December, 2015 | FORECLOSURE FRAUD | by DinSFLA

Archive | December, 2015

OCWEN LOAN SERVICING vs  CONNOLLY, GEANEY, ABLITT & WILLARD, P.C., | the Law Firm and/or the Law Partners committed malpractice and engaged in conduct that was unethical, wrongful, negligent, and fraudulent

OCWEN LOAN SERVICING vs CONNOLLY, GEANEY, ABLITT & WILLARD, P.C., | the Law Firm and/or the Law Partners committed malpractice and engaged in conduct that was unethical, wrongful, negligent, and fraudulent

Note: Case was closed in 2015

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF FLORIDA
WEST PALM BEACH DIVISION
CIVIL NO. 9:14-cv-81046

OCWEN LOAN SERVICING, L.L.C.,
Plaintiff,

v.

CONNOLLY, GEANEY, ABLITT & WILLARD,
P.C., a Rhode Island professional corporation, f/k/a
ABLITT SCOFIELD P.C., JOHN CONNOLLY,
JR., an individual, KEVIN GEANEY, an
individual, STEVEN ABLITT, an individual,
RACHELLE WILLARD, an individual, ROBERT
FEIGE, an individual, LAWRENCE SCOFIELD,
an individual, DURHAM COMMERCIAL
CAPITAL CORP., a New York corporation,
Defendants.

AMENDED COMPLAINT

Plaintiff Ocwen Loan Servicing, LLC, by and through its undersigned counsel, hereby
brings this amended complaint against Defendant Connolly, Geaney, Ablitt and Willard, P.C., a
Rhode Island corporation formerly known as Ablitt Scofield, P.C., Defendants John Connolly,
Kevin Geaney, Steven Ablitt, Rachelle Willard, Robert Feige, Lawrence Scofield, as individuals,
and Defendant Durham Commercial Capital Corp., a New York corporation, and as grounds
therefore alleges as follows:

INTRODUCTION
1. Ocwen Loan Servicing, LLC (“Ocwen”) brings this amended action against its
former attorneys, John Connolly (“Connolly”), Kevin Geaney (“Geaney”), Steven Ablitt
(“Ablitt”), Rachelle Willard (“Willard”), and Lawrence Scofield (“Scofield”) (collectively, the
“Law Partners”), their law firm Connolly, Geaney, Ablitt and Willard, P.C., formerly known as
Ablitt Scofield, P.C. (“CGAW” or the “Law Firm”), the Firm’s Chief Operating and Financial
Officer, Robert Feige (“Feige”) and an investment firm that claims it has a right to collect legal
fees from Ocwen. During the course of Ocwen’s representation by CGAW, the Law Firm
and/or the Law Partners committed malpractice and engaged in conduct that was unethical,
wrongful, negligent, and fraudulent. CGAW, and the Law Partners, regularly placed their
interests above Ocwen’s interests. CGAW, the Law Partners and Feige mismanaged trust
accounts containing funds belonging to Ocwen resulting in the misappropriation of at least $1.6
million of Ocwen’s money. Rather than disclose their mismanagement and wrongful conduct,
however, CGAW, Feige and/or the Law Partners failed to communicate with Ocwen, made overt
misrepresentations to Ocwen, and did not make any meaningful disclosures of pertinent
information to Ocwen until after they purported to abandon their law practice.

2. In this action, Ocwen seeks to recover the funds that CGAW, Feige and the Law
Partners mismanaged and misappropriated. In addition, Ocwen seeks a declaration establishing
its rights under the June 11, 2012 Local Counsel Agreement (the “LCA”), between Ocwen and
CGAW. Ocwen seeks to establish that any legal fees currently being claimed by the Defendants
are offset by the Defendants’ misconduct and, in any case, such fees are improper, unreasonable
and unconscionable. Ocwen further seeks to establish that, because of the breach of CGAW and
the Law Partners’ ethical, fiduciary, and statutory obligations to Ocwen, CGAW should be
required to disgorge and forfeit CGAW’s right to any fees.

3. As set forth in more detail below, Ocwen alleges the following causes of action
against CGAW: (a) malpractice; (b) breach of fiduciary duty; (c) breach of contract;
(d) indemnity; (e) declaratory relief; (f) unfair and deceptive acts and practices; (g) conversion;
(h) action for accounting (i) fraud/misrepresentation; (j) fraud by suppression; (k) negligence;
and (l) breach of implied covenant of good faith and fair dealing. Ocwen seeks to recover any
and all damages, including compensatory damages and costs incurred by Ocwen due to the
Defendants’ misconduct as well as attorneys’ fees and punitive damages for CGAW’s, Feige’s
and the Law Partners wanton and willful violation of law.

[…]

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Judge halts evictions of 3 families in foreclosure case

Judge halts evictions of 3 families in foreclosure case

The Detroit News-

Three families facing evictions following tax foreclosures won a reprieve Wednesday when a federal judge issued a temporary restraining order halting the action for 14 days.

The order from U.S. District Judge Judith Levy comes amid a controversy involving several Wayne County suburbs that acquired tax-foreclosed properties from the county before its annual fall auction and resold them to developers.

Eighteen affected families filed suit Monday. Levy said the case raises “federal constitutional issues, violations of due process and equal protection,” but she only has jurisdiction in three cases whose owners hadn’t yet had eviction cases filed against them in local courts.

[THE DETROIT NEWS]

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Ex-foreclosure king David J. Stern sells Fort Lauderdale manse for a record $28M

Ex-foreclosure king David J. Stern sells Fort Lauderdale manse for a record $28M

TRD-

David J. Stern, known as Florida’s ex-foreclosure king, just sold his Fort Lauderdale mansion for $27.5 million — a hefty discount from what he listed it for in September.

The disbarred lawyer and his wife Jeanine Stern had listed their sprawling waterfront estate for $32 million a little over three months ago. Their home at 5 Harborage Isle Drive has six bedrooms, nine bathrooms and sits on an oversized 1.4-acre lot on the corner of a small island.

As a result of its corner perch, the home has 505 feet of water frontage. That can fit any boat up to a 300-foot megayacht. –

See more at: http://therealdeal.com/miami/blog/2015/12/24/ex-foreclosure-king-sells-fort-lauderdale-manse-for-28m/#sthash.AGkPdNSB.dpuf

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Pacheo vs JP Morgan Chase – Class Action – alleged illegal demand of payment from junior mortgage holders who’s senior mortgages had been foreclosed. The class claims that JPMorgan’s demands violated several California laws

Pacheo vs JP Morgan Chase – Class Action – alleged illegal demand of payment from junior mortgage holders who’s senior mortgages had been foreclosed. The class claims that JPMorgan’s demands violated several California laws

H/T refinblog

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA

GLENN PACHEO, individually, and on
behalf of others similarly situated,
Plaintiff,

v.

JPMORGAN CHASE BANK, N.A. d/b/a
CHASE, a National Banking Association,
Defendant.

excerpt:
3. Defendant’s policy of routinely seeking to collect on such debts violates section
580d. Defendant’s collection practices and correspondence are unlawful because they mislead
debtors into believing that these “sold-out” junior mortgage debts are legally enforceable when,
in truth, the debtors have no legal obligation to pay them. Defendant’s policies and practices are
also unlawful because, on information and belief, defendant fails to report to credit agencies the
true non-recourse nature of these debts.

4. Plaintiff was a victim of these unlawful policies and practice with respect to his
former-property located at 2471 South Manila Avenue, Fresno, CA 93727 (the “property”).
Specifically, the defendant foreclosed on the first mortgage of the property but continued (and
continues) to demand routine re-payment on the second mortgage debt without disclosing (or
admitting) that the debt was not (and is not) legally enforceable. To the contrary, following the
foreclosure of the property, the defendant affirmatively represented that the plaintiff was
required to pay the debt and that the debt remained legally enforceable notwithstanding the
foreclosure. As a result, the plaintiff made thousands of dollars in monthly payments to avoid
legal enforcement of a debt that was not legally enforceable in the first instance.

[…]

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Springer v. US Bank National Association | Securitization FAIL; non compliance with terms of the Note and Deed of Trust M-T-D Denied in part …

Springer v. US Bank National Association | Securitization FAIL; non compliance with terms of the Note and Deed of Trust M-T-D Denied in part …

 

Springer alleges that the actual assignments  were void under Nevada law  because the note and the deed of trust  were not actually assigned together.

 

RANDY SPRINGER, Plaintiff,
v.
U.S. BANK NATIONAL ASSOCIATION AS TRUSTEE FOR MASTR ASSET BACKED SECURITIES TRUST 2005-HE1, MORTGAGE PASS THROUGH CERTIFICATES, SERIES 2005-HE1, MASTR ASSET BACKED SECURITIES TRUST 2005-HE1, MORTGAGE PASS THROUGH CERTIFICATES, SERIES 2005-HE1, THE CERTIFICATEHOLDERS OF MASTR ASSET BACKED SECURITIES TRUST 2005-HE1, MORTAGAGE PASS THROUGH CERTIFICATES, SERIES 2005-HE1, MORTGAGE ASSET SECURITIZATION TRANSACTIONS, INC., ROES 1-10 AND DOES 1-10 INCLUSIVE, REPRESENTING A CLASS OF UNKNOWN PERSONS WHO CLAIM OR HAVE THE RIGHT TO CLAIM AN INTEREST IN CERTAIN REAL PROPERTY LOCATED IN LAS VEGAS, NEVADA, Defendants.

