UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK

In re:
Chapter 13
Cynthia Carrsow-Franklin
Debtor.

MEMORANDUM OF DECISION ON DEBTOR’S OBJECTION TO CLAIM OF WELLS FARGO BANK, NA

APPEARANCES: Garvey, Tirelli & Cushner, Ltd., by Linda M. Tirelli, for the debtor
Hogan Lovells US LLP, by David Dunn and Nocole E. Schiavo, for Wells Fargo Bank, NA
HON. ROBERT D. DRAIN, UNITED STATES BANKRUPTCY JUDGE

EXCERPT:
It appears from Mr. Kennerty’s deposition transcript, although his testimony on this point was at
times quite evasive, that during the period in question in 2010 he signed on average between 50 and
150 original documents a day in connection with Wells Fargo’s administration and enforcement of
defaulted loans. Deposition Transcript, dated October 15, 2012, of Herman John Kennerty (“Dep. Tr.”)
at 89?92. This was part of his duties as the Wells Fargo manager in charge of “default documents.” Id. at
44. In other words, on a daily basis Mr. Kennerty and his team, members of which he also testified
signed a like number of documents each day, id., processed a large volume of loan documents for
enforcement with very little thought about what they were doing. It is not clear that Mr. Kennerty fully
understood the legal consequences of signing these documents; for example, he testified when shown
the Assignment of Mortgage that he executed it not on behalf of the assigning party but, rather, on
behalf of the party “in getting the assignment,” although he also testified that “I’m – I’m not an
attorney, but the way I understand this document, it was assigning the mortgage, taking it out of MERS’
name and putting into Wells Fargo Bank’s name.” Id. at 93?4. It is clear, however, that he pretty much
signed whatever outside counsel working on the default put in front of him and that these documents
often included assignments, including the Assignment of Mortgage, drafted by Wells Fargo’s outside
enforcement counsel to fill in missing gaps in the record.

Thus, in describing the work of his “assignment team” Mr. Kennerty stated, “[I]f there was not
an assignment in there [that is, in Wells Fargo’s loan file] then they would – excuse me, they would
advise the attorney that we did not have it, that they would need to draft the – the appropriate
assignment.” Id. at 116. See also id. at 76 (“[I]f the assignment needed to be created they would have
advised the attorney, the requesting attorney to – that we did not have the assignment in the collateral
file, then they needed to draw up the appropriate document.”); id. at 121 (“Once it [that is, the
collateral file] was received then they would check to see if it was something that could be used or not
used; and, if it’s something that was in the file, but couldn’t be used then they would advise the
requesting attorney to go ahead and draft the actual document.”).

Because Wells Fargo does not rely on the Assignment of Mortgage to prove its claim, the
foregoing evidence is helpful to the Debtor only indirectly, insofar as it goes to show that the blank
indorsement, upon which Wells Fargo is relying, was forged. Nevertheless it does show a general
willingness and practice on Wells Fargo’s part to create documentary evidence, after?the?fact, when
enforcing its claims, WHICH IS EXTRAORDINARY.19

Moreover, Mr. Kennerty’s testimony does not stop at describing manufactured mortgage
assignments. He also testified that his “assignment team’s” duties were not limited to processing
assignments, including, when determined necessary, creating them; in addition, the “assignment team”
included people tasked with endorsing notes. Id. at 136. His testimony on this issue is critical and will
be quoted at length:

Q. Okay. Did your department endorse notes?
A. Yes.
Q. Okay. And how was it that your department would come to endorse
notes?
A. I don’t recall the specific process, but to the best of my recollection
there’s usually a – in – usually a – blank endorsement on – on the notes and there would
– and then based on that they would complete the endorsement.
Q. So when you say they would complete the endorsement, who is they?
A. I’m sorry. There was a – there – there were some processors that would
perform that task.
Q. Okay. When you say complete the endorsement, what do you mean by
that?
A. They would execute a note endorsement, a new note endorsement if
there was a blank one on there.
Q. And they would do that with the original note from the collateral file?
A. To the best of my recollection, yes.
Q. Okay. And at whose request would the processors perform that
function?
A. Again, to the best of my recollection, it would be done at the – either
the foreclosure attorney’s request or the bankruptcy attorney’s request.
Id. at 129?31.
Mr. Kennerty then testified about the process for receiving such requests from outside
enforcement attorneys and how one or two people in his department had the job of endorsing notes.
Id. at 131?32. When questioned about how often such requests were made, whether on a daily basis or
on rare occasions, Mr. Kennerty replied, “To the best of my recollection, it was on a regular basis.” Id. at
133. He also testified about the information system or systems at Wells Fargo where such requests
might be made and maintained.20 Id. at 133?34.
He then testified as follows:
Q. And the actual procedure for endorsing an original note, if you could
just walk me through that process. What would the processor do?
A. To the best of my recollection, they would – the request would come in.
Again, we would check to see if we had the collateral file. If we – if we had it and
depending on the status of the – of the loan itself, if we had the note then we could
check to see, you know, what was actually on the note to see what needed to be done.
If we did not have the collateral file then they would work – that processor would work
with the collateral file ordering team to reach out with the appropriate attorney or, I’m
sorry, the appropriate custodian to obtain the collateral file. And then they would look
to – once the file came in they would look to ensure that the original note was in there
and check to see if there was any endorsement on the back of the note.
Q. Okay. And if there wasn’t how would they go about – how would the
processor go about endorsing the note?
A. I don’t recall specifically how they completed that particular task.
Q. Was it a rubber stamp? Was it somebody signing? How was it?
A. To the best of my recollection, a stamp was involved but then it had to
be signed.
Q. Okay. And if an endorsement was coming from an entity that no longer
existed how would it be signed?
A. I do not recall.
Id. at 135?36 (emphasis added).
Later in his deposition, Mr. Kennerty was shown the two forms of the Note attached to Claim
Nos. 1?1 and No. 1?2, respectively, and testified that he did not know how or when the indorsements
were placed on them. Id. at 142?44. He did have this to say, however:
Q. Now, if any one of these endorsements were a rubber stamp and
produced by your department would there be a record of that somewhere?
Mr. Cromwell: Objection; misstates his testimony.
Witness. I – the term rubber stamp is a – not accurate because although the –
a stamp to produce the ‘pay to order of’ was used, the term to me, use of a rubber
stamp, means it was signed, there was a signature on the – on the stamp itself and that
– to my recollection, that was not the case.
Id. at 143?44. Mr. Kennerty said nothing more that was relevant to the issue of whether Wells Fargo
forged the blank ABN Amro indorsement, with the exception of stating that “I am not familiar with
Margaret Bezy,” id. at 143, who has not been identified as ever having been an employee of Wells Fargo
and presumably was an employee of ABN Amro.

