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CFPB Takes Action Against Wells Fargo and JPMorgan Chase for Illegal Mortgage Kickbacks

CFPB Takes Action Against Wells Fargo and JPMorgan Chase for Illegal Mortgage Kickbacks

Banks to Pay $35.7 Million After Loan Officers Illegally Traded Referrals for Cash and Marketing Services

WASHINGTON, D.C. — Today, the Consumer Financial Protection Bureau (CFPB) and the Maryland Attorney General took action against Wells Fargo and JPMorgan Chase for an illegal marketing-services-kickback scheme they participated in with Genuine Title, a now-defunct title company. The Bureau and Maryland also took action against former Wells Fargo employee Todd Cohen and his wife, Elaine Oliphant Cohen, for their involvement. Genuine Title gave the banks’ loan officers cash, marketing materials, and consumer information in exchange for business referrals. The proposed consent orders, filed in federal court, would require $24 million in civil penalties from Wells Fargo, $600,000 in civil penalties from JPMorgan Chase, and $11.1 million in redress to consumers whose loans were involved in this scheme. Cohen and Oliphant Cohen also will pay a $30,000 penalty.

“Today we took action against two of the nation’s largest banks, Wells Fargo and JPMorgan Chase, for illegal mortgage kickbacks,” said CFPB Director Richard Cordray. “These banks allowed their loan officers to focus on their own illegal financial gain rather than on treating consumers fairly. Our action today to address these practices should serve as a warning for all those in the mortgage market.”

“Homeowners were steered toward this title company, not because they were the best or most affordable, but because they were providing kickbacks to loan officers who referred consumers to them,” said Maryland Attorney General Brian Frosh. “This type of quid pro quo arrangement is illegal, and it’s unfair to other businesses that play by the rules.”

Genuine Title was a Maryland-based title company that offered real-estate-closing services from 2005 until it went out of business in April 2014. As part of the marketing-services-kickback scheme, Genuine Title offered loan officers valuable services to increase the amount of loan business generated. Genuine Title conducted this scheme at several financial institutions. The services the company offered included purchasing, analyzing, and providing data on consumers and creating letters with the banks’ logos that the company had printed, folded, stuffed into envelopes, and mailed. In return, the banks’ loan officers would increase Genuine Title’s profits by referring homebuyers to the company for closing services. This scheme was especially profitable for the loan officers, who generally are paid by commission.

The marketing-services-kickback scheme violated the Real Estate Settlement Procedures Act (RESPA), which prohibits giving a “fee, kickback, or thing of value” in exchange for a referral of business related to a real-estate-settlement service.

Wells Fargo

The Bureau’s investigation identified more than 100 Wells Fargo loan officers in at least 18 branches, largely in Maryland and Virginia, who participated in this scheme. The Bureau alleges that these loan officers referred thousands of loans to Genuine Title over the course of the scheme. The Bureau alleges that, despite the fact that Wells Fargo had multiple warnings of the illegal arrangements between its loan officers and Genuine Title – including a federal lawsuit explicitly alleging the existence of such agreements – the bank failed to take action to stop the practices and did not have an adequate system in place to identify these violations. Under the proposed consent order filed today, Wells Fargo would be required to pay $10.8 million in redress and $24 million in civil penalties. The Bureau also filed an administrative consent order against Wells Fargo prohibiting future violations.

Wells Fargo employed Todd Cohen as a loan officer from April 2009 through August 2010. The Bureau alleges that, while at Wells Fargo, Cohen not only received marketing materials, he also took substantial cash payments in exchange for referrals. Rather than pay Cohen directly, Genuine Title made payments to Cohen’s then-girlfriend, now-wife, Elaine Oliphant Cohen, in an effort to disguise the kickback nature of the payment. She received tens of thousands of dollars in payments for loans Cohen referred to Genuine Title. Under the proposed consent order filed today, Cohen and Oliphant Cohen would be required to pay a civil penalty of $30,000, and Cohen would be banned from participation in the mortgage industry for two years.

