Lexology-

In Lori Jo Vincent, et al. v. The Money Store, Inc. et al, No. 03 cv 2876 (S.D.N.Y. February 2, 2015), the United States District Court for the Southern District of New York certified a class of home mortgage borrowers who defaulted on their loans and received uniform “breach letters” from a law firm sent on behalf of the defendant mortgage servicing company and the defendant lenders.

The breach letters informed the debtors that the servicer of their loans, defendant TMS Mortgage, Inc. (TMS), intended to enforce the loans by accelerating the principal and interest and that the law firm had been retained by defendants to collect the debt. The law firm sent out a total of 88,937 breach letters and received a flat fee of $50, later reduced to $35, per letter. The crux of the plaintiffs’ allegation is that the defendants hired the law firm to represent itself as collecting defendants’ debt, but in reality the law firm was simply sending out form letters on firm letterhead at the defendants’ “behest.” The plaintiffs contend that defendants’ conduct violates the “false name exception” of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692e(6).

Generally, creditors are not subject to the FDCPA. See Maguire v. Citicorp Retail Servs., Inc., 147 F.3d 232, 235 (2d Cir. 1998). However, under the “false name exception,” the FDCPA defines debt collectors as creditors “who, in the process of collecting [their] own debts, use[ ] any name other than [their] own which would indicate that a third person is collecting or attempting to collect such debts.” 15 U.S.C. § 1692a(6); Catencamp v. Cendant Timeshare Resort Group-Consumer Fin., Inc., 471 F.3d 780, 782 (7th Cir. 2006) (citingMaguire v. Citicorp Retail Servs., Inc., 147 F.3d 232 (2d Cir. 1998)). The “false name exception” applies to any creditor who, in the process of collecting its debts, “indicate[s] that a third party is collecting or attempting to collect such debts . . . pretends to be someone else or uses a pseudonym or alias . . . or . . . [who] owns and controls the debt collector, rendering it the creditor’s alter ego.” See Mazzei v. Money Store, 349 F. Supp. 2d 651, 659 (S.D.N.Y. 2004) (internal quotations and citations omitted).

[LEXOLOGY]

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

DUROY HENDERSON and MARILYN HENDERSON,
Appellants,

v.

DEUTSCHE BANK NATIONAL TRUST COMPANY as Trustee under Pooling and Serving Agreement dated as of May 1, 2007 Securitized Asset Back Receivables LLC Trust 2007-BR4 Mortgage Pass-Through Certificates, Series 2007-BR4, PALM AUTO PLAZA, INC. d/b/a PALM BEACH TOYOTA, STATE OF FLORIDA DEPARTMENT OF REVENUE, HUGHES SUPPLY, INC. d/b/a FLORIDA PIPE & SUPPLY CO., Unknown Parties in Possession #1, Unknown Parties in Possession #2; If living, and all Unknown Parties claiming by, through, under and against the above named Defendant(s) who are not known to be dead or alive, whether said Unknown Parties may claim an interest as Spouse, Heirs, Devisees, Grantees, or Other Claimants,
Appellees.

No. 4D13-1780
[ February 11, 2015 ]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Howard Harrison, Judge; L.T. Case No. 502007CA020031.

James A. Bonfiglio, Boynton Beach, for appellants.
Eve Cann of Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., Fort Lauderdale, for Appellee-Deutsche Bank.
PER CURIAM.

The borrowers, Duroy and Marilyn Henderson, appeal a final judgment of foreclosure entered after a bench trial. Because Deutsche Bank failed to prove its entitlement to foreclose, we reverse the final judgment. Without further comment, however, we find that the trial court did not err in denying relief on the borrowers’ counterclaim under the Truth in Lending Act.

As a preliminary matter, the record reflects—and Deutsche Bank concedes—that Deutsche Bank’s witness’s testimony regarding the loan payment history did not satisfy the business records exception to the hearsay rule. Therefore, the trial court erred in admitting the evidence regarding the loan payment history. See, e.g., Glarum v. LaSalle Bank Nat’l Ass’n, 83 So. 3d 780, 781-83 (Fla. 4th DCA 2011).

Furthermore, the evidence at trial was insufficient to prove that Deutsche Bank had standing to enforce the promissory note at the time the complaint was filed. Deutsche Bank seems to concede this point, acknowledging in its answer brief that “[t]he witness also appeared unable to confirm that [Deutsche Bank] had the right to enforce the note and mortgage prior to the filing of the subject foreclosure action.” Because Deutsche Bank failed to prove it had standing to foreclose at the inception of the case, we reverse the final judgment of foreclosure and remand for the trial court to enter an involuntary dismissal of the complaint. See, e.g., Klemencic v. U.S. Bank Nat’l Ass’n, 142 So. 3d 983, 984 (Fla. 4th DCA 2014).