[…]

Decided on January 28, 2015

SUPREME COURT OF THE STATE OF NEW YORK

Appellate Division, Second Judicial Department

PETER B. SKELOS, J.P.
LEONARD B. AUSTIN
SANDRA L. SGROI
HECTOR D. LASALLE, JJ.

2013-01362
(Index No. 15801/11)

[*1]Emigrant Savings Bank-Brooklyn/Queens, appellant,

v

Johanne Doliscar, respondent, et al., defendants.

Stagg, Terenzi, Confusione & Wabnik, LLP, Garden City, N.Y. (Ronald P. Labeck and Patrique P. Denize of counsel), for appellant.

Robert A. Carrozzo, Farmingdale, N.Y., for respondent.

DECISION & ORDER

In an action to foreclose a mortgage, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Queens County (Rosengarten, J.), entered October 19, 2012, as denied its motion for summary judgment on the complaint and for an order of reference.

ORDERED that the order is affirmed insofar as appealed from, with costs.

In June 2008, the defendant Johanne Doliscar executed a note memorializing a loan in the sum of $265,000 from Emigrant Mortgage Company, Inc. (hereinafter EMC). The note was secured by a mortgage on Doliscar’s residence in Queens. In November 17, 2009, EMC executed a written assignment, assigning the mortgage and note to the plaintiff, Emigrant Savings Bank-Brooklyn/Queens.

On July 1, 2011, the plaintiff commenced this foreclosure action, alleging that it was the holder of the note and mortgage, pursuant to the written assignment dated November 17, 2009, and that it was “in possession of the original note, an allonge in blank, and other loan documents.” In her answer, Doliscar alleged that the plaintiff could not prove that it was the lawful holder of the note and, thus, was not entitled to maintain this action. The plaintiff moved for summary judgment on the complaint and for an order of reference appointing a referee to compute the sums allegedly due and owing under the subject note and mortgage. The Supreme Court, inter alia, denied the plaintiff’s motion.

A plaintiff has standing if it is the holder or assignee of both the subject mortgage and of the underlying note when the action is commenced (see Aurora Loan Servs., LLC v Taylor, 114 AD3d 627; HSBC Bank USA v Hernandez, 92 AD3d 843). ” 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'” (HSBC Bank USA v Hernandez, 92 AD3d at 844, quoting U.S. Bank, N.A. v Collymore, 68 AD3d 752, 754).

In opposition to the plaintiff’s prima facie showing of entitlement to judgment as a matter of law, Doliscar raised a triable issue of fact as to whether the plaintiff had standing to [*2]prosecute this action. Specifically, Doliscar raised triable issues of fact as to whether, prior to the commencement of this action on July 1, 2011, a written assignment of the mortgage and note allegedly delivered to the plaintiff was executed and drafted in a form sufficient to effectuate the assignment, and whether, prior to the commencement of the action, the actual note was physically delivered to the plaintiff (see HSBC Bank USA v Hernandez, 92 AD3d at 844; Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 108; cf. Aurora Loan Servs., LLC v Taylor, 114 AD3d 627). The written assignment was made in blank, and there remain triable issues of fact as to when the written assignment was actually drafted and executed, and when the plaintiff took possession of the written assignment. Accordingly, there are triable issues of fact as to whether an assignment was made, or intended to be made, to the plaintiff (see generally Lichtenstein v Eljohnan, Inc., 161 AD2d 397, 398) prior the commencement of the action. Moreover, an allonge to the note that is included in the record was not only undated, but was both endorsed by EMC to the plaintiff and then endorsed in blank by the plaintiff, raising triable issues of fact as to whether the note was actually assigned to the plaintiff and, if so, whether the plaintiff had already reassigned the note to yet another party. Thus, the allonge presented a triable issue of fact as to whether the plaintiff was the holder or assignee of both the note and mortgage prior to its commencement of this action (see Deutsche Bank Natl. Trust Co. v Barnett, 88 AD3d 636, 638).

Accordingly, the Supreme Court properly denied the plaintiff’s motion for summary judgment on the complaint and for an order of reference.

In light of our determination, we need not address the parties’ remaining contentions.

SKELOS, J.P., AUSTIN, SGROI and LASALLE, JJ., concur.
ENTER:

Aprilanne Agostino

Clerk of the Court

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF PENNSYLVANIA

WILLIAM WEISS and ROBERT LESSMAN, and
ANN HARRELL and EDDIE HARRELL,
individually and on behalf of all others similarly
situated,
Plaintiffs,

v.

BANK OF AMERICA CORPORATION, BANK
OF AMERICA, N.A., and BANK OF AMERICA
REINSURANCE CORPORATION,
Defendants.

INTRODUCTION

1. Defendants Bank of America Corporation (“BAC”), Bank of America, N.A, (“BoA
N.A.”), and their affiliated reinsurer, Bank of America Reinsurance Corporation (“BoA RE”)
(collectively, “Bank of America”), have engaged in a pattern of racketeering activity in violation of
the Racketeer Influenced and Corrupt Organizations Act (“RICO”) by effectuating a captive
reinsurance scheme which defrauded Plaintiffs William Weiss, Robert Lessman, Ann Harrell and
Eddie Harrell (collectively, “Plaintiffs”) and the Class (defined below) and compelled them to fund
illegal kickbacks and referral payments in the form of purported reinsurance premiums that were
paid by United Guaranty Residential Insurance Company, Triad Guaranty Insurance Corporation,
Republic Mortgage Insurance Company, Mortgage Guaranty Insurance Corporation, Radian
Guaranty Inc., Genworth Mortgage Insurance Corporation, and PMI Mortgage Insurance Company
(collectively, the “Private Mortgage Insurers”) to BoA RE.

2. This is a proposed nationwide action brought by Plaintiffs on behalf of themselves and
a class of all other similarly situated persons who obtained residential mortgage loans originated,
funded and/or originated through correspondent lending by BAC and/or BoA N.A. and their mortgage
lending subsidiaries and/or affiliates between January 1, 2004, and the present (the “Class Period”)
and, in connection therewith, purchased private mortgage insurance and whose residential mortgage
loans were included within Bank of America’s captive mortgage reinsurance arrangements
(hereinafter, the “Class”).

3. Captive reinsurance schemes, such as the scheme involving Defendants described
herein, have been widespread throughout the mortgage lending industry. As American Banker
magazine reported in connection with an investigation by the Inspector General of the Department of
Housing and Urban Development (“HUD”), “beginning in the late 1990s major U.S. banks began
coercing [private mortgage] insurers into cutting them in on what would ultimately amount to $6
billion of insurance premiums in exchange for assuming little or no risk.” See Jeff Horwitz, Bank
Mortgage Kickback Scheme Thrived Amid Regulatory Inaction, American Banker (Sept. 16, 2011,
7:45 PM), http://www.americanbanker.com/issues/176_181/mortgages-reinsurance-deals-kickbacks-
HUD-1042277-1.html, attached as Exhibit 1 (hereinafter referred to as “Mortgage Kickback
Scheme”); see also Jeff Horwitz, Banks Took $6B in Reinsurance Kickbacks, Investigators Say,
American Banker (Sept. 6, 2011, 4:55 PM), http://www.americanbanker.com/issues/176_173/mortgage-reinsurance-respa-kickbacks-hudinvestigation-doj-1041928-1.html, attached as Exhibit 2 (hereinafter referred to as “Reinsurance
Kickbacks”).

