February, 2014 | FORECLOSURE FRAUD | by DinSFLA

Archive | February, 2014

Blind Manchester teen helps stop foreclosure auction of her house

Blind Manchester teen helps stop foreclosure auction of her house


A 17-year-old legally blind girl’s written plea for help halted the foreclosure auction of her family home in Manchester.

Lindsey Vachon suffers from a series of genetic conditions so rare that she is only one of five people in the world who has them. With just hours left before their house could be sold, Lindsey and her mother, Lynn Vachon, were in court trying to avert disaster.

A lawyer filed a motion Tuesday afternoon to stop the process less than 18 hours before the house was supposed to go up for sale.

“The foreclosure and the auction just became too big,” Lynn Vachon said. “Too big for me to help or understand or take care of, and then my hero stepped in.”


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


For PETE’s Sake!

For PETE’s Sake!

Let’s implement some new rules for the mortgage modification Three Card Monty game. If we put our cards on the table as we do, have done, time and time again to these banks demanding every single line item of our financial identity, why are we the only ones naked at the table? Why has the game been rigged for so long now without the turnabout of fair play? Unless of course you can afford an expensive lawyer to represent you in revealing our imaginary friend, PETE, aka Person Entitled To Enforce the “debt”, the note, the loan, the mortgage.

It’s time for a new conversation. Homeowners are no longer silent at the table, and we
no longer wish to be on the menu. It’s time to look at some out of the box ideas in
regard to the cards being stacked in favor of the casino banks. The homeowners need
to be a voice in this process, need to be heard and treated fairly as to the hands we’ve
been dealt.

Here are a few ideas as to the negotiations that we as citizens, homeowners, renters
from homeowners, and community members would like to see more action on in regard
to our rights, our investments and our homes.

We look to our law enforcement, Consumer advocates and the organizations/bureaus
in place to serve and enforce the truth of the law, to protect the rights of consumers,
individuals, and land records, not the will of the mega banks that have time and time
again admitted to wrong doing, consumer harm, fraudulent foreclosures, money laundering,
abusive lending practices, forgery, robo signing, incentivizing foreclosure with
gift cards for God’s sake and so much more – paying settlements in the high billions
with not even a slap on the wrist, let alone an arrest of a high ranking executive. Quite
the opposite in fact. Jamie Dimon of JP Morgan Chase was just given a 70% raise after
paying out billions of dollars in settlements of wrong doing last year!! John Stumpf,
CEO of Wells Fargo makes over $9,000.00/hour and as part of his 2013 compensation
received a one million dollar bonus. 21,702 shares of stock at $46.00 a share.


Meanwhile lower and middle class homeowners are literally thrown into the street,
locked out of their homes, their belongings taken, stolen or destroyed. Where is PETE
and why is he of no real consequence in regard to those hired to serve and protect us?
Those of us that have found ourselves in this merciless maze begging for mercy have
come to know that the cards are stacked against us. We didn’t know that going in. We
innocently wandered in trying to refinance or modify what, due to hardships and an
economic depression everyone refers to still as a recession. Layoffs, catastrophic illness
– whatever it is, we were told we could call the HOPE hotline and HAMP or HARP
our way into a modification to save the day. A reset of our mortgage payments that
would make it affordable. We played fair. We put all of our chips on the table, heart
pounding, dice blowing lady luck looking on, we didn’t know that we didn’t stand a
chance cause she works for the casino.

Most of us were not flipping houses and buying boats. Most of us were and are just
trying to get by in this big bad new world we find ourselves in over the last five or six
years. We had faith because we were offered hope.

HOWEVER, the Intent of these banks has been NOT to Modify, but to Capitalize on the Loss
Mitigation, insurance, fees, short sales and foreclosures under the guise of document requests
to assist us in modifying our mortgages.

Georgetown Law professor Adam Levitin spelled this out in testimony before Congress
in 2010: “If mortgages were not properly transferred in the securitization process,
then mortgage-backed securities would in fact not be backed by any mortgages

That being said, the mortgage modification Three Card Monty game seems to be still
standing by like Vanna White all gussied up, beaming with the promise of the right
guess, the spin of the wheel, the flip of the card – Jackpot!!

The long shots are flattering – nothing personal but Vanna is getting old like the rest
of us and time is of the essence, so…..what if….

All servicing banks should be required to produce a NPV report when a loan mod is
denied. A homeowner cannot appeal a denial if they do not know the numbers that the
servicer used. The underwriter notes used to “decision” a denial must be produced.
No more than one SPOC assigned to a homeowner through out the thirty day process.
New homeowner protection laws in place need to be fortified and locked up – no wiggle
room and they need to be national, not just in specific states. New specifics need
to be in place in regard to what can be requested by the banks, so that the document
requests are more standardized across the board.

Strict time sensitivity given to a simplified across the board doc request. A decision
made within thirty days.

Homeowner must be supplied a clear concise Qualified Written Request of the nature
and history of the mortgage since it’s inception/transaction took place.
Any modification must be honored by any bank or entity that transfers or assumes
servicing duties on the mortgage.

No more monkey business. No more marked cards. No more homeowner strip poker!

1) We should have a right to know if our chain of title is accurate, so that we might
know who our true “investor” is. Since it is supposedly up to the investor
whether or not we are modified. Proof of ownership by the investor/or servicer
must be provided and forensically legitimate.

2) Hardship letter should not be a prerequisite, nor should we have to ‘qualify’, obviously,
we already have the loan. Their qualification is a form of extortion. In
other words….how much do you have so we can squeeze you for the maximum
amount. There should be a reduction in principle and interest. Period.

3) Modification should be mandatory, due to the the massive systemic fraud,
forgeries, billions in settlements and admitted wrong doing by the banks abuses
to consumers. Tho…some qualify and some do not….all were victims, not just
the investors and the ones who are still paying on time, juggling two or three
jobs to do it, should still benefit from the settlement with a modification. This
is not a two way contract with our signature. Why are we treated like its a one
way contract? We are the third party with so much to lose In regard to a bad
contract as well as all other parties involved in this negotiation.

If a homeowner is denied modification or refinance then –

The rules must be simplified, (eh hem,) “Modified” if you will.

No prolonged discovery fights. No more abuse of our courts and financial

We are entitled to the entire record of phone recordings, emails, data entry,
express written denials from investor on modification requests, or
principal forbearance, to compare and contrast their entries with our
own paperwork – internal notes to see when the servicer collected on as
to the “servicer mortgage insurance” that will bring us back to the INTENT
not to modify. We are entitled to our Pooling and Servicing Agreement
and the Qualified Written Request, all notes, SPOC names and the PETE’s

We need and expect our land recordation departments, consumer protection
agencies, govt. offices, congressional representatives and officers of
the court system to acknowledge the fact that homeowners have a place
at this table, a tremendous financial, emotional, literal investment at
stake in the house we have made our home. We expect to be treated judiciously
and fairly and we will not accept anything less. We demand to
have a face to face meeting with PETE, not a suited up group of well fed
attorneys on Mr. Stumpf’s payroll.

Lainey Hashorva is a Social Media Activist, Advocate for homeowners fighting
foreclosure, Investigative Journalist, Artist and Solopreneur of The Magic Bean
Company since 1994. Her line of handcrafted one of a kind items and vintage
collectibles can be found via Etsy.com – Laineybean.

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


Washington State AG sues Quality Loan Service (QLS)

Washington State AG sues Quality Loan Service (QLS)

H/T Dave Kreiger






Down Load PDF of This Case


Down Load PDF of This Case

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


Glaski is only a “baby step”!

Glaski is only a “baby step”!

Clouded Titles-

Foreclosure defense advocates are hailing the California Supreme Court’s decision NOT to depublish the Glaski v. Bank of America, N.A. case. Once the decision (significant in its own right) was published (July 31, 2013), the foreclosure mills set about to upend it before the California Supreme Court in a major letter writing campaign. The major banks and their trust counterparties certainly couldn’t have another “nail in the coffin” driven into their game plan to screw American homeowners now, could they? They failed when yesterday’s decision to depublish Glaski was denied. For those of you just now getting your head around this decision, here’s the sum and substance of it:

“Here, the specific defect alleged is that the attempted transfers were made after the closing date of the securitized trust holding the pooled mortgages and therefore the transfers were ineffective.

We conclude that a borrower may challenge the securitized trust’s chain of ownership by alleging the attempts to transfer the deed of trust to the securitized trust (which was formed under the trust instrument are void under New York trust law (New York Estates & Trusts Section 7-2.4) and borrowers have standing to challenge void assignments of their loans even though they are not a party to, or a third party beneficiary of, the assignment agreement. We therefore reverse the judgment of dismissal and remand for further proceedings.”


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


Washington Supreme Court Takes On Loan Fraud, Foreclosure Fights

Washington Supreme Court Takes On Loan Fraud, Foreclosure Fights


Larry Jametsky visits his family home frequently, even though he was evicted from it almost four years ago.

He and his family have been homeless since then, but they’ve stayed near the blue house in the city of SeaTac. “This was my grandparents’ house, my dad’s house,” Jametsky said.

Jametsky is in the throes of a legal battle over the house after he signed over the deed in what he thought was a loan deal. His case and others have caught the attention of the Washington Supreme Court and attorney general as the effects of the housing crisis continue to be felt.


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


In re: AMANDA D. TUCKER | HAWAII BK Court – Opposing bankruptcy attorney is a former law partner of the Judge

In re: AMANDA D. TUCKER | HAWAII BK Court – Opposing bankruptcy attorney is a former law partner of the Judge

ANYONE SEE ANY ISSUES WITH THIS?? Do you think this is fair to the debtor? You cannot make this stuff up!


Original Rule 60( b) motion that was denied (without its voluminous exhibits).

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


GLASKI v. BANK OF AMERICA | Supreme Court of California Denies Depublication Request!!! CASE CLOSED!!!

GLASKI v. BANK OF AMERICA | Supreme Court of California Denies Depublication Request!!! CASE CLOSED!!!

H/T Gary Dubin

Supreme Court of California Case Notification for: S213814


Case: S213814, Supreme Court of California


Date (YYYY-MM-DD):                     2014-02-26

Event Description:                           Depublication request denied (case closed)

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


Prepared Remarks of CFPB Director Richard Cordray at the National Association of Attorneys General

Prepared Remarks of CFPB Director Richard Cordray at the National Association of Attorneys General

No need to “read between the lines”; just READ the green lines.



February 26, 2014



Office of Communications

Tel: (202) 435-7170       

Prepared Remarks of Richard Cordray

Director of the Consumer Financial Protection Bureau


National Association of Attorneys General


Washington, D.C.

February 26, 2014

Thank you for having me back again this year.  I am glad to say that I now stand before you as the undisputed Director of the Consumer Financial Protection Bureau, having been confirmed by a strongly bipartisan vote of the Senate last summer.  That was an important milestone for me and for our new agency, and we all thank you for your strong support throughout that process.  It means not only that the Consumer Bureau has fully come into its own, but also that we are building a solid foundation for a long time to come.


We continue to move forward with our mission to make consumer financial markets work better for consumers and for honest businesses.  But what I want most to talk about with you today is the many ways we are building and strengthening our partnership with you.  Through our work together, we are looking out for people all across this country.  We are seeing to it that they are being treated fairly by the powerful financial companies that make up the markets for consumer credit and other household financial products and services.  It is good work, important work, and it is clearly work that we can do best when we do it together.

When Elizabeth Warren first recruited me to join the new Consumer Bureau just over three years ago, she told me she wanted someone to lead our enforcement efforts who could understand and work well with the state attorneys general.  I was highly motivated to show that she had made the right judgment about me, and we built a strong and exceptionally talented enforcement team that has grown to meet her vision, including some outstanding lawyers with valuable experience that they gained from working in various attorney general offices.

For myself, I have made it a point to be here every year at the winter NAAG meeting to discuss with you our developing efforts to protect American consumers.  When it later turned out, unexpectedly to me, that I would be nominated to run the Bureau, this purpose did not change.  At this new agency, we have found that we can achieve some tremendous results by working together and being great partners.


Let me start by pushing you to consider doing something that most of you have not yet done, but that would be quite helpful to you, your staff, and your constituents.


Under our statute, the Consumer Bureau is required to develop and operate a process for receiving and handling consumer complaints in all the markets that we regulate.  Currently, we are handling complaints about mortgages, credit cards, auto loans, student loans, bank account products, payday loans, consumer loans, debt collection, credit reporting, and money transfers.  I know that many of you, as we did when I served as the Ohio Attorney General, have devised your own ways of handling constituent concerns.  It often is just a matter of happenstance whether consumers turn to your offices or to ours to seek help with their problems, and we believe we can jointly manage these matters better and more productively if we share information and consider pooling our efforts.

So we have begun working with several states to give them real-time access to our growing database of consumer complaints.  Just last month alone we received more than 30,000 calls and handled more than 20,000 complaints from consumers.  They come from people in each of your states.  We have found that collecting, investigating, and resolving consumer complaints is an integral part of our work.  It allows us to address many problems for hard-pressed consumers.

Some of these complaints rise to the level of violations of federal consumer financial law.  So our complaint process serves people who otherwise would have to invoke the legal process or, much more likely, just have to lump it and absorb the injustice.  Other complaints may not state a legal violation but nonetheless highlight important concerns affecting consumers.  In this way, the complaint process helps consumers tell us exactly what is bothering them, in real time, which we use to prioritize our supervision and enforcement efforts.  Because we are now able to provide complaint information to state agencies through a secure government portal, you can review complaints and even search and filter them by company, product, or issue.

The California, Virginia, Oregon, and Texas Attorneys General are already partnering with us on these efforts, as are the banking regulators in fourteen states.  I strongly urge the rest of you to join us and do the same.  If you want to know what your constituents are saying about the problems they face in the consumer financial marketplace, our government portal makes it extremely easy to do that.  We want every attorney general to take advantage of this technology, which will help us see things through the same eyes and find new opportunities to serve consumers more effectively.

Furthermore, when consumers come to you to make a complaint or enforce their rights, they may also have questions about consumer financial products or services.  That is why we developed our Ask CFPB tool.  We have more than one thousand answers to questions that consumers frequently ask about mortgages, credit cards, payday loans, credit reporting, debt collection, and other categories.  Over one million consumers have visited the site so far, and we invite you to add a link to the Ask CFPB feature on your websites.