Reversed and Remanded as to foreclosure judgment; Affirmed as to denial of relief on counterclaim.
DAMOORGIAN, C.J., TAYLOR and CONNER, JJ., concur.

* * *
Not final until disposition of timely filed motion for rehearing.

Charlotte Observer-

North Carolina lawmakers are poised to renew a rule requiring homeowners to pay state income taxes on mortgage debt forgiven by lenders – a move that could cost some homeowners thousands of dollars in additional taxes.

For years, North Carolina allowed taxpayers not to count written-off mortgage debt as taxable income after Congress, responding to the mortgage crisis, enacted a similar exclusion on federal income taxes.

In 2013, North Carolina took away the exclusion for the first time since the crisis. And last week the N.C. Senate passed a bill that would not allow the exclusion for tax year 2014. The House is expected to vote on the measure this week.

Read more here: http://www.charlotteobserver.com/2015/02/16/5514038/tax-changes-could-hurt-troubled.html#storylink=cpy

Herald Tribune-

It took seven years for Florida’s court systems to erase a backlog of nearly half a million home defaults left over from the Great Recession.

But just as that logjam is clearing, a pair of recent appellate court rulings could bring thousands of seemingly dead foreclosure cases back to life, all at a time when court systems are losing state funding to process them.

If upheld, the decisions could resurrect dismissed foreclosures dating back nearly a decade, potentially swamping court systems with yet another pool of default filings.

[HERALD TRIBUNE]

Bill Moyers-

After her stroke, Alice Emile of Freeport, New York, wanted to die at home. On April 24, 2009, she passed away quietly at the age of 74. Her son Darrell Emile, executor of the estate, had to close the reverse mortgage she took out in 2006, which had passed into the hands of Bank of America.

A Bank of America representative told Emile he would receive a payoff document within six months, and have six additional months to determine the best way to settle the account. This is considered standard for reverse mortgage closings. But in October 2009, a bank representative claimed that they had never received word that Emile’s mother had died (even though, by this time, the bank was addressing letters about the house to “the Estate of Alice Emile”). After Emile faxed Bank of America the death certificate, for what he says was the third time, the bank informed him that the account was in default.

Emile had the money to settle the mortgage, and would have had he simply received a payoff document. But Bank of America never delivered one, and they refused his offers to pay afterward, instead filing for foreclosure in May 2010. Since Emile cannot get a payoff document, he cannot sell the home, which is stuck in limbo awaiting completion of foreclosure. The estate did, however, benefit in April 2013 from the Independent Foreclosure Review, a Federal Reserve–led settlement designed to compensate homeowners for foreclosure errors. The check was for $300.

[BILL MOYERS]

Clouded Titles-

The media is starting to pay attention to issues created by recent court rulings in Florida’s very complex foreclosure debate. However, until the Supreme Court of Florida steps in and decides what is just, which is certainly debatable in of itself, Florida may be the worse place to buy REO’s (real estate owned property) and any property affected by MERS-originated mortgages. REO’s that have had MERS in their chains of title may have complicated the sale of these properties to investors looking to score a “great deal”. At best, these MERS-tainted REO’s may end up purposefully serving only as rental properties in the greater scheme of things.

The Sarasota Herald-Tribune newspaper published an article worthy of mention here (see the link to the article HERE), as 15 cases of evidence are about to be turned over to the Osceola County, Florida Sheriff’s Department for further review of 156 specifically-reviewed cases, along with hundreds of other related documents discussed in the Trib’s article involving “robosigned” documents that were recorded in real property records across the State of Florida. The Osceola County Circuit Clerk, Armando Ramirez, commissioned a forensic examination of his county’s real property and court records to look for evidence of criminal wrongdoing in the way foreclosure cases were handled. It’s no secret that many of Florida’s foreclosure mill law firms are likely implicated in the furtherance of document manufacturing in order to “create standing” for the very clients they represent as plaintiffs in foreclosure actions against unsuspecting homeowners. It is also of great concern that Osceola County’s representative law firm may find itself conflicted out of future challenges against the county if any wrongdoing involving county officials or their agents is discovered. In other words, any law firm representing the Clerk of a county against another county agency will pose serious issues because one law firm can’t represent internal opposing sides of the same client. The forensic examination may thus turn into a political bailiwick for Florida’s 9th Circuit and as a result, may never go anywhere. This however is not going to stop aggrieved homeowners from filing complaints with the Sheriff and demanding their investigation. If these complaints are ignored, the political burden could ultimately shift against the Florida 9th Circuit’s prosecutorial arm come next November. From the current issues involving the investigation, the investigating parties now handling the matter are way in over their heads in the knowledge and understanding it takes to constructively understand what is going on in each of these suspect cases.