[…]

Palm Beach Post-

In March 2013, a $50 million foreclosure prevention program was approved to reduce monthly mortgage payments for struggling Florida homeowners.

But in nearly two years, just 71 borrowers have been approved for the plan, called the Modification Enabling Pilot.

Why it’s been slow on the uptake, and may eventually fatally stumble, is an inability to compete with corporate hedge funds and billion-dollar, for-profit firms still making money on the housing crisis. And it’s not an easy program to understand so the public lacks awareness.

[PALM BEACH POST]

H/T AVIRANI and please visit their blog!!

LawReader-

Chief Justice Jorge Labarga and Judge Marcia CookeAM Holt

Poor and middle-class litigants in Florida are increasingly showing up to court without lawyers, resulting in a significant access-to-justice problem throughout the state.

That was the consensus of a panel on “The Importance of Access to Justice to the Judiciary” held Friday at the University of Miami School of Law. The panel was part of a Legal Services Corp. half-day seminar.

Panelists included Florida Supreme Court Chief Justice Jorge Labarga; U.S. District Judge Marcia Cooke in Miami; Richard Leefe of Leefe, Gibbs, Sullivan & Dupre in Louisiana; Puerto Rico Supreme Court Chief Justice Liana Fiol Matta; and William Van Norwick Jr., a retired judge from Florida’s First District Court of Appeal. The panel was moderated by Harvard law dean Martha Minow.

Cooke and other panelists said they are more concerned about the “working middle class” who are not eligible for legal aid programs like the poor.

“I have seen a lot of working middle class litigants in court without attorneys,” she said. “Where they might have had a neighborhood attorney representing them before, now they are in court alone. Somewhere the wheels have fallen off the bus for the working middle class.”

[LAWREADER]

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

You can read the opinion here: HOLM vs WELLS FARGO, FREDDIE MAC | Wells Fargo Home Mtg gets hit with $2.9-million in punitive damages!

Kansas City Business-

A Gladstone lawyer has secured a $3.25 million judgment for a southeast Missouri family whose home was wrongfully foreclosed on.

Crystal and David Holm owned their home in Clinton County, and according to a judge’s ruling, disputed a debt on the property in 2008.

Wells Fargo Home Mortgage Inc. and its lawyers, Kozeny & McCubbin LC, began foreclosure proceedings while the debt was still being settled.

Wells Fargo told the family they could pay money to stop the foreclosure sale.

[KANSAS BUSINESS JOURNAL]

STATE OF VERMONT

SUPERIOR COURT
Windsor Unit

PETER DERNIER &
NICOLE DERNIER,
Plaintiffs,

v.

U.S. BANK NATIONAL ASS’N,
as Trustee for CSMC Mortgage-Backed
Pass-Through Certificates, Series 2006-3,
Defendant

OPINION AND ORDER RE: MOTION FOR SUMMARY JUDGMENT (#12)

EXCERPT:

As noted, this case was previously appealed to the Vermont Supreme Court as Dernier v. Mortgage Network, Inc. On remand, the sole question before this court is whether the Defendant presently lacks the right to enforce the Plaintiff’s promissory note because the note was stolen.

[…]

The question, then is whether the Plaintiffs can sufficiently show that the note was lost or stolen so as to survive summary judgment. The court concluded that the Plaintiffs have made such showing.

[…]

Although the Plaintiffs have offered no direct evidence that the note was stolen. They have offered the affidavit of a Chad M. Goodwin, swearing that he is a former employee of Mortgage Network, Inc. and that the signature on the indorsement is not his own. Taken in the light most favorable to the Plainiffs, a finder of fact could conclude that the indorsement was forged, and that, therefor, the note is not a bearer instrument….

[…]

Bloomberg-

Ocwen Financial Corp. (OCN), one of the biggest U.S. home-loan servicers, rejected as “groundless” accusations by an investor group that the company’s practices created defaults on mortgage bonds backed by debt it oversees.

“Ocwen denies that there is any basis for a default under the Trust agreements, and it will respond, at the appropriate time,” according to a letter sent by Richard A. Jacobsen on behalf of Ocwen to the attorney representing the bondholders.

Investors owning at least 25 percent of voting rights for 119 mortgage-backed securities deals sent a so-called notice of non-performance to trustees for the bonds, saying that the company has failed to meet its requirements as a loan servicer while shifting the costs of regulatory-probe settlements to them, according to a Jan. 23 statement by the bondholders’ attorney, Kathy Patrick of Gibbs & Bruns LLP.

[BLOOMBERG]

Homeowner was represented by attorney Greg Leyh in Missouri.

IN THE CIRCUIT COURT OF CLINTON COUNTY, MISSOURI
DIVISION II

DAVID and CRYSTAL HOLM,

Plaintiffs,

v.

WELLS FARGO HOME MORTGAGE
INC.
and
FEDERAL HOME LOAN MORTGAGE
CORPORATION (FREDDIE MAC),

Defendants

EXCERPTS:
Based upon the facts presented at trial, and including, but not limited to, the facts set forth hereinabove, the Court finds Plaintiffs are entitled to punitive damages against defendant Wells Fargo Home Mortgage, Inc., in the amount of TWO MILLION NINE HUNDRED FIFTY-NINE THOUSAND TWENTY-THREE DOLLARS ($2,959,123.00).
[…]

NOTE: As a preface to this announcement, it should be noted that Mr. Ramirez is the first Clerk ever in the United States to conduct a forensic examination of both his land and court records.  The press conference has been cancelled due to new developments that are under investigation.

H/T Dave Krieger!

The Forensic Examination Report commissioned by Armando Ramirez, the Osceola County Clerk

of the Circuit Court of Osceola County, has been submitted to the Orange/Osceola State Attorney recently.

The first one hundred victimized families related to alleged fraudulent foreclosure

documents will begin to sign criminal complaints against the entities or individuals at the  Kissimmee Police Department very soon.

A press release will be issued by my office this week with additional information.

Sincerely,

Armando Ramirez

Clerk of the Circuit Court

Osceola County

REUTERS-

Major mortgage bond investors including BlackRock (BLK.N), MetLife (MET.N) and Pimco (ALVG.DE) on Friday took a first step toward suing Ocwen Financial Corp (OCN.N), accusing it of having failed to properly collect payments on $82 billion of home loans, according to a person familiar with the matter and to documents seen by Reuters.

