ownership, physical address, primary line of business, and affiliation to the SDGT Tajco, HBUS received an MT 199 free format Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) message from the remitting financial institution. The SWIFT message response stated: the originator’s full name was “Tajco Company Limited,” its address was “9 Picton Street, Banjul, The Gambia,” (the SDN List identifies one of Tajco’s addresses as “1 Picton Street, Banjul, The Gambia”), the entity referenced in the payment instructions had no affiliation with “Tajco Com LLC” or “Tajco SARL” (aliases of Tajco identified by OFAC) and Tajco was owned by “Hussein Tajideen.” HBUS’ interdiction software did not screen this incoming message because at the time of processing the bank did not screen all MT 199 messages for potential OFAC matches. In addition, an HBUS Compliance Officer reviewing the information did not manually screen the names Hussein Tajideen and Tajco against the SDN List or recognize them as potential SDGTs, and authorized the payment. HBUS processed the funds transfer on December 27, 2010.

Between December 23, 2010, and December 30, 2010, the HBUS VP/Senior Manager of OFAC
Compliance requested an internal report from the bank’s Anti-Money Laundering (“AML”) Unit
listing all transactions for the previous five years that the bank handled containing a reference to
“Tajideen” or “Tajco.” On January 3, 2011, the HBUS VP/Senior Manager of OFAC
Compliance received an internal report from the bank’s AML Unit regarding transactions with
references to “Tajideen” or “Tajco,” which included information pertaining to the December 10,
2010, payment that HBUS had released on December 27, 2010. The HBUS VP/Senior Manager
of OFAC Compliance reviewed the December 10, 2010, payment message, which included a
reference to “40 Percent Advance Payment Order No 1011284,” suggesting that future payments
related to the same parties would be forthcoming. Despite having reviewed this information,
HBUS Compliance did not take any additional steps – beyond initially including Tajco, Hussein
Tajideen, and the other OFAC-designated SDGTs in its interdiction software on December 9,
2010 – to interdict future transactions that could involve the same parties or that referenced the
order number quoted in the December 10, 2010, payment.

On January 7, 2011, and April 7, 2011, HBUS processed two additional funds transfers valued at
$14,963.25 and $13,709.96, respectively, that appear to have involved an interest of Tajco.
While the subsequent payments did not reference a person appearing on the SDN List and each
had a different originator from the originator of the December 10, 2010, payment, the payment
instructions for the January 7, 2011, and April 7, 2011, funds transfers included the same order
number and were destined for the same HBME account of the same food company as the
December 10, 2010, transaction.

The settlement amount reflects OFAC’s consideration of the following facts and circumstances,
pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines, 31
C.F.R. part 501, app. A. OFAC considered the following to be mitigating factors: HBUS
voluntarily self-disclosed the apparent violations to OFAC; HBUS took appropriate remedial
action in response to these apparent violations and now has a more robust compliance program in
place; and HBUS has not received a penalty notice or Finding of Violation from OFAC for
substantially similar apparent violations in the five years preceding the earliest date of the
transactions giving rise to the apparent violations. The settlement amount reflects the following
aggravating factors: HBUS managers and employees whose primary responsibility includes
OFAC compliance were aware of the first apparent violation and had reason to be aware of the
second and third apparent violations; the apparent violations resulted in actual economic benefit
to an SDGT; HBUS is a large and commercially sophisticated financial institution; HBUS
initially provided an incomplete response to an administrative subpoena; and, at the time of the
first apparent violation, HBUS’ compliance program did not screen all MT 199 messages for
potential OFAC matches. OFAC further reduced the proposed penalty in light of HBUS’
agreement to settle its potential liability for the apparent violations.

For more information regarding OFAC regulations, please visit: http://www.treasury.gov/ofac

Source: https://t.co/rpFc5lgRcq

SUPERIOR COURT OF NEW JERSEY
CHANCERY DIVISION
MERCER COUNTY

JOHN
J. HOFFMAN,
Acting Attorney General of New Jersey on
behalf of
AMY KOPLETON,
Acting Chief of the New Jersey Bureau of
Securities,
Plaintiff,

v.

CREDIT SUISSE SECURITIES (USA) LLC,
CREDIT SUISSE FIRST BOSTON
MORTGAGE SECURITIES CORP., and DLJ
MORTGAGE CAPITAL, INC.
Defendants.

SUMMARY

1. This case arises out of defendants’ sale of billions of dollars in toxic residential
mortgage backed securities (“RMBS”) trust certificates to investors. These RMBS trusts
included, but are not limited to, the Home Equity Mortgage Trusts (“HEMT”) Series 2006-4,
2006-5,2006-6,2007-l and 2007-2, and Home Equity Asset Trusts (“HEAT”) Series 2006-4,
2006-5, 2006-6, 2006-7, 2006-8, 2007-I, 2007-2, and 2007-3. These securities were offered
between May 1,2006 and April 30,2007, through offering materials that misrepresented to
investors that, among other things: (1) the mortgages underlying the trusts would be in
“substantial compliance” with the unden¡witing standards of the originators of the loans; (2) each
loan originator not affiliated with Credit Suisse would originate loans “in accordance with
accepted practices and prudent guidelines;” (3) defendants employed “certain quality assurances
designed to ensure” that the correct loan underwriting criteria for certain originators would be
“properly applied;” and (4) none of the loans had a negative equity because their combined loan
to value (“CLTV”) ratios did not exceed one hundred percent.

