IN THE SUPREME COURT OF THE STATE OF WASHINGTON

ROCIO TRUJILLO,
Petitioner,

v.

NORTHWEST TRUSTEE SERVICES, INC.,
Respondent;

WELLS FARGO BANK, NA,
Defendant.

GORDON McCLOUD, J.- Rocio Trujillo’s home loan was secured by a
deed of trust encumbering the home. She defaulted, and Northwest Trustee Services
Inc. (NWTS), the successor trustee, sent a notice of default and scheduled a trustee’s
sale of her property. Under the deeds of trust act (DTA), a trustee may not initiate
such a nonjudicial foreclosure without “proof that the beneficiary [of the deed of
trust] is the owner of any promissory note … secured by the deed of trust.” RCW
61.24.030(7)(a) (emphasis added). But the very next sentence of that statute says,
“A declaration by the beneficiary made under the penalty of perjury stating that the
beneficiary is the actual holder of the promissory note or other obligation secured
by the deed of trust shall be sufficient proof as required under this subsection.” Id.
(emphasis added).

NWTS had a beneficiary declaration from Wells Fargo Banlc It did not
contain that specific statutory language. Instead, it stated under penalty of perjury,
“Wells Fargo Banlc, NA is the actual holder of the promissory note . . . or has
requisite authority under RCW 62A.3-301 to enforce said [note].” Clerk’s Papers
(CP) at 36 (emphasis added). This declaration language differs from the language
ofRCW 61.24.030(7)(a), quoted above, by adding the “or” alternative.
Following our recent decision in Lyons v. U.S. Bank National Ass ‘n, 181
Wn.2d 775, 336 P.3d 1142 (2014), we hold that a trustee cannot rely on a beneficiary
declaration containing such ambiguous alternative language. Trujillo therefore
alleged facts sufficient to show that NWTS breached the DT A and also to show that
that breach could support the elements of a Consumer Protection Act (CPA) claim.
Ch. 19.86 RCW. However, her allegations do not support a claim for intentional
infliction of emotional distress or criminal profiteering. We therefore reverse in part
and remand for trial.

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Request for Comment
Comments are sought on Amendments to:
Bankruptcy Rules 1001 and 1006
Evidence Rules 803 and 902

All Written Comments are Due by
February 16, 2016

The Judicial Conference Advisory Committees on Bankruptcy and Evidence Rules have
proposed amendments to their respective rules, and requested that the proposals be circulated to
the bench, bar, and public for comment. The proposed amendments, rules committee reports,
and other information are attached and posted on the Judiciary’s website at:
http://www.uscourts.gov/rules-policies/proposed-amendments-published-public-comment

Opportunity for Public Comment
All comments on these proposed amendments will be carefully considered by the rules
committees, which are composed of experienced trial and appellate lawyers, judges, and scholars.
Please provide any comments on the proposed amendments, whether favorable, adverse, or
otherwise, as soon as possible but no later than Tuesday, February 16, 2016. All comments
are made part of the official record and are available to the public.
Comments concerning the proposed amendments must be submitted electronically by
following the instructions at:
http://www.uscourts.gov/rules-policies/proposed-amendments-published-public-comment

Members of the public who wish to present testimony may appear at public hearings on
these proposals. The Advisory Committees will hold hearings on the proposed amendments on
the following dates:
• Bankruptcy Rules in Washington, DC, on January 22, 2016, and in Pasadena, CA,
on January 29, 2016;
• Rules of Evidence in Phoenix, AZ, on January 6, 2016, and in Washington, DC,
on February 12, 2016.

If you wish to testify, you must notify the Committee in writing at least 30 days before the
scheduled hearing. Requests to testify should be mailed to the Committee on Rules of Practice
and Procedure, Administrative Office of the United States Courts, Thurgood Marshall Federal
Judiciary Building, One Columbus Circle, N.E., Suite 7-240, Washington, D.C. 20544.
After the public comment period, the Advisory Committees will decide whether to submit
the proposed amendments to the Committee on Rules of Practice and Procedure. At this time,
the Committee on Rules of Practice and Procedure has not approved these proposed
amendments, except to authorize their publication for comment. The proposed amendments
have not been submitted to or considered by the Judicial Conference or the Supreme Court.
The proposed amendments would become effective on December 1, 2017, if they are
approved, with or without revision, by the relevant Advisory Committee, the Committee on
Rules of Practice and Procedure, the Judicial Conference, and the Supreme Court, and if
Congress does not act to defer, modify, or reject them.

If you have questions about the rulemaking process or pending rules amendments, please
contact the Rules Committee Support Office at 202-502-1820 or visit
http://www.uscourts.gov/rules-policies

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

SHORT FORM ORDER
SUPREME COURT OF THE STATE OF NEW YORK
I.A.SPART 9 – SUFFOLK COUNTY
INDEX NO.: 39134-11
PRESENT:
Hon. DANIEL MARTIN
MOTION DATE: 10-29-14
~—————————-

U.S. BANK NATIONAL ASSOCIATION, AS
TRUSTEE FOR BANC OF AMERICA FUNDING
2007-6 TRUST
Plaintiff,

-against-

MICHAEL NEVERS NKJA MICHAEL G. NEVERS
MORTGAGE ELECTRONIC REGISTRATION
SYSTEMS, INC., AS NOMINEE FOR MORTGAGEIT
INC.
Defendants.

The following named papers have been read on this motion:
Notice of Motion for Summary Judgment and an Order of Reference
Cross-Motion
Answering Affidavits
Replying Affidavits
60 Seaman A venue, 4 E
New York, N. Y. 10034

ORDERED that this motion (001) by the plaintiff for, inter alia, an order awarding summary
judgment in its favor and against the defendant Michael Nevers, fixing the defaults of the non-answering
defendants, appointing a referee and amending the caption is denied in its entirety; and it is further
ORDERED that the plaintiff is directed to serve a copy of this order with notice of entry upon all
parties who have appeared herein and not waived further notice within thirty (30) days of the date herein,
and to promptly file the affidavits of service with the Clerk of the Court.
[* 1]

This is an action to foreclose a mortgage on real property known as 501 Fulton Place. West
Babylon. New York 11704 (“the property”). On March 28, 2007, the defendant Michael Nevers (“the
answering defendant”) executed a fixed-rate note in favor of Mortgage it, Inc. (”the lender”) in the principal
sum of$363,250.00. To secure said note, the answering defendant gave the lender a mortgage also dated
March 28, 2007 on the property. The mortgage, which was recorded on September l 0, 2007, indicates that
Mortgage Electronic Registration Systems, Inc. (MERS) was acting solely as a nominee for the lender and
its successors and assigns and that, for the purposes of recording the mortgage, MERS was the mortgagee
of record. By way of an undated endorsement and an allonge, the note was allegedly transferred to US
Bank National Association, as Trustee for Banc of America Funding 2007-6 Trust (“the plaintiff’). The
transfer of the note to the plaintiff was memorialized by an assignment of the mortgage, which was
subsequently duly recorded in the Suffolk County Clerk’s Office. Thereafter, another assignment of the
mortgage was executed in favor of the plaintiff, whereby the plaintiff’s address set forth therein was
corrected. This assignment was also duly recorded in the Suffolk County Clerk’s Office.

The answering defendant allegedly defaulted on the note and mortgage by failing to make the
monthly payment of principal and interest due on November I, 2009, and each month thereafter. The
plaintiff allegedly provided the answering defendant with notice of his default by two separate documents
each dated August 14, 2011. After the answering defendant allegedly failed to cure said default, the
plaintiff commenced the instant action by the filing of a lis pendens, summons and complaint on December
27. 2011. Thereafter, the answering defendant interposed an answer with affirmative defenses. The
remaining defendants have neither answered nor appeared herein, and thus are in default.
By way of background. the parties began a prolonged period of negotiations in an attempt to agree
on a loan modification, and foreclosure settlement conferences were conducted or adjourned beginning on
June 1, 2012 and lasting until August 6, 2013. A representative of the plaintiff attended and participated
in all settlement conferences. On the last date, this case was dismissed from the conference program as
the parties were unable to modify the loan or otherwise reach a settlement. Accordingly, there has been
compliance with CPLR 3408; no further conference is required under any statute, law or rule.

The plaintiff now moves for, inter alia, an order: ( 1) awarding summary judgment in its favor and
against the answering defendant, striking his answer and dismissing the affirmative defenses set forth
therein; (2) fixing the defaults of the non-answering defendants; (3) appointing a referee to (a) compute
amounts due under the subject mortgage; and (b) examine and report whether the subject premises should
be sold in one parcel or multiple parcels; and (4) amending the caption. In opposition, the answering
defendant has filed. inter alia. an affirmation from his counsel, and, in response, the plaintiff has a filed a
reply.

In its present form, RP APL§ 1304 provides that in a legal action, including a residential mortgage
foreclosure action, at least 90 days before the lender commences an action against the borrower. the lender
must send a notice to the borrower including certain language and the notice must be in 14-point type. The
notice must be sent by registered or certified mail and also by first-class mail to the last known address of
the borrower, and if different, to the residence that is the subject of the mortgage (see, RP APL § 1304).
Such notice shall be sent by the lender, assignee or mortgage loan servicer in a separate envelope from any
[* 2] other mailing or notice (id.). The statute further provides that the notice shall contain a list of at least five
housing counseling agencies that serve the region where the borrower resides (id.). RP APL § 1304
provides that the notice must be sent to the “borrower,” a term not defined in the statute (Aurora Loan
Servs., LLC v Weisblum, 85 AD3d 95, l 05, 923 NYS2d 609 [2d Dept 2011 ]).

Proper service of the RP APL § I 304 notice containing the statutorily-mandated content on the
“borrower” or “borrowers” is a condition precedent to the commencement of a foreclosure action, and the
plaintiff’s failure to show strict compliance requires dismissal (Hudson City Sav. Bank v DePasquale, 113
AD3d 595. 596, 977 NYS2d 895 [2d Dept 2014]; Deutsclre Bank Natl. Trust Co. v Spanos, 102 AD3d
909, 910, 961NYS2d200 (2d Dept 2013];Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, supra
at 103 (2d Dept 2011]; see also, Pritchard v Curtis, 101 AD3d 1502, 1504, 957 NYS2d 440 [3d Dept
2012]). Since this action was commenced on December 27, 2011, the 90-day notice requirement set forth
in the statute is applicable. Thus, in support of its motion for summary judgment on the complaint, the
plaintiff was required to prove its allegations by tendering sufficient evidence demonstrating the absence
of material issues as to its strict compliance with RP APL 1304, and failure to make this showing requires
denial of the motion, regardless of the opposing papers (Aurora Loan Servs., LLC v Weisblum, 85 AD3d
at 106 [citation omitted]).