JPMorgan Chase

The CFPB also found that loan officers at JPMorgan Chase participated in the marketing-services-kickback scheme with Genuine Title. The Bureau alleges that at least six Chase loan officers in three different branches in Maryland, Virginia, and New York were involved. These officers referred settlement business to Genuine Title on almost 200 loans. The Bureau also alleges that Chase did not have an adequate system in place to ensure that its loan officers were following the law. Under the proposed consent order filed today, Chase would pay approximately $300,000 in redress and $600,000 in civil penalties. The Bureau also filed an administrative consent order against Chase prohibiting future violations.

In addition to the loan officers at Wells Fargo and JPMorgan Chase, several loan officers at another financial institution also participated in the scheme with Genuine Title. While Wells Fargo and JPMorgan Chase did not identify or address the illegal conduct, that institution self-identified the problematic practices and terminated the loan officers involved. The institution also cooperated with the CFPB’s investigation and self-initiated a remediation plan. Based on the institution’s behavior, the CFPB has resolved that investigation without an enforcement action, consistent with the CFPB’s Bulletin on Responsible Business Conduct.

Today’s actions are the result of a joint investigation by the CFPB, the State of Maryland, and the Maryland Insurance Administration, which regulates title insurance providers such as Genuine Title.

A copy of the CFPB’s complaint is available here: http://files.consumerfinance.gov/f/201501_cfpb_complaint_wells-fargo-chase-cohen.pdf

Copies of the proposed consent orders filed in federal court and of the Bureau’s administrative consent orders will be available later today at: http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-wells-fargo-and-jpmorgan-chase-for-illegal-mortgage-kickbacks/

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The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.

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Susan Chana Lask Beats NY Foreclosure Based on Bank’s Defective Documents and Assignment Delays

Susan Chana Lask Beats NY Foreclosure Based on Bank’s Defective Documents and Assignment Delays

In BLB Trading, Inc. v. Ledgister, Westchester County Supreme Court, Index 15407/11, Susan Chana Lask, Esq. won her argument for a NY homeowner that a bank cannot foreclose based on defective documents.  The decision holds that a one and half year gap in the transfer of the mortgage and note are reasons to deny summary judgment to the Bank. Also, the court accepted Ms. Lask’s argument that UCC §3-804 mandates that a lost note affidavit must be factually specific regarding the events surrounding the loss, including when the note was lost.   Finally, Ms. Lask brought forth other issues regarding whether employees executing affidavits were actually employees of the bank or other entities that raised suspicion as to the authenticity of the Bank’s  alonge alleged to be attached to the note to even support a foreclosure.  The court refused to grant a foreclosure by summary judgment to the bank.

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF WESTCHESTER

PRESENT: HON. SAM 0. WALKER, J.s.c.

———————- ————– ———– ———————x
BLB TRADING, LLC,

-against-

Plaintiff,

DECISION AND ORDER
Index No. 15407/2011 Motion Sequence 1

SUSAN LEDGISTER A/K/A SUZANNE LEDGISTER,

Defendants.
——–x

Excerpts:

Defendant contends that there is no explanation for the two year delay in the assignment of the mortgage and the note from MERS to Evestmac; that the lost note affidavit is invalid because it does not provide details of how and when the note was lost and whether the affiant ever reviewed the original note and compared it to the copy; that the March 9, 2011 allonge states that Mortgage Lenders ceased operations on June 9, 2009, but three months after, on September 25, 2009, Mortgage Lenders via MERS assigned the mortgage without the note, to Evestmac; that the Vice President, Keith Douglas who executed the mortgage assignment, is not an officer of Mortgage Lenders, but was an employee of Acqura Loan Services, the mortgage servicing company for the loan; that MERS did not have authority as nominee to assign anything and the purported 2010 assignment alleged in the complaint is void; that the allonge violates UCC 3-202 and UCC 3-104 by not being affixed to the note; that the affidavit of merit omits any proof of possession of the note; that an affidavit by a person with personal knowledge was not submitted; that there was no proof that plaintiff had possession of the note when this action was commenced; that the motion fails to provide evidence in admissible form; that the out of state notaries on the assignments are invalid; that discovery is needed and that dismissal of the affirmative defenses and counterclaims should be denied.