2. These representations were false and misleading, and omitted to disclose material
information,inat least the following respects: (1) many of the loans were not in “substantial
compliance” with applicable underwriting guidelines, which had been largely disregarded in
order to maximize the amount of loans in the offering and therefore defendants’ profits; (2) the
loans had not been originated by entities that conducted themselves “in accordance with accepted
practices and prudent guidelines,” but had instead been acquired from originators with poor track
records characfeized by alarming levels of defaults and delinquencies; (3) signif,rcant numbers
of loans had a negative equity as reflected by the most recent CLTV ratios in defendants’
possession; (4) defendants’ traders had warned about the high risks of certain types of the loans
being securitized and had even eliminated them from their matrix of products they were willing
to purchase; and (5) defendants were pocketing for themselves tens of millions of dollars in
settlements with originators due to defects in loans that had been securitized without passing
those funds along to the trusts and the investors themselves. These facts were material because
they would have disclosed that the mortgages that made up the RMBS posed a high risk of
delinquency and default, which could – and ultimately did – inflict enorrnous losses on the
investors who purchased these securities.

3. Within a relatively short period of time after their issuance, the HEMT and HEAT
trusts reported skyrocketing rates of delinquency and default on the underlying loan pools. This
resulted in significantly reduced distributions to investors, and write downs in the principal of
underlying loans as they veered into foreclosure or bankruptcy. Standard & Poor’s, Inc. (“S&P”)
and Moody’s Investor Services, Inc. (“Moody’s”) (together the “Ratings Agencies”) ultimately
downgraded virtually all of these securities from investment grade to junk status. One of the
reasons cited for the downgrades was the “aggressive underwriting” practices in the initial
origination of the loans. Subsequent investigations and analyses of certain of these loan pools
have shown that many of the loans had violated the underwriting guidelines of the sellers who
originated the loans, but had nevertheless been waived into the trusts by defendants even though
third-party due diligence firms retained by defendants had found that many of the loans had been
originated in violation of the applicable guidelines. Billions of dollars in investor funds have
been lost as a result.

4. While this Complaint focuses its discussion on HEMT Series 2006-4,2006-5,
2006-6,2007-I and2007-2, and HEAT Series 2006-4,2006-5,2006-6,2006-7,2006-8,2007-1,
2007-2, amd 2007-3, upon information and belief, Credit Suisse’s other RMBS trusts issued
during this time period had similar records of false and misleading statements and material
omissions in their offering materials and had similar delinquency and default experiences.

[…]

Channeling Goldman Sachs’ “This is Gods Work”

Think Progress-

Outgoing Mayor Michael Bloomberg (I-NY) went on the defensive when asked whether he was moved by the New York Times’ powerful series on a homeless family struggling to survive in New York City. Bloomberg defended his homelessness policies and claimed that 11-year-old Dasani, the star of the piece, ended up in dire straits due to bad luck.

“This kid was dealt a bad hand. I don’t know quite why. That’s just the way God works. Sometimes some of us are lucky and some of us are not,” he told Politicker, calling her plight “a sad situation.”

Bloomberg argued that New York “has done more than any city to help the homeless,” citing the city’s policies of subsidized health care, job training, and shelter counseling. “But if you are poor and homeless you’d be better off in New York City than anyplace else,” he insisted.

[THINK PROGRESS]

image: NYT – Ruth Fremson

This could possibly be excellent news! Lets see if the FDIC pulls out the very secret 118 page agreement that has been kept from the public eye!

There’s going to be a ton of “Redacting” and “Orders for protection” on this one here…that’s for certain. Or it’s all just plain out fake (gaging each other).

American Banker-

JPMorgan Chase (JPM) has sued the Federal Deposit Insurance Corp. over Washington Mutual’s legal liabilities, the Wall Street Journal reported Tuesday.

The complaint, filed in U.S. District Court for the District of Columbia, is not yet available through the court’s website. However, it alleges that the FDIC has failed to uphold an obligation to absorb legal claims against Washington Mutual, which was seized and transferred to JPMorgan in 2008, according to the Journal.

 [AMERICAN BANKER]

Reuters-

According to a complaint filed in a state court in Hinds County, Mississippi, JPMorgan has, since at least 2007, relied on “robo-signing” and other discredited practices to pursue consumers for sums they did not owe, already paid, or had excused in bankruptcy.