The group sent a formal notice of non-performance to Ocwen and trustees for 119 residential mortgage-backed securities trusts, alleging improper loan modification practices, wrongfully recouped advances, and a failure to account for cash flows.

The notice said that Ocwen also steered work to affiliates such as Altisource Portfolio Solutions (ASPS.O) and Home Loan Servicing Solutions (HLSS.O) for allegedly unnecessary or overpriced mortgage servicing to the detriment of the trusts, investors and borrowers.

[REUTERS]

Sunday January 25, 2015

You do not want to miss today’s show!

Here are some of the topics that will be covered:

1. The Source, Nature, and Amount of Fraudulent Mortgage Loan Documents That Have Been and That Are Being Recorded Today.

2. The Manner in Which Fraudulent Mortgage Loan Documents as Breeder Documents Have Been Used and Are Now Being Used in Nonjudicial and in Judicial Foreclosure Proceedings Today.

3. What Is And What Is Not Being Done About Combatting the Use of Fraudulent Mortgage Loan Documents Today By Courts, State Legislatures, Congress, Recording Offices, Title Companies, and the Legal Profession Today.

4. What Marie is Doing To Assist Recording Offices To Purge and To Prevent in the Future the Recording of Fraudulent Mortgage Loan Documents in Their Jurisdictions.

5. How the National Homeowners SuperPAC Intends To Support Marie’s Efforts To Assist Recording Offices To Purge and To Prevent in the Future the Recording of Fraudulent Mortgage Loan Documents in Their Jurisdictions.

Tune in Below!

image: www.mcdonnellanalytics.com

DEPARTMENT OF BUSINESS OVERSIGHT
Ensuring a Fair and Secure Financial Services Marketplace for all Californians

JAN LYNN OWEN
Commissioner of Business Oversight

For Immediate Release Contact: Tom Dresslar

January 23, 2015 (916) 327-0309

Ocwen Agrees to $2.5 Million Settlement for Failing to Provide Loan Information
Ocwen to also pay for auditor to ensure compliance with state laws

SACRAMENTO – The California Department of Business Oversight (DBO) announced a $2.5 million settlement today with Ocwen Loan Servicing, LLC over the firm’s failure for more than a year to provide loan information needed by the DBO to assess Ocwen’s compliance with state mortgage lending laws.

“The Department is committed to supporting a fair and secure financial services marketplace for all California consumers,” said DBO Commissioner Jan Lynn Owen. “This settlement allows us to move forward and ensure that Ocwen is meeting its obligations under the law.”

Under the consent order agreement, the DBO will select an independent, third-party auditor, paid for by Ocwen, whose duties will include ensuring Ocwen provides the DBO all the information it has requested from loan files. Ocwen also will pay $2.5 million in penalties and cover the DBO’s administrative costs associated with the case.

The settlement also prohibits Ocwen from taking on any new California customers until the DBO determines the firm can fully respond in a timely manner to future requests for information, and the DBO will drop its effort to suspend Ocwen’s license to operate in California. Filed Oct. 3, 2014, the formal accusation grew out of Ocwen’s conduct during a routine regulatory examination and will now be withdrawn.

The third-party auditor will review the loan-file information. Based on the review, the auditor will submit a report to the DBO on Ocwen’s compliance with the California Residential Mortgage Lending Act, the 2012 Homeowner Bill of Rights, and other state and federal laws and regulations.

Additionally, the auditor will submit a report to the Commissioner and Ocwen that assesses the firm’s loan servicing procedures, processes and staffing levels. Ocwen will have to adopt an action plan to correct any deficiencies identified by the auditor. The Commissioner must approve the action plan, and the auditor will oversee its implementation by Ocwen.

The DBO retains the ability to pursue an enforcement action against Ocwen should the examination of the loan files uncover substantive violations of laws designed to protect mortgage loan consumers.

# # #

Features-

When Guillermo Galindo lost his two-family Revere home to foreclosure in 2009, the soft-spoken Colombian thought he had finally freed himself from the flood of threatening collection letters from his lender and a ballooning, untenable debt.

All his savings, scraped together over years delivering medicine for local pharmacies, were gone, along with the home he bought in 2005 for $410,000. Devastated, the 54-year-old immigrant, along with his wife and three-year-old daughter, packed their belongings and moved into a small apartment, hoping to rebuild.

But that hope evaporated in a matter of months, when Galindo received a letter from a lawyer claiming he owed $136,547 on the family home he’d left behind.

[FEATURES]

Banks to Pay $35.7 Million After Loan Officers Illegally Traded Referrals for Cash and Marketing Services

WASHINGTON, D.C. — Today, the Consumer Financial Protection Bureau (CFPB) and the Maryland Attorney General took action against Wells Fargo and JPMorgan Chase for an illegal marketing-services-kickback scheme they participated in with Genuine Title, a now-defunct title company. The Bureau and Maryland also took action against former Wells Fargo employee Todd Cohen and his wife, Elaine Oliphant Cohen, for their involvement. Genuine Title gave the banks’ loan officers cash, marketing materials, and consumer information in exchange for business referrals. The proposed consent orders, filed in federal court, would require $24 million in civil penalties from Wells Fargo, $600,000 in civil penalties from JPMorgan Chase, and $11.1 million in redress to consumers whose loans were involved in this scheme. Cohen and Oliphant Cohen also will pay a $30,000 penalty.

“Today we took action against two of the nation’s largest banks, Wells Fargo and JPMorgan Chase, for illegal mortgage kickbacks,” said CFPB Director Richard Cordray. “These banks allowed their loan officers to focus on their own illegal financial gain rather than on treating consumers fairly. Our action today to address these practices should serve as a warning for all those in the mortgage market.”

“Homeowners were steered toward this title company, not because they were the best or most affordable, but because they were providing kickbacks to loan officers who referred consumers to them,” said Maryland Attorney General Brian Frosh. “This type of quid pro quo arrangement is illegal, and it’s unfair to other businesses that play by the rules.”

Genuine Title was a Maryland-based title company that offered real-estate-closing services from 2005 until it went out of business in April 2014. As part of the marketing-services-kickback scheme, Genuine Title offered loan officers valuable services to increase the amount of loan business generated. Genuine Title conducted this scheme at several financial institutions. The services the company offered included purchasing, analyzing, and providing data on consumers and creating letters with the banks’ logos that the company had printed, folded, stuffed into envelopes, and mailed. In return, the banks’ loan officers would increase Genuine Title’s profits by referring homebuyers to the company for closing services. This scheme was especially profitable for the loan officers, who generally are paid by commission.

The marketing-services-kickback scheme violated the Real Estate Settlement Procedures Act (RESPA), which prohibits giving a “fee, kickback, or thing of value” in exchange for a referral of business related to a real-estate-settlement service.