The most obvious basis for us to collaborate is where we share the same tools and approach to enforcing the law – through investigations and lawsuits.  To date, this collaboration has yielded some excellent and historical results.


The Consumer Bureau joined forces with state attorneys general in New Mexico, North Carolina, North Dakota, Wisconsin, and Hawaii to refund money to consumers who were unlawfully charged advance fees for debt settlement services by the company Payday Loan Debt Solutions.  In a matter where a large residential developer was bilking purchasers, we teamed up with the Kentucky Attorney General to reach positive results.


In our current lawsuit against the online loan servicer CashCall, we have been coordinating with Arizona, Arkansas, Colorado, Indiana, Massachusetts, New Hampshire, New York, and North Carolina, and other states are getting involved as well.


In our enforcement action against GE CareCredit for deceptive enrollment in health care credit cards, we were able to build on outstanding work that had been done on a statewide basis by the New York Attorney General’s office.

And we just concluded a matter where we worked closely with 49 states and the District of Columbia to file a court order requiring Ocwen, the nation’s largest nonbank mortgage servicer, to provide $2 billion in principal reduction to underwater borrowers.  In that order, we also secured $125 million in refunds to borrowers who had been subject to foreclosure.  To achieve this outcome, we teamed up with both state attorneys general and state banking superintendents in a massive intergovernmental joint venture that will benefit many, many consumers.

But this is just a list of some of the specific cases we have worked on thus far that have resulted in public filings.  Actually our teamwork is much more deeply embedded.  Not a day goes by at the Consumer Financial Protection Bureau without some of my colleagues speaking with, meeting with, or working with members of your teams.


Sometimes our specific authority over federal consumer financial law works better to address issues, and sometimes your consumer protection authorities under state law can more effectively clean up illegal activity that may go beyond the provision of consumer financial products and services.  We frankly do not care what color uniform the prosecutor is wearing, as long as the bottom line is that we enforce the law vigorously and make things right for consumers.


Let me also speak to another aspect of the work that attorneys general do, which is to serve as a catalyst for broader reforms.  In addition to investigations and enforcement actions, which are tools we share with you, our statutes also provide us with the supervisory authority to examine financial institutions for compliance with the law.  And we have the ability to write new rules that create substantive law governing the operations of consumer financial markets.  It is striking to me just how extensively the experience and perspective of attorneys general have been and will be informing these initiatives.

Take as a notable example the mortgage servicing market.  From the beginning of the financial crisis, the attorneys general have led the charge in addressing servicing abuses and assisting borrowers.  It all started with the early multi-state cases against servicers, your various home preservation programs, and the collaboration of the NAAG multi-state foreclosure group.  That work eventually culminated in the national mortgage servicing settlement and many progressive new state laws and regulations.  Throughout this period, you have been on the forefront seeking relief and helping gain tens of billions of dollars in assistance and direct relief for homeowners nationwide.  You also imposed new terms and conditions on how the five largest servicers must conduct their business for a period of several years.

At the same time, the Dodd-Frank Act that created the new Consumer Bureau also authorized us to write new rules to clean up the mortgage servicing market.  Where did we go when we set about writing these rules?  Naturally enough, we took a close look at what we could learn from many years of work that you and your teams had already been doing in the mortgage servicing space.  And we learned plenty.

All of that consideration has now borne fruit in a new regulatory regime.  This regime will govern the mortgage servicing market – including both the banks and their nonbank competitors – in perpetuity.  And the Consumer Bureau has both supervisory authority and enforcement authority to make these rules stick and ensure that servicers must comply with them.  These changes will usher in a new era of fundamental reforms in mortgage servicing.


Debt collection is another example that shows how your work reverberates.  For decades, the attorneys general, along with the Federal Trade Commission, have been at the forefront of fighting unfair and deceptive practices by debt collectors.  Back when I was the Ohio Attorney General, we found that these investigations and lawsuits came thick and fast, because consumers were constantly crying out against the many abuses to which they were subjected by some unscrupulous debt collectors.

Interestingly, this market is one that attorneys general know backward and forward, because most attorneys general not only oversee the activities of debt collectors in their states, but they are also debt collectors themselves.  When you collect debts owed to the state government, or to state universities, you learn as I did that this work can and should be done the right way.  But you also come to understand the many financial pressures that can lead debt collection companies and their employees to do things the wrong way.  You see first-hand how some people are tempted to engage in indefensible practices just to squeeze whatever they can out of debtors, regardless of the ethics and regardless of the harm done.

Under the Dodd-Frank Act, the new Consumer Bureau was given authority for the first time ever to develop rules to implement the Fair Debt Collection Practices Act, which was enacted in 1977 – the year I graduated from high school.  Right now, we are in the early stages of preparing possible proposals, which could lead to the most significant changes in federal law in this area in 37 years.  Those years have not been uneventful for our society and for debt collection:  they have witnessed the evolution of computers, the proliferation of telephone answering machines, the coming (and going) of fax machines, the birth of the Internet, the rise of email, and the advent of cell phones, blackberries, and smart phones.

As you can see, we face an immense task.  And where should we look for guidance about how to handle that task?  We decided, right away, to seek input from attorneys general and your teams.  Very few policymakers can sit down and sketch a unified theory of the universe that actually fits the world around us.  Better insight comes from those doing the relevant work, who can speak from experience.  So we put out an Advanced Notice of Proposed Rulemaking and later extended the deadline for comments so we could get more input from you and others.  I am glad to know that you will guide us, and advise us, as we carry out this overhaul of federal debt collection law.  The results will be better informed, and more balanced, because you are in a position to counsel us in our efforts.


In these ways and others, your thoughtful and energetic work is spurring national reforms.  That is especially the case through your partnership with us.  Although financial issues can be highly complex, what we are both seeking really is not.  Our job is simply to work together to help create a consumer financial marketplace that works for consumers and honest businesses alike.

To this end, we have several other ongoing efforts where we are jointly engaged in protecting American consumers.  One concern that is widely shared by state attorneys general is online lending that is pursued in violation of state or federal law.  We all know that law enforcement in cyberspace poses some difficult challenges.  We have made the commitment to work together to find ways to make sure that technology serves consumers and does not create the means of circumventing compliance with the law.

Another area of mutual engagement is unfair and deceptive marketing practices by for-profit colleges.  This is a matter of utmost importance to our nation.  Tens of billions of dollars are being spent every year on these institutions, and we are hearing widespread complaints about the serious gap between promises and reality.  Our next generation of leadership in this country is being diverted or held back by their student loan burdens, which are made even worse if they are the victims of exploitative lending practices.  We will have more to say later today about some of the specific activity we are undertaking here in coordination with a number of attorneys general.


Three years ago, I first came here as a new member of SAGE and as a new employee of the Consumer Financial Protection Bureau.  We only had six people on our enforcement team then, as we were just beginning to build this new agency.  Now I am already able to speak at length about the crusades we are undertaking together to improve life for American consumers.  Let me say that it feels just great to be your partner.  As Henry Ford once said, “Coming together is a beginning; keeping together is progress; working together is success. Thank you.


The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.

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


Dave Curatola: Landlord Abuses With College Student Housing

Dave Curatola: Landlord Abuses With College Student Housing

The author should also look into available tax credits on housing if any to out of state parents/students.


As a responsible parent when my daughter was accepted into Florida State University several years ago we decided to house her for her freshman year in the dorm. Typically parents have two choices when it comes to student housing, the natural option is the college dorm or second option is to rent from one of the many student apartments off Campus.

In her second through senior year in order to have her acclimate into the world of apartment renting and responsibility, she chose the rental apartment. These apartments are actually built with multi student living in mind. Each unit has 4 bedrooms with a central living and kitchen area shared by all. Each bedroom has its own private bathroom and is very ordinary, white drywall interior walls with plain white tile bathroom. Very similar to a no frills motel room!

The landlords operate these apartments like a military operation, the usual first and last month’s rent plus a month’s security deposit. In defense of these landlords I’m sure they need to get as much as possible do to young students partying and carless behavior. But some students are responsible and follow the rules and respect the rental lease.


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


N.Y. Regulator Probing Ocwen’s Relationships

N.Y. Regulator Probing Ocwen’s Relationships

Mr. Lawsky is the Real Deal!!

4- Traders-

New York’s top financial regulator is probing mortgage-servicing firm Ocwen Financial Corp.’s relationships with several business affiliates, raising concerns that borrowers may be harmed because of the companies’ close ties.

Benjamin Lawsky, the state’s superintendent of financial services, sent a letter Wednesday to Ocwen seeking information about the company’s financial interests in affiliated firms, services that the other firms provide Ocwen and agreements between the firms and other details.

The agency’s “ongoing review of Ocwen’s mortgage servicing practices has uncovered a number of potential conflicts of interest between Ocwen and other public companies with which Ocwen is closely affiliated,” Mr. Lawsky said in the letter, adding that “this tangled web of conflicts could create incentives that harm borrowers and push homeowners unduly into foreclosure.”


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


And just when you thought it was “safe” to sell real estate!

And just when you thought it was “safe” to sell real estate!

A very good article especially for Real Estate Professionals.

Clouded Titles-

I found an article online put out by the law firm of Niles, Barton & Wilmer which I thought exemplified my previous assertions that real estate agents and brokers were not “exempt” from this real estate mortgage mess. It appears this law firm has done extensive research on the subject and real estate agents and brokers have a lot to look out for in today’s trouble markets. I thought it merited sharing here:

The current real estate market has caused an increase in activity for real estate professionals. With this increase in activity, there has also been an increase in litigation against real estate agents, brokers, appraisers, home inspectors, mortgage specialists and other real estate professionals across the country. Likely causes of actions include claims for breach of the standard of care (i.e., professional negligence), breach of contract, negligent and intentional misrepresentation, deceptive trade practice, consumer fraud and other state-specific causes of action. Often, not only will real estate professionals have to defend a lawsuit, but they may also find themselves in a position where they may have to defend their license before their state licensing agency. The following is a list of emerging trends in suits against real estate professionals and the ways in which real estate professionals can guard against such claims.


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


CORNERSTONE TITLE & ESCROW, INC. v. EVANSTON INSURANCE COMPANY,, Court of Appeals, 4th Circuit 2014 | Professional liability policy may cover foreclosure fraud

CORNERSTONE TITLE & ESCROW, INC. v. EVANSTON INSURANCE COMPANY,, Court of Appeals, 4th Circuit 2014 | Professional liability policy may cover foreclosure fraud



No. 13-1318.
United States Court of Appeals, Fourth Circuit.
Argued: January 29, 2014.
Decided: February 19, 2014.
Stephan Young Brennan, ILIFF, MEREDITH, WILDBERGER & BRENNAN, P.C., Pasadena, Maryland, for Appellants.

Paul Newman Farquharson, SEMMES, BOWEN & SEMMES, Baltimore, Maryland, for Appellee.

Before AGEE, FLOYD, and THACKER, Circuit Judges.

Reversed and remanded by unpublished opinion. Judge Agee wrote the opinion, in which Judge Floyd and Judge Thacker joined.


Unpublished opinions are not binding precedent in this circuit.

AGEE, Circuit Judge.

The Maryland Attorney General sued Cornerstone Title & Escrow, Inc., alleging that Cornerstone and others engaged in a scheme to defraud homeowners on the brink of foreclosure. In response, Cornerstone sought coverage from its professional liability insurer, Evanston Insurance Company, but Evanston denied any duty to defend under the policy. Cornerstone and its owner then filed a breach-of-contract action against Evanston in the District of Maryland. That court entered summary judgment in Evanston’s favor, finding that at least two policy exclusions barred coverage for the underlying action. Cornerstone appealed.

For the reasons explained below, we reverse and remand the judgment of the district court. Not all the claims found in the underlying complaint fall within the two exclusions that the district court identified, so those two exclusions do not defeat Evanston’s duty to defend and, by extension, duty to indemnify.



Evanston issued a “Service and Technical Professional Liability Insurance” policy to Cornerstone, which provides that Evanston will pay “the amount of Damages and Claims Expenses because of any (a) act, error or omission in Professional Services rendered or (b) Personal Injury committed by [Cornerstone].” (J.A. 67-68.) The policy also says that Evanston will “investigate, defend and settle any Claim to which coverage under this policy applies.” (J.A. 68.) Taken together, these provisions require Evanston to defend and indemnify Cornerstone for covered claims.

This case implicates four of the policy’s exclusions:

• Exclusion (a): applying to claims “based upon or arising out of any dishonest, deliberately fraudulent, malicious, willful or knowingly wrongful act or omissions committed by or at the direction of [Cornerstone].” (J.A. 70.).

• Exclusion (n): applying to claims “based upon or arising out of [Cornerstone] gaining any profit or advantage to which [Cornerstone] is not legally entitled.” (J.A. 70.)

• Exclusion (x): applying to claims “based upon or arising out of the actual or alleged theft, conversion, misappropriation, disappearance, or any actual or alleged insufficiency in the amount of, any escrow funds, monies, monetary proceeds, or any other assets, securities, negotiable instruments, irrespective of which individual, party, or entity actually or allegedly committed or caused in whole or part the [excluded act].” (J.A. 65.)

• Exclusion (cc): applying to claims “based upon or arising out of the Real Estate Settlement Procedures Act (RESPA) or any similar state or local legislation.” (J.A. 66.)

If a “[c]laim” falls within one of these exclusions, then the policy “[d]oes [n]ot [a]pply.” (J.A. 69.)


In 2008, the Maryland Attorney General sued Cornerstone and ten co-defendants, alleging that the defendants collectively violated two Maryland statutes: the Protection of Homeowners in Foreclosure Act and the Consumer Protection Act. According to the complaint, the defendants violated these statutes by scheming to “take title to homeowners’ residences and strip the equity that the homeowners ha[d] built up in their homes.” (J.A. 109.) The complaint identified thirteen specific property transactions in which the defendants, including Cornerstone, acted wrongfully; it asked the court for a variety of relief, including restitution.