The mortgage was assigned on September 25, 2009 by MERS as nominee for Mortgage Lenders to Evestmac. However, as per the allonge, submitted to show transfer of the note, Mortgage Lenders ceased operations on June 9, 2009. This particular issue would be moot, since the mortgage passes with the debt as an inseparable incident,’! [U.S. Bank, N.A. v. Collymore, 68 A.D.3d at 754, 890 N.Y.S.2d 578; HSBC Bank US'A v. Hernandez, 92 A.D.3d 843, 939i N.Y.S.2d 120], if not for the one and a half year gap in the transfer of the mortgage and the transfer of the note. The allonge states that the note was not transferred to Evestmac until March 9, 2011. This discrepancy creates a question of fact.

Further, Elonna Ashuroua, a managing member of BLB avers in the lost note affidavit that the original note was misplaced during a transfer of the collateral file from Mortgage Lenders to Evestmac. Due to the time lag between the transfer of the mortgage and the transfer of the note. the Court is unclear if this lost of the note occurred in 2009 or in 2011.

UCC § 3-804 states that, “the owner of an instrument which is lost, whether by destruction, theft or otherwise, may maintain an action in his own name and recover from any party liable thereon upon due proof of his ownership, the facts which prevent his I production of the instrument and its terms”. UCC § 3-804. To meet the requirements of the UCC, the lost note affidavit does not state enough facts pertaining to the loss, such as the approximate time period, especially in light of the gap between the transfer of the mortgage and the transfer of the note.

The Court is also unclear as to the role of Elonna Ashuroua. She signed the lost note affidavit as managing member of BLB, but also signed the allonge to the promissory note transferring the note from Evestmac to BLB. Is this person an employee of both BLB and Evestmac.

Another issue that creates a question of fact is the allonges submitted transferring the note. UCC § 3-202 states that “[a]n indorsement must be written by or on behalf of the holder and on the instrument or on a paper so firmly affixed thereto as to become a part thereof”. Since the original note was lost, and the Court cannot determine exactly when it was lost, the attachment or lack thereof of the allonge to the note, is also a question of fact to be determined.

[...]

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CA Dept of Business Oversight | OCWEN || ACCUSATION IN SUPPORT OF NOTICE OF INTENT TO ISSUE AN ORDER SUSPENDING RESIDENTIAL MORTGAGE LENDER AND LOAN SERVICER LICENSE

CA Dept of Business Oversight | OCWEN || ACCUSATION IN SUPPORT OF NOTICE OF INTENT TO ISSUE AN ORDER SUSPENDING RESIDENTIAL MORTGAGE LENDER AND LOAN SERVICER LICENSE


Case Number: FSD License #413-0544

Date of Initial Action: 10/03/14

Defendants/Respondents: Ocwen Loan Servicing, LLC
See also FSD Licensee Listing 413-0544

Documents:


 Lic. Status:  Active License  Lic. Date:  Jan 12, 2011
 Lic. Number:  4130544  Lic. Type:  Residential Mortgage Lender
 Name:  Ocwen Loan Servicing, LLC
  
 Address:  1661 Worthington Road Suite 100
West Palm Beach,  FL  33409

________________________

California Regulator In Process Of Suspending Ocwen Financial’s 

Forbes-Jan 13, 2015
Mortgage firm Ocwen Financial has found itself in hot water over … According to the L.A. Times, an administrative law judge will preside over …
Ocwen, California Regulators Lock Horns
In-Depth-Wall Street Journal-13 hours ago


Explore in depth (69 more articles)

Related:

03/14/2014
California Joins $2.1 Billion Settlement With Ocwen Mortgage Loan Servicing
The California share of relief to borrowers in the settlement between Ocwen and 49 states is $268 million. (PDF) (HTML)

________________________

Home About DBO

About Us

The Department of Business Oversight (DBO) provides protection to consumers and services to businesses engaged in financial transactions. The Department regulates a variety of financial services, products and professionals. The Department oversees the operations of state-licensed financial institutions, including banks, credit unions, money transmitters, issuers of payment instruments and travelers checks, and premium finance companies. Additionally, the Department licenses and regulates a variety of financial businesses, including securities brokers and dealers, investment advisers, deferred deposit (commonly known as payday loans) and certain fiduciaries and lenders. The Department regulates the offer and sale of securities, franchises and off-exchange commodities. For the complete list, see the Department’s Licensees page.

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Ocwen facing ‘legal actions’ after admitting internal problems

Ocwen facing ‘legal actions’ after admitting internal problems

NY POST-

Ocwen may be getting rid of Chairman Bill Erbey, but not its problems.

