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MAGLOIRE v. Bank of New York, Fla: Dist. Court of Appeals, 4th Dist. 2014 | A trial court lacks jurisdiction to hear a case once it has been dismissed

MAGLOIRE v. Bank of New York, Fla: Dist. Court of Appeals, 4th Dist. 2014 | A trial court lacks jurisdiction to hear a case once it has been dismissed

 

MORIN MAGLOIRE and GERMAIN JEAN CLAUDE, Appellants,
v.
THE BANK OF NEW YORK as Trustee for the certificate holders CWABS, INC. ASSET-BACKED CERTIFICATES, SERIES 2006-23, Appellee.

No. 4D11-4540.
District Court of Appeal of Florida, Fourth District.
September 10, 2014.
S. Tracy Long of Law Offices of S. Tracy Long, P.A., Deerfield Beach (withdrawn as counsel after filing brief); Morin Magloire and Germain Jean-Clause, Lauderdale Lakes, pro se.

Michael P. Bruning of Connolly, Geaney, Ablitt & Willard, P.C., West Palm Beach, for appellee.

PER CURIAM.

The homeowners appeal the trial court’s order granting final summary judgment of foreclosure in favor of the bank. The homeowners argue that the trial court erred in granting the bank’s motion for summary judgment after the trial court previously dismissed the case for lack of prosecution. We agree.

On October 10, 2008, the bank filed a mortgage foreclosure complaint based on a mortgage and note executed by the homeowners in September of 2006. On October 15, 2008, the homeowners filed an answer to the complaint, in the form of a letter to the court, explaining that they had “experienced a serious hardships [sic] that have prevented [them] from making the mortgage payments on [their] primary residence.” Additionally, they stated that they were trying to work with the leader “to work out a re-instatement or re-payment plan.”

On November 19, 2009, the trial court filed a notice of intent to dismiss the bank’s complaint after there had been no record activity in the case since November 5, 2008. The trial court set a hearing on the issue, and the bank filed a statement asserting good cause as to why the action should remain pending.[1] Within its response, the bank stated that it was currently evaluating the homeowner’s loan to determine if the homeowners would qualify for a settlement offer, and asked the court to allow the case to remain open until the bank could complete negotiations with the homeowners. On December 16, 2009, the trial court entered a final order of dismissal of the bank’s complaint, because there was “no record activity > 1 yr (since 11/5/2008) and no good cause.”

On June 28, 2010, the bank filed a motion for summary judgment. Then, on November 9, 2011, a hearing was held on the bank’s motion for summary judgment. On the same date, the trial court entered a summary final judgment of foreclosure in favor of the bank. The homeowners appeal this order.

There were no transcripts provided of the motion for summary judgment hearing, and it is therefore unknown whether the homeowners raised the issue of the previous dismissal of the case and the trial court’s subsequent lack of jurisdiction over the case. However, “the issue of subject-matter jurisdiction . . . may be raised for the first time on appeal.” Rudel v. Rudel, 111 So. 3d 285, 291 (Fla. 4th DCA 2013).[2]

“Whether a court has subject matter jurisdiction is a question of law reviewed de novo.” Sanchez v. Fernandez, 915 So. 2d 192, 192 (Fla. 4th DCA 2005).

A trial court lacks jurisdiction to hear a case once it has been dismissed. See Gardner v. Nioso, 108 So. 3d 1122, 1123 (Fla. 1st DCA 2013) (“[B]y the trial court’s dismissal of the action against them, and the subsequent affirmance of that dismissal, the trial court no longer has jurisdiction over Appellees.”); Harrison v. La Placida Cmty. Ass’n, 665 So. 2d 1138, 1141 (Fla. 4th DCA 1996) (“Once [the defendat] was dismissed, the trial court no longer had jurisdiction over her.’); Ludovici v. McKiness, 545 So. 2d 335, 336 n.3 (Fla. 3d DCA 1989) (“A trial court lacks jurisdiction to vacate an order of dismissal without prejudice after the order becomes final. An exception to this finality is a Rule 1.540 motion. The trial court has jurisdiction to entertain a timely motion for rehearing or to revisit the cause on the court’s own initiative within the time allowed for a rehearing motion.”) (internal citations omitted); Derma Lift Salon, Inc v. Swanko, 419 So. 2d 1180, 1180-81 (Fla. 3d DCA 1982). (“The trial court’s order of dismissal entered May 11, 1982, albeit `without prejudice,’ was a final appealable order, subject to the further jurisdiction of the trial court only upon a timely filed motion for rehearing under Florida Rule of Civil Procedure 1.530.”) (internal citation omitted). Since there was no motion for rehearing or motion to vacate filed or ruled upon regarding the order of dismissal in the instant case, the trial court did not have jurisdiction to enter an order granting the bank’s subsequently-filed motion for summary judgment. Additionally, although the trial court’s final order of dismissal was entered “without prejudice to refile,” the bank never refiled the complaint prior to filing its motion for summary judgment.

The bank argues that the trial court’s order should be allowed to stand because it exercised its powers of “equitable jurisdiction” in granting the bank’s motion for summary judgment. However, we find the bank’s argument, basically that equitable jurisdiction can replace subject-matter jurisdiction, unconvincing. See Black’s Law Dictionary 18(c) (9th ed. 2009) (quoting William Q. de Funiak, Handbook of Modern Equity 38 (2d ed. 1956)) (“[T]he term equity jurisdiction does not refer to jurisdiction in the sense of the power conferred by the sovereign on the court over specified subject-matters or to jurisdiction over the res or the persons of the parties in a particular proceeding but refers rather to the merits. The want of equity jurisdiction does not mean that the court has no power to act but that it should not act, as on the ground, for example, that there is an adequate remedy at law.”) (emphasis added) (internal quotation marks omitted).

Therefore, we reverse the trial court’s order granting the bank’s motion for summary judgment and remand the case to the trial court for proceedings consistent with this opinion.

Reversed and remanded.

GROSS, GERBER and CONNER, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

[1] “[T]he action shall be dismissed by the court on its own motion or on the motion of any interested person, whether a party to the action or not, after reasonable notice to the parties, unless a party shows good cause in writing at least 5 days before the hearing on the motion why the action should remain pending. Mere inaction for a period of less than 1 year shall not be sufficient cause for dismissal for failure to prosecute.” Fla. R. Civ. P. 1.420(e) (emphasis added).

[2] The type of jurisdiction at issue in the instant case is that of subject-matter jurisdiction. See Bernard v. Rose, 68 So. 3d 946, 948 (Fla. 3d DCA 2011) (referring to the trial court’s jurisdiction over a case after a dismissal for lack of prosecution as that of subject-matter jurisdiction).

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Deutsche Bank Natl. Trust Co. v Tassone | NYSC – the initial assignment of the mortgage and note from New Century to DBNT, is circumspect, thereby rendering any subsequent assignments questionable….fails to indicate whether the Note was assigned as well.

Deutsche Bank Natl. Trust Co. v Tassone | NYSC – the initial assignment of the mortgage and note from New Century to DBNT, is circumspect, thereby rendering any subsequent assignments questionable….fails to indicate whether the Note was assigned as well.

Decided on June 20, 2014

Supreme Court, Putnam County

 

Deutsche Bank National Trust Company, AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF MAY 1, 2003 MORGAN STANLEY ABS CAPITAL I INC. TRUST 2003-NC5, Plaintiff, -against -

against

Cosmo Tassone, CARMELA TASSONE, and “JOHN DOE” No.1-10, “MARY DOE” #1-10, and “JANE DOE” #1-10, the names being fictitious, their true names being unknown to the plaintiff, persons intended being persons in possession of portions of the premises herein described, Defendants.

2480/2011

Bruce H. Ashbahian, Esq.

DeRose & Surico

Attorney for Plaintiff

213-44 38th Avenue

Bayside, New York 11361

Nicole M. Black, Esq.

Clair & Gjersten, Esqs.

Attorney for Defendant

720 White Plains Road

Scarsdale, New York 10583
Victor G. Grossman, J.

The following papers, numbered 1 to 28, were considered in connection with Plaintiff’s motion to: (1) strike Defendant’s answer and grant summary judgment in Plaintiff’s favor; (2) change the name of plaintiff pursuant to an assignment of the mortgage; (3) amend the caption of the summons and complaint, notice of pendency, and all other papers filed by discontinuing the action against “John Doe” #1-10, “Mary Doe” #1-10, and “Jane Doe” #1-10 without prejudice; (4) appoint a referee; and (5) grant Plaintiff such other and further relief as the Court may deem just and proper; and Defendant’s Cross-Motion to Dismiss the Action in its Entirety.

PAPERSNUMBERED

Notice of Motion/Affirmation/Affidavit of Indebtedness/

Exhs. A-K1-14

Notice of Cross Motion/Affirmation in Opposition and In

Support of Cross Motion/Exhs. A-D15-20

Affirmation in Opposition/Exhs. A-G21-28

On February 18, 2003, Defendants Cosmo and Carmela Tassone executed an Adjustable Rate Note (the “Note”) with New Century Mortgage Corporation, wherein Defendants promised to repay New Century Mortgage Corporation, the principal sum of $280,000.00 with interest (Affirmation, Exh. A). At the same time, Defendants executed an Adjustable Rate Rider (Affirmation, Exh. A). To secure payment of the sum represented in the Note, Defendants duly executed and delivered to New Century Mortgage Corporation, a mortgage (the “Mortgage”), dated February 18, 2003, encumbering property located at 9 Fieldstone Road, Putnam Valley, New York 10579 (Affirmation, Exh. B). The Mortgage was recorded on April 2, 2003, in the Office of the Clerk of Putnam County at Liber 3552, Page 275 (Affirmation, Exh. B).

According to the documents presented to this Court, New Century Mortgage Corporation allegedly assigned the Mortgage and Note to Deutsche Bank National Trust Company f/k/a Bankers Trust Company of California, N.A., as Trustee (Affirmation, Exh. C). However, it is unclear when this occurred because the date of this document is January 2, 2004, but the document was not notarized until May 6, 2005 (Affirmation, Exh. C).

On July 1, 2011, Deutsche Bank National Trust Company f/k/a Bankers Trust Company of California, N.A., apparently assigned the Mortgage to Deutsche Bank National Trust Company, as Trustee Under Pooling and Servicing Agreement Dated as of May 1, 2003 Morgan Stanley ABS Capital 1 Inc. Trust 2003-NC5 (Affirmation, Exh. C).

There appears to be another assignment of the Mortgage on May 20, 2013 by Plaintiff Deutsche Bank National Trust Company, as Trustee Under Pooling and Servicing Agreement Dated [*2]as of May 1, 2003 Morgan Stanley ABS Capital 1 Inc. Trust 2003-NC5, to Deutsche Bank National Trust Company, As Trustee For Morgan Stanley ABS Capital 1 Inc. Trust 2003-NC5, Mortgage Pass-Through Certificates, Series 2003-NC5 (Affirmation, Exh. C) — almost two years after this action for foreclosure was commenced (Affirmation, Exh. D).

According to Plaintiff, Defendants defaulted by failing to make the monthly payment that was due on December 1, 2009, and each successive month thereafter (Affirmation, Exh. D).

On March 24, 2011, Plaintiff allegedly sent Defendants their ninety (90) day notice (Cross-Motion, Exh. B). The next day, on March 25, 2011, Plaintiff allegedly sent Defendants a thirty (30) day notice of default. As a result of Defendants’ failure to cure the default, Plaintiff declared the balance of the principal indebtedness immediately due and owing (Affirmation; Affidavit of Indebtedness; Exh. J).

On August 11, 2011, Plaintiff filed the Summons and Complaint and Notice of Pendency (Affirmation, Exhs. D-E). On August 24, 2011, Defendant Carmela Tassone was personally served the Summons and Complaint, along with RPAPL §1303 Notice (Affirmation, Exh. F).

Defendants interposed an Answer on September 6, 2011, denying the allegations in the complaint and alleging thirteen (13) affirmative defenses (Affirmation, Exh. G).

Settlement conferences were held on February 8, 2012, April 11, 2012, May 23, 2012, and July 25, 2012 (Report to Court, Exh. K). After the July 25, 2012 hearing, Court Attorney-Referee Albert J. DeGatano ruled that Plaintiff, by virtue of being under a pooling agreement, was not acting in bad faith for not offering a loan modification where that pooling agreement specifically prohibited Plaintiff from do so, the matter was released from the Foreclosure Settlement Part, and the instant motion was filed. Defendants are opposing, and cross moving for dismissal.RPAPL §1304 provides that at least 90 days before a lender commences an action to foreclose on a mortgage, notice must be provided to the borrower that the loan is in default and that his or her home is at risk. The lender is required to send this notice “by registered or certified mail and also by first-class mail” See RPAPL §1304. “[P]roper service of RPAPL notice on the borrower or borrowers is a condition precedent to the commencement of a foreclosure action, and the plaintiff has the burden of establishing satisfaction of this condition.” Aurora Loan Services, LLC v. Weisbaum, 85 AD3d 95, 103 (2d Dept. 2011). Since satisfaction of a statutory condition precedent is an element of the claim itself which must be proved by plaintiff, the failure to show strict compliance would require dismissal. Id.

Here, the 90-day notice was sent to Defendant on March 24, 2011 (Affirmation, Exh. J). While there is a typed notation at the top of the document reflecting that it was sent “VIA First Class Mail,” and “VIA Certified Mail (return receipt requested),” and noting the certified number, there is no affidavit of service submitted to establish proper service on the borrowers, thereby confirming these notations. See Aurora Loan Services, LLC v. Weisblum, 85 AD3d, supra at 106. As such, Plaintiff has failed to satisfy a “mandatory condition precedent,” and the foreclosure action must be dismissed.

And to the extent Plaintiff submitted its opposition to Defendants’ cross-motion and attached a printout from the USPS reflecting the same certified number, this Court will not accept it. First, this affirmation, dated February 28, 2014, was served over two months after Defendants’ December 13, 2013 cross-motion was made, and there is no indication in the papers or the file that Plaintiff was granted an extension. Moreover, Plaintiff fails to explain why there was a delay. While this Court prefers to decide issues on their merits, this Court cannot ignore [*3]this excessive delay. And second, even it the Court were to consider this printout — which is arguably not even in admissible form — Plaintiff cannot rely on evidence submitted for the first time in its reply papers to remedy deficiencies in its prima facie showing. See Novita, LLC v. Hotel Times Square, LLC, 2013 WL 5785929 (Sup.Ct. October 17, 2013), citing Those Certain Underwriters at Lloyds, London v. Gray, 49 AD3d 1, 9 (1st Dept. 2007); see also Gampero v. Mathai, 105 AD3d 995 (2d Dept. 2013). As such, this Court will not consider the reply papers.In further support of their cross-motion, Defendants contest Plaintiff’s standing to commence this action. Although the failure to properly serve RPAPL §1304 Notice is sufficient reason to grant Defendants’ cross-motion and dismiss the complaint, this Court will address the standing issue in light of the possibility that the action may be recommenced after Plaintiff effects proper service of RPAPL §1304 Notice.