No. 15-cv-1107(JGK).
United States District Court, S.D. New York.

December 23, 2015.

MEMORANDUM OPINION & ORDER

 . . .

B.


<Paragraph One>
The First and Twentieth Causes of Action seek a declaratory judgment adjudicating the status of the defendants’ property interest in the promissory note and deed of trust and allege a defective foreclosure under Nevada law. FAC ¶¶ 116-26, 291-320. Springer seeks a declaratory judgment that U.S. Bank does not have an interest in the plaintiff’s loan because the assignments from Novelle Financial Services to U.S. Bank are void. FAC ¶¶ 119, 123.


<Paragraph Six>
It is undisputed that Springer was a party to the promissory note and the deed of trust.  ….There is a concrete injury that can be redressed by a declaratory judgment on the validity of the underlying assignments. The validity of the assignments does not hinge on whether U.S. Bank and the other defendants complied with the PSA or Prospectus, but only on whether the assignments were permitted by the terms of the promissory note, the deed of trust, and Nevada law.
 . . .

<Paragraph Eight>
Springer’s First Cause of Action—that sought a declaratory judgment that the defendant did not have a secured or unsecured interest in the loan was arguing that the assignment never occurred or that the assignment occurred but was invalid. Le Bouteiller, 2015 WL 5334269, at *10 n.5. The district court dismissed the claim concluding that the complaint and the exhibits to the complaint showed that the assignment had in fact occurred and the plaintiff did not plead facts demonstrating otherwise. Id. Springer does not contend that the assignments never occurred; he argues that the assignments violated the terms of the promissory note, the deed of trust, and Nevada law. Springer’s claims are therefore different from the claims apparently asserted in Le Bouteiller. While the deed of trust explicitly permitted the sale of the deed of trust together with the note, Compl., Ex. 1, Springer alleges that the actual assignments were void under Nevada law because the note and the deed of trust were not actually assigned together. FAC ¶¶ 292-96. U.S. Bank has not responded to these allegations.

 . . .
<Last Paragraph>
But Springer can pursue his claim that the assignments were invalid under Nevada law and that the foreclosure is defective because only the owner of the note can seek foreclosure and the means by which U.S. Bank obtained the note violated the terms of the note and the deed of trust. FAC ¶¶ 299-301, 293-95. Given U.S. Bank’s failure to respond to this argument …..Thus, U.S. Bank’s motion to dismiss the First and Twentieth Causes of Action is denied to the extent Springer pleads that the assignments violate express provisions of the deed of trust and the promissory note and Nevada law.
 . . .

[1] The FAC names the MASTR Asset Backed Securities Trust 2005-HE1 as a defendant, but under New York law, a trust cannot sue or be sued, and suits must be brought by or against the trustee. McCarty v. The Bank of N.Y. Mellon, No. 14-cv-6756 (AT), 2015 WL 5821405, at *1 n.1 (S.D.N.Y. Sept. 8, 2015); Anh Nguyet Tran v. Bank of N.Y., No. 13-cv-580 (RPP), 2014 WL 1225575, at *1 n.4 (S.D.N.Y. Mar. 24, 2014) aff’d, 592 F. App’x 24 (2d Cir. 2015) order amended and superseded, 610 F. App’x 82 (2d Cir. 2015). Accordingly, all the claims against the Trust are dismissed. Moreover, the complaint also names the certificate holders in the Trust and various Roes and Does. The claims against these defendants suffer from the same deficiencies as the claims against U.S. Bank, and the motion to dismiss is treated as having been brought on behalf of all the defendants. See McCarty, 2015 WL 5821405, at *1 n.1. The present motion does not resolve the claims against Mortgage Asset Securitization Transaction, Inc., against whom Springer is seeking a default judgment

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U.S. Bank National Association v. Smith | Hawaii ICA – TILA Claims on SOL & UDAP – Vacated and Remanded

U.S. Bank National Association v. Smith | Hawaii ICA – TILA Claims on SOL & UDAP – Vacated and Remanded

IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI’I

U.S.BANK NATIONAL ASSOCIATION AS TRUSTEE, ON BEHALF
OF THE HOLDERS OF THE CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP HOME EQUITY PASS THROUGH CERTIFICATES,
SERIES 2006-8, Plaintiff-Appellee

v.

DANIEL SMITH, TAMMY SMITH, Defendants-Appellants

On the briefs:

Gary Victor Dubin
Frederick J. Arensmeyer
(Dubin Law Offices)
for Defendants-Appellants

Excerpt:
Because the circuit court rejected the Smiths’ TILA
claim on the statue of limitations grounds and their UDAP claim on
the theory that it could not be raised against U.S. Bank, the
circuit did not address whether there were genuine issues
of material fact regarding the merits of those claims. On
remand, the circuit court shall determine whether genuine issues
of material facts exist as to those claims.

 

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Commerzbank sues BNY Mellon, Deutsche Bank AG, Wells Fargo, HSBC over mortgage losses

Commerzbank sues BNY Mellon, Deutsche Bank AG, Wells Fargo, HSBC over mortgage losses

REUTERS-

Commerzbank AG has sued four banks in the United States, claiming that they failed to properly monitor billions of dollars in toxic mortgage-backed securities acquired by the German lender before the 2008 financial crisis.

Bank of New York Mellon Corp and units of Deutsche Bank AG, Wells Fargo & Co and HSBC Holdings Plc were named in the lawsuits filed on Wednesday and Thursday in Manhattan federal court.

BNY Mellon was the trustee for over $1 billion in mortgage-backed securities bought by Commerzbank and $1.3 billion of investments tied to a collateralized debt obligation, Millstone II CDO, court documents showed.

[REUTERS]

Commerzbank 1-main

Exhibit G cover up 1-7

Exhibit H Commerzbank

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TFH 12/27/15 What Every Homeowner Needs To Know About Foreclosure Defense Attorneys: Why They Remain An Endangered Species And What If Anything Can Be Done About It

TFH 12/27/15 What Every Homeowner Needs To Know About Foreclosure Defense Attorneys: Why They Remain An Endangered Species And What If Anything Can Be Done About It

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

.

.

Sunday – December 27, 2015

What Every Homeowner Needs To Know About Foreclosure Defense Attorneys: Why They Remain An Endangered Species And What If Anything Can Be Done About It

~

.
Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

EVERY SUNDAY
3:00 PM HAWAII
5:00 PM PACIFIC
8:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
iHEART RADIO

The Foreclosure Hour 12

 

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Sued Over Old Debt, and Blocked From Suing Back

Sued Over Old Debt, and Blocked From Suing Back

NYT-

Clifford Cain Jr., a retired electrician in Baltimore, was used to living on a tight budget, carefully apportioning his Social Security and pension benefits to cover his rent and medication for multiple sclerosis.
From Our Advertisers

So Mr. Cain was puzzled when he suddenly could not make ends meet. Months later, he discovered why: A debt collector had garnished his bank account after suing him for about $4,500 the company said he owed on an old debt.

Mr. Cain said he never knew the lawsuit had been brought against him until the money was gone. Neither did other Baltimore residents who were among the hundreds of people sued by the collector, Midland Funding, a unit of the Encore Capital Group, in Maryland State Court. Some of them said they did not even owe any money, or their debt had long expired and was not legally collectible, according to a review of court records.

In any case, the Encore subsidiary was not licensed to collect debt in Maryland.

[NEW YORK TIMES]

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Walters v. Nationstar | FL 5DCA – Nationstar failed to establish that Aurora, Nationstar’s predecessor in interest, had standing to bring the foreclosure action.

Walters v. Nationstar | FL 5DCA – Nationstar failed to establish that Aurora, Nationstar’s predecessor in interest, had standing to bring the foreclosure action.

IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FIFTH DISTRICT
NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
DISPOSITION THEREOF IF FILED

SYLVIA G. WALTERS,
Appellant,

v.                      Case No. 5D14-2810

NATIONSTAR MORTGAGE, LLC, ET AL.,
Appellees.
________________________________/

Opinion filed December 18, 2015

Appeal from the Circuit Court
for Marion County,
Frances S. King, Judge.

Gregg M. Horowitz, Sarasota, for Appellant.
Sara F. Holladay-Tobias, Emily Y. Rottman,
and C. Harold Houston, III, Jacksonville, for
Appellee.

PER CURIAM.

Sylvia Walters appeals a final judgment of foreclosure entered in favor of
Nationstar Mortgage, LLC (“Nationstar”). She argues that Nationstar failed to establish
that Aurora, Nationstar’s predecessor in interest, had standing to bring the foreclosure
action. We agree and reverse the judgment under review. See McLean v. JP Morgan
Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173-74 (Fla. 4th DCA 2012) (holding that “a
party’s standing is determined at the time the lawsuit was filed” and that “[w]here the
plaintiff contends that its standing to foreclose derives from an endorsement of the note,
the plaintiff must show that the endorsement occurred prior to the inception of the lawsuit.”
(citing Progressive Exp. Ins. Co. v. McGrath Cmty. Chiropractic, 913 So. 2d 1281, 1286
(Fla. 2d DCA 2005))). Accordingly, we reverse the judgment under review and remand
this case to the trial court to enter an order of involuntary dismissal of the action. See
Schmidt v. Deutsche Bank, 170 So. 3d 938, 942 (Fla. 5th DCA 2015) (“Because Bank
failed to establish standing at the time of filing of the complaint, we reverse and remand
for entry of a final order of involuntary dismissal of the action.”).