The alleged scheme worked by preying on homeowners close to losing their homes in foreclosure.[1] The “Lewis Defendants” marketed foreclosure-consulting services for a fee and, with the help of a colluding mortgage broker (Thomas), would convince their consulting clients to enter sale-leaseback agreements. Under such an agreement, a homeowner would sell her home to the Lewis Defendants and rent it back. The Lewis Defendants pitched the arrangement as a way to resolve the homeowner’s delinquency while allowing the homeowner to rebuild her credit and keep her home. The reality was much different. Once a sale was consummated, the Lewis Defendants would tell a homeowner that unspecified closing fees and charges had consumed any equity proceeds and convince the homeowner to sign her check for the settlement proceeds back to the Lewis Defendants. Then, the Lewis Defendants would charge the homeowner monthly rent payments that were much higher than the original mortgage payments — driving the homeowner out of her home and ending any chance for her to repurchase it in the future.

Cornerstone “provide[d] settlement services for the sale-leaseback transactions,” and the Attorney General alleged that Cornerstone failed to “deliver to homeowners the checks for proceeds due to them at settlement or afterwards.” (J.A. 116.) Cornerstone instead “deliver[ed] the homeowners’ [unendorsed] checks to the Lewis Defendants or to Defendant Thomas, who deliver[ed] the checks to the Lewis Defendants.” (J.A. 116.) The complaint alleged that Cornerstone never “disclose[d] [to the homeowners] the fact that it provide[d] homeowners’ checks to other parties” (J.A. 116), and alleged that this failure to disclose amounted to “a failure to state material facts” in violation of the Maryland Consumer Protection Act. (J.A. 129.) In addition, by acting as the settlement agent, “Cornerstone participated in and provided substantial assistance to the [equity-stripping] scheme.” (J.A. 129.)

The Attorney General sought to hold Cornerstone responsible not just for its own alleged failure to disclose, but also for its co-defendants’ acts. The Attorney General pled that it was the defendant’s “concerted action that [made] the enterprise possible” (J.A. 109), so each defendant was “jointly and severally liable” for the acts of every other co-defendant (J.A. 124, 130). Applying this theory, the Attorney General asserted that Cornerstone was liable for a laundry list of statutory violations committed by its co-defendants, including:

• Failing to provide a written foreclosure consulting contract or written sale-leaseback agreement;

• Requiring homeowners to pay a membership fee before receiving foreclosure consulting services;

• Obtaining an interest in a person’s home while offering that same person foreclosure consulting services;

• Representing that the services were offered to save a homeowner from foreclosure;

• Failing to disclose the nature of the foreclosure services provided, the material terms of the sale-leaseback agreement, the terms of the rental agreement that followed, and the terms of any subsequent repurchase;

• Failing to disclosure specific terms of the sale-leaseback agreements that statutes require to be disclosed;

• Failing to provide several statutorily required forms and notices in connection with the foreclosure counseling and the sale-leaseback agreements;

• Failing to determine whether the borrower has the reasonable ability to make lease payments and repurchase her home;

• Misleading consumers about whether they are entitled to proceeds of settlement and whether those proceeds would be placed in escrow accounts;

• Taking consumers’ settlement checks; and

• Recording land deeds and encumbering properties before the homeowners’ rescission period expired.

Cornerstone sought coverage under the policy from Evanston, requesting that Evanston defend Cornerstone against the complaint and indemnify it for any liability. Evanston denied coverage. Although Cornerstone denied the Attorney General’s allegations, it eventually agreed to a settlement in which it agreed to pay $100,100 in restitution.


In March 2012, Cornerstone sued Evanston, alleging that the insurer breached both its duty to defend and its duty to indemnify under the policy. Cornerstone moved for summary judgment on the duty-to-defend issue and Evanston responded by filing its own cross-motion for partial summary judgment. Among other things, Evanston argued that the Attorney General’s suit fell within policy exclusions (a), (n), (x), and (cc) and thus no duty to defend, or indemnify, arose.

The district court granted Evanston’s motion for partial summary judgment, denied Cornerstone’s cross-motion, and sua sponte entered judgment on Cornerstone’s duty-to-indemnify claim. Of relevance here, the court concluded — based on the “gravamen” of the complaint — that the Attorney General’s complaint “only alleged conduct that meets exclusions of the policy—(n) and (x), at minimum[.]” Cornerstone Title & Escrow, Inc. v. Evanston Ins. Co., No. WMN-12-746, 2013 WL 393286, at *3, *7 (D. Md. Jan. 30, 2013). The court stated that misappropriation and illegal gains were “precisely” what the Attorney General alleged in his complaint against Cornerstone. Id. at *7. Therefore, the district court concluded that Evanston had no duty to defend and, consequently, no duty to indemnify, but did not address exclusions (a) or (cc).

Cornerstone filed this timely appeal, over which we have jurisdiction under 28 U.S.C. § 1291.


The district court decided this case on summary judgment, and we review that decision de novo. See Turner v. United States, 736 F.3d 274, 280 (4th Cir. 2013). In doing so, we apply “the same legal standards as the district court and view[] all the facts and reasonable inferences therefrom in the light most favorable to the non moving party,” Cornerstone. Id. “Summary judgment is appropriate if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Id. (internal quotation marks and citation omitted).


As the parties agree, Maryland law applies to this diversity case. The district court focused on the law concerning the duty to defend, correctly reasoning that Evanston would have no duty to indemnify if it had no duty to defend, because the duty to defend is broader. See Cowan Sys., Inc. v. Harleysville Mut. Ins. Co., 457 F.3d 368, 372 (4th Cir. 2006).

In Maryland, the duty to defend “should be construed liberally in favor of the policyholder,” Pac. Emp’rs Ins. Co. v. Eig, 864 A.2d 240, 248 (Md. Ct. Spec. App. 2004), and it attaches “when there exists a potentiality that the claim could be covered by the policy,” id. (emphasis in original; internal quotation marks omitted). Even a slim possibility can constitute a “potentiality.” Compare Walk v. Hartford Cas. Ins. Co., 852 A.2d 98, 106 (Md. 2004) (defining a potentiality as “a reasonable potential that the issue triggering coverage will be generated at trial” (quotation marks omitted)), with Litz v. State Farm Fire & Cas. Co., 695 A.2d 566, 572 (Md. 1997) (“If there is a possibility, even a remote one, that the plaintiffs’ claims could be covered by the policy, there is a duty to defend.”). And “any doubts about the potentiality of coverage must be resolved in favor of the insured.” Cowan Sys., 457 F.3d at 372.

To determine whether the insurer must defend, Maryland courts ask two questions: “(1) what is the coverage and what are the defenses under the terms and requirements of the insurance policy? [and] (2) do the allegations in the [underlying] tort action potentially bring the tort claim within the policy’s coverage?” Id. (alterations in original). “The first question focuses upon the language and requirements of the policy, and the second question focuses upon the allegations of the tort suit.” St. Paul Fire & Marine Ins. Co. v. Pryseski, 438 A.2d 282, 285 (Md. 1981).


In answering the first question noted above, “[i]nsurance contracts are treated as any other contract, and [Maryland courts] measure such an agreement by its terms.” United Servs. Auto. Ass’n v. Riley, 899 A.2d 819, 833 (Md. 2006). We must construe the policy as a whole, and a word should be accorded “its usual, ordinary and accepted meaning unless there is evidence that the parties intended to employ it in a special or technical sense.” Clendenin Bros., Inc. v. U.S. Fire Ins. Co., 889 A.2d 387, 393 (Md. 2006) (quotation marks omitted). “In addition, [Maryland courts] examine the character of the contract, its purpose, and the facts and circumstances of the parties at the time of execution.” Cole v. State Farm Mut. Ins. Co., 753 A.2d 533, 537 (Md. 2000) (quotation marks omitted). “[I]f no ambiguity in the terms of the insurance contract exists, a court will enforce those terms.” Nat’l Union Fire Ins. Co. of Pittsburgh v. David A. Bramble, Inc., 879 A.2d 101, 109 (Md. 2005). But “if an insurance policy is ambiguous, it will be construed liberally in favor of the insured and against the insurer as drafter of the instrument,” Dutta v. State Farm Ins. Co., 769 A.2d 948, 957 (Md. 2001) (quotation marks omitted; emphasis in original), at least if extrinsic evidence cannot resolve the ambiguity, Clendenin Bros., 889 A.2d at 394. We must find policy language ambiguous if it “suggests more than one meaning to a reasonably prudent layperson.” State Farm Mut. Auto. Ins. Co. v. DeHaan, 900 A.2d 208, 226 (Md. 2006).

In interpreting the insurance contract, we should take special care to interpret exclusion provisions narrowly. See Megonnell v. United Servs. Auto. Ass’n, 796 A.2d 758, 772 (Md. 2002). “[S]ince exclusions are designed to limit or avoid liability, they will be construed more strictly than coverage clauses and must be construed in favor of a finding of coverage.” Id. (quotation marks omitted). And, in all cases, the insurer bears the burden of showing that an exclusion applies. See Prop. & Cas. Ins. Guar. Corp. v. Beebe-Lee, 66 A.3d 615, 624 (Md. 2013); see also Trice, Geary & Myers, LLC v. Camico Mut. Ins. Co., 459 F. App’x 266, 274 (4th Cir. 2011) (unpublished) (applying Maryland law).


In answering the second question, courts evaluate the “causes of action actually alleged by the plaintiff in [the underlying] lawsuit.” Reames v. State Farm Fire & Cas. Ins., 683 A.2d 179, 186 (Md. Ct. Spec. App. 1996); see also Sheets v. Brethren Mut. Ins. Co., 679 A.2d 540, 542 (Md. 1996) (“[W]e must assume that the facts in the [underlying] complaint are true.”). We do not consider the merits of the underlying suit at the duty-to-defend stage; “the underlying tort suit need only allege action that is potentially covered by the policy, no matter how attenuated, frivolous, or illogical that allegation may be.” Sheets, 679 A.2d at 544 (emphasis in original). The policyholder — but not the insurer — may also introduce extrinsic evidence at this step to establish a potentiality of coverage. Aetna Cas. & Sur. Co. v. Cochran, 651 A.2d 859, 866 (Md. 1995).

Finally, and critically, if the complaint at issue contains some covered claims and some non-covered claims, then the insurer must defend the entire action. See Perdue Farms, Inc. v. Travelers Cas. & Sur. Co. of Am., 448 F.3d 252, 258 (4th Cir. 2006) (“Under Maryland’s comprehensive duty to defend, if an insurance policy potentially covers any claim in an underlying complaint, the insurer must typically defend the entire suit, including non-covered claims.”).

With these basic principles in mind, we consider each of the parties’ exclusion-related arguments.



Evanston first argues that exclusion (n), sometimes called the personal-profits exclusion, defeats coverage. In its view, exclusion (n) applies whenever an underlying action suggests that the policyholder gained an illegal benefit or superior position. Evanston contends that the Attorney General’s complaint alleged such an advantage because Cornerstone did not deliver the settlement checks to the selling homeowners, thereby taking part in an equity-stripping scheme.

Even if we were to adopt Evanston’s reading of the relevant exclusion, we do not agree with its view of the complaint. Our disagreement leads us to conclude that exclusion (n) does not bar coverage to Cornerstone.

The Attorney General’s complaint did not allege that any particular “profit” or “advantage” inured to Cornerstone’s benefit, as exclusion (n) requires. To the contrary, the complaint alleged that all the relevant benefits and funds went to the Lewis Defendants and, perhaps, Thomas. It was the Lewis Defendants, after all, who “stripped” the equity from homeowners’ homes by contriving false fees and other reasons to obtain the homeowners’ settlement proceeds. Evanston admits as much. (See Evanston’s Br. 17 (“The result of this scheme allowed the Lewis Defendants to wrongfully take the homeowners’ equity.” (emphasis added)).) Although Cornerstone collected the settlement proceeds, the complaint does not suggest that it ever retained them. See Perdue Farms, 448 F.3d at 256 n.3 (finding personal-profits exclusion inapplicable where the underlying plaintiffs “never alleged that [the defendant] gained any advantage from its unlawful conduct”). There is no allegation that Cornerstone should not have collected the settlement proceeds because, as a settlement agent, the company was required to do so. Cf. Obligation of Title Insurance Companies to Conduct Annual Review of Settlement Agents, 85 Md. Op. Att’y Gen. 306, 315 (2000) (“Funds are normally escrowed as a part of a real estate settlement.”). While the homeowners’ equity and money might be an illegal profit or advantage that went to someone after settlement, those assets went to parties other than “the Insured” under the terms of Cornerstone’s policy with Evanston.

We also observe that exclusion (n) would not apply because the underlying complaint did not allege illegal profiteering by Cornerstone. Instead, the complaint alleged illegal conduct that produced incidental gains. Put another way: the Attorney General could have succeeded on its claims against Cornerstone without showing that Cornerstone received a single dollar or any other advantage, legal or illegal. In fact, many of the claims for which Cornerstone was allegedly jointly and severally liable did not involve money at all, but instead alleged wrongful disclosures and misrepresentations. (See J.A. 109 (defining Cornerstone as a “Foreclosure Rescue Defendant”); J.A. 126-30 (listing actions for which all Foreclosure Rescue Defendants were responsible).) Cf. Fed. Ins. Co. v. Kozlowski, 792 N.Y.S.2d 397, 403 (N.Y. App. Div. 2005) (explaining that personal-profits exclusion did not relieve insurer of duty to pay defense costs where underlying actions also contained allegations relating to “alleged misstatements and omissions” that were “archetypical of claims that encompass both excluded and covered behavior”). The underlying nondisclosure claims, at a minimum, do not “arise out of” the illegal profit or advantage itself, so those allegations of the complaint do not fall within the exclusion. Perdue Farms, 448 F.3d at 256 n.3 (“[T]he alleged ERISA violations do not `aris[e] out of’ illegal profiteering, because 29 U.S.C. § 1140 proscribes specified conduct, not profit.”); see also Brown & LaCounte, LLP v. Westport Ins. Corp., 307 F.3d 660, 664 (7th Cir. 2002) (distinguishing between cases involving “allegations of breaches of fiduciary duty where the dispute concerned the illegality of the actions taken or profits received” and case involving an “unequivocal[] alleg[ation] that [the defendant] reaped an illegal profit”).

