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Wells Fargo Bank, N.A. v Sylvester | NYSC – WFB has failed to establish compliance with the notice requirements of RPAPL 1303, its application for an order of reference must be denied

Wells Fargo Bank, N.A. v Sylvester | NYSC – WFB has failed to establish compliance with the notice requirements of RPAPL 1303, its application for an order of reference must be denied

Decided on March 25, 2015
Supreme Court, Kings County

Wells Fargo Bank, N.A. SUCCESSOR BY MERGER TO WELLS FARGO HOME MORTGAGE INC., Plaintiff,

against

Gaye Sylvester, NEW YORK CITY, ENVIRONMENTAL CONTROL BOARD, NEW YORK CITY PARKING VIOLATIONS BUREAU, NEW YORK CITY TRANSIT ADJUDICATION BUREAU, WELLS FARGO BANK, N.A., “JOHN DOE” said names being fictitious, it being the intention of plaintiff to designate fictitious, it being the intention of Plaintiffto designate any and all occupants of premises being foreclosed herein, and any parties, corporations or entities, if any, having or claiming an interest of lien upon the mortgaged premises, Defendants.

20589/2009

Atty for Plaintiff

Miranda L. Sharlette, Esq.

Fein, Such & Crane, LLP

28 East Main Street, Suite 1800

Rochester, NY 14614

(585) 232-7400

Atty for Defendant

George M. Gilmer, Esq.

943 Fourth Avenue

Brooklyn, NY 11232

(718) 788-0100

Francois A. Rivera, J.

Recitation in accordance with CPLR 2219 (a) of the papers considered on the motion of Wells Fargo Bank, N.A. (hereinafter WFB or the plaintiff), filed on March 20, 2014, under motion sequence number two, for an order (1) granting relief to correct a mistake and extending [*2]time pursuant to CPLR 2001, 2004 and 2005 to move for an order striking the answer and counterclaims of defendant Gaye Sylvester (hereinafter Sylvester or the mortgagor); and (2) granting summary judgment in its favor as against Sylvester; (3) striking the John Doe defendants and replacing it with Tarik Sylvester; and (4) appointing a referee to compute pursuant to the RPAPL 1321.

Notice of Motion

Affirmation of regularity

Affidavit of plaintiff’s Vice-president

Exhibit A-J

Proposed order of reference

Affirmation in accordance with AO/431/11

Affirmation in opposition

Exhibit A-C

BACKGROUND

On August 14, 2009, WFB commenced the instant residential mortgage foreclosure action by filing a summons, complaint and a notice of pendency (hereinafter the commencement papers) with the Kings County Clerk’s office.

The complaint alleges in pertinent part that on July 1, 2003, Sylvester executed a note (the subject note) in favor of the WFB in the amount of $205,874.00 secured by a mortgage (the subject mortgage) on certain real property known as 1483 East 55th Street, Brooklyn, New York, Block 7880 Lot 27 (hereinafter the subject property). On April 27, 2007, the mortgage was modified or consolidated with another mortgage by a Consolidation, Extension and Modification Agreement (hereinafter CEMA) to form a single lien in the amount of $292,093.00 (hereinafter the CEMA mortgage). Thereafter, Sylvester defaulted on making payments due and owing on said note. WFB sent Sylvester a notice of his default and of its intent to accelerate the total amount due on the subject note if the default was not cured. Sylvester did not cure the default.

On or about September 3, 2009, Sylvester interposed an answer with counterclaim. Sylvester is the only defendant who has answered the complaint and who has submitted opposition to the instant motion.

At a status conference on the instant action conducted on December 12, 2013, Supreme Court Justice Knipel made a finding that more than one year had passed since joinder of issue and that the plaintiff had unreasonably neglected to prosecute the action. He issued an order dismissing the complaint and cancelling the notice of pendency pursuant to CPLR 3126 unless the plaintiff filed a note of issue or otherwise proceeds by motion for entry of judgment within 90 days. The order was entered on May 13, 2014.

Pursuant to CPLR 2221 (a), this Court issued an order referring the instant motion to Justice Knipel to address the first branch of WFB’s motion seeking to enlarge its time to avoid dismissal of the complaint pursuant to his order dated December 12, 2013 order. By order dated May 24, 2014, Justice Knipel vacated his prior order dated December 12, 2013 and referred the instant motion back to Part 52 to address the balance of the motion.

 

LAW AND APPLICATION

For the reasons set forth below, the Court grants that branch WFB’s motion seeking to amend the caption and denies the balance without prejudice.

WFB’s Motion to Substitute the John Doe Defendant

Through the affirmation of it counsel, WFB has demonstrated that Tarik Sylvester [FN1] was served the commencement papers and that there are no other “John Does” occupying the mortgaged premises. There is no opposition to this branch of WFB’s motion. Accordingly, its motion seeking to substitute John Doe with Tarik Sylvester is granted (Deutsche Bank Nat. Trust Co. v Islar, 122 AD3d 566 (2nd Dept 2014) citing CPLR 1024 and Flagstar Bank v Bellafiore, 94 AD3d 1044 at 1046 [2nd Dept 2012]).

WFB’s Motion to Appoint a Referee to Compute

RPAPL 1321 provides in pertinent part as follows:

If the defendant fails to answer within the time allowed or the right of the plaintiff is admitted by the answer, upon motion of the plaintiff, the court shall ascertain and determine the amount due, or direct a referee to compute the amount due to the plaintiff and to such of the defendants as are prior incumbrancers of the mortgaged premises, and to examine and report whether the mortgaged premises can be sold in parcels and, if the whole amount secured by the mortgage has not become due, to report the amount thereafter to become due.

When seeking an order of reference to determine the amount that is due on an encumbered property, a WFB must show its entitlement to a judgment. That entitlement may be shown by demonstrating defendant’s default in answering the complaint, or by the plaintiff showing entitlement to summary judgment or by showing that the defendant’s answer admits plaintiff’s right to a judgment (see RPAPL 1321; 1—2 Bruce J. Bergman, Bergman on New York Mortgage Foreclosures, § 2.01 [4] [k] [note: online edition]).As a preliminary matter the Court reviews WFB’s compliance with the mandatory pre-commencement notices prior to reviewing the requirements for the appointment of a referee. RPAPL 1303 was enacted in July 2006, as part of the Home Equity Theft Prevention Act (hereinafter HETPA) (see First Natl. Bank of Chicago v Silver, 73 AD3d 162 (2nd Dept 2010); Senate Introducer Mem. in Support, Bill Jacket, L. 2006, ch. 308, at 7—8) (Board of Directors of House Beautiful at Woodbury Homeowners Ass’n, Inc. v Godt, 96 AD3d 983 [2nd Dept 2012]). As relevant here, that section provides that “[t]he foreclosing party in a mortgage foreclosure action, involving residential real property shall provide notice to … any mortgagor if the action relates to an owner-occupied one-to-four family dwelling” (RPAPL 1303 [1] [a]) (Id.). The statute “requires the foreclosing party in a residential mortgage foreclosure action to deliver statutory-specific notice to the homeowner, together with the summons and complaint” (First Natl. Bank of Chicago v Silver, 73 AD3d at 165, 899 NYS2d 256). “[T]he foreclosing party has the burden of showing compliance therewith and, if it fails to demonstrate such compliance, the foreclosure action will be dismissed” (Id. at 166).

The full text of RPAPL 1303 (1) now reads:

The foreclosing party in a mortgage foreclosure action, which involves residential real property consisting of owner-occupied one-to-four-family dwellings shall provide notice to the mortgagor in accordance with the provisions of this section with regard to information and assistance about the foreclosure process (Countrywide Loans v Taylor, 17 Misc 3d 595 [NY Sup Ct Suffolk Co. 2007]).

The statutorily required language of the notice is set forth in RPAPL 1303 (3), which became effective February 1, 2007. The appearance and procedural details of the notice are set forth in RPAPL 1303 (2), which also became effective February 1, 2007 and which states:

The notice required by this section shall be delivered with the summons and complaint to commence a foreclosure action. The notice required by this section shall be in bold, fourteen-point type and shall be printed on colored paper that is other than the color of the summons and complaint, and the title of the notice shall be in bold, twenty-point type. The notice shall be on its own page.

 

In this action, the WFB’s summons and complaint and notice of pendency were filed with the County Clerk on August 4, 2009, after the effective date of RPAPL 1303, thereby requiring compliance with the notice provisions set forth in the statute (WMC Mortg. Corp. v Thompson, 24 Misc 3d 738 [NY Sup Ct Kings Co. 2009]). Given the explicit statutory requirements regarding the content, type size and paper color of the notice, the WFB must submit proper evidentiary proof to establish full compliance with the substantive and procedural requirements of RPAPL 1303.

CPLR 2214 (c) requires the moving party to furnish to the court all other papers not already in the possession of the court necessary to the consideration of the questions involved. Here the WFB has annexed affidavits of service attesting to service of the summons, complaint and RPAPL 1303 notice on the defendants. However, WFB did not annex a copy of the RPAPL 1303 notice that was purportedly sent to the defendants. Accordingly, the WFB did not provide a sufficient basis upon which the court may conclude as a matter of law that the WFB has complied with the statute (Countrywide Loans v Taylor, 17 Misc 3d 595 [NY Sup. Ct. Suffolk Co. 2007]).

Since WFB has failed to establish compliance with the notice requirements of RPAPL 1303, its application for an order of reference must be denied (Id.). While this also serves as a basis for denying WFB’s motion for an accelerated judgment in its favor, certain issues in WFB’s motion papers warrant discussion for the purposes of addressing them in any future application for the same relief.

WFB’s Motion to Strike Sylvester’s Answer

Motions to strike a pleading are generally associated with sanctions for disclosure violations pursuant to CPLR 3126. WFB seeks to strike Sylvester’s answer contending that it is a general denial and, as such, serves as an admission of all allegation in the complaint pursuant to CPLR 3018. WFB’s conclusion is erroneous. When a specific denial is mandated, a general denial is an admission of that which should have been specifically denied (see Duban v Platt, 23 AD2d 660 [2nd Dept 1965]). However, in this case there is no allegation of fact that requires a specific denial.