REVERSED and REMANDED with directions.

SAWAYA and ORFINGER, JJ., and TYNAN, G.A., Associate Judge, concur.

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Deerfield Beach Foreclosure Firm Behind on Rent When Evicted

Deerfield Beach Foreclosure Firm Behind on Rent When Evicted

DBR-

Elizabeth Wellborn closed her Deerfield Beach law firm after she was evicted by her landlord, MMB Commercial Properties Co. Inc., owing $109,221 in rent, a lawsuit stated.

The Law Offices of Elizabeth R. Wellborn closed in late November after 12 years of litigating creditors’ rights and laid off dozens of employees. At one time, the firm had 95 employees.

The eviction lawsuit filed in Broward Circuit Court said Wellborn skipped her October rent at 350 Jim Moran Blvd. and owed her landlord for rent and electricity.

After failing to pay within three days, Wellborn was evicted Nov. 12 by the Broward Sheriff’s Office.

 [DAILY BUSINESS REVIEW]

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Calvo v. U.S. Bank NA | FL 4dca – U.S. Bank did not prove that it was the holder when this action was commenced, and we find that U.S. Bank did not establish its standing to foreclose when the complaint was filed

Calvo v. U.S. Bank NA | FL 4dca – U.S. Bank did not prove that it was the holder when this action was commenced, and we find that U.S. Bank did not establish its standing to foreclose when the complaint was filed

Our review of the record reveals that the last page of the original note differs from the previously-filed copies. The borrower’s signature is not the same, and the indorsements are in reverse order and signed by different people. Because the appellants do not raise this issue of authentication, it is not considered by this court as grounds for reversal.

 

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

SELVA ADRIANA CALVO and MARCOS FABIAN CALVO,
Appellants,

v.

U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-BC-1,
Appellee.

No. 4D14-1424
[December 16, 2015]

Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Cynthia G. Imperato, Judge; L.T. Case No. 10-21967 CA 06 11.
Bruce K. Herman of The Herman Law Group, P.A., Fort Lauderdale, for appellants.
Donna L. Eng, Michael K. Winston and Dean A. Morande of Carlton Fields Jorden Burt, P.A., West Palm Beach, for appellee.

STEVENSON, J.

Selva and Marcos Calvo appeal a final judgment of foreclosure. We find the trial court erred because U.S. Bank National Association did not establish its standing to foreclose when the complaint was filed. We thus reverse.
The original lender in this case was Aegis Funding Corporation. U.S. Bank filed this foreclosure action on May 24, 2010, attaching copies of the mortgage and note to the complaint. The note attached to the complaint did not include any indorsements.

More than three years later, counsel for U.S. Bank filed a document entitled “Certification of Possession of Original Promissory Note.” The copy of the note attached to the certification included two stamped indorsements including an indorsement in blank. At trial, U.S. Bank filed the original note, also bearing an indorsement in blank.1

U.S. Bank’s only witness was an employee of the servicer. She testified that counsel for U.S. Bank had possession of the original note when the complaint was filed. She did not testify as to when the indorsements were placed on the note, and she did not know whether the original note the attorneys had in their possession when suit was filed included the indorsements.

If a note is indorsed in blank, it is payable to the bearer and is “negotiated by transfer of possession alone.” § 673.2051(2), Fla. Stat. (2014) (emphasis added). Where the plaintiff’s status as holder relies on a blank indorsement, the plaintiff must establish that it had possession of the original note, indorsed in blank, when the complaint was filed. See Snyder v. JP Morgan Chase Bank, Nat’l Ass’n, 169 So. 3d 1270, 1273 (Fla. 4th DCA 2015); McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012).

While it is not necessary for the plaintiff to prove the exact date the indorsement was placed on the note, the plaintiff must present competent, substantial evidence that the indorsement was placed on the note before suit was filed. “We have said before, and apparently need say again: if an indorsement is undated and appears for the first time after the complaint is filed, some evidence must be introduced that will support a finding that the indorsement was made prior to the complaint’s filing.” Jelic v. BAC Home Loans Servicing, LP, 40 Fla. L. Weekly D2476, D2476 (Fla. 4th DCA Nov. 4, 2015).

At bar, U.S. Bank’s witness was testifying from screenshots. The screenshots set forth the date the note changed hands, but did not set forth whether the note that was changing hands included the blank indorsement. U.S. Bank thus failed to establish its possession of the indorsed note on the requisite date.

Accordingly, U.S. Bank did not prove that it was the holder when this action was commenced, and we find that U.S. Bank did not establish its standing to foreclose when the complaint was filed. We thus reverse the final judgment of foreclosure and remand for entry of an order of involuntary dismissal of the action. See Sosa v. U.S. Bank Nat’l Ass’n, 153 So. 3d 950, 952 (Fla. 4th DCA 2014).

Reversed and remanded.

DAMOORGIAN and CONNER, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

1 Our review of the record reveals that the last page of the original note differs from the previously-filed copies. The borrower’s signature is not the same, and the indorsements are in reverse order and signed by different people. Because the appellants do not raise this issue of authentication, it is not considered by this court as grounds for reversal.

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Clerk of courts submits mortgage case to FBI

Clerk of courts submits mortgage case to FBI

Around Osceola-

Following the Osceola County Sheriff’s Office findings that mortgage lenders doing business in the county did not commit fraud as asserted by Armando Ramirez, the county Clerk of Courts has turned the case over to the FBI office in Tampa.

After appealing to the U.S. Department of Justice, that agency, on his behalf, forwarded records derived from a 738-page forensic report to the FBI, the DOJ’s investigative arm.
Ramirez said the case needed to be investigated at the federal level.

“Now I feel at ease after pleading to the Justice Department,” he said. “From the beginning, I disagreed with the State Attorney’s Office (who Ramirez originally filed his report with) handing this over the Sheriff’s Office. They are good cops and responders, but no one in that office is trained to handle such a complex forensic audit.”

 [AROUND OSCEOLA]

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BANK OF NEW YORK MELLON v. LEMAY, Haw: Intermediate Court of Appeals 2015 – BNYM’s “doctored” responses to their discovery requests | BNYM relied almost exclusively on the Declaration. Without the Declaration, there was no basis for the circuit court to grant summary judgment

BANK OF NEW YORK MELLON v. LEMAY, Haw: Intermediate Court of Appeals 2015 – BNYM’s “doctored” responses to their discovery requests | BNYM relied almost exclusively on the Declaration. Without the Declaration, there was no basis for the circuit court to grant summary judgment

H/T Gary Dubin

THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK, AS TRUSTEE FOR THE CERTIFICATEHOLDERS OF THE CHL MORTGAGE PASS-THROUGH TRUST 2006-OA5, MORTGAGE PASS THROUGH CERTIFICATES, SERIES 2006-OA5, Plaintiff-Appellee,

v.

RICHARD ARTHUR LEMAY; BAY THI LEMAY; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., SOLELY AS NOMINEE FOR COUNTRYWIDE HOME LOANS, INC.; ASSOCIATION OF APARTMENT OWNERS OF KAPIOLANI TERRACE, Defendants-Appellees, and
DERMABELLE PRODUCTS, LLC, Intervenor-Defendant-Appellant, and
JOHN DOES 1-20, JANE DOES 1-20, DOE CORPORATIONS 1-20, DOE ENTITIES 1-20, AND DOE GOVERNMENTAL UNITS 1-20, Defendants.

No. CAAP-14-0001339.
Intermediate Court of Appeals of Hawai`i.
December 7, 2015.
Colin B. Sakumoto, for Intervenor-Defendant-Appellant.

Peter T. Stone, Daisy Lynn B. Hartsfield, (TMLF Hawaii), for Plaintiff-Appellee.

FOLEY, PRESIDING J., LEONARD AND REIFURTH, JJ.

OPINION OF THE COURT BY FOLEY, J.

Intervenor-Defendant-Appellant Dermabelle Products, LLC (Dermabelle) appeals from:

(1) the “Order Denying [Dermabelle’s] Motion to Compel Responses to Discovery Requests and Motion for Attorney Fees” (Order Denying Dermabelle’s First Motion to Compel), entered September 5, 2014;

(2) the denial of “[Dermabelle’s] Second Motion to Compel Discovery Requests and Motion for Attorney’s Fees” (Denial of Dermabelle’s Second Motion to Compel);[1]and

(3) the “Findings of Fact [(FOFs)], Conclusions of Law and Order Granting Plaintiff’s Motion for Summary Judgment for Foreclosure Against All Defendants and for Interlocutory Decree of Foreclosure” (FOFs/COLs/Order), entered December 16, 2014 in the Circuit Court of the First Circuit[2] (circuit court).[3]

On appeal, Dermabelle contends the circuit court erred in: (1) denying it the opportunity to conduct discovery; (2) not excluding the Declaration of Indebtedness (Declaration) as inadmissible hearsay; and (3) granting the motion for summary judgment in favor of Plaintiff-Appellee the Bank of New York Mellon fka the Bank of New York, as Trustee for the Certificateholders of the CHL Mortgage Pass-Through Trust 2006-OA5, Mortgage Pass Through Certificates, Series 2006-OA5 (BNYM).