The lawsuit said employees described a “chaotic” and “disorganized” workplace marred by “rampant” mistakes, inadequate training, constantly changing policies, high turnover and unrealistic quotas.

Hood also accused JPMorgan of relying on “outhouse” law firms that would churn out lawsuits without first reviewing the underlying claims, and working with now-defunct arbitration firm Mann Bracken — dubbed “Mann Broken” by bank employees — that could not keep track of customer payments.

[REUTERS]

QZ-

JPMorgan CEO Jamie Dimon and his family have sent out their annual missive, wishing family and friends happy holidays and all the best for 2014. Like last year, the card features Jamie, his wife Judy, their three daughters, a dog, and a young man who we presume is a boyfriend or son in law.

[Head over to QZ for More]

Same folks every time.. never fails!

Reuters-

The U.S. Justice Department is preparing to file civil fraud charges against Citigroup Inc and Bank of America’s Merrill Lynch unit over their sale of flawed mortgage securities ahead of the financial crisis, according to people familiar with the probes.

Civil investigators have compiled evidence that allegedly shows that investors lost tens of billions of dollars after purchasing securities Citigroup had marketed as safe even though the bank had reason to believe otherwise, one person said.

An investigation into the mortgage securities marketed by Merrill Lynch, which Bank of America agreed to acquire at the height of the crisis in 2008, is also close to completion, two other people said.

[REUTERS]

A name in this article does stand out…CashCall, through lawyers Neil Barofsky and Katya Jestin, denied it did anything wrong.

Denver Post-

The federal government and several states, including Colorado, on Monday began a crackdown on unscrupulous online loan servicers that allegedly have violated state licensing requirements or state interest-rate caps in their operations nationwide.

Colorado Attorney General John Suthers and Richard Cordray, director of the federal Consumer Financial Protection Bureau, said during a news conference that consumers who fell victim to the alleged scheme were being charged annual interest rates on loans ranging from 90 percent to 350 percent.

Suthers said Colorado allows a maximum of a 21 percent annual percentage rate on such loans.

[DENVER POST]

The corrupt government has absolutely no idea what this is doing to these kids…Nothing has changed since this video.

HuffPO-

Two students who were kicked out of school after becoming homeless will temporarily be allowed back in their Pennsylvania district until a judge makes a final ruling on their case.

The two brothers -– whose names have not been released to the public -– were expelled from the Eastern Area School District earlier this month because they currently live outside the district in a camping trailer, according to local outlet The Morning Call. The district’s actions directly contradict the McKinney-Vento Homeless Assistance Act, which says that homeless children who live in “motels, hotels, trailer parks, or camping grounds” outside their district are allowed remain in the school they attended prior to becoming displaced.

The special education students, who are in 8th and 12th grade, were displaced after their home was foreclosed on in 2011, local outlet The Express-Times reported. The family was previously told in 2011 that the boys could remain enrolled the district, where their mother works part-time.

[HUFFINGTON POST]

Their attorneys say the three reported problems with foreclosure papers as soon as they learned of it.

The Portland Press Herald-

Representatives for three attorneys facing possible discipline by the Maine Board of Overseers of the Bar in connection with the filing of unverified documents in mortgage-foreclosure proceedings said Monday that they reported the problem as soon as they knew about it.?

The three attorneys, with the Portland law firm Drummond and Drummond, are accused of failing to act after learning that GMAC Mortgage was filing paperwork with unverified information in foreclosure proceedings during the nation’s mortgage foreclosure crisis.?

The allegations against the lawyers, who represented GMAC, resulted from a Maine case that had national repercussions, including the temporary suspension of foreclosures by GMAC and other big mortgage lenders. ?The case also led to congressional hearings and prompted all 50 states to enter a joint investigation into mortgage industry practices.?

[THE PORTLAND PRESS HERALD]

NY Books-

Five years have passed since the onset of what is sometimes called the Great Recession. While the economy has slowly improved, there are still millions of Americans leading lives of quiet desperation: without jobs, without resources, without hope.

Who was to blame? Was it simply a result of negligence, of the kind of inordinate risk-taking commonly called a “bubble,” of an imprudent but innocent failure to maintain adequate reserves for a rainy day? Or was it the result, at least in part, of fraudulent practices, of dubious mortgages portrayed as sound risks and packaged into ever more esoteric financial instruments, the fundamental weaknesses of which were intentionally obscured?

If it was the former—if the recession was due, at worst, to a lack of caution—then the criminal law has no role to play in the aftermath. For in all but a few circumstances (not here relevant), the fierce and fiery weapon called criminal prosecution is directed at intentional misconduct, and nothing less. If the Great Recession was in no part the handiwork of intentionally fraudulent practices by high-level executives, then to prosecute such executives criminally would be “scapegoating” of the most shallow and despicable kind.