[CLOUDED TITLES]

More than 150 cases have been filed in the Osceola County courts.

http://www.wftv.com/

.

Decided on February 11, 2015

SUPREME COURT OF THE STATE OF NEW YORK Appellate Division, Second Judicial Department

JOHN M. LEVENTHAL, J.P.
L. PRISCILLA HALL
LEONARD B. AUSTIN
SANDRA L. SGROI, JJ.
2013-10952
(Index No. 11403/11)

Richard J. Sullivan, Port Jefferson, N.Y., for appellants.

Hogan Lovells US, LLP, New York, N.Y. (Chava Brandriss of counsel), for respondent.

DECISION & ORDER

In an action to foreclose a mortgage, the defendants Brian Burke and Lisa Burke appeal, as limited by their brief, from so much of an order of the Supreme Court, Suffolk County (Whelan, J.), entered September 16, 2013, as granted those branches of the plaintiff’s motion which were for summary judgment on the complaint, to strike their answer, and to appoint a referee to compute the sums due and owing under the subject note and mortgage.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and those branches of the plaintiff’s motion which were for summary judgment on the complaint, to strike the answer of the defendants Brian Burke and Lisa Burke, and to appoint a referee to compute the sums due and owing under the subject note and mortgage are denied.

In a mortgage foreclosure action, where the plaintiff’s standing to commence the action is placed in issue by the defendant, “the plaintiff must prove its standing in order to be entitled to relief” (U.S. Bank, N.A. v Collymore, 68 AD3d 752, 753). “[A] plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced” (Bank of N.Y. v Silverberg, 86 AD3d 274, 279). “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 Bank of N.Y. v Silverberg, 86 AD3d at 281).

Here, the evidence submitted by the plaintiff in support of its motion, inter alia, for summary judgment on the complaint, to strike the answer of the defendants Brian Burke and Lisa Burke (hereinafter together the Burke defendants), and to appoint a referee to compute the sums due and owing under the subject note and mortgage, did not establish that the subject note was physically delivered to it prior to the commencement of the action (see US Bank N.A. v Faruque, 120 AD3d 575, 577; Bank of N.Y. Mellon v Gales, 116 AD3d 723). The affidavits of the plaintiff’s Vice President of Loan Documentation did not give any factual details of a physical delivery and, thus, failed to establish that the plaintiff had physical possession of the note at the time the action was commenced (see US Bank N.A. v Faruque, 120 AD3d at 577; Deutsche Bank Natl. Trust Co. v Haller, 100 AD3d 680, 682; cf. Aurora Loan Servs., LLC v Taylor, 114 AD3d 627, 628-629). Further, although the plaintiff’s Vice President of Loan Documentation stated in her affidavits that [*2]the plaintiff was the holder of the note, she never stated that the plaintiff was the holder of the note at the time the action was commenced (see U.S. Bank, N.A. v Collymore, 68 AD3d at 754).

While the copy of the note submitted by the plaintiff in support of its motion includes an indorsement to the plaintiff by the original lender and a second indorsement to the plaintiff, both indorsements are undated and, thus, it is not clear whether the indorsements were effectuated prior to the commencement of this action (see Deutsche Bank Natl. Trust Co. v Haller, 100 AD3d at 682-683; U.S. Bank, N.A. v Collymore, 68 AD3d at 754). Regarding the purported assignment of the note and mortgage, the assignment of the mortgage from the Mortgage Electronic Registration Systems, Inc., to the plaintiff dated March 4, 2011, transferred only the mortgage and, thus, the plaintiff failed to demonstrate that the note had also been assigned at that time (see US Bank N.A. v Faruque, 120 AD3d at 577; Bank of N.Y. v Silverberg, 86 AD3d at 283; cf. Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674). Under these circumstances, the plaintiff failed to establish, prima facie, that it had standing to commence this action.

In any event, as the Burke defendants correctly contend, the plaintiff failed to submit an affidavit of service evincing that it properly served the Burke defendants pursuant to RPAPL 1304 (see Deutsche Bank Natl. Trust Co. v Spanos, 102 AD3d 909, 911; Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 106). Consequently, under the circumstances, the plaintiff failed to tender sufficient evidence demonstrating the absence of material issues as to its strict compliance with RPAPL 1304 (see Aurora Loan Servs., LLC v Weisblum, 85 AD3d at 106).