Rule 103 of the old (pre-1963) Rules of Civil Practice authorized a motion to strike a denial if it was found to be sham. The CPLR has no such motion. There is no motion to strike denials, whether because sham or frivolous or interposed in bad faith or anything else (see Abrahao v Perrault, 147 AD2d 824, 824-25 [3rd Dept 1989]).

Pursuant to CPLR 3211 (b) a party may move for judgment dismissing one or more defenses, on the ground that a defense is not stated or has no merit. However, a CPLR 3211 (b) motion cannot be used to strike general denials as contrasted with specific [*3]defenses such as those contained in CPLR 3018 [b] (City of Rochester v Chiarella, 65 NY2d 92 [1985]).

WFB’s Motion to Strike Sylvester’s Counterclaims

Contrary to the requirements of CPLR 2214, WFB’s motion to strike Sylvester’s counterclaims does not set forth the procedural vehicle being utilized, rendering it ambiguous. It is unclear whether it is a request for sanction requests pursuant to CPLR 3126, a request for summary judgment motion pursuant to CPLR 3212, or a motion to dismiss pursuant to CPLR 3211 (a). Assuming it is meant to be a summary judgment motion, it must be denied due to WFB’s failure to join issue with a reply. A motion for summary judgment may not be made before issue is joined (CPLR 3212 [a]; City of Rochester v Chiarella, 65 NY2d 92 [1985]). “The appropriate response to a counterclaim is a reply (CPLR 3011; Siegel, N.Y.Prac. § 229). It serves the same function with relation to a counterclaim that an answer serves to a complaint and the requirement is strictly adhered to” (Id.). Assuming it is a pre-answer motion to dismiss pursuant to CPLR 3211 (a), WFB did not set forth which section it is applying and how it is applied.

In light of the foregoing ambiguity, this branch of WFB’s motion is denied without prejudice.

WFB’s Motion for Summary Judgment

As previously indicated, WFB has not interposed a reply to Sylvester’s counterclaims, and has not joined issue with respect to same. Accordingly, WFB’s motion for summary judgment foreclosing on the subject proporty to satisfy WFB’s mortgage is denied without prejudice as premature (Enriquez v Home Lawn Care and Landscaping, Inc., 49 AD3d 496, 497 [2nd Dept 2008]).

CONCLUSION

The portion of WFB’s motion seeking to strike Sylvester’s answer is denied.That portion of WFB’s motion seeking to strike Sylvester’s counterclaims is denied without prejudice.

That portion of WFB’s motion seeking to summary judgment in its favor as against Sylvester is denied without prejudice.

That portion of WFB’s motion seeking to substitute John Doe with Tarik Sylvester is granted.

That portion of WFB’s motion seeking the appointment of a referee to compute pursuant to RPAPL 1321 is denied without prejudice.

The foregoing constitutes the decision and order of this Court.

Enter:

J.S.C.

Footnotes

Footnote 1:Despite the same last name it’s a different individual from Gaye Sylvester.

http://www.courts.state.ny.us/reporter/3dseries/2015/2015_50425.htm

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Chase Home Fin. LLC v Silver | NYSC –  Denied, Denied, Denied…The motion papers, however, do not contain any documents demonstrating that JPMC has authority to speak or act on behalf of CHF.

Chase Home Fin. LLC v Silver | NYSC – Denied, Denied, Denied…The motion papers, however, do not contain any documents demonstrating that JPMC has authority to speak or act on behalf of CHF.

Decided on March 23, 2015
Supreme Court, Kings County

Chase Home Finance LLC, Plaintiff,

against

Martin Silver A/K/A MARTIN SILBERSTEIN, ESTER SILBERSTEIN A/K/A ESTHER SILVER, REBECCA STERN, ABRAHAM STERN, MANUFACTURERS & TRADERS TRUST COMPANY, TAUB & SHOWMAN LLP, CITY OF NEW YORK ENVIRONMENTAL CONTROL BOARD AND CITY OF NEW YORK DEPARTMENT OF TRANSPORTATION PARKING VIOLATIONS BUREAU, and “JOHN DOE No.1” through “JOHN DOE #7”, the last seven names being fictitious and unknown to plaintiff, the person or parties intended being the persons or parties, if any, having or claiming an interest in or lien upon the mortgaged premises described in the complaint, Defendants.

27773/09

Atty for Plaintiff

Marianna Dalton, Esq.

187 East Main Street

Huntington, NY 11743

(631) 935-1616

Atty for Defendants

Stephen C. Silverberg, PLLC

626 RXR Plaza

Uniondale, NY 11556-0626 (516) 522-2575

Francois A. Rivera, J.

Recitation in accordance with CPLR 2219 (a) of the papers considered on the notice of motion of plaintiff Chase Home Finance LLC (hereinafter CHF or plaintiff), filed on September 9, 2013 under motion sequence number two, for an order: (1) striking the joint verified answer of defendants Martin Silver, Esther Silver and Rebecca Stern [FN1] (hereinafter the answering defendants) and then granting summary judgment in favor of CHF as against the answering defendants pursuant to CPLR 3212; (2) granting a default judgment against the remaining defendants pursuant to CPLR 3215; (3) appointing a referee to compute pursuant to RPAPL 1321; (4) substituting Ms. Silver [FN2] in place of “John Doe and Jane Doe # 1 through #7; and (5) substituting JPMorgan Chase Bank National Association (hereinafter JPMC) instead of CHF as plaintiff.

Notice of Motion

Affirmation in support

Affidavit of Merit

Exhibits A—Q

Proposed order of reference

Affirmation in compliance with Administrative Order 431/11

– Proposed order of reference

Two stipulations to adjourn the motion

Affirmation in opposition

Exhibits A—L

Notice of rejection of affirmation in opposition

BACKGROUND

On November 2, 2009, CHF commenced the instant residential mortgage foreclosure action by filing a summons, complaint and a notice of pendency with the Kings County Clerk’s office.

The complaint alleges in pertinent part, that on February 15, 2001, defendant Martin Silver (hereinafter “the mortgagor”) executed and delivered to Flagstar Bank, FSB (hereinafter Flagstar) a note in its favor in the principal sum of $275,000.00 (hereinafter the note). On that same date, he also executed and delivered to Flagstar a mortgage on certain real property known as 1068 East 2nd Street, Brooklyn, New York Block 6514 Lot 36 (hereinafter the subject property) to secure the note. On March 14, 2001, the mortgage was duly recorded in the Kings [*2]County City Register’s office (hereinafter KCR). On November 28, 2001, Flagstar assigned the note and mortgage to Federal National Mortgage Association (hereinafter FNMA). On February 25, 2002, Flagstar’s assignment of the mortgage to FNMA was recorded with the KCR. On August 23, 2003, Chase Manhattan Mortgage Corporation, as attorney in fact for FNMA assigned the mortgage to JPMC. On April 19, 2004, FNMA’s assignment to JPMC was recorded with the KCR.

On November 25, 2003, the mortgagor executed and delivered to JPMorgan Chase a second note (hereinafter the second note) in the principle sum of $7,396.24. On that same date, he also executed and delivered to JPMorgan Chase a second mortgage (hereinafter the second mortgage) to secure the second note. On April 19, 2004, the second mortgage was duly recorded in the KCR.

On November 25, 2003, the note, mortgage, second note and second mortgage were consolidated to from a single lien in the amount of $275,000.00 pursuant to a consolidation, extension and modification agreement (hereinafter CEMA). On April 19, 2004, the CEMA was recorded with the KCR. On November 16, 2006, the CEMA was assigned by JPMC to CHF. On December 1, 2006, this CEMA assignment was recorded with the KCR.

 

CHF alleges that the mortgagor failed to make payments when due and defaulted on the CEMA. Thereafter, CHF accelerated the note and commenced the instant action based on the mortgagor’s default. CHF further alleges that the answering defendants are the only parties who answered the complaint and who have opposed the instant motion.

By a joint verified answer dated January 21, 2010, the answering defendants have joined issue. Their answer pleads thirteen affirmative defenses, including a claim that the plaintiffs lacks standing.

LAW AND APPLICATION

Application to Reject Opposition Papers

As a preliminary matter, CHF returned the answering defendants opposition papers with a cover letter denominated as a Notice of Rejection. The cover letter stated that the time to submit opposition papers was January 10, 2014, and that CHF was rejecting the papers as untimely. At oral argument of the instant motion, CHF requested that the court reject the answering defendants’ opposition papers on that basis.

Contrary to the requirements of CPLR 2214, CHF did not set forth the legal or factual basis for its conclusion that the opposition papers were untimely served. It is noted that the complete set of submitted motion papers included two stipulations between CHF and the answering defendants adjourning the return date of the motion from November 1, 2013 to December 6, 2013 and from December 6, 2013 to January 10, 2014.Assuming, for the sake of argument, that CHF correctly determined that January 10, 2014 was the deadline for the answering defendants to serve it with opposition papers, the answering defendants’ affidavit of service of its opposition papers establishes that the papers were indeed served on CHF’s counsel on that date. CPLR 2103 governs the service of papers in a pending action including the service of motion papers and provides in pertinent part that service is deemed complete upon mailing (see CPLR 2103 (b) (2); see also Unigard Ins. Group v State, 286 AD2d 58 [2nd Dept 2001]). Therefore, CHF has not shown that the opposition papers were served late.

Furthermore, the court has the discretion to consider late opposition papers, provided it [*3]affords the movant time to submit reply papers (Kavakis v Total care Systems, 209 AD2d 480 [2nd Dept 1994]). CHF did not ask for time to submit a reply and certainly did not and could not show that it would suffer any prejudice by the court’s acceptance of allegedly late opposition papers (Prato v Arzt, 79 AD3d 622 [1st Dept 2010] citing Dinnocenzo v Jordache Enters., 213 AD2d 219 [1st Dept 1995]). Accordingly, the Court will consider the answering defendant’s opposition papers.

