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

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

Decided on March 25, 2015
Supreme Court, Kings County

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

against

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

20589/2009

Atty for Plaintiff

Miranda L. Sharlette, Esq.

Fein, Such & Crane, LLP

28 East Main Street, Suite 1800

Rochester, NY 14614

(585) 232-7400

Atty for Defendant

George M. Gilmer, Esq.

943 Fourth Avenue

Brooklyn, NY 11232

(718) 788-0100

Francois A. Rivera, J.

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

Notice of Motion

Affirmation of regularity

Affidavit of plaintiff’s Vice-president

Exhibit A-J

Proposed order of reference

Affirmation in accordance with AO/431/11

Affirmation in opposition

Exhibit A-C

BACKGROUND

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

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

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

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

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

LAW AND APPLICATION

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

WFB’s Motion to Substitute the John Doe Defendant

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

WFB’s Motion to Appoint a Referee to Compute

RPAPL 1321 provides in pertinent part as follows:

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

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

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

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

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

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

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

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

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

WFB’s Motion to Strike Sylvester’s Answer

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

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

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

WFB’s Motion to Strike Sylvester’s Counterclaims

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

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

WFB’s Motion for Summary Judgment

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

CONCLUSION

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

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

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

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

The foregoing constitutes the decision and order of this Court.

Enter:

J.S.C.

Footnotes

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

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

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

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

Decided on March 23, 2015
Supreme Court, Kings County

Chase Home Finance LLC, Plaintiff,

against

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

27773/09

Atty for Plaintiff

Marianna Dalton, Esq.

187 East Main Street

Huntington, NY 11743

(631) 935-1616

Atty for Defendants

Stephen C. Silverberg, PLLC

626 RXR Plaza

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

Francois A. Rivera, J.

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

Notice of Motion

Affirmation in support

Affidavit of Merit

Exhibits A—Q

Proposed order of reference

Affirmation in compliance with Administrative Order 431/11

- Proposed order of reference

Two stipulations to adjourn the motion

Affirmation in opposition

Exhibits A—L

Notice of rejection of affirmation in opposition

BACKGROUND

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

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

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

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

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

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

LAW AND APPLICATION

Application to Reject Opposition Papers

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

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

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

Motion to Substitute John Doe and Jane Doe defendants

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

Motion for accelerated judgments and appointment of a referee

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

RPAPL 1321 provides in pertinent part as follows:

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

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

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

Mandatory Pre-Commencement Notices in Foreclosure Actions

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

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

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

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

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

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

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

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

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

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

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

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

Motion to substitute the plaintiff

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

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

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

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

CONCLUSION

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

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

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

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

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

The foregoing constitutes the decision and order of the court.

ENTER____________________________________x

J.S.C.
Footnotes

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

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

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

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

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

The Economist-

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

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

[THE ECONOMIST]

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

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

Yahoo-

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

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

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

[YAHOO]

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

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

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

SUSAN LLOYD and JAMES LLOYD,
Appellants,

v.

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

No. 4D13-3799

[March 25, 2015]

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

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

KLINGENSMITH, J.

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

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

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

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

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

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

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

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

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

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

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

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

Reversed and Remanded with instructions.

GROSS and CONNER, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

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New York regulator Lawsky aims at Deutsche Bank over Libor: FT

New York regulator Lawsky aims at Deutsche Bank over Libor: FT

REUTERS-

Benjamin Lawsky, New York state’s financial services regulator, has added himself to the regulators investigating Deutsche Bank AG for manipulation of the Libor benchmark borrowing rate, the Financial Times reported on Sunday, citing unnamed sources.

The New York Department of Financial Services’ probe of the German bank marks the first Libor investigation for the regulator. Deutsche Bank is currently negotiating a settlement with the U.S. Justice Department, the newspaper said.

Lawsky’s department regulates banks with charters in New York as well as foreign banks with branches in the state. He is not investigation other banks, which have already settled with the government, the Financial Times said.

[REUTERS]

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One Bank Is Finally on Trial for the Financial Crisis

One Bank Is Finally on Trial for the Financial Crisis

New Republic-

The trial of the century—a long-awaited determination of the damage perpetrated by Wall Street institutions in the financial crisis—began Monday in New York. But it’s only happening because one bank—unlike Goldman Sachs, JP Morgan, Citigroup, and Bank of America—refused to settle out of court. The Japanese firm Nomura stands accused of lying to mortgage giants Fannie Mae and Freddie Mac about the quality of mortgages pooled into securities during the housing bubble. The case will finally reveal hard data on just how much money Nomura, and the rest of the industry, made through fraud.

The Federal Housing Finance Agency (FHFA), conservator of Fannie Mae and Freddie Mac, sued 18 of the biggest banks in the world in 2011. As an investor, Fannie and Freddie purchased $196 billion in mortgage-backed securities from 2005 to 2007, filled with loans that did not meet specific underwriting guidelines. Sixteen of the 18 banks settled with FHFA, netting the agency $18.2 billion. One suit with the Royal Bank of Scotland remains in limbo. Only Nomura pushed FHFA into trial.1

[NEW REPUBLIC]

Nomura. Photographer: Kiyoshi Ota/Bloomberg

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BYMEL v. BANK OF AMERICA | FL 3rd DCA – order allowing Bymel (short sale buyer) to intervene in the foreclosure action

BYMEL v. BANK OF AMERICA | FL 3rd DCA – order allowing Bymel (short sale buyer) to intervene in the foreclosure action

Third District Court of Appeal
State of Florida

Opinion filed March 11, 2015.
Not final until disposition of timely filed motion for rehearing.

________________

No. 3D13-3099
Lower Tribunal No. 12-7660
________________

William J. Bymel,
Appellant,

vs.

Bank of America, N.A.,
Appellee.

An Appeal from an order of the Circuit Court for Miami-Dade County,
Jennifer D. Bailey, Judge.

Krinzman, Huss, Lubetsky, and Cary A. Lubetsky and Aniella Gonzalez, for
appellant.

Albertelli Law (Tampa),1 for appellee.

1 Albertelli Law represented Bank of America in the proceedings below, and
Bymel served Albertelli Law with his notice of appeal. This Court issued an order
directing Bank of America to file an answer brief within ten days from the date of
the order or be precluded from filing a brief and/or presenting an oral argument.
Bank of America failed to file an answer brief as directed by this Court.
Thereafter, this Court issued an order precluding Bank of America from filing an
Before SHEPHERD, C.J., and SUAREZ and ROTHENBERG, JJ.

ROTHENBERG, J.

William J. Bymel (“Bymel”) appeals from an order denying his motion to

intervene in the foreclosure action filed by Bank of America, N.A. against Paul

Everett and Carmell S. Johnson-Everett (collectively, “the Everetts”).2 We find

that the trial court abused its discretion by denying the motion to intervene, and

therefore, we reverse and remand for further proceedings.

After Bank of America filed its foreclosure action against the Everetts and

recorded its lis pendens in 2012, Bank of America approved a short sale of the

Everetts’ property to Bymel in May 2013. Prior to the closing of the short sale,

Bank of America approved the settlement statement that was prepared by the

settlement agent. Then, in June 2013, the short sale transaction closed; the

Everetts executed a warranty deed naming Bymel as the purchaser of the real

property, which deed was later recorded; and the settlement agent initiated a wire

transfer to Bank of America of the short sale proceeds. The wire transfer was not

answer brief or presenting an oral argument unless otherwise ordered, but allowed
Bank of America to file a memorandum of points and authorities in support of its
position. As of this date, Bank of America has not filed anything in this appeal.
2 Bymel also appealed the denial of his motion to continue the non-jury trial

scheduled for December 10, 2013. The non-jury trial did not take place due to
Bymel’s filing of the instant appeal, and therefore, the denial of the motion to
continue is no longer at issue.

2
accepted by Bank of America,3 and thereafter, the settlement agent attempted to

resolve the matter with Bank of America. In October 2013, Bank of America sent

a second letter to the Everetts stating that it was approving the short sale to Bymel.

As requested by Bank of America, the Everetts executed this letter although the

short sale had previously closed and the Everetts had already transferred the

property to Bymel in June 2013. On December 5, 2013, Bank of America

contacted the settlement agent acknowledging that it had received certain

documents but indicated that there had not been a final approval. Bank of America

informed the settlement agent that one of its settlement associates would be in

contact within five days.4

Based on these proceedings, Bymel moved on December 6, 2013, to

continue the non-jury foreclosure trial scheduled for December 10, 2013, and also

moved to intervene in the foreclosure action pursuant to Florida Rule of Civil

Procedure 1.230. Bymel asserted that he has a superior interest in the real property

because he is the present owner of the real property as a result of the short sale

approved by Bank of America. Bymel further asserted that he reasonably

3 At this point, it is unclear why Bank of America refused to accept the short sale
funds after approving the settlement statement and allowing the short sale to
proceed to closing. We note, however, that the short sale approval letter provides
that Bank of America will cancel the approval of the short sale offer and continue
with the foreclosure action if the terms and conditions of the short sale approval
are not met. We offer no opinion as to whether the terms and conditions of the
short sale were met.
4 The short sale proceeds are currently in the settlement agent’s trust account.

3
anticipated that Bank of America would dismiss the foreclosure action, discharge

the notice of lis pendens, and record a satisfaction of mortgage shortly after the

closing of the short sale, thereby clearing title to the real property. The trial court

denied Bymel’s motion to continue the trial and motion to intervene. Bymel’s

appeal followed.

Bymel contends that the trial court abused its discretion by denying his

motion to intervene. See Racing Props., L.P. v. Baldwin.

885 So. 2d 881

, 883 (Fla.

2004) (holding that a trial court’s ruling on a motion to intervene is reviewed for

an abuse of discretion). Under the facts of this case, we agree.

Rule 1.230 provides: “Anyone claiming an interest in pending litigation

may at any time be permitted to assert a right by intervention, but the intervention

shall be in subordination to, and in recognition of, the propriety of the main

proceeding, unless otherwise ordered by the court in its discretion.” As stated

earlier, Bymel claims that he has an interest in the pending litigation because he is

the current owner of the real property that is the subject of Bank of America’s

foreclosure action.

We recognize that in Andresix Corp. v. Peoples Downtown National Bank,

419 So. 2d 1107

(Fla. 3d DCA 1982), this Court affirmed the denial of Andresix’s

motion to intervene in a pending foreclosure action, holding that “Andresix, as a

purchaser of property which was then the subject of a mortgage foreclosure action

4
and accompanying lis pendens by Peoples Downtown National Bank, was not

entitled to intervene in such action.” Id. at 1107; see SADCO, Inc. v. Countrywide

Funding, Inc.,

680 So. 2d 1072

, 1072 (Fla. 3d DCA 1996) (affirming denial of

motion to intervene in a residential foreclosure action citing to Andresix for the

proposition that a “purchaser of property that was subject of lis pendens arising

from bank’s foreclosure action was not entitled to intervene in that action”); see

also Timucuan Props., Inc. v. Bank of New York Mellon,

135 So. 3d 524

, 524

(Fla. 5th DCA 2014) (per curiam affirmance citing to SADCO and Andresix). The

rule in Andresix is based on the “concern that to allow purchasers pendente lite to

intervene would unnecessarily protract litigation.” Harrod v. Union Fin. Co.,

420 So. 2d 108

, 108 (Fla. 3d DCA 1982). Thus, when property is purchased during a

pending foreclosure action in which a lis pendens has been filed, the purchaser

generally is not entitled to intervene in the pending foreclosure action. Indeed, if

such a buyer purchases the property, he does so at his own risk because he is on

notice that the property is subject to the foreclosure action. See Centerstate Bank

Cent. Fla., N.A. v. Krause,

87 So. 3d 25

, 28 (Fla. 5th DCA 2012) (“[T]he purpose

of a notice of lis pendens is to notify third parties of pending litigation and protect

its proponents from intervening liens that could impair or extinguish claimed

property rights.”). Allowing such a purchaser to intervene would unnecessarily

prolong the foreclosure action.

5
The instant case, however, is factually and materially distinguishable from

Andresix, Harrod, SADCO, and this general rule. Unlike the purchasers in

Andresix, Harrod, SADCO, and most situations where the buyer purchases

property during a pending foreclosure action, Bymel was not a stranger to Bank of

America. Rather, Bank of America was actively involved in Bymel’s purchase of

the real property because it had approved both the short sale of the real property to

Bymel and the settlement statement prepared by the settlement agent prior to the

short sale closing. Therefore, this is not a situation where Bymel believed that he

was purchasing the property subject to the pending foreclosure action and the lis

pendens. Instead, Bymel reasonably believed that following the short sale, Bank

of America would dismiss its foreclosure action against the Everetts, discharge its

notice of lis pendens, and record a satisfaction of its mortgage, thereby clearing

title to the real property.

Based on the facts of this case, we conclude that the trial court abused its

discretion by denying Bymel’s motion to intervene. Accordingly, we reverse the

denial of Bymel’s motion to intervene and remand with instructions to enter an

order allowing Bymel to intervene in the foreclosure action.

Reversed and remanded.

6

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Legislation to Extend Tax Relief to Distressed Homeowners Currently in House, Senate Committees

Legislation to Extend Tax Relief to Distressed Homeowners Currently in House, Senate Committees

DS NEWS-

Two similar pieces of legislation introduced last month in the House and Senate that would extend tax relief to homeowners who are underwater on their mortgage loans have been referred to committees and are waiting to be heard.