[NY BOOKS]

The Judge that knows too much and everything we know about being best friends with the enemies…

NEW YORK TIMES-

It used to be common for the federal government to prosecute prominent people responsible for debacles that rattled the financial system. Michael R. Milken, the junk bond artist, went to prison in 1991; Charles H. Keating Jr., the face of the savings-and-loan crisis, pleaded guilty to four counts of fraud in 1999; and it looks like Jeffrey K. Skilling, the former chief executive of Enron, will be in prison until 2017.

And what of the recent financial crisis? The statute of limitations on most plausible charges is running out, and it seems there will not be a single prosecution of a prominent figure in the entire mess.

Judge Jed S. Rakoff wants to know why. In a blistering essay in the issue of The New York Review of Books that arrives this week, he argues that the Justice Department has failed in its rudimentary responsibilities, offering excuses instead of action.

[NEW YORK TIMES]

UNITED STATES DISTRICT COURT
DISTRICT OF COLORADO

RICHARD GEORGE; STEVEN LEAVITT
and SANDRA LEAVITT, and all others
similarly situated
Plaintiffs,

v.

URBAN SETTLEMENT SERVICES d/b/a
URBAN LENDING SOLUTIONS; BANK OF
AMERICA, N.A.
Defendants.

I. INTRODUCTION

1. In early 2009, Bank of America (“BOA”) took more than $45 billion in
government bailout money. As a condition of receiving this bailout, BOA agreed to participate
in the Home Affordable Modification Program (“HAMP”) – a detailed program designed to stem
the foreclosure crisis by providing affordable mortgage loan modifications and other alternatives
to foreclosure to eligible borrowers. BOA signed a contract with the U.S. Treasury on April 17,
2009 agreeing to comply with the HAMP requirements and to perform loan modification and
other foreclosure prevention services described in the program guidelines.

2. Though BOA accepted billions of dollars and contractually agreed to comply with
the HAMP directives and extend loan modifications to eligible homeowners, BOA has
systematically and deliberately worked to sabotage HAMP and to modify as few mortgages as
possible according to its terms. BOA found it was more profitable if homeowners accepted inhouse
modifications rather than the loan modifications mandated by the HAMP process.
Consequently, BOA pushed homeowners who were applying for HAMP modifications toward
more expensive in-house modifications using tactics of outright fraud.

3. Rather than working diligently to reduce the number of loans in danger of default
by establishing permanent modifications, BOA serially strung out, delayed, and otherwise
hindered the modification processes that it agreed to facilitate. BOA’s delay and obstruction
tactics have taken various forms with the common result that homeowners with loans BOA
serviced, and who met the requirements for participation in HAMP, did not get a fair opportunity
to secure a permanent loan modification through the HAMP process.

4. To accomplish its objectives, BOA created a widespread RICO enterprise to
defraud homeowners who sought modifications and then acted as the kingpin of that enterprise.
BOA enlisted Defendant Urban Settlement Services (d/b/a Urban Lending Solutions, referred to
hereinafter as “Urban”) to act as a member of the RICO enterprise and assigned to Urban key
aspects of the process of administering HAMP, including interacting with homeowners seeking
HAMP modifications, collecting and processing documents from homeowners, and
corresponding with homeowners. BOA and Urban worked in concert, under BOA’s direction
and for many years, to frustrate the HAMP process and to prevent as many homeowners as
possible from obtaining permanent loan modifications that complied with HAMP while allowing
BOA to maintain the appearance to regulators and the public of trying to comply with its HAMP
obligations. Through this relationship and with this common goal, BOA and Urban formed an
association-in-fact enterprise that was effectuated through the use of thousands of false wire and
mail communications. As part of the scheme “site leaders” were told BOA would collect more
money if HAMP modifications were delayed and, as such, BOA employees were instructed to
delay HAMP modifications.

5. As part of the loan-modification scheme and enterprise, homeowners seeking
HAMP trial plans were directed by wire and mail instructions from BOA to send financial
information directly to Urban. Consumers were led to believe that they were dealing with BOA
when secretly they were communicating with Urban. As part of the loan-modification scheme
and enterprise, Urban became a “black hole” for documents sent by homeowners. As part of the
enterprise and scheme, BOA used the mail and wires to falsely deny modifications by claiming
that information required of homeowners seeking a HAMP modification had not been received,
when in fact BOA and Urban had received the documents. Oftentimes consumers were led to
believe they were speaking with BOA’s “Office of the President” when in fact they were
speaking with Urban employees. As part of the scheme Urban employees manipulated financial
records to justify ending the HAMP modifications process for homeowners.

6. Numerous former employees of both BOA and Urban report that BOA directed its
employees and contractors to use the wires and mails to deliberately lie to homeowners who
were in the process of trying to obtain loan modifications under HAMP. They further report a
widespread and deliberate practice of knowingly issuing false notices claiming that homeowners
had failed to submit required documentation and of denying HAMP applications en masse for
reasons they knew to be false. These actions were taken with the full knowledge, and at the
direction, of the individuals tasked with running Defendants’ HAMP modification program.