Though Evanston argues otherwise, it makes no difference that Cornerstone received fees for the settlement services that it provided at closing when the houses were conveyed to the Lewis Defendants. The complaint does not allege that Cornerstone overcharged or that it failed to provide bona fide settlement services. Under the plain terms of exclusion (n), Cornerstone’s receipt of legally justified funds does not defeat policy coverage. See, e.g., St. Paul Mercury Ins. Co. v. Foster, 268 F. Supp. 2d 1035, 1045 (C.D. Ill. 2003) (finding personal-profits exclusion inapplicable where policyholder might have been “legally entitled to retain” the funds in question). More importantly, as the district court held in an unchallenged ruling and as Evanston acknowledged at argument, the Attorney General’s complaint did not seek damages for the “consideration or expenses paid to [Cornerstone] for services or goods.” Cornerstone, 2013 WL 393286, at *5 (alteration in original). Because the Attorney General’s claims did not touch upon Cornerstone’s settlement fees, those fees could hardly have been a “profit” or “advantage” that spurred the underlying claim. See, e.g., Axis Reinsurance Co. v. Telekenex, Inc., 913 F. Supp. 2d 793, 803 (N.D. Cal. 2012) (finding personal-profits exclusion did not bar coverage for spoliations sanction even though spoilative act might have also provided business advantage, where court did not premise the sanction on the act creating the advantage); In re Donald Sheldon & Co., Inc., 186 B.R. 364, 369 (S.D.N.Y. 1995) (holding that exclusion did not apply where the “alleged personal profits were not the basis of the liability for which recovery was sought”).

Finally, Evanston has not persuaded us that some undefined personal benefit flowed to Cornerstone merely because the Attorney General sought restitution as a remedy under the complaint. To be sure, a restitution award sometimes suggests that the defendant enjoyed some gain, as “restitution [in the Consumer Protection Act context] aims at disgorgement of unjust enrichment, not compensation for damages.” Consumer Prot. Div. v. Morgan, 874 A.2d 919, 953 (Md. 2005). But in a case that involves “concerted action” — that is, a case like the underlying action here — the restitution award doesn’t necessarily aim to disgorge benefits from particular defendants. Instead, the award serves to disgorge the benefits going to the scheme as a whole. A conspiring Consumer Protection Act defendant will therefore face potential restitution anytime any of his co-conspirators enjoyed some benefit. Id. (“As tortfeasors acting in concert are responsible for the damages each caused, so too are Consumer Protection Act violators who act in concert responsible for the unjust enrichment each gained at the consumers’ expense.”). A defendant who enjoyed no personal gain could still be ordered to pay restitution if he were part of a broader concerted action that produced benefits to a fellow co-defendant. See, e.g., State v. Cottman Transmissions Sys., Inc., 587 A.2d 1190, 1201 (Md. Ct. Spec. App. 1991) (ordering defendant to pay restitution where another party received improper fees but defendant “indirectly” assisted other party in deception); see also J.P. Morgan Secs. Inc. v. Vigilant Ins. Co., 992 N.E.2d 1076, 1082-83 (N.Y. 2013) (finding that personal-profit exclusion would not apply where disgorgement payment made by defendant “did not actually represent the disgorgement of [the defendant’s] own profits,” but rather “represented the improper profits acquired by third-part[ies]”). The restitution request therefore does not serve as any guarantee of personal gain on Cornerstone’s part.

In sum, the personal-profits exclusion — exclusion (n) — does not defeat Evanston’s duty to defend and the district court erred in granting partial summary judgment to Evanston in that regard.


Alternatively, Evanston references the Attorney General’s allegations that Cornerstone misdirected settlement checks and maintains that exclusion (x) also bars coverage. This improper delivery, it says, amounts to conversion.[2] Evanston’s argument suffers from a fatal flaw: the improper delivery seen here did not amount to conversion.

In Maryland, the payee of a check (here, the homeowner) must receive the check before he or she can bring a conversion action based on a misuse or improper delivery of it. See Md. Code Ann., Comm. L. § 3-420(a) (“An action for conversion of an instrument may not be brought by a payee or indorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a co-payee.”). Where the payee has not received the check, the payee retains a cause of action against the drawer (in this case, Cornerstone) for the liability reflected in the check, but, at least at that point in time, cannot bring a conversion action. See Jackson v. 2109 Brandywine, LLC, 952 A.2d 304, 321 (Md. Ct. Spec. App. 2008). In this case, Cornerstone allegedly misdirected the settlement checks before they ever reached the hands of the homeowners. Thus, the necessary element of delivery for a Maryland conversion action to the payee was absent at the time of the allegedly wrongful transfer by Cornerstone.

Even if we could overlook this basic issue and assume that the Cornerstone’s act of “improper delivery” fell within exclusion (x), we would still find that other allegations in the Attorney General’s complaint are not within the ambit of that exclusion and therefore the duty to defend is triggered. For instance, the underlying complaint faults Cornerstone for failing to disclose certain facts. And, as we have now previously described, the underlying complaint attempts to impose liability on Cornerstone for acts of its co-defendants that have no connection at all to misdirected checks. Among other things, the Attorney General sought to hold Cornerstone responsible for acts such as failing to make required statutory disclosures, recording deeds prematurely, and making misleading statements about the services that the defendants provided. Those claims do not arise from theft, conversion, misappropriation, or any of the other acts described in exclusion (x), and consequently require coverage under the policy.

At argument, Evanston pressed two other points that we need only briefly address. First, Evanston evoked a notion reminiscent of the one that the district court adopted — that the “gravamen” of the underlying complaint should decide whether it warrants coverage. But as we have already discussed, the well-established rule in Maryland says otherwise. Where covered and uncovered claims arise in the same action, the insurer must defend, regardless of what the gravamen of the action might be. See, e.g., Cont’l Cas. Co. v. Bd. of Educ. of Charles Cnty., 489 A.2d 536, 542 (Md. 1985); Back Creek Partners, LLC v. First Am. Title Ins. Co., 75 A.3d 394, 400 (Md. Ct. Spec. App. 2013); Zurich Ins. Co. v. Principal Mut. Ins. Co., 761 A.2d 344, 348 (Md. Ct. Spec. App. 2000); Balt. Gas & Elec. Co. v. Commercial Union Ins. Co., 688 A.2d 496, 512 (Md. Ct. Spec. App. 1997). Indeed, in Utica Mutual Insurance Co. v. Miller, 746 A.2d 935, 941-42 (Md. Spec. Ct. App. 2000), the Court of Special Appeals of Maryland found that an underlying complaint triggered the duty to defend even though the “gravamen” of that complaint was plainly excluded, where other claims were not. Second, Evanston questioned whether Cornerstone faced a genuine prospect of liability from the acts of its co-defendants. As should be clear by now, we need not answer that question to determine whether the insurer must defend. The insurer has a duty to defend a covered claim even when the claim can be called “frivolous.” Back Creek Partners, 75 A.3d at 400.

In short, exclusion (x) also does not defeat Evanston’s duty to defend the Attorney General’s suit and the district court erred in awarding Cornerstone partial summary judgment in that regard.


Evanston suggests that we affirm on alternative grounds, particularly that exclusions (a) and (cc) exclude coverage. As noted earlier, the district court did not address these policy exclusions. “Although we are not precluded from addressing [alternative grounds for affirmance], we deem it more appropriate to allow the district court to consider them, if necessary, in the first instance on remand.” Q Int’l Courier Inc. v. Smoak, 441 F.3d 214, 220 n.3 (4th Cir. 2006); see also United States ex rel. Carter v. Halliburton Co., 710 F.3d 171, 184 (4th Cir. 2013) (“The district court did not reach this argument, having found grounds for dismissal elsewhere. We decline to address this issue for the first time on appeal.”). Accordingly, we will remand the case for further proceedings so that the district court can address the parties’ arguments as to exclusions (a) and (cc) in the first instance.


For these reasons, we reverse the district court’s grant of summary judgment to Evanston on the duty-to-defend issue. Because the district court’s decision on the duty-to-indemnify matter rested solely on its erroneous duty-to-defend decision, we must reverse that decision as well. We direct the district court to enter partial summary judgment in Cornerstone’s favor on the duty-to-defend issue as to exclusions (n) and (x). We remand for further proceedings consistent with this opinion.


[1] As explained below, we assume that the allegations of the underlying complaint are true for purposes of determining whether Evanston owes Cornerstone a duty to defend.

[2] On appeal, Evanston invokes only the conversion portion of the exclusion.

Down Load PDF of This Case

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Petition: TIMOTHY J. RACICOT Assistant U.S. Attorney – Prosecute the Criminals, not the Victims!

Petition: TIMOTHY J. RACICOT Assistant U.S. Attorney – Prosecute the Criminals, not the Victims!

This petition will be delivered to:

Assistant US attorney
TIMOTHY J. RACICOT Assistant U.S. Attorney
Sen. Elizabeth Warren
Sen. Rand Paul

Prosecute the Criminals, not the Victims!

    1. mary mcculleyPetition by
    2. mary mcculley

      Owensboro, KY

US BANK was found liable for ACTUAL fraud on Feb 7, and the jury awarded  $5 million in punitive damages, because their actions were heinous and malicious.

Timothy Racicot is is possession of the forged and altered deeds, along with other federal documents that were used in this fraud.  These include federally required RESPA documents, multiple altered deeds of trust and more.

I reported this to the FBI in 2011, and they shoved me under the rug.  I reported these forgeries and fraud to every state and federal agency I could find.  No one would help.   Instead, it took me almost 7 years to prove the fraud, – which I did.

The fraud was egregious and deliberate,  -it was planned,  and the guy who forged the deeds with the bank? – American Land Title Company where many of the documents were copied, and changed? –   He had ME arrested claiming I told him I was an FBI agent and stole his birthday card.

ENOUGH IS ENOUGH. The federal government now has PROOF of the fraud, and they want to throw me in prison, because they would rather believe a thief and a forger than me, the victim.


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


Pam Bondi: Dad ‘conspired’ for me to get jobs and I NEVER done a resume in my life!!!

Pam Bondi: Dad ‘conspired’ for me to get jobs and I NEVER done a resume in my life!!!

Makes you wonder what other “connections” she had with those under investigation for Foreclosure Fraud… I think we all figured this one out a long time ago!!!

Fox News-

After Attorney General Pam Bondi spoke to students about how she got her career started with the help of her father’s connections, and that she had never made a resume in her life, a student newspaper editorial slammed her for being out of touch.

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


SunTrust says could face “substantial penalties” in mortgage probe

SunTrust says could face “substantial penalties” in mortgage probe


SunTrust Banks Inc said it may attract “substantial penalties” from on an ongoing mortgage-related probe and also disclosed a new investigation by the Department of Justice, according to a regulatory filing late Monday.

U.S. Attorney’s Office for the Western District of Virginia and Office of the Special Inspector General for the Troubled Asset Relief Program have been investigating SunTrust concerning its participation in a federal mortgage-assistance program.

The agencies have indicated the plan to pursue some form of action and may impose substantial penalties on SunTrust, the company said in the filing with the U.S. Securities and Exchange Commission.


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


Understanding the National Mortgage Settlement: A Road Map for Housing Counselors

Understanding the National Mortgage Settlement: A Road Map for Housing Counselors


“It appears that unless the servicers who signed the settlement agreement cannot continue with foreclosures unless all the conditions precedent under the agreement have been met.”

The two-part series of webinar trainigs focused on Settlement’s standards for servicing mortgage loans:

Part I: Settlement’s servicing standards
Recording & PowerPoint Presentation

Part II: Settlement and CFPB servicing standards
Recording & PowerPoint Presentation



 Click on the cover image to download a high-resolution version of the Guide.

For a low-resolution version, click here.

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


SCOTUS: Why Lujan?

SCOTUS: Why Lujan?

Why Lujan?
A noteworthy repeat and review.

Lujan v. Defenders of Wildlife, 504 U.S. 555, 570-71 n.5 (1992)

In response to comments from folks who read BONY v Romero on this site, a case cited in Romero was Lujan, which case focused on standing – a term every reader here is fondly familiar with. 

A lot can be gleaned from Lujan which has been cited over 15,000 times – worth reading to learn why this case was cited so much.

While the current events are not about endangered species, per se, ironically, it is time to start addressing a new ‘endangered specie being threatened as a result of the destruction or adverse modification of habitat that has  reached a critical mass over the past 5 years.  For decades we have looked out for and protected, as we should, innocent species and their rights to live and survive without threats of man-made devices. 

Now we, as individuals, and families, are the ones being threatened in our habitats by the MILLIONS; yet no entity or agency is doing anything about it.   We have become the new endangered species and it is time focus is on us and our habitats.

Lujan is not solely about wildlife conservation, but legal concerns, it just ironically focuses on the subject matter of preserving species – a topical subject involving human habitation in a form of ‘specie survival’ for American families today.

In Lujan . . . Each Federal agency shall, in consultation with and with the assistance of the Secretary [of the Interior], insure that any action authorized, funded, or carried out by such agency . . . is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of habitat of such species which is determined by the Secretary, after consultation as appropriate with affected States, to be critical. 16 U. S. C. § 1536(a)(2).

While the Constitution of the United States divides all power conferred upon the Federal Government into “legislative Powers,”Art. I, § 1, “[t]he executive Power,” Art. II, § 1, and “[t]he judicial Power,” Art. III, § 1, it does not attempt to define those terms. To be sure, it limits the jurisdiction of federal courts to “Cases” and “Controversies,” but an executive inquiry can bear the name “case” (the Hoffa case) and a legislative dispute can bear the name “controversy” (the Smoot-Hawley controversy). Obviously, then, the Constitution’s central mechanism of separation of powers depends largely upon common understanding of what activities are appropriate to legislatures, to executives, and to courts.