Congressman Tom Reed (R-New York) introduced the Mortgage Forgiveness Tax Relief Act of 2015 (H.R. 1002) on February 13, and that bill is now being heard in the House Committee on Ways and Means. Two weeks later, Senators Debbie Stabenow (D-Michigan) and Dean Heller (R-Nevada) introduced a similar bill (S. 608), which is currently in the Senate Banking Committee. Both bills would extend relief to homeowners on forgiven mortgage debt – the remaining mortgage balance when a borrower sells a home in a short sale to avoid foreclosure. The bills would allow homeowners to exclude the forgiven debt from federal income tax forms and not report it as earned income.

Without such legislation, distressed and underwater homeowners would be required to report the amount of mortgage debt forgiven in a short sale as taxable income.

[DS NEWS]

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NY Attorney General Schneiderman Announces Groundbreaking Consumer Protection Settlement WithTransUnion, Equifax and Experian

NY Attorney General Schneiderman Announces Groundbreaking Consumer Protection Settlement WithTransUnion, Equifax and Experian

A.G. Schneiderman Announces Groundbreaking Consumer Protection Settlement With The Three National Credit Reporting Agencies

Experian, Equifax, And Transunion, Which Maintain Consumer Credit Information On 200 Million Americans, Have Agreed To Increase Protections For Consumers Facing Credit Report Errors; Provide Second Free Annual Credit Report To Consumers

Agreement Increases Protections For Consumers With Medical Debt; Reforms Process For Correcting Report Errors; Improves Accuracy Of Reports

A.G. Schneiderman: This Agreement Will Reform The Entire Industry And Provide Vital Protections For Millions Of Consumers Across The Country

NEW YORK – Attorney General Eric T. Schneiderman today announced a settlement with the nation’s three leading national credit reporting agencies, Experian Information Solutions, Inc., (“Experian”), Equifax Information Services, LLC (“Equifax”), and TransUnion LLC (“TransUnion”). The agreement means the companies will improve credit report accuracy; increase the fairness and efficacy of the procedures for resolving consumer disputes of credit report errors; and protect consumers from unfair harm to their credit histories due to medical debt. All three credit reporting agencies worked cooperatively with the office to develop these critical reforms.

“Credit reports touch every part of our lives. They affect whether we can obtain a credit card, take out a college loan, rent an apartment, or buy a car – and sometimes even whether we can get jobs,” Attorney General Schneiderman said. “The nation’s largest reporting agencies have a responsibility to investigate and correct errors on consumers’ credit reports. This agreement will reform the entire industry and provide vital protections for millions of consumers across the country. I thank the three agencies for working with us to help consumers.”

“Debt collection is consistently one of our top complaints, with collection of debts not owed being the number one reason New Yorkers contact us,” said NYC Department of Consumer Affairs Commissioner Julie Menin. “Mistakes like these, illegal payday loans and other information like medical debt end up on credit reports where they can misrepresent a consumer’s creditworthiness. The agreement by Attorney General Schneiderman with the three credit reporting companies is no small feat and I applaud him for ambitiously requiring these institutional agencies to make it easier to obtain and repair one’s report.”

“Today marks a major victory for New York consumers; it has been widely reported over the last few years that there are gross inaccuracies that can be found on the average consumer’s credit report,” said Assemblyman Jeffrey Dinowitz. “Our system puts great faith in the credit reporting agencies to serve as the de facto watch dogs of the credit market in this country and in New York State. To put it simply, the current system was failing. As Chairman of the Assembly Standing Committee on Consumer Affairs and Protection I held a hearing on the inaccuracy of credit reports in 2013 and what we found was a system that ignored errors and made it practically impossible for a consumer to repair their credit without undue hardships. This settlement should help to restore consumers’ faith in the credit reporting system and will hopefully make repairing erroneous marks on their report that much simpler. I applaud Attorney General Schneiderman for his action on this issue.”

“Problems with credit reports routinely block people’s access to housing and jobs, particularly low income people and people of color,” said Susan Shin, Senior Staff Attorney at New Economy Project. “The practices of the big three credit reporting agencies have an outsized impact on the lives of hundreds of millions of people. We applaud Attorney General Schneiderman for his leadership in challenging fundamental inequities in the credit reporting system.”

“This agreement addresses some of the most egregious problems in credit reporting that consumer advocates have complained about for many years,” said Chi Chi Wu, National Consumer Law Center staff attorney. ”We commend Attorney General Schneiderman and his staff for getting these changes, which should benefit consumers enormously.”

Experian, Equifax, and TransUnion are credit reporting agencies (“CRAs”) that maintain consumer credit information on approximately 200 million consumers. The credit information is compiled by the CRAs via voluntary submissions from “data furnishers” such as banks and collection agencies. The CRAs provide credit reports to companies who then use the reports to assess consumers’ credit-worthiness. Creditors use credit reports to assign numerical ratings, called “credit scores” that are used in determining whether to grant credit and in determining the cost of credit.

Credit report errors may arise as a result of identity theft or fraud, or through the CRAs’ process of matching information provided by furnishers to individual consumer’s credit files. For example, when consumers have similar names and share other identifying information, some or all of the credit information of one consumer can become “mixed” into the file of another consumer.

A 2012 study by the Federal Trade Commission found that 26% of study participants identified at least one potentially material error in their credit reports, and that 13% of study participants experienced a change for the better in their credit score as a result of modification to their credit report after a dispute to a credit reporting agency. These findings suggest that millions of consumers have material errors on their credit reports.

The Attorney General’s settlement requires the CRAs to institute a number of reforms to increase protections for consumers, over a three year period. Many of those reforms will be instituted nationwide:

1. Improving the Dispute Resolution Process

Consumers have the right to challenge inaccurate information in their credit report by initiating a “dispute” with a CRA. Attorney General Schneiderman’s investigation of the CRAs revealed that in some cases, the CRAs use a fully-automated process in which they reduce consumers’ disputes to a three-digit code and submit the code and any documentation to the creditor. If the creditor verifies the challenged information, the CRA rejects the consumer’s dispute without conducting any further investigation.

The agreement requires that the CRAs employ specially trained employees to review all supporting documentation submitted by consumers for all disputes involving mixed files, fraud or identity theft. The agreement also requires that, for all categories of disputes, when a creditor verifies a disputed credit item through the automated dispute resolution system, the CRA will not automatically reject the consumer’s dispute, but rather, a CRA employee with discretion to resolve the dispute must review the supporting documentation.

2. Medical Debt

Over half of all collection items on credit reports are medical debts. Medical debts often
result from insurance-coverage delays or disputes. As a result, medical debt may not accurately reflect consumers’ creditworthiness.

Pursuant to the Attorney General’s agreement, the CRAs will institute a 180-day waiting period before medical debt will be reported on a consumer’s credit report. This waiting period will provide extra time to permit resolution of delinquencies that result from insurance delays or disputes. In addition, while delinquencies ordinarily remain on credit reports even after a debt has been paid, the CRAs will remove all medical debts from a consumer’s credit report after the debt is paid by insurance.

3. Increasing the Visibility of AnnualCreditReport.com

Many consumers are not aware that they are legally entitled to one free annual credit report from each CRA via AnnualCreditReport.com. Consumers searching for a credit report online frequently find a CRA’s website, and many consumers subscribe to a CRA credit monitoring service to obtain a credit report or purchase a credit report from the CRA without understanding that they can obtain a free credit report. The agreement requires the CRAs to include a prominently-labeled hyperlink to the AnnualCreditReport.com website on the CRAs’ homepages. The hyperlink must appear directly on the CRAs’ homepages or via a drop-down menu visible on the homepages.

4. Additional Free Annual Credit Report

Consumers have a statutory right to obtain one free credit report per year from each CRA. The Attorney General’s agreement requires the CRAs to provide a second free credit report to consumers who experience a change in their credit report as a result of initiating a dispute. This requirement will permit consumers to verify that the CRA made the correction to their credit report without have to pay for a second credit report.

5. Payday Loan Debt

Predatory high-interest loans made in violation of New York lending laws are often referred to as “payday loans.” New Yorkers who take these loans often have trouble paying them back, damaging their credit, and making it more difficult to obtain a credit card, get a job, or even rent an apartment. The Attorney General’s agreement prohibits the CRAs from including debts from lenders who have been identified by the Attorney General as operating in violation of New York lending laws on New York consumers’ credit reports.

6. Furnisher Monitoring

Companies that provide consumer data to the CRAs (“furnishers”) must investigate consumers’ disputes and report their findings to the CRAs. The Attorney General’s agreement requires the three CRAs to create a National Credit Reporting Working Group (“Working Group”) that will develop a set of best practices and policies to enhance the CRAs’ furnisher monitoring and data accuracy. The Working Group will develop metrics for analyzing furnisher data, including: the number of disputes related to particular furnishers or categories of furnishers; furnishers’ rate of response to disputes; and dispute outcomes. Each CRA will implement policies to monitor furnishers’ performance and take corrective action against furnishers that fail to comply with their obligations.

7. Media Campaign About Consumers’ Rights

To ensure that consumers understand their rights, the Attorney General’s agreement requires the CRAs to carry out an extensive consumer education campaign in New York via public service announcements and paid placements on television, radio, print media, and online. The campaign will be carried out over three years and will focus on consumers’ rights to: (a) obtain a free annual credit report; (b) dispute errors in their credit reports; and (c) submit documents in support of disputes. The agreement also requires the CRAs to expand the consumer education materials available on AnnualCreditReport.com, the website that consumers can use to obtain their free annual credit report.

All three credit reporting agencies cooperated in the Attorney General’s investigation and demonstrated a strong commitment to reforming practices to increase protections for consumers.

Tips for Consumers:

  • You can get a free credit report from each of the CRAs once each year.
  • To get your free report, visit www.AnnualCreditReport.com or call (877)-322-8228.
  • You can request all three credit reports at the same time, or you can request the reports separately. Spreading out the reports permits you to monitor your credit over the course of the year.
  • It is important to review your credit report regularly in order to check for errors.
  • If you find an error, you have the right to dispute the error with the CRA and with the company that provided the information.
  • You have the right to submit copies of documents that support your dispute. You may submit such documents to the CRAs online via the CRAs’ websites.
  • Watch out for websites that claim to offer “free” credit reports, but require you to subscribe to their fee-based services in order to obtain the credit report.

New York City residents who need help understanding their credit report or improving their credit score, should call 311 to find their nearest Financial Empowerment Center for free financial counseling.

This case was handled by Special Counsel Carolyn Fast, Assistant Attorney General Melissa O’Neill and Bureau Chief Jane M. Azia, all of the Consumer Frauds Bureau, and Executive Deputy Attorney General Karla G. Sanchez.

source: http://www.ag.ny.gov

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Did Bank Complaints Result in Transfer of Foreclosure Referee?

Did Bank Complaints Result in Transfer of Foreclosure Referee?

Combing through many past pro-homeowner cases, this referee was no doubt a target of the banks to oust her!


WiseLawNY-

I have come into possession of a copy of an internal e-mail from a court attorney to a top official at the Office of Court Administration that paints an unsettling picture of bank influence in the handling of foreclosure cases in Brooklyn.

The e-mail was from Deborah Goldstein, a court attorney at the Supreme Court in Brooklyn, who for four years had been supervising conferences required by state law between banks and homeowners facing foreclosure. In her-email, Goldstein asked Judge Lawrence K. Marks, the number two official in charge of court administration throughout New York, to stop an imminent plan to move her to a pool of lawyers whose job is to help judges draft opinions.

In her e-mail, Goldstein advised Marks that Lawrence S. Knipel, the administrative judge in charge of civil cases at the Brooklyn court, was moving her out of her mini-courtroom after having received complaints “verbally made at a private meeting” with lawyers who represent banks at the settlement conferences, without providing her “any [of those] complaint(s) in writing or an opportunity to respond.”

[WISELAWNY]

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Posted in STOP FORECLOSURE FRAUD0 Comments

Breaking News: Bank of America whistleblower to be on The Foreclosure Hour Sunday 3/8/2015

Breaking News: Bank of America whistleblower to be on The Foreclosure Hour Sunday 3/8/2015

Breaking news:

The Foreclosure Hour will have a genuine whistle blower on the show tomorrow who is going to reveal that he personally worked recently (four months ago) as part of an army of robos in one of four Bank of America mortgage assignment manufacturing factories throughout the country (he will name their locations and give vivid details including names), falsifying loan documents, signing under oath not before notaries who have been similarly false swearing, for MERS and for the Big Banks such as Chase and for Securitized Trusts such as Bank of New York Mellon, as their supposed Assistant Vice Presidents and supposed Assistant Secretaries, AFTER the Bank of America signed the AG National Settlement agreeing to stop the practice.

It is amazing the arrogance that the ruling banking class has, believing apparently true that it controls the U.S. Treasury Department and the U.S. Attorney General.

Gary the host of The Foreclosure Hour will be asking whether any of his listeners are being or have been foreclosed on as a result of such fraudulently sworn-to loan documents, including made-up allonges and falsely rubber-stamped endorsements on their promissory notes, recorded and used against them or that will be used against them in their foreclosure cases.

Gary will be asking if any state and federal judges and any state and federal legislators and any state recorders are listening and what if anything are they going to do about it or just themselves robotically accepting these false documents as evidence, ignoring one thousand years of Anglo-Saxon-American evidentiary jurisprudence.

I just cannot understand how our judges will be able to continue to kowtow and genuflect before such fraudulent evidence submitted to them by licensed banks and licensed attorneys in the future after tomorrow’s radio broadcast.

Click the link below and DO NOT MISS THIS SHOW

show time for the Pacific Time Zone will be 6:00 p.m.

show time for the Eastern Time Zone will be 9:00 p.m.

UPDATE: PODCAST HAS BEEN UPLOADED IN LINK BELOW.

In case you might need the plugin to listen to the show, you may download it here.