Motion to Substitute John Doe and Jane Doe defendants

CHF seeks an order substituting Ms. Silver for John Doe and Jane Doe #1 through #7. This application is supported by an affirmation of CHF’s counsel attesting to the fact that Ms. Silver was served with process and no other John Doe or Jane Doe defendants are necessary to the action. Inasmuch, as there is no opposition to this branch, CHF’s motion, and there is no prejudice to any party, the request is granted.

Motion for accelerated judgments and appointment of a referee

CHF also seeks an order: granting summary judgment as against the answering defendants; striking their answer; granting a default judgment against all other defendants and appointing a referee. In residential mortgage foreclosure actions, a plaintiff seeking summary judgment establishes its prima facie entitlement to judgment as a matter of law by producing the mortgage and the unpaid note, and evidence of the default (Midfirst Bank v Agho, 121 AD3d 343 [2nd Dept 2014]).

RPAPL 1321 provides in pertinent part as follows:

If the defendant fails to answer within the time allowed or the right of the plaintiff is admitted by the answer, upon motion of the plaintiff, the court shall ascertain and determine the amount due, or direct a referee to compute the amount due to the plaintiff and to such of the defendants as are prior incumbrancers of the mortgaged premises, and to examine and report whether the mortgaged premises can be sold in parcels and, if the whole amount secured by the mortgage has not become due, to report the amount thereafter to become due.

When seeking an order of reference to determine the amount that is due on an encumbered property, a plaintiff must show its entitlement to a judgment. That entitlement may be shown by demonstrating defendant’s default in answering the complaint, or by the plaintiff showing entitlement to summary judgment or by showing that the defendant’s answer admits plaintiff’s right to a judgment (see RPAPL 1321; 1—2 Bruce J. Bergman, Bergman on New York Mortgage Foreclosures, § 2.01[4][k] [note: online edition]).

On a motion for leave to enter a default judgment pursuant to CPLR 3215, the movant is required to submit proof of service of the summons and complaint, proof of the facts constituting the claim, and proof of the defaulting party’s default in answering or appearing (U.S. Bank Nat. Ass’n v Poku, 118 AD3d 980 [2nd Dept 2014] citing CPLR 3215[f]; U.S. Bank, N.A. v Razon, 115 AD3d 739 [2nd Dept 2014]).

Mandatory Pre-Commencement Notices in Foreclosure Actions

As a preliminary matter the Court reviews plaintiff’s compliance with the mandatory pre-commencement notices prior to reviewing the requirements for an accelerated judgment or for the appointment of a referee. In this matter, CHF’s motion papers reveals deficiencies in the [*4]pre-commencement notice requirements of RPAPL 1303 and 1304 as set forth below.

RPAPL 1303 was enacted in July 2006, as part of the Home Equity Theft Prevention Act (hereinafter HETPA) (see First Natl. Bank of Chicago v Silver, 73 AD3d 162 [2nd Dept 2010]; Senate Introducer Mem. in Support, Bill Jacket, L. 2006, ch. 308, at 7—8; Board of Directors of House Beautiful at Woodbury Homeowners Ass’n, Inc. v Godt, 96 AD3d 983 [2nd Dept 2012]). As relevant here, that section provides that “[t]he foreclosing party in a mortgage foreclosure action, involving residential real property shall provide notice to … any mortgagor if the action relates to an owner-occupied one-to-four family dwelling” (RPAPL 1303 [1] [a]) (Id.). The statute “requires the foreclosing party in a residential mortgage foreclosure action to deliver statutory-specific notice to the homeowner, together with the summons and complaint” (First Natl. Bank of Chicago v Silver, 73 AD3d at 165). “[T]he foreclosing party has the burden of showing compliance therewith and, if it fails to demonstrate such compliance, the foreclosure action will be dismissed” (Id. at 166).

The statutorily required language of the notice is set forth in RPAPL 1303 (3), which became effective February 1, 2007. The appearance and procedural details of the notice are set forth in RPAPL 1303 (2), which also became effective February 1, 2007 and which states:

The notice required by this section shall be delivered with the summons and complaint to commence a foreclosure action. The notice required by this section shall be in bold, fourteen-point type and shall be printed on colored paper that is other than the color of the summons and complaint, and the title of the notice shall be in bold, twenty-point type. The notice shall be on its own page.

 

CHF’s summons and complaint and notice of pendency were filed with the Kings County Clerk’s office on November 2, 2009, after the effective date of RPAPL 1303, thereby requiring compliance with the notice provisions set forth in the statute (WMC Mortg. Corp. v Thompson, 24 Misc 3d 738 [NY Sup Ct Kings Co. 2009]). Given the explicit statutory requirements regarding the content, type size and paper color of the notice, the plaintiff must submit proper evidentiary proof to establish full compliance with the substantive and procedural requirements of RPAPL 1303.

CPLR 2214 (c) requires the moving party to furnish to the court all other papers not already in the possession of the court necessary to the consideration of the questions involved. Here the plaintiff has annexed affidavits of service attesting to service of the summons, complaint and RPAPL 1303 notice on the defendants. However, plaintiff did not annex a copy of the RPAPL 1303 notice that was purportedly sent to the defendants. Accordingly, the plaintiff did not provide a sufficient basis upon which the court may conclude as a matter of law that the plaintiff has complied with the statute (Countrywide Loans v Taylor, 17 Misc 3d 595 [NY Sup. Ct. Suffolk Co. 2007]).

RPAPL 1304 provides that, “at least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower, including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower in at least fourteen-point type” (RPAPL 1304 [1]; Deutsche Bank Nat. Trust Co. v Spanos, 102 AD3d 909, 910 [2nd Dept 2013]). RPAPL 1304 sets forth the requirements for the content of such notice (see RPAPL 1304 [1]), and further provides that such notice must be sent by [*5]registered or certified mail, and also by first-class mail, to the last known address of the borrower (RPAPL 1304 [2]; Deutsche Bank Nat. Trust Co. v Spanos, 102 AD3d 909, 910 [2nd Dept 2013]).

“[P]roper service of RPAPL 1304 notice on the borrower or borrowers is a condition precedent to the commencement of a foreclosure action, and the plaintiff has the burden of establishing satisfaction of this condition” (Deutsche Bank Nat. Trust Co. v Spanos, 102 AD3d 909, 910 [2nd Dept 2013] citing, Aurora Loan Servs., LLC, 85 AD3d at 106). If the foreclosing party fails to establish that the statutory notices were satisfied the foreclosure action will be dismissed (First Nat. Bank of Chicago, 73 AD3d 162 [2nd Dept. 2010]). Furthermore, failure to comply with the notice requirements are not required to be plead as affirmative defenses in an answer (Id).

“Such notice shall be sent by the lender, assignee or mortgage loan servicer in a separate envelope from any other mailing or notice. Notice is considered given as of the date it is mailed. RPAPL 1304 (2) specifically requires that the notice shall contain a list of at least five housing counseling agencies as designated by the division of housing and community renewal, that serve the region where the borrower resides.

The only document which addressed service of the RPAPL 1304 notice was the affirmation of CHF’s counsel. CHF’s counsel stated in paragraph fifteen of her affirmation that the requisite RPAPL 1304 pre-foreclosure notice was sent to the mortgagor on September 25, 2008 and that a copy of the notice is annexed as exhibit G to the motion. Exhibit G contained a cover letter addressed to Martin Silver at the subject property followed by a document containing some of the language required by RPAPL 1304. The exhibit, however. does not include a list of housing counseling agencies.

Consequently, the notices sent by the plaintiff were not in compliance with the strict statutory requirements of RPAPL 1304.

Since the plaintiff has failed to establish compliance with the notice requirements of RPAPL 1303 and 1304, its application for summary judgment, a default judgment and an order of reference must be denied (First Nat. Bank of Chicago, 73 AD3d 162 [2nd Dept 2010]; see also Countrywide Loans v Taylor, 17 Misc 3d 595 [NY Sup. Ct. Suffolk Co. 2007]).

Motion to substitute the plaintiff

CPLR 1018 provides that upon any transfer of interest, the action may be continued by or against the original parties unless the court directs the person to whom the interest is transferred to be substituted or joined in the action.

“CPLR 1018 addresses the situation in which a party transfers its interest in the subject matter of the action to another person while the action is pending, as, for example, by assignment of the claim (see NY Gen. Oblig. Law § 13—101) or conveyance of the relevant property. CPLR 1018 authorizes continuation of the action by or against the original party—the assignor/transferor—without the need for substitution of the assignee/transferee” (Alexander, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 1018).

CHF seeks an order substituting JPMC as plaintiff and had submitted numerous annexed assignments and an affidavit of Kristina Mitkvski (hereinafter Mitkviski) in support of this branch of the motion. Mitkviski, described herself as the Vice-president of JPMC and the servicer of CHF. The motion papers, however, do not contain any documents demonstrating that [*6]JPMC has authority to speak or act on behalf of CHF.

In the interest of judicial economy, the Court did not continue to review CHF’s motion papers for problems after discovering the above mentioned issues. In the event that CHF seeks the same relief in a subsequent motion, it is directed to annex the instant decision and order with its motion papers.

CONCLUSION

That branch of CHF’s motion which seeks an order striking the answer of the answering defendants and granting summary judgment in its favor as against them is denied without prejudice.

That branch of CHF’s motion which seeks an order granting a default judgment against all other defendants is denied without prejudice.

That branch of CHF’s motion which seeks an order appointing a referee to compute is denied without prejudice.

That branch of CHF’s motion which seeks to amend the caption by substituting Ms. Silver as defendant instead of John Doe and Jane Doe defendants #1 through #7 is granted.

That branch of CHF’s motion seeking an order substituting JPMC as plaintiff is denied without prejudice.

The foregoing constitutes the decision and order of the court.

ENTER____________________________________x

J.S.C.
Footnotes

Footnote 1:The court has arbitrarily chosen to use one name when referring to defendants Martin Silver, Esther Silver and Rebecca Stern, although each of them is known by other names.