The plaintiff in a foreclosure action must establish the existence of the promissory note and a related mortgage referable to the subject property, its ownership of the mortgage and the defendant’s default in payment. Campaign v. Barba, 23 AD3d 327 (2d Dept. 2005). With respect to the issue of ownership, “[a]n assignment of a mortgage without assignment of the underlying note or bond is a nullity, and no interest is acquired by it.” Deutsche Bank National Trust Co. v. Barnett, 88 AD3d 636, 637 (2d Dept. 2011). The foreclosing party, as plaintiff, must establish that it is “both the holder or assignee of the subject mortgage, and the holder of the underlying note, at the time the action is commenced.” Homecomings Financial, LLC v. Guldi, 103 AD3d 506 (2d Dept. 2013), quoting Bank of New York v. Silverberg, 86 AD3d 274, 282-83 (2d Dept. 2011).

Here, in the documents provided, the initial assignment of the mortgage and note from New Century Mortgage Corporation to Deutsche Bank National Trust Company f/k/a Bankers Trust Company of California, N.A., is circumspect, thereby rendering any subsequent assignments questionable. Moreover, the subsequent assignment of the mortgage to the current Plaintiff fails to indicate whether the Note was assigned as well.

Moreover, putting aside the validity of the initial assignment, it is still unclear from the affidavit of Alexa Benincasa whether Plaintiff was in physical possession of the Note at the time the action was commenced. As a threshold matter, as Defendant correctly points out, there is no indication in the record or moving papers, what authority a “Contract Management Coordinator” has to attest to the facts that she has. Moreover, her blanket statement that Plaintiff possessed the Note at the time of the commencement of the action, without any facts to support this statement, is insufficient to establish that Plaintiff did in fact have such possession. And the assignment of mortgage to the instant Plaintiff lends no further proof. As such, Plaintiff needs to be prepare to answer these questions at a future hearing, if one is ordered, as it has failed to establish a prima facie case.In light of the foregoing, this Court need not address the remaining issues, and it is hereby

ORDERED that Plaintiff’s motion is denied; and it is further

ORDERED that Defendant’s cross-motion is granted, and the action is dismissed without prejudice.The foregoing constitutes the Decision and Order of the Court.

Dated:Carmel, New York

June 20, 2014

__________________________________

HON. VICTOR G. GROSSMAN, J.S.C.

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The Reasons Bankers Weren’t Busted

The Reasons Bankers Weren’t Busted

One word: Government


Bloomberg View-

“There Were No Convictions of Bankers for Good Reason” is the headline of a post by Mark F. Pomerantz, a lawyer and retired partner at Paul, Weiss, Rifkind, Wharton & Garrison in the New York Times’s Room for Debate discussion:

The reason that senior bankers did not face charges, even though investigators interviewed countless witnesses and pored over truckloads of emails and other documents for many years, is that the executives running companies like Bank of America, Citigroup and JP Morgan were not engaged in criminal acts.

At least that is why according to Pomerantz. It should surprise no one that a lawyer who spent much of his career representing financial institutions and their executives wouldn’t see any prosecutable crimes. Fortunately, it is easily refutable, which is our task for today and tomorrow.

[BLOOMBERG VIEW]

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Courts Have Ability To Issue Sanctions In Foreclosure Cases

Courts Have Ability To Issue Sanctions In Foreclosure Cases

New York Law Journal-

In response to the insightful article by Daniel Wise, “Panel Shifts Toward Remedy in ‘Sarmiento,’” (Aug. 29), I would raise one small point. Wise lamented that “The 2009 New York law (mandating settlement conferences in foreclosure cases) specifically instructed the Judiciary to issue rules to ‘ensure’ that judges have ‘the necessary authority and power’ to see that ‘conferences not be unduly delayed or subject to willful dilatory tactics,’” but that “the Judiciary has taken no action on the Legislature’s command.”

What the Legislature actually stated was “The chief administrator of the courts shall … promulgate such additional rules as may be necessary to ensure the just and expeditious processing of all settlement conferences authorized hereunder.”1

Although banks and mortgage servicers have argued in a number of cases that the failure of the chief administrator to have issued rules specifying what sanctions might be imposed for failing to negotiate in good faith at a settlement conference means that courts do not have any authority to sanction a violation, those arguments have been uniformly rejected.2

[NEW YORK LAW JOURNAL]

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CHASE PLAZA CONDOMINIUM ASSOCIATION, INC. v. JPMorgan Chase Bank, NA, DC: Court of Appeals 2014 | In sum, we hold that a condominium association can extinguish a first deed of trust by foreclosing on its six-month super-priority lien under D.C. Code § 42-1903.13 (a)(2).

CHASE PLAZA CONDOMINIUM ASSOCIATION, INC. v. JPMorgan Chase Bank, NA, DC: Court of Appeals 2014 | In sum, we hold that a condominium association can extinguish a first deed of trust by foreclosing on its six-month super-priority lien under D.C. Code § 42-1903.13 (a)(2).

I’m looking for the pdf for this.

CHASE PLAZA CONDOMINIUM ASSOCIATION, Inc. and DARCY, LLC, Appellants,
v.
JPMORGAN CHASE BANK, N.A., Appellee.

Nos. 13-CV-623 & 13-CV-674.
District of Columbia Court of Appeals.
Argued April 17, 2014.
Decided August 28, 2014.
Robert C. Gill, with whom Carolyn Due was on the brief, for appellant Chase Plaza Condominium Association, Inc.

Rachel Abramson for appellant Darcy, LLC.

Thomas J. McKee, Jr., with whom Michael R. Sklaire was on the brief, for appellee JPMorgan Chase Bank, N.A.

Thomas Moriarty, >Jason E. Fisher, >Laura M. Gagliuso, >Henry Goodman, and Loura Sanchez filed a brief on behalf of the Community Associations Institute as amicus curiae, in support of appellant Chase Plaza Condominium Association, Inc.

Before THOMPSON and McLEESE, Associate Judges, and KING, Senior Judge.

This opinion is subject to formal revision before publication in the Atlantic and Maryland Reporters. Users are requested to notify the Clerk of the Court of any formal errors so that corrections may be made before the bound volumes go to press.

McLEESE, Associate Judge.

Brian York purchased a condominium unit, financing the purchase through a mortgage loan that was secured by a deed of trust on the unit. After Mr. York defaulted on his monthly condominium assessments, appellant Chase Plaza Condominium Association, Inc. foreclosed on the unit. Appellant Darcy, LLC purchased the property at a foreclosure sale. Several months later, appellee JPMorgan Chase Bank, N.A. filed a complaint alleging that the foreclosure sale was void, because the price at the sale was unconscionably low and because the sale impermissibly purported to extinguish the lien created by the deed of trust. The trial court agreed on the latter point and granted summary judgment to JPMorgan. We reverse and remand.

I.

Except as noted, the following facts are undisputed. In July 2005, Mr. York purchased a condominium unit in Washington, D.C. Mr. York financed the purchase by executing a promissory note for $280,000 that was secured by a deed of trust on the unit. The deed of trust named Mr. York as “Borrower,” First Financial Services, Inc. as “Lender,” Federal Title & Escrow Co. as “Trustee,” and Mortgage Electronic Registration Systems, Inc. (“MERS”) as beneficiary and as a nominee for First Financial Services, Inc. The deed of trust was recorded in August 2005.

By late 2008, Mr. York was delinquent both on his mortgage payments and on the monthly condominium-association payments he was required to make to Chase Plaza. In April 2009, Chase Plaza recorded a condominium-assessment lien on the unit. Chase Plaza also conducted a title search on the unit, which revealed three outstanding liens: (1) the first deed of trust; (2) a second mortgage for $60,000; and (3) the condominium-assessment lien for $9,415.

Chase Plaza subsequently initiated foreclosure proceedings against Mr. York, seeking to recover six months’ worth of unpaid assessments. In January 2010, Chase Plaza filed a notice of foreclosure sale, published the notice, and mailed the notice to the parties named in the deed of trust. The notice specified that the foreclosure sale would not be subject to the first deed of trust. In other words, the notice reflected the position that Chase Plaza’s lien had a higher priority than the lien created by the first deed of trust and that if the foreclosure sale generated insufficient proceeds to satisfy Chase Plaza’s lien, the foreclosure sale would extinguish the lien created by the first deed of trust. See generally, e.g., Pappas v. Eastern Sav. Bank, FSB, 911 A.2d 1230, 1234 (D.C. 2006) (general rule is that valid foreclosure sale extinguishes subordinate liens that cannot be satisfied from proceeds of sale).

In February 2010, Darcy purchased the unit for $10,000 at a foreclosure sale.[1] Darcy was the only bidder at the sale. A deed of trust reflecting Darcy’s purchase was executed in March 2010.

In April 2010, JPMorgan commenced foreclosure proceedings against Mr. York for failure to make mortgage payments. After discovering that Chase Plaza had already foreclosed on the unit, JPMorgan filed a complaint against Chase Plaza and Darcy requesting that the trial court set aside the foreclosure sale and declare that JPMorgan held title to the unit. In explaining its interest in the unit, JPMorgan stated that in March 2009 MERS, which was designated as the beneficiary and nominee in the first deed of trust, had assigned its interest in the deed of trust to an entity JPMorgan referred to as Washington Mutual. JPMorgan further stated that it had acquired Washington Mutual in 2008, and that it also was the current holder of the original promissory note.

The trial court granted partial summary judgment to JPMorgan. Specifically, the trial court (1) determined that JPMorgan had standing to bring the action; (2) determined that Chase Plaza could not lawfully extinguish the first deed of trust; (3) voided the foreclosure sale because the unit had not been sold subject to the first deed of trust; and (4) declared that JPMorgan held title to the unit. Pursuant to the stipulation of the parties, the trial court subsequently dismissed JPMorgan’s remaining claims.

II.

We begin by addressing three threshold issues: whether JPMorgan has standing to raise its claims; whether the trial court’s order granting summary judgment is void because it violated the automatic stay under federal bankruptcy law; and whether Mr. York and Washington Mutual are indispensable parties to this case under Rule 19 of the Superior Court Rules of Civil Procedure.

A.

Chase Plaza and Darcy argue that JPMorgan lacks an interest in the unit sufficient to confer standing on JPMorgan. We disagree. JPMorgan alleges, and Chase Plaza and Darcy do not dispute, that JPMorgan has physical possession of the original promissory note, which is a negotiable instrument indorsed in blank. “An indorsement in blank is essentially a stamp that indorses an instrument without specially indorsing it to a specific party. Usually it makes that instrument payable to the bearer and transfers with it legal title to security attached to the instrument.” Leake v. Prensky, 798 F. Supp. 2d 254, 256 n.3 (D.D.C. 2011). Under District of Columbia law, the holder of a negotiable instrument indorsed in blank is normally entitled to enforce the instrument, including through foreclosure proceedings. See D.C. Code § 28:3-301 (2012 Repl.) (holder of negotiable instrument may enforce instrument), -205 (b) (2012 Repl.) (instrument indorsed in blank is payable to bearer and may be negotiated by transfer of possession); Leake, 789 F. Supp. 2d at 256-57 (bank in possession of note indorsed in blank was entitled to commence non-judicial foreclosure proceedings); Grant II v. BAC Home Loans Servicing, No. 10-cv-01543, 2011 WL 4566135, at *4 (D.D.C. Sept. 30, 2011) (“[A]s the Note is indorsed in blank, [the loan-servicing company's] possession of the Note establishes its status as holder of the Note . . . . As holder of the note, [the loan-servicing company] could properly enforce its provisions” through foreclosure proceedings.). We therefore conclude that JPMorgan has standing to seek to set aside the foreclosure sale.[2]

B.

During the course of the events at issue in this case, two of the dramatis personae declared bankruptcy: Mr. York, who had purchased the unit in 2005 but whose default in 2008 led to the 2010 foreclosure, declared personal bankruptcy in June 2011; and Washington Mutual, Inc., which arguably was assigned an interest in the promissory note in 2009, declared bankruptcy under Chapter 11 of the federal bankruptcy laws in 2008. Under federal bankruptcy law, the filing of certain kinds of bankruptcy petitions triggers an automatic stay. 11 U.S.C. § 362 (a) (2012) (filing petition for bankruptcy relief “operates as a stay”). That stay extends, among other things, to certain lawsuits “against the debtor . . . or to recover a claim against the debtor”; “to obtain possession of property of the [bankruptcy] estate or of property from the estate or to exercise control over property of the estate”; to enforce a lien against property of the estate; or to enforce against property of the debtor a lien securing a claim that arose before commencement of the bankruptcy proceeding. Id. at § 362 (a)(1), (3)-(5). Judgments rendered in violation of the automatic stay are void. Jones v. Cain, 804 A.2d 322, 329 (D.C. 2002). This court has the authority to decide in the first instance whether a trial-court ruling violated the bankruptcy stay. See id. at 325-29 (deciding in first instance that judgment against defendant violated automatic stay and was therefore void, because judgment was rendered after defendant filed petition for bankruptcy).

We perceive no violation of the automatic stay. With respect to Mr. York’s bankruptcy proceedings, which began in 2011, JPMorgan obtained an order lifting the stay to permit JPMorgan to foreclose against the unit “free and clear of any interest” of Mr. York or the bankruptcy estate. Moreover, Mr. York’s interest in the unit had been foreclosed upon in 2010, without any objection from Mr. York; Mr. York did not list the unit on his schedule of assets in the bankruptcy proceedings; and Mr. York denied owning the unit as of the time he filed for bankruptcy. Under the circumstances, we agree with the parties that the unit was not property of Mr. York’s bankruptcy estate and that the present lawsuit did not otherwise run afoul of the automatic stay. Cf., e.g., Foskey v. Plus Props., LLC, 437 B.R. 1, 11-12 (D.D.C. 2010) (property in which debtor has no legal or equitable interest “is deemed to be outside the property of the estate” and not subject to automatic stay; automatic stay did not bar post-petition acts concerning property previously owned by debtor but sold in pre-petition tax sale).