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Posted in STOP FORECLOSURE FRAUD3 Comments

Court approves Bank of America’s $8.5 B mortgage pact

Court approves Bank of America’s $8.5 B mortgage pact

The Charleston Observer-

A New York appeals court on Thursday approved Bank of America’s $8.5 billion pact with investors over bad mortgages, potentially putting to rest a legal dispute that dates to 2011.

The Charlotte-based bank’s agreement covers 1.6 million loans that were packaged into securities from 2004 to 2008 by subprime lender Countrywide Financial and sold to big investors such as BlackRock. Bank of America bought Countrywide in 2008 and has since paid billions to cover lawsuits and penalties tied to the lender.

Bank of America negotiated the 2011 pact after the Countrywide loans had begun to sour. The bank has already set aside money for the agreement, but final court approval has been slow in coming.

Read more here: http://www.charlotteobserver.com/news/business/banking/article12610187.html#storylink=cpy

image credit: Reuters Mike Blake

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Posted in STOP FORECLOSURE FRAUD0 Comments

MetLife Home Loans LLC, Successor to MetLife Bank N.A., to Pay $123.5 Million to Resolve Alleged Federal Housing Administration Mortgage Lending Violations

MetLife Home Loans LLC, Successor to MetLife Bank N.A., to Pay $123.5 Million to Resolve Alleged Federal Housing Administration Mortgage Lending Violations

Department of Justice
Office of Public Affairs

FOR IMMEDIATE RELEASE

Wednesday, February 25, 2015

MetLife Home Loans LLC, Successor to MetLife Bank N.A., to Pay $123.5 Million to Resolve Alleged Federal Housing Administration Mortgage Lending Violations

MetLife Home Loans LLC has agreed to pay the United States $123.5 million to resolve allegations that MetLife Bank N.A. (MetLife Bank) violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements, the Justice Department announced today. 

MetLife Bank was a banking services company headquartered in Bridgewater, New Jersey.  In June 2013, MetLife Bank merged into MetLife Home Loans LLC, a mortgage finance company headquartered in Irving, Texas.  MetLife Bank was, and MetLife Home Loans LLC is, a wholly owned subsidiary of MetLife Inc., a holding company headquartered in New York City.

“MetLife Bank’s improper FHA lending practices not only wasted taxpayer funds, but also inflicted harm on homeowners and the housing market that lasts to this day,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.  “As this settlement shows, we will continue to hold accountable financial institutions that elected to ignore the rules and to pursue their own financial interests at the expense of hardworking Americans.” 

“MetLife Bank took advantage of the FHA insurance program by knowingly turning a blind eye to mortgage loans that did not meet basic underwriting requirements, and stuck the FHA and taxpayers with the bill when those mortgages defaulted,” said U.S. Attorney John Walsh of the District of Colorado.  “This settlement is part of our systematic, national effort to hold lenders accountable for irresponsible lending practices that not only harmed FHA, but also contributed to a catastrophic wave of home foreclosures across the country.”

During the time period covered by the settlement, MetLife Bank participated as a Direct Endorsement Lender (DEL) in the FHA insurance program.  A DEL has the authority to originate, underwrite and certify mortgages for FHA insurance.  If a loan certified for FHA insurance later defaults, the holder of the loan may submit an insurance claim to the FHA for the losses resulting from the defaulted loan.  Because the FHA does not review the underwriting of a loan before it is endorsed for FHA insurance, the FHA depends on a DEL to follow program rules to ensure that only eligible loans are submitted for FHA insurance. 

 

As part of the settlement, MetLife Home Loans LLC admitted to the following facts: From September 2008 through March 2012, it repeatedly certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements.  MetLife Bank was aware that a substantial percentage of these loans were not eligible for FHA mortgage insurance due to its own internal quality control findings.  According to these findings, between January 2009 and August 2010, the portion of MetLife Bank loans containing the most serious category of deficiencies, which MetLife Bank called “material/significant,” ranged from 25 percent to more than 60 percent.  These quality control findings were routinely shared with MetLife Bank’s senior managers, including the chief executive officer and board of directors.  While the overall “significant” error rate identified by MetLife Bank decreased in 2010 and 2011, during the same time period, MetLife Bank more frequently downgraded FHA loans from “significant” to “moderate.”  In one instance, a quality control employee wrote in an email discussing MetLife Bank’s practice of downgrading its quality control findings: “Why say Significant when it feels so Good to say MODERATE.”  Overall, between January 2009 and December 2011, MetLife Bank identified 1,097 FHA mortgage loans underwritten by MetLife Bank with a “significant” finding, but despite an obligation to self-report findings of material violations of FHA requirements, MetLife Bank only self-reported 321 mortgages to HUD.  MetLife Bank’s conduct caused FHA to insure hundreds of loans that were not eligible for insurance and, as a result, FHA suffered substantial losses when it later paid insurance claims on those loans. 

“The settlement announced today is the culmination of two years of work by HUD OIG and our continued efforts to identify and properly respond to instances of fraud against HUD’s mortgage insurance program,” said Inspector General David Montoya of HUD.

“We appreciate that MetLife Bank has accepted responsibility for its actions and is settling with the government,” said General Counsel Helen Kanovsky of HUD.  “We want to thank the Department of Justice and HUD’s Office of Inspector General for all of their efforts in helping us make this settlement a reality.  This settlement with MetLife Bank underscores our consistent message that HUD takes compliance with its requirements seriously.”

The settlement was the result of a joint investigation conducted by HUD, HUD OIG, the Civil Division and the U.S. Attorney’s Office for the District of Colorado.

15-226

Updated February 25, 2015

 

source: justice.gov
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BANK OF NEW YORK MELLON v. Carson, Wis: Supreme Court | Bank Must Sell Foreclosure Property Within a Reasonable Time if Abandoned

BANK OF NEW YORK MELLON v. Carson, Wis: Supreme Court | Bank Must Sell Foreclosure Property Within a Reasonable Time if Abandoned

 

The Bank of New York Mellon, fka The Bank of New York, as Trustee for CWABS, Inc. Asset-Backed Certificates, Series 2007-13, Plaintiff-Respondent-Petitioner,
v.
Shirley T. Carson, Defendant-Appellant,
Bayfield Financial LLC and Collins Financial Services, Defendants.

No. 2013AP544.
Supreme Court of Wisconsin.
Opinion Filed: February 17, 2015.
Oral Argument: September 23, 2014.
For the plaintiff-respondent-petitioner, there were briefs by Valerie L. Bailey-Rihn, Katherine Maloney Perhach and Quarles & Brady LLP, Madison and Milwaukee; and James W. McGarry, Keith Levenberg, and Goodwin Procter LLP, Boston and Washington. Oral argument by Valerie L. Bailey-Rihn.

For the defendant-appellant, there was a brief by April A.G. Hartman, Jeffrey R. Myer, and Legal Action of Wisconsin, Inc. Oral argument by April A.G. Hartman.

An amicus curiae brief by Grant F. Langley city attorney; Danielle M. Bergner, deputy city attorney; and Kail J. Decker, assistant city attorney, on behalf of the City of Milwaukee.

An amicus curiae brief by Catherine M. Doyle, Amanda E. Adrian, and Legal Aid Society of Milwaukee, Inc., on behalf of the Legal Aid Society of Milwaukee.

PROSSER, ZIEGLER, GABLEMAN, JJJ., concur.

ANN WALSH BRADLEY, J.

¶1 Petitioner, Bank of New York Mellon (“the Bank”), seeks review of a published decision of the court of appeals that reversed the circuit court’s denial of Shirley Carson’s motion to amend a judgment of foreclosure on her former home.[1] She requested that the court find the property to be abandoned and that it order a sale of the property upon expiration of five weeks from the date of entry of the amended judgment. The court of appeals concluded that the circuit court erroneously determined that it was without authority to grant the motion.

¶2 The Bank asserts that Wis. Stat. § 846.102 (2011-12)[2], the statute governing foreclosure of abandoned properties, does not require it to sell a property after it obtains a judgment of foreclosure and the redemption period has passed. It maintains that the statute is permissive, not mandatory, and that it cannot be required to sell a property. The Bank further contends that even if the statute does mandate that the Bank sell the abandoned property after the redemption period, it provides no deadline for doing so. Thus, the Bank concludes that it is free to execute on its judgment at any time within five years after rendition of the judgment, and the circuit court is without authority to order it to sell the property at a specific time.

¶3 Based on the statute’s plain language and context, we conclude that when the court determines that a property is abandoned, Wis. Stat. § 846.102 authorizes the circuit court to order a mortgagee to bring the property to sale after the redemption period. We further conclude, consistent with the purpose of the statute, that the circuit court shall order the property to be brought to sale within a reasonable time after the redemption period. The circuit court’s determination of what constitutes a reasonable time should be based on the totality of the circumstances in each case.

¶4 In this case, the circuit court did not reach the issue of whether the property had been abandoned. Accordingly, we affirm the court of appeals and remand the cause to the circuit court for such a determination and further proceedings.

I

¶5 In 2007, Countrywide Home Loans loaned $52,000 to Carson. As security for the debt, Carson mortgaged her home on Concordia Avenue in Milwaukee, Wisconsin. After Carson defaulted on her payments, Countrywide and Carson entered an agreement modifying the terms of the loan. Subsequently, Carson again defaulted on the loan payments.

¶6 The Bank, as trustee for Countrywide, filed a complaint against Carson, seeking a judgment of foreclosure and sale of the mortgaged premises. Attempts to serve Carson at the Concordia Avenue property were unsuccessful. In his affidavit, the process server observed that the house appeared to be vacant. On his first visit he reported that the garage had been boarded, that the snow was not shoveled, there were no footprints in it, and there was no furniture in the house. Notes from his successive visits state that the snow was still not shoveled and there were still no footprints around the house.

¶7 Thereafter, the Bank published notice of the foreclosure action in a local newspaper. Carson, who was physically and financially unable to care for the property, did not file an answer or otherwise dispute the foreclosure. In April 2011, BAC Home Loan Servicing, LP, apparently a loan servicer for Countrywide, filed a City of Milwaukee Registration of Abandoned Property in Foreclosure form for the property.[3]

¶8 The circuit court entered a judgment in favor of the Bank. It determined that Carson owed the Bank $81,356.59. After acknowledging that the property was not owner occupied, the court directed that the property “shall be sold at public auction under the direction of the sheriff, at any time after three month(s) from the date of entry of judgment.” The judgment also enjoined both parties from committing waste on the premises and specified that in the event the property is abandoned by the defendants, the Bank “may take all necessary steps to secure and winterize the subject property.”

¶9 After the judgment was entered, the Bank did not take steps to secure the property. It was repeatedly burglarized and vandalized. At one point someone started a fire in the garage. Despite an order from the City of Milwaukee Department of Neighborhood Services to maintain the property, the Bank did not do so. Carson received notices of accumulated trash and debris, as well as notices of overgrown weeds, grass, and trees. The City imposed approximately $1,800 in municipal fines on her and she made payments of approximately $25 per month toward the fines.

¶10 By November 2012, more than 16 months after the judgment of foreclosure was entered, the Bank had not sold the property and had no plans to sell it. Carson filed a motion to amend the judgment to include a finding that the property was abandoned and an order that the sale of the premises be made upon expiration of five weeks from the date of entry of the amended judgment, pursuant to Wis. Stat. § 846.102.[4]

¶11 In support of her motion, Carson referenced the affidavit from the process server indicating that the house appeared vacant. She produced her own affidavit stating that she had terminated her utility accounts, that the property had been vandalized, that the doors and windows on the house had been boarded, and that the garage had been damaged by fire. She also produced the form the loan servicer filed with the City of Milwaukee registering the premises as an abandoned property, violation notices from the City indicating that there was trash and debris on the property, a copy of the complaint record from the City, and a re-inspection fee letter from the City.

¶12 The circuit court denied Carson’s motion. It observed that Wis. Stat. § 846.102 did not specifically grant it authority to order the Bank to sell the property at a specific time. It explained “I can’t find anywhere in the statute [Wis. Stat. § 846.102] that I have the authority to grant the relief that [Carson is] requesting.” The court further noted that the statute contemplates that the redemption period be elected by the mortgagee, not the borrower, and questioned whether a mortgagee could be compelled to execute a judgment when someone else is seeking the order. Accordingly, it stated, “I’m specifically finding that I don’t have the authority . . . so the motion is denied on those grounds.”

¶13 Carson appealed, arguing that under Wis. Stat. § 846.102 the circuit court did have the authority to order sale of the property upon expiration of the redemption period. The court of appeals agreed with Carson. Bank of New York v. Carson, 2013 WI App 153, ¶9, 352 Wis. 2d 205, 841 N.W.2d 573. It determined that “the plain language of the statute directs the court to ensure that an abandoned property is sold without delay, and it logically follows that if a party to a foreclosure moves the court to order a sale, the court may use its contempt authority to do so.” Id., ¶13. Accordingly, it reversed the circuit court and remanded the case. Id., ¶16.

II

¶14 This case presents two issues. First, we are asked to determine whether Wis. Stat. § 846.102 authorizes a circuit court to order a mortgagee to bring a property to sale. Second, we are asked whether a court can require a mortgagee to bring a property to sale at a certain point in time. Both questions require us to determine the scope of authority granted to the circuit court by Wis. Stat. § 846.102. Statutory interpretation is a question of law that we review independently of the determinations rendered by the circuit court and the court of appeals. Bank Mut. v. S.J. Boyer Constr., Inc., 2010 WI 74, ¶21, 326 Wis. 2d 521, 785 N.W.2d 462.