The embattled mortgage servicer could face an onslaught of “legal actions” from state and federal regulators this year after the company admitted to a slew of internal problems that led to the downfall of its founder and chairman, according to a research report.

The legal pressure could come from as many as 49 state regulators, the Consumer Finance Protection Bureau and the monitor of the National Mortgage Settlement, Deutsche Bank analyst Ying Shen wrote in a Wednesday report.

[NEW YORK POST]

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NY Attorney General Schneiderman Announces First Homes Saved Under The Mortgage Assistance Loan Program

NY Attorney General Schneiderman Announces First Homes Saved Under The Mortgage Assistance Loan Program

AG’s New York State Mortgage Assistance Program Provides Loans Of Up To $40,000 To Families Struggling to Avoid Foreclosure

More Than 140 Applications Received And More Than 20 Loans Approved In The Program’s First Three Months

NEW YORK — Attorney General Eric T. Schneiderman today announced that the first loans have been closed in the New York State Mortgage Assistance Program (NYS MAP), bringing tangible relief to New York homeowners at immediate risk of losing their homes. NYS MAP provides loans to families who are struggling to avoid foreclosure by offering them a way, for example, to pay off back property taxes or a second mortgage – debts that have kept them from receiving a mortgage modification. With a MAP loan – of up to $40,000 – families are able to stay in their homes. The program is an enhancement to the Attorney General’s Homeowner Protection Program (HOPP), which provides struggling borrowers with free legal and housing counseling services, and has served more than 35,000 homeowners across the state since the launch of the program in October 2012.

“For families across New York, receiving a NYS MAP loan will means they are going to be approved for a mortgage modification and that they are going to be able to stay in their homes. It’s hard to imagine a better investment in our communities and homeowners who are continuing to struggle in the aftermath the foreclosure crisis,” Attorney General Schneiderman said. “We know that our Homeowner Protection Program has had real results, helping thousands of families keep their homes. I’m pleased that our Mortgage Assistance Program is now starting to send a lifeline to families in need.”

Using funds from the National Mortgage Settlement, the Attorney General launched NYS MAP in two stages, first opening up the program to families in Long Island in late September, and then to families across the rest of the state in mid-October. In just over three months, the program has received 146 applications from every corner of the state. This includes: 50 from New York City, 41 from Long Island, 14 from Monroe County and the surrounding area, 10 in the Hudson Valley, seven in the Capital Region, and four in Buffalo and the surrounding area. Since mid-November, NYS MAP has already been able to approve 26 loans, including nine on Long Island, six in Monroe County and the surrounding area, and five in New York City.

Azeez Ruheem Smith,who lives in Brentwood, Long Island, fell on hard times when his wife passed away from breast cancer — leaving him as the sole provider for his three children. When Smith suffered a temporary loss of employment, he fell behind on his mortgage and the bank moved to foreclose. Smith found his way to the Economic Opportunity Counsel, a HOPP provider in Suffolk County. The group helped him apply for a NYS MAP loan. The loan provided Smith with just over $17,000, enough to settle the mortgage arrears and terminate his foreclosure proceedings.

“Without the support of the Attorney General and the funding for HOPP and NYS MAP we would not be able to assist homeowners in such a meaningful and efficient way,” said Carol Yopp, a Senior Housing Counselor at Long Island Housing Partnership. “The fact that my client submitted his full application on November 20th and the loan was closed by December 15th proves just how nimble and effective this program is at keeping New York families in their homes.”

Mary Gammariello, of Rochester, NY, also defaulted on her mortgage loan because of mounting medical bills resulting from her cancer treatments, causing her to go into foreclosure. Once she got in touch with The Housing Council, she was able to apply to NYS MAP. Her $29,000 loan will pay off her mortgage loan in full, ensuring she can stay in her home.

While working to ameliorate the effects of housing crisis, Attorney General Schneiderman’s office discovered that many families were being denied mortgage modifications as a result of small outstanding debts. Even families with reliable income streams are often denied modifications because of outstanding debts, such as unpaid property taxes, a series of missed mortgage payments, or delinquent second- or third-mortgage liens that need to be satisfied before a first mortgage holder will grant a modification. By filling the gap for families, the NYS MAP program is empowering consumers to negotiate with their mortgage holders and ultimately remain in their homes.