I. BACKGROUND[4]

[FOFs]

. . . .

3. On or about 01/19/2006, for value received, Defendants [-Appellees] Richard Lemay and Bay Thi Lemay [(collectively, the Lemays)] made, executed and delivered to Countrywide Home Loans, Inc. a promissory note (“Note”) in the principal amount of $280,000.00

4. For the purposes of securing payment on the Note of the principal sum, interest thereon, and all other changes as provided for in the Note, [the Lemays] made, executed, and delivered to Mortgage Electronic Registration Systems, Inc., solely as nominee for Countrywide Home Loans, Inc. that certain Mortgage (“Mortgage”), which encumbers the property located at 1560 Kanunu St #918, Honolulu, HI 96814, TMK X-X-X-XXX-XXX-XXXX (“Property”), more fully described in Exhibit “A” of the Mortgage. The Mortgage was filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii (“Land Court”) as Land Document No. 3382578.

5. [BNYM] is the owner and holder of the Note and Mortgage by virtue of that certain Assignment of Mortgage dated 04/16/2011, filed in the Land Court on 05/10/2011, as Land Court Document No. 4071740 (“Assignment”). The Note, Mortgage, and Assignment are collectively referred to as the “Loan Documents.”

. . . .

7. [The Lemays] stopped making monthly payments on 03/01/2010.

On January 27, 2012, BNYM filed their Complaint for Mortgage Foreclosure (Complaint) against the Lemays, alleging the Note and Mortgage had been assigned to BNYM on April 16, 2011. The Complaint named the Association of Apartment Owners of Kapiolani Terrance (AOAO) as a defendant based on its interest “by virtue of unpaid maintenance fees” and a notice of lien filed in Land Court.

Dermabelle moved to intervene as a defendant on July 2, 2013 on the grounds that Dermabelle “claims an interest in the Subject Property arising from the Quitclaim Deed from the [AOAO] executed on May 7, 2012. Furthermore, this interest in the Subject Property is subject to divestment should [BNYM] prevail in their foreclosure action.” The circuit court granted Dermabelle’s motion to intervene on November 8, 2013.

BNYM filed a motion for summary judgment on December 4, 2013 (MSJ). In support of its motion, BNYM relied primarily on the Declaration signed by Lyvonne Jones (Jones). The first paragraph of the declaration states, “I [Jones] am authorized to sign this Declaration on behalf of [BNYM], as an officer of Resurgent Capital Services, LP . . . [(Resurgent Capital)], which is [BNYM’s] servicing agent for the subject loan. . . .”

Dermabelle filed its first set of discovery requests to BNYM on or about December 12, 2013. Dermabelle filed a motion to compel responses to the first set of discovery requests on July 15, 2014 (First Motion to Compel). On August 12, 2014, the circuit court held a hearing on Dermabelle’s First Motion to Compel. At the hearing, the circuit court denied the motion on the grounds that the parties had failed to meet and confer in good faith.

Dermabelle filed its “Second Motion to Compel Responses to Discovery Requests and Motion for Attorney’s Fees” (Second Motion to Compel) on August 29, 2014. The circuit court held a hearing on the Second Motion to Compel on September 16, 2014. At the hearing, the circuit court did not make an oral ruling, and the record on appeal does not contain a written order on Dermabelle’s Second Motion to Compel.

On October 1, 2014, the circuit court held a hearing on BNYM’s December 4, 2013 MSJ. On December 16, 2014, the circuit court entered its FOFs/COLs/Order granting summary judgment in BNYM’s favor.

II. STANDARD OF REVIEW

A. Discovery

[The Hawai`i Rules of Civil Procedure (HRCP)] reflect a basic philosophy that a party to a civil action should be entitled to the disclosure of all relevant information in the possession of another person prior to trial, unless the information is privileged. However, the extent to which discovery is permitted under [HRCP] Rule 26 is subject to considerable latitude and the discretion of the trial court. Thus, the exercise of such discretion will not be disturbed in the absence of a clear abuse of discretion that results in substantial prejudice to a party. Accordingly, the applicable standard of review on a trial court’s ruling on a motion to compel discovery, brought pursuant to HRCP Rule 26, is abuse of discretion.

Hac v. Univ. of Hawai`i, 102 Hawai`i 92, 100-01, 73 P.3d 46, 54-55 (2003) (citations, internal quotation marks, brackets, and ellipsis omitted).

B. Summary Judgment

[An appellate] court reviews a trial court’s grant of summary judgment de novo. O’ahu Transit Servs., Inc. v. Northfield Ins. Co., 107 Hawai`i 231, 234, 112 P.3d 717, 720 (2005). The standard for granting a motion for summary judgment is well settled:

Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. A fact is material if proof of that fact would have the effect of establishing or refuting one of the essential elements of a cause of action or defense asserted by the parties. The evidence must be viewed in the light most favorable to the non-moving party. In other words, [the appellate court] must view all of the evidence and the inferences drawn therefrom in the light most favorable to the party opposing the motion.

Price v. AIG Hawai`i Ins. Co., 107 Hawai`i 106, 110, 111 P.3d 1, 5 (2005) (original brackets and citation omitted).

Kamaka v. Goodsill Anderson Quinn & Stifel, 117 Hawai`i 92, 104, 176 P.3d 91, 103 (2008). On a motion for summary judgment, “[a] fact is material if proof of that fact would have the effect of establishing or refuting one of the essential elements of a cause of action or defense asserted by the parties.” Crichfield v. Grand Wailea Co., 93 Hawai`i 477, 482-83, 6 P.3d 349, 354-55 (2000) (quoting Hulsman v. Hemmeter Dev. Corp., 65 Haw. 58, 61, 647 P.2d 713, 716 (1982)). “[A] `genuine issue as to any [material] fact’ . . . under a conflict in the affidavits as to a particular matter must be of such a nature that it would affect the result.” Richards v. Midkiff, 48 Haw. 32, 39, 396 P.2d 49, 54 (1964).

Affidavits in support of a summary judgment motion are scrutinized to determine whether the facts they aver are admissible at trial and are made on the personal knowledge of the affiant. Also, ultimate or conclusory facts or conclusions of law are not to be utilized in a summary judgment affidavit.

Miller v. Manuel, 9 Haw. App. 56, 66, 828 P.2d 286, 292 (1991) (citations omitted).

III. DISCUSSION

Dermabelle argues that the circuit court abused its discretion in denying both of Dermabelle’s motions to compel because the information Dermabelle requested was relevant to whether BNYM had satisfied the standing requirements to bring a judicial foreclosure action. Although Dermabelle lists the Order Denying Dermabelle’s First Motion to Compel in its notice of appeal, it does not challenge the circuit court’s dismissal of that motion in its substantive argument. Therefore, we do not address whether the circuit court erred in entering the Order Denying Dermabelle’s First Motion to Compel. See HRAP Rule 28(b)(7) (“Points not argued may be deemed waived.”).

Dermabelle also disputes the circuit court’s denial of its Second Motion to Compel. Dermabelle cites only to the transcript of the hearing in which the circuit court did not rule on the motion. There is no written order denying the Second Motion to Compel in the record on appeal. However, the Second Motion to Compel was effectively denied by the circuit court’s grant of BNYM’s motion for summary judgment. As such, we will address the merits of Dermabelle’s argument. See Morgan v. Planning Dept., Cnty. of Kauai, 104 Hawai`i 173, 180-81, 86 P.3d 982, 989-90 (2004) (“This court . . . has consistently adhered to the policy of affording litigants the opportunity to have their cases heard on the merits, where possible.” (citation and internal quotation mark omitted)).

Dermabelle argues on appeal:

[It was] wholly relevant for [Dermabelle] to question whether Resurgent Capital is in fact authorized to service the loan on behalf of [BNYM]. . . . [Dermabelle] must be allowed to ask for the documents establishing Resurgent Capital as the servicer of the loan for [BNYM] in order to determine whether or not [BNYM] has satisfied their basic standing requirements to bring a judicial foreclosure action.

At the hearing on Dermabelle’s Second Motion to Compel, the circuit court suggested to counsel for Dermabelle, “I’m not inclined, in your capacity, where you’re coming in as a purchaser of a foreclosure sale, [to allow Dermabelle] to come in and file this motion for discovery on a case in which your client doesn’t have any obligation on the note and mortgage.”

In FOF 13, which neither party disputes on appeal, the circuit court found:

13. [AOAO] may claim an interest in the Property by virtue of unpaid maintenance fees and, if applicable, on that certain Notice of Lien filed in the Land Court on 01/25/2006 as Document No. 3382579. Its interest in the Property, if any, is junior to [BNYM’s] lien.

Dermabelle had acquired the AOAO’s interest on April 27, 2012 as the result of a power of sale foreclosure, for which Dermabelle received a quitclaim deed. Dermabelle’s interest in defending the suit, therefore, was to protect its junior interest in the property. Under HRCP Rule 26(b)(1)(A),[5] Dermabelle is permitted to seek discovery of information relevant to defending its interest in the property.