¶15 Our goal in statutory interpretation is to determine what the statute means so that it may be given its full, proper, and intended effect. State ex rel. Kalal v. Circuit Court for Dane Cnty., 2004 WI 58, ¶44, 271 Wis. 2d 633, 681 N.W.2d 110. Interpretation of a statute begins with an examination of the statutory language. Id., ¶45. “Statutory language is given its common, ordinary, and accepted meaning, except that technical or specially-defined words or phrases are given their technical or special definitional meaning.” Id.

¶16 In seeking to give a statute its intended effect, we are cognizant that “[a] statute’s purpose or scope may be readily apparent from its plain language or its relationship to surrounding or closely-related statutes—that is, from its context or the structure of the statute as a coherent whole.” Id., ¶49. Thus, statutory language is interpreted “in the context in which it is used; not in isolation but as part of a whole; in relation to the language of surrounding or closely-related statutes.” Id., ¶46.

¶17 Where the statutory language is ambiguous we turn to extrinsic sources, such as legislative history, to help us discern the meaning of a statute. Id., ¶51. “[A] statute is ambiguous if it is capable of being understood by reasonably well-informed persons in two or more senses.” Id., ¶47 (citations omitted).

III

¶18 We begin with the language of the statute at issue. Wisconsin Stat. § 846.102 governs actions for enforcement of mortgage liens on abandoned properties.[5] Under the statute, if the court makes an affirmative finding that a property has been abandoned, it shall enter a judgment stating that “the sale of such mortgaged premises shall be made upon the expiration of 5 weeks from the date when such judgment is entered.” Wis. Stat. § 846.102(1). It states:

(1) In an action for enforcement of a mortgage lien if the court makes an affirmative finding upon proper evidence being submitted that the mortgaged premises have been abandoned by the mortgagor and assigns, judgment shall be entered as provided in s. 846.10 except that the sale of such mortgaged premises shall be made upon the expiration of 5 weeks from the date when such judgment is entered. Notice of the time and place of sale shall be given under ss. 815.31 and 846.16 and placement of the notice may commence when judgment is entered.

Wis. Stat. § 846.102(1) (emphasis added).

¶19 The statute further permits entities other than the mortgagee to present evidence that a property had been abandoned and describes what type of evidence should be considered:

(2) In addition to the parties to the action to enforce a mortgage lien, a representative of the city, town, village, or county where the mortgaged premises are located may provide testimony or evidence to the court under sub. (1) relating to whether the premises have been abandoned by the mortgagor. In determining whether the mortgaged premises have been abandoned, the court shall consider the totality of the circumstances, including the following:

(a) Boarded, closed, or damaged windows or doors to the premises.

(b) Missing, unhinged, or continuously unlocked doors to the premises.

(c) Terminated utility accounts for the premises.

(d) Accumulation of trash or debris on the premises.

(e) At least 2 reports to law enforcement officials of trespassing, vandalism, or other illegal acts being committed on the premises.

(f) Conditions that make the premises unsafe or unsanitary or that make the premises in imminent danger of becoming unsafe or unsanitary.

Wis. Stat. § 846.102(2).

¶20 The plain language of the statute grants the circuit court the authority to order a bank to sell the property. Indeed, under the statute the court’s judgment must include a requirement that the property be sold. It provides that if the court makes a finding of abandonment then “judgment shall be entered as provided in s. 846.10 except that the sale of such mortgaged premises shall be made upon the expiration of 5 weeks from the date when such judgment is entered.”[6] Wis. Stat. § 846.102(1) (emphasis added).

¶21 Generally, “the word `shall’ is presumed mandatory when it appears in a statute.” Karow v. Milwaukee Cnty. Civil Serv. Comm’n, 82 Wis. 2d 565, 570, 263 N.W.2d 214 (1978); see also Norman J. Singer & J.D. Shambie Singer, 3 Sutherland Statutory Construction § 57:2 (7th ed. 2008) (“`Shall’ is considered presumptively mandatory unless there is something in the context or the character of the legislation which requires it to be looked at differently.”). We have previously interpreted “shall” as mandatory when used in Wis. Stat. ch. 846. GMAC Mortgage Corp. v. Gisvold, 215 Wis. 2d 459, 478, 572 N.W.2d 466 (1998).


¶22 We acknowledge, however, that although the word “shall” suggests that a statutory provision is mandatory, the legislature’s use of the word “shall” is not governed by a per se rule. See State v. R.R.E., 162 Wis. 2d 698, 707, 470 N.W.2d 283 (1991). This court has previously explained that “`[s]hall’ will be construed as directory if necessary to carry out the intent of the legislature.” Id.; see also State ex rel. Marberry v. Macht, 2003 WI 79, ¶15, 262 Wis. 2d 720, 665 N.W.2d 155 (court considers legislative intent in determining whether a statutory provision is mandatory or directory); State v. Thomas, 2000 WI App 162, ¶9, 238 Wis. 2d 216, 617 N.W.2d 230 (noting that factors to consider in determining whether a statute is mandatory include “the statute’s nature, the legislative objective for the statute, and the potential consequences to the parties, such as injuries or wrongs.”).

¶23 The context in which “shall” is used in Wis. Stat. § 846.102(1) indicates that the legislature intended it to be mandatory. First, when the legislature uses the terms “shall” and “may” in the same statutory section, it supports a mandatory reading of the term “shall” as the legislature is presumed to be aware of the distinct meanings of the words. GMAC Mortgage Corp., 215 Wis. 2d at 478; Karow, 82 Wis. 2d at 571; Singer 7 Singer, Sutherland Statutory Construction § 57:3. In Wis. Stat. § 846.102(1) the legislature used both “shall” and “may” indicating its intent that the words have different meanings.

¶24 Second, a comparison with the neighboring statutes also suggests that the term “shall” in Wis. Stat. § 846.102 was intended to be mandatory. The statutes on both sides of Wis. Stat. § 846.102 address mortgage foreclosures in other circumstances. Wisconsin Stat. § 846.101 addresses foreclosures on 20-acre properties.[7] Wisconsin Stat. § 846.103 addresses foreclosures on commercial properties and multifamily residences.[8] Under both statutes it is up to the mortgagee to elect whether to seek a foreclosure judgment. See Wis. Stat. § 846.101 (court enters judgment if mortgagee waives judgment of deficiency and permits the mortgagor to remain in possession of the property until it is sold); Wis. Stat. § 846.103 (same). In contrast to these neighboring statutes, Wis. Stat. § 846.102 does not require action by the mortgagee after it has initiated a foreclosure proceeding. It specifically permits entities other than the mortgagee to appear and submit evidence of abandonment. Wis. Stat. § 846.102(2). As the court of appeals stated, once a mortgagee has filed a foreclosure action, the focus of the proceeding is on the condition of the property, not the mortgagee’s preference. Bank of New York, 352 Wis. 2d 205, ¶12.

¶25 The Bank contends that the court of appeals’ interpretation of Wis. Stat. § 846.103 in Arch Bay Holdings LLC-Series 2008B v. Matson, No. 2013AP744, unpublished slip op. (Wis. Ct. App. Mar. 18, 2014), and Deutsche Bank Nat. Trust Co. v. Matson, No. 2012AP1981, unpublished slip op. (Wis. Ct. App. July 30, 2013), is dispositive on the issue of whether the court can require a mortgagee to sell an abandoned property. In Deutsche Bank, the court of appeals determined that the language in Wis. Stat. § 846.103 permitted the mortgagee to sell the property once the statutory prerequisites were met, but did not require it. No. 2012AP1981, ¶20. In Arch Bay, the court reached the same conclusion when interpreting a judgment containing the same language as the statute. No. 2013AP744, ¶17.

¶26 The Bank maintains that because the court of appeals determined that the language of Wis. Stat. § 846.103 was not mandatory, the same construction should be applied to Wis. Stat. § 846.102. However, as discussed above, Wis. Stat. § 846.103 and Wis. Stat. § 846.102 are significantly different statutes.[9] See supra ¶20. Further, Arch Bay and Deutsche Bank are unpublished and have no precedential authority. Wis. Stat. § 809.23(3)(b). Although they may be cited as persuasive authority, given the above discussion, they do not persuade us that the language in Wis. Stat. § 846.102 is permissive.

¶27 Considering the statute’s clear language and its context, the Bank’s argument that it cannot be required to sell a property under Wis. Stat. § 846.102 is unpersuasive. Wisconsin Stat. § 846.102 mandates that the court order a sale of the mortgaged premises if certain conditions are met. Those conditions do not depend on action by the mortgagee alone and are not dependent on its acquiescence or consent.

IV

¶28 Having determined that Wis. Stat. § 846.102 authorizes a court to order a mortgagee to bring a property to sale, we turn to consider whether a court can also require a mortgagee to bring a property to sale at a certain point in time.


¶29 Again, we begin with the words of the statute. It provides that “the sale of such mortgaged premises shall be made upon the expiration of 5 weeks from the date when such judgment [of foreclosure] is entered.” Wis. Stat. § 846.102(1). This language is indicative of the time frame a court must impose for the sale: “upon expiration of 5 weeks.”

¶30 The Bank asserts that even if Wis. Stat. § 846.102 mandates that the circuit court order a sale of the property after the redemption period, it provides no time limit for the sale. Absent any specific timeline, the Bank contends that it has five years to execute its judgment under Wis. Stat. § 815.04.[10]

¶31 We decline to adopt the Bank’s argument. We acknowledge that the word “upon” in Wis. Stat. § 846.102 is ambiguous as “upon expiration of 5 weeks from the date when such judgment is entered” could be read to mean any time after the five weeks but before the five years. It could also be interpreted to mean immediately upon expiration of five weeks or something in between. In discerning the answer to our inquiry, we examine here the context of the statute, its legislative history, and the purpose of the statute.

¶32 When considered in light of its neighboring statutes, the context of Wis. Stat. § 846.102 suggests that the legislature intended a prompt sale. Wisconsin Stat. § 846.101, addressing 20-acre properties, provides that if the mortgagee waives judgment of deficiency and permits the mortgagor to remain in the property until it is sold, the court shall enter a judgment that the property be sold after the expiration of six months from the date of the judgment. Wisconsin Stat. § 846.103, addressing foreclosures of commercial properties and multifamily residences, provides that the mortgagee waives judgment of deficiency and permits the mortgagor to remain in the property until it is sold, the court shall enter a judgment that the property be sold after the expiration of three months from the date of the judgment. Wis. Stat. § 846.103(2).

¶33 The statute at issue in this case, Wis. Stat. § 846.102, prompts faster sales with fewer requirements for abandoned premises than its neighboring statutes. It provides that upon finding abandonment, the court shall enter a judgment that the premises shall be sold after the expiration of five weeks. Wis. Stat. § 846.102(1). Unlike its neighboring statutes, Wis. Stat. § 846.102 does not contain the requirements that the mortgagee waive deficiency judgment and permit the mortgagor to remain on the premises in order for the court to order a sale. When viewed in light of its neighboring statutes, the loosened requirements in Wis. Stat. § 846.102 evince an intent to ensure a prompt sale of the property.

¶34 The contrary statutory intent asserted by the Bank is unconvincing. Referencing the redemption periods in Wis. Stat. §§ 846.101, 846.102 and 846.103, the Bank contends that the purpose behind the statute is to create delay so that defaulted borrowers will have one last chance to retain their properties. However, the Bank’s assertion ignores the differences between Wis. Stat. § 846.102 and those neighboring statutes. Wisconsin Stat. § 846.102 addresses properties that have been abandoned, properties which borrowers no longer have an interest in retaining. Thus, the policy concern of creating a delay does not appear to be implicated.

¶35 The legislative intent for a prompt sale is also supported by the legislative history of Wis. Stat. § 846.102. In 2011, Wis. Stat. § 846.102 was amended to shorten the redemption period for abandoned properties from two months to five weeks, to add subsection (2) permitting the city, town, village, or county to provide testimony or evidence of abandonment, and to indicate what sort of evidence of abandonment a court should consider. 2011 WI Act 136, §§ 1r, 2 (enacted Mar. 21, 2012). The Act was introduced as 2011 Senate Bill 307 with bipartisan support. Four individuals spoke at the public hearing on the bill: its sponsor, a representative of the City of Milwaukee, a representative of Legal Action of Wisconsin, and a representative of the Wisconsin Bankers Association. 2011 Senate Bill 307, Hearing before the Senate Committee on Financial Institutions and Rural Issues, 2011 Regular Session, Nov. 30, 2011. Each individual referenced that the bill’s intent was to help municipalities deal with abandoned properties in a timely manner.[11]

¶36 Two of the speakers explained that abandoned properties were a significant problem in Milwaukee. Such properties increase the crime rate and have a destabilizing impact on neighborhoods. This testimony echoes researchers’ findings that home abandonment leads to blight:

Abandoned homes substantially decrease the value of neighboring properties, which in turn lowers the tax revenue cities can collect to help alleviate the blight caused by abandonment. Moreover, abandoned homes become public nuisances, such as fire hazards, that can endanger the community.

Creola Johnson, Fight Blight: Cities Sue to Hold Lenders Responsible for the Rise in Foreclosures and Abandoned Properties, 2008 Utah L. Rev. 1169, 1171.[12]

¶37 Interpreting Wis. Stat. § 846.102 as permitting sale at any time within five years after judgment is entered would exacerbate the problem that the statute was meant to ameliorate. Such an interpretation would allow mortgagees to initiate foreclosures, but fail to bring the properties to sale for an extended period of time, leaving the properties in legal limbo.[13]

¶38 Multiple studies have remarked upon the negative impact of such a scenario. For example, a study by the Government Accountability Office determined that abandoned foreclosures create unsightly and dangerous properties that contribute to neighborhood decline. GAO, Mortgage Foreclosures: Additional Mortgage Servicer Actions Could Help Reduce the Frequency and Impact of Abandoned Foreclosures, GAO-11-93 at 29 (Nov. 2010). “[A]s a result of vandalism, exposure, and neglect, vacant properties can become worthless. . . . abandoned foreclosures that remain vacant for extended periods pose significant health, safety, and welfare issues at the local level.” Id. at 31.