With respect to Washington Mutual, any interest it might have in the first deed of trust did not arise until 2009, after Washington Mutual, Inc. filed for bankruptcy. Where the bankruptcy debtor is a corporation that continues to operate during the pendency of the bankruptcy proceeding, as apparently was the case with Washington Mutual, Inc., property obtained by the debtor corporation after the filing of the bankruptcy petition may well be property of the bankruptcy estate. See 3 Alan N. Resnick & Henry J. Sommer, Collier Bankruptcy Manual § 541.02, at 541-6 to -7 (4th ed. 2014) (citing 11 U.S.C. § 541 (a)(6)-(7) (2012)). But it is not at all clear on the record before us whether the interest in the deed of trust should properly be viewed as part of the Washington Mutual, Inc. bankruptcy estate. There are a number of different but apparently related entities with some variant of the name Washington Mutual. The document assigning MERS’s interest in the deed of trust refers to Washington Mutual without clearly indicating the precise entity to which the interest was being assigned. Moreover, JPMorgan purchased some of the assets of Washington Mutual Bank on September 25, 2008, the day before Washington Mutual, Inc. filed its bankruptcy petition. JPMorgan appears to claim that the interest subsequently transferred to Washington Mutual by MERS fell within the scope of that transaction, and thus that JPMorgan rather than the bankruptcy estate is the owner of the interest in the deed of trust. It appears that there has been significant litigation in the bankruptcy case with respect to the question of which Washington Mutual assets were acquired by JPMorgan in the September 2008 transaction. We cannot tell from the record in this case whether this case involved property of Washington Mutual, Inc.’s bankruptcy estate or otherwise violated the automatic stay. Under the circumstances, we have no basis upon which to conclude that the trial court’s judgment in this case is void as a violation of the automatic stay. Cf. In re Angelo, 480 B.R. 70, 83 (Bankr. D. Mass. 2012) (“A party seeking to establish that a judgment was entered in violation of the automatic stay bears the burden of proof.”) (citation omitted).[3]

C.

Finally, we conclude that Mr. York and Washington Mutual are not indispensable parties to this case. Under Rule 19 (b) of the Superior Court Rules of Civil Procedure, a court may not grant relief in the absence of an indispensable party. To qualify as an indispensable party, a person must either be necessary to grant complete relief to the parties or “claim[] an interest relating to the subject of the action.” Super. Ct. Civ. R. 19 (a). Because there is insufficient evidence in this record that either Mr. York or Washington Mutual has a present interest in the unit or is otherwise essential to grant complete relief to the parties, we have no basis to find that they are indispensable parties. Cf., e.g., Habib v. Miller, 284 A.2d 56, 56-58 (D.C. 1971) (company that claimed “no interest” in deposit was not indispensable in action to recover deposit).

III.

Turning to the merits, we review de novo orders granting summary judgment. District of Columbia v. Place, 892 A.2d 1108, 1110-11 (D.C. 2006). “Summary judgment is only appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.” Ward v. Wells Fargo Bank, N.A., 89 A.3d 115, 126 (D.C. 2014) (internal quotation marks omitted). “In considering summary judgment, we view the facts in the light most favorable to the non-moving [parties].” Id. (internal quotation marks omitted).

This case turns on the proper understanding of D.C. Code § 42-1903.13 (2012 Repl.), which addresses condominium foreclosures. Chase Plaza and Darcy argue that a condominium association is permitted to foreclose on a six-month condominium-assessment lien and distribute the proceeds from the foreclosure sale first to satisfy the condominium-assessment lien and then to satisfy any remaining liens in order of lien priority. Any liens that are unsatisfied by the foreclosure-sale proceeds are extinguished, and the foreclosure-sale purchaser acquires free and clear title. JPMorgan argues, to the contrary, that although a condominium association is permitted to foreclose on a six-month condominium-assessment lien, the foreclosure is subject to any previously recorded first mortgage lien. We agree with Chase Plaza and Darcy.

A.

Whether the foreclosure sale extinguished the first deed of trust under D.C. Code § 42-1903.13 is a question of statutory interpretation that we determine de novo. Hernandez v. Banks, 84 A.3d 543, 552 (D.C. 2014). “The first step in construing a statute is to read the language of the statute and construe its words according to their ordinary sense and plain meaning.” O’Rourke v. District of Columbia Police & Firefighters’ Ret. & Relief Bd., 46 A.3d 378, 383 (D.C. 2012) (internal quotation marks omitted). “The literal words of a statute, however, are not the sole index to legislative intent, but rather, are to be read in the light of the statute taken as a whole, and are to be given a sensible construction and one that would not work an obvious injustice.” Columbia Plaza Tenants’ Ass’n v. Columbia Plaza Ltd. P’ship, 869 A.2d 329, 332 (D.C. 2005) (internal quotation marks and brackets omitted). We “consult the legislative history of a statute for guidance as necessary.” Robert Siegel, Inc. v. District of Columbia, 892 A.2d 387, 393 (D.C. 2006). “[A]s a general rule, we presume that where a legislature adopts a term of art, it knows and adopts the cluster of ideas that were attached to each borrowed word.” Doe No. 1 v. Burke, 91 A.3d 1031, 1041 (D.C. 2014) (internal quotation marks omitted). Moreover, “[n]o statute should be construed as altering the common law, farther than its words import. It is not to be construed as making any innovation upon the common law which it does not fairly express.” Estate of Gulledge, 673 A.2d 1278, 1281 (D.C. 1996) (internal quotation marks omitted); see also United States v. Texas, 507 U.S. 529, 534 (1993) (“[S]tatutes which invade the common law . . . are to be read with a presumption favoring the retention of long-established and familiar principles, except when a statutory purpose to the contrary is evident.”) (internal quotation marks omitted).

The District of Columbia Condominium Act governs the creation and operation of condominiums. D.C. Code § 42-1901.01 et seq. (2012 Repl.). Under the Act, a condominium association may impose a lien against a unit for non-payment of condominium-association assessments. Id. at § 42-1903.13 (a). The lien is “prior to any other lien or encumbrance except [among other things,] . . . [a] first mortgage . . . or [first] deed of trust . . . recorded before the date on which the assessment sought to be enforced became delinquent[.]” Id. at § 42-1903.13 (a)(1)(B). The Act, however, provides the highest priority to liens relating to the most recent six months of condominium assessments:

The lien shall also be prior to a [first] mortgage or [first] deed of trust . . . to the extent of the common expense assessments . . . which would have become due in the absence of acceleration during the [six] months immediately preceding institution of an action to enforce the lien.

Id. at § 42-1903.13 (a)(2). Thus, the Act effectively splits condominium-assessment liens into two liens of differing priority: (1) a lien for six months of assessments that is higher in priority than the first mortgage or first deed of trust — sometimes called a “super-priority lien” — and (2) a lien for any additional unpaid assessments that is lower in priority than the first mortgage or first deed of trust.

The Act does not expressly address what happens when, as in this case, a condominium association forecloses solely on its super-priority lien and the proceeds of the sale are not sufficient to pay off a first deed of trust. A general principle of foreclosure law, however, potentially provides an answer: liens with lower priority are extinguished if a valid foreclosure sale yields proceeds insufficient to satisfy a higher-priority lien. Pappas, 911 A.2d at 1234. That general principle is derived from the common law and is well settled in this and other jurisdictions. See, e.g., Waco Scaffold & Shoring Co. v. 425 Eye St. Assocs., 355 A.2d 780, 783 (D.C. 1976) (foreclosure sale based on lien with “superior” priority extinguished liens with lower priority); In re Cypresswood Land Partners, I, 409 B.R. 396, 437 (Bankr. S.D. Tex. 2009) (noting “common-law rule that foreclosure of a senior lien extinguishes all junior liens”) (internal quotation marks omitted); Conseco Fin. Servicing Corp. v. J & J Mobile Homes, Inc., 120 S.W.3d 878, 885 (Tex. App. 2003) (relying on “common-law rule that foreclosure of a senior lien extinguishes all junior liens”); cf. Abdoney v. York, 903 So. 2d 981, 983 (Fla. Dist. Ct. App. 2005) (“Under the common law, the foreclosure of a senior mortgage extinguishes the liens of any junior mortgagees. . . .”); Restatement (Third) of Property (Mortgages) § 7.1 (2014) (“A valid foreclosure of a mortgage terminates all interests in the foreclosed real estate that are junior to the mortgage being foreclosed. . . .”).[4]

The parties in this case do not dispute that, under D.C. Code § 42-1903.13 (a)(2), Chase Plaza’s super-priority lien had a higher priority than JPMorgan’s first deed of trust. The parties also do not dispute that the proceeds from the foreclosure sale were insufficient to satisfy the first deed of trust. Taking the language of the statute together with basic principles of foreclosure law, it would seem to follow that Chase Plaza’s foreclosure sale extinguished JPMorgan’s first deed of trust. The concept of a split-priority lien does not appear to have been part of the common law, however, and we therefore confront the question whether the general principles of foreclosure law apply in this novel context. For the reasons that follow, we conclude that they do.

First, JPMorgan’s interpretation of D.C. Code § 42-1903.13 (a)(2) would create a six-month condominium-assessment lien that had priority over the first deed of trust but could not extinguish the first deed of trust. Such an interpretation would be a significant departure from the basic principle that foreclosure on a higher priority lien extinguishes lower-priority liens. The language of § 42-1903.13 (a)(2) does not suggest that the District of Columbia Council intended such a departure. Cf. Conseco Fin. Servicing Corp., 120 S.W.3d at 885 (“Nothing in the legislative history or in the language of the statute itself indicates legislative intent to super[s]ede the common-law rule that foreclosure of a senior lien extinguishes all junior liens. Indeed, if junior liens were to survive a foreclosure sale, buyers would have no incentive to bid on the property.”). We are inclined to think that if the Council had intended to depart from well-settled principles of foreclosure law, it would have done so explicitly. See, e.g., Newell-Brinkley v. Walton, 84 A.3d 53, 58 (D.C. 2014) (“[I]t is highly unlikely that the Council would have altered preexisting law in so fundamental a way implicitly rather than explicitly.”) (citing Whitman v. American Trucking Ass’ns, 531 U.S. 457, 468 (2001) (“Congress . . . does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions—it does not, one might say, hide elephants in mouseholes.”)); cf., e.g., Samantar v. Yousuf, 560 U.S. 305, 320 n.13 (2010) (“Congress is understood to legislate against a background of common-law. . . principles”) (internal quotation marks omitted; ellipses in Samantar).

The legislative history of D.C. Code § 42-1903.13 (a)(2) supports the same conclusion. The provision creating the six-month super-priority lien for condominium assessments was enacted in 1991. Condominium Act of 1976 Reform Amendment Act of 1990, D.C. Law 8-233, § 2 (gg)(1), 38 D.C. Reg. 283-84 (1991). The Committee Report on the Act describes that provision as giving condominium “associations the maximum flexibility in collecting unpaid condominium assessments.” D.C. Council, Report on Bill 8-65, at 3 (Nov. 13, 1990). The provision was modeled on the Uniform Common Ownership Interest Act (“UCOIA”) and the Uniform Condominium Act (“UCA”), each of which includes a quite similar provision creating a six-month super-priority lien. UCOIA § 3-116 (b), 7 U.L.A. 122 (1982); UCA § 3-116 (b), 7 U.L.A. 626 (amended 1980). The official comments to the UCOIA and UCA indicate that the drafters of those uniform laws understood that foreclosure on the super-priority lien could extinguish a first mortgage or first deed of trust, but expected that mortgage lenders would take the necessary steps to prevent that result, either by requiring payment of assessments into an escrow account or by paying assessments themselves to prevent foreclosure. UCOIA § 3-116, cmt. 1, 7 U.L.A. 124; UCA § 3-116, cmt. 2, 7 U.L.A. 627. An example provided by the drafters of the uniform laws further illustrates the point, describing the first mortgage lien as “junior” to the six-month super-priority lien, and noting that lenders could protect themselves by requiring escrow of six months of assessments, as lenders do with property taxes. UCA § 2-118, ex. 1B, 7 U.L.A. 571, 572.[5]

Because the pertinent provision of the District’s Condominium Act is based on the UCA and UCOIA, the official comments by the drafters of those uniform acts provide important guidance in construing our provision. See generally, e.g., Platt v. Aspenwood Condo. Ass’n, Inc., 214 P.3d 1060, 1063-64 (Colo. App. 2009) (relying on drafters’ comments to UCOIA for guidance in interpreting state statute based on UCOIA; “We accept the intent of the drafters of a uniform act as the General Assembly’s intent when it adopts that uniform act.”) (internal quotation marks omitted); Hunt Club Condos., Inc. v. Mac-Gray Servs., Inc., 721 N.W.2d 117, 123-25 (Wis. Ct. App. 2006) (official and published comments accompanying provision of UCA are “valid indicator” of state legislature’s intent in enacting corresponding state statute).[6]

Taken together, the language of D.C. Code § 42-1903.13 (a)(2), general principles of foreclosure law, and the legislative history of the provision support a conclusion that Chase Plaza’s foreclosure pursuant to the super-priority lien extinguished JPMorgan’s first deed of trust. See, e.g., 7912 Limbwood Ct. Trust v. Wells Fargo Bank, N.A., 979 F. Supp. 2d 1142, 1146-53 (D. Nev. 2013) (under Nevada law, foreclosure sale on super-priority lien extinguished all junior interests, including first deed of trust); Summerhill Vill. Homeowners Ass’n v. Roughley, 289 P.3d 645, 647-48 (Wash. Ct. App. 2012) (same under Washington law). But see, e.g., Premier One Holdings, Inc. v. BAC Home Loans Servicing LP, No. 2:13-CV-895, 2013 WL 4048573, at *3-6 (D. Nev. Aug. 9, 2013) (under Nevada law, homeowner association’s foreclosure on super-priority lien did not extinguish first deed of trust, and foreclosure-sale purchaser took property subject to first deed of trust) (citing cases); Bayview Loan Servicing, LLC v. Alessi & Koenig, LLC, 962 F. Supp. 2d 1222, 1226-30 (D. Nev. 2013) (same).

B.

We are not persuaded by JPMorgan’s arguments to the contrary. First, JPMorgan contends that D.C. Code § 42-1903.13 (a)(2) does not allow foreclosure on a super-priority lien to extinguish a first deed of trust, because the provision does not explicitly state that the super-priority lien is a “senior lien” and that the first deed of trust is a “junior lien.” JPMorgan does not cite authority for its contention that the use of the terms “senior lien” and “junior lien” is essential to the application of the general principle that foreclosure on a lien with higher priority extinguishes a lien with lower priority. To the contrary, our cases discussing that principle of foreclosure law do not invariably use the terms “senior lien” and “junior lien.” See, e.g., Pappas, 911 A.2d at 1234 (“[W]here a valid foreclosure sale yields proceeds insufficient to satisfy a priority lien, the result is extinguishment of subordinate liens.”) (citing cases). Moreover, there is no mention of the terms “senior lien” or “junior lien” in Title 42, Chapter 8 of the D.C. Code, which governs mortgages and deeds of trust, D.C. Code § 42-801 et seq. (2012 Repl.), or in Title 40 of the D.C. Code, which governs liens. D.C. Code § 40-101 et seq. (2012 Repl.). Under the logic of JPMorgan’s theory, the absence of such terminology would mean that foreclosure on the liens governed by these provisions could not operate to extinguish liens with lower priority, which would turn the general rule of foreclosure law on its head. Focusing more specifically on the Condominium Act, § 42-1903.13 (a)(1)(B) does not use the term “senior lien” when referring to the priority of the first deed of trust, but JPMorgan concedes that foreclosure on the first deed of trust extinguishes liens with lower priority. In sum, the terms “senior lien” and “junior lien” are simply one way of referring to liens with higher and lower priority, see supra page 16 n.4, and the absence of those terms from § 42-1903.13 (a)(2) does not affect the applicability of the general rule that foreclosure on a lien with greater priority extinguishes liens with lower priority.