The circuit court’s hesitation to grant Dermabelle’s Second Motion to Compel because it was not a party to the Note or Mortgage was unwarranted because the information Dermabelle sought was relevant to defending its junior interest in the property under HRCP Rule 26(b)(1)(A). The remaining question is whether the exclusion of Dermabelle’s requested information would have affected the circuit court’s grant of BNYM’s motion for summary judgment such that Dermabelle was substantially prejudiced by the exclusion. See Hac, 102 Hawai`i at 100-01, 73 P.3d at 54-55 (noting that the trial court’s denial of a motion to compel discovery “will not be disturbed in the absence of a clear abuse of discretion that results in substantial prejudice to a party.”).

In Dermabelle’s First Motion to Compel, arguments and analysis of which were adopted in its Second Motion to Compel, Dermabelle argues that BNYM’s allegedly inadequate responses to Dermabelle’s interrogatory requests suggest that Jones is “a foreclosure specialist with New Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing . . . [and] who has neither job responsibilities for [Resurgent Capital] nor familiarity with the records maintained by [Resurgent Capital], directly contradicting the [Declaration].” The information requested by Dermabelle’s Second Motion to Compel may have led to evidence contradicting the assertions of facts made in Jones’ declaration.[6] By denying Dermabelle’s Second Motion to Compel, the circuit court precluded Dermabelle from defending against the MSJ by denying discovery that may have led to the existence of genuine issues of material fact. See HRCP Rule 56(e) (“The court may permit affidavits to be supplemented or opposed by depositions, answers to interrogatories, or further affidavits.”)

When moving for summary judgment in a foreclosure action, a plaintiff-movant has the initial burden of producing the documentation necessary to establish that a borrower had defaulted on her note and that the lender was entitled to foreclose on the mortgage securing the note. See Ocwen Fed. Bank, FSB v. Russell, 99 Hawai`i 173, 184, 53 P.3d 312, 323 (App. 2002). A declaration of indebtedness is one document that helps to prove that a borrower defaulted on her note and that the lender was entitled to foreclose on the mortgage. See id.

In BNYM’s MSJ, BNYM relied almost exclusively on the Declaration. Without the Declaration, there was no basis for the circuit court to grant summary judgment because BNYM did not rely on any source of information other than the Declaration to prove that the Lemays had defaulted on their loan and that BNYM was entitled to foreclose. In addition to effectively denying Dermabelle’s Second Motion to Compel, the circuit court granted BNYM’s MSJ before Dermabelle could depose Jones about her declaration, which may have ameliorated the prejudice resulting from the circuit court’s denial of Dermabelle’s Second Motion to Compel. See HRCP Rule 56(f) (“Should it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party’s opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.”). Therefore, effectively denying Dermabelle’s Second Motion to Compel was an abuse of discretion that substantially prejudiced Dermabelle. Hac, 102 Hawai`i at 100-01, 73 P.3d at 54-55.

Because we have concluded that the denial of Dermabelle’s Second Motion to Compel was reversible error, we do not need to address Dermabelle’s other points of error on appeal.

IV. CONCLUSION

Therefore, the following entered in the Circuit Court of the First Circuit are vacated and this case is remanded for further proceedings consistent with this Opinion:

(1) the “Order Denying Defendant’s Dermabelle Products LLC’s Motion to Compel Responses to Discovery Requests and Motion for Attorney Fees,” entered September 5, 2014;

(2) the denial of “Defendant Dermabelle Products, LLC’s Second Motion to Compel Responses to Discovery Requests and Motion for Attorney’s Fees”; and

(3) the “Findings of Fact, Conclusions of Law and Order Granting Plaintiff’s Motion for Summary Judgment for Foreclosure Against All Defendants and for Interlocutory Decree of Foreclosure,” entered December 16, 2014.

[1] Dermabelle’s notice of appeal noted that the Denial of Dermabelle’s Second Motion to Compel was not filed as of the date the notice of appeal was filed. The record on appeal does not include a copy of the order, and it is unclear to this court whether the order was ever entered by the circuit court. As discussed below, we treat the grant of BNYM’s Motion for Summary Judgment as a denial of Dermabelle’s Second Motion to Compel.

[2] The Honorable Bert I. Ayabe presided.

[3] Although Dermabelle does not designate the circuit court’s Judgment entered on December 16, 2014, we do not dismiss appeals “for informality of form or title of the notice of appeal.” Hawai`i Rules of Appellate Procedure (HRAP) Rule 3(c)(2); see State v. Graybeard, 93 Hawai`i 513, 516, 6 P.3d 385, 388 (App. 2000) (“[A] mistake in designating the judgment should not result in loss of the appeal as long as the intention to appeal from a specific judgment can be fairly inferred from the notice and the appellee is not misled by the mistake.” (citation, internal quotation marks, and ellipsis omitted)).

[4] This background is excerpted primarily from the undisputed circuit court’s FOFs. The background is augmented from other sources where indicated.

[5] HRCP Rule 26 provides in relevant part:

Rule 26. GENERAL PROVISIONS GOVERNING DISCOVERY.

. . . .

(b) Discovery Scope and Limits. Unless otherwise limited by order of the court in accordance with these rules, the scope of discovery is as follows:

(1) IN GENERAL.

(A) Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party, including the existence, description, nature, custody, condition and location of any books, documents, electronically stored information or tangible things and the identity and location of persons having knowledge of any discoverable matter. It is not ground for objection that the information sought will be inadmissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.

[6] This possibility is supported by Dermabelle’s evaluation of BNYM’s “doctored” responses to their discovery requests in its First Motion to Compel. For example, Dermabelle described its Interrogatory No. 8:

Interrogatory No. 8 of Dermabelle’s Discovery Requests specifically asks [BNYM] to:

Please explain the capacity in which [Jones] is employed by [Resurgent Capital]. Include in your answer the periods of employment for [Jones] and the title of the position held by [Jones].

Instead of providing a response, [BNYM] doctored Interrogatory No. 8 to state:

Please explain the capacity in which [Jones] is employed by New Penn Financial, LLC d/b/a/ Shellpoint Mortgage Servicing. Include in your answer the periods of employment for [Jones] and the title of the position held by [Jones], foreclosure specialist.

[BNYM] then refused to answer the Interrogatory they materially altered.

(brackets omitted and emphasis in original). This response suggests that Jones was not, as she declared under penalty of perjury in her declaration, “authorized to sign this Declaration on behalf of [BNYM], as an officer of [Resurgent Capital], which is [BNYM’s] servicing agent for the subject loan. . . .”

 Down Load PDF of This Case

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Posted in STOP FORECLOSURE FRAUD3 Comments

New York | Facing Foreclosure? Get Live Chat Assistance via CourtHelp

New York | Facing Foreclosure? Get Live Chat Assistance via CourtHelp

RealNY-

The foreclosure crisis in New York State is far from over. Foreclosures filings in New York remain high, hovering at more than 40,000* a year since 2013, a number well above pre-recession levels. After reaching a low in 2011 of under 17,000, the number of filings began to creep back up to a level alarmingly close to those seen at the height of the crisis.

At the beginning of 2015, there were over 90,000 foreclosure cases pending in New York State Courts. Overwhelmingly, homeowners in foreclosure cases in New York State appear in court without counsel, while 100% of the plaintiffs are represented.

On December 14, 2015, new help became available to New Yorkers facing foreclosure: LawHelpNY, together with the New York State Courts Access to Justice Program and Pro Bono Net, launched LiveHelp, a real time chat service, on the foreclosure pages of the CourtHelp website.

[REAL NY]

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Posted in STOP FORECLOSURE FRAUD0 Comments

Banks strike out in omnibus

Banks strike out in omnibus

The Hill-

The financial industry came up empty-handed in the massive government funding package unveiled early Wednesday morning.

After pushing for a host of policy riders, including provisions to rework portions of the Dodd-Frank financial reform law and delay a contentious rule on investment advisers, Wall Street had nothing to show for it in the final 2,000-page bill.

To add insult to injury, the banking industry was also unable to roll back a recent policy change that cut billions of dollars banks had received from the Federal Reserve for more than a century. That policy tweak was included in recent highway bill to help cover the costs for the overall legislation.

“Failing to pass needed regulatory relief while forcing banks to pay for roads and bridges is unconscionable and comes with very real costs for both hometown banks and the broader economy,” said Rob Nichols, the incoming president and CEO of the American Bankers Association.

[THE HILL]

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Posted in STOP FORECLOSURE FRAUD2 Comments

HOLLENSHEAD v. NATIONAL RESIDENTIAL ASSETS CORP., Dist. Court, ED Texas 2015 | RESPA, FDCPA – Bank of America, N.A.’s Motion for Interlocutory Summary Judgment Denied

HOLLENSHEAD v. NATIONAL RESIDENTIAL ASSETS CORP., Dist. Court, ED Texas 2015 | RESPA, FDCPA – Bank of America, N.A.’s Motion for Interlocutory Summary Judgment Denied

THOMAS C. HOLLENSHEAD
v.
NATIONAL RESIDENTIAL ASSETS CORP., BANK OF AMERICA, N.A., and SOCA FUNDING, L.L.C.

Case No. 4:14-CV-766.
United States District Court, E.D. Texas, Sherman Division.