In The Federalist No. 48, Madison expressed the view that “[i]t is not infrequently a question of real nicety in legislative bodies whether the operation of a particular measure will, or will not, extend beyond the legislative sphere,” whereas “the executive power [is] restrained within a narrower compass and .. . more simple in its nature,” and “the judiciary [is] described by landmarks still less uncertain.” One of those landmarks, setting apart the “Cases” and “Controversies” that are of the justiciable sort referred to in Article III —” serv[ing] to identify those disputes which are appropriately resolved through the judicial process,” Whitmore v. Arkansas, 495 U. S. 149, 155 (1990) — is the doctrine of standing.  Though some of its elements express merely prudential considerations that are part of judicial self-government, the core component of standing is an essential and unchanging part of the case-or-controversy requirement of Article III. See, e. g., Allen v. Wright, 468 U. S. 737, 751 (1984).

Over the years, our cases have established that the irreducible constitutional minimum of standing contains three elements.

First, the plaintiff must have suffered an “injury in fact” — an invasion of a legally protected interest which is

(a)     concrete and particularized, see id., at 756; Warth v. Seldin, 422 U. S. 490, 508 (1975); Sierra Club v. Morton, 405 U. S. 727, 740-741, n. 16 (1972);[1] and

(b)     “actual or imminent, not `conjectural’ or `hypothetical,’ ” Whitmore, supra, at 155 (quoting Los Angeles v. Lyons, 461 U. S. 95, 102 (1983)).

Second, there must be a causal connection between the injury and the conduct complained of — the injury has to be “fairly. . . trace[able] to the challenged action of the defendant, and not . . . th[e] result [of] the independent action of some third party not before the court.” Simon v. Eastern Ky. Welfare *561 Rights Organization, 426 U. S. 26, 41-42 (1976).

Third, it must be “likely,” as opposed to merely “speculative,” that the injury will be “redressed by a favorable decision.” Id., at 38, 43.

The party invoking federal jurisdiction bears the burden of establishing these elements. See FW/PBS, Inc. v. Dallas, 493 U.S. 215, 231 (1990); Warth, supra, at 508. Since they are not mere pleading requirements but rather an indispensable part of the plaintiff’s case, each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i. e., with the manner and degree of evidence required at the successive stages of the litigation.   Lujan, supra, at 871, 883-889; Gladstone, Realtors v. Village of Bellwood, 441 U. S. 91, 114-115, and n. 31 (1979); Simon, supra, at 45, n. 25; Warth, supra, at 527, and n. 6 (Brennan, J., dissenting).

The takeaway – it requires the party seeking review be himself among the injured. 

To survive summary judgment a party has to submit affidavits or other evidence showing, through specific facts, not only listed claims were being threatened by activities elsewhere [i.e., MERS, servicers, trustees], but also one or more of a party’s members would thereby be directly affected apart from their special interest in the subject [again, investors, servicers, MERS, trustees]. 

Moral of the story as it relates to our readers, only the party that was the true source of funds in these real estate transactions could suffer ‘injury’ – and only one to a customer – the odds are the party in these mortgage cases was never injured and was in fact made whole by insurance, default swaps, bailouts, advances, etc. 

So instead of ‘what’s in your wallet?’ it’s ‘who’s in your wallet?’  Answers we will know in this mortgage mess.

There is a lot to learn from Lujan, keep reading and glean what you can!


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


In the Matter of Cohen & Slamowitz, LLP, et al. | NY Appeals Court – Even if the individual respondent lacked personal knowledge of the particular client matters … the pattern and practice of misconduct established at the hearing, which were pervasive within C&S since 1996

In the Matter of Cohen & Slamowitz, LLP, et al. | NY Appeals Court – Even if the individual respondent lacked personal knowledge of the particular client matters … the pattern and practice of misconduct established at the hearing, which were pervasive within C&S since 1996

Supreme Court of the State of New York
Appellate Division: Second Judicial Department


2008-10218 OPINION & ORDER

In the Matter of Cohen & Slamowitz, LLP, et al.,
attorneys and counselors-at-law.

Grievance Committee for the Tenth Judicial District,
petitioner; Law Firm of Cohen and Slamowitz, LLP,
et al., respondents.

(Attorney Registration No. 1661263)

DISCIPLINARY PROCEEDING instituted by the Grievance Committee for the
Tenth Judicial District. By decision and order on application of this Court dated January 15, 2009,
the Grievance Committee for the Tenth Judicial District was authorized to institute and prosecute
a disciplinary proceeding against the law firm of Cohen & Slamowitz, LLP, and David A. Cohen,
a principal of the law firm of Cohen & Slamowitz, LLP, based upon the acts of professional
misconduct set forth in a petition dated November 3, 2008, and the issues were referred to the
Honorable Charles F. Cacciabaudo, as Special Referee, to hear and report. By decision and order
on motion dated July 9, 2009, the Honorable Charles F. Cacciabaudo was relieved, and the issues
were referred to the Honorable Joseph A. Esquirol, Jr., as Special Referee, to hear and report. By
further decision and order on motion dated March 12, 2010, the Honorable Joseph A. Esquirol, Jr.,
was relieved, and the issues were referred to the Honorable Kenneth A. Davis, as Special Referee,
to hear and report. The respondent David A. Cohen was admitted to the Bar at a term of the
Appellate Division of the Supreme Court in the Second Judicial Department on February 20, 1980.

Robert A. Green, Hauppauge, N.Y. (Leslie B. Anderson of counsel), for petitioner.

McDonough &McDonough, Garden City, N.Y. (Chris McDonough of counsel), for

PER CURIAM. The Grievance Committee for the Tenth Judicial
District served the respondents with a petition dated November 3, 2008, containing four charges of
professional misconduct involving multiple client matters. The respondents served an answer, dated
February 10, 2009. On June 30, 2011, the parties entered into a stipulation, which addressed, inter
alia, the facts alleged in the petition. One client matter was withdrawn. After a hearing on June 30,
2011, the Special Referee sustained charge two, based on one client matter (Durand). With respect
to charge one, the Special Referee sustained the factual allegations of two of the underlying client
matters (Quader and Kerschhagel), but did not find a pattern and practice of misconduct necessary
to sustain the charge as a whole. Charges three and four, which are derivatives of charge one, were
also not sustained by the Special Referee. The respondents now move to confirm in part, and
disaffirm in part, the Special Referee’s report. The Grievance Committee cross-moves to confirm
in part, and disaffirm in part, the report of the Special Referee.

The charges are predicated upon a common set of facts, as amended by the stipulation
entered into by the parties on June 30, 2011, as follows:

Cohen & Slamowitz, LLP (hereinafter C&S), is a law firm engaged in the practice
of law with offices at 199 Crossways Park Drive, P.O. Box 9004, Woodbury, New York 11797-
9004. David A. Cohen (hereinafter the individual respondent) is the senior partner of C&S. As
senior partner, the individual respondent oversaw the legal activities of C&S’s collection practice
during the relevant period of time, and indirectlysupervised approximatelythree hundred employees,
including attorneys, paralegals, collection staff, and support staff. In April 2002, the individual
respondent had an informal discussion with Grievance Committee counsel, and was advised to
“exercise caution, try to be careful and supervise [his] staff adequately, make sure [he had]
appropriate and reasonable procedures in place, and that [he monitored those] procedures.” The
individual respondent alsowas advised that he, his partner Mitchell G. Slamowitz, and the attorneys
employed by C&S were responsible for the conduct of their staff.

Complaint of Frank A. Mandriota, Sr.

In or about March 2003, the individual respondent and C&S (hereinafter together the
respondents) were retained to collect a debt of approximately $1,800 from a debtor identified as
“Frank Mandriota.” The respondents undertook collection efforts against Frank A. Mandriota
(hereinafter Mandriota Senior), a 73-year-old man residing in Plainview, New York. The
respondents were provided with an address, in Huntington, New York, as well as the social security
number for the actual debtor, Frank G. Mandriota (hereinafter Mandriota Junior), the 53-year-old
son of Mandriota Senior. Despite being provided with the foregoing, the respondents caused a
summons and complaint in the name of “FrankMandriota” to be served at a propertyin Farmingdale,
New York, owned by Mandriota Senior. Thereafter, the respondents obtained a judgment in the
District Court, Nassau County, which was entered in or about December 2003, and became a lien
on Mandriota Senior’s property.

Complaint of Adrian K. Hyde

In or about February 2005, the respondents were retained to collect a debt of
approximately $2,474.20 from a debtor identified as “Adrian Hyde.” Between February 28, 2005,
and March 16, 2005, the respondents undertook collection of the debt against “Adrian K. Hyde,”
who resided at an address onBroadway inNewYork,NewYork. The respondentswere advised that
“Adrian K. Hyde” at that address on Broadway in New York, New York, was not the actual debtor.
Despite this advice, the respondents attempted, on or about July 11, 2005, to have a summons and
complaint served on “Adrian K. Hyde” at that address on Broadway in New York, New York.

Complaint of Dr. Gholam Mujtaba

In or about January 2005, the respondents initiated an action to collect a debt from
a debtor identified as “GhulamMujtaba” of Flushing,NewYork. In pursuing collection of the debt,
the respondents erroneously pursued the matter against “Dr. Gholam Mujtaba” of Corona, New
York. In or aboutAugust 2005, the respondents discontinued collection efforts againstDr. Mujtaba.
On or about January 31, 2006, the respondents were retained to collect an unrelated debt from a
debtor identified as “Ghulam Mujtaba.” Once again, the respondents undertook to collect the debt
from Dr. Gholam Mujtaba. During their collection efforts, the respondents were notified that Dr.
Mujtabawas not the actual debtor. Despite being so advised, the respondents caused a summons and
complaint to be served on Dr. Mujtaba in or about October 2006.

Complaint of Mohammad Quader

On or about November 29, 2005, the respondents were retained to collect an
outstanding debt of approximately $1,450.13 from a debtor identified as “Mohammad Qader,”
residing on Seventh Avenue in Brooklyn, New York. The respondents thereafter undertook
collection efforts against “Mohammad Quader,” residing on Alderton Street in Rego Park, New
York. The respondents were advised that “MohammadQuader,” of Rego Park, New York, was not
the actual debtor. Despite being so advised, the respondents caused a summons and complaint to
be served upon him.

Complaint of Peter Kerschhagel

On or about June 17, 2004, the respondents were retained to collect an outstanding
debt of approximately $5,107.34 from a debtor identified as PeterKerschhagel. In or about February
2005, the respondents undertook collection efforts against Peter Kerschhagel of Dobbs Ferry, New
York, formerly of Irvington, New York. In May and June of 2005, the respondents were advised,
and provided with evidence, that the debt they were attempting to collect had been satisfied in May
2003, and that Kerschhagel resided in Dobbs Ferry, New York. Despite receiving this information,
in or about February 2006, the respondents caused substituted service of a summons and complaint
to purportedlybe effected uponKerschhagel at his former address in Irvington,NewYork. Adefault
judgment was awarded to the respondents’ client in or about May 2006. The respondents thereafter
caused the bank account of Kerschhagel to be restrained, despite evidence that the subject debt had
been satisfied, and that Kerschhagel resided in Dobbs Ferry.

Complaint of Barbara Durand

In or about March 2006, the respondents were retained to enforce a judgment against
a debtor named Barbara Durand. In or about June 2006, by agreement withDurand, the respondents
were sent a check in full satisfaction of the judgment. On March 16, 2007, the respondents sent a
satisfaction of judgment, dated January 11, 2007, to the City Court of Syracuse, New York. That
document was rejected by that court. On or about March 22, 2007, Durand received a copy of the
satisfaction of judgment. As of April 27, 2007, the respondents’ records reflected that the
satisfaction of judgment was again “to be filed” with the court.

Charge one alleges that the respondents engaged in a pattern and practice of conduct
prejudicial to the administration of justice by pursuing the collection of debts without conducting
a reasonable and proper search to verify the identity and property of alleged debtors, and the validity
of the alleged debts, based upon the Mandriota, Hyde, Mujtaba, Quader, and Kerschhagel matters,
in violation of former Code of Professional Responsibility DR 1-102(A)(5) (22 NYCRR

Charge two alleges that the respondents engaged in conduct prejudicial to the
administration of justice by failing to timely file a satisfaction of judgment, and failing to provide
a client with a copy of the satisfaction of judgment, based upon the Durand matter, in violation of
former Code of Professional Responsibility DR 1-102(A)(5) (22 NYCRR 1200.3[a][5]).
Charge three alleges that the individual respondent,DavidA.Cohen, as senior partner
of C&S, engaged in a pattern and practice of failing to exercise reasonable management or
supervisory authority over the conduct of firm employees so as to avoid conduct prejudicial to the
administration of justice by those employees, based upon the facts alleged in charge one, in violation
of former Code of Professional Responsibility DR 1-104(D)(2) (22 NYCRR 1200.5).
Charge four alleges that the individual respondent, David A Cohen, engaged in a
pattern and practice of conduct adversely reflecting on his fitness as a lawyer, based upon the facts
alleged in charge one, in violation of former Code of Professional Responsibility DR 1-102(A)(7)
(22 NYCRR 1200.3[a][7]).

Based upon the respondents’ admissions and the evidence adduced, we find that
charge one should have been sustained in its entirety.

In the Mandriota matter, the evidence shows that the respondents received the social
security number and date of birth for the actual debtor, Mandriota Junior, from their client in or
about March 2003. Moreover, Mandriota Senior or his wife informed the respondents, in writing,
as early as June or July 2003, that the debtor theywere seekingwas Mandriota Junior, not Mandriota
Senior. Nonetheless, the respondents proceeded against Mandriota Senior by causing substituted
service of a summons and complaint naming “FrankMandriota” to be effected atMandriota Senior’s
Farmingdale property, and improperly encumberingMandriota Senior’s Farmingdale property upon
the entry of a default judgment. The respondents admittedly made no independent efforts to verify
whoowned or resided at the Farmingdale address. The improper encumbrancewas not released until
March 2005, almost two years after it was entered, despite the respondents’ actual knowledge that
Mandriota Junior did not own the property, and efforts byMandriota Senior and his wife to have the
encumbrance released when they became aware of it, beginning in or about December 2004.