Wells Fargo

The Bureau’s investigation identified more than 100 Wells Fargo loan officers in at least 18 branches, largely in Maryland and Virginia, who participated in this scheme. The Bureau alleges that these loan officers referred thousands of loans to Genuine Title over the course of the scheme. The Bureau alleges that, despite the fact that Wells Fargo had multiple warnings of the illegal arrangements between its loan officers and Genuine Title – including a federal lawsuit explicitly alleging the existence of such agreements – the bank failed to take action to stop the practices and did not have an adequate system in place to identify these violations. Under the proposed consent order filed today, Wells Fargo would be required to pay $10.8 million in redress and $24 million in civil penalties. The Bureau also filed an administrative consent order against Wells Fargo prohibiting future violations.

Wells Fargo employed Todd Cohen as a loan officer from April 2009 through August 2010. The Bureau alleges that, while at Wells Fargo, Cohen not only received marketing materials, he also took substantial cash payments in exchange for referrals. Rather than pay Cohen directly, Genuine Title made payments to Cohen’s then-girlfriend, now-wife, Elaine Oliphant Cohen, in an effort to disguise the kickback nature of the payment. She received tens of thousands of dollars in payments for loans Cohen referred to Genuine Title. Under the proposed consent order filed today, Cohen and Oliphant Cohen would be required to pay a civil penalty of $30,000, and Cohen would be banned from participation in the mortgage industry for two years.

JPMorgan Chase

The CFPB also found that loan officers at JPMorgan Chase participated in the marketing-services-kickback scheme with Genuine Title. The Bureau alleges that at least six Chase loan officers in three different branches in Maryland, Virginia, and New York were involved. These officers referred settlement business to Genuine Title on almost 200 loans. The Bureau also alleges that Chase did not have an adequate system in place to ensure that its loan officers were following the law. Under the proposed consent order filed today, Chase would pay approximately $300,000 in redress and $600,000 in civil penalties. The Bureau also filed an administrative consent order against Chase prohibiting future violations.

In addition to the loan officers at Wells Fargo and JPMorgan Chase, several loan officers at another financial institution also participated in the scheme with Genuine Title. While Wells Fargo and JPMorgan Chase did not identify or address the illegal conduct, that institution self-identified the problematic practices and terminated the loan officers involved. The institution also cooperated with the CFPB’s investigation and self-initiated a remediation plan. Based on the institution’s behavior, the CFPB has resolved that investigation without an enforcement action, consistent with the CFPB’s Bulletin on Responsible Business Conduct.

Today’s actions are the result of a joint investigation by the CFPB, the State of Maryland, and the Maryland Insurance Administration, which regulates title insurance providers such as Genuine Title.

A copy of the CFPB’s complaint is available here: http://files.consumerfinance.gov/f/201501_cfpb_complaint_wells-fargo-chase-cohen.pdf

Copies of the proposed consent orders filed in federal court and of the Bureau’s administrative consent orders will be available later today at: http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-wells-fargo-and-jpmorgan-chase-for-illegal-mortgage-kickbacks/

Via Liberty Road Media

The deposition took place in the offices of Duke Copeland Court Reporters in Monroe, Louisiana.

And what do we discover in this testimony?  Well, that Linda Tirelli was right—this is “business as usual for all the big banks”—at least as far as creating allonges, voiding existing endorsements, and/or creating new endorsements to take the place of existing ones (or to create endorsements that should have existed but didn’t).  Thanks to Jones’ sworn testimony, apparently we can now add JPMorgan Chase to the list of banks that appear to do this type of thing.

Read these quotes from the 93-page Jones deposition while keeping in mind the above information regarding Wells Fargo, Countrywide/BoA, et. al above.  Think of the quotes from this deposition in that context.  The “Q” in these quotes is questioner Reed Peterson, attorney for Defendant Donna B. Ray and “A” is the deponent, Vermyrtis Jones.

In an attempt to make this easier to navigate, blue-highlighted and numbered short summaries regarding what each of the quotes are referring to appear above each quote.  Number 7 was particularly intriguing.

1. REGARDING A COMPUTER SYSTEM CALLED “OPUS” AND CREATING NEEDED DOCUMENTS:

“A It’s a system that we use to create allonges, lost note affidavits, voids and extras. So basically, that’s just our main system that we use, and we go into there to verify what needs to be created. And during that particular time when I was working for asset sales, I was working all LNAs exceptions.” p. 15

“A No. I went from asset sales to chain of title, and that’s where I’m working at now, but our procedures was to create an allonge and also go over to custody to clear exceptions, which is voids and extras. Voids and extras is meaning you may have an endorsement on the allonge or–I mean–excuse me–on the note, or you may have an allonge already in the file that custody’s asking for, and if you see that already in the file, there’s no need to create an allonge or stamp the note from like Chase Bank USA, N.A. to blank.” pp. 16-17

2. IGNORANCE OF BASIC ASSIGNMENT OF MORTGAGE TERMINOLOGY AND CONVEYOR-BELT, FILL-IN-THE-BLANK NATURE OF LOST-NOTE AFFIDAVITS:

“Q Explain the procedure for researching a lost note affidavit as far as exactly what blanks you’re looking to fill in the affidavit and where you looked to fill in those blanks.

A We look to see if it’s the deed of trust or the mortgage. They’re going to ask you that because there’s a blank spot there. You’re looking for the principal amount, the interest rate, the buyer’s name, the county, the book page, the instrument number, and that’s it.

Q Okay. What is the book page?

A I don’t know.

Q All right.

A Yeah.

Q And when you say you don’t know, what you know is that there was a place that you would have to go into JPMorgan’s computer system to look for a specific bit of information, and then that information you would enter into the lost note affidavit. Is that correct?

A Yes.

Q But as far as what it was, you have no idea, or what it meant, you have no idea?

A Correct.

Q Okay. You had mentioned another piece of information that you look for that I didn’t–and maybe you can help me out after the–whatever we were just talking about. I can’t remember–

A The instrument number?

Q The instrument number. What is that?

A I don’t know.

Q Okay. Same thing, you go into the system, find a bit of information, and transpose that into the lost note affidavit. Correct?

A Yes.

Q Was that information on recorded mortgages?

A Yes.” pp. 23-24

3. JONES SAYS SHE HAS SIGNING AUTHORITY FOR MULTIPLE ENTITIES:

“Q You mentioned, I think, four or five entities that you have signing authority for when we first started this deposition. Do you have signing authority for more entities than the ones you initially named?

A Yes.

Q Do you have any idea how many entities you have signing authority for?

A No.

Q Let me try to narrow that a little bit.

A Okay.

Q Okay. More than ten?

A Yes.

Q More than a hundred?

A No.

Q More than fifty?

A I don’t know.