Eligible loan uses include, but are not limited to, paying off arrears including mortgage payments or unpaid interests and fees; paying down second or third mortgages; satisfying property tax liens or other liens that might lead to loss of homeownership; and supplying borrowers with a “matching” fund to achieve principal reduction or other beneficial first lien modification terms.

Consumers are eligible to apply for loans of varying amounts, but not to exceed $40,000 per borrower, and the Attorney General anticipates that the program will have the capacity to disburse several hundred NYS MAP loans over the next 12 months. In all cases, a NYS MAP Loan will result in homeownership retention at the time the loan is made.

The Attorney General Program is working with the Center for New York City Neighborhoods (CNYCN), as well as the Empire Justice Center, to assist in the operations of NYS MAP. Both agencies are contracted by the Office of the Attorney General to assist with the administration of the HOPP and NYS MAP.

“Together with the Empire Justice Center and HOPP agencies across the state, we’ve launched a program that helps keep New Yorkers in their homes, and in their neighborhoods. A NYS MAP loan can make all the difference for a family fighting to keep their home,” said Christie Peale, Executive Director of the Center for NYC Neighborhoods. “If you’re behind on your mortgage, now is the time to act. Call the AG’s hotline and get high-quality help today.”

To access NYS MAP, homeowners will work with an existing HOPP counselor or legal aid provider to complete the application. The Attorney General’s office launched the website www.nysmap.org where prospective applicants can find out about the program and get connected to a HOPP lawyer or counselor. Consumers can also contact the New York Attorney General Consumer hotline at 855-HOME-456.

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

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Combs v. OCWEN LOAN SERVICING, LLC | “…The motion to dismiss is otherwise denied with respect to the second and third causes of action seeking to quiet title and invalidate the October 2, 2009 assignment of the mortgage to the Trust. …”

Combs v. OCWEN LOAN SERVICING, LLC | “…The motion to dismiss is otherwise denied with respect to the second and third causes of action seeking to quiet title and invalidate the October 2, 2009 assignment of the mortgage to the Trust. …”

2014 NY Slip Op 33362(U)

MARC D. COMBS, et ano., Plaintiffs,
v.
OCWEN LOAN SERVICING, LLC., et al. Defendants.

Docket No. 501420/14.
Supreme Court, Kings County.
December 10, 2014.
December 15, 2014.
Filed December 23, 2014.
LAWRENCE S. KNIPEL, Judge.

Defendants Ocwen Loan Servicing, LLC (Ocwen), US Bank National Association as Trustee for J.P. Morgan Mortgage Acquisition Corp. 2005-FRE1ASSET Backed Pass-Through Certificates, Series 2005-FRE1 (the “Trust”); JP Morgan Chase & Co., J.P. Morgan Mortgage Acquisition Corporation, J.P. Morgan Acceptance Corporation 1 and Mortgage Electronic Registration Systems (MERS) move for an order, pursuant to CPLR 3211 (a)(1) and (a)(7), dismissing the complaint of plaintiffs Marc D. Combs and Mychelle Combs.

Plaintiffs are the owners of the property located at 1506 Pacific Street in Brooklyn. On July 25, 2005, plaintiffs executed a mortgage on the property to secure a note from Fremont Funding Corp. (Fremont) in the amount of $463,000.00. The mortgage was recorded on August 30, 2005 in the name of MERS as nominee for Fremont. According to an assignment instrument dated October 2, 2009 and recorded November 18, 2009, the mortgage was purportedly assigned from MERS to the Trust.

Plaintiffs commenced the instant action pursuant to article 15 of the Real Property Actions and Proceedings Law (RPAPL) to quiet title to the subject property, to invalidate the mortgage and assignment and for an award of actual and punitive damages against Ocwen, the servicer of the mortgage, for allegedly improper application of escrow payments. In their verified complaint, plaintiffs set forth causes of action alleging that: 1) the mortgage and note were “intentionally separated” when the mortgage was recorded in the name of MERS, thereby rendering the note unsecured; 2) the MERS mortgage and October 2, 2009 assignment are unenforceable; 3) the purported October 2, 2009 assignment of the mortgage is invalid as it was made during Fremont’s bankruptcy; 4) the purported assignment of the mortgage to the Trust is void as it was made after the “closing date” set forth in the Pooling and Servicing Agreement (PSA) creating the Trust and 5) Ocwen improperly applied escrow payments to pay water charges and arbitrarily increased the monthly payment as a result.