December 9, 2015.

MEMORANDUM OPINION AND ORDER

AMOS L. MAZZANT, III, District Judge.

Pending before the Court is Defendant Bank of America, N.A.’s Motion for Interlocutory Summary Judgment (Dkt. #9). The Court, having considered the relevant pleadings, finds that Defendant’s motion should be denied.

On September 22, 2015, Defendant Bank of America, N.A. (“BANA”) filed a Motion for Summary Judgment (Dkt. #9). No response was filed by Plaintiff.

LEGAL STANDARD

The purpose of summary judgment is to isolate and dispose of factually unsupported claims or defenses. See Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). Summary judgment is proper if the pleadings, the discovery and disclosure materials on file, and any affidavits “[show] that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). A dispute about a material fact is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The trial court must resolve all reasonable doubts in favor of the party opposing the motion for summary judgment. Casey Enters., Inc. v. Am. Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir. 1981) (citations omitted). The substantive law identifies which facts are material. Anderson, 477 U.S. at 248.

The party moving for summary judgment has the burden to show that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Id. at 247. If the movant bears the burden of proof on a claim or defense on which it is moving for summary judgment, it must come forward with evidence that establishes “beyond peradventure all of the essential elements of the claim or defense.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). Where the nonmovant bears the burden of proof, the movant may discharge its burden by showing that there is an absence of evidence to support the nonmovant’s case. Celotex, 477 U.S. at 325; Byers v. Dallas Morning News, Inc., 209 F.3d 419, 424 (5th Cir. 2000). Once the movant has carried its burden, the nonmovant must “respond to the motion for summary judgment by setting forth particular facts indicating there is a genuine issue for trial.” Byers, 209 F.3d at 424 (citing Anderson, 477 U.S. at 248-49). The nonmovant must adduce affirmative evidence. Anderson, 477 U.S. at 257. No “mere denial of material facts nor . . . unsworn allegations [nor] arguments and assertions in briefs or legal memoranda” will suffice to carry this burden. Moayedi v. Compaq Computer Corp., 98 F. App’x 335, 338 (5th Cir. 2004). Rather, the Court requires “significant probative evidence” from the nonmovant in order to dismiss a request for summary judgment supported appropriately by the movant. United States v. Lawrence, 276 F.3d 193, 197 (5th Cir. 2001). The Court must consider all of the evidence, but must refrain from making any credibility determinations or weighing the evidence. See Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007).

DISCUSSION AND ANALYSIS

Plaintiff asserts three causes of action and also seeks recovery of his attorneys’ fees, expenses and court costs. Plaintiff first asserts that BANA violated the Real Estate Settlement Procedures Act by failing to respond to his qualified written requests. Plaintiff next asserts that BANA violated the Fair Debt Collection Practices Act (“FDCPA”) by failing to cease collection activities when he notified BANA that he disputed the debt. Plaintiff also asserts that BANA violated the FDCPA by failing to inform him that it had transferred the servicing of his mortgage loan to another lender. Finally, Plaintiff alleges he never received notice the loan was transferred to another company or that BANA would be servicing that loan for the new company. Plaintiff alleges BANA has not provided any documentation showing that it has the authority to act for the new owner of the mortgage or that BANA has any authority to conduct a foreclosure sale. Plaintiff seeks a declaratory judgment that BANA has no authority to foreclose his mortgage and enjoining BANA from proceeding with foreclosure in this case.

After reviewing the summary judgment evidence and BANA’s scant briefing, the Court finds that there are issues of fact remaining. Summary judgment should be denied. The case should proceed to trial.

CONCLUSION

It is therefore ORDERED that Defendant’s Motion for Interlocutory Summary Judgment (Dkt. #9) is hereby DENIED.

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HEPWORTH v WELLS FARGO | 4DCA – PSA trust had an opening date of January 1, 2006. Testimony established a closing date before the complaint was filed, but there is no evidence the subject note was transferred into the trust.

HEPWORTH v WELLS FARGO | 4DCA – PSA trust had an opening date of January 1, 2006. Testimony established a closing date before the complaint was filed, but there is no evidence the subject note was transferred into the trust.

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

LAURA T. HEPWORTH and MICHAEL E. HEPWORTH,
Appellants,

v.

WELLS FARGO BANK, N.A., AS TRUSTEE FOR OPTION ONE MORTGAGE LOAN TRUST 2006-1, ASSET-BACKED CERTIFICATES, SERIES 2006-1,
Appellee.

No. 4D13-4056

[December 9, 2015]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; John J. Hoy, Judge; L.T. Case No. 502009CA018458XXXXMB.
Thomas Erskine Ice of Ice Appellate, Royal Palm Beach, for appellants.
Eve A. Cann of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Fort Lauderdale, for appellee.
MAY, J.

Borrowers appeal a final judgment of foreclosure. They argue Wells Fargo’s witness was unqualified to testify concerning business records. We disagree and affirm on this issue. The borrowers next argue Wells Fargo lacked standing. We agree with the borrowers on the standing issue and reverse.

The borrowers executed a note and mortgage with Homefield Financial, Inc. (“Homefield”) on October 4, 2005. The borrowers failed to make their monthly payment and in May 2009, Wells Fargo filed a two-count complaint seeking to foreclose on the mortgage and reestablish the lost note. Wells Fargo alleged that it was “the legal and/or equitable owner and holder of the Note and Mortgage and has the right to enforce the loan documents.” It also alleged that it was “not in possession of the subject Promissory Note and . . . cannot reasonably obtain possession of said Note because it is lost, stolen, or destroyed.”

Attached to the complaint was a copy of the note, mortgage, and an assignment of mortgage. The assignment of mortgage was signed October 6, 2005 and assigned both the note and mortgage from Homefield to Option One Mortgage Corporation, a California Corporation (“Option One”).1 The note was unendorsed.

The borrowers filed a pro se answer. They later retained counsel and filed an amended answer and asserted several affirmative defenses, including lack of standing. In July 2013, Wells Fargo dismissed the lost note count.
In September 2013, Wells Fargo filed its notice of trial exhibits, and noted that the original note contained three allonges, which were not attached to the note attached to the original complaint. The first allonge is undated and contains a blank endorsement from Homefield. The second allonge is dated September 13, 2005, with a note date of September 13, 2005, and is specially endorsed from Homefield to Option One.2 It has a different loan number than the loan number on the note. The third allonge is also dated September 13, 2005, with a note date of September 13, 2005, and is specially endorsed from Option One to Wells Fargo Bank N.A., as Trustee. It also has a different loan number than the loan number on the note.

At the non-jury trial, Wells Fargo introduced a limited power of attorney, default notice, original note and mortgage, pooling and servicing agreement (“PSA”), payment history, and notice of servicing transfer. The power of attorney named Ocwen Loan Servicing, LLC (“Ocwen”) in its capacity as servicer as attorney-in-fact. The note contained the three above described allonges. The PSA lists Option One as the Master Servicer, Option One Mortgage Acceptance Corporation as the Depositor, and Wells Fargo Bank, N.A., as the Trustee. The PSA is dated January 1, 2006.

The PSA’s alleged mortgage loan schedule is redacted, except for one line that has the borrowers’ loan information on it. The mortgage loan schedule contains the loan number that was on the second and third allonges, but is different from the loan number on the original note and first allonge. The note has loan number xxxxxx0133 and the mortgage loan schedule has loan number xxxxx0728.

Wells Fargo offered the testimony of a loan analyst for Ocwen. The analyst testified that Ocwen had been the current servicer of the loan since October 2012. Homeward Residential (“Homeward”) was the prior servicer, but Ocwen purchased Homeward. Every document in Ocwen’s servicing system was a business record because it relies on the records to conduct its business. As a loan analyst, the witness reviews business records and loan documents, and appears for court mediation and depositions.3

The analyst testified that records showed Option One took possession of the original promissory note on October 21, 2005. The note was transferred from Homefield to Option One to the PSA trust through the PSA. The physical note then went to the custodian for the PSA trust. He noted that the PSA trust had a closing date of February 3, 2006, but said he had no personal knowledge of when the note was physically transferred into the trust, absent business records that make it appear as though it was at some point. The analyst did not know when the allonges were executed or when they were affixed to the back of the note.

Wells Fargo rested and the borrowers moved for involuntary dismissal. They argued the analyst lacked familiarity with the requisite departments and how payments were processed and had no personal knowledge of some departments. The trial court denied the motion and the borrowers rested. The court entered final judgment of foreclosure in favor of Wells Fargo. From this judgment the borrowers have appealed.

The borrowers argue Wells Fargo failed to prove standing at the time of filing suit because it failed to prove when Wells Fargo took possession of the note. Wells Fargo responds that it had standing to foreclose as a holder of the note. It proved standing by producing the original note bearing a special endorsement in its favor. The borrowers reply that Wells Fargo’s analyst readily admitted he had no knowledge of when the allonge endorsements were created or when the allonges were affixed to the note. We agree with the borrowers that Wells Fargo failed to establish standing and reverse.

We have de novo review of the standing issue. Dixon v. Express Equity Lending Grp., LLLP, 125 So. 3d 965, 967 (Fla. 4th DCA 2013) (citation omitted).