Q More than twenty-five?

A I don’t know.

Q Are there certain entities that you normally sign

for?

A Yes.

Q Which are those?

A Chase Bank USA, JPMorgan Chase Bank, N.A., Chase Home Finance, Chase Manhattan Mortgage Corporation, EMC, Wells Fargo.

Q Any others?

A State Street.

Q So in your work, there are certain entities that you know you have signing authority for, and you don’t need to go into POTS to check to make sure you have signing authority. Is that fair to say?

MR. RIPLEY: Object to form. You can answer.

A Well, I’m not going to say that. I always go and check my work, check my systems to make sure if I can sign for that particular lender.

Q But if you had an allonge you had to sign and you were signing for Chase Bank USA, N.A., would you go into POTS to make sure that you had authority to sign for Chase Bank USA, N.A. on that particular day?

A Yes.

Q Every time?

A Every time.”  pp. 37-39

4. JONES PRINTS OUT AND SIGNS ALLONGES WITH A PEN IN BLACK INK:

“Q Well, let me take a step back because we just talked about allonges where signatures are placed on there–on the allonge electronically. Correct?

A Yes.

MR. RIPLEY: Object to form.

Q That allonge is created using an electronic image of your signature. Correct?

MR. RIPLEY: Object to the form.

A No. I guess the misunderstanding was electronic signature. I actually sign the allonge with the pen myself. There’s no electronic. If the image is imaged in iVault, I see my signature out there, but there’s no passing–like no other step as far as the image being signed with my signature. I sign the allonge with my own signature with the pen. No electronic signature for me. Like a system that has a system out there for my signature, no, I do it myself. I print out the allonge that I created, I get a pen, and I sign it myself.

Q So every allonge that bears your signature and is the original allonge is going to have a signature created by you using a pen. Is that correct?

A Yes.

Q JPMorgan then does not create allonges by placing a scanned image of your signature into the allonge. Is that correct?

A Yes.

Q Are you aware of a process used by JPMorgan to create allonges by inserting a scanned image of a signature into the allonge?

A No.

Q Are you aware of documents called signature tables?

A No.

Q Are you aware of any process to manage scans of JPMorgan’s employees’ signatures?

A No.” pp. 42-43

[later in the proceedings, Peterson asks what color ink Jones signs with]

“Q And I don’t have the original allonge here, but if I had the original allonge, it would have your original signature on it. Correct?

A Yes.

Q Would the original signature be signed in a particular ink color?

A Yes.

Q What color?

A Black.

Q Do you sign all allonges in black?

A Yes.

Q Is that part of JPMorgan’s policies and procedures?

A Yes.” pp. 80-81

5. JONES DISCUSSES CREATING ENDORSEMENTS AS WELL AS ALLONGES, EXPLANATION OF “VOIDS AND EXTRAS”:

“Q No. Let me ask that a different way. Every exception that comes to you is a request to determine whether an endorsement or an allonge is needed. Correct?

A Yes.

Q And that’s sent by custody. Correct?

A Yes.

Q Custody has custody of the collateral file. Correct?

A Yes.

Q Do you go to custody for every exception that you receive?

A No.

Q So why would you go to custody to see if the documents had an endorsement or an allonge already in the physical file when custody is telling you that that’s needed?

A Well, we have a procedure that we do as far as endorsements or allonges that we create–it’s called voids and extras, and it’s meaning that it’s an endorsement out there or there’s an allonge already out there. I’m not saying that every exception that we do we go over there to custody to verify that, but it’s just a procedure that custody opened up, and we rely on custody to see if there’s an endorsement or allonge already out there. And if it is, who to say somebody might go over there and void it out. Then that’s when we take upon ourself to go ahead and create the allonge because if it’s voided, it’s no good. Now they need a current allonge or endorsement that needs to be placed in a file.

Q This sounds really confusing. Is it confusing on your end?

MR. RIPLEY: Object to the form.

A No.” pp. 46-47

6. 25-50 “VOIDS AND EXTRAS” PROCESSED EVERY DAY:

“Q How many voids and extras would you receive on average in a given day?

A Twenty-five to fifty.

Q Twenty-five to fifty.

A Right.

Q So in a given day, on average, you would receive approximately fifty allonge exceptions and twenty-five to fifty void and extras exceptions. Is that correct?

A Yes.

Q On average, when you went to custody, how many files were you pulling?

A I wasn’t pulling–pulling the files. Custody would already have the files pulled for me, and they would place those files on a gondola.

Q Okay. So they’d be prepped and ready for you to look at when you got there?

A Correct.

Q You said you went to custody on average every other day. When you say you went there every other day, on average, was your work assignment to go there every other day?

A Yes.

Q So it really wasn’t on average? I mean, that was your routine was every  other day you would go to custody?

A Yes. Myself and another employee.

Q How long would you spend at custody on that day you went?

A It just depends on how many files I have. Just say if I have twenty-files that’s pulled for me, about an hour and a half a day.

Q Okay. Would twenty-five files be normal?

A Yes.

Q So of the voids and extras that you would receive in a two-day period, anywhere from fifty–twenty-five to fifty percent would require you to go to custody to review the files. Is that about right?

A Yes.” pp, 48-50

7. JONES DISCUSSES “VOIDING” EXISTING ENDORSEMENTS TO REPLACE THEM WITH NEW ONES:

“Q Okay. So we’ve talked about two instances where nothing really needs to be done, the file–the collateral file is correct. Right?

A Yes.

Q But the collateral file is not always correct.  Right?

A Yes.

MR. RIPLEY: Object to the form.

Q Which is why you have to go to custody and do the extra research. Right?

A Yes.

Q So what happens if the endorsement on the note is not correct? What do you do?

A If the endorsement’s not correct, sometimes we may void that endorsement and create an allonge to take place of that endorsement, if we have signing authority for it.

Q For the allonge?

A For the endorsement, the original lender or whoever gave it to that particular company.”  p. 58

8. INTERESTING—A “SWIRL” ON A NOTE PURPORTEDLY MARKS IT AS THE ORIGINAL:

“Q Near the top right corner of “Exhibit 1? there is what appears to be a snail. Do you see that?

A Yes.

Q Are you familiar with that?

A Yes.

Q Okay. Internally, you call that a snail, don’t

you?

A Well, they change it. Back in the day it was a swirl or something like that, so–

Q Swirl?

A Yeah.

Q Now what’s it called?

A I’m not for sure.

Q Okay.

A Yeah.

Q Is there any meaning to the swirl that you know of?

A Yes.

Q What meaning is assigned to that swirl?

A That this is the original note.

Q What company places that swirl on the note?

A I know the department is custody.

Q Okay. And that’s custody at JPMorgan. Correct?

A Yes.

Q So this is a marking specific to JPMorgan.

Correct?

A Yes.