¶39 Another study has observed that “[t]he result of these abandoned foreclosures has been devastating to cities and consumers throughout the country.” Judith Fox, The Foreclosure Echo: How Abandoned Foreclosures are Reentering the Market through Debt Buyers, 26 Loy. Consumer L. Rev. 25, 29-30 (2013). “With no threat of citation for nuisance violations, and thus little incentive to maintain the premises, many lenders very well may allow the properties they control to deteriorate.” Kristin M. Pinkston, In the Weeds: Homeowners Falling Behind on their Mortgages, Lenders Playing the Foreclosure Game, and Cities Left Paying the Price, 34 S. Ill. U.L.J. 621, 633 (2009). Failing to interpret Wis. Stat. § 846.102 as enabling a court to require a prompt sale would inhibit its use as a tool to address abandoned properties.

¶40 Because its context and the legislative history of Wis. Stat. § 846.102 clearly indicate that the statute was intended to help municipalities deal with abandoned properties in a timely manner, we decline to interpret it so as to permit properties to languish abandoned for five years. Cf. Waller v. Am. Transmission Co., 2013 WI 77, ¶108, 350 Wis. 2d 242, 833 N.W.2d 764 (construing statute in a manner to further the statutory purpose); Bank Mut., 326 Wis. 2d 521, ¶¶71-76 (interpreting Wis. Stat. § 846.103 in a manner consistent with the statute’s goals).

¶41 In order to give effect to the statute’s purpose, we interpret the requirement in Wis. Stat. § 846.102 that a court order an abandoned property to be brought to sale after the five week redemption period as a requirement that the court order the property to be brought to sale within a reasonable time after the redemption period. Admittedly, what is considered a reasonable time will vary with the circumstances of each case. The circuit court is in the best position to consider arguments and evidence on this issue. Thus, we leave it to the circuit court’s discretion to determine, after considering the totality of the circumstances, what a reasonable period of time may be for each case, in light of the statute’s purpose.

V

¶42 In this case, the circuit court did not determine whether the property on Concordia Avenue was abandoned. Rather, it denied Carson’s motion after concluding that it did not have the authority to order the mortgagee to bring the property to sale as requested by Carson. Given that we have concluded that the circuit court does have such authority, a finding as to whether the property has been abandoned is needed here. Absent a finding of abandonment, sale of the property cannot be ordered under Wis. Stat. § 846.102.

¶43 Accordingly, we remand the case to the circuit court to determine whether the Concordia property has been abandoned. If the court finds that the property has been abandoned, it shall consider the totality of the circumstances and, consistent with the statutory purpose, enter an order stating the reasonable time after the redemption period in which the mortgagee must bring the property to sale.

VI

¶44 In sum, based on the statute’s plain language and context we conclude that when the court determines that the property is abandoned, Wis. Stat. § 846.102 authorizes the circuit court to order a mortgagee to bring a mortgaged property to sale after the redemption period.

¶45 We further conclude, consistent with the purpose of the statute, that the circuit court shall order the property to be brought to sale within a reasonable time after the redemption period. The circuit court’s determination of what constitutes a reasonable time should be based on the totality of the circumstances in each case.

¶46 In this case, the circuit court did not reach the issue of whether the property had been abandoned. Accordingly, we affirm the court of appeals and remand the case to the circuit court for such a determination and further proceedings.

By the Court.—The decision of the court of appeals is affirmed and the cause is remanded to the circuit court.

¶47 DAVID T. PROSSER, J. (concurring).

I agree with the majority’s decision to affirm the court of appeals. I do not agree with the majority’s reasoning in support of this decision. In my view, the owner of real property may seek a judicial sale of the property when the owner’s authority to sell is impeded or otherwise in doubt. Wis. Stat. § 840.03(1)(g). However, the ultimate availability of this judicial “remedy” is dependent upon the equities involved, including recognition of the “interests in real property” of others. Wis. Stat. § 840.01. For the reasons stated below, I respectfully concur.

I

¶48 The majority opinion is preoccupied with an interpretation of Wis. Stat. § 846.102, which is part of the chapter on Real Estate Foreclosure. Chapter 846 is a detailed and vitally important chapter of the Wisconsin Statutes. Section 846.102, entitled “Abandoned premises,” is a significant provision within the chapter. A mistaken interpretation of this section is likely to have profound ramifications on real estate financing in Wisconsin.

¶49 The early sections of Chapter 846 set out foreclosure procedure in a variety of situations. Before examining these sections, I believe it is useful to reiterate several fundamental principles.

¶50 A mortgage has been defined as “any agreement or arrangement in which property is used as security.” Wis. Stat. § 851.15. “Wisconsin is a lien-theory state with regard to mortgages. A mortgage creates a lien on real property but does not convey title to the property to the mortgagee (lender).” Lawrence Sager, Wisconsin Real Estate Practice & Law 137 (11th ed. 2004).

¶51 In simple terms, a “mortgage conveys an interest in the real estate to the lender as security for the debt, while the mortgage note is a promise to repay the debt. Mortgages are the most common form of loan instruments in Wisconsin.” Id.

¶52 The foreclosure provisions of Chapter 846 are invoked by mortgagees (lenders) when a mortgagor (borrower) fails to repay a debt. The law provides protections for the mortgagor, so that a mortgagee cannot move too quickly against the mortgagor, and the mortgagor has a period to redeem the property after foreclosure.

¶53 As a practical matter, a mortgagee invokes the foreclosure provisions of Chapter 846 when its loan is not being repaid. However, foreclosure does not transfer ownership of the property to the mortgagee. Thus, the mortgagee does not control the mortgaged property after foreclosure, and it may end up receiving no payment on its loan until the property is sold and the sale is confirmed. As a result, the mortgagee normally has a strong incentive for a prompt sale after foreclosure.

¶54 The mortgagee is usually entitled to a deficiency judgment against the mortgagor in the event that sale of the property does not satisfy the debt. In truth, however, many mortgagors do not have the wherewithal to satisfy a deficiency judgment. This is one reason why the mortgagee may waive its right to a deficiency judgment in order to speed up sale of the property. There is no reason for the mortgagee to delay sale of the property unless there is a rational economic reason to do so.

¶55 Wisconsin Stat. § 846.10 is the basic foreclosure statute. It reads in part:

(1) If the plaintiff recovers the judgment shall describe the mortgaged premises and fix the amount of the mortgage debt then due and also the amount of each installment thereafter to become due, and the time when it will become due, and whether the mortgaged premises can be sold in parcels and whether any part thereof is a homestead, and shall adjudge that the mortgaged premises be sold for the payment of the amount then due and of all installments which shall become due before the sale, or so much thereof as may be sold separately without material injury to the parties interested, and be sufficient to pay such principal, interest and costs; and when demanded in the complaint, direct that judgment shall be rendered for any deficiency against the parties personally liable and, if the sale is to be by referee, the referee must be named therein.

Wis. Stat. § 846.10(1).

¶56 Subsection (2) then reads:

(2) . . . No sale involving a one- to 4-family residence that is owner-occupied at the commencement of the foreclosure action . . . may be held until the expiration of 12 months from the date when judgment is entered, except a sale under s. 846.101 or 846.102. . . . In all cases the parties may, by stipulation, filed with the clerk, consent to an earlier sale.

Wis. Stat. § 846.10(2).

¶57 Section 846.101 deals with foreclosure sales (primarily of residential property under 20 acres) in which the mortgagor has agreed to a shorter period of time for sale and redemption (six months) and the “plaintiff” (mortgagee) has elected in its complaint to waive its right to a deficiency judgment against the mortgagor.

¶58 Section 846.102 permits an even shorter period between foreclosure and sale (five weeks) when the court finds that the mortgagor has abandoned the property—that is, “relinquishment of possession or control of the premises whether or not the mortgagor or the mortgagor’s assigns have relinquished equity and title.” Wis. Stat. § 846.102(1).

¶59 Section 846.103 relates to “Foreclosures of commercial properties and multifamily residences.”

¶60 The mortgagee is the “plaintiff” under these four sections. The mortgagor does not need to sue the mortgagee because the mortgagor may stipulate to a sale without initiating litigation. Wis. Stat. § 846.10(2).

¶61 That the mortgagee is the “plaintiff” under Wis. Stat. § 846.102 is clear from the opening phrase of the section: “In an action for enforcement of a mortgage lien. . . .” The mortgagee has the “mortgage lien” on mortgaged property as well as standing to enforce the lien; the mortgagor does not have either. Moreover, although § 846.102 does not use the word “plaintiff,” as surrounding §§ 846.10, 846.101, and 846.103 do, § 846.102 refers back to § 846.10: “judgment shall be entered as provided in s. 846.10. . . .”

¶62 Any notion that a municipality could bring an action under § 846.102 is belied by the language in subsection (2), which limits the role of “a representative” of a municipality to providing testimony or evidence of abandonment.[1]

II

¶63 In this case, the Bank of New York brought suit against Shirley Carson under Wis. Stat. § 846.101. The Bank waived its right to a deficiency judgment. The complaint, filed January 25, 2011, reads in part:

6. The mortgagors expressly agreed to the reduced redemption period provisions contained in Chapter 846 of the Wisconsin Statutes; the plaintiff hereby elects to proceed under section 846.101 with a six month period of redemption, thereby waiving judgment for any deficiency against every party who is personally liable for the debt, and to consent that the owner, unless he or she abandons the property, may remain in possession and be entitled to all rents and profits therefrom to the date of confirmation of the sale by the court.

¶64 The Milwaukee County Circuit Court, Mel Flanagan, Judge, entered a default judgment (Findings of Fact, Conclusions of Law and Judgment) on June 13, 2011. The court found that “the mortgaged premises . . . shall be sold at public auction under the direction of the sheriff, at any time after three month(s) from the date of entry of judgment.” (Emphasis added.) The court also found “THAT NO DEFICIENCY JUDGMENT MAY BE OBTAINED AGAINST ANY DEFENDANT.” The court determined that the mortgagor’s indebtedness totaled $81,356.59.

¶65 The mortgagor made no effort to redeem the property. In fact, she abandoned the property, according to an affidavit she filed with the court on November 6, 2012.


¶66 On the same date, the mortgagor filed a motion in the original foreclosure case. The mortgagor brought the motion under Wis. Stat. §§ 806.07(g) & (h) and 846.102. The motion sought to reopen the foreclosure judgment pursuant to Wis. Stat. § 806.07 and to compel the Bank to sell the mortgaged property “upon the expiration of 5 weeks from the date of entry of the amended judgment” under Wis. Stat. § 846.102.

¶67 As the majority opinion notes, the Milwaukee County Circuit Court, Jane Carroll, Judge, denied the motion. The court “observed that Wis. Stat. § 846.102 did not specifically grant it authority to order the Bank to sell the property at a specific time.” Majority op., ¶12.

It explained “I can’t find anywhere in the statute [Wis. Stat. § 846.102] that I have the authority to grant the relief that [Carson is] requesting.” The court further noted that the statute contemplates that the redemption period be elected by the mortgagee, not the borrower, and questioned whether a mortgagee could be compelled to execute a judgment when someone else is seeking the order. Accordingly, it stated, “I’m specifically finding that I don’t have the authority . . . so the motion is denied on those grounds.”

Id.

¶68 The court of appeals reversed. Bank of New York v. Carson, 2013 WI App 153, 352 Wis. 2d 205, 841 N.W.2d 573. The court of appeals criticized the Bank (mortgagee) for not maintaining the property. Id., ¶5. More important, the court of appeals concluded that a mortgagor could rely on Wis. Stat. § 846.102 to compel a sale of the mortgagor’s property:

We . . . conclude that the trial court erred as a matter of law when it concluded that only the Bank could elect the five-week abandonment period provided in the statute. The trial court could have . . . decided to amend the judgment to a foreclosure of an abandoned property as described by § 846.102.

Id., ¶12. The court of appeals added:

The statutory language also makes clear that the trial court did have the power to order the Bank to sell the property upon the expiration of the redemption period. . . . We conclude that the plain language of the statute directs the court to ensure that an abandoned property is sold without delay, and it logically follows that if a party to a foreclosure moves the court to order a sale, the court may use its contempt authority to do so.

Id., ¶13.

¶69 The majority affirms the court of appeals without disavowing these pronouncements. On the contrary, the majority adopts the method of statutory interpretation used by the court of appeals, see majority op., ¶¶18, 20, 21, 23, 24, to reach the following conclusions:

(1) “The plain language of [Wis. Stat. § 846.102] grants the circuit court the authority to order a bank to sell the property.” Id., ¶20. “[I]f the court makes a finding of abandonment then `judgment shall be entered as provided in s. 846.10 except that the sale of such mortgaged premises shall be made upon the expiration of 5 weeks from the date when such judgment is entered.’ Wis. Stat. § 846.102(1) (emphasis added).” Id. (footnote omitted).

(2) “The context in which `shall’ is used in Wis. Stat. § 846.102(1) indicates that the legislature intended it to be mandatory.” Id., ¶23.

(3) “Wis. Stat. § 846.102 does not require action by the mortgagee after it has initiated a foreclosure proceeding. . . . As the court of appeals stated, . . . the focus of the proceeding is on the condition of the property, not the mortgagee’s preference.” Id., ¶24.