7. This scheme was conducted via interstate mail and phone lines, in thousands of
documents sent via mail and overnight courier, including documents and phone calls intended to
deceive borrowers into believing they would receive HAMP modifications, and letters and phone
calls which were knowingly false about why borrowers were not receiving HAMP modifications.

8. Because of the BOA-Urban loan-modification scheme, hundreds of thousands of
homeowners were wrongfully being deprived of an opportunity to cure their delinquencies, pay
their mortgage loans and save their homes. By failing to live up to its obligations under the
terms of the agreement it entered into with the Department of the Treasury, and the terms of the
contracts it formed with individual homeowners, BOA has left thousands of borrowers in a state
of limbo – often worse off than they were before they sought a modification from BOA.

9. On behalf of nationwide classes of borrowers, Plaintiffs state a cause of action
under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(c), alleging
that Defendants created an association-in-fact enterprise designed to mislead and deceive
borrowers through use of the United States mail and wires. On behalf of the members of those
classes, Plaintiffs seek declaratory relief and/or a judgment of liability.
10. In addition, on behalf themselves and statewide classes of similarly situated
borrowers, Plaintiffs state claims of promissory estoppel for representations made to them by
Defendants.

[…]

Excellent piece! Some of us knew this was sort of happening…!

Bloomberg-

Isabel Santamaria thought she finally caught a break in her effort to save her Florida home from foreclosure after nine frustrating months: She reached Bank of America Corp.’s Office of the CEO and President.

What the mother of two autistic children didn’t know is that her case would find its way to contractors, including Urban Lending Solutions in Broomfield, Colorado, far from the bank’s headquarters in Charlotte, North Carolina. Bank of America hired the firm founded by Chuck Sanders, a former Pittsburgh Steelers running back, to clear a backlog of complaints about a federal program designed to prevent foreclosures.

“It felt like a big deal, reaching the CEO’s office,” Santamaria, 43, said of having her June 2010 call escalated to what she was told was the bank’s top level. “It only happened because I complained to my congressman, the attorney general, television stations. They only put you there if you make a big stink, but once you’re there, they still don’t help you.”

[BLOOMBERG]

Wells Fargo sues itself!

Conflict anyone?

SUPREME COURT- STATE OF NEW YORK
I.A.S. PART 10 SUFFOLK COUNTY

WELLS FARGO BANK, N.A.,
3476 Stateview Boulevard
Ft. Mill, SC 29715,
Plaintiff,

-against-

A YSE KAHY A, WELLS FARGO BANK, N.A.,
MR. KAHY A and YILMAZ KAHY A,
Defendants.

EXCERPT:

A plaintiff in a mortgage foreclosure action establishes a prima facie case for summary
judgment by submission of the mortgage, the note, bond or obligation, and evidence of default (see,
Valley Natl. Bank v Deutsch, 88 A.D.3d 691, 930 N.Y.S.2d 477 [2d Dept. 2011]; Wells Fargo
Bank v Das Karla, 71A.D.3d1006, 896 N.Y.S.2d 681 [2d Dept. 2010]; Washington Mut. Bank,
F.A. v O’Connor, 63 A.D.3d 832, 880 N.Y.S.2d 696 [2d Dept. 2009]). The burden then shifts to
the defendant to demonstrate “the existence of a triable issue of fact as to a bona fide defense to the
action, such as waiver, estoppel, bad faith, fraud, or oppressive or unconscionable conduct on the
part of the plaintiff’ (Capstone Bus. Credit, LLC v Imperia Family Realty, LLC, 70 A.D.3d 882,
883, 895 N. Y.S.2d 199 [2d Dept. 201 O], quoting Mahopac Natl. Bank v Baisley, 244 A.D.2d 466,
467, 644 N.Y.S.2d 345 [2d Dept. 1997]).

In addition, “proper service of RP APL § 1304 notice on the borrower or borrowers is a
condition precedent to the commencement of a foreclosure action, and the plaintiff has the burden
of establishing satisfaction of this condition” (Aurora Loan Servs., LLC, 85 A.D.3d at 106, 923
N.Y.S.2d 609).

The fourth affirmative defense and the affirmation in opposition to the motion assert that the
plaintiff failed to comply with the mortgage foreclosure notice provisions required by RP APL §
1304. RP APL 1304 provides that, “at least ninety days before a lender, an assignee or a mortgage
loan servicer commences legal action against the borrower, including mortgage foreclosure, such
lender, assignee or mortgage loan servicer shall give notice to the borrower in at least fourteen-point
type” (RP APL 1304[ 1] ). RP APL 1304 sets forth the requirements for the content of such notice
(see RP APL 1304[1] ), and further provides that such notice must be sent by registered or certified
mail, and also by first-class mail, to the last known address of the borrower (see RP APL 1304[2]).
RPAPL § 1304 currently applies to any “home loan,” as defined in RPAPL 1304(5)(a).