Second, JPMorgan points out that condominium-assessment liens are given priority only “to the extent” of six months’ worth of assessments. D.C. Code § 42-1903.13 (a)(2). According to JPMorgan, the words “to the extent” mean that foreclosure on the super-priority lien cannot extinguish a first deed of trust. We disagree. The words “to the extent” limit the amount and size of the condominium-assessment lien that is given super-priority status. Id. at § 42-1903.13 (a)(2) (condominium-assessment lien is “prior to a [first] mortgage or [first] deed of trust . . . to the extent of the common expense assessments . . . which would have become due . . . [six] months immediately preceding” foreclosure action) (emphasis added). There is no indication that the words were intended to impose any other limit, much less to create a novel lien with higher priority and the right to foreclose, but without the ability extinguish a lower-priority lien.

Third, JPMorgan argues it would be unreasonable as a matter of policy to interpret D.C. Code § 42-1903.13 (a)(2) to permit six-month condominium-assessment liens to extinguish first mortgages or first deeds of trust. JPMorgan points out that the Condominium Act does not require that the condominium association give notice to mortgage lenders or other lienholders before foreclosure and does not permit either the property owner or the mortgage lender to redeem foreclosed property by paying the delinquent amounts.[7] According to JPMorgan, permitting condominium-assessment foreclosures to extinguish mortgage liens under such circumstances will leave mortgage lenders unable to protect their interests, which in turn will cripple mortgage lending in the District of Columbia. These are legitimate policy concerns, but Chase Plaza and Darcy point to corresponding policy arguments that support interpreting § 42-1903.13 (a)(2) to permit foreclosure on the six-month super-priority lien to extinguish a first mortgage or first deed of trust. Specifically, Chase Plaza and Darcy contend that if foreclosure on super-priority condominium-association liens did not extinguish mortgage liens, then condominium associations often might be unable to find buyers at foreclosure sales, and thus condominium associations would be unable to take prompt steps to obtain timely payment of assessments. See Report of the Joint Editorial Bd. for Unif. Real Prop. Acts, The Six-Month “Limited Priority Lien” for Association Fees Under the Uniform Common-Interest Ownership Act, at 2-6 (“Joint Editorial Bd. Report”); UCOIA § 3-116, cmt. 1, 7 U.L.A. 124 (purpose of super-priority lien is “[t]o ensure prompt and efficient enforcement of the association’s lien for unpaid assessments”); cf. Park Place E. Condo. Ass’n v. Hovbilt, Inc., 652 A.2d 781, 783 (N.J. Super. Ct. Ch. Div. 1994) (“The legislative scheme for collection of assessments . . . against individual unit owners is a recognition that such [assessments] are the financial life-blood of the Association.”). Moreover, there is support for the idea that lenders can decrease the risk that their mortgage liens will be extinguished, by among other things creating an escrow requirement. Joint Editorial Bd. Report, at 4; UCOIA § 3-116, cmt. 1, 7 U.L.A. 124; UCA § 3-116, cmt. 2, 7 U.L.A. 627.

Our role is not to resolve this policy dispute between the parties or to second-guess the policy determinations of the Council. See, e.g., Allman v. Snyder, 888 A.2d 1161, 1169 (D.C. 2005) (“we have no license to substitute our views of public policy for those of the legislature”). Rather, we simply conclude that JPMorgan has failed to establish that it would be absurd or clearly unreasonable to interpret D.C. Code § 42-1903.13 (a)(2) as permitting a condominium association’s six-month super-priority lien to extinguish a first mortgage or first deed of trust.

Finally, relying on Malakoff v. Washington, 434 A.2d 432, 435 (D.C. 1981), JPMorgan argues that the six-month condominium-assessment lien could be given super-priority status only if the legislature made it clear that it intended that result. The Council did make explicit, however, that a condominium association’s six-month lien was to be given priority over a first mortgage or first deed of trust. The issue in this case is whether that super-priority extends to extinguishing a first mortgage or first deed of trust, and Malakoff does not suggest that a clear statement is required on that topic.

IV.

Finally, JPMorgan argues that Chase Plaza’s by-laws do not permit Chase Plaza to extinguish JPMorgan’s first deed of trust. We conclude otherwise.

Under the Condominium Act, a condominium association can choose to forego its power to foreclose on property based on the owner’s failure to pay assessments. D.C. Code § 42-1903.13 (c)(1) (condominium instruments may prohibit association from non-judicial foreclosure if such foreclosure is “specifically and expressly prohibited by the condominium instruments”). This provision, however, does not seem to be relevant, because JPMorgan does not contend that Chase Plaza’s by-laws waived Chase Plaza’s right of non-judicial foreclosure. Rather, JPMorgan argues that Article XI, § (2)(D) of Chase Plaza’s by-laws provides that a first mortgage or first deed of trust is “prior to” the condominium-assessment lien. It is unclear whether such a provision in a condominium association’s by-laws could constitute an effective waiver of the association’s statutory right of priority. See D.C. Code § 42-1901.07 (“Except as expressly provided by this chapter, a provision of this chapter may not be varied by agreement and any right conferred by this chapter may not be waived.”). In any event, the Fourth Amendment to Chase Plaza’s by-laws provides that Chase Plaza may foreclose on an assessment lien “pursuant to D.C. Code Section 45-1853 [now codified at D.C. Code § 42-1903.13].” The latter provision appears to authorize Chase Plaza to rely on the rights conferred upon it under § 42-1903.13 (a)(2). To the extent that the Fourth Amendment and Article XI, § (2)(D) of the by-laws appear to contradict each other, the D.C. Code provides a rule to resolve any conflict. In the event of a conflict among condominium instruments, “a construction consistent with [Chapter Nineteen of Title 42] controls in all cases over any inconsistent construction.” D.C. Code § 42-1902.07. We therefore must construe the by-laws as a whole as permitting Chase Plaza to exercise its rights under the Condominium Act to foreclose on its six-month super-priority lien and to thereby extinguish the first deed of trust.

In sum, we hold that a condominium association can extinguish a first deed of trust by foreclosing on its six-month super-priority lien under D.C. Code § 42-1903.13 (a)(2). We therefore reverse the trial court’s grant of summary judgment to JPMorgan and remand for further proceedings.[8]

So ordered.

[1] After Chase Plaza deducted the six months of unpaid condominium assessments, the interest on the unpaid assessments, and various expenses associated with the foreclosure sale, the remaining balance from the foreclosure-sale proceeds was $478. Chase Plaza forwarded the $478 to MERS as the nominee of record under the first deed of trust, but that money was returned to Chase Plaza.

[2] JPMorgan also claims to be a successor in interest under the deed of trust, because MERS, a beneficiary and nominee under the deed of trust, transferred its interest to Washington Mutual, which had been purchased by JPMorgan. Chase Plaza and Darcy argue, however, that it is unclear whether JPMorgan obtained an interest in the deed of trust, because (1) it is unclear to which of several Washington Mutual entities MERS transferred its interest, (2) JPMorgan only purchased some, not all, of the assets of Washington Mutual Bank, and (3) JPMorgan’s purchase occurred before the date of MERS’s transfer of its interest in the deed of trust to Washington Mutual. JPMorgan, however, can seek to protect its interests under the promissory note even if it is not a successor in interest under the deed of trust, because “the rights under the Deed of Trust follow the Note.” Grant II, 2011 WL 4566135, at *4; see also Smith v. Wells Fargo Bank, 991 A.2d 20, 29-30 n.19 (D.C. 2010) (“The transfer of the note carries with it the security, without any formal assignment or delivery, or even mention of the latter.”) (internal quotation marks omitted). Because JPMorgan’s interest under the promissory note is sufficient to confer standing on JPMorgan, we need not address whether JPMorgan obtained an interest in the deed of trust through Washington Mutual. Chase Plaza and Darcy also raise other challenges to the validity of JPMorgan’s alleged interest in the unit, including that JPMorgan cannot assert any interest in the unit against Chase Plaza and Darcy because JPMorgan failed to properly record documents relating to the transactions giving rise to JPMorgan’s alleged interest. We do not view those contentions as going to JPMorgan’s standing, and in light of our disposition of the case on the merits, we see no need at this juncture to address the additional arguments raised by Chase Plaza and Darcy.

[3] As a precaution, we are sending a copy of this opinion to the bankruptcy judge and the bankruptcy trustee in the Washington Mutual, Inc. bankruptcy proceeding.

[4] A “junior lien” is a lien that “is subordinate to one or more other liens on the same property[,]” and a “senior lien” is a lien that “has priority over liens on the same property.” Black’s Law Dictionary 1063, 1064 (10th ed. 2014); see also, e.g., Indiana Lawrence Bank v. PSB Credit Servs., Inc., 706 N.E.2d 570, 574 n.6 (Ind. Ct. App. 1999); City of Chanute v. Polson, 836 P.2d 6, 10 (Kan. Ct. App. 1992).

[5] We also note a recent report of the Joint Editorial Board for Uniform Property Acts, which includes representatives of the Uniform Law Commission, the American Bar Association Real Property, Trust and Estate Law Section, and the American College of Real Estate Lawyers. That report concludes that foreclosure pursuant to the six-month super-priority lien under the UCOIA is properly understood to extinguish a first mortgage lien, leaving the buyer at the foreclosure sale with clear title to the property. Report of the Joint Editorial Bd. for Unif. Real Prop. Acts, The Six-Month “Limited Priority Lien” for Association Fees Under the Uniform Common Interest Ownership Act, at 8-10 (June 1, 2013).

[6] “[O]rdinarily, the views of a subsequent legislature form a hazardous basis for inferring the intent of an earlier one.” Hargrove v. District of Columbia, 5 A.3d 632, 637 (D.C. 2010) (brackets and internal quotation marks omitted). We do note, however, that within a year of the enactment of the provision creating the super-priority lien, the Council considered a proposal to repeal the provision. D.C. Council, Report on Bill 9-240, at 4 (Dec. 12, 1991). In support of the proposal, the Department of Consumer and Regulatory Affairs (“DCRA”) submitted a report contending that the super-priority lien provision created an “obvious threat [to lending institutions] of the use of foreclosure proceedings to collect unpaid assessments.” Statement of Aubrey H. Edwards on Bill 9-240, Dir., DCRA, at 9 (Oct. 30, 1991). The DCRA report further noted that the provision could have “a chilling effect on the availability of condominium mortgage loans.” Id. After considering the DCRA report, the Council declined to repeal the provision creating the super-priority lien, because “[n]o adverse effect on lending” had occurred in states that had enacted such a provision. D.C. Council, Report on Bill 9-240, at 4.

[7] With respect to the issue of notice, it appears that Chase Plaza did give notice of foreclosure to all parties listed on the first deed of trust, but JPMorgan did not receive notice because it had failed to record its subsequently obtained interest in the unit. We also note that JPMorgan has not argued that the lack of a notice requirement renders D.C. Code § 42-1903.13 (a)(2) unconstitutional either facially or as applied to JPMorgan in this case. We therefore have no occasion to address those issues.

[8] Among the issues that remain to be resolved on remand is JPMorgan’s claim that the foreclosure sale should be invalidated because the purchase price was unconscionably low.

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Posted in STOP FORECLOSURE FRAUD0 Comments

HSBC vs. MILLER | NYSC – Plaintiff 2nd Attempt to Foreclose…This Court Finds NO Reference to Def. Miller’s Obligation in the Pooling and Servicing Agreement…PSA & Lost Note Goes Down in Flames

HSBC vs. MILLER | NYSC – Plaintiff 2nd Attempt to Foreclose…This Court Finds NO Reference to Def. Miller’s Obligation in the Pooling and Servicing Agreement…PSA & Lost Note Goes Down in Flames

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF SULLIVAN

HSBC BANK USA, NATIONAL ASSOCIATION, A3
TRUSTEE FOR WELLS FARGO ASSET SECURITIES
CORPORATION, MORTGAGE ASSET-BACKED PASS
THROUGH CERTIFICATES SERIES 2007-PA2

Plaintiffs

against

JEFFREY F. MILLER,
CHASE BANK USA, N.A.,
GEMINI CAPITAL GROUP, LLC,
Defendants

Down Load PDF of This Case

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Posted in STOP FORECLOSURE FRAUD1 Comment

The revolving door spins as the DOJ Fraud Section chief, Jeffrey H. Knox moves to Simpson Thacher

The revolving door spins as the DOJ Fraud Section chief, Jeffrey H. Knox moves to Simpson Thacher

Obviously, there is something going on here and this might be a way to keep some quiet in the game.

 

NY TIMES-

Jeffrey H. Knox, a senior federal prosecutor who butted heads with a number of Wall Street banks, is switching sides.

The Justice Department announced on Tuesday that Mr. Knox, chief of its fraud section, was leaving the government. In turn, the law firm Simpson Thacher Bartlett released its own announcement: Mr. Knox will join the firm as a partner in Washington.

The move by Mr. Knox, which caps more than a decade-long prosecutorial career, comes just as one of his biggest Wall Street cases nears a turning point. The Justice Department, along with regulators in Washington and London, is closing in on actions against some of the world’s biggest banks for suspected manipulation of foreign currencies.

[NEW YORK TIMES]

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Posted in STOP FORECLOSURE FRAUD0 Comments

HSBC Bank USA, N.A. v Gilbert | NY Appeals Court – plaintiff failed to demonstrate its prima facie entitlement to judgment as a matter of law, because it did not eliminate triable issues of fact regarding whether it had standing as the lawful holder or assignee of the subject note on the date it commenced the action

HSBC Bank USA, N.A. v Gilbert | NY Appeals Court – plaintiff failed to demonstrate its prima facie entitlement to judgment as a matter of law, because it did not eliminate triable issues of fact regarding whether it had standing as the lawful holder or assignee of the subject note on the date it commenced the action

Decided on August 27, 2014 SUPREME COURT OF THE STATE OF NEW YORK Appellate Division, Second Judicial Department
WILLIAM F. MASTRO, J.P.
MARK C. DILLON
ROBERT J. MILLER
JOSEPH J. MALTESE, JJ.
2013-01081
(Index No. 9436/09)

[*1]HSBC Bank USA, National Association, etc., respondent,

v

Arlene Gilbert, et al., appellants, et al., defendants.

Amed Marzano & Sediva, PLLC, New York, N.Y. (Alexander Sediva and Naved Amed of counsel), for appellants.