In meeting this burden, the plaintiff benefits from the long-standing doctrine of presumption of
regularity: generally, a letter or notice that is properly stamped, addressed, and mailed is presumed to be
delivered by that addressee (Trusts & Guar. Co. v Barnhardt, 270 NY 350, 352 [J 936]; News Syndicate
Co. v Gatti Paper Stock Corp., 256 NY 211, 214-216 [1931]; Connolly vA/lstate Ins. Co., 213 AD2d 787,
787, 623 NYS2d 373 (3d Dept 1995]; Kearney v Kearney, 42 Misc3d 360, 369, 979 NYS2d 226 [Sup Ct,
Monroe County 2013]). The presumption of receipt by the addressee “may be created by either proof of
actual mailing or proof of a standard office practice or procedure designed to ensure that items are properly
addressed and mailed” (Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679, 680, 729 NYS2d
776 [2d Dept 200 I]). CPLR 2103(t)( l) defines mailing as “the deposit of a paper enclosed in a first class
postpaid wrapper, addressed to the address designated by a person for that purpose or, if none is designated,
at that person’s last known address, in a post office or official depository under the exclusive care and
custody of the United States Postal Service within the state” (see, Lindsay v Pasternack Tilker Ziegler
Walsh Stanton & Romano LLP, 129 AD3d 790, 2015 NY Slip Op 04819 [2d Dept 2015]). “If that proof
is established, the burden shifts to the borrower,” and “the final legal truism prevails: once the presumption
of proper service has been established, mere denial of receipt is insufficient to rebut the presumption”
(Kearney v Keamey, 42 Misc3d 360, supra at 370; see, Matter of ATM One v Landaverde, 2 NY3d 472,
4 78, 779 NYS2d 808 [2004 ]).

The plaintiff failed to establish its prima facie entitlement to judgment as a matter of law because
it did not demonstrate that it complied with the condition precedent contained in the subject mortgage
agreement. which required that it provide the answering defendant with notice of default prior to
demanding payment of the loan in full (see, Nationstar Mtge., LLC v Dimura, 127 AD3d 1152. 7 NYS3d
573 [2d Dept 2015); HSBC Mtge. Corporatio11 (USA) v Gerber, 100 AD3d 966, 955 NYS2d 131 [2d Dept
2012]; cf, Deutsche Bank Natl. Trust Co. v MacP/1erson, 122 AD3d 896, 998 NYS2d 394 [2d Dept
2014); Indymac Bank, F.S.B. v Kamen, 68 AD3d 931, 890 NYS2d 649 [2d Dept 2009]). The
unsubstantiated and conclusory statements in the affidavit of the plaintiffs officer that “[o]n August 14,
[* 3] 201 I a demand letter was sent to the defendant[] … [which] identifies the amount due, and notifies
defendant that a foreclosure action could be commenced if the default was not cured within 30 days[]’\
even when combined with a copies of the notice of default, did not establish that the required notice was
mailed by first class mail or actually delivered to the notice address if sent by other means, as required by
the terms of the mortgage agreement (see, GMAC Mtge. LLC v Bell, 128 AD3d 772. 11 NYS3d 73 [2d
Dept 2015]; Wells Fargo Bank, N.A. v Eisler, 118 AD3d 982, 988 NYS2d 682 l2d Dept 2014]; cf,
JPMorgan Chase Bank v Kang, 2015 NY Misc LEXIS 1953, 2015 NY Slip Op 30955 [U] lSup Ct,
Queens County 2015) [affidavit of merit of plaintiffs “Legal Specialist Ill” sufficiently detailed proof of
mailing of the default notice, by indicating that she had knowledge of and has reviewed business records,
which were maintained in the course of the plaintiffs regularly conducted business activities, and said
records included proof of mailing documentation obtained from the United States Post Office at or near
the time of mailing was made]). In her affidavit, the plaintiffs officer provided a summary of relevant
events, including the default in payments and the amounts due. The plaintiffs officer, however, did not
allege sufficient facts as to how compliance with the default notice provisions in the mortgage were
accomplished; nor did she identify the individual who allegedly did so (see, Nocella v Fort Dearborn Life
Ins. Co. of N.Y., 99 AD3d 877, 955 NYS2d 70 [2d Dept 2012]; cf, Preferred Mut. Ins. Co. v Donnelly,
l l 1 AD3d 1242, 974 NYS2d 682 [4th Dept 2013]). More specifically, the affiant did not give any
indication that she is familiar with the standard mailing practices or procedures of the entity alleged to have
sent the notices, and that those practices or procedures were followed in this instance. The affiant also
made no attempt to explain the significance of the certain documentation submitted herein and allegedly
addressed to the answering defendant, in which the default notices were allegedly mailed.

While compliance with the 90-day notice requirements of RP APL 1304 satisfies the 30-day default
notice requirements in a mortgage document (see, Wachovia Bank, N.A. v Carcano, 106 AD3d 724, 965
NYS2d 516 f2d Dept 2013]), the plaintiff also failed to supply adequate evidcntiary proof of compliance
with RP APL§ l 304 for the same reasons articulated above (see, Hudson City Sav. Bank v DePasquale,
113 AD3d 595, 977 NYS2d 895 [2d Dept 2014]; cf, TD Bank, N.A. v Leroy, 121AD3d1256. 995 NYS2d
625 f3d Dept 20141; Deutsche Bank Natl. Trust Co. v Spanos, 102 AD3d 909, supra; VS Bank N.A. v
Caro1111a. 92 AD3d 865, 938 NYS2d 809 [2d Dept 2012]). In any event, the conclusory statements set
forth in the affidavit of the plaintiff’s officer that “[a )t least 90 days prior to the commencement of this
action, (p ]laintiff provided RP APL § 1304 notice to the borrower[] … by first class and certified mail, to
the borrower’s last known address located at 501 Fulton Place, West Babylon, NY 11704, and to the
mortgaged premises,” even when combined with copies of certain documentation submitted herein, is
insufficient to meet the requirements of the statute (see, Hudson City Sav. Bank v DePasquale, J J 3 AD3d
595, supra; VS Bank Natl. Assn. v Lampley, 46 Misc3d 630, 996 NYS2d 499 [Sup Ct, Kings County
2014 ]). The affiant did not allege sufficient facts as to how compliance was accomplished. She also does
not state that she served the notice; nor does she identify the individual who allegedly did so. Additionally,
the plaintiff submitted neither an affidavit of service of the 90-day notice upon the answering defendant,
nor an affidavit from one with personal knowledge of the mailing, along with copies of the certified
mailing receipts stamped by the United States Post Office on the date of the alleged mailing (see, Deutsche
Bank Natl. Trust Co. v Spanos, 102 AD3d 909, supra).

Thus, the plaintiff failed to establish its prima facie entitlement to judgment as a matter oflaw with
respect to the answering defendant. The plaintiffs failure to make a prima facie showing requires the
[* 4] denial of the motion, regardless of the sufficiency of the defendant mortgagors’ opposing papers (see,
Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 487 NYS2d 316 [ 1985]).

In view of the open question of whether the plaintiff has complied with the default notice provisions
in the mortgage and whether the plaintiff strictly complied with the 90-day notice requirement of RP APL
§ 1304, the remaining branches of the plaintiffs motion are denied at this juncture.

In view of the foregoing, the proposed order submitted been marked “not
signed.”

__ FINAL DISPOSITION–=-=—
[* 5]

MarketWatch-

Hundreds of bankers may have used their work email addresses to register for the adultery website AshleyMadison.com, MarketWatch found after searching data provided by security researcher Robert Graham.

Hackers on Tuesday unleashed the purported email and street addresses, phone numbers and credit-card details of about 36 million people represented as users of the adultery website AshleyMadison.com. MarketWatch searched through the email addresses, as provided by Graham, who owns Atlanta-based Errata Security, and found at least 665 emails associated with big banks.

The Hill reported that the leak appears to include more than 15,000 government and military emails.

 […]

Here are the financial institutions we searched, and how many associated email addresses we found — bearing in mind that we cannot verify the accuracy of the data:

• Wells Fargo — @wellsfargo.com: 175
• Bank of America — @bankofamerica.com: 76
• Deutsche Bank — @db.com: 73
• Citigroup — @citi.com: 51
• Goldman Sachs — @gs.com: 45
• PNC Bank — @pnc.com: 28
• U.S. Bancorp — @usbank.com: 15
• Bank of New York Mellon — @bnymellon.com: 14
• J.P. Morgan Chase — @jpmchase.com: 9
• Capital One — @capitalone.com: 4

[MARKETWATCH]

Reuters-

A U.S. regulator sued Bank of New York Mellon Corp (BK.N) on Wednesday over $2.06 billion in residential mortgage-backed securities purchased by a failed Texas bank, and accused it of breaching its duties as bond trustee to protect investors.

In a complaint filed in Manhattan federal court, the Federal Deposit Insurance Corp, which sued in its capacity as receiver for the former Guaranty Bank, said it suffered more than $440 million in losses when it sold the securities in March 2010.

The FDIC filed a similar lawsuit against US Bancorp (USB.N), another major bond trustee, over more than $248 million of mortgage debt bought by Guaranty, and resulting in “significant” losses when those securities were sold.

[REUTERS]

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

MANUEL C. PEREZ and THERESA PEREZ,
Appellants,

v.

DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE FOR HARBOR VIEW MORTGAGE LOAN TRUST MORTGAGE LOAN PASS-THROUGH CERTIFICATES SERIES 2006-7,
Appellee.

No. 4D13-4812
[August 19, 2015]

Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Cynthia G. Imperato, Judge; L.T. Case No. 08-037886 (18).

Bruce Botsford of Bruce Botsford, P.A., Fort Lauderdale, for appellants.

Eve A. Cann of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Fort Lauderdale, for appellee.

LEVINE, J.

Appellants appeal a final judgment of foreclosure, arguing that the Bank lacked standing to foreclose. We agree that the Bank failed to prove that it had standing at the time it filed the complaint. Therefore, we reverse.
In August 2008, Deutsche Bank National Trust Company (“the Bank”) filed a complaint against appellants for mortgage foreclosure. After initiating the lawsuit, the Bank then filed a copy of the note, which listed American Brokers as the lender and contained an undated endorsement in blank. Appellants filed an answer and affirmative defenses, challenging the Bank’s standing.