RPAPL § 1304(5)(a) defines a “home loan” in pertinent part as “a loan … in which … (I) [t]he
borrower is a natural person; (ii)[t]he debt is incurred by the borrower primarily for personal family,
or household purposes; [and] (iii) “[t]he loan is secured by a mortgage … on real estate improved by
a one to four family dwelling … used or occupied, or intended to be used or occupied wholly or
partly, as the home or residence of one or more persons and which is or will be occupied by the
borrower as the borrower’s principle dwelling.” Notwithstanding the use of the singular, there may
be more than one “borrower” on a “home loan” (see Aurora Loan Services v. Weisblum, 85 A.D.3d
at 105).

Further, when the statute was first enacted, and when this action was commenced, it applied
only to ”high cost,” “subprime,” and “non-traditional” home loans (Aurora Loan Servs., LLC v.
Weisblum, 85 A.D.3d at 104, [citing L. 2008, ch. 472, § 2] ). The moving papers fail to address
whether the subject loan was a “high cost,” “subprime,” or “non-traditional” home loan when made.
“[P]roper service of RPAPL 1304 notice on the borrower or borrowers is a condition
precedent to the commencement of a foreclosure action, and the plaintiff has the burden of
establishing satisfaction of this condition” or that service of the notice was not required under the
version of the statute that was in effect at the time the action was commenced (Aurora Loan Servs.,
LLC, 85 A.D.3d at 106, 923 N.Y.S.2d 609).

Here, the plaintiff failed to submit an affidavit of service evincing that it properly served the
borrower pursuant to RP APL 1304, or in the alternative, demonstrate that the subject loan was not
a “high cost,” “subprime,” or “non-traditional” home loan to which the former version of RP APL
§ 1304 applied (see id.). Thus, the plaintiff failed to meet its prima facie burden of establishing its
entitlement to judgment as a matter of law in connection with the fourth affirmative defense (see
Aurora Loan Servs., LLC, 85 A.D.3d at 106, 923 N. Y.S.2d 609; see also Deutsche Bank Nat. Trust
Co. v. Spanos, 102 A.D.3d 909, 911, 961N.Y.S.2d200 [2d Dept. 2013]).
Since on the motion for summary judgment the plaintiff did not argue that the defendant did
not reside at the subject premises when the action was commenced, and the pre-foreclosure notice
requirement of RP APL § 1304 only applies to statutorily defined “home loans”, and further, since
the defendant did not have an opportunity to address that issue in opposing the motion, the Court
likewise declines to address it here.

Accordingly, that branch of the plaintiffs motion which is for summary judgment dismissing
the fourth affirmative defense alleging that the plaintiff failed to comply with RP APL 1304 is
denied, without regard to the sufficiency of the defendant’s opposition papers (see Winegrad v. New
York Univ. Med. Ctr., 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642). The denial is
without prejudice to renew upon proper papers as indicated herein within one-hundred twenty days
of the date of this order. Any renewal shall include a copy of this Order and the supporting papers
on this application.

The remaining affirmative defenses numbered First through Third and Fifth through
Nineteenth are stricken. These affirmative defenses are not supported by any proof in admissible
form sufficient to raise a triable issue of fact. The opposition consisted solely of the affirmation of
the appointed Guardian Ad Litem and Military Attorney who has no personal knowledge of the facts
(see Zuckerman v City of New York, 49 N.Y.2d 557, 404 N.E.2d 718, 427 N.Y.S.2d 595 [1980]
[party opposing summary judgment may not rest upon mere allegations or denials, but must set forth
specific facts showing that there is a genuine issue of material fact for trial]). “Defenses which
merely plead conclusions of law without supporting facts are insufficient and should be stricken”
(see CPLR § 3018(b); see also Petracca v. Petracca, 305 A.D.2d 566, 567, 760 N.Y.S.2d 513 [2d
Dept. 2003]; Bruno v. Sant’Elia, 52 A.D.3d 556, 557, 860 N.Y.S.2d 589 [2d Dept. 2008]; Cohen
Fashion Optical, Inc. v. V & M Optical, Inc., 51A.D.3d619, 858 N.Y.S.2d 260 [2d Dept. 2008].

[…]

I wouldn’t be surprised if these letters are being re-created…recall this?  In Re: SHARON DIANE HILL | PA BK Court, Fraud Upon Court, “ReCreated” Letters, Sanctions, Countrywide, GMM and Puida

LA Times-

Daniel A. Bailey Jr. isn’t your average homeowner. He hasn’t paid his mortgage in more than five years, and has no plans to start now.

His stance stems from a bizarre incident that thrust Bailey into the news in 2008, when he suddenly became a public relations liability for embattled home lender Countrywide Financial of Calabasas.

Bailey had blanketed Countrywide with emails begging for a mortgage modification. The reply came from none other than Angelo Mozilo, Countrywide’s chief executive, who accidentally hit “reply” instead of “forward” on a note meant for colleagues. In the misfired missive, Mozilo called Bailey’s letter a “disgusting” and “unbelievable” example of the form letters then inundating the lender from borrowers saying they couldn’t pay.