Friedman Harfenist Kraut & Perlstein, LLP, Lake Success, N.Y. (Andrew Lang of counsel), for respondent.

DECISION & ORDER

In an action to foreclose a mortgage, the defendants Arlene Gilbert and James Coffey appeal, as limited by their brief, from so much of an order of the Supreme Court, Dutchess County (Brands, J.), dated November 30, 2012, as granted that branch of the plaintiff’s motion which was for summary judgment on the complaint insofar as asserted against them.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and that branch of the plaintiff’s motion which was for summary judgment on the complaint insofar as asserted against the appellants is denied.

On or about May 14, 2005, the defendant Arlene Gilbert executed a note to borrow the sum of $227,500 from Homebridge Mortgage Bankers Corp. The note was secured by a mortgage executed by Gilbert and the defendant James Coffey (hereinafter together the appellants). The mortgage was subsequently assigned to the plaintiff and, when the appellants defaulted, the plaintiff commenced this action to foreclose the mortgage, alleging, inter alia, that it was the owner and holder of the note and the mortgage. The appellants asserted the plaintiff’s lack of standing as an affirmative defense. The plaintiff moved, inter alia, for summary judgment on the complaint insofar as asserted against the appellants, and the Supreme Court granted that branch of the motion.

In a mortgage foreclosure action, where the plaintiff’s standing to commence the action is placed in issue by the defendant, the plaintiff must prove standing to be entitled to relief (see Bank of N.Y. Mellon v Gales, 116 AD3d 723; U.S. Bank, N.A. v Collymore, 68 AD3d 752). The plaintiff has standing where, at the time the action is commenced, it is the holder or assignee of both the subject mortgage and the underlying note (see Bank of N.Y. Mellon v Gales, 116 AD3d 723; Deutsche Bank Natl. Trust Co. v Haller, 100 AD3d 680; Bank of N.Y. v Silverberg, 86 AD3d 274). Written assignment of the underlying note or physical delivery of the note prior to the commencement of the action is sufficient to transfer the obligation (see Bank of N.Y. Mellon v Gales, 116 AD3d 723; Deutsche Bank Natl. Trust Co. v Haller, 100 AD3d 680; U.S. Bank, N.A. v [*2]Collymore, 68 AD3d 752). Once a promissory note is tendered to and accepted by an assignee, the mortgage passes as an incident to the note (see Bank of N.Y. v Silverberg, 86 AD3d 274; Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674). However, the assignment of a mortgage without assignment of the underlying debt is a nullity, and no interest is acquired by it (see Bank of N.Y. Mellon v Gales, 116 AD3d 723; HSBC Bank USA v Hernandez, 92 AD3d 843; Bank of N.Y. v Silverberg, 86 AD3d 274).

Here, the plaintiff failed to demonstrate its prima facie entitlement to judgment as a matter of law, because it did not eliminate triable issues of fact regarding whether it had standing as the lawful holder or assignee of the subject note on the date it commenced the action (see Bank of N.Y. Mellon v Gales, 116 AD3d 723; HSBC Bank USA v Hernandez, 92 AD3d 843; U.S. Bank, N.A. v Collymore, 68 AD3d 752).

Accordingly, the Supreme Court erred in granting that branch of the plaintiff’s motion which was for summary judgment on the complaint insofar as asserted against the appellants.

MASTRO, J.P., DILLON, MILLER and MALTESE, JJ., concur.

ENTER:

Aprilanne Agostino

Clerk of the Court

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U.S. Bank N.A. v Pia | NYSC – Plaintiff cannot escape responsibility for the loan it acquired. Public policy neither provides for shifting the burden of Plaintiff’s violation of TILA to Defendants, nor does it allow for Plaintiff to claim it is somehow insulated or protected from the obligation to correct the violation they acquired

U.S. Bank N.A. v Pia | NYSC – Plaintiff cannot escape responsibility for the loan it acquired. Public policy neither provides for shifting the burden of Plaintiff’s violation of TILA to Defendants, nor does it allow for Plaintiff to claim it is somehow insulated or protected from the obligation to correct the violation they acquired

Decided on August 26, 2014

Supreme Court, Putnam County

 

U.S. Bank National Association AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF MARCH 1, 2006 ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST, SERIES NC-2006- HE2 ASSET BACKED PASS-THROUGH CERTIFICATES, SERIES NC 2006-HE2, Plaintiff,

against

Lisa Ann Pia AND XAVIER F. PIA, Defendants.

976/2007

Marco Cercone, Esq.

Rupp, Baas, Pfalzgraf,

Cunningham, & Coppola LLC

Attorneys for Plaintiff

1600 Liberty Building

Buffalo, New York 14202

Daniel A. Schlanger, Esq.

Schlanger & Schlanger, LLP

Attorneys for Defendants

343 Manville Road

Pleasantville, New York 10570
Victor G. Grossman, J.

On December 8, 2005, Defendant Lisa Ann Pia executed a Note and Mortgage in the amount of $372,000.00 secured by her property at 13 Lowell Road, Carmel, New York. On or about May 10, 2007, the instant foreclosure action was commenced. Defendants answered the Complaint, asserted counterclaims, and interposed a third-party action, as well as an Amended Answer on July 9, 2007, and a Second Amended Verified Answer on February 14, 2008, containing counterclaims and a third-party complaint. Plaintiff replied to the counterclaims. The gravamen of Defendants’ allegations are that Plaintiff and Third-Party Defendants violated the Truth-in-Lending Act (“TILA”), Real Estate Settlement Procedures Act (“RESPA”), and various state laws, including General Business Law (“GBL”) §349. They sought, inter alia, rescission of the loan and damages. In May 2009, Defendants moved for partial summary judgment, and Plaintiff moved for summary judgment on the foreclosure action and dismissal of Defendants’ counterclaims. The motions were denied by Decision and Order dated May 15, 2009 as the Court (O’Rourke, J.) observed, “There are many issues which must be determined and cannot be resolved by summary judgment.” The issues were heard in a “framed-issue” hearing before the Hon. Francis A. Nicolai in March 2011.

The Court, by Order entered October 19, 2011 (Nicolai, J.), determined that Defendants were entitled to rescission of the instant mortgage and to attorney’s fees and costs, pursuant to the Truth in Lending Act. A Referee was appointed to determine the specific amounts to be paid to affect rescission of the loan. United States Bank Nat’l Assn v. Pia, 2011 NY Misc. LEXIS 4962 (N.Y.Sup. Ct. Oct. 7, 2011). Justice Nicolai’s Decision was affirmed by the Appellate Division. U.S.Bank, N.A. v Pia, 106 AD3d 991 (2d Dept. 2013), and leave to appeal was denied by the Court of Appeals. 21 NY3d 1071 (2013).

By Order dated April 25, 2013, this Court adopted the Referee’s Report and Recommendation, and directed Plaintiff to:

“1.Tender to the Defendants the sum of $37,472.91 with interest thereon at the statutory rate of 9% from October 9, 2011 to October 9, 2013;

2.Terminate the existing Mortgage on the subject property by preparing a Release of Mortgage for Defendants to review;

3.Deliver to Defendants a proposed new Mortgage for $ 196,277.09 payable by one payment of $37,472.91 and 267 monthly payments of $733.00 and one final payment of $566.09.”[FN1]

No appeal was taken from this Order, and Plaintiff did not undertake any efforts to [*2]comply with the Order between April 25, 2013 and November 6, 2013. Pursuant to the Court’s instructions on November 6, 2013, Defendants filed a proposed order giving Plaintiff a thirty-day opportunity to comply with the prior Orders of the Court. The Order was signed with minor modifications on December 9, 2013, and Plaintiff was served with the Order with Notice of Entry on December 24, 2013. The new Order, in salient terms, directed the same relief as the April 25, 2013 Order. No appeal was taken from the Order entered on December 24, 2013.

The October 19, 2011 Order awarded attorney’s fees, but left the amount to be determined upon future application. This Court, by Justice Nicolai, awarded attorney’s fees of $265,453.86 and costs of $12,252.52, by Decision entered on December 17, 2013, and served with Notice of Entry on December 26, 2013. The Decision was reduced to a money Judgment on January 6, 2014, and was served with Notice of Entry on January 13, 2014. No appeal was taken from that Judgment.

On January 14, 2014, Defendants served an Information Subpoena and Restraining Notice, pursuant to CPLR §§5224(a)(3) and 5222. Plaintiff’s deadline to answer the Information Subpoena and comply with the Restraining Notice has passed, without compliance. No attempt was made to condition or quash the Information Subpoena and/or Restraining Notice until the instant Cross-Motion was filed on or about May 8, 2014.

Plaintiff’s Cross-Motion seeks to quash or modify the Information Subpoena and Restraining Notice on the grounds they are based on an interlocutory judgment, and are calculated to harass, annoy, intimidate, or otherwise put undue pressure on Plaintiff to comply with the Decision and Order of the Trial Court, which Plaintiff considers “unlawful”, despite its affirmance by the Second Department and the denial of leave to appeal by the Court of Appeals. Plaintiff further seeks an Order, pursuant to CPLR §5016, disposing of all claims that remain outstanding, in order to pursue its appellate remedies. Thus, the Court is presented with three Orders and Judgment, which have neither been complied with, nor appealed from. Plaintiff asserts the ordered remedy is unlawful, and Defendants’ assert they are entitled to enforcement of their Judgment and the Orders entered herein.

In view of the issues raised, the parties appeared for oral argument on June 6, 2014, and the Court reserved decision allowing for post-argument submissions.[FN2]

The Judgment awarding attorney’s fees then due and owing has not been appealed. It is final and conclusive on that issue. The finality is strengthened by the Appellate Division’s affirmance of Justice Nicolai’s October 19, 2011 Order, which held attorney’s fees were properly awarded. Moreover, the April 25, 2013 Order, confirming the Referee’s Report and Recommendation, from which no appeal was taken, supports the award of attorney’s fees. Plaintiff fails to offer any support for the claim that the Information Subpoena and Restraining Notices are calculated to harass, annoy, intimidate, or otherwise put undue pressure on Plaintiff. Instead, Plaintiff proposes Justice Nicolai’s Order, affirmed by the Appellate Division, and the Order confirming the Report and Recommendation of the Referee, are “unlawful”. In short, Plaintiff wants “another bite of the apple” by way of a further ruling from this Court that may be appealed.

Specifically, Plaintiff further seeks an Order “fully disposing of all outstanding claims or, in the alternative, issuing a scheduling order with respect to its remaining claims.” Plaintiff asserts there are outstanding claims against it that have not been resolved, precluding the entry of final judgment (Cercone Affirmation ¶81). Plaintiff asserts Defendants’ Third Counterclaim regarding alleged violations of GBL §349 remains unresolved (Cercone Affirmation ¶84), and the Court has not issued a final order or judgment disposing of all claims. As a result, as Plaintiff claims, its appellate remedies are limited because there is no “final determination” of the matter, as the determinations made herein are non-final. Plaintiff observes the denial of leave to appeal Justice Nicolai’s October 19, 2011 Order was due to the fact that it was “not a final order”, and further proceedings were undertaken.

However, a careful reading of the Record reveals the lack of any outstanding issues. Notably, when Justice Nicolai signed an Order, confirming the Referee’s Report and Recommendations, the issue of attorney’s fees and “any remaining claims are hereby severed and shall be addressed at a hearing,” which he scheduled for June 7, 2013. To the extent that the hearing only addressed the issue of attorney’s fees, the remaining issues, such as the third counterclaim (GBL §349) or third-party claims, were waived by Defendants. Defendants’ failure to pursue the third counterclaim constitutes a default under CPLR §3215(a). Eller v. Eller, 116 AD2d 617 (2nd Dept. 1986). Plaintiff cannot rely on Defendants’ default or waiver as a basis for further appellate relief. Certainly, Plaintiff cannot claim to be harmed by not having to defend a claim. Insofar as no further testimony was offered with respect to the Third Counterclaim, or the Third-Party action, those matters have been waived, and the Judgment entered on January 13, 2014, was, and is, the final Judgment in this matter. No appeal was taken from the Judgment; consequently, Plaintiff’s Cross-Motion seeking an order disposing of all claims, or in the alternative, issuing a scheduling order, is denied.

Defendant’s motion is granted. Plaintiff is in contempt for failing to comply with the Order Confirming the Referee’s Report and Judgment of this Court awarding attorney’s fees. The Decision, Order and Judgment of December 17, 2013, to the extent that it addressed two of the three counterclaims, also implicitly dismissed the third counterclaim under GBL §349 as having been waived by Defendants, or defaulted upon, when it was not pursued at the hearing. While the better practice would have been to recite the dismissal of the third counterclaim, the failure to do so is not fatal to the “finality” of the action. The finality of the Order and Judgment rests on the disposition of the causes of action between the parties, leaving nothing for future judicial action. Burke v. Crosson, 85 NY2d 10 (1995). The failure to appeal from the Decision, Order and Judgment entered on June 17, 2013 is not saved or excused by the entry of a separate judgment on the issue of attorney’s fees from which no appeal was taken. Shah v. State, 212 AD2d 876 (3rd Dept. 1995). A final order may not be reviewed on appeal from a later judgment. Crystal v. Manes, 130 AD2d 979 (4th Dept. 1987); Matter of Burke v. Axelrod, 90 AD2d 577 (3d Dept. 1982). According to Professor Siegel, the term “final” “has usually been given a pragmatic interpretation meaning a judgment or order that puts an end to the case, or to a logically separable part of it, and leaves nothing else in respect of it to be decided” Siegel, New York Practice, 4th ed. §527, p. 900 (emphasis added).

Plaintiff fails to offer any viable, or cognizable, excuse for its failure to comply with the Judgment awarding attorney’s fees and disbursements. The delays and excuses offered by Plaintiff’s counsel, based on their recent entry into the matter, are far from persuasive. This is especially true when Plaintiff’s counsel claims, at oral argument, that he “had teams of people [*3]looking at pulling the servicing agreement,” and his firm began its review in February 2014, but did not substitute into the matter until April 4, 2014 (Didone Affidavit ¶80, 84). The explanations offered focus on the enforcement, compliance with, or challenge to the Order Confirming the Referee’s Report, and fail to address the issue of the Judgment awarding attorney’s fees. Interest is accruing on the Judgment awarding attorney’s fees, costs, and disbursements, but compliance is inexcusably outstanding. The Court is concerned that Plaintiff’s pattern of delay, failure to comply, failure to seek relief, and general inertia is designed to evade the remedies to which Defendants are entitled.