Footnote 2:The affidavits of service of the commencement papers annexed as exhibit J to CHF’s motion papers makes clear that Ms. Silver and answering defendant Esther Silver are different individuals.

http://www.courts.state.ny.us/reporter/3dseries/2015/2015_50424.htm

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Barney Frank drops a bombshell: How a shocking anecdote explains the financial crisis

Barney Frank drops a bombshell: How a shocking anecdote explains the financial crisis

SALON-

Barney Frank has a new autobiography out. He’s long been one of the nation’s most quotable politicians. And Washington lives in perpetual longing for intra-party conflict.

So why has a critical revelation from Frank’s book, one that implicates the most powerful Democrat in the nation, been entirely expunged from the record? The media has thus far focused on Frank’s wrestling with being a closeted gay congressman, or his comment that Joe Biden “can’t keep his mouth shut or his hands to himself.” But nobody has focused on Frank’s allegation that Barack Obama refused to extract foreclosure relief from the nation’s largest banks, as a condition for their receipt of hundreds of billions of dollars in bailout money.

The anecdote comes on page 295 of “Frank,” a title that the former chair of the House Financial Services Committee holds true to throughout the book. The TARP legislation included specific instructions to use a section of the funds to prevent foreclosures. Without that language, TARP would not have passed; Democratic lawmakers who helped defeat TARP on its first vote cited the foreclosure mitigation piece as key to their eventual reconsideration.

[SALON]

Image of Barney Frank (Credit: AP/J. Scott Applewhite)

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FED and OCC assert bank examination privilege in mortgage-backed securities class action

FED and OCC assert bank examination privilege in mortgage-backed securities class action

Lexology-

On March 23, the Federal Reserve and the Office of the Comptroller of the Currency – both non-parties in the suit – filed briefs requesting that a district court reject a motion to compel discovery of over 30,000 documents held by a large bank. Arguing that the documents contain confidential supervisory information, the regulators asserted the bank examination privilege – “a qualified privilege that protects communications between banks and their examiners in order to preserve absolute candor essential to the effective supervision of banks.” As for scope, the regulators argued that the privilege covers the documents because they provide agency opinion, not merely fact, and that any factual information was nonetheless “inextricably linked” with their opinions. Additionally, they contended that the privilege is not strictly limited to communications from the regulator to the bank – instead, it may also cover communications made from the bank to the regulator and communications within the bank. As for procedure, the regulators claimed that a plaintiff is required to request the disclosure of privileged documents through administrative processes before seeking judicial relief, a requirement they contend exists even where a defendant bank also holds copies of the documents. Finally, the regulators argued in the alternative that the lead plaintiff has not shown good cause to override the qualified privilege, as the interests of the government in protecting the supervisory information outweighs the interest of the plaintiffs in production.

[LEXOLOGY]

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Guess What Happened When JPMorgan’s CEO Visited Elizabeth Warren’s Office

Guess What Happened When JPMorgan’s CEO Visited Elizabeth Warren’s Office

Suddenly Dimon got quiet. He leaned back and slowly smiled. “So hit me with a fine. We can afford it.”


HuffPO-

A meeting between Sen. Elizabeth Warren (D-Mass.) and Jamie Dimon deteriorated almost immediately after the JPMorgan Chase & Co. CEO visited the recently elected senator and consumer advocate at her Capitol Hill office in 2013.

In a new afterword for the release of the paperback version of her book A Fighting Chance, Warren recalls that the tenor of the conversation between the two policy adversaries soured when Dimon complained about financial regulations that she has supported:

[HUFFINGTONPOST]

image: www.politico.com

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Foreclosure victims to demand money from settlements

Foreclosure victims to demand money from settlements

Delaware Online-

People who lost homes to foreclosure will rally Tuesday to demand they get a share of Delaware’s settlement money stemming from the 2008 financial meltdown.

Victims Stand Against Foreclosure Everywhere is hosting the event to gather support from public officials and to identify and connect victims of foreclosure.

“We still haven’t heard any definitive response to our pleas to legislators to fund programs [for foreclosure victims],” said Penny Dryden, a VSAFE organizer and executive director of the nonprofit Community Housing and Empowerment Connections. “We thought this might make a stronger pitch.”

[DELAWARE ONLINE]

image: thinkprogress.org

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Foreclosure to Home Free, as 5-Year Clock Expires

Foreclosure to Home Free, as 5-Year Clock Expires

NYT-

In September, Susan Rodolfi celebrated an unusual anniversary: five years of missed mortgage payments.

She is like a ghost of the housing market’s painful past, one of thousands of Americans who have skipped years of mortgage payments and are still living in their homes.

Now a legal quirk could bring a surreal ending to her foreclosure case and many others around the country: They may get to keep their homes without ever having to pay another dime.

The reason, lawyers for homeowners argue, is that the cases have dragged on too long.

[NEW YORK TIMES]

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Posted in STOP FORECLOSURE FRAUD1 Comment

DFS about to agree on a settlement with Deutsche Bank for its alleged part in the manipulation of LIBOR

DFS about to agree on a settlement with Deutsche Bank for its alleged part in the manipulation of LIBOR

The Economist-

DESPICABLE criminals, eye-popping sums of money and doughty defenders of the law are a marketable mix, as any comic-book author can attest. They also tend to feature prominently in the speeches of Benjamin Lawsky, the head of New York’s Department of Financial Services (DFS). The agency is said to be about to agree on a settlement with Deutsche Bank for its alleged part in the manipulation of LIBOR, a benchmark interest rate. If it does, expect another stentorian statement.

The DFS was created from the merger of two existing state regulators in 2011, at the behest of Andrew Cuomo, New York’s governor. He appointed Mr Lawsky, his former chief of staff, to run it. Although the Federal Reserve, the Federal Deposit Insurance Corporation and federal prosecutors typically take the lead in keeping banks honest, any big international bank must have an operation in New York—and it is Mr Lawsky who hands out most licences for that. This has allowed the DFS to elbow in on investigations of all manner of wrongdoing, and along with America’s national regulators, extract massive fines.

[THE ECONOMIST]

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Nomura, RBS ‘crap’ emails come into play in $1 billion mortgage bond trial

Nomura, RBS ‘crap’ emails come into play in $1 billion mortgage bond trial

Yahoo-

NEW YORK (Reuters) – In 2007, a Royal Bank of Scotland Group Plc employee emailed his boss with his view of a sample of mortgages underlying a bond that the bank was underwriting: “This one is crap.”

Asked about it this week in Manhattan federal court, Brian Farrell, the employee, said he did not recall the deal. But a U.S. regulator cited the email as evidence that Nomura Holdings Incand RBS made false statements about mortgage securities they sold to Fannie Mae and Freddie Mac.

The email and others like it are part of a $1.1 billion lawsuit by the Federal Housing Finance Agency against Nomura and RBS that went to trial this month. The messages add to a litany of arguably embarrassing electronic musings by bank employees that have resurfaced in litigation over the 2008 financial crisis.

[YAHOO]

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Wall Street banks threaten to withhold campaign funds from Dems in tantrum against Elizabeth Warren

Wall Street banks threaten to withhold campaign funds from Dems in tantrum against Elizabeth Warren

If this doesn’t sound the alarm and call into question of past campaign funds, then I don’t know what to think of this capture?


Raw Story-

Big Wall Street banks are so upset with Democratic Senator Elizabeth Warren’s call for them to be broken up that some have discussed withholding campaign donations to Senate Democrats in symbolic protest, sources familiar with the discussions said.

Representatives from Citigroup, JPMorgan, Goldman Sachs and Bank of America, have met to discuss ways to urge Democrats, including Warren and Ohio Senator Sherrod Brown, to soften their party’s tone toward Wall Street, sources familiar with the discussions said this week.

Bank officials said the idea of withholding donations was not discussed at a meeting of the four banks in Washington but it has been raised in one-on-one conversations between representatives of some of them. However, there was no agreement on coordinating any action, and each bank is making its own decision, they said.

[RAW STORY]

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Posted in STOP FORECLOSURE FRAUD2 Comments

Ocwen offering indemnification to company directors and executive officers

Ocwen offering indemnification to company directors and executive officers

Is more legal trouble imminent?


Housing Wire-

By its own admission, Ocwen Financial (OCN) is facing 21 pending investigations in 15 different states, is currently facing delisting by New York Stock Exchange for delaying the release of its annual report, and has run afoul of investors and homeowners alike.

Either in spite of or because of those issues, Ocwen said Thursday that it is offering indemnification agreements to each of the company’s directors and executive officers.

Ocwen disclosed the pending indemnification agreements in a filing with the Securities and Exchange Commission.

[HOUSING WIRE]

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Posted in STOP FORECLOSURE FRAUD3 Comments

Foreclosure probe digging deeper into title work done on cases by Colorado attorneys who controlled the bulk of the business during the foreclosure crisis

Foreclosure probe digging deeper into title work done on cases by Colorado attorneys who controlled the bulk of the business during the foreclosure crisis

A little behind times as we all know most Mills own or control their own title companies.


Denver Post-

State investigators digging into Colorado attorneys who controlled the bulk of the business during the foreclosure crisis are taking a closer look at a title insurance company with ties to those law firms.

In a Denver District Court filing, the Colorado Attorney General’s Office said a company with connections to former foreclosure powerhouse Lawrence Castle “might be improperly charging an additional $175 for title commitments” it never actually issued to consumers.

In a related development, Castle said in a separate court filing for the same case that he’s considering suing state investigators for allegedly causing federal mortgage agencies to dump his law firm from handling its cases, effectively forcing the state’s biggest foreclosure processor to close shop.

[DENVER POST]

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Posted in STOP FORECLOSURE FRAUD1 Comment

Servicers in DOJ’s Crosshairs Following JPM Robo-Signing Settlement

Servicers in DOJ’s Crosshairs Following JPM Robo-Signing Settlement

Quit slapping their wrists and put them in jail. Then maybe just maybe they’ll learn from committing any type of fraud. You’re the enablers.


National Mortgage News-

Mortgage servicers were supposed to have stopped robo-signing foreclosure documents when state and federal authorities cracked down on the practice years ago, but it seems some have not learned their lesson.

While only JPMorgan Chase has been cited for recent robo-signing infractions, Clifford J. White 3rd, the head of a Justice program that oversees consumer bankruptcies, says he is seeing evidence of other servicers not following proper protocols when it comes to dealing with homeowners who have filed for bankruptcy. That could include not just robo-signing documents, but also failing to inform homeowners of mortgage payment increases or charging excessive loan-default fees.