During trial, the Bank presented testimony from one witness, Paul Myers, an employee of the loan servicing company Ocwen Financial Corporation. Myers testified that the Bank took ownership of the loan around August 1, 2006, as part of a corresponding pooling and serving agreement (“PSA”). According to Myers, the note was provided to the Bank at the time the trust was created. Myers explained that he knew this because the Bank had the note when Ocwen requested it; however, Myers admitted he did not recall when Ocwen requested the note. He did not know if Ocwen requested the note when the lawsuit was filed. It was his understanding that the Bank held the note as custodian because of the PSA. The PSA was not introduced into evidence.

At the close of the Bank’s case, appellants moved for an involuntary dismissal, arguing that the Bank did not have standing because there was no evidence that the Bank had the note when the complaint was filed. Appellants contended that the Bank did not show standing by assignment or equitable transfer and that the PSA was insufficient to establish standing. The Bank argued that it met its burden to establish standing through production of the original note and the PSA, which closed prior to the inception of the action. The court found that the Bank had standing and entered a final judgment in favor of the Bank.

An appellate court reviews de novo the sufficiency of evidence to prove standing in a foreclosure action. Sosa v. U.S. Bank Nat’l Ass’n, 153 So. 3d 950, 951 (Fla. 4th DCA 2014). “To establish standing, the plaintiff must submit 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). “A party must have standing to file suit at its inception and may not remedy this defect by subsequently obtaining standing.” Id. (citation omitted). Standing is established where a bank possesses and files an original note endorsed in blank. See Harvey v. Deutsche Bank Nat’l Trust Co., 69 So. 3d 300, 304 (Fla. 4th DCA 2011).

In the present case, the Bank failed to establish standing because no evidence was introduced showing the note was transferred to the Bank prior to the inception of the lawsuit. A copy of the note was not attached to the complaint, and the endorsement in blank on the original note was undated. Additionally, the PSA was insufficient to establish standing.

In Deutsche Bank National Trust Co. v. Boglioli, 154 So. 3d 494, 495 (Fla. 4th DCA 2015), this court held that the bank failed to establish standing where the bank introduced an undated blank endorsement, the bank’s only witness was unable to testify as to when the note was endorsed, and the bank failed to introduce a PSA through which the bank claimed it acquired the assignment of the note. Similarly, in the instant case, the Bank introduced an undated blank endorsement, the Bank’s only witness was unable to testify as to when the note was endorsed, and the PSA was not introduced into evidence.

Even if the PSA had been introduced into evidence, the evidence still would have been insufficient to establish standing. In Balch v. LaSalle Bank N.A., 2015 WL 4641534, at *1 (Fla. 4th DCA Aug 5, 2015), this court held that “evidence that the note was transferred into the trust prior to the foreclosure action is insufficient by itself to confer standing because there was no evidence that the indorsee had the intent to transfer any interest to the trustee.” In support, the Balch court cited Jelic v. LaSalle Bank, National Ass’n, 160 So. 3d 127, 130 (Fla. 4th DCA 2015), which reversed a final judgment of foreclosure, in part because there was no evidence that the party transferring the note into a PSA had any intent to transfer an interest to the trustee.

Similarly, in Jarvis v. Deutsche Bank National Trust Co., 40 Fla. L. Weekly D1416 (Fla. 4th DCA June 17, 2015), this court held that “evidence that the note was physically transferred into a trust prior to Deutsche Bank filing its foreclosure complaint does not, by itself, establish standing.” “[A] plaintiff must prove not only physical possession of the original note but also, if the plaintiff is not the named payee, possession of the original note endorsed in favor of the plaintiff or in blank (which makes it bearer paper).” Id. (quoting Kiefert v. Nationstar Mortg., LLC, 153 So. 3d 351, 353 (Fla. 1st DCA 2014)).

Because the Bank failed to establish standing, we reverse and remand with instructions for the trial court to enter an involuntary dismissal.

Reversed and remanded.

STEVENSON and FORST, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

ARTURO CARDONA and AIDA PALOMINO,
Appellants,

v.

NATIONSTAR MORTGAGE, LLC,
Appellee.

No. 4D14-1609
[August 19, 2015]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; John J. Hoy, Judge; L.T. Case

No. 502010CA21967XXXXMB.

Jeffrey Harrington and Millie Orrico of Harrington Law Associates PLLC, West Palm Beach, for appellants.

Nancy M. Wallace and Michael J. Larson of Akerman LLP, Tallahassee, and William P. Heller of Akerman LLP, Fort Lauderdale, for appellee.

MAY, J.

The homeowners appeal a final judgment of foreclosure. They argue the trial court erred in allowing the bank’s witness to testify about the content of business records not introduced into evidence, and in finding the bank proved standing. We agree with the homeowners on the first issue and reverse.

In an amended complaint, the bank alleged it was the holder of the note. The same copy of the mortgage, note, and allonge attached to the original complaint were attached to the amended complaint. The bank also attached a corporate assignment of the mortgage to the bank, dated June 27, 2012.

In September 2013, the bank filed a “Certification as to Original Promissory Note” dated September 21, 2013, which stated that the bank physically possessed the note. The homeowners answered and asserted lack of standing as an affirmative defense.

The case proceeded to a non-jury trial in April 2014. A bank employee, who had worked for the bank since January 2014, testified. He never worked for the predecessor bank. He was familiar with the loan only as a result of his review of the bank’s business records, which were kept in the ordinary course of business. His job involved research and interpretation of the bank’s business records.

He testified that the records were created by individuals who entered the data contemporaneously with the events recorded. The homeowners objected to his testimony as hearsay. The court overruled the objection.

The bank introduced the original note, the blank endorsed allonge, and the mortgage, which the bank employee identified. He testified that the note was in “the bank’s” possession when the complaint was filed without identifying whether it was the current or predecessor bank. He based his testimony on his review of business records kept in the bank’s internet database, FileNet. The homeowners objected to this testimony as hearsay, which the court again overruled.

The bank employee testified about: (1) the breach letter; (2) the loan and the homeowners’ uncured default; (3) the homeowners’ loan payment history; and (4) the proposed final judgment figures, which he confirmed as correct. On cross-examination, the bank employee admitted his job was to review cases in preparation for trial, review defaulted mortgages, and attend mediation. He reiterated the entire history of the subject loan based on his review of business records, but he did not bring the records to court because they are kept on FileNet.
At that point, the homeowners moved to strike the bank employee’s testimony on the basis that he could not testify about business records that were not admitted into evidence. The court denied the motion. After closing argument, the court entered a final judgment of foreclosure in favor of the bank. From that final judgment, the homeowners appeal.

The homeowners argue the trial court erred when it admitted the bank employee’s testimony that “the bank” was in possession of the note at the time it filed the foreclosure complaint because his only knowledge was based on his review of business records not introduced into evidence. The bank responds the trial court did not err because its employee testified he had personal knowledge of the bank’s possession of the note from reviewing the bank’s business records and complete loan history. The homeowners reply that while the bank employee may have had personal knowledge based on his review of business records, those records must be admitted into evidence for the testimony to be admissible.

We review evidentiary issues for an abuse of discretion. Cayea v. CitiMortgage, Inc., 138 So. 3d 1214, 1216 (Fla. 4th DCA 2014) (citing Hayes v. Wal-Mart Stores, Inc., 933 So. 2d 124, 126 (Fla. 4th DCA 2006)).

The Second District’s decision in Sas v. Federal National Mortgage Ass’n, 112 So. 3d 778 (Fla. 2d DCA 2013), is instructive on this issue. There, the only evidence of the loan amount due was testimony from a litigation specialist with the loan servicer. Id. at 779. His testimony was based on his review of the servicer’s business records; he had no other personal knowledge. Id. The bank did not produce the business records upon which the witness relied. Id.
The Second District held “the trial court abused its discretion in allowing [the witness] to testify over objection about the contents of [the bank’s] business records to prove the amount of the debt without having first admitted those business records.” Id. We have held the same. See, e.g., Beauchamp v. Bank of N.Y., 150 So. 3d 827, 829 (Fla. 4th DCA 2014) (remanding for determination of debt owed because witness testified about debt owed based on his review of business records not introduced into evidence).

Here, the bank employee specifically testified his only knowledge of “the bank’s” possession of the note at the time the complaint was filed was based on his review of the bank’s business records via FileNet. He did not work for the predecessor bank and was not personally involved in the transaction. Without the business records, the bank’s employee had no personal knowledge.

Because the business records were not introduced into evidence, the trial court erred by overruling the homeowners’ hearsay objection. We therefore reverse and remand the case for a new trial. See Bank of N.Y. v. Calloway, 157 So. 3d 1064, 1073–74 (Fla. 4th DCA 2015) (reversing for a new trial where trial court erred in failing to admit business records). This renders the homeowners’ second issue moot.

Reversed and Remanded for a new trial.

WARNER and KLINGENSMITH, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

CRAIG D. LAMB,
Appellant,

v.

NATIONSTAR MORTGAGE, LLC, et al.,
Appellee.

No. 4D13-3125

[August 19, 2015]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Roger B. Colton, Judge; L.T. Case No. 502011CA004062.

Craig D. Lamb, West Palm Beach, pro se.

Silver Jade Deutch of Morris | Schneider | Wittstadt, Tampa, for appellee Nationstar Mortgage, LLC.

STEVENSON, J.

Craig Lamb appeals a final judgment of foreclosure. We find the trial court erred in determining that Nationstar Mortgage, LLC, had standing and reverse.

This court reviews the sufficiency of the evidence to prove standing to bring a foreclosure action de novo. Dixon v. Express Equity Lending Grp., LLLP, 125 So. 3d 965, 967 (Fla. 4th DCA 2013). In addition to proving standing when the complaint is filed, a bank must also establish its standing at the time final judgment is entered. Boumarate v. HSBC Bank USA, N.A., 109 So. 3d 1239, 1239 (Fla. 5th DCA 2013).

This case was commenced by Aurora Loan Services, LLC. The note attached to the complaint included several indorsements, the last one being a special indorsement in favor of Aurora. Nationstar filed a Motion for Substitution of Party Plaintiff, alleging it had acquired the note and mortgage. Nationstar attached to the motion an “Assignment of Mortgage” from Aurora. Without objection, the court issued its order allowing the substitution.