[LA TIMES]

CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT

MILTON HOWARD GAINES,
Plaintiff and Appellant,

v.

FIDELITY NATIONAL TITLE INSURANCE COMPANY et al.
Defendants and Respondents.

EXCERPT:

This case was one of hundreds, perhaps thousands of lawsuits that grew out of the financial meltdown. This litigation is almost the paradigm case: elderly plaintiffs – home owners with substantial equity in their house, mortgage payments two months in arrears – are approached by an employee of their lender with an unsolicited offer to refinance the mortgage based on the lender’s so-called, but false, “preapproval.” This is followed by a bait and switch that sends plaintiffs to the employee’s fiancé, who offers to help with a refinance. The fiancé ends up buying the house with a supposed offer to include lease-back and repurchase options which fail to materialize in the final documentation. In comes the line of assignees and transferees, including ultimate note holder Lehman Brothers, which will not survive the financial crisis. Meanwhile the “assister” pulls out $90,000 in cash from the deal without plaintiffs’ approval but with the aid of the escrow/title insurance company. Later he refinances the property and obtains another $150,000, for a tidy $240,000 fee for his “assistance.” Remarkably, the loan goes into default because the assister does not pay “his” mortgage, and plaintiffs pay an additional $25,000 to $30,000 to avoid foreclosure. Shortly before the lawsuit is filed, one of the plaintiffs dies. During its pendency, the other dies.

I acknowledge that some of these “facts” are allegations to be decided after trial. We do know that plaintiffs settled with Countrywide for $375,000, of which $200,000 represented lost equity, with the rest designated for noneconomic damages. This suggests that there was some fundamental merit to at least some of plaintiffs’ claims, that this was not a sham lawsuit, and this was a lawsuit that demanded the trial court’s exercise of discretion under section 583.340, subdivision (b) to avoid a miscarriage of justice. In my view the dismissal of this lawsuit under the circumstances described defeats the substantial ends of justice.

Instead, it rewards parties who, it would appear, have played a major and unlawful role in the theft of someone’s home.

I would reverse the trial court’s judgment in its entirety.

RUBIN, J.

This clearly shows the bifurcation of mortgage and note in ALL MERS assignments! Past, Present and Future…

IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS
COUNTY DEPARTMENT, CHANCERY DIVISION

THE PEOPLE OF THE STATE OF
ILLINOIS,
Plaintiff,

Case No. 12 CH 03602

V.

NATIONWIDE TITLE CLEARING, INC., a
Florida corporation,
Defendant.

FINAL CONSENT DECREE

I. Plaintiff, the People of the State of Illinois, by Lisa Madigan, Attorney
General of Illinois, has filed a complaint( the ” Complaint”) for a permanent injunction and
other relief in this matter pursuant to the Consumer Fraud and Deceptive Business Practices
Act(” Consumer Fraud Act”), alleging that the Defendant, Nationwide Title Clearing, Inc.
the Defendant”) violated the Consumer Fraud Act and the Uniform Deceptive Trade
Practices Act in the course of its business of creating, signing, and recording documents in
the public land records system in Illinois on behalf of financial institutions or mortgage
servicers within the mortgage industry.

2. Plaintiff and Defendant, by their counsel, have agreed to the entry of this Final
Consent Decree by the Court, without trial or adjudication of any issue of fact or law. This
Final Consent Decree is entered into by the parties to promptly and completely resolve this
controversy and avoid the costs of further litigation.

3. This Final Consent Decree is entered into only for the purpose of resolving the
issues raised in the Complaint. It does not bind any other officers or agencies of the State of
Illinois nor does it in any way restrict or affect Defendant’ s ability to defend itself against
any other claims brought by anyone not a party to this litigation. The Illinois Attorney
General hereby releases Defendant of any claim based on factual allegations of the type
described in Plaintiffs Complaint occurring prior to the date of this Consent Decree under
the Illinois Consumer Fraud Act or her common law authority.

4. Defendant acknowledge that it has read and understood the terms of this Final Consent
Decree. Defendant further understands the legal obligations imposed upon it by this Final Consent Decree, and
understands that a violation of this Final Consent Decree may result in proceedings against Defendant, including an
action for contempt of court.

NO ADMISSION OF LIABILITY

5. Plaintiff and Defendant consent to this Final Consent Decree without an
admission of liability on the part of the Defendant. The Plaintiff and Defendant are settling
this matter so as to avoid the risks and expenses associated with further litigation.

NO ADMISSION OF LIABILITY

5. Plaintiff and Defendant consent to this Final Consent Decree without an
admission of liability on the part of the Defendant. The Plaintiff and Defendant are settling
this matter so as to avoid the risks and expenses associated with further litigation.