Accordingly, those branches of the plaintiff’s motion which were for summary judgment on the complaint, to strike the answer of the Burke defendants, and to appoint a referee to compute the sums due and owing under the subject note and mortgage, should have been denied, without regard to the sufficiency of the opposition papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).

LEVENTHAL, J.P., HALL, AUSTIN and SGROI, JJ., concur.

ENTER:

Aprilanne Agostino

Clerk of the Court

KOB 4-

The American foreclosure crisis gripped our nation, reminded all of us of the dangers of risky loans and left millions without their homes. At its peak, it was downright scary for homeowners worrying when the bank would repossess their homes.

But we’ve discovered a darker side to the business of home foreclosures; it’s a side that victimizes the most innocent of people. Banks often contract out the gritty process of clearing out homes, but as we explore in this investigation, contractors often gets it wrong.

Joseph and Priscilla Saavedra know that fact all too well. The couple lives in Tijeras, but they own a house in the San Miguel County village of San Geronimo, just outside of Las Vegas, NM. And this isn’t just any house; it’s a home that has been in their family for generations and the home where they planned to live full time after they retire.

[KOB 4]

image credit: kob.com

WSJ-

She surely ranks as one of the world’s most successful whistleblowers, but Alayne Fleischmann, whose revelations about former employer J.P. Morgan cost the bank a $13 billion settlement with regulators, still doesn’t think justice has been done.

A Canadian who worked as a securities lawyer at the bank between 2006 and 2008, Ms. Fleischmann turned over information on the bank’s dealings in sourced mortgage-backed bonds before the financial crisis, conduct Attorney General Eric Holder said “helped sow the seeds of the mortgage meltdown.”

Ms. Fleischmann’s role as a whistleblower was revealed in an interview last November with Rolling Stone magazine, which dubbed her J.P. Morgan’s “worst nightmare”.

[WALL STREET JOURNAL]

image credit: Reuters

Credit Slips-

Empirical economic analysis is a powerful tool. It can elucidate correlations and sometimes even get us to causual explanations. But it has a serious weak-spot: its value is entirely dependent upon the integrity of the data analyzed. To put the problem succinctly: sh*t in, sh*t out.

This brings us to analyses of the housing bubble. There’s a sizeable academic literature on the housing bubble (and relatedly also expert witness reports on loss causation in MBS litigation) that rely on loan-level data. The problem is that a lot of that loan-level data is suspect. That should hardly be a surprise: the industry even referred to some products as “liar loans”. And there were also FBI Mortgage Fraud reports indicating an uptick in mortgage fraud. But it was easy for economists to ignore the data integrity problem as long as the problems were merely anecdotal (e.g., the mariachi musician with the six-figure income), and could be blissfully assumed to only affect a small number of loans.

[CREDIT SLIPS]

image credit: works.bepress.com

Wall Street is in the rental business now.

DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT

24 CFR Parts 91 and 93
[Docket No. FR–5246–I–03]
RIN 2506–AC30

Housing Trust Fund
AGENCY: Office of the Assistant
Secretary for Community Planning and
Development, HUD.

ACTION: Interim rule.

SUMMARY: The Housing and Economic
Recovery Act of 2008 (HERA)
establishes a Housing Trust Fund (HTF)
to be administered by HUD. The
purpose of the HTF is to provide grants
to State governments to increase and
preserve the supply of rental housing for
extremely low- and very low-income
families, including homeless families,
and to increase homeownership for
extremely low- and very low-income
families. This rule establishes the
regulations that will govern the HTF.
HUD is issuing this rule as an interim
rule. It is HUD’s intention to open this
interim rule for public comment to
solicit comments once funding is
available and the grantees gain
experience administering the HTF
program.

DATES: Effective: March 31, 2015.

FOR FURTHER INFORMATION CONTACT:
Marcia Sigal, Director, Program Policy
Division, Office of Affordable Housing
Programs, Office of Community
Planning and Development, Department
of Housing and Urban Development,
451 7th Street SW., Room 7164,
Washington, DC 20410; telephone
number 202–708–2684 (this is not a tollfree
number). Persons with hearing or
speech impairments may access this
number through TTY by calling the tollfree
Federal Relay Service at 800–877–
8389.

image credit: www.keepingcurrentmatters.com

Just a reminder that many are coming to reset this year and on. According to National Mortgage News, 2015 marks a decade since the surge of boom-era home equity line of credit originations, and mortgage industry insiders forewarn that roughly $23 billion of these loans will have payment increases in the coming year alone as the interest-only phase ends. That number is projected to reach $56 billion by 2017.