“The first lesson in ‘Foreclosures 101’: a lender must prove it had standing before the complaint is filed to foreclose on a mortgage.” Peoples v. Sami II Trust 2006-AR6, 40 Fla. L. Weekly D2328, D2328 (Fla. 4th DCA Oct. 14, 2015). “[S]tanding may be established from the plaintiff’s status as the note holder, regardless of any recorded assignments.” McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). “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.” Id. The plaintiff may also show “an affidavit of ownership to prove its status as the holder of the note.” Id.

“A plaintiff alleging standing as a holder must prove it is a holder of the note and mortgage both as of the time of trial and also that [it] had standing as of the time the foreclosure complaint was filed.” Kiefert v. Nationstar Mortg., LLC, 153 So. 3d 351, 352 (Fla. 1st DCA 2014) (emphasis added).

Such 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). If the foreclosure plaintiff is not the original, named payee, the plaintiff must establish that the note was endorsed (either in favor of the original plaintiff or in blank) before the filing of the complaint in order to prove standing as a holder.

Id. at 353 (internal citations omitted). “A plaintiff’s lack of standing at the inception of the case is not a defect that may be cured by the acquisition of standing after the case is filed and cannot be established retroactively by acquiring standing to file a lawsuit after the fact.” LaFrance v. U.S. Bank Nat’l Ass’n, 141 So. 3d 754, 756 (Fla. 4th DCA 2014) (citation omitted) (internal quotation marks omitted).

Here, Wells Fargo argues it proved standing because it “asserted in its complaint that it owned and held the note and mortgage, and produced the original note bearing a specific endorsement [in its favor]. Clearly, it met the burden established through Florida case law.” However, when Wells Fargo filed the complaint, it attached a copy of the note, which was in favor of Homefield and unendorsed. Wells Fargo did not file the original note with the three either undated or pre-note-execution-dated allonges until the trial date. This alone is insufficient to establish standing at the case’s inception. 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, 1132 (Fla. 4th DCA 2014)).

Wells Fargo also argues the chain of allonges attached to the original note proved standing, but this argument also fails. The first allonge contained a blank endorsement from Homefield, but it was undated and not affixed to the note when the complaint was filed. See § 673.2041(1), Fla. Stat. (2013). The second and third allonges show a chain of endorsements from Homefield to Option One to Wells Fargo, but they are dated before the original note was executed, contain a different loan number than is found on the original note, and have a different note execution date than is found on the original note. See Cutler v. U.S. Bank Nat’l Ass’n, 109 So. 3d 224, 225–26 (Fla. 2d DCA 2012).

Wells Fargo could have proved through its analyst that it owned or held the note prior to filing the complaint because the endorsement occurred prior to filing the complaint. See Sosa v. U.S. Bank Nat’l Ass’n, 153 So. 3d 950, 951 (Fla. 4th DCA 2014). But, the analyst testified that he did not know when the allonges were executed or when they were affixed to the back of the original note.

Finally, Wells Fargo argues it established standing through the PSA, but this also fails. There is no evidence that PSA Depositor Option One Mortgage Acceptance Corporation (different from Option One Mortgage Corporation) had the right to deposit the subject note and mortgage into the PSA trust. Moreover, the PSA trust had an opening date of January 1, 2006. Testimony established a closing date before the complaint was filed, but there is no evidence the subject note was transferred into the trust. The loan number in the PSA’s mortgage loan schedule is different from the one on the original note and the original note’s loan number is not found on the schedule. Jarvis v. Deutsche Bank Nat’l Trust Co., 169 So. 3d 194, 196 (Fla. 4th DCA 2015) (“[E]vidence that the note was physically transferred into a trust prior to [the plaintiff] filing its foreclosure complaint does not, by itself, establish standing.”).

Put simply, Wells Fargo failed to establish standing at the time the complaint was filed. We therefore reverse and remand the case for entry of judgment in favor of the borrowers. Murray v. HSBC Bank USA, 157 So. 3d 355, 359 (Fla. 4th DCA 2015).

Reversed and Remanded.

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

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MORRIS v DEUTSCHE BANK | FL 4DCA – Deutsche Bank did not prove that the note was endorsed in blank at that time. Moreover, the Corrective Assignment did not assign the note, and thus did not establish Deutsche Bank’s standing

MORRIS v DEUTSCHE BANK | FL 4DCA – Deutsche Bank did not prove that the note was endorsed in blank at that time. Moreover, the Corrective Assignment did not assign the note, and thus did not establish Deutsche Bank’s standing

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

CHRISTINE MORRIS,
Appellant,

v.

DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE FOR HSI ASSET SECURITIZATION CORPORATION TRUST 2006-HE1, MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-HE1, UNKNOWN TENANT 1, and ANSON STREET LLC,
Appellees.

No. 4D13-4049
[December 9, 2015]

Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Joel T. Lazarus, Judge; L.T. Case No. CACE12-03320(11).

Brian Korte of Korte and Wortman, P.A., West Palm Beach, for appellant.
Michael K. Winston, Dean A. Morande and Jorge A. Perez Santiago of Carlton Fields Jorden Burt, P.A., West Palm Beach, for Appellee Deutsche Bank National Trust Company.
TAYLOR, J.

Christine Morris appeals the final summary judgment of foreclosure entered in favor of Deutsche Bank National Trust Company. We reverse, because a genuine issue of material fact exists as to Morris’s affirmative defense that Deutsche Bank lacked standing on the date that the underlying complaint was filed.

The UCC provides that a “person entitled to enforce” a negotiable instrument means the holder of the instrument, a non-holder 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. § 673.3011(1)-(3), Fla. Stat. (2011). 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),2Fla. Stat. (2011).

“When a plaintiff asserts standing based on an undated endorsement of the note, it must show that the endorsement occurred before the filing of the complaint through additional evidence, such as the testimony of a litigation analyst.” See Lloyd v. Bank of New York Mellon, 160 So. 3d 513, 515 (Fla. 4th DCA 2015). Standing has not been proven where the evidence establishes only that the original plaintiff “was in possession of the note at the time the complaint was filed, not that the note had been endorsed at the time the complaint was filed.” Kiefert v. Nationstar Mortg., LLC, 153 So. 3d 351, 353 (Fla. 1st DCA 2014).

Here, the copy of the note attached to the complaint did not contain any endorsements. Deutsche Bank subsequently filed the original note with a blank endorsement. Although the summary judgment evidence may have proven that Deutsche Bank was in possession of the note at the time the complaint was filed, Deutsche Bank did not prove that the note was endorsed in blank at that time. Moreover, the Corrective Assignment did not assign the note, and thus did not establish Deutsche Bank’s standing. See Lamb v. Nationstar Mortg., LLC, 174 So. 3d 1039, 1041 (Fla. 4th DCA 2015) (“A bank does not have standing to foreclose where it relies on an assignment of the mortgage only.”).
In short, we conclude Deutsche Bank failed to prove standing because Deutsche Bank did not establish that, at the time it filed the original complaint, it was entitled to enforce the note as the holder of the note, a non-holder in possession of the note with the rights of a holder, or a person not in possession of the instrument who was entitled to enforce it. Thus, a genuine issue of material fact remained regarding Deutsche Bank’s standing to foreclose at the inception of the case.

Accordingly, we reverse the final summary judgment of foreclosure and remand for further proceedings.

Reversed and Remanded for proceedings consistent with this opinion.

GROSS, J. and SHEPHERD, CAROLINE, Associate Judge, concur.

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

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Gardner v. Nationstar Mortgage, LLC | USDC of Arizona – Once a borrower can shoehorn his or her way into the mechanics of a securitized trust in this way, the next issue arises whether the underlying debt has already been partially or completely paid by non-recourse insurance…

Gardner v. Nationstar Mortgage, LLC | USDC of Arizona – Once a borrower can shoehorn his or her way into the mechanics of a securitized trust in this way, the next issue arises whether the underlying debt has already been partially or completely paid by non-recourse insurance…

Via: Gary Dubin
Once a borrower can shoehorn his or her way into the mechanics of a securitized trust in this way, the next issue arises whether the underlying debt has already been partially or completely paid by non-recourse insurance which is usually the case and therefore carrying the Court’s reasoning further, what is actually still owed and to whom if the debt and the investors have for instance already been paid.

Gardner v. Nationstar Mortgage, LLC
United States District Court for the District of Arizona
December 7, 2015, Decided; December 7, 2015, Filed

No. 2:13-cv-1641-HRH; [Consolidated with No. 2:13-cv-2478-HRH]

Reporter
2015 U.S. Dist. LEXIS 163703

JAY N. GARDNER and RACHEL B. GARDNER, Plaintiffs,

vs.

NATIONSTAR MORTGAGE, LLC,
et al., Defendants.