In determining whether a complaint is sufficient to withstand a motion pursuant to CPLR 3211 (a)(7), “the sole criterion is whether the pleading states a cause of action, and if from its four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law a motion for dismissal will fail” (Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]). The court must accept the facts alleged in the complaint to be true and determine only whether the facts alleged fit within any cognizable legal theory (see Dye v Catholic Med. Ctr. of Brooklyn & Queens, 273 AD2d 193 [2000]). The court “is not concerned with determinations of fact or the likelihood of success on the merits” (Detmer v Acampora, 207 AD2d 477 [1994] see Stukuls v State of New York, 42 NY2d 272, 275 [1977]). “Whether a plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss” (EBC I, Inc. v Goldman Sachs & Co., 5 NY3d 11, 19 [2005]). To succeed on a motion to dismiss pursuant to CPLR 3211 (a)(1), the documentary evidence which forms the basis of the defense must be such that it resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff’s claim (see Trade Source v Westchester Wood Works, 290 AD2d 437 [2002]).

An action to quiet title may be brought “[w]here a person claims an estate or interest in real property … to compel the determination of any claim adverse to that of the plaintiff which the defendant makes. . . .” (RPAPL § 1501). A claim for quiet title requires a plaintiff to allege “the existence of a removable `cloud’ on the property, which is an apparent title, such as in a deed or other instrument, that is actually invalid or inoperative” (Barberan v Nationpoint, 706 F Supp 2d 408, 418 [SDNY 2010]).

The court finds no merit in plaintiffs’ first cause of action for a judgment declaring the note unsecured on the ground that the mortgage, recorded in the name of MERS, was “intentionally separated” from the note. In Merritt v Bartholick, (36 NY 44 [1867]) the Court of Appeals held that as a mortgage is but an incident to the debt which it is intended to secure; the security cannot be separated from the debt, and exist independently of it (see HSBC Bank USA, N.A. v Miller, 26 Misc 3d 407 [Supreme Court, Sullivan County 2009]). Moreover, the mortgage is not invalid merely because it was recorded in the name of MERS as nominee for Fremont (see Matter of MERSCORP, Inc. v Romaine, 8 NY3d 90 [2006]).

Aside from the recording of the mortgage in the name of MERS, plaintiffs have not made any further allegations which call into question the validity of the underlying mortgage itself. Plaintiffs do not allege that the mortgage and/or note were forged or procured as the result of fraud. Plaintiffs state in their complaint that they “do not contend that they are not obligated under the note signed at closing.” Thus, plaintiffs have not stated a cause of action for a judgment declaring that the underlying mortgage is invalid.

The gravamen of the second, third and fourth causes of action is that the purported assignment of the mortgage from MERS to the Trust is invalid.

To the extent that plaintiffs are seeking in their fourth cause of action to invalidate the alleged assignment of the mortgage based on a violation of the PSA forming the Trust, plaintiffs’ have no standing to bring this claim (Rajamin v Deutsche Bank Nat. Trust Co., US Dist Ct, SD NY, Mar. 28, 2013, Swain, J.; ["a nonparty to a PSA lacks standing to assert noncompliance with the PSA as a claim or defense unless the non-party is an intended (not merely incidental) third-party beneficiary of the PSA"]; Karamath v U.S. Bank, N.A., US Dist Ct, ED NY, Aug. 29, 2012, Levy, J. [mortgagor "is not a party to the PSA or to the Assignment of Mortgage, and is not a third-party beneficiary or either, and therefore has no standing to challenge the validity of that agreement or the assignment"]).