Q That swirl is JPMorgan’s way of indicating a document is an original. Correct?

A Yes.

Q Do you know who is authorized to place that swirl on notes?

A No.

Q When you review the collateral files as part of your work process at custody, do all the original notes that you look at have that swirl on them?

A No.

Q Have you ever placed a swirl on a note?

A No.

Q Have you ever observed a swirl being placed on a note?

A No.

Q Are the swirls placed on notes only for specific lenders?

A I don’t know.

Q So it sounds as if a swirl is placed on what is believed to be the original note and sometimes it’s not. Is that correct?

A Yes.

Q As far as whether an employee of JPMorgan attended the closing for a loan in which the named lender is Chase Bank USA, N.A., you have no knowledge whether that happened, do you?

A No.

Q So do you know if the swirl is always on the first page?

A Yes. For the ones I reviewed and seen, it’s always on the first page.” pp. 73-75

There are many other interesting exchanges in this deposition, but these are some highlights.  You can downloaded the deposition here: Jones, Vermyrtis 04-30-14-JPMC

Bank of America, JP Morgan Chase, Citi and Wells Fargo Bank to Assist Consumers in Curing Foreclosure-Related Title Defects

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

DONNA MURRAY and MARC MURRAY,
Appellants,

v.

HSBC BANK USA, NATIONAL ASSOCIATION AS TRUSTEE FOR ACE SECURITIES CORP HOME EQUITY LOAN TRUST, SERIES 2006-OP1 ASSET BACKED PASS THROUGH CERTIFICATES,
Appellee.

No. 4D13-4316

[January 21, 2015]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Howard Harrison, Judge; L.T. Case No. 502009CA005458XX.
Kunal A. Mirchandani and Joann M. Hennessey of Civil Justice Advocates, PL, Fort Lauderdale, for appellants.
Khari E. Taustin, Jeremy W. Harris, Masimba M. Mutamba, and Angela Barbosa Wilborn of Morris, Laing, Evans, Brock & Kennedy CHTD., West Palm Beach, for appellee.

MAY, J.

In this foreclosure puzzle, one of the pieces is missing. The borrowers appeal a final judgment of foreclosure following a non-jury trial. They argue the bank failed to prove standing. We agree and reverse.

The borrowers and Option One Mortgage Corporation, a California corporation (“Option One California”), executed a mortgage and note. When the borrowers missed their monthly payment, HSBC filed a two-count complaint seeking to foreclose the mortgage and reestablish the lost note. The original complaint, filed February 13, 2009, alleged that HSBC “owns and holds said note and mortgage.” The borrowers then filed their answer and affirmative defenses.

On April 3, 2009, Sand Canyon Corporation f/k/a Option One Mortgage Corporation (“Sand Canyon”) executed an assignment of the mortgage to HSBC. The assignment included an effective date of January 24, 2009. On April 6, 2010, HSBC voluntarily dismissed the lost note count and filed the original note and mortgage. The note was made payable to Option One California, but did not have an indorsement or allonge.

On October 5, 2010, Sand Canyon executed another assignment in favor of HSBC, with a stated effective date of April 23, 2007. On February 6, 2013, HSBC filed a second amended complaint alleging that HSBC was “a nonholder in possession with the rights of a holder and is entitled to enforce the terms of the Note and Mortgage, pursuant to Florida Statute 673.3011.” The case proceeded to a non-jury trial.

At trial, HSBC offered the testimony of a loan analyst with Ocwen Loan Servicing (“Ocwen”). HSBC also offered the pooling and servicing agreement (“PSA”), note, mortgage, demand letter, and payment history. HSBC did not admit the assignments into evidence.

The main issue at trial concerned HSBC’s allegation that it was a nonholder in possession with the rights of a holder.1 The PSA and attached mortgage loan schedule both referenced the borrowers’ loan. The PSA had ACE Securities Corp. (“ACE”) as the Depositor, Option One Mortgage Corporation as the Servicer, Wells Fargo Bank, N.A. (“Wells Fargo”) as the Master Servicer and Securities Administrator, and HSBC as the Trustee. The effective date of the PSA was May 1, 2006; it does not reference Option One California.

The loan analyst testified that Option One Mortgage Corporation was a predecessor to American Home Mortgage Servicing (“AHMS”), which was rebranded as Homeward Residential, and subsequently purchased by Ocwen. Those companies serviced the loan from its inception and Ocwen was currently servicing the loan for HSBC. He also testified that AHMS acquired servicing rights from Option One Mortgage Corporation, a Delaware corporation (“Option One Delaware”).

After the trial, the court took the matter under advisement and had the parties submit memoranda. On November 4, 2013, the trial court entered a final judgment of foreclosure in favor of HSBC, from which the borrowers now appeal.

The borrowers argue the trial court erred in granting a final judgment of foreclosure because Option One California never transferred its rights to HSBC, directly or through ACE. They argue that HSBC failed to connect the dots between ACE and the last identifiable holder of the note, Option One California. HSBC responds that it proved its right to enforce the note as a nonholder in possession with the rights of a holder.

The dotted line represents the missing piece in the chain of transfers.

We have de novo review. Dixon v. Express Equity Lending Grp., LLLP, 125 So. 3d 965, 967 (Fla. 4th DCA 2013). “A crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose” when the complaint is filed. McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). “[S]tanding may be established from the plaintiff’s status as the note holder, regardless of any recorded assignments.” Id. “If the note does not name the plaintiff as the payee, the note must bear a special [i]ndorsement in favor of the plaintiff or a blank [i]ndorsement.” Id.

The plaintiff may also show “evidence of an assignment from the payee to the plaintiff or an affidavit of ownership to prove its status as the holder of the note.” Id. “Because a promissory note is a negotiable instrument and because a mortgage provides the security for the repayment of the note, the person having standing to foreclose a note secured by a mortgage may be . . . a nonholder in possession of the note who has the rights of a holder.” Mazine v. M & I Bank, 67 So. 3d 1129, 1130 (Fla. 1st DCA 2011).

A “person entitled to enforce” an instrument is: “(1) [t]he holder of the instrument; (2) [a] nonholder in possession of the instrument who has the rights of a holder; or (3) [a] person not in possession of the instrument who is entitled to enforce the instrument pursuant to s[ection] 673.3091 or s[ection] 673.4181(4).” § 673.3011, Fla. Stat. (2013). A “holder” is defined as “[t]he person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.” § 671.201(21)(a), Fla. Stat. (2013). Thus, to be a holder, the instrument must be payable to the person in possession or indorsed in blank. See § 671.201(5), Fla. Stat. (2013).

HSBC did not qualify under section 673.3011(1) or (3). It was not a holder of the note because the note is payable to Option One California, and there is no blank indorsement. HSBC failed to produce any evidence to prove its status as the holder of the note at trial. Indeed, HSBC admitted it was not a holder of the note. HSBC was thus left to enforce the note under section 673.3011(2) as a nonholder in possession of the instrument with the rights of a holder. The issue then is whether HSBC is a nonholder in possession with the rights of a holder.