 

Background

Plaintiffs are Jay N. Gardner and Rachel B. Gardner. Defendants are Nationstar Mortgage LLC; T.D.
Service Company of Arizona; U.S. Bank, N.A.;4 Starlet J. Japp; Clayton A. Goff; AMSL Legal Group,
LLC; and AMSL Legal Group, LLP.5

In April 2007, plaintiffs borrowed $960,000 from GreenPoint Mortgage Funding, Inc., to purchase
²property located at 3601 East Mountain View Road, Phoenix, Arizona….²6 The Adjustable Rate Note
that plaintiffs signed named GreenPoint as the ²Lender² and provided ²that Lender may transfer this
Note. Lender or anyone who takes this Note by transfer and who is entitled to receive payments under
this Note is called the ’Note Holder.’²7 The Note provided that if the borrower is
in default, the Note Holder may send me [the borrower] a written notice telling me that if I do not
pay the overdue amount by a certain date, the Note Holder may require me to pay immediately the
full amount of Principal that has not been paid and all the interest that I owe on that amount. That
date must be at least 30 days after the date on which the notice is mailed to me or delivered by other
means.8

Plaintiffs, as trustors, also executed a Deed of Trust.9 The Deed of Trust named GreenPoint as the
²Lender² and Marin Conveyancing Corp. as the ²Trustee.²10 The Deed of Trust listed the Mortgage
[*4] Electronic Registration Systems, Inc. (MERS), ²as a nominee for the Lender and Lender’s
successors and assigns. MERS is the beneficiary under this Security Interest.²11 The Deed of Trust
provided that ²[t]his Security Instrument secures to Lender: (i) the repayment of the Loan, and all
renewals, extensions and modifications of the Note; and (ii) the performance of Borrower’s covenants
and agreements under this Security Interest and Note.²12 ²For this purpose, Borrower irrevocably
grants and conveys to Trustee, in trust, with power of sale² the property at 3601 East Mountain View
Road, Phoenix, Arizona.13

[…]

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MERS v DITTO | IF MERS HAD AN “ASS” … THE TENNESSEE SUPREMES WOULD HAVE KICKED IT!

MERS v DITTO | IF MERS HAD AN “ASS” … THE TENNESSEE SUPREMES WOULD HAVE KICKED IT!

BREAKING NEWS VIA CLOUDED TITLES BLOG!

Chattanooga, Tennessee — The Chattanoogan.com news site is reporting that in a lawsuit filed to set aside a tax sale of mortgaged land in Hamilton County, the Tennessee Supreme Court has held that Mortgage Electronic Registration Systems, Inc. was not entitled to prior notice of the sale because MERS did not have an interest in the land that is protected under the Due Process Clause of the U.S. Constitution! 

READ THE OPINION HERE: MERS v DITTO_TN Supreme Court rules against MERS!   The Tennessee Supreme Court is the first to rule in such a manner! 

The site is reporting that the purchaser of the Hamilton County land borrowed money from a MERS member lender, signing a promissory note secured by the property by a deed of trust, which was recorded in the Hamilton County Register of Deeds office. The deed of trust described MERS as “a separate corporation that is acting solely as nominee for [the lender]” and said that MERS was the beneficiary of the deed of trust “solely as nominee” for the lender and any successor to the lender.  As is customary in the MERS® System, the originating lender sold the note to another lender.  Subsequent to that, the property owners failed to pay their 2006 property taxes, so Hamilton County initiated tax foreclosure proceedings.

The county sent notice of the foreclosure and the tax sale to the borrowers and to the original lender, but not to MERS. Eventually, the property was sold at a tax sale to Carlton Ditto.  Just like in the Cabrera, Robinson and Johnston cases in California, after learning of the action, MERS filed a lawsuit to set aside the tax sale, naming Hamilton County and Mr. Ditto as defendants. MERS argued that Hamilton County violated its constitutional right to due process of law by selling the land without notifying MERS. This crap is the same argument propounded in the California cases, where MERS claimed that the deed of trust gave MERS its own independent interest in the Hamilton County property, so it was constitutionally entitled to prior notice of the tax sale.  In California, MERS also wanted the courts to rule that the California Quiet Title Statutes were unconstitutional and that the judges who rendered the quiet title judgments in all three cases were civil co-conspirators, something this blogger has learned has infuriated the state judges!  (I sure hope MERS doesn’t show up in front of one of them any time soon! LOL)

The trial court ruled against MERS, holding that MERS was merely an agent of the lender without a separate interest in the property, and not entitled to prior notice of the tax sale. MERS appealed to the Court of Appeals, which affirmed the trial court’s decision for a slightly different reason, holding that MERS did not have standing to bring the lawsuit. MERS was then granted permission to appeal to the Tennessee Supreme Court.

The Supreme Court considered whether Hamilton County was required to give MERS prior notice of the tax sale. The Court recognized that the Due Process Clause of the U.S. Constitution generally applies when the government sells a taxpayer’s land to satisfy unpaid taxes, so if the government fails to give the taxpayer such notice, the sale is unconstitutional and void.  The Court then considered whether MERS had an interest in the land that was protected under the Constitution. The Court first noted that the deed of trust for the Hamilton County transaction used contradictory language to describe the role of MERS in the property loan transaction; it described MERS as a “beneficiary” but also said that MERS acted “solely as nominee” for the lender. Considering the parties’ roles in the loan transaction, the Court held that MERS was not in fact a beneficiary but only an agent for the true beneficiary, the note holder, and that MERS acquired no independent interest in the Hamilton County land. Because MERS did not have an interest that was constitutionally protected, Hamilton County was not required to give MERS notice before it sold the land to pay the unpaid tax obligation. For this reason, the Supreme Court affirmed the trial court’s judgment in favor of Hamilton County and the tax sale purchaser, Mr. Ditto.

My take on today’s news …

From gandering at the opinion issued by the Court, it appears they quoted MERS’s own counsel on company policies!  Many attorneys have told me, as have certain legislators in DC, that just because MERS has a “business model” doesn’t mean: (1) it’s perfectly okay to rip off 3,007 counties across America in denying fees while obfuscating the real parties in interest from the borrowers; and (2) it should be accorded the same interests as the Lender, especially when the Lender doesn’t have a recorded (perfected) interest that still could be challenged.

This is another decision you’re going to see referred to in THE QUIET TITLE WAR MANUAL … because there are thousands of investors out there buying up tax deeds and tax liens and Mr. Ditto gets kudos and accolades from me (along with his counsel) for fighting the beast head-on.  Tennessee now joins Washington, Oregon, Montana, Maine and New York as battleground states against the MERS® System.

-30-

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Morgan Stanley Agrees to Pay $225 Million to Settle NCUA’s Claims Due To Faulty Residential Mortgage-Backed Securities

Morgan Stanley Agrees to Pay $225 Million to Settle NCUA’s Claims Due To Faulty Residential Mortgage-Backed Securities

Most Recent Settlement Resolves Cases in New York and Kansas Federal Courts

ALEXANDRIA, Va. (Dec. 10, 2015) – The National Credit Union Administration today announced a settlement with Morgan Stanley for $225 million to resolve claims arising from losses related to corporate credit unions’ purchases of faulty residential mortgage-backed securities.

“NCUA continues to pursue recoveries on behalf of the corporate credit unions against the financial firms we maintain contributed to the corporates’ losses,” NCUA Board Chairman Debbie Matz said. “These actions fulfill our statutory obligation to act in order to minimize costs to the credit union system resulting from the crisis. They also promote accountability and ensure consumers remain protected.”

NCUA Associate General Counsel John Ianno recognized the U.S. Justice Department’s involvement in the litigation.

“We appreciate the efforts of the Department of Justice, with whom we have worked closely in achieving this favorable resolution,” Ianno said.

The settlement covers claims asserted in 2013 by the NCUA Board on behalf of U.S. Central Federal Credit Union, Western Corporate Federal Credit Union, Members United Corporate Federal Credit Union and Southwest Corporate Federal Credit Union. NCUA will dismiss pending suits against Morgan Stanley in federal district courts in New York and Kansas. Morgan Stanley does not admit fault in the settlement.

Net proceeds from this settlement and others are used to pay claims against the failed corporate credit unions, including those of the Temporary Corporate Credit Union Stabilization Fund. Stabilization Fund recoveries reduce borrowings from the U.S. Treasury and eliminate the need for assessments to federally insured credit unions.

NCUA was the first federal regulatory agency for depository institutions to recover losses from investments in these securities on behalf of failed financial institutions.

NCUA continues to pursue litigation in federal courts in New York, Kansas and California against financial firms, including RBS, Goldman Sachs, UBS and Credit Suisse, based on the sale of faulty securities that caused the collapse of five corporate credit unions. The agency, on behalf of the failed corporates, has other litigation pending against securities firms alleging violations of state and federal anti-trust law by manipulation of interest rates through the London Interbank Offer Rate system. NCUA also has pending suits against financial firms alleging their failure to perform their duties as trustees of residential mortgage-backed securities trusts.


NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of nearly 101 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. At MyCreditUnion.gov and Pocket Cents, NCUA also educates the public on consumer protection and financial literacy issues.

–NCUA–

National Credit Union Administration

Office of Public & Congressional Affairs

703.518.6330
pacamail@ncua.gov

Contacts:

John Fairbanks
Office: 703.518.6336
Mobile: 571.438.0801
jfairbanks@ncua.gov

Ben C. Hardaway
Office: 703.518.6333
Mobile: 703.298.5223 bhardaway@ncua.gov

Kenzie Snowden
Office: 703.518.6334
ksnowden@ncua.gov

“Protecting credit unions and the consumers who own them through effective regulation”

– See more at: https://www.ncua.gov/newsroom/Pages/news-2015-dec-settlement.aspx#sthash.eeT6mg2d.dpuf

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