I’ve read this total would reach upwards of $100+ billion elsewhere by 2018.

Rolling Stone-

Three years ago, then-U.S. Attorney of the Eastern District of New York Loretta Lynch crafted a soft-touch deferred-prosecution deal for Europe’s largest bank, HSBC, which had only been caught in the largest drug-money-laundering case in history.

Today, as Lynch awaits approval for the Attorney General job, HSBC is in the news again. This time, the global mega-bank is being exposed in a massive scheme to help wealthy clients avoid taxes. This is from the New York Times:

In a report released on Sunday, the International Consortium of Investigative Journalists… said that secret documents revealed that bank employees had reassured clients that HSBC would not disclose details of their accounts to tax authorities in their home countries and discussed options to avoid paying taxes on those assets.

[ROLLING STONE]

Bankruptcy-RealEstate-Insights –

A debtor objected to attorney fees included in the proof of claim filed by a mortgagee, and the mortgagee moved for relief from the automatic stay to exercise its rights under a security deed securing the debtor’s guaranty based in part on the debtor’s lack of equity in the property.

The lender’s proof of claim initially included attorney fees of $275,000 (15% of the outstanding principal and interest as of the petition date). It was later amended to claim ~$184,000 in attorney fees (based on a statutory formula of 15% of the first $500 of outstanding principal and interest and 10% of the excess). The lender acknowledged that actual fees were ~$149,000.

The debtor objected, arguing that the lender was limited to reasonable actual fees. In particular, the debtor had guaranteed a note, and an addendum to the note stated: “Notwithstanding anything to the contrary contained within the Note or other Loan Documents … any reference to attorney fees accrued to the account of the Borrower or any Guarantor shall be limited to reasonable attorneys’ fees actually incurred.”

[Bankruptcy-RealEstate-Insights]

Service Members to Receive Over $123 Million for Unlawful Foreclosures Under the Servicemembers Civil Relief Act

Bloomberg-

Ocwen Financial Corp., which agreed with regulators in December to improve its mortgage servicing, sent Nathan Fitzgerald a notice saying his loan was in default. If he didn’t send a $2,266 check immediately, Ocwen said, it would foreclose on him.

The warning in January shocked Fitzgerald, who said he never missed a payment on his three-bedroom home near Napa, California, and sent Ocwen bank records to prove it.

“This is a nightmare,” said Fitzgerald, 53, owner of a real estate and investment firm. “I have spent endless hours on the phone trying to get this fixed, and I’ve gotten nowhere.”

[BLOOMBERG]

KPMG were auditors to HSBC 1991 – 2013. Ex KPMG partners chair HMRC and direct Financial Conduct Authority. 

BBC-

Banking giant HSBC helped wealthy clients across the world evade hundreds of millions of pounds worth of tax, the BBC has learned.

Panorama has seen accounts from 106,000 clients in 203 countries, leaked by whistleblower Herve Falciani in 2007.

The documents include details of almost 7,000 clients based in the UK.

HSBC admitted that it was “accountable for past control failures.” But it said it has now “fundamentally changed”.

“We acknowledge that the compliance culture and standards of due diligence in HSBC’s Swiss private bank, as well as the industry in general, were significantly lower than they are today,” it added.

[BBC]

IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FIFTH DISTRICT

NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
DISPOSITION THEREOF IF FILED

CRISTOBAL COLON,
Appellant,

v.       Case No. 5D14-1191

JP MORGAN CHASE BANK, NA, ET AL.,
Appellees.
_______ _________________________/
Opinion filed February 6, 2015

Appeal from the Circuit Court
for Osceola County,

Jeffords D. Miller, Judge.
Robert Flavell, of Robert Flavell, P.A.,
Miami Lakes, for Appellant.
Charles P. Gufford, of McCalla Raymer,
LLC, Orlando, for Appellee.

LAMBERT, J.

Cristobal Colon (“Colon”) appeals the summary final judgment of mortgage
foreclosure entered in favor of JP Morgan Chase Bank, N.A. (“Bank”). He argues that the
court erred in entering the summary final judgment because no competent evidence was
presented to refute his affirmative defense that Bank failed to satisfy the notice
requirement of paragraph 22 of the mortgage. We agree and reverse.