At trial, the court took judicial notice of the court file, including the order allowing substitution of Nationstar for Aurora as plaintiff. Nationstar’s witness testified that “[w]e acquired Aurora Loans last year around mid-2012. We took over that company, . . . we now service all of Aurora Loans.” There was no other testimony on the issue of Nationstar’s standing. The original note was lost and the copy placed into evidence was specially indorsed to Aurora.
“When specially indorsed, an instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person.” § 673.2051(1), Fla. Stat. (2013). Where a bank is seeking to enforce a note which is specially indorsed to another, it may prove standing “‘through evidence of a valid assignment, proof of purchase of the debt, or evidence of an effective transfer.’” Stone v. BankUnited, 115 So. 3d 411, 413 (Fla. 2d DCA 2013) (quoting BAC Funding Consortium Inc. ISAOA/ATIMA v. Jean-Jacques, 28 So. 3d 936, 939 (Fla. 2d DCA 2010)); see also Hunter v. Aurora Loan Servs., LLC, 137 So. 3d 570, 573 (Fla. 1st DCA), review denied, 157 So. 3d 1040 (Fla. 2014); Dixon, 125 So. 3d at 967 (“‘[T]he plaintiff must submit the note bearing a special [i]ndorsement 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.’”) (quoting Rigby v. Wells Fargo Bank, N.A., 84 So. 3d 1195, 1196 (Fla. 4th DCA 2012)). “A witness who testifies at trial as to the date a bank became the owner of the note can serve the same purpose as an affidavit of ownership.” Sosa v. U.S. Bank Nat’l Ass’n, 153 So. 3d 950, 951 (Fla. 4th DCA 2014).

Nationstar did not prove its standing to enforce the note through evidence of an assignment because the assignment at bar assigns only the mortgage. “The mortgage follows the assignment of the promissory note, but an assignment of the mortgage without an assignment of the debt creates no right in the assignee.” Tilus v. AS Michai LLC, 161 So. 3d 1284, 1286 (Fla. 4th DCA 2015) (citing Bristol v. Wells Fargo Bank, Nat’l Ass’n, 137 So. 3d 1130, 1133 (Fla. 4th DCA 2014)). A bank does not have standing to foreclose where it relies on an assignment of the mortgage only.
We also find that Nationstar failed to prove its standing through either “proof of purchase of the debt,” “evidence of an effective transfer,” or “affidavit of ownership proving its status as holder.” While its witness testified that Nationstar acquired Aurora, the witness did not testify that Nationstar acquired this particular note which bears a special indorsement to Aurora. See Dixon, 125 So. 3d at 967 (“Although the lender’s president testified that the lender was the owner and holder of the note, the special indorsement appearing on the back of the original note suggests otherwise.”); Jelic v. LaSalle Bank, Nat’l Ass’n, 160 So. 3d 127, 130 (Fla. 4th DCA 2015) (“[T]he special indorsement on the original note suggests Washington Mutual Bank was the proper party to initiate the foreclosure action.”); see also Gorel v. Bank of N.Y. Mellon, 165 So. 3d 44, 46–47 (Fla. 5th DCA 2015); compare Stone, 115 So. 3d at 413 (finding that the plaintiff had standing where employee of original lender testified that the plaintiff acquired all of the assets of the original lender including the note and mortgage in question pursuant to a purchase assumption agreement). The record lacks competent substantial evidence that this note was transferred by its indorsee, or otherwise purchased or acquired by Nationstar.

Because Nationstar failed to establish its standing at the time judgment was entered, the trial court erred in finding that Nationstar had standing to enforce the note. Accordingly, we reverse the final judgment of foreclosure and remand for entry of an order of involuntary dismissal of the action. See Sosa, 153 So. 3d at 952 (reversing and remanding for involuntary dismissal of foreclosure case following non-jury trial where the bank failed to establish standing).

Reversed and remanded.

LEVINE and FORST, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

LUZ MARIANA DONADO and OSCAR DONADO,
Appellants,

v.

PENNYMAC CORP.,
Appellee.

No. 4D14-1383
[August 19, 2015]

Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Cynthia G. Imperato, Judge; L.T. Case No. CACE 10017106(11).

Vestalia Aylsworth of Aylsworth & Aylsworth, Miami, for appellants.

Nancy M. Wallace of Akerman LLP, Tallahassee, William P. Heller of Akerman LLP, Fort Lauderdale, and Celia C. Falzone of Akerman LLP, Jacksonville, for appellee.

KLINGENSMITH, J.

Luz Mariana and Oscar Donado (“appellants”) appeal the trial court’s final judgment of foreclosure in favor of PennyMac Corporation (“appellee”). On appeal, we consider whether the trial court erred by failing to dismiss the initial complaint for failure to include verification in its pleading as required by then-Florida Rule of Civil Procedure 1.110(b) (“rule 1.110(b)”).1 We hold that appellee’s failure to verify its complaint caused it to be defective. We therefore reverse the final judgment of foreclosure entered in favor of appellee and remand this case to the trial court for dismissal of the action without prejudice.

Because appellants’ issue pertains to the sufficiency of the initial complaint, the appropriate standard of review is de novo. See Rubenstein v. Primedica Healthcare, Inc., 755 So. 2d 746, 748 (Fla. 4th DCA 2000) (“Because the issue of whether a complaint is sufficient to state [a] cause of action is one of law, the standard of review is de novo.”). Additionally, “[t]he standard of review of a trial court’s interpretation of the rules of civil procedure is de novo.” R.T.G. Furniture Corp. v. Coates, 93 So. 3d 1151, 1153 (Fla. 4th DCA 2012).

On April 19, 2010, appellee filed a complaint against appellants alleging one count of foreclosure, and attached both the note and the mortgage. The complaint did not contain any verification language as required by the Florida Supreme Court when it amended rule 1.110(b) to “require verification of mortgage foreclosure complaints involving residential real property.” In re Amendments to the Fla. R. Civ. P., 44 So. 3d 555, 556 (Fla. 2010). The court added the following language to that rule:

When filing an action for foreclosure of a mortgage on residential real property the complaint shall be verified. When verification of a document is required, the document filed shall include an oath, affirmation, or the following statement:

“Under penalty of perjury, I declare that I have read the foregoing, and the facts alleged therein are true and correct to the best of my knowledge and belief.”
Id. at 560.

The court also stated that the amendment was to “become effective immediately upon the release of this opinion,” on February 11, 2010. Id. at 559.

After this opinion initially was released, the court issued a revised opinion on June 3, 2010. See JP Morgan Chase Bank v. Jurney, 86 So. 3d 1182, 1183-84 (Fla. 2d DCA 2012) (explaining the events following the initial February 11, 2010 publication of In re Amendments to the Florida Rules of Civil Procedure). This modified opinion also was dated February 11, 2010, and stated that the amendments were to be “effective immediately upon the release of this opinion.” Id. at 1184. Moreover, the revised opinion did not change any of the original opinion’s amendments to rule 1.110(b). Id.

In light of the issuance of the modified opinion, appellee maintains that the effective date of the amendment to rule 1.110(b) was the date of its release, specifically June 3, 2010. Because the modified opinion was issued over two months after appellee filed its initial complaint, appellee claims that it was not required to include a verification. That position is incorrect.

Because the court’s modified opinion clearly lists February 11, 2010, as the effective date of the amendment to rule 1.110(b), this is the point in time after which all foreclosure complaints were required to contain a verification. See id. (stating that “[i]t is the understanding of this court that, in this context, the supreme court intends rules to become effective on the issuance of the original opinion and to remain effective during any period in which a motion for rehearing can be filed or is pending”); see also Phillip Padovano, Florida Appellate Practice § 18.7, at 356-57 (2007-2008 ed.) (noting that finality and the effective date of an appellate decision are “distinct concept[s],” and stating that “[t]he effective date of an appellate decision is the date appearing on the face of the decision, even though most decisions do not actually become final until after the time has expired for filing a motion for rehearing . . . the date appearing on the decision is the effective date”). As such, appellee was required to file a foreclosure complaint containing either an oath, affirmation or verification language sufficient to comply with the rule.

It is clear from the record that the complaint at issue did not contain any of the verification elements necessary for compliance with the amendment to rule 1.110(b) in place at that time, nor were there any other terms or attachments that reasonably could have satisfied the verification requirement. See, e.g., BAC Home Loan Servicing, L.P. v. Stentz, 91 So. 3d 235, 236 (Fla. 2d DCA 2012) (reversing trial court’s decision to dismiss appellant’s amended complaint with prejudice for failure to verify because the court found that appellant’s “usage of the terms ‘to the best of my knowledge and belief’” satisfied the verification requirement); Becker v. Deutsche Bank Nat’l Trust Co., 88 So. 3d 361, 362 (Fla. 4th DCA 2012) (holding that the verification requirement in rule 1.110(b) was satisfied where “verification was attached to the complaint as a separate document rather than incorporated within it,” and stating “[w]e will not read more into the rule than its plan language dictates”).

Appellee’s failure to include the necessary verification in its complaint constitutes a defect of such significance that the trial court should have dismissed this action without prejudice.

Reversed and Remanded.

WARNER and MAY, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.

foot note: 1 The current version of rule 1.110(b) no longer contains the verification requirement for foreclosure actions on real property. See Fla. R. Civ. P. 1.110(b). The language was dropped from rule 1.110(b) in 2014 in light of the creation of new Florida Rule of Civil Procedure 1.115. See id. (stating in the committee notes that “[t]he last two paragraphs of rule 1.110(b) regarding pleading requirements for certain mortgage foreclosure actions were deleted and incorporated in new rule 1.115”); see also Fla. R. Civ. P. 1.115(e).

Friedman, J.P., Renwick, Manzanet-Daniels, Clark, JJ.

Upon remittitur from the Court of Appeals for consideration of issues raised but not determined on appeal to this Court (25 NY3d 1043 [2015]), order, Supreme Court, New York County (Barbara R. Kapnick, J.), entered April 24, 2012, which, to the extent appealed from, denied defendant’s motion to dismiss the causes of action for fraudulent inducement and fraudulent concealment, unanimously affirmed, without costs.

Plaintiff, ACA Financial Guaranty Corp., alleges that defendant, Goldman, Sachs & Co. fraudulently induced plaintiff to issue a financial guaranty for a synthetic collateralized debt obligation while concealing the fact that its hedge fund client Paulson & Co., which selected most of the portfolio investment securities, planned to take a “short” position. Plaintiff alleges that had it known this information, it would not have agreed to the guaranty as it exposed plaintiff to substantial liability.