Such abuses violate a 2012 settlement between law enforcement officials and the nation’s largest servicers and White is putting other servicers on notice that they too will be punished if they flout bankruptcy rules.

[NATIONAL MORTGAGE NEWS]

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Posted in STOP FORECLOSURE FRAUD1 Comment

Mains v. Citibank (State AND Federal Litigations) | Case Filings and Commentary | FDIC Employee Quits and Goes Public With Complaint Against Chase, WAMU

Mains v. Citibank (State AND Federal Litigations) | Case Filings and Commentary | FDIC Employee Quits and Goes Public With Complaint Against Chase, WAMU

H/T LivingLies

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
NEW ALBANY DIVISION

ERIC P. MAINS
PLAINTIFF

vs

CITIBANK, N.A. as TRUSTEE for the W AMU-HE2 Trust
CHASE BANK, N.A.
CYNTHIA RILEY
NELSON & FRANKENBERGER, P.C.
Christine A. SAUERER
JODI SOBOTTA
BLACK KNIGHT Financial Services, LLC (formerly LPS)
WASHINGTON MUTUAL BANK
BOSE MCKINNEY & EVANS, LLP; and
UNKNOWN JOHN DOE’S
DEFENDANTS

Excerpts:
Mains discovered Cynthia Riley is one overwhelmingly productive
and multi-talented former bank officer. Apparently she was even
capable of endorsing hundreds of loan documents a day, and in Mains’
case, even after she was no longer employed by Washington Mutual
Bank (See Exhibit 5).
. . .
58. Per her deposition, in November 2006 Cynthia Riley was laid off from
WAMU, and was never again employed in the Note Review Department of
WAMU nor at JPMorgan Chase Bank, NA.
. . .
122. As discussed Supra in this complaint, In addition to misrepresenting the terms of
the Mains loan, WAMU never disclosed adequately the terms of the loan as actually
structured. Mains rescinded his loan effective February 27,2015 by giving proper
notice as required under TILA. The Defendants whom are required to respond within 20
days of the notice as claimed creditors and owners of his loan have failed to do so,
effectively waiving rights they might claim.

[…]

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Couple face foreclosure on home they sold in 1994

Couple face foreclosure on home they sold in 1994

Orlando Sentinel-

A recent knock on the door of Sheridon and Susan Turner’s suburban home delivered news that shocked the elderly couple: Wells Fargo was suing them for foreclosure on a home they sold 21 years ago.

The Turners sold the house on Hidden Lake Drive in Sanford to homebuyer Alton Ricks in July 1994 and transferred their assumable mortgage to him as part of the sale, which was processed by an Orlando real estate law firm. Until the process server knocked on their door, they had heard nothing for decades about the house, the mortgage, or the man who bought it from them.

“Needless to say, we were shocked,” said Sheridon Turner, 72. “That lawsuit could ruin my credit. If we had the mortgage, why wouldn’t the bank send me a notice when someone stopped making the payments last August?”

[ORLANDO SENTINEL]

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Lloyd v. The Bank of New York Mellon | FL 4DCA – it cannot be said that the assignment of the note and the mortgage took place “prior to instituting the complaint.”

Lloyd v. The Bank of New York Mellon | FL 4DCA – it cannot be said that the assignment of the note and the mortgage took place “prior to instituting the complaint.”

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

SUSAN LLOYD and JAMES LLOYD,
Appellants,

v.

THE BANK OF NEW YORK MELLON f/k/a THE BANK OF NEW YORK, as Trustee for the Certificate Holders of CWABS, INC., Asset-Backed Certificates, Series 2006-6,
Appellee.

No. 4D13-3799

[March 25, 2015]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Kenneth D. Stern, Judge; L.T. Case No. 502009CA 032165AW.

Bonnie S. Satterfield, Coral Springs, for appellants.
David W. Rodstein of Padula Hodkin, PLLC, Boca Raton, for appellee.

KLINGENSMITH, J.

Susan and James Lloyd (“Defendants”) executed a mortgage agreement and a promissory note with ACCU Funding Corporation (“ACCU”) for a loan, but later defaulted on their mortgage by failing to make any payments. The Bank of New York Mellon f/k/a The Bank of New York, as Trustee for the Certificate Holders of CWABS Inc., Asset-Backed Certificates, Series 2006-6 (“Plaintiff”) filed its complaint against Defendants containing one count for foreclosure of the mortgage and one count to enforce a lost instrument. Defendants claim the Plaintiff failed to prove standing to bring this action. We agree.

A copy of the mortgage agreement between Defendants and ACCU was attached to the complaint, along with a copy of the promissory note bearing an undated blank endorsement from ACCU. Before trial, the Plaintiff filed the original promissory note with the court. The endorsement in blank on the version of the note filed with the initial complaint was altered on the second version of the note, to reflect an endorsement from ACCU to Countrywide Bank, N.A.1

Along with the original note, Plaintiff filed an assignment of mortgage from ACCU to Plaintiff dated one month after suit was filed, although the document also stated that the assignment was intended to “relate back” to the month preceding Plaintiff’s filing of the initial complaint. The trial court ruled that Plaintiff had standing to file the lawsuit, and entered a final judgment of foreclosure in favor of Plaintiff. We review the sufficiency of the evidence to prove standing to bring a foreclosure action de novo. Boyd v. Wells Fargo Bank, N.A., 143 So. 3d 1128, 1129 (Fla. 4th DCA 2014).

“A crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose.” See McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). Standing must exist at the time the foreclosure suit is filed. Id.; see also Vidal v. Liquidation Props., Inc., 104 So. 3d 1274, 1276 (Fla. 4th DCA 2013); GMAC Mortg., LLC v. Choengkroy, 98 So. 3d 781, 781 (Fla. 4th DCA 2012). A plaintiff may satisfy this burden by submitting “the note bearing a special endorsement in favor of the plaintiff, an assignment from payee to the plaintiff or an affidavit of ownership proving its status as holder of the note.” Rigby v. Wells Fargo Bank, N.A., 84 So. 3d 1195, 1196 (Fla. 4th DCA 2012).

When a plaintiff asserts standing based on an undated endorsement of the note, it must show that the endorsement occurred before the filing of the complaint through additional evidence, such as the testimony of a litigation analyst. See Sosa v. U.S. Bank Nat’l Ass’n, 153 So. 3d 950, 951 (Fla. 4th DCA 2014). In Sosa, this court held the bank failed to establish standing, because its litigation analyst did not clearly testify as to when the bank became the owner of the note. Id. at 951-52. Where a later-filed promissory note does not include the date upon which the endorsement was made, the plaintiff must provide “record evidence proving that it had the right to enforce the note on the date the complaint was filed.” McLean, 79 So. 3d at 174.

1 Where the endorsement on the promissory note attached to the initial complaint had nothing written on the “pay to the order of” line, that space on the original note contained a “Countrywide Bank, N.A.” stamp. None of the endorsements on either version of the note were dated, and there is no other information in the record that sheds any light on when these endorsements were made.

Here, Plaintiff called a witness who testified that while assignments do not always strictly occur on the dates shown on the document, he was unable to say whether the note attached to the initial complaint was the most recent copy of that document, and could only assume that was the case. He also did not provide any information definitively establishing that Plaintiff had possession of the note prior to the time it filed its initial complaint. As a result, Plaintiff was unable to prove it had “standing to bring a mortgage foreclosure complaint by establishing an assignment or equitable transfer of the note and mortgage prior to instituting the complaint.” Joseph v. BAC Home Loans Servicing, LP, No. 4D12-4137, 2015 WL 71842, at *1 (Fla. 4th DCA Jan. 7, 2015) (emphasis added) (citing McLean, 79 So. 3d at 173).

Plaintiff’s evidence supporting its claim that the assignment of the mortgage “related back” to before the suit commenced was also insufficient to prove standing in this case. The witness testified that he did not have any information, other than the document itself, to verify when the assignment took place. In situations where mortgage assignments have been back-dated to pre-date the filing of the initial complaint, this court has stated that:

[T]wo inferences can be drawn from the effective date language. One could infer that ownership of the note and mortgage were equitably transferred [on the earlier date], but one could also infer that the parties to the transfer were attempting to backdate an event to their benefit. Because the language yields two possible inferences, proof is needed as to the meaning of the language, and a disputed fact exists.
Vidal, 104 So. 3d at 1277 (footnote omitted).

As such, “[a]llowing assignments to be retroactively effective would be inimical to the requirements of pre-suit ownership for standing in foreclosure cases.” Id. at 1277 n.1.

Because neither the information included in the record nor the witness’s testimony resolved the issue of when the assignments to the Plaintiff occurred, it cannot be said that the assignment of the note and the mortgage took place “prior to instituting the complaint.” Joseph, 2015 WL 71842, at *1 (citing McLean, 79 So. 3d at 173). Since the trial court’s conclusion that Plaintiff had standing to foreclose is not supported by competent substantial evidence, we hereby reverse the final judgment of foreclosure entered in favor of Plaintiff, and remand this case to the trial court for entry of a judgment in favor of the Defendants. De Groot v.

Sheffield, 95 So. 2d 912, 916 (Fla. 1957) (stating that “the evidence relied upon to sustain the ultimate finding should be sufficiently relevant and material that a reasonable mind would accept it as adequate to support the conclusion reached”).

Reversed and Remanded with instructions.

GROSS and CONNER, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

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Matthews v. FANNIE MAE (FNMA) | FL 4DCA – unendorsed note payable to Bank of America and not to FNMA attached to complaint and at trial the “original” note with an undated blank indorsement was entered

Matthews v. FANNIE MAE (FNMA) | FL 4DCA – unendorsed note payable to Bank of America and not to FNMA attached to complaint and at trial the “original” note with an undated blank indorsement was entered

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

PAUL G. MATTHEWS and MARYELLEN L. MATTHEWS,
Appellants,

v.

FEDERAL NATIONAL MORTGAGE ASSOCIATION,
Appellee.