However, the court finds plaintiffs’ second and third causes of action, to the extent they seek to quiet title and invalidate the October 2, 1999 assignment of mortgage, state cognizable causes of action (see Honig v U.S. Bank N.A., 40 Misc 3d 1214 [A], 2013 NY Slip Op 51189 [U] [Supreme Court, Nassau County 2013]). The October 2, 1999 recorded assignment from MERS to the Trust purports to transfer only the mortgage. It is well established that an assignment of the mortgage without the underlying note is a nullity (U.S. Bank Nat. Assn. v Dellarmo, 94 AD3d 746, 748 [2d Dept 2012]; HSBC Bank USA v Hernandez, 92 AD3d 843, 843-844 [2d Dept 2012]; Deutsche Bank National Trust Co. v Barnett, 88 AD3d 636, 637 [2d Dept. 2011]). 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” (GRP Loan, LLC v Taylor, 95 AD3d 1172, 1173 [2d Dept 2012] [citations omitted]). “[A] promissory note [is] a negotiable instrument within the meaning of the [New York] Uniform Commercial Code [UCC]” (Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674, 674 [2d Dept 2007]). “The note secured by the mortgage is a negotiable instrument (see UCC § 3-104) which requires indorsement on the instrument itself `or on a paper so firmly affixed thereto as to become a part thereof’ (UCC § 3-202 [2]) in order to effectuate a valid `assignment’ of the entire instrument (UCC § 3-202 [3], [4])” (Slutsky v Blooming Grove Inn, 147 AD2d 208, 212 [2d Dept 1989]). UCC § 3-202 (1) provides, in pertinent part, that “[i]f the instrument is payable to order it is negotiated by delivery with any necessary indorsement.” UCC § 3-204 (2) further provides that “[a]n indorsement in blank specifies no particular indorsee and may consist of a mere signature. A note payable to order and indorsed in blank becomes payable to bearer and may be negotiated by delivery alone until specially indorsed” (UCC § 3-204 [2]).

The Trust argues that the recorded October 2, 1999 assignment is inconsequential as the note was properly delivered to the Trust pursuant to the PSA. However, while the Trust has submitted a copy of the note in its reply papers, this document alone does not conclusively dispose of plaintiffs’ claims. Along with a copy of the note, the Trust attaches a separate page which contains an endorsement from Fremont in blank. The Trust alleges that the separate page is attached because the endorsement is on the back of the last page of the note. However, this is not substantiated by an affidavit of someone who physically examined the original note. Further, assuming there is an endorsement in blank on the back of the note, in order to establish ownership of the note (and, consequently, the mortgage), the Trust must provide an affidavit of someone with personal knowledge who provides factual details as to the note’s physical delivery (see Homecomings Fin., LLC v Guldi, 108 AD3d 506, 509 [2d Dept 2013]; Deutsche Bank Natl. Trust Co. v Haller, 100 AD3d 680, 682 [2d Dept 2012]; HSBC Bank USA v Hernandez, 92 AD3d at 844 [2d Dept 2012]. The attorney for the Trust does not provide such factual details in his affirmations nor does he attest to having personal knowledge.

With respect to the fifth cause of action alleging that Ocwen improperly applied escrow payments for water charges, Ocwen submits a copy of the mortgage and cites the following provisions:

3. Monthly Payments for Taxes and Insurance

(a) Borrower’s Obligations.

I will pay to Lender all amounts necessary to pay for taxes assessments, water charges, sewer rents and other similar charges . . . Each Periodic Payment will include an amount to be applied toward payment of the following items which are called “Escrow Items.”

(1) The taxes, assessments, water charges, sewer rents and other similar charges, on the Property which under Applicable Law may be superior to this Security Instrument as a lien on the Property . . .

* * *

After signing the Note, or at any time during this term, Lender may include these amounts as Escrow Items. The monthly payment I will make for Escrow Items will be based on Lender’s estimate of the annual amount required.

I will pay to lender all of these amounts to Lender unless Lender tells me, in writing, that I do not have to do so . . .

. . . Lender will estimate from time to time the amount of Escrow Funds I will have to pay by using assessments and bills and reasonable estimates of the amount I will have to pay for Escrow Items in the future . . .