On a prior appeal, we reversed, granted defendant’s motion to dismiss the causes of action for fraudulent inducement and fraudulent concealment finding that plaintiff’s amended complaint failed to establish justifiable reliance as a matter of law (106 AD3d 494 [2013]). The Court of Appeals reversed our order, finding that plaintiff has sufficiently pleaded justifiable reliance for the causes of action for fraud in the inducement and fraudulent concealment, and remitted the case to this Court “for consideration of issues raised but not determined” (25 NY3d 1043 [2015]).

We find that plaintiff adequately pleaded all of the requisite elements comprising a fraud claim. “To make a prima facie claim of fraud, the complaint must allege misrepresentation or concealment of a material fact, falsity, scienter on the part of the wrongdoer, justifiable reliance and resulting injury” (Dembeck v 220 Cent. Park S., LLC, 33 AD3d 491, 492 [1st Dept 2006]). Defendant argued, inter alia, that the motion court erred in finding that the amended complaint adequately pled a material misrepresentation and scienter. However, the motion court properly determined that plaintiff pleaded a material misrepresentation. Plaintiff provided allegations that defendant misrepresented Paulson’s economic interest in ABACUS. Further, the complaint alleges that two other entities refused to assist Paulson upon learning of its true role in the transaction, and Paulson’s position was described as a “stark departure” from the basic assumption in the industry that sponsors of a deal want it to succeed. These allegations all supported plaintiff’s claim that the alleged misrepresentation/concealment of Paulson’s conflict of interest was material and it would not have provided the financial guaranty had it known the truth.

The motion court correctly found scienter sufficiently alleged. Ordinarily, intent to commit fraud is a question of fact which cannot be resolved on a motion to dismiss (Schisgal v Brown, 21 AD3d 845, 847 [1st Dept 2005]), and proof of intent is to be determined from surrounding circumstances (see Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553 [2009]; Oster v Kirschner, 77 AD3d 51, 56 [1st Dept 2010]). Here, plaintiff’s complaint alleged [*2]that Goldman had a long-term and economically rational interest in pleasing a client with whom it had already done billions of dollars in transactions and in positioning itself as a leader in the burgeoning market for the type of investment product involved in this matter. As such, the complaint contains a rational basis for inferring that the alleged misrepresentations were made intentionally (see Seaview Mezzanine Fund, LP v Ramson, 77 AD3d 567, 568 [1st Dept 2010][rational inference standard]).

We have considered defendant’s remaining arguments and find them unavailing.

THIS CONSTITUTES THE DECISION AND ORDER

OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: AUGUST 18, 2015

DEPUTY CLERK

Press Release

August 18, 2015

Contact: Matt Anderson, 212-709-1691

STATEMENT BY ACTING NEW YORK SUPERINTENDENT OF FINANCIAL SERVICES ANTHONY J. ALBANESE ON AGREEMENT WITH PROMONTORY FINANCIAL GROUP, LLC

Anthony J. Albanese, Acting Superintendent of Financial Services for the State of New York, issued the following statement today on an agreement between the Department of Financial Services (DFS) and Promontory Financial Group, LLC. The agreement resolves the conduct outlined in the Department’s August 3, 2015 report on its investigation of Promontory’s consulting work at Standard Chartered Bank.

Acting Superintendent Albanese said: “We are pleased that Promontory has agreed to resolve this matter and to work constructively with the Department moving forward to help strengthen integrity within the consulting industry. The Department will continue to aggressively investigate and address conflicts of interest at consulting firms, which is a critical part of combating misconduct and improving accountability in the financial markets.”

Under the agreement:

• Promontory will pay $15 million;
• Promontory agrees to a 6-month voluntary abstention from new consulting engagements that require the Department to authorize the disclosure of confidential information under New York Banking Law §36(10);
• Promontory agrees that, in certain instances, its actions during the Standard Chartered engagement did not meet the Department’s current requirements for consultants performing regulatory compliance work for entities supervised by the Department.
• Promontory acknowledges that any report it submits to the Department must be objective and reflect its best independent judgment.  In all pending and future matters in which it or its client submits a report to the Department, Promontory will document any changes to such a report that it makes at the suggestion of a client or the client’s counsel.

To view a copy of the agreement between DFS and Promontory, please visit, link.

NEWSJS-

According to data compiled by SNL Financial, big settlements with regulators have become a rarer sight as the banking credit crisis fades further into memory. The tally for credit crisis and mortgage-related settlements now stands at $132.15 billion for the six largest bank holding institutions by total assets. The figure marks an additional $3.72 billion since SNL’s previous analysis in August 2014.

Most recently, on July 31, Goldman Sachs agreed to pay nearly $270 million to settle a lawsuit led by the NECA-IBEW Health & Welfare Fund of Illinois concerning crisis-era residential mortgage-backed security investments. Goldman recently raised its cost estimate for current legal proceedings to approximately $5.9 billion in excess of reserves, up from its previous estimate of $3.8 billion, according to the company’s August 3 Form 10-Q.

In contrast, Wells Fargo only marginally boosted its expected litigation costs, noting in its second-quarter Form 10-Q that the high end of its range for probable and estimable losses related to legal matters was $1.4 billion, compared to $1.2 billion for the previous quarter.

[NEWSJS]

NBC-

Goldman Sachs Group Inc. will pay $272 million to settle a lawsuit that claimed the Wall Street bank defrauded investors about the safety of about $6 billion of residential mortgage-backed securities they bought in 2007 and 2008.

The settlement with investors led by the NECA-IBEW Health & Welfare Fund, an electrical workers’ pension fund in Decatur, Illinois, was disclosed in filings with the U.S. District Court in Manhattan on Thursday.

NECA-IBEW accused Goldman of misleading investors about the underwriting of home loans backing the securities, including the quality of appraisals and whether borrowers were capable of repaying their loans. The fund said the securities’ prices collapsed during and after the financial crisis, while their credit ratings fell to low, “triple-C” junk grades from “triple-A.”

[NBC]

HuffPost-

The Federal Reserve can’t stop hiring Goldman Sachs executives. On Monday, the Dallas Fed named former Goldman Sachs Vice Chairman Robert Kaplan as its president — a post with significant regional regulatory responsibilities and influence over critical monetary policy decisions.

Kaplan will serve on the the powerful Federal Open Market Committee, which sets interest rates that have a massive impact on economic growth, unemployment and inflation. He’ll also be a major regulator. Kaplan has been critical of the regulatory response to the 2008 financial crisis, saying that the Wall Street reform law passed by Congress is hurting small businesses.

“My complaint about Dodd-Frank is that it should be slimmed down and focused on two or three top priorities,” Kaplan told The American Interest in 2012. During the same interview, Kaplan hinted that he’d be willing to end the Fed’s historic eight-year adherence to zero interest rate policy, saying that “what the Fed thinks it has been doing over the past three years [2009-2012] is what the ECB is now doing for Germany and Europe: buying them time, and hopefully putting on the pressure for [fiscal policy-makers] to get in gear because they can’t keep on indefinitely with hyper-aggressive monetary policy.”

[HUFFINGTON POST]

MATTHEW J. HART, on behalf of plaintiff and the class defined herein, Plaintiff-Appellant,
v.
FCI LENDER SERVICES, INC., Defendant-Appellee.

PRESTON L. ZARLOCK (Spencer L. Durland, on the brief), Phillips Lytle LLP, Buffalo, New York, for FCI Lender Services, Inc.

Before: WINTER, RAGGI, AND CARNEY, Circuit Judges.

SUSAN L. CARNEY, Circuit Judge.

Matthew J. Hart sued FCI Lender Services, Inc. (“FCI”), his mortgage loan servicer and a debt collector, seeking damages under the Fair Debt Collection Practices Act (“FDCPA” or the “Act”), 15 U.S.C. § 1692 et seq., on behalf of himself and others similarly situated. Hart asserts that FCI violated the Act by sending him two written communications that failed to comply with FDCPA requirements that debt collectors timely provide certain notices to debtors. The first of the communications is a letter advising Hart that FCI had assumed mortgage servicing responsibilities related to Hart’s mortgage loan. The second is a payment statement that FCI sent Hart some months later. The Act’s notice obligations are triggered by a debt collector’s “initial communication with a consumer in connection with the collection of any debt.” 15 U.S.C. § 1692g.

The United States District Court for the Western District of New York (Charles J. Siragusa, Judge) granted FCI’s motion to dismiss Hart’s amended complaint for failure to state a claim, ruling principally that the letter, which the court viewed as primarily a transfer-of-servicing informational notice sent pursuant to the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605, was not also a communication sent “in connection with the collection of any debt” under the FDCPA. See Hart v. FCI Lender Servs., Inc., No. 13-CV-6076, 2014 WL 198337 (W.D.N.Y. Jan. 15, 2014). The District Court also ruled that Hart failed to allege (adequately or otherwise) that FCI violated the FDCPA by mailing the payment statement. Finally, the District Court denied Hart leave to file a second amended complaint. On appeal, Hart challenges all three rulings.

Construing the FDCPA in light of its remedial purposes, we agree with Hart that he has adequately alleged that FCI sent the letter “in connection with the collection of [a] debt,” thereby triggering the FDCPA’s initial notice requirements. We accordingly vacate the judgment and remand for further proceedings, without addressing Hart’s alternative arguments that the later payment statement triggered those requirements and that he should have been given a further opportunity to amend his complaint.

BACKGROUND

We draw this narrative from the allegations of Hart’s first amended complaint, see App. 113-32, including the documents attached to the amended complaint as exhibits, see Fed. R. Civ. P. 10(c). We accept Hart’s well-pleaded factual allegations as true and draw all reasonable inferences in his favor. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Hart, a mortgagor, filed suit under the Act seeking damages from FCI, a corporation offering “a full spectrum of loan servicing, collection and foreclosure services locally or nationally.” Am. Compl. ¶ 8. As an “integral part of its business,” FCI regularly collects payments on “non[-]performing” loans—that is, loans that are in default. Id. ¶ 11. Hart’s case rests primarily on a letter sent to him by FCI in July 2012 (the “Letter”), after FCI assumed loan servicing obligations for Hart’s mortgage loan from GMAC Mortgage, LLC (“GMAC”), the prior servicer. Hart was in default on his mortgage loan when FCI assumed servicing responsibilities.