(4) “Considering the statute’s clear language and its context, the Bank’s argument that it cannot be required to sell a property under Wis. Stat. § 846.102 is unpersuasive. Wisconsin Stat. § 846.102 mandates that the court order a sale of the mortgaged premises if certain conditions are met. Those conditions do not depend on action by the mortgagee alone and are not dependent on its acquiescence or consent.” Id., ¶27.

(5) “[W]e turn to consider whether a court can also require a mortgagee to bring a property to sale at a certain point in time.” Id., ¶28. “[W]e begin with the words of the statute. . . . This language is indicative of the time frame a court must impose for the sale: `upon expiration of 5 weeks.’” Id., ¶29.

(6) “[T]he context of Wis. Stat. § 846.102 suggests that the legislature intended a prompt sale.” Id., ¶32. “The legislative intent for a prompt sale is . . . supported by the legislative history. . . .” Id., ¶35.

¶70 I acknowledge that the majority opinion softens its holdings by requiring a court acting under Wis. Stat. § 846.102 to order mortgaged property to be “brought to sale within a reasonable time after the redemption period.” Id., ¶41. But this statement is inconsistent with the majority’s overall interpretation of the statute.

III

¶71 The majority opinion radically revises the law on mortgage foreclosure. Under Wisconsin law, a lending institution like the Bank of New York does not own the property upon which it holds a mortgage as security for a debt. The mortgagee’s obvious goal is to be repaid on its loan, with interest for the use of its money. When this goal becomes infeasible, the mortgagee prudently seeks to minimize its loss. Sometimes the mortgagee delays the sale of foreclosed property in the expectation that the circumstances for sale will improve. The majority opinion substantially impairs the mortgagee’s ability to minimize or mitigate a loss.

¶72 The opinion shifts to the circuit court the authority to set the date for sale of abandoned property. It gives the court authority to disregard the preferences of the mortgagee as to the timing of the sale when the mortgagee files for foreclosure under Wis. Stat. §§ 846.10, 846.101, or 846.102.

¶73 Because of this loss in flexibility, mortgagees are likely to act to protect their interests. For instance, the costs of borrowing money to finance residential real estate transactions are likely to go up, and some potential borrowers will be denied loans altogether.

¶74 Under the new regime, thousands of foreclosed properties statewide may have to be scheduled for sale within a few months of this decision because they have already been held by mortgagees without sale for an “unreasonable” period after foreclosure.

¶75 These consequences are not discussed by a majority that is a bit too eager to depict mortgage lenders as the source of the problem.

¶76 Knowing what they face if they file for foreclosure when the timing is not propitious, many mortgagees may choose not to file foreclosure actions. If mortgagees forego filing, leverage will transfer from mortgagees to non-paying mortgagors.

¶77 Still, some mortgagors may wish to extricate themselves from their continuing ownership responsibilities.

¶78 The majority attempts to preclude a mortgagor from becoming a plaintiff under Wis. Stat. § 846.102, majority op.,


¶18 n.5, by suggesting that only a mortgagee may initiate an action under Chapter 846. This is a correct interpretation of the chapter. However, it does not account for Wis. Stat. § 840.03.

¶79 Wisconsin Stat. § 840.01(1) defines the term “interest in real property.”[2] The definition implicates those who own or hold title to land (like Shirley Carson) and those with “security interests and liens on land” (like the Bank of New York).

¶80 Wisconsin Stat. § 840.03 then provides: Real property remedies. (1) Any person having an interest in real property may bring an action relating to that interest, in which the person may demand the following remedies singly, or in any combination, or in combination with other remedies not listed, unless the use of a remedy is denied in a specified situation:

(a) Declaration of interest.

(b) Extinguishment or foreclosure of interest of another.

(c) Partition of interest.

(d) Enforcement of interest.

(e) Judicial rescission of contract.

(f) Specific performance of contract or covenant.

(g) Judicial sale of property and allocation of proceeds.

(h) Restitution.

(i) Judicial conveyance of interest.

(j) Possession.

(k) Immediate physical possession.

(l) Restraint of another’s use of, or activities on, or encroachment upon land in which plaintiff has an interest.

(m) Restraint of another’s use of, activities on, or disposition of land in which plaintiff has no interest; but the use, activity or disposition affect plaintiff’s interest.

(n) Restraint of interference with rights in, on or to land.

(o) Damages.

(2) The indication of the form and kind of judgment in a chapter dealing with a particular remedy shall not limit the availability of any other remedies appropriate to a particular situation.

(Emphasis added.)

¶81 Section 840.03 includes in its listed remedies “Judicial sale of property” and “Judicial conveyance of interest.” Mortgagors may seek to secure one of these remedies to escape the responsibilities of ownership.

¶82 As I read the statute, the owner of property may “bring an action” for a judicial sale or a judicial conveyance of interest. Although a mortgagor may not be able to serve as plaintiff in a foreclosure action under any of the foreclosure statutes, e.g., Wis. Stat. §§ 846.10, 846.101, 846.102, and 846.103, the mortgagor may be able to invoke the new principles this court has discovered in Wis. Stat. § 846.102 when it “brings an action” for judicial sale or conveyance of interest under Wis. Stat. § 840.03(1).

¶83 Wisconsin Stat. § 840.03(1) has been part of Wisconsin law for 40 years. See § 16, Chapter 189, Laws of 1973 (creating Wis. Stat. § 840.03(1) (1974)). It has been interpreted as creating substantive rights. SJ Props. Suites v. Specialty Fin. Grp., LLC, 864 F. Supp. 2d 776 (E.D. Wis. 2012). Nonetheless, a mortgagor seeking the sale of his or her property or the conveyance of his or her property under Wis. Stat. § 840.03(1) would heretofore have been required to show that the mortgagor was entitled equitably to this remedy, inasmuch as it is clear that a defaulting mortgagor does not have the same powers and prerogatives as a mortgagee under Wis. Stat. § 846.102.

¶84 “An action to foreclose a mortgage is equitable in nature.” Wis. Brick & Block Corp. v. Vogel, 54 Wis. 2d 321, 327, 195 N.W.2d 664 (1972) (citing Frick v. Howard, 23 Wis. 2d 86, 96, 126 N.W.2d 619 (1964)); see also Harbor Credit Union v. Samp, 2011 WI App 40, ¶19, 332 Wis. 2d 214, 796 N.W.2d 813; JP Morgan Chase Bank, NA v. Green, 2008 WI App 78, ¶11, 311 Wis. 2d 715, 753 N.W.2d 536; First Fin. Sav. Ass’n v. Spranger, 156 Wis. 2d 440, 444, 456 N.W.2d 897 (Ct. App. 1990). This equity prevails throughout the proceedings. GMAC Mortg. Corp. v. Gisvold, 215 Wis. 2d 459, 480, 572 N.W.2d 466 (1998). The court’s discretion should be exercised so that “no injustice shall be done to any of the parties.” Strong v. Catton, 1 Wis. 408, 424 (1853).

¶85 Considering equity, a mortgagee may want to delay the sale of mortgaged property that has been abandoned for legitimate economic reasons. Admittedly, the mortgagee might be forced to recognize that such a delay will constitute a burden on the mortgagor in terms of maintenance and taxes. Consequently, it is not inherently unreasonable for a mortgagor to seek relief from such a burden, inasmuch as it is unrealistic to expect that a mortgagor will properly maintain and pay the taxes on property it has abandoned. At the same time, however, if the mortgagee is expected to assume responsibility for abandoned property, the mortgagee must be given reasonable options, even if unpalatable, rather than be forced into an unwanted sale without the protection of the equitable principles upon which mortgage foreclosures rest.

¶86 The majority opinion alters these principles by its interpretation of Wis. Stat. § 846.102. It forces prompt public sales despite the objection of the mortgagee. This interpretation of Wis. Stat. § 846.102 does not comport with the statute’s language or its legislative history and will often be inequitable to the mortgagee. Even a mortgagee that conscientiously maintains abandoned property may be forced to sell it quickly at the direction of the court.

¶87 I agree that the mortgagor here is entitled to seek the statutorily recognized remedy of “sale,” but only as provided under Wis. Stat. § 840.03(1)(g), prior to the court’s mistaken interpretation of Wis. Stat. § 846.102. For the reasons set forth, I respectfully concur.

¶88 I am authorized to state that Justice ANNETTE KINGSLAND ZIEGLER and Justice MICHAEL J. GABLEMAN join this concurrence.

[1] Bank of New York v. Carson, 2013 WI App 153, 352 Wis. 2d 205, 841 N.W.2d 573 (reversing judgment of the circuit court for Milwaukee County, Jane V. Carroll, judge).

[2] All subsequent references to the Wisconsin Statutes are to the 2011-12 version unless otherwise indicated.

[3] “Loan servicers are the entities that collect payments for mortgages, provide billing and tax payments to the homeowners, and have sole control over the modification of a loan.” Andrew Peace, Coming Up for Air: The Constitutionality of Using Eminent Domain to Condemn Underwater Mortgages, 54 B.C. L. Rev. 2167, 2178 n.82 (2013).

[4] Wisconsin Stat. § 846.102(1) states:

In an action for enforcement of a mortgage lien if the court makes an affirmative finding upon proper evidence being submitted that the mortgaged premises have been abandoned by the mortgagor and assigns, judgment shall be entered as provided in s. 846.10 except that the sale of such mortgaged premises shall be made upon the expiration of 5 weeks from the date when such judgment is entered.

[5] The language of the statute and its placement within chapter 846 indicate that it governs only foreclosure actions initiated by mortgagees.


[6] Wisconsin Stat. § 846.10 states, in relevant part:

(1) If the plaintiff recovers the judgment shall describe the mortgaged premises and fix the amount of the mortgage debt then due and also the amount of each installment thereafter to become due, and the time when it will become due, . . . and shall adjudge that the mortgaged premises be sold for the payment of the amount then due . . . and when demanded in the complaint, direct that judgment shall be rendered for any deficiency against the parties personally liable. . . . (2)

[7] Wisconsin Stat. § 846.101 states:

(1) If the mortgagor has agreed . . . to the provisions of this section, and the foreclosure action involves a one- to 4-family residence that is owner-occupied at the commencement of the action . . . the plaintiff in a foreclosure action of a mortgage on real estate of 20 acres or less . . . may elect . . . to waive judgment for any deficiency which may remain due to the plaintiff after sale of the mortgaged premises . . . and to consent that the mortgagor, unless he or she abandons the property, may remain in possession of the mortgaged property and be entitled to all rents, issues and profits therefrom to the date of confirmation of the sale by the court.

(2) When plaintiff so elects, judgment shall be entered as provided in this chapter, except that . . . the sale of such mortgaged premises shall be made upon the expiration of 6 months from the date when such judgment is entered.

[8] Wisconsin Stat. § 846.103 provides:

(1) No foreclosure sale involving real property other than a one- to 4-family residence that is owner-occupied at the commencement of the foreclosure action. . . may be held until the expiration of 6 months from the date when judgment is entered except a sale under sub. (2). . . .

(2) If the mortgagor of real property other than a one- to 4-family residence that is owner-occupied at the commencement of the foreclosure action . . . has agreed . . . to the provisions of this section, the plaintiff in a foreclosure action of a mortgage. . . may elect by express allegation in the complaint to waive judgment for any deficiency which may remain due to the plaintiff after sale of the mortgaged premises . . . and to consent that the mortgagor, unless he or she abandons the property, may remain in possession of the mortgaged property and be entitled to all rents, issues and profits therefrom to the date of confirmation of the sale by the court. When the plaintiff so elects, judgment shall be entered as provided in this chapter, except that . . . the sale of the mortgaged premises shall be made upon the expiration of 3 months from the date when such judgment is entered.

[9] We decline to interpret the similar sale language in Wis. Stat. §§ 846.101 and 846.103 as it is not at issue in this case.

[10] Wisconsin Stat. § 815.04(1)(a) provides:

Upon any judgment of a court of record perfected as specified in s. 806.06 or any judgment of any other court entered in the judgment and lien docket of a court of record, execution may issue at any time within 5 years after the rendition of the judgment. When an execution has been issued and returned unsatisfied in whole or in part other executions may issue at any time upon application of the judgment creditor.

[11] The hearing can be viewed online at: http://www.wiseye.org/Programming/VideoArchive/ArchiveList.aspx? cm=152.

[12] The City of Milwaukee submitted an amicus brief detailing the scope of the City’s abandoned property problem. It noted that there are currently 4,900 vacant buildings in the City. According to the City’s records, approximately 400 of those 4,900 properties are currently in some stage of mortgage foreclosure.

Abandoned properties in Milwaukee are a magnet for crime and create unsafe conditions. The City explained that since 2011, its police department has responded to at least 2,025 burglaries, 93 aggravated assaults, 84 robberies, 44 sexual assaults, 36 sudden deaths, and 7 homicides at vacant buildings. Further, the City’s fire department reported a 163% increase in the number of fires occurring in vacant residential buildings between 2005 and 2012.

[13] Various terms are used to describe this situation, including: “abandoned foreclosure,” “bank walkaway,” “zombie title/property,” and “limbo loan.” See Judith Fox, The Foreclosure Echo: How Abandoned Foreclosures are Reentering the Market Through Debt Buyers, 26 Loy. Consumer L. Rev. 25, 31 (2013).

[1] The principal author of the bill creating subsection (2) of Wis. Stat. § 846.102, Senator Glenn Grothman, explained that the purpose of the legislation was to shorten the redemption period in abandonment cases from two months to five weeks and to permit municipalities to present evidence of abandonment. He testified: “The effects of this bipartisan bill will be modest, but they are an attempt to better balance the needs of municipalities and responsible homeowners while still protecting the rights of property owners who may have fallen on hard times.” Legislative Council File for 2011 S.B. 307, Letter from Sen. Glenn Grothman to Members of the Assembly Committee on Financial Institutions (Feb. 1, 2012), available at http://legis.wisconsin.gov/lc/comtmats/old/11files/sb0307_201112 01084222.pdf.