No. 4D13-4645

[March 25, 2015]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Howard Harrison, Senior Judge; L.T. Case No. 502010CA003425XXXXMB.

Paul G. Matthews and Maryellen L. Matthews, Tequesta, pro se.
K. Denise Haire and Joseph F. Poklemba of Blank Rome, LLP, Boca Raton, for appellee.

CIKLIN, J.

The appellants challenge a final judgment of foreclosure entered after a non-jury trial, and argue that the plaintiff below, Federal National Mortgage Association (“Fannie Mae”), failed to establish standing at inception of the suit. We agree and reverse.

In February 2010, Fannie Mae brought a mortgage foreclosure suit against the appellants, alleging that it was the “present designated holder of the note and mortgage with authority to pursue the present action.” The copy of the note attached to the complaint identified Bank of America, N.A. (“Bank of America”), as the lender. The note was not endorsed.1

1 Section 673.2051, Florida Statutes (2010), defines endorsement in part as follows:

(1) If an indorsement is made by the holder of an instrument, whether payable to an identified person or payable to bearer, and the indorsement identifies a person to whom it makes the instrument
2 During trial, Fannie Mae introduced the original note into evidence. This note contained an undated blank endorsement by Bank of America. Fannie Mae also introduced into evidence a notarized assignment of mortgage and note by Bank of America to Fannie Mae. The assignment was executed on March 18, 2010, but provided for an effective (“back”) date of January 27, 2010. At trial, an employee of Bank of America testified that he did not know how Fannie Mae obtained ownership of the underlying note.

Ultimately, the trial court ruled in favor of Fannie Mae and entered a final judgment of foreclosure based on this evidence.

On appeal, the appellants argue that Fannie Mae failed to establish standing at the inception of the suit. In response, Fannie Mae relies on its submission of the original note, the assignment, and the testimony of its witness as evidence of standing.

 

“A de novo standard of review applies when reviewing whether a party has standing to bring an action.” Boyd v. Wells Fargo Bank, N.A., 143 So. 3d 1128, 1129 (Fla. 4th DCA 2014) (citation omitted). See also Lacombe v. Deutsche Bank Nat’l Trust Co., 149 So. 3d 152, 153 (Fla. 1st DCA 2014) (“We review the sufficiency of the evidence to prove standing to bring a foreclosure action de novo.” (citing Dixon v. Express Equity payable, it is a “special indorsement.” When specially indorsed, an instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person. . . .
(2) If an indorsement is made by the holder of an instrument and it is not a special indorsement, it is a “blank indorsement.” When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed.

We use the spelling “endorsement,” but we recognize that “indorsement” is a proper variation. Although Black’s Law Dictionary lists “endorsement” as a variation of “indorsement,” The Merriam-Webster Dictionary takes a contrary position. Compare Black’s Law Dictionary 789 (8th ed. 2004) with Endorsement Definition, Merriam-Webster.com, http:// www.merriam-webster.com/dictionary/endorsement (last visited February 18, 2015). We are not the first court to engage in an aside in order to address the variations on the spelling, and we note that the reasons that have been given by courts for their preferred spelling are even more varied than the spellings. See In re Junk, 512 B.R. 584, 588 n.3 (Bankr. S.D. Ohio 2014); King v. Bank of N.Y. Mellon Corp., NB, 957 F. Supp. 2d 680, 685 n.13 (E.D. Va. 2013); Colonial Pac. Corp. v. Conn. Nat’l Bank, 952 F.2d 406, *1 n.1 (9th Cir. 1992).
Lending Grp., LLLP, 125 So. 3d 965 (Fla. 4th DCA 2013))).

This court has elaborated on the issue of standing to bring a foreclosure suit:

A crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose.

Standing may be established by either an assignment or an equitable transfer of the mortgage prior to the filing of the complaint. For example, standing may be established from a plaintiff’s status as the note holder, regardless of any recorded assignments.

If the note does not name the plaintiff as the payee, the note must bear a special endorsement in favor of the plaintiff or a blank endorsement. Alternatively, the plaintiff may submit evidence of an assignment from the payee to the plaintiff or an affidavit of ownership to prove its status as a holder of the note.

 

Even in the absence of a valid written assignment, the “mere delivery of a note and mortgage, with intention to pass the title, upon a proper consideration, will vest the equitable interest in the person to whom it is so delivered.”
McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012) (internal citations omitted).2
“An assignment of a promissory note or mortgage, or the right to enforce such, must pre-date the filing of a foreclosure action. A party must have standing to file suit at its inception and may not remedy this defect by subsequently obtaining standing.” Venture Holdings & Acquisitions Grp., LLC v. A.I.M. Funding Grp., LLC, 75 So. 3d 773, 776 (Fla. 4th DCA 2011) (internal citation omitted).

Here, the note attached to the complaint did not establish standing. It was not made payable to Fannie Mae and contained no endorsements.

2 McLean arose from a final summary judgment. Therefore, not all the methods of proof of standing suggested in McLean, such as the use of affidavits, may be admissible at a full trial without stipulations or testimony from witnesses with knowledge.

Additionally, the note introduced at trial, while establishing Fannie Mae’s standing at that moment in time, did not establish standing when the suit was commenced. The blank endorsement was undated. See McLean, 79 So. 3d at 174.
Nor does the backdated assignment, standing alone, establish standing. See Vidal v. Liquidation Props., Inc., 104 So. 3d 1274, 1277 n.1 (Fla. 4th DCA 2013) (“Allowing assignments to be retroactively effective would be inimical to the requirements of pre-suit ownership for standing in foreclosure cases.”).3 Fannie Mae argues that other exhibits, namely a limited power of attorney in favor of BAC Home Loans Servicing LP, and a loan history showing the dates payments were made to Bank of America, established standing. We find that on this record, these exhibits do not establish standing.

Because Fannie Mae failed to establish standing, we reverse the final judgment of foreclosure. We decline to address the other issue raised by the appellants.

Reversed.

WARNER and GERBER, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

3 We recognize that “[e]ven if the assignment . . . does not occur until after the plaintiff files the complaint,” standing may be established by evidence of an equitable transfer prior to the filing date. GMAC Mortg., LLC v. Choengkroy, 98 So. 3d 781, 782 (Fla. 4th DCA 2012). We simply find that this type of evidence was not presented to the trial court.

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Jelic v. LaSalle Bank | FL 4DCA – Promissory Note FAIL, Assignment of Mortgage FAIL, PSA FAIL

Jelic v. LaSalle Bank | FL 4DCA – Promissory Note FAIL, Assignment of Mortgage FAIL, PSA FAIL

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

DIANA JELIC,
Appellant,

v.

LASALLE BANK, NATIONAL ASSOCIATION,
Appellee.

No. 4D13-4040

[March 25, 2015]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Kenneth Stern, Judge; L.T. Case

No. 502009CA004409 XXXXMB AW.

Kendrick Almaguer, Peter Ticktin, Josh Bleil and Michael Vater of The Ticktin Law Group, P.A., Deerfield Beach, for appellant.
Sarah T. Weitz of Weitz & Schwartz, P.A., Fort Lauderdale, for appellee.

STEVENSON, J.

In this appeal of a final judgment of foreclosure, Diana Jelic (“Homeowner”) raises two arguments. We find merit in Homeowner’s argument that the bank lacked standing to foreclose at the time the complaint was filed. Accordingly, we reverse the final judgment of foreclosure and remand for entry of an order of involuntary dismissal of the action.

Facts
On February 4, 2009, LaSalle Bank, National Association (“Bank”) filed a foreclosure complaint against Homeowner. It attached to this complaint a copy of the mortgage, executed in favor of Sterling Bank, but not a copy of a note or an assignment of note. About a month after filing its complaint, Bank filed a copy of the note, which contained no blank or special indorsements.

The case proceeded to a non-jury trial. Through its sole witness, a VP and consumer ombudsman for Select Portfolio Servicing, Bank introduced into evidence the original note, two assignments of mortgage and note, and a portion of a Pooling and Servicing Agreement (“PSA”). The original note contained two undated special indorsements, one from Sterling Bank to Greenpoint Mortgage Funding and the second from Greenpoint Mortgage Funding to Washington Mutual Bank. As for the assignments, the first assigned the note and mortgage from Sterling Bank to MERS, and was executed the same day the mortgage was signed. The second assignment assigned the mortgage and note from MERS to Bank. Notably, it was executed on August 10, 2009, more than six months after Bank filed its foreclosure complaint.

 

The portion of the PSA introduced at trial consisted of seven pages. The PSA’s cover page listed WaMu Asset Acceptance Corporation as the depositor, Washington Mutual Bank as the servicer, and Bank as the trustee. The cut-off date for the trust was listed as April 1, 2006. The remaining six pages contained Homeowner’s name, a servicing ID number, loan numbers, and other numeric information. Bank’s witness testified that, based on the cut-off date, Homeowner’s loan had been transferred into the trust before April 1, 2006.

Homeowner’s counsel moved for an involuntary dismissal of the action, arguing Bank lacked standing at the time it initiated the foreclosure action. The trial court found Bank had standing at the time it filed the complaint and entered final judgment in favor of Bank.

Analysis
“We review the sufficiency of the evidence to prove standing to bring a foreclosure action de novo.” Lacombe v. Deutsche Bank Nat’l Trust Co., 149 So. 3d 152, 153 (Fla. 1st DCA 2014) (citing Dixon v. Express Equity Lending Grp., LLLP, 125 So. 3d 965 (Fla. 4th DCA 2013)).

In a foreclosure case, “the plaintiff must prove that it had standing to foreclose when the complaint was filed.” McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). “A plaintiff who is not the original lender may establish standing to foreclose a mortgage loan by submitting a note with a blank or special endorsement, an assignment of the note, or an affidavit otherwise proving the plaintiff’s status as the holder of the note.” Focht v. Wells Fargo Bank, N.A., 124 So. 3d 308, 310 (Fla. 2d DCA 2013) (citing McLean, 79 So. 3d at 173). A plaintiff can also establish standing by submitting evidence that an equitable transfer of the mortgage and note occurred before the filing of a foreclosure complaint. See McLean, 79 So. 3d at 173. Considering the various ways a plaintiff can establish standing, we find Bank failed to provide sufficient evidence that it had standing at the time it filed its foreclosure complaint.