The text of the Letter requires our close scrutiny. Entitled “Transfer of Servicing Letter” and dated “7/17/2012,” it consists of one and one-half pages on FCI letterhead in the format of a signed letter, and two numbered pages of attachments. App. 123-26. In the body of the Letter, FCI notifies Hart that FCI has become his mortgage loan servicer: The text begins, “Please be advised that effective June 28, 2012 the servicing of your mortgage loan with GMAC Mortgage, LLC, secured by a Deed of Trust/Mortgage on real property, has been assigned to FCI Lender Services, Inc.” App. 123. It informs Hart that his loan number has been changed and instructs that “[b]eginning June 28, 2012 you should mail your payments, including all past due payments, to FCI Lender Services, Inc. . . . .” Id. The Letter provides relevant timing, payment, and correspondence particulars about the transfer.

The body of the Letter also refers expressly to consumer rights conferred by section 6 of RESPA. Congress enacted RESPA to protect consumers from certain “abusive practices” that had developed “in some areas of the country” with respect to the settlement process used for residential real estate purchases and sales. 12 U.S.C. § 2601(a). RESPA obligates a new servicer of certain types of mortgage loans timely to notify the borrower of the change in servicer and to provide certain other information regarding the transfer. See id. § 2605(c). Reflecting (as none dispute) FCI’s effort to meet its obligations under RESPA, the Letter’s body identifies the effective date of the servicing transfer, provides phone numbers for both FCI and GMAC, and further details Hart’s rights under RESPA regarding (for example) the timeliness of payments sent during the transfer period and how a consumer may dispute aspects of his account.

The Letter’s third page (the first page of the attachment) plays a pivotal role here. Entitled “IMPORTANT NOTICES — PLEASE READ,” it contains the following language, in the following format (insofar as reproducible here):

NOTICE

THIS IS AN ATTEMPT TO COLLECT UPON A DEBT, AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE

YOU HAVE THE FOLLOWING RIGHTS

THIS DEBT WILL BE ASSUMED TO BE VALID UNLESS YOU DISPUTE ITS VALIDITY WITHIN 30 DAYS AFTER RECEIVING THIS NOTICE.

IF YOU NOTIFY THIS OFFICE IN WRITING THAT THE DEBT IS DISPUTED WITHIN 30 DAYS, THIS OFFICE WILL MAIL TO YOU VERIFICATION OF THE DEBT OR A COPY OF THE JUDGMENT AGAINST YOU.

THIS OFFICE WILL PROVIDE YOU WITH THE NAME AND ADDRESS OF THE ORIGINAL CREDITOR (IF DIFFERENT FROM THE CURRENT CREDITOR) UPON YOUR WRITTEN REQUEST WITHIN 30 DAYS.

IT IS IMPORTANT THAT YOU UNDERSTAND THAT YOU HAVE THE RIGHT TO ENFORCE THE ABOVE NOTICE.

FAIR DEBT COLLECTION PRACTICES ACTS

The federal Fair Debt Collection practices Act . . . require[s] that, except under unusual circumstances, collectors may not contact you before 8 a.m. or after 9 p.m. They may not harass you by using threats of violence or arrest or by using obscene language. Collectors may not use false or misleading statements or call you at work if they know or have reason to know that you may not receive personal calls at work. For the most part, collectors may not tell another person, other than your attorney or spouse, about your debt. Collectors may contact another person to confirm your location or enforce a judgment. For more information about debt collection activities, you may contact the Federal Trade Commission at 1-877-FTC-HELP or www.ftc.gov.

App. 125 (sic).^[1] The attachment is not separately signed, and it follows the signature line appearing on the second page of the main body of the Letter. See App. 124.

On February 13, 2013, Hart filed this suit against FCI as a putative class action, alleging that FCI violated the FDCPA by sending the Letter and, inter alia, “failing to identify the current creditor” and “misstat[ing] the debtor’s rights,” Compl. ¶ 28 — information that the Act requires a debt collector to provide within five days of an “initial communication with a consumer in connection with the collection of any debt,” 15 U.S.C. § 1692g. Hart sought an award of statutory damages.^[2] In an amended complaint filed some months later, Hart added allegations that his mortgage was in default when it was transferred to FCI for servicing and that FCI regularly and as an integral part of its business collected debts, both factors that he contended rendered FCI a “debt collector” under the Act. Hart attached as an exhibit to the amended complaint both the Letter and a December 28, 2012 payment statement (the “Payment Statement”) sent by FCI to Hart and showing past-due amounts of $31,736.43, as well as the principal balance of Hart’s loan and late charges due. See App. 128.

FCI moved under Fed. R. Civ. P. 12(b)(6) to dismiss the amended complaint for failure to state a claim, arguing principally that as a matter of law the Letter was not FCI’s “initial communication . . . in connection with the collection of any debt” under the FDCPA. The District Court accepted that argument and granted FCI’s motion to dismiss. See Hart, 2014 WL 198337, at *7-8. In light of deadlines imposed by a scheduling order entered in the interim,^[3] the District Court concluded further that Hart was not entitled to amend his complaint a second time to add allegations that the Payment Statement, too, gave rise to notice obligations under the Act. See id. at *7.

Hart timely appealed.

DISCUSSION

Hart maintains that the Letter was sent “in connection with the collection of [a] debt.” In the alternative, he contends that the amended complaint plausibly established that the Payment Statement triggered FCI’s notice obligations and that the District Court abused its discretion in denying him leave to further amend his complaint to add new allegations relating to the Payment Statement. FCI responds, in essence, that: (1) the Letter was intended merely to comply with RESPA by providing certain information — that is, it was not aimed at “collect[ing] [a] debt” — and thus did not trigger the FDCPA’s notice requirements; (2) Hart failed to plead adequately that the Payment Statement served as a predicate for an FDCPA violation; and (3) the District Court acted within the fair scope of its discretion in denying Hart a second opportunity to amend his complaint.

We review de novo a district court’s grant of a defendant’s motion to dismiss. See City of Pontiac Gen. Emps.’ Ret. Sys. v. MBIA, Inc., 637 F.3d 169, 173 (2d Cir. 2011). To survive a motion to dismiss, a complaint “must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (internal quotation marks omitted).

1. The FDCPA

In passing the FDCPA, Congress aimed “to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e). A particular goal was to address “`the recurring problem of debt collectors dunning the wrong person or attempting to collect debts which the consumer has already paid.'” Jacobson v. Healthcare Fin. Servs., Inc., 516 F.3d 85, 89 (2d Cir. 2008) (quoting S. Rep. No. 95-382, at 4 (1977), as reprinted in 1977 U.S.C.C.A.N. 1695, 1699).

Section 1692g of Title 15 (in which the Act is codified) is entitled “Validation of debts” and requires a “debt collector” to furnish a written notice conveying certain information (the “§ 1692g notice”) to a consumer debtor upon the debt collector’s “initial communication with a consumer in connection with the collection of any debt.” 15 U.S.C. § 1692g(a).^[4] When an initial communication triggers the Act’s notice obligations, the debt collector must either include a § 1692g notice in that communication or send a separate written notice to the debtor within the following five days, unless by that time the debtor has already paid the debt. See id. The required contents of the § 1692g notice relate both to the particular debt and to the consumer’s rights under the Act: the notice must state the amount of the debt and the name of the creditor to whom the debt is owed and must inform the consumer of her right to dispute the debt’s validity.^[5] And to enforce these and other provisions, the FDCPA “grants a private right of action to a consumer who receives a communication that violates the Act.” Jacobson, 516 F.3d at 91; see 15 U.S.C. § 1692k.

FCI concedes for purposes of this appeal that it is a “debt collector” covered by the Act. Further, the parties agree that the Letter was FCI’s “initial communication” with Hart.^[6] The parties disagree, however, as to whether that initial communication was “in connection with the collection of any debt,” so as to give rise to § 1692g notice obligations; the statute offers no definition for the phrase.

2. The Letter

FCI urges that, rather than seeking to compel Hart to pay his debt, the Letter was intended only to provide transfer-of-servicing information so as to comply with RESPA. Accordingly, FCI argues, the Letter was not sent “in connection with the collection” of Hart’s debt, and FCI had no obligation to provide the complete recitation of debt-related information required by § 1692g.

The District Court accepted this construction of both the Act and the Letter. Examining the Letter, which it denominated the “transfer-of-servicing” or “RESPA” letter, the court reasoned that:

[The Letter] did not attempt to induce [Hart] to make payment, but rather, it assumes that he will be making payments and directs where he should send them. The notice is informational in nature, and does not reference an amount owed or threaten to take any action if payment is not made. . . . [T]he document itself establishes that it was not sent in order to induce [Hart] to make a payment.

Hart, 2014 WL 198337, at *6-7 (emphasis in original). The court acknowledged that the third page of the Letter included certain required FDCPA notifications— including the language “THIS IS AN ATTEMPT TO COLLECT UPON A DEBT,” see id. at *2—but the court did not refer to that material in its analysis, see id. at *5-7.

This court has never addressed the scope of the FDCPA’s “in connection with the collection of any debt” language. We here conclude that whether a communication is “in connection with the collection of [a] debt” is a question of fact to be determined by reference to an objective standard. Thus, in determining at the motion to dismiss stage whether the Letter triggers the Act’s notice provisions, we must view the communication objectively, asking whether Hart has plausibly alleged that a consumer receiving the communication could reasonably interpret it as being sent “in connection with the collection of [a] debt,” rather than inquiring into the sender’s subjective purpose. See, e.g., Ruth v. Triumph P’ships, 577 F.3d 790, 798 (7th Cir. 2009) (“[T]he proper standard [for assessing whether a communication is in connection with the collection of any debt] is an objective one.”); cf. Grden v. Leikin Ingber & Winters PC, 643 F.3d 169, 173 (6th Cir. 2011) (affirming award of summary judgment to defendant where a “reasonable jury could not find” that the communication was in connection with the collection of a debt). Such an inquiry is consistent with the FDCPA’s goal of protecting consumers: if a consumer receiving a letter could reasonably understand it to be a communication in connection with the collection of a debt, then the consumer is entitled to the protections Congress has mandated for such communications. An objective standard that determines the apparent purpose of a communication with an eye towards a consumer’s understanding also aligns with our teaching that the FDCPA is “remedial in nature, [and] its terms must be construed in liberal fashion if the underlying Congressional purpose is to be effectuated.” Vincent v. The Money Store, 736 F.3d 88, 98 (2d Cir. 2013) (internal quotation marks omitted).