[2] Wisconsin Stat. § 840.01(1) reads:

(1) Except as provided in sub. (2), “interest in real property” includes estates in, powers under ch. 702 over, present and future rights to, title to, and interests in real property, including, without limitation by enumeration, security interests and liens on land, easements, profits, rights of appointees under powers, rights under covenants running with the land, powers of termination and homestead rights. The interest may be an interest that was formerly designated legal or equitable. The interest may be surface, subsurface, suprasurface, riparian or littoral.

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The Foreclosure Crisis is Behind Us? Where?  Who says?

The Foreclosure Crisis is Behind Us? Where? Who says?

Absolutely, the the same thoughts as I read that foreclosures are now a thing of the past.


Mandelman Matters-

This won’t take long. It’s not like I want to write about this topic. It’s just that I feel obligated to say something here, because if you’re reading the mainstream news… or the lack of mainstream news… it could seem that the foreclosure crisis is now behind us… AND IT’S NOT.

In fact, I can tell you that it’s not even close.

Maybe the mainstream media has simply gotten tired of the topic. And it’s not like they’ve ever had a particularly good handle on what’s going on in real life when it come to foreclosures in general. So, perhaps I shouldn’t be surprised at the latest coverage, or lack thereof.

But I am surprised.

As recently as September of last year, RealtyTrac has been reporting that the crisis is “well behind us.” In its U.S. Foreclosure Market Report for August 2014, were reported on 116,913 U.S. properties in August, an increase of 7 percent from the previous month but still down 9 percent from a year ago.

Now, it’s important to realize that RealtyTrac defines “foreclosure filings” as including, “default notices, scheduled auctions and bank repossessions.” That means that all of the delinquent loans on which no Notice of Default has been sent out… yet… aren’t included. And there are always plenty of those. (For the record, I wrote about RealtyTrac’s September 2014 report on September 20th last year, and explained in detail what I found to be wrong or misleading.)

Still, RealtyTrac concludes the report’s numbers as reflecting, “the smallest decrease in the last 47 consecutive months of year-over-year declines in U.S. foreclosure activity.”

And, RealtyTrac’s vice president, Daren Blomquist, referring to the September 2014 report was quoted as saying…

“The August foreclosure numbers demonstrate that although the foreclosure crisis is well behind us, the messy business of cleaning up the distress lingering from the housing bust continues in many markets. The annual increase in foreclosure auctions — the first since the robo-signing controversy rocked the foreclosure industry back in late 2010 — indicates mortgage servicers are finally adjusting to the new paradigms for proper foreclosure that have been implemented in many states, whether by legislation or litigation or both.”

Like I said last September, “Oh, shut-up Daren.”

First of all, there are the Home Equity Lines of Credit (HELOCs), which are interest only loans for ten years, so the HELOCs that were taken out in 2004 and 2005 are all due to become fully amortizing loans… meaning that their monthly payments are increasing significantly. That is already causing foreclosures to rise, and it will continue to do so through 2018.

The L.A. Times wrote about this looming threat last August under the headline: “Home equity line defaults are likely to rise.” David Dayen, writing for The New Republic late last August, also covered the topic, saying…

“TransUnion, the credit rating firm, estimates that between $50 and $79 billion in home-equity loans risk default because of the increased payments, which could add hundreds or even thousands of dollars to payments a month.”

For another thing, the HAMP loan modifications that were granted in 2009 and 2010 were almost all modified to a lower interest rate, but only for five years… so they are also now resetting to higher rates and therefore higher monthly payments. Since most people’s incomes have not recovered to pre-crises levels, these higher payments are also a source of increasing delinquencies and therefore potential foreclosures.

807807

 

There are also a number of second mortgages, among other factors, that are causing increasing numbers of foreclosures.  Just a couple of weeks ago, on February 11th, Mike Sunnuck, writing for the Phoenix Business Journal reported…

  • “Foreclosures hit a 20-month high both in Phoenix and Arizona as a whole in January.
  • Foreclosures jumped more than 100 percent in January compared to December both in Phoenix and statewide, according to new numbers today from RealtyTrac. There were more than 2,300 homes and condos in the foreclosure process last month. That is up 104 percent from December. Statewide that increase is 109 percent from January 2014.
  • Foreclosure activity both locally and statewide are at 20-month highs as banks step up their repossessions, auctions and filing of default notices.
  • According to RealtyTrac, Phoenix saw a 45 percent increase in January foreclosures compared a year earlier… foreclosure auctions in Arizona were up 37 percent in January, also a 20-month high and bank repossessions are up 61 percent… those same repossessions are up 58 percent in Phoenix.”

RealtyTrac also reported that foreclosure activity, whatever that means, was also reportedly up “in states such as Ohio, New Jersey, Maryland and California and metropolitan areas such as St. Louis, Los Angeles and San Francisco… and the worst cities for foreclosures include Atlantic City, Las Vegas and eight Florida markets including Tampa, Orlando, Miami and Jacksonville.”

Of course, compared with the carnage that went on during 2009-10, the number of completed foreclosures today is lower, but it’s akin to saying it has declined from the intolerable to merely tragic.  From three million, or so, down to $1.5 million last year is hardly something about which to brag.  It’s “down” to almost 30,000 completed foreclosures a week, “down” to over 4,000 a day… in this country… from sea to shining sea.

Does any of that sound like a foreclosure crisis that’s behind us? Not even close. In fact, it sounds a lot like the same sort of foreclosure crisis I’ve been writing about since 2008.

Follow the bouncing ball…

Then there’s the seemingly-impossible-to-count remaining unresolved delinquent loans that have been bouncing around the still-largely-dysfunctional loan modification process for the last several years… in fact, quite a few are still bouncing around after five or even six years.

000555000

 

How do I know this to be true?

Because I hear from homeowners all over the country every single day who are still struggling through the process or trying to save their homes from foreclosure as they remain unable to make a payment after falling behind years ago. (In fact, I just helped one homeowner’s loan get modified after seven years of not making a mortgage payment… not that I’m suggesting that as being a good idea.)

The point is… for many, the loan modification process is still much like driving a 40 year-old car with a million miles on it that doesn’t have tires or a steering wheel, and is perpetually running on empty. Some people manage to get to a destination, but most are stuck somewhere along the road waiting for roadside assistance that never comes.

In judicial states it’s probably worse than non-judicial ones… New York and New Jersey come immediately to mind… but it’s plenty bad all over. The reality is that I still get as many calls and emails as I ever did, and the problems people are having are the same as they always were.

It shouldn’t come as a surprise to anyone that this is the case. After all, what have we done at the state or federal level over the last few years that would have changed the situation for the better? The answer is… nothing.

So, are we thinking that the problems that caused eight million Americans to lose homes to foreclosure are going to fix themselves? Because if that’s what you’re thinking might happen, then all I can say is please pass the bong… and the Oreos… because I want some of whatever you’re smoking.

The foreclosure crisis is nowhere near over… the economy is still on what could be described as government-funded life support… most kids under 30 are living with their parents… qualifying for a mortgage remains painful and difficult… and if you’re not underwater, then you’re close. Maybe not in North Dakota or Iowa… I’m talking about places where people actually live.

And I don’t care about what the media has to say about the subject. I get proof of the ongoing crisis in my email inbox every single day. I’ll let you know when that changes.

 

Mandelman out.