In theHydematter, the evidence shows that the respondents pursued collection efforts
against “Adrian K. Hyde” at an address on Broadway in New York, New York, even though their
client provided no middle initial, and an address for an Adrian Hyde in Stony Point, New York.
Despite evidence of at least six possible addresses for the subject debtor, a credit report indicating
that the debtor’s middle initial was “R,” and both oral and written notification from “Adrian K.
Hyde” that the respondents were pursuing the wrong individual, the respondents nonetheless
attempted to effectuate service upon him via “the front desk of [his] condominium” at the address
on Broadway in New York, New York.

In the Mujtaba matter, the evidence shows that the respondents previously had
pursued “Dr. GholamMujtaba,” when the actual debtor was “GhulamMujtaba.” The secondmatter
was opened six months after the first matter was closed. Due to the proximity in time, the
respondents’ attempt to obtain a credit report for “Ghulam Mujtaba” was denied in the second
matter, as they were already in possession of a current credit report from the prior matter. We find
that a simple review of information already in the respondents’ possession relative to their prior
collection efforts could have prevented a second erroneous attempt to collect the debt of “Ghulam
Mujtaba” from “Dr. Gholam Mujtaba.”

In the Quader matter, the evidence shows that the respondents pursued “Muhammad
Quader” at a Queens address, when the actual debtor was “Muhammad Qader,” whose address was
in Brooklyn. Despite being in possession of the latter information, which was provided by their
client, and receiving two communications from Quader or his son disclaiming the debt, the
respondents proceeded to suit. Although that suit was eventually discontinued by stipulation, the
respondents thereafter sent Quader a letter offering him a “60% settlement of the . . . debt” in “full
satisfaction.” After Quader or his son wrote to the respondents declining the settlement offer, the
respondents sent Quader an information subpoena urging him, in an accompanying letter, to settle.
The Special Referee found, and we agree, that the respondents’ conduct in this matter was
“particularly egregious.”

In the Kerschhagel matter, the respondents commenced an action, and effected
substituted service, at Kerschhagel’s former address in Irvington, New York, despite confirmation
that he resided in Dobbs Ferry, New York, and despite the fact that the subject debt previously had
been satisfied. Having obtained a default judgment after the copies of the summons and complaint
thatweremailed to Irvingtonwere returned as “undeliverable,” the respondents proceeded to restrain
Kerschhagel’s bank account, resulting in an irate call from Kerschhagel’s wife, in which she
indicated that she and her husband were not aware of any default judgment. The respondents’
contemporaneous review of their file revealed that “the wrong address was served”; the “right
address” previously had been verified; the debt appeared to have been satisfied three years earlier;
and proof of those facts had been provided. However, as of November 2006, the default judgment
had yet to be vacated, and the file had yet to be closed, despite review of the file having occurred in
or about August 2006. The Special Referee found, and we agree, that it is “inexplicable” that the
respondents chose to serve Kerschhagel in Irvington, despite having information that his current
address was in Dobbs Ferry.

The individual respondent, David A. Cohen, did not testify. Rather, the respondents
relied primarily upon the testimony of an expert witness, Ronald M. Abramson, Esq. A creditors’
attorney and member of the Grievance Commission of Maryland, Abramson testified that the
respondents’ conduct was both reasonable and proper in the aforementioned matters. According to
Abramson, the respondents could not assume that what was being told to them by the debtors was
correct, and that the onus was not upon the respondents to establish the validity of the debtors’
claims absent written notice from the debtors, within 30 days, following their presumed receipt of
a validation letter pursuant to the Fair Debt Collection Practices Act (15 USC § 1692k; hereinafter
FDCPA). Abramson testified, further, that in the absence of FDCPA violations, there could be no
ethical violations. However, on cross-examination, Abramson conceded that there did not have to
be a violation of the law for there to be professional misconduct.

Notwithstanding Abramson’s testimony,we find that the respondents’ conduct in the
aforementioned matters was neither reasonable nor proper, particularly in the Mujtaba, Quader, and
Kerschhagel matters, wherein the respondents had information at their disposal that they were
pursuing the wrong debtor; continued to pursue a collection matter even after the matter was
concluded; and restrained a debtor’s bank account despite improper service and knowledge that the
debt had previously been satisfied. Based upon their unreasonable and improper conduct inmultiple
debt collection matters, we find that the respondents engaged in a pattern and practice of failing to
act appropriately, and that this pattern and practice was prejudicial to the administration of justice,
in violation former Code of Professional Responsibility DR 1-102(A)(5) (22 NYCRR 1200[a][5];
cf. Matter of Sokoloff, 95 AD3d 254).

Based upon the respondents’ admissions and the evidence adduced, we find that the
Special Referee properly sustained charge two as a result of the respondents’ failure to timely file,
and provide Barbara Durand with, a satisfaction of judgment.

Based upon our findings with respect to charge one, we find that charge three should
have been sustained. Even if the individual respondent lacked personal knowledge of the particular
client matters specified in charge one, the pattern and practice of misconduct established at the
hearing, which were pervasive within C&S since 1996, were sufficient to impute such knowledge
to him as senior partner of C&S. Not only was the individual respondent personally advised to
“exercise caution; . . . supervise [his] staff adequately . . . make sure [he had] appropriate and
reasonable procedures in place . . . and . . . monitor [those] procedures,” but he and C&S had
previously received numerous Letters of Caution and Admonitions for similar conduct.
Based upon our findings with respect to charges one and three, we find that charge
four should have been sustained. As the Court of Appeals held in Matter of Holtzman (78 NY2d
184, 191, cert denied sub nom. Holtzman v Grievance Committee for Tenth Judicial Dist., 502 US
1009), “the guiding principle must be whether a reasonable attorney, familiar with the Code and its
ethical strictures, would have notice of what conduct is proscribed.” Based upon the record before
us, it is clear that the individual respondent had such notice.

In determining an appropriate measure of discipline to impose, we note that the
respondents have a voluminous history of similar misconduct. On or about June 29, 2012, the
individual respondent received aLetter ofReprimand emanating fromcomplaints filed between 2004
and 2008,whichwere similar in nature to those presently before the Court. Additionally, from 1996
through 2005, a total of seven Letters of Caution, two Admonitions, and three PersonallyDelivered
Admonitions, were issued to either the individual respondent or C&S, and they all emanated from
complaints similar to those involved in the instant petition, and arose from conduct including the
failure to conduct adequate investigations prior to commencing debt collections or restraining bank
accounts, the failure to adequately supervise non-legal staff, and the failure to adequately address
inquiries and complaints from alleged debtors.

In mitigation,C&S’s managing attorney, Leandre John, testified that the respondents
have undertaken efforts to reform their collection practices by adding a compliance department and
other safeguards to prevent future misconduct. John testified that he presently oversees C&S’s
legal procedures, supervises the attorneys and support staff in the legal department, and assists the
individual respondent and his partner in addressing legal issues. He testified, further, that the
respondents’ compliance department reviews complaints from debtors and alleged debtors, as well
as issues between managers and staff. The respondents’ expert witness, Abramson, testified that
staff training is better now than it was prior to 2008. Moreover, he was impressed by the
respondents’ compliance department.

Under the totality of the circumstances, particularly the remedial measures undertaken
and improvements made, the respondents,DavidA. Cohen and the lawfirm of Cohen&Slamowitz,
LLP, are each publicly censured (cf. Matter of Wilens & Baker, 9 AD3d 213).


ORDERED that the respondents’ motion to confirmin part, and disaffirmin part, the
report of the Special Referee is denied; and it is further,
ORDERED that the petitioner’s cross motion to confirmin part, and disaffirmin part,
the report of the Special Referee is granted, such that all four charges are sustained; and it is further,

ORDERED that the respondents, David A. Cohen and the law firm of Cohen &
Slamowitz, LLP, are each publicly censured.

Aprilanne Agostino
Clerk of the Court

Down Load PDF of This Case

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


Florida: Force-placed insurance practices – excellent case!

Florida: Force-placed insurance practices – excellent case!

Florida:  Force-placed insurance practices – excellent case! 

Hall, et al. v.  Bank of America; Balboa and QBE (insurance companies).  This is a class action suit alleging Bank of America’s manipulation of the force-placed insurance market, whereby Bank of America engages in exploitative and self-dealing practices for its own benefit, was to the detriment of its borrowers (homeowners).

Bank of America and its subsidiary, Balboa, entered into a relationship whereby all force-placed insurance for Bank of America borrowers was purchased from Balboa.

In return, Balboa paid a kickback equal to a percentage of each force-placed insurance policy to Bank of America.

This relationship benefited both Bank of America and Balboa at the expense of Bank of America consumers.

Sound familiar?  Read the initial Complaint and Amended.

Hall v BA CMP



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


New Mexico: BONY v Romero – Weekend Warrior reading – closer look at the Opinion

New Mexico: BONY v Romero – Weekend Warrior reading – closer look at the Opinion

“Weekend Warrior Reading”

New Mexico:  BONY v Romero – weekend reading with a closer look at the language of the Original Appeal on Certiorari Opinion.

Due to a majority of readers being individuals an academic approach would be to start breaking down these valuable cases by reading them in sections in order to digest or glean from them what the court is conveying. 

Read in sections carefully and make note of how these sections may (or may not) apply to a homeowner’s unique situation and begin to read the cases cited by the Court.

BONY v Romero Opinion (begin page 5):

A.     The Bank of New York Lacks Standing to Foreclose

1.     Preservation

{14}     As a preliminary matter, we address the Bank of New York’s argument that the Romeros waived their challenge of the Bank’s standing in this Court and the Court of Appeals by failing to provide the evidentiary support required by Rule 12-213(A)(3) NMRA.  See Bank of N.Y., 2011-NMCA-110, ¶¶ 20-21 (dismissing the Romeros’ challenge to standing as without authority and based primarily on the note’s bearer-stamp assignment to JPMorgan Chase); see also Rule 12-213(A)(3) (“A contention that a verdict, judgment or finding of fact is not supported by substantial evidence shall be deemed waived unless the summary of proceedings includes the substance of the evidence bearing upon the proposition.”).

{15}     We have recognized that “the lack of [standing] is a potential jurisdictional defect which ‘may not be waived and may be raised at any stage of the proceedings, even sua sponte by the appellate court.’” Gunaji v. Macias, 2001-NMSC-028, ¶ 20, 130 N.M. 734, 31 P.3d 1008 (citation omitted).

While we disagree that the Romeros waived their standing claim, because their challenge has been and remains largely based on the note’s indorsement to JPMorgan Chase, whether the Romeros failed to fully develop their standing argument before the Court of Appeals is immaterial.

This Court may reach the issue of standing based on prudential concerns. See New Energy Economy, Inc. v. Shoobridge, 2010-NMSC-049, ¶16, 149 N.M. 42, 243 P.3d 746 “Indeed, prudential rules’ of judicial self-governance, like standing, ripeness, and mootness, are ‘founded in concern about the proper—and properly limited—role of courts in a democratic society’ and are always relevant concerns.” (citation omitted)).

Accordingly, we address the merits of the standing challenge.

2.     Standards of Review

{16}     The Bank argues that under a substantial evidence standard of review, it presented sufficient evidence to the district court that it had the right to enforce the Romeros’ promissory note based primarily on its possession of the note, the June 25, 2008, assignment letter by MERS, and the trial testimony of Kevin Flannigan.

By contrast, the Romeros argue that none of the Bank’s evidence demonstrates standing because

    (1)     possession alone is insufficient,

    (2)     the “original” note introduced by the Bank of New York at trial with the two undated indorsements includes a special indorsement to JPMorgan Chase, which cannot be ignored in favor of the blank indorsement,

    (3)     the June 25, 2008, assignment letter from MERS occurred after the Bank of New York filed its complaint, and as

a mere assignment of the mortgage does not act as a lawful transfer of the note, and

    (4)     the statements by Ann Kelley and Kevin Flannigan are inadmissible because both lack personal knowledge given that Litton Loan Servicing did not begin servicing loans for the Bank of New York until seven months after the foreclosure complaint was filed and after the purported transfer of the loan occurred.

    For the following reasons, we [court] agree with the Romeros.

{17}     The Bank of New York does not dispute that it was required to demonstrate under New Mexico’s Uniform Commercial Code (UCC) that it had standing to bring a foreclosure action at the time it filed suit. 

    See NMSA 1978, § 55-3-301 (1992) (defining who is entitled to enforce a negotiable interest such as a note);

    see also NMSA 1978, § 55-3-104(a), (b), (e) (1992) (identifying a promissory note as a negotiable instrument);

    ACLU of N.M. v. City of Albuquerque, 2008-NMSC-045, ¶ 9 n.1, 144 N.M. 471, 188 P.3d 1222 (recognizing standing as a jurisdictional prerequisite for a statutory cause of action);

    Lujan v. Defenders of Wildlife, 504 U.S. 555, 570-71 n.5 (1992) (“[S]tanding is to be determined as of the commencement of suit.”);

    accord 55 Am. Jur. 2d Mortgages § 584 (2009) (“A plaintiff has no foundation in law or fact to foreclose upon a mortgage in which the plaintiff has no legal or equitable interest.”).

  One reason for such a requirement is simple:

        “One who is not a party to a contract cannot maintain a suit upon it

If [the entity] was a successor in interest to a party on the [contract], it was incumbent upon it to prove this to the court.”

        L.R. Prop. Mgmt., Inc. v. Grebe, 1981-NMSC-035, ¶ 7, 96 N.M. 22, 627 P.2d 864 (citation omitted).

The Bank of New York had the burden of establishing timely ownership of the note and the mortgage to support its entitlement to pursue a foreclosure action. See Gonzales v. Tama, 1988-NMSC-016, ¶ 7, 106 N.M. 737, 749 P.2d 1116 (“One who holds a note secured by a mortgage has two separate and independent remedies, which he may pursue successively or concurrently; one is on the note against the person and property of the debtor, and the other is by foreclosure to enforce the mortgage lien upon his real estate.” (internal quotation marks and citation omitted)).

3.     None of the Bank’s Evidence Demonstrates Standing to Foreclose

{19}     The Bank of New York argues that in order to demonstrate standing, it was required to prove that before it filed suit, it either

    (1)     had physical possession of the Romeros’ note indorsed to it or indorsed in blank or

    (2)     received the note with the right to enforcement, as required by the UCC.