FINDINGS

6. With the consent of the parties and the Court being fully advised of the matter,
the Court hereby finds as follows:

a. This Court has jurisdiction over the subject matter of the Complaint filed
herein and over the parties to this Final Consent Decree.
b. The Defendant has at all times relevant hereto, engaged in trade and
commerce within the meaning of the Section 1( f) of the Consumer Fraud
Act, 815 ILCS 505/ 1( f), by creating, signing, and recording documents in
county recording offices throughout Illinois.

NON-MONETARY TERMS

7. On the basis of these findings and for the purpose of entering this Final
Consent Decree, IT IS HEREBY ORDERED that Defendant, its agents, employees, and all
persons or entities associated, affiliated or connected with Defendant, and any successor
corporation or business entity shall, as of the effective date of this Final Consent Decree,
comply with and remain in compliance with Section 2 the Consumer Fraud Act and Section
2 of the Uniform Deceptive Trade Practices Act. Specifically, the Defendant, its agents,
employees, and all persons or entities associated, affiliated or connected with Defendant, and
any successor corporation or business entity shall comply with the following terms:

a. Defendant shall not sign a document that is recorded in the county
recording offices in Illinois unless the person signing the document(” the
signatory”) has performed a substantive review of the information
contained in the document to ensure the accuracy and validity of that
information. Substantive review means that the signatory must read,
understand, and review each document to be recorded. Defendant must
train and supervise each signatory to ensure that the signatory is
performing a substantive review of each document in compliance with this
subsection.
b. Defendant shall ensure that affidavits( or any other document containing
sworn testimony ) executed by the Defendant, or executed by any person at
the direction of the Defendant, are based on the affiant’ s review and
personal knowledge of the accuracy d of the assertions in
the affidavits. Any such affidavit shall set forth facts that Defendant
reasonably believes to be true, and the ffidavit must explain why the
affiant is competent to testify on the matters asserted in the affidavit. The
affiant shall confirm that the affiant has reviewed competent and reliable
information to substantiate the assertions contained within the affidavit.
c. Documents prepared for electronic recording shall be electronically signed
by the signatory only after the signatory has performed the substantive
review described in subsection( a) above. Electronically recorded
documents shall be notarized by the identified notary only after performing
the notarial acts required by law. Electronically recorded documents shall
not be signed or notarized outside of the presence, knowledge and control
of the signatory or notary.
d. Documents signed by signatories at the direction of the Defendant for the
purpose of recordation in Illinois shall accurately identify the signatory’ s
employer( e.g., employed by Nationwide Title Clearing, Inc.) and indicate
that the signatory has the qualified authority to sign on behalf of the
financial institution or mortgage servicer.
e. Documents recorded by Defendant shall accurately reflect the nature and
substance of the transaction.
f. Assignments into and out of the Mortgage Electronic Registration Systems,
Inc. (” MERS”) shall not claim that both the mortgage and note have been
assigned when, in fact, only the mortgage has been transferred by the
assignment.
g. Defendant shall remediate any document in Illinois that is found by a court
to be a cloud on title or otherwise unlawful. Defendant shall also
remediate any document when reasonably necessary to assist any person or
borrower, or when required by federal, state, or local law. Defendant shall
establish, advertise and staff a toll- free telephone hotline where Illinois
consumers may ask questions regarding any document executed by NTC,
including but not limited to requests that NTC remediate a document.
NTC shall ensure that the hotline is adequately staffed by competent,
trained employees. For a period of twenty-four months NTC shall
maintain a log of calls and responses, including the consumer’ s name,
contact information, and a description of the question or request and
NTC’ s response. NTC shall keep the same type of log for any consumer
communication submitted to NTC by any other form or manner. NTC
shall provide an up-to-date log upon request at any time by the Illinois
Attorney General’ s Office. After conclusion of the 24- month period, the
parties shall confer, and the Attorney General shall make a reasonable
determination as to whether the Defendant shall continue to maintain the
hotline and logs described in this paragraph for a period of no longer than
twelve additional months.

PAYMENT

8. Defendant shall pay the Plaintiff three hundred fifty thousand dollars
350,000). Upon entry of this Final Consent Decree, payment of this amount shall be
tendered to Plaintiff in the form of a cashier’ s or certified check. The amount paid to the
State of Illinois under this section shall be deposited into the Attorney General State Projects
and Court Ordered Distribution Fund. Payment is not and shall not be construed as an
admission of liability on the part of the Defendant. The Defendant shall not be entitled to
further accounting regarding the money deposited into said fund.
JURISDICTION RETAINED
9. Jurisdiction is expressly retained by this Court for the purpose of enforcing
compliance with the provisions of this Final Consent Decree.
10. This is a final order and no just reason exists to delay enforcement.

[…]

Dec. 12 (Bloomberg) — Sen. Elizabeth Warren, a Democrat from Massachusetts, discusses the state of too big to fail banks on Bloomberg Television’s “Market Makers.”