In January 2013, Bank filed a verified amended complaint, seeking to foreclose a
mortgage executed by Colon. Paragraph seven of the amended complaint contained a
general allegation that “all of the conditions precedent to the filing of this action have been
performed or have occurred.” Colon filed an answer generally denying this allegation and
additionally asserting as his second affirmative defense that:

[Bank] is precluded from obtaining relief due to the fact that it
has failed to satisfy all conditions precedent. Specifically,
[Bank] has failed to comply with the notice requirements
contained in paragraphs 15 and 22 of the mortgage and the
notice requirements contained in the note prior to accelerating
the loan and instituting a foreclosure action against
defendants. Defendants specifically deny receiving any
demand, breach and/or acceleration letter from plaintiff, its
servicers, agents and/or employees.

Paragraph 22 of the mortgage creates a condition precedent that Bank must satisfy
prior to accelerating the loan and commencing the foreclosure action. Samaroo v. Wells
Fargo Bank, 137 So. 3d 1127 (Fla. 5th DCA 2014). Paragraph 22 of the mortgage
provides:

Acceleration; remedies. Lender shall give notice to
borrower prior to acceleration following borrower’s breach of
any covenant or agreement in this security instrument (but not
prior to acceleration under section 18 unless applicable law
provides otherwise). The notice shall specify: (a) the default;
(b) the action required to cure the default; (c) the date not less
than 30 days from the date the notice is given to borrower, by
which the default must be cured; (d) that failure to cure the
default on or before the date specified in the notice may result
in acceleration of the sums secured by this security
instrument, foreclosure by judicial proceeding and sale of the
property. The notice shall further inform borrower of the right
to reinstate after acceleration and the right to assert in the
foreclosure proceeding the non-existence of a default or any
other defense of borrower to acceleration and foreclosure. If
the default is not cured on or before the date specified in the
notice, lender at its option may require immediate payment in
full of all sums secured by this security instrument without
further demand and may foreclose this security instrument by
judicial proceeding. Lender shall be entitled to collect all
expenses incurred in pursuing the remedies provided in this
section 22, including, but not limited to, reasonable attorney’s
fees and costs of title evidence.

In July 2013, Bank filed a motion for summary judgment together with an affidavit
of indebtedness establishing that Colon defaulted on his mortgage obligations and the
amounts then due and owing under the note and mortgage. However, in its motion and
affidavit, Bank did not respond to Colon’s affirmative defense of the lack of the condition
precedent, and Bank did not attach to its affidavit a copy of an acceleration letter.
Addressing this affirmative defense at the summary judgment hearing, Bank argued: (1)
the verified amended complaint signed under oath by its designated representative
specifically alleged that it complied with all conditions precedent; (2) the affirmative
defense was insufficiently pleaded; and (3) Colon had not filed an affidavit in opposition
to the motion for summary judgment. Colon countered that as there was no summary
judgment evidence “authenticating the breach letter,” he was not obligated to file an
affidavit in opposition. Colon is correct.

The standard of review of a trial court’s entry of a summary final judgment is de
novo. Volusia Cnty. v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000);
Gee v. U.S. Bank Nat’l Ass’n, 72 So. 3d 211, 213 (Fla. 5th DCA 2011). When reviewing
a ruling on summary judgment, an appellate court must examine the record in the light
most favorable to the nonmoving party. Suarez v. City of Tampa, 987 So. 2d 681, 682
(Fla. 2d DCA 2008). Summary judgment cannot be granted unless the pleadings,
depositions, answers to interrogatories, and admissions on file together with affidavits, if
any, conclusively show that there is “no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.” Fla. R. Civ. P. 1.510(c). The
party moving for summary judgment has the burden of showing the nonexistence of a
genuine issue of material fact. Holl v. Talcott, 191 So. 2d 40, 43 (Fla. 1966). If affirmative
defenses have been raised, the moving party must also either factually refute the
affirmative defenses or establish that they are legally insufficient. See Pavolini v.
Williams, 915 So. 2d 251, 253 (Fla. 5th DCA 2005) (quoting The Race, Inc. v. Lake &
River Recreational Props., Inc., 573 So. 2d 409 (Fla. 1st DCA 1991)).
Initially, we reject Bank’s argument that Colon’s affirmative defense was
insufficiently pleaded. Florida Rule of Civil Procedure 1.120(c) requires that a denial of
conditions precedent “shall be made specifically and with particularity.” The purpose of
the rule is “to put the burden on the defendant to identify the specific condition that the
plaintiff failed to perform—so that the plaintiff may be prepared to produce proof or cure
the omission, if it can be cured.” Godshalk v. Countrywide Home Loans Servicing, L.P.,
81 So. 3d 626, 626 (Fla. 5th DCA 2012). Bank argues that the affirmative defense was
legally insufficient because Colon “specifically denied receiving any demand, breach
and/or acceleration letter” and the mortgage did not require it to prove that Colon received
the breach or acceleration letter. However, Colon also specifically pleaded, in his second
affirmative defense, that Bank failed to comply with the notice requirements contained in
paragraphs 15 and 22 of the mortgage. We agree with the Second District Court of
Appeal that this affirmative defense was pleaded sufficiently. See, e.g., DiSalvo v.
SunTrust Mortg., Inc., 115 So. 3d 438, 439–41 (Fla. 2d DCA 2013) (stating that the
defendant’s denial “that they had received the required notice and alleg[ation] that
SunTrust had not complied with any of the conditions precedent expressed in Section 22
of the mortgage . . . was legally sufficient to dispute SunTrust’s allegations that all
conditions precedent had been met”).