        See § 55-3-301 (defining “[p]erson entitled to enforce” a negotiable instrument).

While we agree with the Bank that our state’s UCC governs how a party becomes legally entitled to enforce a negotiable instrument such as the note for a home loan, we disagree that the Bank put forth such evidence.

a.     Possession of a Note Specially Indorsed to JPMorgan Chase Does Not Establish the Bank of New York as a Holder

{20}     Section 55-3-301 of the UCC provides three ways in which a third party can enforce a negotiable instrument such as a note. Id. (“‘Person entitled to enforce’ an instrument means

    (i)     the holder of the instrument,

    (ii)     a nonholder in possession of the instrument who has the rights of a holder, or

    (iii)     a person not in possession of the instrument who is entitled to enforce the [lost, destroyed, stolen, or mistakenly transferred] instrument pursuant to [certain UCC enforcement provisions].”);

  see also § 55-3-104(a)(1), (b), (e) (defining “negotiable instrument” as including a “note” made “payable to bearer or to order”).

Because the Bank’s arguments rest on the fact that it was in physical possession of the Romeros’ note, we need to consider only the first two categories of eligibility to enforce under Section 55-3-301.

{21}     The UCC defines the first type of “person entitled to enforce” a note—the “holder” of the instrument—as “the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.” NMSA 1978, §55-1-201(b)(21)(A) (2005);

    see also Frederick M. Hart & William F. Willier, Negotiable Instruments Under the Uniform Commercial Code, § 12.02(1) at 12-13 to 12-15 (2012)

    (“The first requirement of being a holder is possession of the instrument. However, possession is not necessarily sufficient to make one a holder. . . .

    The payee is always a holder if the payee has possession.

    Whether other persons qualify as a holder depends upon whether the instrument initially is payable to order or payable to bearer, and whether the instrument has been indorsed.” (footnotes omitted)).

    Accordingly, a third party must prove both physical possession and the right to enforcement through either a proper indorsement or a transfer by negotiation.   See NMSA 1978, § 55-3-201(a) (1992)

    (“‘Negotiation’ means a transfer of possession . . . of an instrument by a person other than the issuer to a person who thereby becomes its holder.”).

    Because in this case the Romeros’ note was clearly made payable to the order of Equity One, we must determine whether the Bank provided sufficient evidence of how it became a “holder” by either an indorsement or transfer.

{22}     Without explanation, the note introduced at trial differed significantly from the original note attached to the foreclosure complaint, despite testimony at trial that the Bank of New York had physical possession of the Romeros’ note from the time the foreclosure complaint was filed on April 1, 2008.

    Neither the unindorsed note nor the twice-indorsed note establishes the Bank as a holder.

{23}     Possession of an unindorsed note made payable to a third party does not establish the right of enforcement,

    just as finding a lost check made payable to a particular party does not allow the finder to cash it. See NMSA 1978, § 55-3-109 cmt. 1 (1992)

    (“An instrument that is payable to an identified person cannot be negotiated without the indorsement of the identified person.”).

    The Bank’s possession of the Romeros’ unindorsed note made payable to Equity One does not establish the Bank’s entitlement to enforcement.

{24}     The Bank’s possession of a note with two indorsements, one of which restricts payment to JPMorgan Chase, also does not establish the Bank’s entitlement to enforcement.

    The UCC recognizes two types of indorsements for the purposes of negotiating an instrument.

    A blank indorsement, as its name suggests, does not identify a person to whom the instrument is payable but instead makes it payable to anyone who holds it as bearer paper.  See NMSA 1978, § 55-3-205(b) (1992) (“If an indorsement is made by the holder of an instrument and it is not a special indorsement, it is a ‘blank indorsement.’”). “When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed.” Id.

{25}     By contrast, a special indorsement “identifies a person to whom it makes the instrument payable.” Section 55-3-205(a).

    “When specially indorsed, an instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person.” Id.; accord Baxter Dunaway, Law of Distressed Real Estate, § 24:105 (2011)

    (“When an instrument is payable to an identified person, only that person may be the holder.

    A person in possession of an instrument not made payable to his order can only become a holder by obtaining the prior holder’s indorsement.”).

{26}     The trial copy of the Romeros’ note contained two undated indorsements:

    a blank indorsement by Equity One and

    a special indorsement by Equity One to JPMorgan Chase.

    Although we agree with the Bank that if the Romeros’ note contained only a blank indorsement from Equity One, that blank indorsement would have established the Bank as a holder because the Bank would have been in possession of bearer paper,

    that is not the situation before us.

    The Bank’s copy of the Romeros’ note contained two indorsements, and the restrictive, special indorsement to JPMorgan Chase establishes JPMorgan Chase as the proper holder of the Romeros’ note absent some evidence by JPMorgan Chase to the contrary. See Cadle Co. v. Wallach Concrete, Inc., 1995-NMSC-039, ¶ 14, 120 N.M. 56, 897 P.2d 1104

    (“[A] special indorser . . . has the right to direct the payment and to require the indorsement of his indorsee as evidence of the satisfaction of own obligation.

    Without such an indorsement, a transferee cannot qualify as a holder in due course.” (omission in original) (internal quotation marks and citation omitted)).

    Because JPMorgan Chase did not subsequently indorse the note, either in blank or to the Bank of New York,

    the Bank of New York cannot establish itself as the holder of the Romeros’ note simply by possession.

{28}     Accordingly, we conclude that the Bank of New York’s possession of the twice indorsed note restricting payment to JPMorgan Chase does not establish the Bank of New York as a holder with the right of enforcement.

b.     None of the Bank of New York’s Evidence Demonstrates a Transfer of the Romeros’ Note

{29}     The second type of “person entitled to enforce” a note under the UCC is a third party in possession who demonstrates that it was given the rights of a holder. See § 55-3-301

    (“‘Person entitled to enforce’ an instrument means . . . a nonholder in possession of the instrument who has the rights of a holder.”).

    This provision requires a nonholder to prove both possession and the transfer of such rights.

    See NMSA 1978, § 55-3-203(a)-(b) (1992) (defining what constitutes a transfer and vesting in a transferee only those rights held by the transferor).

    A claimed transferee must establish its right to enforce the note. See § 55-3-203 cmt. 2

    (“[An] instrument [unindorsed upon transfer], by its terms, is not payable to the transferee and the transferee must account for possession of the unindorsed instrument by proving the transaction through which the transferee acquired it.”).

{30}     Under this second category, the Bank of New York relies on the testimony of Kevin Flannigan, an employee of Litton Loan Servicing who maintained that his review of loan servicing records indicated that the Bank of New York was the transferee of the note.

    The Romeros objected to Flannigan’s testimony at trial, an objection that the district court overruled under the business records exception.

    We agree with the Romeros that Flannigan’s testimony was inadmissible and does not establish a proper transfer.

{31}     As the Bank of New York admits, Flannigan’s employer, Litton Loan Servicing, did not begin working for the Bank of New York as its servicing agent until November 1, 2008—seven months after the April 1, 2008, foreclosure complaint was filed.

    Prior to this date, Popular Mortgage Servicing, Inc. serviced the Bank of New York’s loans.

    Flannigan had no personal knowledge to support his testimony that transfer of the Romeros’ note to the Bank of New York prior to the filing of the foreclosure complaint was proper because Flannigan did not yet work for the Bank of New York.

    See Rule 11-602 NMRA

    (“A witness may testify to a matter only if evidence is introduced sufficient to support a finding that the witness has personal knowledge of the matter.  Evidence to prove personal knowledge may consist of the witness’s own testimony.”).

    We make a similar conclusion about the affidavit of Ann Kelley, who also testified about the status of the Romeros’ loan based on her work for Litton Loan Servicing. As with Flannigan’s testimony, such statements by Kelley were inadmissible because they lacked personal knowledge.

{32}     When pressed about Flannigan’s basis of knowledge on cross-examination, Flannigan merely stated that “our records do indicate” the Bank of New York as the holder of the note based on “a pooling and servicing agreement.”

    No such business record itself was offered or admitted as a business records hearsay exception. See Rule 11-803(F) NMRA (2007) (naming this category of hearsay exceptions as “records of regularly conducted activity”).

{33}     The district court erred in admitting the testimony of Flannigan as a custodian of records under the exception to the inadmissibility of hearsay for “business records” that are made in the regular course of business and are generally admissible at trial under certain conditions. See Rule 11-803(F) (2007) (citing the version of the rule in effect at the time of trial).

    The business records exception allows the records themselves to be admissible but not simply statements about the purported contents of the records. See State v. Cofer, 2011-NMCA-085, ¶ 17, 150 N.M. 483, 261 P.3d 1115 (holding that, based on the plain language of Rule 11-803(F) (2007), “it is clear that the business records exception requires some form of document that satisfies the rule’s foundational elements to be offered and admitted into evidence and that testimony alone does not qualify under this exception to the hearsay rule

    and concluding that “‘testimony regarding the contents of business records, unsupported by the records themselves, by one without personal knowledge of the facts constitutes inadmissible hearsay.’” (citation omitted)).

    Neither Flannigan’s testimony nor Kelley’s affidavit can substantiate the existence of documents evidencing a transfer if those documents are not entered into evidence.  Accordingly,

    Flannigan’s trial testimony cannot establish that the Romeros’ note was transferred to the Bank of New York.

{34}     We also reject the Bank’s argument that it can enforce the Romeros’ note because it was assigned the mortgage by MERS.

    An assignment of a mortgage vests only those rights to the mortgage that were vested in the assigning entity and nothing more. See § 55-3-203(b)

    (“Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course.”); accord Hart & Willier, supra, § 12.03(2) at 12-27

    (“Th[is] shelter rule puts the transferee in the shoes of the transferor.”).  1359, 1361-63 (2010) (explaining that MERS was created by the banking industry to electronically track and record mortgages in order to avoid local and state recording fees).

    The Romeros’ mortgage contract reiterates the MERS role, describing “MERS [a]s a separate corporation that is acting solely as a nominee for Lender and Lender’s successors and assigns.”

    A “nominee” is defined as “[a] person designated to act in place of another, usu. in a very limited way.”  Black’s Law Dictionary 1149 (9th ed. 2009). 

    As a nominee for Equity One on the mortgage contract, MERS could assign the mortgage but lacked any authority to assign the Romeros’ note.

    Although this Court has never explicitly ruled on the issue of whether the assignment of a mortgage could carry with it the transfer of a note, we have long recognized the separate functions that note and mortgage contracts perform in foreclosure actions. See First Nat’l Bank of Belen v. Luce, 1974-NMSC-098, ¶ 8, 87 N.M. 94, 529 P.2d 760

    (holding that because the assignment of a mortgage to a bank did not convey an interest in the loan contract, the bank was not entitled to foreclose on the mortgage);

    Simson v. Bilderbeck, Inc., 1966-NMSC-170, ¶¶ 13-14, 76 N.M. 667, 417 P.2d 803

    (explaining that “[t]he right of the assignee to enforce the mortgage is dependent upon his right to enforce the note

    and noting that “[b]oth the note and mortgage were assigned to plaintiff.

    Having a right under the statute to enforce the note, he could foreclose the mortgage.”); accord 55 Am. Jur. 2d Mortgages § 584

    (“A mortgage securing the repayment of a promissory note follows the note, and thus, only the rightful owner of the note has the right to enforce the mortgage.”); Dunaway, supra, § 24:18

    (“The mortgage only secures the payment of the debt, has no life independent of the debt, and cannot be separately transferred.

    If the intent of the lender is to transfer only the security interest (the mortgage), this cannot legally be done and

    the transfer of the mortgage without the debt would be a nullity.”).

    These separate contractual functions—

where the note is the loan and

the mortgage is a pledged security for that loan—

cannot be ignored
simply by the advent of modern technology

and the MERS electronic mortgage registry system.

{36}     The MERS assignment fails for several additional reasons. 

    First, it does not explain the conflicting special indorsement of the note to JPMorgan Chase.

    Second, its assignment of the mortgage to the Bank of New York on June 25, 2008, three months after the foreclosure complaint was filed, does not establish a proper transfer prior to the filing date of the foreclosure suit.

    Third, except for the inadmissible affidavit of Ann Kelley and trial testimony of Kevin Flannigan, nothing in the record substantiates the Bank’s claim that

    the MERS assignment was meant to memorialize an earlier transfer to the Bank of New York.

    Accordingly, neither the MERS assignment nor Flannigan’s testimony establish the Bank of New York as a nonholder in possession with the rights of a holder by transfer.

c.     Failure of Another Entity to Claim Ownership of the Romeros’ Note Does Not Make the Bank of New York a Holder

{37}     Finally, the Bank of New York urges this Court to adopt the district court’s inference that if the Bank was not the proper holder of the Romeros’ note, then third-party-defendant Equity One would have claimed to be the rightful holder, and

    Equity One made no such claim.

{38}     The simple fact that Equity One does not claim ownership of the Romeros’ note does not establish that the note was properly transferred to the Bank of New York.

    In fact, the evidence in the record indicates that JPMorgan Chase may be the lawful holder of the Romeros’ note, as reflected in the note’s special indorsement. As this Court has recognized,

The whole purpose of the concept of a negotiable instrument under Article 3 [of the UCC]
is to declare that transferees
in the ordinary course of business
are only to be held liable for information appearing in the instrument itself
and will not be expected to know of any limitations on negotiability or changes in terms, etc.,
contained in any separate documents

    In addition, the UCC clarifies that the Bank of New York is not afforded any assumption of enforcement without proper documentation:

    Because the transferee is not a holder, there is no presumption under Section [55-]3-308 [(1992) (entitling a holder in due course to payment by production and upon signature)] that the transferee, by producing the instrument, is entitled to payment.

The instrument, by its terms,
is not payable to the transferee and
the transferee must account for possession of the unindorsed instrument
by proving the transaction through which the transferee acquired it

Because the Bank of New York did not introduce any evidence demonstrating that it was a party with the right to enforce the Romeros’ note either by an indorsement or proper transfer, we hold that the Bank’s standing to foreclose on the Romeros’ mortgage was not supported by substantial evidence, and we reverse the contrary determinations of the courts below.

[Note:  Emphasis added re formatting for ease of reading.]