The parties dispute the extent to which a communication—to be deemed made “in connection with the collection of any debt”—must be designed to induce the debtor’s payment. FCI, citing standards adopted by the Sixth and Seventh Circuits, argues that such a communication “must attempt to induce the borrower to pay, not just convey information about the debt.” Appellee’s Br. 19; see Gburek v. Litton Loan Servicing LP, 614 F.3d 380, 384-85 (7th Cir. 2010) (ruling that the FDCPA “does not apply to every communication between a debt collector and a debtor,” but that a communication made “to induce” a debtor to settle her debt will trigger the statute’s protections (emphasis in original)); see also Grden, 643 F.3d at 173 (holding that, for the FDCPA’s notice provision to apply, “an animating purpose of the communication must be to induce payment by the debtor”). Hart, in turn, points out that a district court in our Circuit, in Tocco v. Real Time Resolutions, Inc., 48 F. Supp. 3d 535 (S.D.N.Y. 2014), recently construed the phrase far more flexibly when it rejected the information/inducement dichotomy and reasoned that “in connection with” is “synonymous with the phrases `related to,’ `associated with,’ and `with respect to,'” and does not necessitate any inducement element. Id. at 540.

We need not delineate the outer bounds of the phrase “in connection with the collection of any debt,” however, because we have no difficulty in concluding that an attempt to collect a debt—which we believe the Letter was—qualifies as a communication “in connection with the collection of any debt.” Indeed, we see few types of communications as more obviously “in connection with the collection” of debts than attempts to collect debts. See, e.g., Caceres v. McCalla Raymer, LLC, 755 F.3d 1299, 1303 (11th Cir. 2014) (concluding that a letter was “an attempt to collect a debt” and therefore a “communication in connection with the collection of a debt”). Moreover, in passing the FDCPA, Congress identified abusive collection attempts as primary motivations for the Act’s passage. See S. Rep. No. 95-382, at 2. Accordingly, we think that treating an attempt to collect a debt as a communication “in connection with the collection of any debt” easily accords with the plain meaning of the broad statutory language, as well as with the Act’s remedial purpose of halting abusive collection practices and giving debtors adequate information about their rights and obligations.^[7]

Hart has sufficiently alleged that the Letter—viewed objectively—is an attempt to collect a debt. The Letter references Hart’s particular debt, directs Hart to “mail [his] payments, including all past due payments, to FCI Lender Services, Inc.” at a specified address, and refers to the FDCPA by name. App. 123, 125. More critically, it warns Hart that he must dispute the debt’s validity within thirty days after receiving the Letter or his debt will “be assumed to be valid.” App. 125. Finally, and most importantly, the Letter, in its two-page attachment, emphatically announces itself as an attempt at debt collection: “THIS IS AN ATTEMPT TO COLLECT UPON A DEBT, AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE.” Id. A reasonable consumer would credit the Letter’s warning, its instruction to take action within thirty days, and its statement that it represents an attempt to collect a debt.

FCI asserts that the inclusion of RESPA-required notices in the Letter’s main body demonstrates that the Letter’s purpose was merely to convey the information that RESPA mandated. In support of that position, it further notes that the Letter does not discuss the current status of Hart’s debt or the amount due on his loan, nor does it explicitly demand payment from Hart. But for the reasons discussed above, even if it could be ascertained that FCI’s sole intention in sending the Letter was to comply with RESPA, we are hard put to accept that a reasonable consumer receiving the Letter would necessarily understand that FCI did not send the Letter in connection with the collection of her debt. And we see no reason that the Letter could not serve more than one purpose in any event.^[8] See, e.g., Simon v. FIA Card Servs., N.A., 732 F.3d 259, 267 (3d Cir. 2013) (“The letter and notice were an attempt to collect the [plaintiffs’] debt. . . . The absence of an explicit payment demand does not take the communication outside the FDCPA.”); Gburek, 614 F.3d at 385 [7th Cir.] (“[T]he absence of a demand for payment is just one of several factors that come into play in the commonsense inquiry of whether a communication from a debt collector is made in connection with the collection of any debt.”).

FCI further asserts that it is circular to conclude that the Letter’s statement that it is “an attempt to collect a debt” helps render the Letter a communication “in connection with the collection of [a] debt.” As FCI points out, the Act elsewhere requires debt collectors to “disclose in the initial written communication with the consumer . . . that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose.” 15 U.S.C. § 1692e(11). FCI argues that it would be unfair to consider this statutorily-required language as evidence that the Letter is in actuality an attempt to collect a debt. But a debtor receiving the Letter has no reason to know that the language is required by the FDCPA or to believe that the language mandated by § 1692e can safely be disregarded on that basis. To the contrary, as we have highlighted, the Letter clearly announces itself an attempt to collect a debt, and its other text only emphasizes the plausibility and gravity of that announcement. We see no reason why we should not take it at its word, nor any reason that a consumer would (or indeed should) fail to credit the clear language of the document. See, e.g., Alibrandi v. Fin. Outsourcing Servs., Inc., 333 F.3d 82, 87-88 (2d Cir. 2003) (holding that lender’s agent’s self-identification as a debt collector in communication to borrower was relevant to whether lender considered the loan in default). While it may be unfortunate for debt collectors that the use of a defective notice helps give rise to an obligation to provide a proper notice, the solution is to improve the defective notice.

Indeed, defective § 1692g notices pose particular dangers to consumers. Here for instance, because the Letter states that the debt will, after thirty days, be “assumed to be valid,” a consumer who fails timely to act upon the Letter might believe that she has forfeited her right to challenge the accuracy of FCI’s debt assessment. But under § 1692g(a)—which FCI paraphrased incompletely in the Letter—such an unchallenged debt may be assumed to be valid only by the debt collector, leaving the consumer free to contest the debt with the lender either directly or in the courts. Compare App. 125 (quoted supra pp. 6-7), with 15 U.S.C. § 1692g(a). By misleading the consumer into believing she had forfeited her right to dispute the validity of her putative debt with the lender, FCI would have frustrated a major objective of the FDCPA.

Finally, FCI points out that Congress, in explaining its decision to pass the FDCPA, cited a number of aggressive practices engaged in by the debt collection industry that it particularly intended to deter by passing the Act. FCI’s argument seems to be that, because Congress “targeted specific methods of collection,” Appellee’s Br. 19, which did not include communications such as the Letter, the Act’s notice requirements should not be triggered by the Letter. Plainly, sending a writing such as the Letter is not as aggressive as making late-night phone calls to debtors or engaging in some of the threatening practices that Congress sought to end. But that Congress cited the industry’s worst practices when passing the FDCPA does not limit the statute’s purview to those practices, when the text reaches well beyond. FCI provides no reason to believe that Congress did not intend the FDCPA to offer broad protection to debtors or that a debt collector’s failure to provide the required § 1692g notice should be excused as no more than a de minimis violation, one from which the Act would not protect consumers. See generally Vincent, 736 F.3d at 98 (noting Congress’s broad remedial intent in adopting the FDCPA).

In sum, Hart has plausibly alleged that the Letter was a “communication in connection with the collection of [a] debt.” Accordingly, the District Court erred in dismissing the amended complaint and ruling as a matter of law that the Letter did not trigger § 1692g’s notice requirement.

3. The Payment Statement

Because we conclude that Hart has stated a claim based on the Letter, we need not decide whether Hart alleged adequately that the Payment Statement also was a communication in connection with the collection of a debt. A debt collector’s duty to provide a § 1692g notice arises only upon the “initial communication with a consumer in connection with the collection of any debt.” 15 U.S.C. § 1692g(a) (emphasis added). As Hart himself notes, “[t]here is only one claim and one recovery of damages regardless of the number of collection communications sent without complying with § 1692g.” Appellant’s Reply Br. 17. Since Hart has plausibly alleged that the Letter was sent “in connection with the collection of any debt,” any allegations relating to the Payment Statement are irrelevant in determining whether Hart stated a claim that FCI violated the Act by failing to provide a § 1692g notice.

Similarly, we need not decide whether the District Court abused its discretion in denying Hart’s request to amend his complaint a second time. Hart’s request to amend was expressly conditioned on a ruling that the Letter was not a communication “in connection with the collection of any debt”: at oral argument before the District Court on FCI’s motion to dismiss, Hart stated that he “would ask for an opportunity to replead with [the Payment Statement], if the Court were inclined to rule” that the Letter did not trigger § 1692g notice obligations. App. 191; see also Appellant’s Br. 40 (“[T]he Court should . . . hold that plaintiff’s amended complaint stated a claim, or alternatively, that plaintiff should be allowed to amend.”).^[9] Because we conclude that Hart adequately alleged that the Letter did trigger FCI’s notice obligations, we decline to address the District Court’s denial of Hart’s request to amend.

CONCLUSION

Applying an objective standard to resolve the question, we decide that Hart adequately alleged that the Letter was an “initial communication . . . in connection with the collection of [a] debt,” so as to obligate FCI to provide Hart a § 1692g notice. The District Court thus erred in granting FCI’s motion to dismiss. Because Hart sufficiently alleged that the Letter triggered FCI’s notice obligations, we decline to address his request to amend his complaint to add allegations regarding the Payment Statement. Accordingly, we VACATE the District Court’s judgment, and REMAND for further proceedings consistent with this opinion.

[1] The second attachment page (the fourth page of the Letter) is entitled “FCI Lender Services, Inc. PRIVACY NOTICE,” App. 126, and contains information solely about FCI’s privacy practices not relevant here.

[2] The FDCPA provides for recovery of actual damages, certain statutory damages, and award of a reasonable attorney’s fee upon a proven violation. See 15 U.S.C. § 1692k(a).

[3] On June 12, 2013, Magistrate Judge Jonathan W. Feldman issued a Scheduling Order directing that “[a]ll motions to . . . amend the pleadings . . . be filed on or before September 12, 2013,” and warning that extension of the amendment deadline would be granted only upon good cause shown prior to the deadline. See Hart, 2014 WL 198337, at *3.

[4] Debt collectors (within the statutory definition) must provide a § 1692g notice only to “consumers,” whom the Act defines as “any natural person[s] obligated or allegedly obligated to pay any debt.” 15 U.S.C. § 1692a(3). For purposes of our discussion of the FDCPA, we refer to “debtors,” “consumers,” and “consumer debtors” interchangeably.

[5] Section 1692g provides:

Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall . . . send the consumer a written notice containing —

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

15 U.S.C. § 1692g(a).

[6] The FDCPA defines a “communication” as “the conveying of information regarding a debt directly or indirectly to any person through any medium.” 15 U.S.C. § 1692a(2).

[7] Our decision in Romea v. Heiberger & Assocs., 163 F.3d 111 (2d Cir. 1998), is also instructive on this point. In Romea, we rejected a debt collector’s argument that a particular letter was not a “communication” under § 1692g because it was a “statutory condition precedent to commencing a summary eviction proceeding” under New York law. Id. at 116. We held that the collector’s purpose was “at least in part to induce Romea to pay the back rent she allegedly owed,” and we therefore ruled it “a `communication’ under 15 U.S.C. § 1692g(a).” Id.