There was some dispute in the record whether the acceleration letter had been
provided to Colon either during discovery or at the summary judgment hearing. However,
it is undisputed that Bank never filed an authenticated copy of the letter pursuant to Florida
Rule of Civil Procedure 1.510(c), which requires the movant to serve at least 20 days
before the time fixed for the hearing all summary judgment evidence on which the movant
relies. “Unauthenticated documents cannot be used in support of a motion for summary
judgment.” Green v. JPMorgan Chase Bank, N.A., 109 So. 3d 1285, 1288 n.2 (Fla. 5th
DCA 2013); see also DiSalvo, 115 So. 3d at 440; Morrison v. U.S. Bank, N.A., 66 So. 3d
387, 387 (Fla. 5th DCA 2011) (holding that the bank’s filing of an unauthenticated notice
letter failed to support summary judgment where the defendant asserted she had not
received a notice of default); Bryson v. Branch Banking & Trust Co., 75 So. 3d 783, 786
(Fla. 2d DCA 2011) (“The unauthenticated copies of default letters purportedly sent to
Bryson by BB & T were insufficient for summary judgment purposes because only
competent evidence may be considered in ruling on a motion for summary judgment.”);
Bifulco v. State Farm Mut. Auto. Ins. Co., 693 So. 2d 707, 709 (Fla. 4th DCA 1997)
(“Merely attaching documents which are not ‘sworn to or certified’ to a motion for summary
judgment does not, without more, satisfy the procedural strictures inherent in Fla. R. Civ.
Proc. 1.510(e).”).

Bank’s argument on appeal that the summary final judgment should be affirmed
because Colon did not raise a genuine issue of material fact since he failed to submit any
competent evidence in response to the summary judgment motion also misses the mark.

A party opposing a motion for summary judgment has no initial obligation to submit
affidavits or proof to establish its affirmative defenses. Stop & Shoppe Mart, Inc. v. Mehdi,
854 So. 2d 784, 786 (Fla. 5th DCA 2003). It is only when the party moving for summary
judgment has properly met its burden of proof demonstrating the nonexistence of a
genuine issue of material fact that the opposing party is then obligated to prove the
existence of an issue of material fact. Lindsey v. Cadence Bank, N.A., 135 So. 3d 1164,
1167 (Fla. 1st DCA 2014) (stating that “if the moving party meets its burden of proof, it is
‘incumbent upon the party against whom the judgment is sought to demonstrate, by
affidavit or otherwise, the existence of an issue of material fact in order to avoid having a
summary judgment rendered against him’” (quoting Connell v. Sledge, 306 So. 2d 194,
196 (Fla. 1st DCA 1975))). Because Bank failed to meet its burden of proof to factually
refute the affirmative defense or establish that it was legally insufficient, Colon had no
obligation to submit competent evidence in opposition to Bank’s motion for summary
judgment.

Finally, Bank argues that its verified complaint was sufficient to prove it complied
with paragraph 22 of the mortgage. Florida Rule of Civil Procedure 1.110 provides:

When filing an action for foreclosure of mortgage on
residential real property, the complaint shall be verified. When
the verification of a document is required, the document filed
shall include an oath, affirmation, or the following statement:
“Under penalty of perjury, I declare that I have read the
foregoing, and the facts alleged therein are true and correct
to the best of my knowledge and belief.”

Fla. R. Civ. P. 1.110(b). Bank’s amended complaint was verified consistent with this rule,
and paragraph seven of Bank’s amended complaint stated generally that “all conditions
precedent to the filing of this action have been performed or have occurred.”