Plaintiff’s request to quash Defendants’ Information Subpoena is denied. Plaintiff fails to identify any reason for supporting a Protective Order. Plaintiff’s contention — that “Defendants’ efforts to enforce an interlocutory judgment before the entire matter is brought to finality is premature” — is erroneous. The award of attorney’s fees, which is the basis of the Judgment, occurred after a full opportunity to be heard to litigate the matter. No appeal was taken. Defendants may pursue all enforcement remedies available to them until the Judgment is satisfied. The award of attorney’s fees is derived from violations of TILA. The alleged “unlawful order” (Order Confirming Referee’s Report) is an attempt to remedy the situation which, regardless of whether it had been properly and timely challenged, would not affect Defendants’ rights to recover legal fees for the underlying violation. The Court will reserve decision on the issue of further sanctions, additional attorneys’ fees and orders of commitment as available remedies. Kahn v. Enbar, 2011 NY Slip Op. 31192(U) (Sup. Ct., NY Co., April 26, 2011); 1319 Third Avenue Realty Corp. v. Chauteaubriant Restaurant Development Co., LLC, 57 AD3d 340 (1st Dept. 2008); Lipstick, Ltd. v. Grupo Tribasa, S.A., de C.V., 304 AD2d 482 (1st Dept. 2003).

Plaintiff further claims it cannot be held in contempt for refusing to comply with the Order Confirming the Referee’s Report, because the Order is “unlawful” in that it would force Plaintiff to violate one federal law by complying with another, and it may suffer tax consequences as a result. This claim is rejected. First, no appeal was taken from the Order, nor was any motion made to reargue it. Second, Plaintiff assumed certain risks when it acquired the loan, and it cannot evade or avoid the risks by attempting to insulate itself from liability at Defendants’ expense. Third, the claim made by present counsel, that former counsel “dropped the ball” (Cercone, oral argument, pp. 23), is not a basis for relief. Fourth, TILA violations are subject to equitable remedies, and it cannot be said the equitable remedy here was “unlawful”. Berkely Federal Bank and Trust, FSB, v. Siegel, 247 AD2d, supra at 499; 15 U.S.C. §1635(b). Fifth, Plaintiff has failed to comply with, or appeal from, three separate Orders and a Judgment of this Court. Sixth, Plaintiff’s late submission of a March 20, 2014 letter from Ocwen Loan Servicing to Credit Suisse (Didone Affidavit, July 17, 2014, Exhibit B) contains an acknowledgment that “Repurchase is required under Section 2.03(a) due to a breach of the warranties made by the Seller that render Loan 70651414 to borrower Lisa Ann Pia unenforceable”. The letter also contains the acknowledgment “there is some case law precedent for this [remedy] procedure which ultimately is an equitable remedy” . Plaintiff cannot escape responsibility for the loan it acquired. Public policy neither provides for shifting the burden of Plaintiff’s violation of TILA to Defendants, nor does it allow for Plaintiff to claim it is somehow insulated or protected from the obligation to correct the violation they acquired.

Under these circumstances, contempt is not only an appropriate remedy, but also a necessary one. Should Plaintiff fail to fully comply with the Information Subpoena and [*4]Restraining Notice within thirty (30) days of service of this Decision and Order with Notice of Entry, Defendants may apply to this Court for further relief. In the interim, Defendants may pursue any and all enforcement and contempt remedies they deem appropriate, including additional attorney’s fees. Further, Plaintiff shall pay all attorney’s fees which have been reduced to Judgment entered on January 6, 2014, with interest thereon, and shall pay a statutory fine of $250.00.

The foregoing constitutes the Decision and Order of the Court.

Dated:Carmel, New York

__________________________________

HON. VICTOR G. GROSSMAN, J.S.C.

Footnotes

Footnote 1:TILA (15 U.S.C.§1601 et. seq.) provides for equitable remedies such as those outlined in Referee’s Report. Berkeley Federal Bank & Trust, FSB v. Siegel, 247 AD2d 498 (2nd Dept. 1998). In light of specific statutory authority providing for rescission, an equitable doctrine, upon a TILA violation (15 U.S.C. 1635[b]), it cannot be said the remedy is unlawful.

Footnote 2:

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FHFA Announces Settlement with Goldman Sachs

FHFA Announces Settlement with Goldman Sachs

HAPPY FRIDAY! In hopes this all is forgotten by Monday and so their stock don’t take a hit. Nice going as usual.

Heard from the sources that Wells Fargo is next…

FOR IMMEDIATE RELEASE
8/22/2014

? Washington, D.C. – The Federal Housing Finance Agency (FHFA), as conservator of Fannie Mae and Freddie Mac, today announced it has reached a settlement with Goldman Sachs, related companies and certain named individuals.  The settlement addresses claims alleging violations of federal and state securities laws in connection with private-label mortgage-backed securities (PLS) purchased by Fannie Mae and Freddie Mac between 2005 and 2007.

Under the terms of the settlement, Goldman Sachs will pay $3.15 billion in connection with releases and the purchase of securities that were the subject of statutory claims in the lawsuit FHFA v. Goldman Sachs & Co., et al., in the U.S. District Court of the Southern District of New York.  Goldman Sachs will pay approximately $2.15 billion to Freddie Mac and approximately $1 billion to Fannie Mae.  This settlement, worth approximately $1.2 billion, effectively makes Fannie Mae and Freddie Mac whole on their investments in the securities at issue.  As part of the settlement, FHFA, Fannie Mae and Freddie Mac will release certain claims against Goldman Sachs & Co. related to the securities involved.

The settlement also resolves claims that involved a Goldman Sachs security in FHFA v. Ally Financial Inc., et al.  FHFA previously settled claims against Ally Financial Inc.

This is the sixteenth settlement reached in the 18 PLS lawsuits? FHFA filed in 2011.  Three cases remain outstanding and FHFA is committed to satisfactory resolution of those actions.

Link to Settlement Agreement with Fannie Mae

Link to Settlement Agreement with Freddie Mac???

 

###

? The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks.  These government-sponsored enterprises provide more than $5.6 trillion in funding for the U.S. mortgage markets and financial institutions.

Contacts:

?Corinne Russell (202) 649-3032 / Stefanie Johnson (202) 649-3030?

SOURCE: fhfa.gov

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A.G. Eric Schneiderman Led State & Federal Working Group Announces Record-Breaking $16.65 Billion Settlement With Bank Of America

A.G. Eric Schneiderman Led State & Federal Working Group Announces Record-Breaking $16.65 Billion Settlement With Bank Of America

RMBS Task Force, Co-Chaired By Schneiderman, Secures Settlement That Includes $800 Million For New Yorkers, Including, For The First Time, Relief For Borrowers With FHA-Insured Loans

Settlement Addresses Misconduct That Contributed To The 2008 Financial Crisis

Schneiderman: “Today’s Settlement Is A Major Victory In The Fight To Hold Those Who Caused The Financial Crisis Accountable”

NEW YORK – Attorney General Eric T. Schneiderman today joined members of a state and federal working group he co-chairs to announce a $16.65 billion settlement with Bank of America. The settlement is the largest in U.S. history with a single institution, surpassing the $13 billion settlement with JPMorgan Chase that was secured by the same state and federal working group last November. The settlement includes $800 million – $300 million in cash, and a minimum of $500 million worth of consumer relief – that will be allocated to New York State. As part of today’s settlement, Bank of America acknowledged it made serious misrepresentations to the public – including the investing public – arising out of the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS) by Bank of America, as well as by Countrywide Financial and Merrill Lynch, institutions that Bank of America acquired in 2008. The resolution also requires Bank of America to provide relief to underwater homeowners, distressed borrowers, and affected communities through a variety of means, including relief that for the first time will assist certain homeowners with mortgages insured by the Federal Housing Administration (FHA) who were ineligible for relief under previous settlements.

The settlement requires Bank of America to pay $9.65 billion in hard dollars and provide $7 billion in consumer relief. New York State will receive at least $800 million: $300 million in cash and a minimum of $500 million in consumer relief for struggling New Yorkers. The settlement was negotiated through the Residential Mortgage-Backed Securities Working Group, a joint state and federal working group formed in 2012 to share resources and continue investigating wrongdoing in the mortgage-backed securities market prior to the financial crisis. Attorney General Schneiderman co-chairs the RMBS working group.

“Since my first day in office, one of my top priorities has been to pursue accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy,” said Attorney General Schneiderman. “This historic settlement builds upon our work bringing relief to families around the country and across New York who were hurt by the housing crisis, and is exactly what our working group was created to do. The frauds detailed in Bank of America’s statement of facts harmed countless of New York homeowners and investors. Today’s result is a major victory in the fight to hold those who caused the financial crisis accountable.”

The settlement includes an agreed-upon statement of facts that describes how Bank of America, Merrill Lynch and Countrywide made representations to RMBS investors about the quality of the mortgage loans they securitized and sold to investors.  Contrary to those representations, the firms securitized and sold RMBS with underlying mortgage loans that they knew had material defects. Bank of America also made representations to the FHA, an agency within the U.S. Department of Housing and Urban Development, about the quality of FHA-insured loans that Bank of America originated and underwrote. Contrary to those representations, Bank of America originated and underwrote FHA-insured mortgages that were not eligible for FHA insurance. Bank of America and Countrywide also made representations and warranties to Fannie Mae and Freddie Mac about mortgages they originated and sold to those Government Sponsored Entities (GSE’s). Contrary to those representations and warranties, many of those mortgages were defective or otherwise ineligible for sale to GSE’s.

As the statement of facts explains, on a number of occasions, Merrill Lynch employees learned that significant percentages of the mortgage loans reviewed by a third party due diligence firm had material defects. Significant numbers of loans—50% in at least one pool—that were found in due diligence not to have been originated in compliance with applicable laws and regulations, not to be in compliance with applicable underwriting guidelines and lacking sufficient offsetting compensating factors, and loans with files missing one or more key pieces of documentation were nevertheless waived into the purchase pool for securitization and sale to investors. In an internal email that discussed due diligence on one particular pool of loans, a consultant in Merrill Lynch’s due diligence department wrote: “[h]ow much time do you want me to spend looking at these [loans] if [the co-head of Merrill Lynch’s RMBS business] is going to keep them regardless of issues? . . . Makes you wonder why we have due diligence performed other than making sure the loan closed.” A report by one of Merrill Lynch’s due diligence vendors found that from the first quarter of 2006 through the second quarter of 2007, 4,009 loans that were part of loan pool samples reviewed by the vendor were not in compliance with underwriting guidelines or applicable laws and regulations, and were waived in to purchase pools by Merrill Lynch. This conduct, along with similar conduct by other banks that bundled defective and toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis.

Attorney General Schneiderman was elected in 2010 and took office in 2011, when the five largest mortgage servicing banks, 49 state attorneys general, and the federal government were on the verge of agreeing to a settlement that would have released the banks – including Bank of America – from liability for virtually all misconduct related to the financial crisis. Attorney General Schneiderman refused to agree to such sweeping immunity for the banks. As a result, Attorney General Schneiderman secured a settlement that preserved a wide range of claims for further investigation and prosecution.

In his 2012 State of the Union address, President Obama announced the formation of the RMBS Working Group. The collaboration brought together the Department of Justice (DOJ), other federal entities, and several state law enforcement officials – co-chaired by Attorney General Schneiderman – to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. The negotiations for settlement, which were led by Associate Attorney General Tony West of DOJ, were part of the RMBS Working Group.

Under the settlement, Bank of America will be required to provide a minimum of $500 million in creditable consumer relief directly to struggling families and communities across the state. The settlement includes a menu of options for consumer relief to be provided, and different categories of relief are credited at different rates toward the bank’s $500 million obligation. The agreement also requires Bank of America to provide minimum amounts of creditable relief under certain priority categories in New York. The Consumer Relief Credit Menu, available here, details the how each category of relief will be credited and the minimum amounts for each category where applicable.

The most significant priority on the Consumer Relief Credit Menu is a change that will allow first lien principal reductions for certain types of FHA-insured mortgages. Borrowers with these types of loans have previously been excluded from getting the benefits of principal reduction under past settlements, despite the fact that a significant number of distressed loans fall into this category. According to data collected by the Office of the Attorney General, roughly 23% of all distressed loans in New York have FHA insurance, and FHA-insured loans represent the largest portion of Bank of America’s remaining distressed loan portfolio in New York.

Attorney General Schneiderman made it a high priority to extend principal forgiveness to FHA-insured mortgages in negotiations with Bank of America, and their inclusion in this settlement represents a huge step forward in Attorney General Schneiderman’s ongoing commitment to helping families move past the foreclosure crisis.

“Empire Justice Center is very pleased that the settlement with Bank of America provides for principal balance reductions on FHA-insured loans,” said Kirsten Keefe, Senior Attorney at the Empire Justice Center. “This is a critical component that has not been included in prior bank settlements. It has left homeowners with FHA loans at a disadvantage when trying to negotiate with their bank to save their homes. We thank Attorney General Schneiderman for making this a priority in the Bank of America Settlement.”

Bank of America will provide a minimum of $60 million in first lien principal reductions in New York, including the FHA-insured portfolio. Other New York-specific minimum requirements for consumer relief under this settlement include:

  • A minimum value of $20 million in donations, including cash and contributions of vacant and abandoned properties to land banks, units of local government and other nonprofits. Bank of America estimates that this will help address as many as 300 vacant properties—also known as zombie properties—across the state of New York.
  • The bank must also earn at least $35 million in credits for making cash donations to legal service providers, housing counseling agencies, land banks and other community development nonprofits. These relief options are a direct compliment to the investment Attorney General Schneiderman has made to these types of programs over the past three years, including more than $60 million in funding to support a network of housing counseling and legal service provider across the state under the Homeowner Protection Program (HOPP), which has provided free, high-quality services to more than 30,000 homeowners since launching in 2012.
  • Bank of America must also provide $125 million in credits to create and preserve hundreds of units of affordable rental housing across New York State. This initiative is particularly critical in New York, where affordable rental housing is scarce and many families are struggling to find decent and affordable alternatives to homeownership following the economic crisis.

New York City Mayor Bill DeBlasiosaid, “We’re in the midst of an affordability crisis hitting New Yorkers from the very poor to those once solidly middle class. We are deeply grateful to the Attorney General for securing a historic settlement that will make a real difference for families struggling across the city and state. We are pushing hard to build and preserve an unprecedented amount of affordable housing to meet this crisis, and the Attorney General’s continued advocacy is proving vitally important in supporting that effort.”

“We applaud AG Schneiderman’s efforts to hold the too-big-to-fail banks accountable to lower income communities,” said Josh Zinner, Co-Director of New Economy Project. “We are hopeful that this settlement will provide relief to people and communities that have been hardest hit by predatory lending and high rates of foreclosure.”

Compliance with the settlement will be overseen by an independent monitor who will be responsible for ensuring that targets under the settlement are met and that quarterly reporting requirements, which will measure how relief is being allocated at a Census Tract level, are made available to the public.

This matter was led by former Deputy Attorney General for Economic Justice Virginia Chavez Romano, Chief of the Investor Protection Bureau Chad Johnson, Senior Enforcement Counsel for Economic Justice Steven Glassman, and Assistant Attorneys General in the Investor Protection Bureau Hannah Flamenbaum and Melissa Gable.