Sound familiar? 

Read the remainder of the Opinion. . .



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Californians sold out by AG Kamala Harris

Californians sold out by AG Kamala Harris

Californians were sold out by AG Kamala Harris:

It’s not just us human beings that think there’s a problem with this entire foreclosure mess, it’s half assed settlements, and how we were all sold out in the National Mortgage Settlement. . . watch this video of a 30 year bank veteran telling it like it is! 

Candace Jones, a retired Bank Fraud Analysis in Santa Barbara rails on California’s AG Kamala Harris for selling out California homeowners in the NMS.  Jones was an FDIC and Resolution Trust Corporation expert, so she knows what she’s talking about and says it like it is in this interview:

” . . .AG Kamala Harris, you sold out Californians . . .”

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


Onewest Bank, FSB v Dewer | NYSC – MERS Assignment/Note Fail, Charles Boyle Affidavit Fail, FDIC, as the receiver for IndyMac to OneWest Bill of Sale Fail

Onewest Bank, FSB v Dewer | NYSC – MERS Assignment/Note Fail, Charles Boyle Affidavit Fail, FDIC, as the receiver for IndyMac to OneWest Bill of Sale Fail





Plaintiff commenced this action on September 10, 2010 to reform and foreclose a
mortgage encumbering the real property known as 119-22 Inwood Street, Jamaica, New York
given by defendants Dewer as security for the payment of a note, evidencing an obligation
in the principal amount of $403,750.00 plus interest. The mortgage names IndyMac Bank,
F.S.B. (IndyMac), as the lender and Mortgage Electronic Registration Systems, Inc. (MERS),
as the nominee for the lender and the lender’s successors and assigns, and as the mortgagee
of record for the purpose of recording the mortgage. Plaintiff alleged in its complaint that
it is the holder of the note and subject mortgage, and that defendants Dewer defaulted under
the terms of the mortgage and note, and as a consequence, it elected to accelerate the entire
mortgage debt. It also alleged that, due to a clerical error, the mortgage was recorded without
a legal description included, and the legal description corresponding to the address of the
property should be incorporated into the mortgage nunc pro tunc.

Defendants Dewer served a combined answer, asserting various affirmative defenses,
including lack of standing, and interposing counterclaims. Plaintiff served a reply to the
counterclaims. Plaintiff did not cause defendants “John Doe” and “Jane Doe” to be served
with process because plaintiff determined that they are unnecessary party defendants.
That branch of the motion by plaintiff for leave to amend the caption deleting
reference to defendants “John Doe” and “Jane Doe” is granted.

It is ORDERED that the caption shall read as follows:

ONEWEST BANK, FSB, Index No. 23000 2010



It is well established that the proponent of a summary judgment motion “must make
a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient
evidence to demonstrate the absence of any material issues of fact” (Alvarez v
Prospect Hosp., 68 NY2d 320, 324 [1986]; Zuckerman v City of New York,
49 NY2d 557 [1980]). To establish a prima facie case in an action to foreclose a mortgage,
the plaintiff must produce the mortgage, the unpaid note, bond or obligation and evidence
of default (see Baron Assoc., LLC v Garcia Group Enters., Inc., 96 AD3d 793 [2d Dept
2012]; Citibank, N.A. v Van Brunt Props., LLC, 95 AD3d 1158 [2d Dept 2012]). Where
standing is put into issue by the defendant, the plaintiff must prove its standing in order to
be entitled to relief (see Deutsche Bank Nat. Trust Co. v Haller, 100 AD3d 680 [2d Dept
2012]; U.S. Bank, N.A. v Collymore, 68 AD3d 752, 753 [2d Dept 2009]; Wells Fargo Bank
Minn., N.A. v Mastropaolo, 42 AD3d 239, 242 [2d Dept 2007]). A plaintiff establishes its
standing in a mortgage foreclosure action by demonstrating that 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 Deutsche Bank Natl. Trust Co. v Rivas, 95 AD3d 1061,
1061-1062 [2d Dept 2012]; Bank of N.Y. v Silverberg, 86 AD3d 274, 279 [2d Dept 2011];
see Homecomings Fin., LLC v Guldi, 108 AD3d 506 [2d Dept 2013]; US Bank N.A. v Cange,
96 AD3d 825, 826 [2d Dept 2012]; U.S. Bank, N.A. v Collymore, 68 AD3d at 753-754;
Countrywide Home Loans, Inc. v Gress, 68 AD3d 709 [2d Dept 2009]). “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” (U.S. Bank, N.A. v Collymore,
68 AD3d at 754; see HSBC Bank USA v Hernandez, 92 AD3d 843 [2d Dept 2012]; see
Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 108 [2d Dept 2011]).

In support of that branch of the motion for summary judgment, plaintiff offers, among
other things, a copy of the pleadings, affidavits of service upon defendants Dewer, an
affirmation of regularity by its counsel, a copy of the subject mortgage, underlying note, an
assignment dated August 26, 2010, and the bill of sale providing for the sale of certain assets
of IndyMac by the Federal Deposit Insurance Company (FDIC), as the receiver for IndyMac
to plaintiff, and an affidavit dated June 21, 2013 of Charles Boyle, an officer of plaintiff. In
his affidavit, Mr. Boyle states plaintiff is the holder and in possession of the original note,
and that plaintiff is the assignee of the “security instrument” for the loan, and defendants
Dewer defaulted in paying the monthly mortgage installment due under the mortgage on
June 1, 2009 and thereafter. The copy of the note presented includes an undated endorsement
in blank, without recourse, by Vincent Dombrowski, as the vice president of IndyMac.

Defendants Dewer oppose the motion, asserting that plaintiff has failed to make a
prima facie showing of standing to commence this action.

To the extent plaintiff contends it is the assignee of the mortgage and note by virtue
of an assignment executed by MERS, plaintiff has failed to show MERS had been the holder
of the note and mortgage, or that MERS had been given an interest in the underlying note by
the lender or specifically authorized to assign the subject note (see Bank of N.Y. v Silverberg,
86 AD3d at 283). In addition, although Mr. Boyle makes reference to the possession of the
note by plaintiff, his affidavit does not give any factual details of a physical delivery of the
note and when the note was endorsed in blank (see Homecomings Fin., LLC v Guldi,
108 AD3d 506 [2d Dept 2013]; HSBC Bank USA v Hernandez, 92 AD3d 843). The
affirmation of plaintiff’s counsel dated July 10, 2013, furthermore, does not indicate it is
based upon personal knowledge and lacks detail as to when the note was endorsed and
physically came into possession by plaintiff. That a copy of the note with the endorsement
was annexed as an exhibit to the complaint filed with the summons does not, without more,
establish that the original note with the endorsement was in physical possession of plaintiff
or its counsel at the time of the institution of the action. To the extent plaintiff additionally
relies upon the bill of sale to demonstrate it had standing to bring this action, the court
declines its invitation to search the internet to verify that the subject mortgage was part of the
assets sold by the FDIC to plaintiff. More importantly, the copy of the bill 1 of sale does not
itself establish that plaintiff was the holder or assignee of the subject mortgage and note or
had physical possession of the note endorsed in blank at the time of the transfer of the assets
by the FDIC to plaintiff or the time of the commencement of this action (cf. JP Morgan
Chase Bank Nat. Assn. v Miodownik, 91 AD3d 546 [1st Dept 2012], lv to appeal dismissed
19 NY3d 1017 [2012]; JP Morgan Chase Bank, N.A. v Shapiro, 104 AD3d 411, 412
[1st Dept 2013]). Under such circumstances, plaintiff has failed to show how or when it
became the lawful holder of the note either by delivery or valid assignment of the note to it
(see Citimortgage, Inc. v Stosel, 89 AD3d 887, 888 [2d Dept 2011]; Bank of N.Y. v
Silverberg, 86 AD3d at 283). As such, that branch of the motion by plaintiff for summary
judgment against defendants Dewer is denied.

With respect to that branch of the motion by plaintiff to strike the affirmative defenses
asserted by defendants Dewer in their 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

With respect to the first affirmative defense and the first counterclaim asserted by
defendants Dewer in their answer, defendants Dewer assert they are entitled to rescind the
loan agreement pursuant the Federal Truth in Lending Act (15 USC § 1601 et seq.) (TILA),
and the TILA implementing regulations (found in Federal Reserve Board Regulation Z
[Regulation Z] at 12 CFR 226), and seek to recover actual and statutory damages for
violations of TILA, in addition to rescission. Defendants Dewer also seek as a second and
third counterclaim a judgment declaring the subject mortgage to be void. Plaintiff offers
evidence that the subject loan transaction was exempt from the requirements of TILA at the
time of the making of the loan because the non-exempt total points and fees charged in
relation to the loan did not exceed 8% of the entire principal loan amount (see
former 15 USC § 1602 [aa] [1] [B]; see also 15 USC § 1605 [e]; 12 CFR 226.4). In addition,
plaintiff offers evidence that it provided the required material disclosures to defendants
Dewer in compliance with TILA at the closing and, therefore, any right to rescind was not
extended to three years after the date of the consummation of the transaction
(see 15 USC § 1635 [f]). Defendants Dewer have failed to come forward with any proof to
show TILA was applicable to the subject loan at the time of its making, or that any material
written representations or disclosures made to them were in conflict with the terms of the
subject mortgage and note. Under such circumstances, that branch of the motion by plaintiff
to dismiss the first affirmative defense and the counterclaims asserted by defendants Dewer
is granted.

That branch of the motion by plaintiff to dismiss the second affirmative defense
asserted by defendants Dewer in their answer based upon failure to state a cause of action is
granted. On its face, the complaint states causes of action for foreclosure and reformation
of the mortgage.

That branch of the motion by plaintiff to dismiss the third, fourth, fifth, twelfth,
thirteenth, nineteenth, and twentieth affirmative defenses based upon unjust enrichment,
estoppel, “condonation and ratification,” the doctrine of unclean hands, waiver, “consent to
Defendants’ conduct,” and participation in wrongdoing, respectively, is granted. They have
failed to allege or prove any facts supporting these conclusions of law (see Moran
Enterprises, Inc. v Hurst, 96 AD3d 914 [2d Dept 2012]; Glenesk v Guidance Realty Corp.,
36 AD2d 852 [2d Dept 1971], abrogated on other grounds by Butler v Catinella,
58 AD3d 145; MacIver v George Braziller, Inc., 32 Misc 2d 477 [Sup Ct, NY County 1961];
CPLR 3018 [b]).

That branch of the motion by plaintiff to dismiss the seventh, eighth, ninth and
eighteenth affirmative defenses of defendants Dewer based upon negligence and assumption
of risk, culpable conduct of third parties and plaintiff, and lack of proximate cause,
respectively, is granted. The concepts of negligence, assumption of risk, culpable conduct
and proximate cause are related to tort. The claims asserted by plaintiff herein relate to a
default under the mortgage and reformation of the mortgage, as opposed to tortious conduct
and thus, any affirmative defense based upon a notion of culpable or tortious conduct
is unavailable herein (see CPLR 1401; Pilweski v Solymosy, 266 AD2d 83 [1st Dept 1999];
Nastro Contracting Inc. v Agusta, 217 AD2d 874 [3d Dept 1995]; Schmidt’s Wholesale, Inc.
v Miller & Lehman Const., Inc., 173 AD2d 1004 [3d Dept 1991]; Castleton Holding Corp.
v Forde, 15 Misc 3d 1111[A] [Sup Ct, Kings County 2007]).

The branch of the motion by plaintiff to dismiss the sixth, fifteenth, sixteenth and
seventeenth affirmative defenses asserted by defendants Dewer is granted. These defenses
are based upon allegations that plaintiff failed to exercise good business judgment,
unjustifiably relied on representations and misrepresentations, and failed to perform due
diligence and make proper inquiry. Such allegations, without more, do not constitute a
defense to a foreclosure action. The legal relationship between a borrower and a lending
bank is normally one of debtor and creditor (see Trustco Bank, Nat. Assn. v Cannon Bldg.
of Troy Assocs., 246 AD2d 797 [3d Dept 1998]), and defendants Dewer have failed to allege
any facts which would demonstrate that a duty of care was owed to them by the lender in the
origination of the loan.

That branch of the motion by plaintiff to dismiss the tenth and fourteenth affirmative
defenses asserted by defendants Dewer based upon failure to mitigate damages and lack of
damages is granted. Mitigation of damages is not an affirmative defense to an action to
foreclose a mortgage. Any dispute as to the exact amount owed plaintiff pursuant to the
mortgage and note, may be resolved after a reference pursuant to RPAPL § 1321 (see
Crest/Good Mfg. Co, v Baumann, 160 AD2d 831 [2d Dept 1990]).

Defendants Dewer assert as an eleventh affirmative defense that plaintiff is guilty of
laches in bringing this action. Laches is not a defense to a mortgage foreclosure proceeding
where, as here, the action was commenced within the statute of limitations (CPLR 213 [4];
see New York State Mtge. Loan Enforcement & Admin. Corp. v North Town Phase II Houses,
Inc., 191 AD2d 151 [1st Dept 1993]; Schmidt’s Wholesale, Inc. v Miller & Lehman Const.,
Inc., 173 AD2d 1004 [3d Dept 1991]). Even if the defense was available here, defendants
Dewer have not shown that they changed their position, or failed to take some action to their
prejudice as a result of the alleged delay.

The allegation that plaintiff suffered no damage because it was insolvent does not
constitute an affirmative defense to a foreclosure action. That branch of the motion by
plaintiff to dismiss the twenty-first affirmative defense asserted by defendants Dewer is

That branch of the motion by plaintiff to dismiss the twenty-second affirmative
defense asserted by defendants Dewer based upon lack of standing is denied (supra at 3-4).

Accordingly, the branch of plaintiff’s motion for an order amending the caption is
granted, as ordered, supra. The branch of the motion for an order granting plaintiff summary
judgment is denied. Those branches of the motion for an order dismissing the first, second,
third, fourth, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth,
fourteenth, fifteenth, sixteenth, seventeenth, eighteenth, nineteenth, twentieth, and twentyfirst
affirmative defenses, and all counterclaims are granted.

Dated: February 6, 2014

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