Second Assignment of Note and Mortgage
First, Bank did not establish standing through the second assignment of the note and mortgage, as the assignment occurred after the foreclosure complaint was filed. See Rigby v. Wells Fargo Bank, N.A., 84 So. 3d 1195, 1195–96 (Fla. 4th DCA 2012) (reversing entry of final summary judgment because the bank failed to establish it had standing to foreclose when the evidence showed the assignment was dated one day after the complaint was filed).

 

Original Note
Further, Bank’s submission of the original note at trial did not prove it had standing to foreclose. The special indorsements found on the original note were undated and there was no testimony establishing that these indorsements were affixed to the note prior to the initiation of the foreclosure action. See McLean, 79 So. 3d at 174 (finding there was insufficient evidence to establish standing when the original note, submitted after the bank filed its foreclosure complaint, contained an undated special indorsement). More importantly, the undated special indorsement was in favor of Washington Mutual Bank, and not Bank. Under section 673.2051(1), Florida Statutes (2009), when a note contains a special indorsement, the “instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person.” See Dixon, 125 So. 3d at 967–68 (holding the bank who filed the foreclosure complaint did not have standing to foreclose when the original note contained a special indorsement in favor of another party). Here, the special indorsement on the original note suggests Washington Mutual Bank was the proper party to initiate the foreclosure action.

Pooling and Servicing Agreement
Likewise, we find the partial PSA admitted into evidence failed to establish standing in this case. Bank’s witness testified that Homeowner’s loan was transferred into the trust at some point before the April 1, 2006 cut-off date and that, consequently, Bank owned the note on the day it filed its foreclosure complaint. The import of this testimony, however, is refuted by the second undated special indorsement found on the original note in favor of Washington Mutual Bank. There is no testimony establishing Washington Mutual Bank’s role as servicer for the trust. Bank did not submit the portion of the PSA defining “servicer,” thus leaving unclear what authority Washington Mutual Bank may have had to enforce the note specially indorsed to it or what control Bank, as trustee under the PSA, had over Washington Mutual Bank. Setting aside the fact that it is undated, the second indorsement suggests Washington Mutual Bank was the proper party to file the foreclosure complaint, and not Bank.

Equitable Transfer of the Note and Mortgage
Finally, there was no equitable transfer of the mortgage and note in the instant case. While there was some evidence that the mortgage and note were transferred into the trust under the PSA by some unidentified party before the complaint was filed, there is no evidence that this unidentified party had the intent to transfer its interest to Bank.1 The only evidence of an intent to transfer an interest to Bank—the second assignment—occurred after Bank filed its complaint and came from MERS, a party not listed as a part of the PSA. Cf. WM Specialty Mortg., LLC v. Salomon, 874 So. 2d 680, 681–82 (Fla. 4th DCA 2004) (finding an equitable transfer of the mortgage occurred when there was evidence that the mortgage was physically transferred to the bank before it filed its foreclosure complaint by the same party who later executed an assignment of the mortgage). Thus, it is impossible to determine whether the unidentified party transferring the mortgage and note into the PSA had any intent to transfer its interest because there is no indicating assignment from that unidentified party.

Because Bank failed to provide sufficient evidence that it had standing at the time it initiated the foreclosure complaint, we reverse the final judgment of foreclosure and remand for entry of an order of involuntary dismissal of the action. See Lacombe, 149 So. 3d at 156 (“We decline to remand the case for the presentation of additional evidence because ‘appellate courts do not generally provide parties with an opportunity to retry their case upon a failure of proof.’” (quoting Morton’s of Chicago, Inc. v. Lira, 48 So. 3d 76, 80 (Fla. 1st DCA 2010))).

Reversed and remanded.

MAY and KLINGENSMITH, JJ., concur.

* * *
Not final until disposition of timely filed motion for rehearing.
1 It is unclear what entity transferred Homeowner’s note and mortgage into the trust. Relying on the PSA, it appears WaMu Asset Acceptance Corporation, as the depositor, might have served that role.

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Seffar v. Residential Credit Solutions, Inc. | Fla. 4th DCA – because there is a gap in the transfer of the note and mortgage, Bayview did not prove that RCS, and subsequently Bayview, were nonholders in possession.

Seffar v. Residential Credit Solutions, Inc. | Fla. 4th DCA – because there is a gap in the transfer of the note and mortgage, Bayview did not prove that RCS, and subsequently Bayview, were nonholders in possession.

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

TAOUFIQ SEFFAR,
Appellant,

v.
RESIDENTIAL CREDIT SOLUTIONS, INC.,
Appellee.

No. 4D13-3514

[March 25, 2015]

Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Dale Ross, Judge; L.T. Case No. CACE10025802.

David H. Charlip of Charlip Law Group, LC, Aventura, for appellant.
Raymond Hora of McCalla Raymer, LLC, Orlando, for appellee.

WARNER, J.

Appellant challenges a final judgment of foreclosure, claiming that the court erred in denying his motion for involuntary dismissal. He claimed that appellee did not prove standing to foreclose at the time suit was filed. We agree that the evidence is insufficient to show the plaintiff had standing and reverse.

Appellant executed a note and mortgage to ABN Amro Mortgage Group (“ABN”) in 2006. In 2009, appellant received a letter from CitiMortgage informing him that the servicing of his note and mortgage was being transferred from CitiMortgage to Residential Credit Solutions (“RCS”). RCS also sent a letter informing appellant of the transfer of the servicing of the loan. When he defaulted on the mortgage, RCS sent him a notice of default and subsequently filed suit, alleging that it had the right to enforce the note and mortgage. Attached to the complaint was the mortgage and note to ABN. The note was stamped “original” and did not contain any endorsements or allonges. Also attached was an assignment of the mortgage from the Federal Deposit Insurance Corporation (“FDIC”), as receiver for Franklin Bank, to Mortgage Electronic Registrations Systems (“MERS”), as nominee for RCS.

About nine months after filing the complaint, RCS filed what it claimed was the “original” note. Filed with this note was an undated, blank allonge, payable to the bearer, allegedly executed by a vice president of ABN. Nothing about the appearance of this allonge, as contained in the appellate record, shows that it was affixed to the note with which it was filed.

Just two weeks before the foreclosure trial, RCS moved to substitute Bayview Loan Servicing as the plaintiff, alleging it had transferred servicing of the loan to Bayview. The documents attached to the motion do not mention that the ownership of the loan or mortgage was also transferred. The trial court allowed the substitution over appellant’s objection.

At trial, a litigation manager for Bayview testified. He was not a records custodian for RCS or for Bayview. He was not familiar with the computer systems that either of the prior servicers, CitiMortgage and RCS, used for compiling information on the loan or how it was inputted into the systems. He had no information as to whether the information on the loans was inputted into the prior servicers’ systems correctly. He could not testify to the truth or accuracy of RCS’s records, just that they were provided to Bayview.

He testified that Bayview was the servicer and holder of the note. He believed that Bayview had acquired the note through a purchase agreement with RCS, but he had not seen the agreement, nor did he have a copy of it. His belief that Bayview was the owner of the note under the purchase agreement was based on “a screen shot of our capital assets systems, which has information in regards to the status of the loan with us.” This screen shot was not produced at trial.

As to the allonge with the blank endorsement from ABN, he did not know when it was executed or whether the signature on it was a “wet ink” signature or a stamp. He did not know whether the allonge was affixed to the note prior to it being filed in the court file. He did not know if the vice president who signed the allonge on ABN’s behalf was in the employ of ABN in November 2009, when Bayview’s records showed that servicing of the loan had been transferred from ABN to Franklin Bank.

The manager agreed that on January 29, 2010, when RCS mailed appellant a notice of intent to take legal action on the note and mortgage, RCS was not the owner and holder of the note by way of the September 30, 2009 assignment of mortgage, but testified, “[t]here may have been a purchase agreement or some other document.” He testified that, on that date, “I only know that RCS was servicing. I don’t know for a fact who was the holder of the note at the time.” While he did testify that RCS owned the note and mortgage on the date the complaint was filed, he then inconsistently stated that RCS had brought the suit as the servicer of the loan, not its owner.

Although appellant moved for involuntary dismissal on the ground that Bayview had not proved standing because it had not shown that it had the right to enforce the note and foreclose the mortgage, the trial court rejected this claim.

 

It entered a final judgment of foreclosure in which it found that Bayview was due and owing the unpaid balance of the note. This appeal follows.

Appellant argues that Bayview failed to prove that it was the owner or holder of the note and that it had the right to foreclose. Based upon this confusing record, we agree that it presented no competent evidence that RCS was the holder of the note at the time it filed suit or that it was a nonholder in possession and entitled to enforce the note. Therefore, Bayview failed to prove standing.

Standing of the plaintiff to foreclose on a mortgage must be established at the time the plaintiff files suit. See McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). McLean set forth the requirements that a plaintiff may prove standing in a mortgage foreclosure:

Standing may be established by either an assignment or an equitable transfer of the mortgage prior to the filing of the complaint. . . For example, standing may be established from a plaintiff’s status as the note holder, regardless of any recorded assignments. . . .

If the note does not name the plaintiff as the payee, the note must bear a special endorsement in favor of the plaintiff or a blank endorsement. . . . Alternatively, the plaintiff may submit evidence of an assignment from the payee to the plaintiff . . .

Even in the absence of a valid written assignment, the mere delivery of a note and mortgage, with intention to pass the title, upon a proper consideration, will vest the equitable interest in the person to whom it is so delivered.
Id. at 173 (citations and quotation marks omitted).

 

Appellant notes several deficiencies in Bayview’s proof which result in a failure to show standing to foreclose the mortgage. First, while the note and mortgage were originally held by ABN, the only assignment of mortgage attached to the complaint and introduced at trial was one from FDIC as receiver for Franklin Bank to MERS as nominee for RCS. There is no proof of any transfer of the note or mortgage from ABN to Franklin Bank. Second, while Bayview contends that the undated allonge supplies the connection, as it shows a transfer payable to bearer, there was no proof that the allonge was attached to the note, and Bayview presented no proof of when it was executed. Finally, there was no competent evidence of what rights Bayview acquired from RCS.