[8] Section 1692g instructs that a communication required by certain statutes, such as the Gramm-Leach-Bliley Act, 15 U.S.C. § 6801 et seq., shall “not be treated as an initial communication in connection with debt collection for purposes of this section.” 15 U.S.C. § 1692g(e). RESPA is not among the enumerated statutes.

[9] Hart requested leave to amend three months after the amendment deadline set by Magistrate Judge Feldman’s Scheduling Order had passed. See App. 85. The Scheduling Order also warned that no extension of the deadline would be granted “except upon written application, made prior to the cutoff date, showing good cause for the extension.” App. 87 (emphasis in original). Hart did not request an extension before the deadline passed, and he did not identify any good cause for an extension before the District Court. See App. 194-95.

VI. CONCLUSION
Section 363(f) of the Bankruptcy Code provides an effective way to kill off a zombie mortgage through a free and clear sale of a vacant home.

Bankruptcy Weapons to Terminate a Zombie Mortgage
Professor Andrea Boyack* and Judge Robert Berger**

I. INTRODUCTION
After receiving notice from JP Morgan Chase in 2008 that foreclosure was imminent, homeowner Joseph Keller vacated his home, moved to a new residence, and tried to pick up the pieces and start again.1 Two years after he had relocated, however, the county sued Keller because his house, “already picked clean by scavengers,” was in violation of the housing code. Upon returning to investigate, Keller found his former home “in [] shambles,” with “hanging gutters and collapsed garage.”2 Keller also discovered that he owed back taxes, sewer fees, as well as bills for municipal weed and waste removal. Furthermore, he remained personally liable on the Chase mortgage loan, the debt having grown from $62,000 to $84,000 because of two years of unpaid interest, penalties, and fees. Adding insult to injury, the Social Security Administration rejected his disability application because the vacant, crumbling home he still unwittingly owned was a valuable “asset.” Chase had dismissed the foreclosure judgment two months after Kelley had moved out, but somehow Kelley was never informed.3

In 2012, Marlon Sheafe was sentenced to probation and faced jail time based on failure to maintain a home that he had abandoned and had presumed was foreclosed upon back in 2008.4 Sheafe, struggling with the symptoms of advanced cancer, started visiting the abandoned home weekly to mow the lawn and attempt to rehabilitate the property that was plagued by “cracked steps, shredded siding, weeds as tall as the door.”5 The Cleveland Housing Court had cited Sheafe for building code infractions on the property even though he did not know that he still owned it. During the four years after Sheafe’s abandonment, “[l]ooters had stripped the place bare, and ‘dope boys’ had left their sneakers on the porch and their empty cans of sausages strewn about inside.”6 Sheafe eventually convinced the bank to release its lien and tried to donate the home to a land bank, but by that time, the county had sold its tax lien to a debt collector who brought suit for foreclosure. This second foreclosure still pending, Sheafe faced thousands of dollars in code violations and court costs and risked owing $10,000 in fees to the county if it ordered the home to be demolished because of blight.7

Reuters-

A federal judge has asked the Washington state Supreme Court to weigh in on whether companies working for Nationstar Mortgage committed trespass by locking homeowners out of their homes before foreclosure proceedings were completed.

In an order on Monday, U.S. District Judge Thomas Rice said the state court’s input is needed to help resolve a complaint that Nationstar violated state law by allegedly entering hundreds of homes without consent. The homeowners are represented by lawyers at Jeffers Danielson Sonn & Aylward.

To read the full story on WestlawNext Practitioner Insights, click here: bit.ly/1IQkyPu

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

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

SARIT J. ASSIL n/k/a SARIT LEVY,
Appellant,

v.

AURORA LOAN SERVICES, LLC, SOHEIL ASSIL, and any and all unknown parties claiming by, through, under, and against the herein named individual defendant(s) who are not known to be dead or alive, whether said unknown parties may claim an interest as spouses, heirs, devises, grantees or other claimants, VICTORIA GROVE HOMEOWNERS ASSOCIATION, INC., JOHN DOE and JANE DOE, as unknown tenants in possession,
Appellees.

No. 4D14-2257

[ August 12, 2015 ]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Howard H. Harrison, Senior Judge; L.T. Case No. 502008CA025998XXXXMB.

Craig A. Boudreau, Wellington, for appellant.
Nancy M. Wallace of Akerman LLP, Tallahassee, William P. Heller of Akerman LLP, Fort Lauderdale, and Celia C. Falzone of Akerman LLP, Jacksonville, for Appellee-Aurora Loan Services, LLC.
PER CURIAM.

We reverse the final judgment of foreclosure entered in favor of appellee Nationstar Mortgage, LLC, successor in interest to Aurora Loan Services, LLC (Aurora), because appellee failed to establish by competent evidence that Aurora had standing to enforce the mortgage when it filed the mortgage foreclosure action.

Whether a party has standing to bring an action is reviewed de novo. Boyd v. Wells Fargo Bank, N.A., 143 So. 3d 1128, 1129 (Fla. 4th DCA 2014).

“The plaintiff must prove that it had standing to foreclose when the complaint was filed.” Vidal v. Liquidation Props., Inc., 104 So. 3d 1274, 1276 (Fla. 4th DCA 2013) (quoting McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012)) (quotation marks omitted). “Pursuant to Florida Rule of Civil Procedure 1.260, a substituted plaintiff acquires the standing of the original plaintiff.” Kiefert v. Nationstar Mortg., LLC, 153 So. 3d 351, 353 n.4 (Fla. 1st DCA 2014).

“[S]tanding may be established from a plaintiff’s status as the note holder, regardless of any recorded assignments.” McLean, 79 So. 3d at 173. A person entitled to enforce an instrument is either the “holder of the instrument,” the “nonholder in possession of the instrument who has the rights of a holder” or “[a] person not in possession of the instrument who is entitled to enforce the instrument . . . .” § 673.3011, Fla. Stat. (2008). 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. (2008). “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.” McLean, 79 So. 3d at 173.

In Seffar v. Residential Credit Solutions, Inc., 160 So. 3d 122, 123 (Fla. 4th DCA 2015), this court found that a substituted plaintiff failed to prove the original plaintiff had standing to file the foreclosure complaint. The original plaintiff/servicer, RCS, alleged that it had the right to enforce the note and mortgage. Id. The note attached to the complaint named another institution as the original lender and did not contain any endorsements or allonges. Id. After filing the complaint, RSC filed the original note with an undated blank allonge, payable to the bearer. Id. Before trial, RSC substituted Bayview Loan Servicing as plaintiff. Id. at 123-24.

At trial, Bayview failed to prove that RCS was the holder or that RCS or itself was a nonholder in possession. Id. at 125-26. As an alternative proof of ownership of the note and mortgage, Bayview relied on a letter from RCS to the homeowners, notifying them of the transfer of servicing rights to RCS. Id. at 126. Bayview sent out a similar letter when it obtained servicing rights. Id. Neither letter addressed RCS’s or Bayview’s rights to enforce the note. Id. Moreover, Bayview did not introduce RCS’s or Bayview’s servicing agreements into evidence to prove what rights they acquired under those agreements. Id. This court reversed because the evidence presented was inadequate to prove standing. Id. at. 127.

Similar to the situation in Seffar, Nationstar failed to provide any evidence, such as a servicing agreement, to prove that Aurora had the right to enforce the Note when it filed the foreclosure action. Aurora filed its
foreclosure complaint on August 25, 2008. In the original complaint, Aurora alleged that it was the owner or holder of the Note and that the Note was lost. Aurora subsequently amended the complaint three times. In the First Amended Complaint, Aurora dropped the lost note count and attached a copy of the Note to the complaint, with a special endorsement to Deutsche Bank. In the Third Amended Complaint, instead of alleging that it was the owner or holder of the Note, Aurora alleged that it was a servicing agent for Deutsche Bank and that it was authorized to prosecute the foreclosure action on behalf of Deutsche Bank.

At trial, Nationstar presented evidence that Deutsche Bank was the owner of the Note when Aurora filed the complaint. The original Note contained a special endorsement to Deutsche Bank, and Nationstar’s only witness testified that Deutsche Bank was the owner of the Note. Nationstar introduced into evidence a print screen from Aurora’s system which shows the scanned copy of the Note including a special endorsement to Deutsche Bank. The print screen was dated August 22, 2008, three days prior to Aurora filing the complaint.

Appellee failed to establish that Aurora had standing to sue on the date of the filing of the suit where there was no assignment of the mortgage and Note, no blank or special endorsement in favor of Aurora on the promissory Note, and no competent evidence that Aurora held the Note on the date it filed suit.

Because Aurora was not shown to be the holder of the Note, it essentially proceeded under the theory that it was a nonholder in possession of the Note with the rights of a holder. However, Aurora failed to provide sufficient proof that it was authorized at any time to prosecute the foreclosure action on behalf of Deutsche Bank. In short, there was insufficient proof that Aurora was the holder of the Note or was otherwise a person entitled to enforce the Note at the time it filed the action. Accordingly, we reverse the final judgment of foreclosure and remand for the trial court to enter an order of involuntary dismissal.

Reversed and Remanded.

TAYLOR, MAY and KLINGENSMITH, JJ., concur.

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

Appeals Court

HAROLD B. MURPHY, trustee,1

vs.

WACHOVIA BANK OF
DELAWARE, N.A., & another.2

No. 13-P-1943.

Middlesex. November 12, 2014. – August 13, 2015.
Present: Kafker, Cohen, & Milkey, JJ.

COHEN, J. This case concerns the proper distribution of
surplus funds after a foreclosure sale initiated and conducted
by the holder of a second mortgage. After a jury-waived trial,
a judge of the Superior Court ruled that defendant Wachovia Bank
of Delaware, N.A. (Wachovia), erroneously distributed surplus
funds to the holder of the first mortgage, Wells Fargo Bank,
N.A. (Wells Fargo), instead of to the mortgagor, Nigel Thorpe.
The judge therefore ordered Wachovia to pay $178,626.61, plus
interest and costs, to the plaintiff, Harold B. Murphy, as
trustee of the bankruptcy estate of Thorpe (trustee). On
appeal, Wachovia argues that it was entitled to disburse the
funds to Wells Fargo, but even if it was not, it had valid
equitable defenses to the trustee’s claims.3 For the reasons
that follow, we affirm.