 

~~~

P.S. If you need help getting your loan modified, especially if you’re with Bank of America or Ocwen, but others are okay as well, email me at: mandelman@mac.com.  I want to hear your story and can usually help in some way.

source: http://mandelman.ml-implode.com/2015/02/the-foreclosure-crisis-is-behind-us-where-who-says/

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.






Posted in STOP FORECLOSURE FRAUD1 Comment

Obama’s Foreclosure Relief Program Was Designed to Help Bankers, Not Homeowners

Obama’s Foreclosure Relief Program Was Designed to Help Bankers, Not Homeowners

Bill Moyers-

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

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

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

[BILL MOYERS]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.






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Wells Fargo Bank, NA v Burke | (N.Y. App. Div. 2015) – Mr. Fargo your Robo-witness is inadmissable…..SUMMARY JUDGEMENT DENIED

Wells Fargo Bank, NA v Burke | (N.Y. App. Div. 2015) – Mr. Fargo your Robo-witness is inadmissable…..SUMMARY JUDGEMENT DENIED

Decided on February 11, 2015

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

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

[*1]Wells Fargo Bank, NA, respondent,

v

Brian Burke, et al., appellants, et al., defendants.

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

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

DECISION & ORDER

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

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

In a mortgage foreclosure action, where the plaintiff’s standing to commence the action is placed in issue by the defendant, “the plaintiff must prove its standing in order to be entitled to relief” (U.S. Bank, N.A. v Collymore, 68 AD3d 752, 753). “[A] plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced” (Bank of N.Y. v Silverberg, 86 AD3d 274, 279). “Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident” (U.S. Bank, N.A. v Collymore, 68 AD3d at 754; see Bank of N.Y. v Silverberg, 86 AD3d at 281).

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

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

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

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

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

ENTER:

Aprilanne Agostino

Clerk of the Court

Down Load PDF of This Case

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.






Posted in STOP FORECLOSURE FRAUD1 Comment

Matt Taibbi | Will HSBC Deal Come Back to Haunt Loretta Lynch?

Matt Taibbi | Will HSBC Deal Come Back to Haunt Loretta Lynch?

Rolling Stone-

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

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

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

[ROLLING STONE]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.






Posted in STOP FORECLOSURE FRAUD1 Comment

NMR is the site and database dedicated to the homeowners – statistics and reports about how they are being helped and what’s out there for them

NMR is the site and database dedicated to the homeowners – statistics and reports about how they are being helped and what’s out there for them

National Mortgage Registry
“NMR”
 
February 7, 2015. 

Interview with one of NMR’s founders and director (as well one of the state directors for the Homeowners’ Superpac Committee).

What is NATIONAL MORTGAGE REGISTRY?

A type of ‘census’ – inventory if you will – for struggling homeowners all over America.  In this country today despite the incredible advancement of technology, 90% of the powers that be have no idea who or what homeowners have been affected by the events over the past 7-8 years.

There have been billions of dollars in settlements – yet not one single homeowner who was victimized has seen a penny – billions of dollars and where did it all go? 

For one thing, no homeowner that we have reached out to has been contacted by anyone at any time regarding their matters unless of course, it was a law firm representing banks or non-bank financial entities – with foreclosure complaints or eviction notices . . . .

No one – from the President, to Congress, Attorney Generals, except maybe New York, has a clue who these people (homeowners) are in each state – yet they have gratefully accepted billion dollar settlements, shut up funds, etc., that have done absolutely NOTHING FOR THE INDIVIDUAL HOMEOWNERS.  And homeowners are FED UP . . .  This will affect greatly the coming elections and overall sentiment in this country – American homeowners are on their last fibers – especially after the State of the Union with absolutely nothing – again – for the 4th or 5th time – regarding millions of struggling homeowners in this country – not a peep!  Doesn’t the Hill know these people are in dire straits. . .!

One of the problems we determined was that there was no census – no inventory – no ‘one stop’ – outside one’s family and neighbors no one really knows about these homeowners – there is no ‘voice’ for them – no one or entity is counting them into the equations of settlement and resolve – especially areas of not getting legal representation and help with protecting their home.

NMR is being established to create one stop source for every single homeowner who wants to be counted and accounted for – along with info on their foes and enemies (banks, servicers, faux lenders, foreclosure mill firms, property inspectors, etc.) are all data also being counted and inventoried. 

There are too many cases, situations, etc., where homeowners are reading and can’t understand why the parties they are dealing with are completely ignoring them.

With a one-stop registration (National Mortgage Registry) – inventory if you will – each homeowner will be counted and represented in this mess.  NMR will also have a tally of how many homes are actually being foreclosed on in a particular state – WHO the lenders suing are – the law firms – everything – so this data can be brought to the Attorney General and governor of each state’s attention – and asking them what they are doing about it and where or how were funds accepted by them being spent to deal with this mess?

Accountability by all involved will be monitored and reported on NMR’s site.

NMR is now forming the logistics of the site but in the meantime, we do not want to waste any more time and our team of forensic paralegals (some who work in criminal cases and fraud backgrounds) are getting ready to get into action in creating a forum so each homeowner has a ‘place to go where someone knows their name . . .’ and who the enemies are.  The data won’t be published but the state, town, entities involved will.  Homeowners will remain privately inventoried with NMR – but homeowners will be able to go to the website and find out what’s happening in their neighborhood – who knows – the guy down the street might be fighting the same entities – they need to get together and look out for each other especially in rural areas.

The inventory gathered by NMR will assist in determining who is doing what to whom . . . illegal property inspections, trash outs, servicers, banks, pretender lenders, the list is endless and needs to be made and the world put on notice of who is doing what to whom.

NMR will then have the ability to match homeowners with prospective representatives, politicians, attorney generals, law firms to help them (hopefully- if they want), and an overall inventory so when news of settlements, etc., hit the internet the homeowner (if the parties match) – will be contacted and advised that there is something going on that may involve and help them and their home – whether it be the lender, the bank, the state, whatever is going on NMR will find out and be a voice for each homeowner – collectively based on their state, lender, foreclosure mill firm, etc.

No longer are homeowners going to be in the dark and left behind.  If the politicians and powers that be aren’t paying attention – NRM and its members will be.
 
NMR is not giving legal advice – it won’t assist in modifications or anything else – NMR is like a library – cataloging each home for each state and the names of parties that are involved with the homeowner – but not disclosed.

We will do this by first the homeowner sending us an email with the acronym “NMR” in the subject line – with the abbreviation of their state the home is in. 

That is the first step. 

The second will be NMR will contact the homeowner back by email to arrange for gathering documents and data pertaining to their home which the homeowner will be sending back by email (“edoc” .pdf format) or if they don’t have capabilities to send by email NMR will arrange to receive paperwork, scan, download as .pdf files – then return courtesy copies to the homeowner of their documents so they will have when and if needed.

NMR found that this was also a constant problem in homeowners either not having pertinent data or it not being in a form ready to be attached to emails – this is understandable as not everyone has computer savvy or work in professions requiring them to work with .pdf documents, edocs, etc.
Those wanting to reach out and help homeowners who do not have their documents ready – will be able to reach out to NMR and it will forward their docs to parties upon request if needed.

Many times opportunities are lost with potential legal representation because homeowners don’t  have their docs ready to be sent and the issues and momentum get lost.

NMR will also be acting as a ‘data bank’ preserving the documents for each homeowner.  This will be explained on the website when it is up and running.

There is no sales pitch – nothing is being solicited  - this is not a telemarketing gimmick – NMR is not interested in modifications – it is simply action being taken by a consortium of professionals, homeowners and paralegals who have themselves been involved in this mess and determined the worst part is no one knowing the homeowner and his or her home exist or the fight they are involved with – it is as though each homeowner and home are falsely imprisoned with no one knowing they are – in fact – prisoners of war in their own homes – in most cases homeowners in trouble don’t even tell their neighbors or family.

NMR cannot go door to door – but it can discreetly and privately take information and from now on the homeowner in distress will not be alone or forgotten! 

The homeowner will be able to go to the website, to their state, and see what’s going on in their area, as well as what is going on with the parties ruining their lives!

Additionally, NMR will know and do everything in its power to make it known to those that need to know – who these homeowners are and who it is their battling with – most homeowners – local police departments aren’t even aware of their dilemma.

Imagine, if there was one place that had data of how many cases a foreclosure mill law firm (in each state) was attempting to or has foreclosed . . . perhaps if they (powers that are supposed to be doing something) start to see the real damages and counts – things will change.

Each homeowner will be charged $15.00 for the first time to be listed in the registry – why $15.00?  Because fellow homeowners that are also professional paralegals (many retired also law enforcement) will be taking at least an hour per homeowner to gather the data and set up the information – scan and upload their docs into NMR’s private storage – each homeowner has unique data that needs to be checked out from reading the docs and determining their unique information to assemble in general data i.e., if it’s a Bank of America note and mortgage – that will be another count added to the numbers of homes under “Bank of America” in that particular state and region – a lot of work goes into the initial setup. 

It will be however the best $15.00 spent during this entire mortgage mess! 

The data however in most cases will be ‘gleaned’ (gathered) from the homeowner’s documents themselves – from their notes, mortgage, deed of trusts, etc., everything will be needed to properly inventory each home affected.

Even if a homeowner is not in litigation, foreclosure, etc., it is still important to be registered in case there are problems later on – a lot of homeowners just want to know who or what it is they are dealing with and want to understand what has been happening during this crisis.

NMR is aligning with organizations and professionals that are beginning to take notice and major steps politically and socially to get this matter finally under control – get the help needed to homeowners and NMR will be assisting by posting on its main page (NMR.com) what is taking place – who the ‘movers and shakers’ of the issues etc. are – homeowners will be encouraged to look at the website as much as possible to follow the news, events, happenings, cases, which copies of cases will be donated FOR FREE by law firms, etc., or NMR will get them and make them available – (much like stopforeclosurefraud.com has graciously provided cases for years now) – especially in their own state to be available to homeowners. 

NMR belongs to homeowners in every state – and is not going to just focus on Florida, California, New York, the usual places that seem to get all the attention and news . . . but every state and every homeowner counts! 

NMR will also find out in each state what media entities are paying attention to the matters and are doing something about it including its politicians.

NMR will endeavor to get this inventory data to as many as possible in each state, including CFBP and anywhere it may be of help to the homeowners – with the hopes someone will reach out to them that can truly do something to help the homeowners besides prey on them. 

NMR will be encouraging law firms to start to see the patterns and data and begin to hopefully reach out and represent homeowners – in these cases NMR does not believe any money should be paid to law firms – so don’t expect NMR to promote any entities – legal representation – at his juncture – should be contingent considering how much work has actually been done by the homeowners themselves and how much they have already lost . . .they don’t need to make law firms rich that don’t deserve it.

The law firms in every state are way behind and need to catch up to what the homeowners have already learned and taught each other in this mortgage mess, including the attorneys bragging they represent homeowners and know less than the homeowners know!  There are a handful of law firms and attorneys that have done incredible work – we all know who they are and are so grateful to them!

It is time all law firms that can and those in power begin to take notice and actually do something for these struggling homeowners and NMR will begin to take notice and report! 

Including a wall of shame of those entities, politicians, attorney generals, anyone or entity that has harmed rather than helped homeowners will be spotlighted .  .  . including the law firms themselves!

NMR does not believe the homeowner should pay a single dollar to any entity for anything in representing them; they’ve already paid dearly. . . if NMR’s support team had the funds they wouldn’t even charge the $15.00 for first time registration – this type of registration should have been created and supported by all the billions of dollars that have gone to each state’s political special needs chests – but didn’t – so members supporting NMR are on their own for now at least.

NOTE:  The website is under ‘construction’ and the overall design will be helped by each homeowner – based on their responses and needs.  There are at least 52 if not more states to design – NMR will not be limited to states but the locations the homeowners report. 

There are many “not-quite-states,” such as Puerto Rico, and thirteen others as well as the large protectorates we’ve had at one time or another, including Cuba and the Philippines; and smaller ones, such as American Samoa, Wake Island, and the Virgin Islands and don’t forget the Northern Mariana Islands.

NMR will not consider a homeowner just because they are not in one of the traditional ‘50’ states – anyone that wants to register their home’s data has a right and is encouraged to do so!

So please don’t look for the website and say ‘oh it doesn’t exist . . .’ it does – just not through a browser window yet – it is being constructed with all in mind adn the bulk of work is being done now with homeowners sending in their email requests!!

NMR staff thanks all especially stopforeclosurefraud.com and are looking forward to getting some help to our American homeowners -

It is a shame we can ship tons of money, food, clothing and help in 24 hours to countries all over the world – but ignore the needs of our own . . . and for more than 7 years now – shame on this country’s leaders for not doing enough – or anything at all – perhaps when all are learned about – from one another – each homeowner will be strengthened in numbers – and if homeowners wish to be connected to each other – NMR will do that too . . . or keep them totally private with no names or data just a census of the basis public data which can be done without the homeowners name or address accessible outside the site and their data is privately contained and stored even though it is public records information.  Homeowners have been humiliated and embarrassed enough. .  .!

If a homeowner is interested, please send an email to (temporary email address) till website is up and running and has its own email address to:    national.mortgage.registry@gmail.com

Please remember to put in the subject line “NMR – “STATE’s Initials” (sample “NMR-GA”) in the subject line.

This is how NMR is organizing with the thousands of responses right now!!

NMR will have its own mail for privacy and confidentiality.  Thanks to all homeowners and please don’t forget to send the email to:   national.mortgage.registry@gmail.com

NMR will send a note back with details on when the site is up – but the homeowner’s data will still be taken and compiled ASAP regardless if the website NationalMortgageRegistry.com or NationalMortgageRegistry.US is up and running yet.
The website will be a place for homeowners to go – the data gathering and inventory is what is important – which data will not be available on the website – only information for homeowners to follow to have their data preserved.  What will be on the website will be totals gathered, where to meet and interact with other homeowners in their area, etc. 
The website will let everyone know what entities and law firms are doing generally and in their own areas and states generally – including news of meetings, movers and shakers etc. – something that is missing despite all the blogs and websites there is not one place that is for everyone – National Mortgage Registry will be focus on all states and sets of rules – that’s a promise – !!  One way to unite us all!

REMEMBER THE WEBSITE IS UNDER CONSTRUCTION!!
Looking forward to hearing from each and every one of you!


© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.






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GOVERNOR CUOMO ANNOUNCES WELLS FARGO TO PAY $4 MILLION re: Wells Fargo affiliate put borrowers’ homes on the line for routine credit card purchases

GOVERNOR CUOMO ANNOUNCES WELLS FARGO TO PAY $4 MILLION re: Wells Fargo affiliate put borrowers’ homes on the line for routine credit card purchases

February 5, 2015

Contact: Matt Anderson, 212-709-1691

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

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

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

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

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

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

Region Borrowers Receiving Restitution Payments
Capital Region

140

Central New York

90

Mid-Hudson

148

Long Island

270

Mohawk Valley

28

New York City

220

North Country

15

Finger Lakes

220

Southern Tier

58

Western New York

141

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

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

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Citibank, N.A. v Herman | N.Y. App. Div. – MERS was never the holder of the note and was without authority to assign the note to the plaintiff.

Citibank, N.A. v Herman | N.Y. App. Div. – MERS was never the holder of the note and was without authority to assign the note to the plaintiff.

Decided on February 4, 2015

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

JOHN M. LEVENTHAL, J.P.
L. PRISCILLA HALL
LEONARD B. AUSTIN
SANDRA L. SGROI, JJ.

2013-06616
(Index No. 34089/09)

[*1]Citibank, N.A., etc., respondent,

v

Thomas Herman, et al., appellants, et al., defendants.

Westerman Ball Ederer Miller & Sharfstein, LLP, Uniondale, N.Y. (Christopher A. Gorman of counsel), for appellants.

Eckert Seamans Cherin & Mellott, LLC, White Plains, N.Y. (Geraldine A. Cheverko of counsel), for respondent.

DECISION & ORDER

In an action to foreclose a mortgage, the defendants Thomas Herman and Barbara Herman appeal, as limited by their brief, from so much of an order of the Supreme Court, Suffolk County (Pastoressa, J.), dated April 23, 2013, as denied those branches of their motion which were for summary judgment dismissing the complaint insofar as asserted against them based upon lack of standing and for the cancellation of a certain notice of pendency filed against the subject property.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and those branches of the motion of the defendants Thomas Herman and Barbara Herman which were for summary judgment dismissing the complaint insofar as asserted against them based upon lack of standing and for the cancellation of a certain notice of pendency filed against the subject property are granted.

In a mortgage foreclosure action, a plaintiff has standing when it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced (see Kondaur Capital Corp. v McCary, 115 AD3d 649, 650; HSBC Bank USA v Hernandez, 92 AD3d 843; Bank of N.Y. v Silverberg, 86 AD3d 274, 279; Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204, 209; U.S. Bank, N.A. v Collymore, 68 AD3d 752, 753). The plaintiff may demonstrate that it is the holder or assignee of the underlying note by showing either a written assignment of the underlying note or the physical delivery of the note (see Kondaur Capital Corp. v McCary, 115 AD3d at 650; Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 108; U.S. Bank, N.A. v Collymore, 68 AD3d at 754). As a general matter, 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 at 280). However, the transfer of the mortgage without the debt is a nullity, and no interest is acquired by it (see Bank of N.Y. Mellon v Gales, 116 AD3d 723, 724; Bank of N.Y. v Silverberg, 86 AD3d at 280), because a mortgage is merely security for a debt or other obligation and cannot exist independently of the debt or obligation (see Deutsche Bank Natl. Trust Co. v Spanos, 102 AD3d 909, 911).

In support of that branch of their motion which was for summary judgment dismissing the complaint insofar as asserted against them, the defendants Thomas Herman and Barbara Herman [*2](hereinafter together the Hermans) demonstrated, prima facie, that the plaintiff did not have standing to be entitled to relief in this action. The prima facie showing which a defendant must make on a motion for summary judgment is governed by the allegations made by the plaintiff in the pleadings (see generally Alvarez v Prospect Hosp., 68 NY2d 320, 325; Foster v Herbert Slepoy Corp., 76 AD3d 210, 214). In this regard, the Hermans submitted, among other things, the complaint, which indicated that the plaintiff allegedly obtained its right to foreclose by way of an assignment of the mortgage and note from Mortgage Electronic Registration Systems, Inc. (hereinafter MERS), acting as nominee for the original lender. However, the Hermans established, prima facie, that MERS was never the holder of the note and was without authority to assign the note to the plaintiff. In opposition, the plaintiff failed to raise a triable issue of fact. While the plaintiff submitted, among other things, a copy of the note in opposition to the Hermans’ motion, the plaintiff failed to establish delivery of the note to MERS prior to the execution of the assignment (cf. Midland Mtge. Co. v Imtiaz, 110 AD3d 773, 776). Moreover, the plaintiff failed to raise a triable issue fact as to whether it was the holder of the note at the time the action was commenced (cf. US Bank N.A. v Faruque, 120 AD3d 575, 577; Homecomings Fin., LLC v Guldi, 108 AD3d 506). Therefore, the Supreme Court should have granted that branch of the Hermans’ motion which was for summary judgment dismissing the complaint insofar as asserted against them based upon lack of standing.

Since the Hermans established their entitlement to judgment as a matter of law dismissing the complaint insofar as asserted against them based upon lack of standing, the Supreme Court should have also granted that branch of their motion which was for the cancellation of a certain notice of pendency filed against the subject property (see CPLR 6514[a]; see also Freidus v Sardelli, 192 AD2d 578, 580).

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

Aprilanne Agostino

Clerk of the Court

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