SOURCE: http://ag.ny.gov

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Inside the Dark, Lucrative World of Consumer Debt Collection

Inside the Dark, Lucrative World of Consumer Debt Collection

NYT-

One afternoon in October 2009, a former banking executive named Aaron Siegel waited impatiently in the master bedroom of a house in Buffalo that served as his office. As he stared at the room’s old fireplace and then out the window to the quiet street beyond, he tried not to think about his investors and the $14 million they had entrusted to him. Siegel was no stranger to money. He grew up in one of the city’s wealthiest and most prominent families. His father, Herb Siegel, was a legendary playboy and the majority owner of a hugely profitable personal-injury law firm. During his late teenage years, Aaron lived essentially unchaperoned in a sprawling, 100-year-old mansion. His sister, Shana, recalls the parties she hosted — lavish affairs with plenty of Champagne — and how their private-school classmates would often spend the night, as if the place were a clubhouse for the young and privileged.

So how, Siegel wondered, had he gotten into his current predicament? His career started with such promise. He earned his M.B.A. from the highly regarded Simon Business School at the University of Rochester. He took a job at HSBC and completed the bank’s executive training course in London. By all indications, he was well on his way to a very respectable future in the financial world. Siegel was smart, hardworking and ambitious. All he had to do was keep moving up the corporate ladder.

Instead, he decided to take a gamble. Siegel struck out on his own, investing in distressed consumer debt — basically buying up the right to collect unpaid credit-card bills. When debtors stop paying those bills, the banks regard the balances as assets for 180 days. After that, they are of questionable worth. So banks “charge off” the accounts, taking a loss, and other creditors act similarly. These huge, routine sell-offs have created a vast market for unpaid debts — not just credit-card debts but also auto loans, medical loans, gym fees, payday loans, overdue cellphone tabs, old utility bills, delinquent book-club accounts. The scale is breathtaking. From 2006 to 2009, for example, the nation’s top nine debt buyers purchased almost 90 million consumer accounts with more than $140 billion in “face value.” And they bought at a steep discount. On average, they paid just 4.5 cents on the dollar. These debt buyers collect what they can and then sell the remaining accounts to other buyers, and so on. Those who trade in such debt call it “paper.” That was Aaron Siegel’s business.

[NEW YORK TIMES]

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LaSalle Bank N.A. v Dono | NYSC – Judge Spinner Rips Into LaSalle – “Bad Faith” … Plaintiff and any assignee is forever barred, prohibited and foreclosed from recovering the same from Defendant

LaSalle Bank N.A. v Dono | NYSC – Judge Spinner Rips Into LaSalle – “Bad Faith” … Plaintiff and any assignee is forever barred, prohibited and foreclosed from recovering the same from Defendant

Decided on August 12, 2014

Supreme Court, Suffolk County

 

Lasalle Bank N.A. As Trustee For MERRILL LYNCH FIRST FRANKLIN MORTGAGE LOAN TRUST 2007-4 MORTGAGE LOAN ASSET-BACKED CERTIFICATES SERIES 2007-4 , Plaintiff,

against

Brian Dono, AMERICAN GENERAL FINANCIAL SERVICES INC. and BENITO DOE, Defendants

2009-04422

Larry T. Powell, Esq.

Davidson Fink LLP

Attorneys for Plaintiff

28 East Main Street

Rochester, New York 14614

John Batanchiev, Esq.

Ian S. Wilder, Esq.

Long Island Housing Services Inc.

Attorneys for Defendant BRIAN DONO

640 Johnson Avenue

Bohemia, New York 11716
Jeffrey Arlen Spinner, J.

Plaintiff, through predecessor counsel Steven J. Baum P.C., commenced this action pursuant to Real [*2]Property Actions and Proceedings Law Article 13, claiming the foreclosure of a first mortgage which encumbers residential real property located at 77 Winchester Drive, Lindenhurst, Town of Babylon, Suffolk County, New York. In its Verified Complaint, the Plaintiff alleges that it is the owner and holder of an Adjustable Rate Note in the principal amount of $ 420,000.00 which is secured by a Mortgage, recorded with the Suffolk County Clerk. Plaintiff demands foreclosure of the Mortgage together with recovery of interest, costs, disbursements, attorney’s fees and a deficiency judgment. Defendant does not deny the default, instead freely admitting that the course of events which brings these parties before the Court occurred as a direct result of his incarceration. The Court recalls that prior to Defendant’s discharge from custody, his wife appeared at the settlement conferences in the exercise of a vain but honest attempt to reach an amicable disposition herein.

In compliance with the provisions of CPLR § 3408, a series of mandatory settlement conferences were held, upon which there were no less than 24 appearances before the Court. Indeed, as early as March 16, 2009, the Court’s records reflect that Defendant requested provision of the appropriate settlement conference package, apparently evincing his intention to attempt to reach an amicable resolution herein.

Defendant, through counsel, now moves this Court for an Order tolling interest and other costs on the mortgage debt, asserting that Plaintiff has failed to negotiate in good faith, as mandated by CPLR § 3408. Not surprisingly, Plaintiff vociferously opposes Defendant’s application, insisting that it has acted in good faith throughout the process and that there exists no basis for Defendant’s application.

In support of its application, Defendant submits the Affirmations of John Batanchiev Esq. and Ian S. Wilder Esq. together with the Affidavit of Brian Dono, supported by a number of exhibits as well as a Reply Memorandum of Law. Plaintiff has submitted the Affirmation of Larry T. Powell Esq. together with a Sur-Reply Affirmation but has not seen fit to provided proof from a party with actual knowledge. The Court is constrained to note that in the particular matter that is sub judice, Plaintiff has failed to appear through a representative during the mandatory settlement conference process, despite having been ordered to do so by the undersigned.

In essence, Defendant asserts, without any factual or admissible contravention by Plaintiff, that since at least October 1, 2010, he has fully complied with each and every document request received from Plaintiff’s various loan servicers, each of whom, it is claimed, have acted in bad faith. Defendant claims, again without contraversion by Plaintiff, that the real property that secures the loan has an approximate fair market value of $ 317,265.00 juxtaposed against a claimed balance due of $ 676,361.45. Defendant further states, once again without opposition, that Plaintiff has unreasonably and wrongfully delayed these proceedings by interposing multiple and duplicitous document demands, that Plaintiff and its servicers have willfully failed to comply with the applicable HAMP guidelines, to which its initial servicer was subject, by offering a “modified” payment equal to 70% of his gross monthly income while knowing that the “cap” was set at 31% within those guidelines, that Plaintiff surreptitiously conveyed the loan to a different, non-HAMP servicer so as to avoid being subject to the HAMP guidelines and which also caused the process to start anew, that Plaintiff failed and neglected to provide HAMP-compliant denials, that Plaintiff refused to consider Defendant’s reasonable counter-offer which fell well within HAMP guidelines and finally, that Plaintiff has refused to negotiate, instead propounding a “take it or leave it” modification which contained unconscionable terms including a waiver of defenses, counterclaims and setoff together with a reverter clause in the nature of a penalty. While Defendant’s sworn averments are supported by efficacious documentation together with Affirmations from two respected attorneys who possess actual and personal knowledge of this particular matter (both attorneys have appeared before the undersigned on multiple occasions with respect to this matter), Plaintiff has failed to submit any evidence whatsoever in opposition, instead relying upon counsel’s cavalier Affirmation.

Plaintiff’s opposition, distilled to its essence, consists solely of counsel’s stentorian albeit factually unsupported assertions that inasmuch as a mortgage is a contract, the Court may neither interfere with nor modify its terms; that since this proceeding is one sounding in equity this Court is bound to comply with the rules of equity (and hence must rule in Plaintiff’s favor), citing IndyMac Bank F.S.B. v. Yano-Horoski 78 AD3d 895 (2nd Dept. 2010) and Bank of America v. Lucido 114 AD3d 714 (2nd Dept. 2014), among others; that the Court may not force a settlement upon the parties; and finally, counsel refers this Court to the decision of a court of co-ordinate jurisdiction in such a manner as to strongly suggest that said opinion is controlling herein. Counsel urges this Court to summarily deny the relief sought by Defendant, stating that Plaintiff has asked for nothing more than that the note and mortgage be strictly enforced according to their terms and further, that it is Defendant who has acted in bad faith. None of these meretricious assertions are supported by so much as a scintilla of evidence and indeed, they are both factuallly inaccurate and decidedly fallacious. Counsel fails and neglects to substantively address any of Defendant’s efficacious claims, instead stridently admonishing this Court that it may not act in a manner that is based upon sympathy, citing Graf v. Hope Building Corp. 254 NY 1 (1930) and further strongly admonishing this Court that in view of the clear language of the note and mortgage, that this Court is “…not at liberty to revise while professing to construe” citing Sun Printing & Publishing Ass’n v. Remington Paper & Power Co. 235 NY 338 (1923).

Interestingly, the Affirmation of Plaintiff’s counsel does not state the basis upon which his bald and unsupported statements are based, other than his position as an associate with Plaintiff’s successor counsel. Again, the opposition submitted is quite conspicuous for its complete absence of any Affidavit of a party with actual knowledge herein and as counsel surely must be aware, an Affirmation of counsel, absent proof of actual first-hand knowledge, is wholly devoid of probative value, Barnet v. Horwitz 278 AD 700 (2nd Dept. 1951).

The decision in this matter is necessarily based upon and is controlled by the provisions of CPLR § 3408, which was promulgated by the Legislature in response to the mortgage foreclosure crisis that was (and is) facing New York homeowners. The statute, remedial in nature, was passed in 2008 and was substantially amended late in 2009.

The relevant portions for purposes of this decision are CPLR § 3408(a) & (f), which read, in pertinent part, as follows:

“(a) In any residential foreclosure action involving a home loan…in which the defendant is a resident

of the property subject to foreclosure, the court shall hold a mandatory conference…for the purpose

of holding settlement discussions pertaining to the relative rights and obligations of the parties under

the mortgage loan documents, including, but not limited to determining whether the parties can reach

a mutually agreeable resolution to help the defendant avoid losing his or her home, and evaluating

the potential for a resolution in which payment schedules or amounts may be modified or other

workout options may be agreed to, and for whatever other purposes the court deems appropriate.

“(f) Both the plaintiff and defendant shall negotiate in good faith to reach a mutually agreeable

resolution, including a loan modification, if possible.” CPLR 3408(a), (f)

While the express language of CPLR § 3408 appears clear on its face, the term “good faith” is nowhere defined in the statute. Too, the legislative history fails to reveal any clue at all as to the definition of this term. Instead, working within a statutory vacuum, various trial courts have assiduously attempted to give real meaning to this concept in the absence of any definition or other guidance. Both Defendant and Plaintiff have cited a plethora of case law in their respective papers, none of which is controlling, in view of a new decision from our Appellate Division, which was released subsequent to the submission of the instant [*3]application.

Instead, this Court finds itself inexorably guided by the decision in the matter of US Bank N.A. v. Jose Sarmiento

2014 NY Slip Op 05533, 2014 NY App Div LEXIS 5457 (2nd Dept., July 30, 2014). In a searching and thoughtful opinion by Justice Leventhal, the Appellate Division painstakingly explored and expounded upon the provisions and guidelines of HAMP, CPLR § 3408 and, most important, the concept of good faith as applied to the mandatory settlement conference process. For purposes of the matter at bar, this Court is only concerned with the issue of good faith. Indeed, the Appellate Division, in that opinion, has expressly and unequivocally stated that “…the issue of whether a party failed to negotiate in good faith’ within the meaning of CPLR 3408(f) should be determined by considering whether the totality of the circumstances demonstrates that the party’s conduct did not constitute a meaningful effort at reaching a resolution.”Therefore, this express language constitutes the yardstick by which this Court must measure the conduct of Plaintiff and Defendant in order to determine which party, if either, failed to act in good faith.

In accord with the ruling of the Appellate Division in US Bank N.A. v. Sarmiento, supra, close and careful examination and consideration of the totality of the circumstances reveals that Defendant has fully complied with Plaintiff’s various document demands on multiple occasions, that Defendant and/or his counsel have appeared on at least 24 occasions before the undersigned with respect to mandatory settlement conferences, that Plaintiff has failed to comply with the HAMP guidelines by offering a “modification” which was facially and obviously not affordable and which exceeded the applicable housing expense ceiling by 39%, that Plaintiff failed and refused to negotiate at all with Defendant, that Plaintiff failed and refused to produce a representative in court despite a Court order to do so, that Plaintiff conveyed the loan to a different servicer which engendered further delay in that the process had to begin anew, all of which has inured to the detriment of Defendant. Since October 1, 2010, interest has continued to accrue at an adjustable rate of not less (and possibly greater) than 8.2% together with the accrual of added costs, disbursements and, presumably, a claim for reasonable counsel fees.

Based upon the totality of circumstances, this Court is constrained to find that Plaintiff, and the servicers acting upon its behalf, have acted in bad faith throughout the mandatory settlement conference process, as “bad faith” has been defined in US Ban k N.A. v. Sarmiento, supra, thus inexorably warranting the granting of Defendant’s application.

It is, therefore,

ORDERED that Defendant’s application shall be and is hereby granted in its entirety; and it is further

ORDERED that all interest, disbursements, costs and attorneys fees which have accrued upon the loan at issue since October 1, 2010 shall be and the same are hereby permanently abated, shall not be a charge on account of or to the detriment of Defendant and that Plaintiff and any assignee is forever barred, prohibited and foreclosed from recovering the same from Defendant; and it is further

ORDERED that such abatement shall continue in futuro and that no further interest, disbursements, costs or attorney’s fees shall accrue or be chargeable to Defendant absent further Order of this Court; and it is further

ORDERED that any relief not expressly granted herein shall be and is hereby denied; and it is further

ORDERED that Defendant’s counsel shall, within twenty one days after entry hereof, serve a copy of this Order with Notice of Entry upon all parties in this action as well as all counsel who have appeared in [*4]this action.

Dated: August 12, 2014

Riverhead, New York

E N T E R:

______________________________________

JEFFREY ARLEN SPINNER, J.S.C.

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On Petition For Writ Of Ceftiorari To The Supreme Court Of The State Of Hawaii | re: Due Process Clauses of the Fifth and Fourteenth Amendments to the United States Constitution

On Petition For Writ Of Ceftiorari To The Supreme Court Of The State Of Hawaii | re: Due Process Clauses of the Fifth and Fourteenth Amendments to the United States Constitution

In the
Supreme Court of the United States

ALBERTO C. TIMOSAN, SIMPLICIA C. TIMOSAN,
ARIEL TIMOSAN, ARCHANGEL TIMOSAN
and AILYN T. OUNYOUNG,
Petitioners,

vs.