Anderson v. Burson, 35 A.3d 452 (Md. 2011), is instructive. There, the court held that the plaintiff was a nonholder in possession and analyzed whether it had rights of enforcement pursuant to a Maryland statute that employs the same language as section 673.3011, Florida Statutes. Anderson, 35 A.3d at 462. “A transfer vests in the transferee only the rights enjoyed by the transferor, which may include the right to enforce[ment],” through the “shelter rule.” Id. at 461–62.

A nonholder in possession, however, cannot rely on possession of the instrument alone as a basis to enforce it. . . . The transferee does not enjoy the statutorily provided assumption of the right to enforce the instrument that accompanies a negotiated instrument, and so the transferee “must account for possession of the unindorsed instrument by proving the transaction through which the transferee acquired it.” Com. Law § 3–203 cmt. 2. If there are multiple prior transfers, the transferee must prove each prior transfer. Once the transferee establishes a successful transfer from a holder, he or she acquires the enforcement rights of that holder. See Com. Law § 3–203 cmt. 2. A transferee’s rights, however, can be no greater than his or her transferor’s because those rights are “purely derivative.”
Id. (emphasis added) (internal citations omitted).

HSBC had to prove the chain of transfers starting with Option One California as the first holder of the note. The only document admitted that purported to transfer the note was the PSA. Although the note was included in the PSA, the parties to the PSA were ACE, Option One Mortgage Corporation, Wells Fargo, and HSBC; not Option One California.
The loan analyst testified that Option One California was acquired by AHMS, which rebranded to Homeward Residential, which was ultimately acquired by Ocwen. HSBC argues that since “Option One” is defined under the PSA as “Option One Mortgage Corporation or any successor thereto,” and Option One transferred its interest to HSBC through the PSA, HSBC had the rights of a holder. We disagree.

Even if Option One California, Option One Delaware, Option One Mortgage Corporation, and Option One Mortgage Corporation, a Maryland corporation, were all the same corporation, HSBC’s argument fails. Although Option One Mortgage Corporation was a party to the PSA, it was the Servicer. “Servicing” is defined in the PSA as “the act of servicing and administering the Mortgage Loans.” Nothing in the PSA established that the Servicer conveyed rights in mortgage loans to any party. Also, even though the loan analyst testified that through a chain of transfers Ocwen was the current servicer of the loan, it does not prove that HSBC had standing as a nonholder in possession with the rights of a holder.

The chain of transfers starts with Option One California as the original holder of the note. ACE, as the Depositor, transferred its rights in the note to HSBC through the PSA. However, there was no evidence that Option One California transferred its rights in the note to ACE. This is the missing piece of the puzzle. See Appendix. As HSBC cannot prove that ACE had any right to enforce the note, it cannot derive any right from ACE and is not a nonholder in possession of the instrument with the rights of a holder to enforce. §§ 673.2031, .3011, Fla. Stat. (2013). Put simply, HSBC failed to prove standing. We therefore reverse the final judgment of foreclosure.

Reversed and Remanded for entry of judgment in favor of appellants.

WARNER and TAYLOR, JJ., concur.
* * *

Not final until disposition of timely filed motion for rehearing.

footnote: 1 The trial court stated:
To me, that’s the only issue in the case; can this Court enter a judgment on what you say is that possession is enough without the [i]ndorsement.
In every other respect they have it. They got the mortgage. They got the records. They got the servicing. They got the whole thing. They just don’t have the [i]ndorsement, and is that fatal?
In other words do you have to go and get, and then start over again? That’s the question. I don’t know the answer.

In BLB Trading, Inc. v. Ledgister, Westchester County Supreme Court, Index 15407/11, Susan Chana Lask, Esq. won her argument for a NY homeowner that a bank cannot foreclose based on defective documents.  The decision holds that a one and half year gap in the transfer of the mortgage and note are reasons to deny summary judgment to the Bank. Also, the court accepted Ms. Lask’s argument that UCC §3-804 mandates that a lost note affidavit must be factually specific regarding the events surrounding the loss, including when the note was lost.   Finally, Ms. Lask brought forth other issues regarding whether employees executing affidavits were actually employees of the bank or other entities that raised suspicion as to the authenticity of the Bank’s  alonge alleged to be attached to the note to even support a foreclosure.  The court refused to grant a foreclosure by summary judgment to the bank.

Clouded Titles-

For those of you who have plans to get your pound of flesh out of Ocwen at any point in time in the near future may wish to heed the warning signs. Ocwen’s stock has plummeted over 36% in recent days … not a good sign considering the amount of business that Ocwen will have to sell off if California regulators go ahead with plans to suspend Ocwen’s operating license in that State.

The once-booming subprime loan servicer who is tied to Goldman-Sachs like an umbilical cord to a dead baby is rumored to be 6 to 12 months out from filing bankruptcy in order to avoid the onslaught of creditors and those coming to obtain money judgments against them for various alleged servicing violations.  Additionally, it is also known by this author that certain jurisdictions are examining records involving Ocwen for the possibility of the filing of criminal charges involving multiple counts of statutory criminal violations.  Aside from paying civil penalties, criminal fines and prison terms potentially loom on the horizon for dozens of employees and officers connected with this bottom feeder.

[CLOUDED TITLES]

NY POST-

Outgoing subprime mortgage scion Bill Erbey is playing chicken with California.

The CEO of an Erbey-chaired company has pooh-poohed the Golden State’s business regulator’s threat to pull Ocwen Financial’s license to do business, just days after the company’s stock had its biggest drop ever.

“Our understanding is that the likelihood of Ocwen losing its license is very low,” Bill Shepro, CEO of Altisource Portfolio Solutions, a major Ocwen client that’s helmed by Erbey, said during a conference call on Friday.

The California Department of Business Oversight has accused Ocwen of dragging its feet in cooperating with an investigation into whether the company is breaking state consumer laws. The company has said it’s fully cooperating.

[NEW YORK POST]

Bangor Daily News-

A Maine Supreme Judicial Court judge has reversed and dismissed the public reprimand of a Portland lawyer in connection with the foreclosure “robo-signing” scandal.

Justice Andrew Mead said in his 12-page decision dated Thursday, Jan. 15, that a three-member panel of the Maine Board of Overseers of the Bar incorrectly found that Paul E. Peck of Portland had violated bar rules in 2010 because he did not “take immediate and effective action” to stop foreclosure proceedings that were based on faulty affidavits.

“[The] panel’s decision is founded upon a ‘should have known’ standard rather than actual knowledge,” Mead wrote. “The distinction is critical.”

[BANGOR DAILY NEWS]