Nevertheless, we conclude that Bank’s verified complaint was insufficient to prove that it
complied with paragraph 22 of the mortgage because it did not satisfy the requirements
of Florida Rule of Civil Procedure 1.510(e). As stated in Lindgren v. Deutsche Bank
National Trust Co., 115 So. 3d 1076 (Fla. 4th DCA 2013):

While a verified complaint may serve the same purpose as an
affidavit for purposes of a summary judgment, the complaint’s
allegations must meet the requirements of the rule governing,
supporting and opposing affidavits. See Ballinger v. Bay Gulf
Credit Union, 51 So. 3d 528, 529 (Fla. 2d DCA 2010). Florida
R. Civ. P. 1.510(e) requires that affidavits must be based upon
personal knowledge and shall “show affirmatively that the
affiant is competent to testify to the matters stated therein.” A
complaint based on “information and belief” and not personal
knowledge, is insufficient. Id. Here, the complaint was not
based upon personal knowledge and was insufficient to meet
the requirements of the rule.
115 So. 3d at 1076. The verified amended complaint filed by Bank was similarly
insufficient for summary judgment purposes.

Assuming the acceleration letter in the instant case exists, in order to factually
refute Colon’s affirmative defense, Bank needed only to have a competent witness
execute a legally sufficient affidavit authenticating the letter, attach the letter to the
affidavit, and then timely file the affidavit. This burden of proof is not unusual or
demanding. For example, at trial, to establish its entitlement to foreclosure, Bank would
have been required to present a competent witness to authenticate the acceleration letter
prior to it being admitted into evidence.1 Here, Bank simply failed to provide competent
summary judgment evidence in order to meet its burden to prove the non-existence of the
disputed issue of material fact, namely, whether it had complied with paragraph 22 of the
mortgage. See Dominko v. Wells Fargo Bank, N.A., 102 So. 3d 696, 698 (Fla. 4th DCA
2012) (“Although Wells Fargo made the general allegation in its complaint that all
conditions precedent to the foreclosure action had occurred, there was no evidence in the
record that Wells Fargo complied with paragraph twenty-two of the mortgage.”).

Accordingly, we reverse the summary final judgment and remand this case for further
proceedings.

REVERSED and REMANDED.

ORFINGER and BERGER, JJ., concur.

February 5, 2015

Contact: Matt Anderson, 212-709-1691

GOVERNOR CUOMO ANNOUNCES WELLS FARGO TO PAY $4 MILLION FOR VIOLATIONS ON CREDIT CARD ACCOUNTS AT FORMER AFFILIATE

More than 1,300 New Yorkers Expected to Receive Restitution Payments Averaging Approximately $1,600

Governor Andrew M. Cuomo today announced that Wells Fargo Bank will pay a $2 million penalty and provide approximately $2 million in direct consumer restitution payments for violations uncovered by a Department of Financial Services examination of the Bank’s former affiliate. Among other issues, the Department’s examination found that the Wells Fargo affiliate secured loans made through its Nowline Visa Platinum Credit Card  product with an interest in the borrower’s home – which is not permissible under New York law.

“New Yorkers deserve to trust who they do business with – and because of this aggressive investigation, individuals and families across the state will be justly compensated,” Governor Cuomo said. “My administration is committed to ensuring that banks and credit card institutions are treating consumers honestly and fairly, and we will continue to do just that.”

Benjamin M. Lawsky, Superintendent of Financial Services, said, “Our investigation uncovered that this Wells Fargo affiliate put borrowers’ homes on the line for routine credit card purchases – creating substantial and undue risks for consumers. This agreement will provide direct relief to New York consumers.”

The 1,300 New Yorkers expected to receive restitution payments are located in the following regions of the state:

Borrowers will also receive future interest rate reductions of 2 percent on their balances going forward, which is estimated to provide additional relief of approximately $300,000 total. Wells Fargo will also release any security interest or liens they hold in New York homes related to the Nowline Visa Platinum Credit Card Account. 

A copy of the consent order between DFS and Wells Fargo is available here.

RAW STORY-

An Ohio company is being sued by homeowners who claim that that its employees broke into homes that had not been foreclosed yet and removed, then destroyed, all the items in them, ABC 6 reports.

The company, Safeguard, is hired by banks to inspect houses on the brink of foreclosure, then clean and secure them after the foreclosure is official. But many Ohio residents claim that the “property preservation company” arrive days and weeks before a foreclosure is official and, without warning, removes all the property within them.

Michael Cole told ABC 6 that he was in the process of moving out when Safeguard “preserved” his home, removing many irreplaceable items, including VHS tapes of his young daughters.

[RAW STORY]