THE BANK OF NEW YORK MELLON TRUST
COMPANY, NATIONAL ASSOCIATION, FKA THE
BANK OF NEW YORK TRUST COMPANY, N.A. AS
SUCCESSOR TO JPMORGAN CHASE N.A. AS
TRUSTEE FOR RAMP 2OO5RS9,
Respondent.

On Petition For Writ Of Centiorari
To The Supreme Court Of The State Of Hawaii

PETITION FOR WRIT OF CERTIORARI

GARY VICTOR DUBIN
FREDERICK J. ARENSMEYER
Counsel of Record for Petitioners
DUBIN Law Offices
55 Merchant Street, Suite 3100
Honolulu, Hawaii 96813
Telephone: (808) 537-2300
Facsimile: (808) 523-7733
E -Mail: gdubin@dubinlaw.net
E-Mail: farensmeyer@dubinlaw. net

QUESTION PRESENTED
Is it a violation of the Due Process Clauses of the
Fifth and Fourteenth Amendments to the United
States Constitution for a federal or state court
through state action to deprive property owners of
title to and possession and enjoyment of real
property by enforcing a nonjudicial or judicial
foreclosure against their economic interests based
solely on recorded mortgages and recorded mortgage
assignments without first also requiring proof by a
foreclosing mortgagee of the location, ownership and
validity of their underlying promissory note?

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LETTER | NYDFS reviewing a troubling transaction involving Ocwen’s related company, Altisource Portfolio Solutions, S.A. (“Altisource”) — Forced Placed Insurance

LETTER | NYDFS reviewing a troubling transaction involving Ocwen’s related company, Altisource Portfolio Solutions, S.A. (“Altisource”) — Forced Placed Insurance

Andrew M. Cuomo
Governor

Benjamin M. Lawsky
Superintendent

August 4, 2014

Timothy Hayes
General Counsel
Ocwen Financial Corporation
1661 Worthington Road, Suite 100
West Palm Beach, FL 33409

Dear Mr. Hayes:
As part of the Department’s ongoing examination of Ocwen’s mortgage servicing practices, we are reviewing a troubling transaction involving Ocwen’s related company, Altisource Portfolio Solutions, S.A. (“Altisource”), and the provision of force-placed insurance. Indeed, this complex arrangement appears designed to funnel as much as $65 million in fees annually from already-distressed homeowners to Altisource for minimal work. Additionally, the role that Ocwen’s Executive Chairman William C. Erbey played in approving this arrangement appears to be inconsistent with public statements Ocwen has made, as well as representations in company SEC filings. As discussed below, we require certain information about this force-placed insurance arrangement and about Mr. Erbey’s role in approving the arrangement.

Background
As you know, the Department has previously expressed concerns about Ocwen’s use of related companies to provide fee-based services such as property inspections, online auction sites, foreclosure sales, real estate brokers, debt collection, and many others. Because mortgage servicing presents the extraordinary circumstance where there is effectively no customer to select a vendor for ancillary services, Ocwen’s use of related companies to provide such services raises concerns about whether such transactions are priced fairly and conducted at arms-length.

The Department now seeks additional information about Ocwen’s provision of force-placed insurance through related companies. As you are aware, the Department’s recent investigation into force-placed insurance revealed that mortgage servicers were setting up affiliated insurance agencies to collect commissions on force-placed insurance, and funneling all of their borrowers’ force-placed business through their own agencies, in violation of New York Insurance Law section 2324’s anti-inducement provisions.

The Department discovered that servicers’ own insurance agencies had an incentive to purchase force-placed insurance with high premiums because the higher the premiums, the higher the commissions kicked back by insurers to the servicers or their affiliates. The extra expense of higher premiums, in turn, can push already struggling families over the foreclosure cliff. In light of this investigation, the Department last year imposed further prohibitions on these kickbacks to servicers or their affiliates.

However, as part of our broader review of ancillary services provided by non-bank mortgage
servicers, we are concerned that certain non-bank mortgage servicers are seeking to side-step
those borrower protections through complex arrangements with subsidiaries and affiliated
companies. Indeed, in recent weeks, we halted one such arrangement at another non-bank
mortgage servicing company.

Agreements with SWBC and Altisource
Based on its investigation and through the Monitor’s work, the Department understands that
Ocwen’s force-placed arrangement with Altisource features the use of an unaffiliated insurance
agent, Southwest Business Corporation (“SWBC”), apparently as a pass-through so that Ocwen
and Altisource are not directly contracting with each other, but Altisource can still receive
insurance commissions and certain fees seemingly for doing very little work.

These are the facts established by documents Ocwen provided to the Monitor: In August 2013,
Ocwen appointed an Altisource subsidiary called Beltline Road Insurance Agency, Inc.
(“Beltline”) as its exclusive insurance representative, purportedly to negotiate and place a new
force-placed insurance program for Ocwen. Ocwen’s existing force-placed arrangement with the
insurer Assurant was set to expire in March 2014, and Beltline’s stated task was to find an
alternative arrangement. In January 2014, Altisource provided a memo to the Credit Committee
of Ocwen Mortgage Servicing, Inc., recommending, among other things, replacing Assurant with
SWBC as Ocwen’s managing general agent. SWBC would then be charged with managing
Ocwen’s force-placed insurance program, including negotiating premiums with insurers. As part
of this arrangement, Altisource recommended itself to provide fee-based services to SWBC.

In emails dated January 15 and 16, 2014, the transaction was approved by the three members of
the Credit Committee: William Erbey, Duo Zhang, and Richard Cooperstein. The Credit
Committee did not meet to discuss this proposal, no minutes were taken of the Credit
Committee’s consideration of this proposed transaction, and the proposed transaction apparently
was not presented for review or approval to any member of the Ocwen Board of Directors except
Mr. Erbey, as Mr. Zhang and Mr. Cooperstein are not members of the Ocwen Board of
Directors.

Just one month after this Credit Committee approval, on February 26, 2014, the company
received the Department’s letter raising concerns about potential conflicts of interest between
Ocwen and its related public companies. In that letter, we identified facts that “cast serious
doubts on recent public statements made by the company that Ocwen has a ‘strictly arms-length
business relationship’ with those companies,” and we specifically referenced the multiple roles
played by Mr. Erbey as an area of concern.

Disregarding the concerns raised in our letter, Ocwen proceeded to execute contracts formalizing
this new force-placed arrangement, apparently without further consideration by any Board
member other than Mr. Erbey. Those contracts, dated as of June 1, 2014, indicate that Altisource
will generate significant revenue from Ocwen’s new force-placed arrangement while apparently
doing very little work. Indeed, a careful review of these and other documents suggests that
Ocwen hired Altisource to design Ocwen’s new force-placed program with the expectation and
intent that Altisource would use this opportunity to steer profits to itself.

First, Altisource will reap enormous insurance commissions for having recommended that Ocwen hire SWBC. Under the contracts, Ocwen promises to give its force-placed insurance business to SWBC. SWBC does the work of negotiating premiums, preparing policies, and handling renewals and cancellations. For these services, SWBC receives commissions from insurers. SWBC then passes on a portion of those commissions, constituting 15% of net written premium on the policies, to Altisource subsidiary Beltline, for “insurance placement services.” Documents indicate that Ocwen expects to force-place policies on its borrowers in excess of $400 million net written premium per year; a 15% commission on $400 million would be $60 million per year. It is unclear what insurance placement services, if any, Altisource is providing to justify these commissions.

Second, Altisource will be paid a substantial annual fee for providing technology support that it appears to be already obligated to provide. This fee relates to monitoring services, whereby Ocwen pays a company to monitor whether its borrowers’ insurance remains in effect. Such monitoring is necessary to establish which borrowers have lapsed on their payments and need to have insurance force-placed upon them. Prior to 2014, Ocwen was paying ten cents per loan per month to Assurant for monitoring. In this new arrangement, however, Ocwen agrees to pay double the prior amount – twenty cents per loan per month now paid to SWBC, for each of the approximately 2.8 million borrowers serviced by Ocwen. SWBC, in turn, agrees to pass on fifteen out of that twenty cents to Altisource, or an estimated $5 million per year. Altisource provides only one service in exchange for this fee: granting SWBC access to Ocwen’s loan files. Altisource, of course, only has access to Ocwen’s loan files through its own separate services agreements with Ocwen, which appear to contractually obligate Altisource to provide this access to business users designated by Ocwen to receive such access.

Third, the contracts require SWBC to use Altisource to provide loss draft management services for Ocwen borrowers; to pay Altisource $75 per loss draft for these services; and to pay Altisource an additional $10,000 per month for certain other services.
In an effort to better understand this arrangement, the Department requests that Ocwen provide the following information and documents:

1. Is Altisource already obligated to provide access to Ocwen’s loan files to SWBC pursuant to separate agreements with Ocwen? If your answer is no, please specifically explain how the Technology Products Letter between Ocwen and Altisource, produced to the Department beginning at OFC00002496, does not impose this obligation.
2. What services, if any, does Altisource or its subsidiary provide to SWBC in exchange for SWBC paying the Altisource subsidiary a commission of 15% of insurance premiums? In addition, it appears that payment of this commission excludes premium generated by policies issued on properties in New York State. Please describe the negotiations that resulted in this exclusion, and identify any alternate compensation to be paid to Altisource or any affiliate to make up for the excluded commissions on New York properties.
3. What services, if any, does Altisource provide to SWBC in exchange for SWBC paying Altisource fifteen cents per loan per month?
4. What services, if any, does Altisource provide to SWBC in exchange for an additional $10,000 per month?
5. Under what circumstances do Ocwen policies and procedures permit approval of transactions solely through the Credit Committee? Did this force-placed insurance arrangement meet those requirements? Do Ocwen policies and procedures require any additional review or approvals for transactions involving related companies? If so, did Ocwen engage in that review or obtain those approvals for this arrangement?
6. Were any options presented to the Credit Committee other than the proposed SWBC transaction? If so, did all such options feature the retention of Altisource to provide fee-based services? Or were options presented that did not involve payments to Altisource?
7. Throughout this process, did members of the Credit Committee or any Ocwen personnel give any consideration to the impact that Altisource fees and commissions would have in increasing insurance premiums to be paid by struggling families?
8. After the Credit Committee approved Altisource’s January 2014 proposal for Ocwen’s new forced-placed insurance program, it appears that certain changes were made to the proposal, including an expansion of SWBC’s and Altisource’s roles in the program and their associated compensation. Please describe those changes and the negotiations that led to those changes, and identify all personnel involved in negotiating and approving those changes.
9. What process resulted in the August 2013 appointment of Altisource’s subsidiary as Ocwen’s exclusive insurance representative? Was this process competitive? What Ocwen Board members or personnel were involved in this appointment? Which Board members, if any, authorized this appointment? Did those Ocwen Board members or personnel know or anticipate that Altisource would return with a plan that would appear to be highly profitable for itself?
10. What amount of revenue has Altisource or its affiliates realized, and what amount of revenue is it projected to realize, from the services it is providing pursuant to this force-placed insurance arrangement? What are its costs for providing those services? How many employees at Altisource or its subsidiaries work on providing those services, and how much of their time is dedicated to this work?
11. Altisource’s presentation to the Credit Committee stated that “Altisource will establish its own managing general underwriter during 2014 to provide LPI underwriting services starting in 2015.” Please explain Altisource’s intention to establish a managing general underwriter, state whether Ocwen supports Altisource’s plan, and explain how this development will affect Ocwen’s force-placed program, Altisource’s revenue, and the fees to be charged to Ocwen borrowers or mortgage investors.

Ocwen’s Public Statements Concerning Transactions with Related Companies

In addition to the issues raised above, the Department has serious concerns about the apparently conflicted role played by Ocwen Executive Chairman William Erbey and potentially other Ocwen officers and directors in directing profits to Altisource, which is “related” to Ocwen but is formally a separate, publicly-traded company. As you know, Mr. Erbey is Ocwen’s largest shareholder and is also the Chairman of and largest shareholder in Altisource. In fact, Mr. Erbey’s stake in Altisource is nearly double his stake in Ocwen: 29 percent versus 15 percent. Thus, for every dollar Ocwen makes, Mr. Erbey’s share is 15 cents, but for every dollar Altisource makes, his share is 29 cents.
The Department and its Monitor have uncovered a growing body of evidence that Mr. Erbey has approved a number of transactions with the related companies, despite Ocwen’s and Altisource’s public claims – including in SEC filings1 – that he recuses himself from decisions involving related companies. Mr. Erbey’s approval of this force-placed insurance arrangement as described above appears to be a gross violation of this supposed recusal policy.

12. Please explain how and why Mr. Erbey approved the arrangement between Ocwen, SWBC, and Altisource.
13. Please provide every instance where Mr. Erbey has approved a transaction involving a related company notwithstanding Ocwen’s statements to the contrary.
Finally, Ocwen and Altisource state in their public filings that rates charged under agreements with related companies are market rate,2 but Ocwen has not been able to provide the Monitor with any analysis to support this assertion.
14. Please advise whether Ocwen has performed any independent analysis to determine whether the rates charged in the SWBC arrangement are market rate.
15. Please address whether Ocwen has performed any independent analysis to support the assertion that the rates charged under other related party agreements are market rate.

We intend to fully review all of the issues raised above. Please also provide documents that support your responses. We ask and expect that Ocwen will preserve all documents concerning the matters discussed in this letter.
Sincerely,
Benjamin M. Lawsky Superintendent of Financial Services
cc: William C. Erbey, Executive Chairman, Ocwen Board of Directors
Ronald M. Faris, Ocwen Board of Directors
Ronald J. Korn, Ocwen Board of Directors
William H. Lacy, Ocwen Board of Directors
Wilbur L. Ross, Jr., Ocwen Board of Directors
Robert A. Salcetti, Ocwen Board of Directors
Barry N. Wish, Ocwen Board of Directors
Mitra Hormozi, Zuckerman Spaeder LLP
James Sottile, Zuckerman Spaeder LLP

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Wells ruling an affront to ‘good faith’

Wells ruling an affront to ‘good faith’

Case is here:US BANK NATIONAL ASSOCIATION v SARMIENTO | NY Appellate Div, 2nd Dept. – we hold that the Supreme Court properly concluded that the plaintiff failed to negotiate in good faith and that the Supreme Court had the authority to sanction the plaintiff for that failure


NYPOST –

In a decision that will have enormous ripple effects through local foreclosure cases, a powerful New York court hit Wells Fargo for failing to negotiate in good faith with Brooklyn borrower José Sarmiento.

The smackdown came as the court affirmed an earlier ruling on the issue, and upheld sanctions preventing Wells from collecting interest and fees on the loan since December 2009 and legal fees in this action — a total of roughly $300,000, according to estimates by Sarmiento’s attorney, David Fuster.

Sarmiento endured 18 rounds of settlement negotiations with Wells, which “delayed and prevented resolution of the action,” according to the decision.

[NEW YORK POST]

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