We recently addressed how a plaintiff may show it is entitled to foreclose on a promissory note in Murray v. HSBC Bank, 40 Fla. L. Weekly D239 (Fla. 4th DCA Jan. 21, 2015):

“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).

Although, nine months after filing the complaint, RCS filed what purported to be the original note with an allonge payable to bearer, it was undated and there is no proof it was affixed to the promissory note. “An allonge is a piece of paper annexed to a negotiable instrument or promissory note, on which to write endorsements for which there is no room on the instrument itself. Such must be so firmly affixed thereto as to become a part thereof.” See Booker v. Sarasota, Inc., 707 So. 2d 886, 887 n.1 (Fla. 1st DCA 1998) (quoting Black’s Law Dictionary 76 (6th ed. 1990)); see also Isaac v. Deutsche Bank Nat’l Trust Co., 74 So. 3d 495, 496 n.1 (Fla. 4th DCA 2011). The litigation manager did not know when the allonge was executed, or whether it was affixed to the note prior to filing. No evidence was presented that the allonge was executed and attached to the note prior to the filing of the initial complaint. Indeed, RCS did not allege in the complaint that it owned and held the mortgage. It merely alleged that it had the right to foreclose the note and mortgage. Therefore, the allonge provided no evidence that RCS was a “holder” at the time it filed the complaint.

 

Alternatively, Bayview argues that RCS was a nonholder in possession. However, Murray shows the fallacy of that claim. In Murray, we held that the lender, HSBC, had not proved standing where it had alleged that it was a nonholder in possession of the note and mortgage, because it did not prove that each prior transfer of the note conferred the right to enforce it:

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, 424 Md. 232, 35 A.3d 452 (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 unendorsed 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.”
Murray, 40 Fla. L. Weekly D239 (emphasis in original) (internal citations omitted). Because HSBC did not offer evidence of one of the prior transfers of the note, we held it did not prove that it was a nonholder in possession.
Similarly, in this case, Bayview did not prove that either RCS or itself was a nonholder in possession. It never connected FDIC as receiver of Franklin Bank, from which RCS acquired an assignment of mortgage, to ABN, the original note holder.

As alternative proof of its “ownership” of the note and mortgage, Bayview relied on a letter from RCS to the appellant, notifying him of the transfer of servicing rights to RCS, and a similar one from Bayview when it became the servicer of the loan. Neither letter addressed a right to enforce the note. None of the servicer agreements were placed in evidence to prove what rights either RCS or Bayview acquired under those agreements. Finally, as to the transfer between RCS and Bayview, the litigation manager testified that while he believed that Bayview purchased the note and mortgage from RCS, he had never seen a purchase agreement, and no document memorializing the purchase was entered into evidence. Therefore, because there is a gap in the transfer of the note and mortgage, Bayview did not prove that RCS, and subsequently Bayview, were nonholders in possession. See Murray, 40 Fla. L. Weekly D239. Simply stated, the evidence presented was woefully inadequate to prove standing to foreclose. It was quite apparent from the record that Bayview’s litigation manager did not have the requisite knowledge, nor did he produce documentary evidence, to support the claim.

We thus reverse and direct judgment in favor of the appellant dismissing the foreclosure on the mortgage for failure of the appellee to prove its standing.

Reversed and remanded.

CIKLIN and GERBER, JJ., concur.

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

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BofA must face Chicago-area predatory lending lawsuit

BofA must face Chicago-area predatory lending lawsuit

Reuters-

A federal judge rejected Bank of America Corp’s request to dismiss a lawsuit in which Cook County, Illinois, accused the lender of targeting black and Hispanic borrowers in the Chicago area with subprime mortgages.

In a decision dated Thursday, U.S. District Judge Elaine Bucklo in Chicago said Cook County could pursue allegations that the bank steered minority borrowers into an outsized number of high-cost home loans, resulting in more foreclosures, lower property taxes and greater urban blight.

“The county has asserted an adequate injury-in-fact that is plausibly connected to defendants’ alleged discriminatory lending,” Bucklo wrote. She did not rule on the case’s merits.

[REUTERS]

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Ocwen Financial Intends to Sell Additional $25 Billion Portfolio of Mortgage Servicing Rights to Nationstar

Ocwen Financial Intends to Sell Additional $25 Billion Portfolio of Mortgage Servicing Rights to Nationstar

Source: OCWEN

March 24, 2015

Ocwen Financial Intends to Sell Additional $25 Billion Portfolio of Mortgage Servicing Rights to Nationstar

 

ATLANTA, March 24, 2015 (GLOBE NEWSWIRE) — Ocwen Financial Corporation (NYSE:OCN) announced today that its subsidiary, Ocwen Loan Servicing, LLC (“Ocwen”) and Nationstar Mortgage LLC, an indirectly-held, wholly-owned subsidiary of Nationstar Mortgage Holdings Inc. (NYSE:NSM) (collectively “Nationstar”) have agreed in principle to the sale by Ocwen of residential mortgage servicing rights on a portfolio consisting of approximately 142,000 loans owned by Freddie Mac and Fannie Mae with a total principal balance of approximately $25 billion. Subject to a definitive agreement, approvals by Freddie Mac, Fannie Mae and FHFA and other customary conditions, Ocwen and Nationstar expect the transaction to close before mid-year.

“This transaction, on top of the one announced in February between Ocwen and Nationstar, furthers our announced corporate strategy and demonstrates the strong working relationship we have developed with Nationstar,” said Ron Faris, Chief Executive Officer of Ocwen.

“This transaction builds upon our strong track record of portfolio acquisitions while serving the needs of homeowners, and we look forward to expeditiously closing and boarding this portfolio,” said Jay Bray, Chief Executive Officer of Nationstar. “We will continue to work cooperatively with Ocwen as they evaluate the sale of additional agency portfolios and look forward to continuing discussions with all counterparties.”

About Ocwen Financial Corporation

Ocwen Financial Corporation is a financial services holding company which, through its subsidiaries, is engaged in the servicing and origination of mortgage loans. Ocwen is headquartered in Atlanta, Georgia, with offices throughout the United States and support operations in India and the Philippines. Utilizing proprietary technology, global infrastructure and superior training and processes, Ocwen provides solutions that help homeowners and make our clients’ loans worth more. Ocwen may post information that is important to investors on its website (www.Ocwen.com).

About Nationstar

Based in Dallas, Texas, Nationstar earns fees through the delivery of quality servicing, origination and transaction based services related principally to single-family residences throughout the United States. Additional corporate information is available on the investors tab at www.nationstarmtg.com.

Forward Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Forward-looking statements and involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially.

Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, the following: adverse effects on our business as a result of recent regulatory settlements; reactions to the announcement of such settlements by key counterparties; increased regulatory scrutiny and media attention, due to rumors or otherwise; uncertainty related to claims, litigation and investigations brought by government agencies and private parties regarding our servicing, foreclosure, modification and other practices; any adverse developments in existing legal proceedings or the initiation of new legal proceedings; our ability to effectively manage our regulatory and contractual compliance obligations; the adequacy of our financial resources, including our sources of liquidity and ability to fund and recover advances, repay borrowings and comply with debt covenants; our servicer and credit ratings as well as other actions from various rating agencies, including the impact of recent downgrades of our servicer ratings; volatility in our stock price; the characteristics of our servicing portfolio, including prepayment speeds along with delinquency and advance rates; our ability to contain and reduce our operating costs; our ability to successfully modify delinquent loans, manage foreclosures and sell foreclosed properties; uncertainty related to legislation, regulations, regulatory agency actions, government programs and policies, industry initiatives and evolving best servicing practices; as well as other risks detailed in Ocwens reports and filings with the Securities and Exchange Commission (SEC), including its annual report on Form 10-K/A for the year ended December 31, 2013 (filed with the SEC on 08/18/14) and its quarterly report on Form 10-Q for the quarter ended September 30, 2014 (filed with the SEC on 10/31/14). Anyone wishing to understand Ocwens business should review its SEC filings. Ocwens forward-looking statements speak only as of the date they are made and, except for our ongoing obligations under the U.S. federal securities laws, we undertake no obligation to update or revise forward-looking statements whether as a result of new information, future events or otherwise.

CONTACT: FOR FURTHER INFORMATION CONTACT: Investors: Stephen Swett T: (203) 614-0141 E: shareholderrelations@ocwen.com Media: John Lovallo T: (917) 612-8419 E: jlovallo@levick.com Dan Rene T: (202) 973-1325 E: drene@levick.com
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Yale Law Clinic Seeks Relief for Homeowners Burdened with Underwater Second Mortgages

Yale Law Clinic Seeks Relief for Homeowners Burdened with Underwater Second Mortgages

Yale Law School-

The Mortgage Foreclosure Litigation Clinic at Yale Law School, along with the Connecticut Fair Housing Center (CFHC), has filed an Amicus Brief with the Supreme Court of the United States in support of Respondents, David Caulkett and Edelmiro Toledo-Cardona, in Bank of America v. Caulkett. The case presents the question of whether wholly underwater second mortgages can be voided in bankruptcy as unsecured liens.

The question of second mortgages is especially pertinent in Connecticut. Hartford, Connecticut, holds the dubious distinction of being the “most underwater” city in the nation, with a negative equity rate of 56%*. Connecticut is also home to three other cities in the top one hundred towns with the highest negative equity in the country, including New Haven. The Supreme Court’s ruling in Caulkett has the potential to affect the many Connecticut residents with underwater second mortgages by providing a helpful alternative to foreclosure for resolving their mortgage troubles, according to the clinic.

The Mortgage Foreclosure Clinic provides legal assistance to individuals who cannot afford private counsel. The Clinic has been representing homeowners fighting foreclosure in Connecticut since 2008. The Clinic has also filed amici briefs with appellate courts in several states and its members have testified before the Connecticut legislature on foreclosure policy.

[YALE LAW SCHOOL]

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