The foregoing provisions clearly entitle Ocwen to include charges for escrow items such as water charges in plaintiffs’ monthly mortgage payment and adjust the amount of monthly escrow payments based on the amount charged in water bills. Even affording the pleadings a liberal construction and accepting all facts alleged as true (see Leon v Martinez, 84 NY2d 83, 87[1994]; Breytman v Olinville Realty, LLC, 54 AD3d 703, 703-704 [2d Dept 2008]), plaintiffs have not clearly articulated a cause of action for damages resulting from Ocwen’s calculation and application of escrow payments. In his affirmation, plaintiffs’ attorney states that Ocwen used escrow funds to pay a water bill that was later found to be erroneous and that Ocwen has not endeavored to recover the erroneous payment from the Department of Environmental Protection (DEP). However, plaintiffs do not cite to any provisions in the mortgage documents which obligate Ocwen itself to recover any erroneously charged funds from the DEP and reapply them to plaintiffs’ account. Moreover, the mortgage terms provide that the amount of monthly escrow payments will be estimated “from time to time” using assessments and bills. It is not clear from the complaint or counsel’s affirmation whether Ocwen is presently overestimating the escrow amounts unreasonably in light of recent accurate water bills.

As a result, defendants’ motion to dismiss the complaint is granted to the extent that the first, fourth and fifth causes of action are dismissed. Dismissal of the fifth cause of action is without prejudice to replead in an amended complaint. The motion to dismiss is otherwise denied with respect to the second and third causes of action seeking to quiet title and invalidate the October 2, 1999 assignment of the mortgage to the Trust.

The foregoing constitutes the decision and order of the court.

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Damning court filings show Morgan Stanley pushed risky subprime mortgage lending

Damning court filings show Morgan Stanley pushed risky subprime mortgage lending

VOX-


1. Court filings say Morgan Stanley, a major Wall Street bank, pushed subprime lender New Century into making riskier and riskier mortgage loans, the New York Times reports.

2. The filings include damning emails, showing that Morgan Stanley employees knew about and even joked about some borrowers’ inability to pay on their mortgages.

3. The Justice Department is now investigating the connection between Morgan Stanley and New Century.

4. The fines further tarnish the reputation of a big bank that, despite its heavy involvement in mortgage-backed securities, until recently had few crisis-related legal troubles.

[VOX]

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Ambac sues Bank of America over Countrywide mortgage bonds

Ambac sues Bank of America over Countrywide mortgage bonds

Perfect way to start off the New Year!


Reuters-

Ambac Assurance Corp sued Bank of America Corp to recoup hundreds of millions of dollars of losses from insuring roughly $1.68 billion of securities backed at least in part by risky mortgages from the bank’s Countrywide Home Loans unit.

In a complaint filed on Tuesday in a New York state court in Manhattan, Ambac accused Countrywide of lying about how well it underwrote so-called “pay option adjustable-rate mortgage negative amortization” loans that backed the securities.

The securities were issued in eight transactions between 2005 and 2007, Ambac said.

[REUTERS]

Image Credit: Reuters/Mike Blake

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The Year in White-Collar Crime

The Year in White-Collar Crime

Simply Unbelievable.


NYT-

White-collar crime cases can take years to develop, so today’s headlines often reflect what happened well in the past. And as we approach the end of 2014, there is a sense, to steal a line from Yogi Berra, that it’s like déjà vu all over again.

We will, of course, see continued fallout from the practices that helped fuel the financial crisis. This past year, the Justice Department reached multibillion-dollar settlements with Bank of America and JPMorgan Chase for selling shoddy mortgage-backed securities before the financial crisis hit in 2008. Most of the loans packaged for investors were made by companies acquired by the banks as the real estate market spiraled downward in 2008, so they paid for the sins of others.

The settlements with big banks hardly close out cases from the financial crisis as names from the past keep popping to the surface. DealBook reported that the Justice Department was considering a civil fraud case against Angelo R. Mozilo, former chief executive of Countrywide Financial, which was at the center of the subprime mortgage market. Prosecutors in Los Angeles closed a criminal investigation a few months after Mr. Mozilo reached a settlement with the Securities and Exchange Commission in 2010 over securities fraud charges. But he may be back in the news again if a new round of civil fraud charges is filed.

The S.E.C. sued the former chief executives of mortgage giants Fannie Mae and Freddie Mac, along with other officers of the companies, for securities fraud in 2011 for not adequately disclosing the companies’ exposure to the subprime mortgages that led to a government bailout. Those cases are just winding up the discovery phase, so it is unlikely there will be a trial in 2015 as the two sides continue to fight over whether the case should proceed.

[NEW YORK TIMES]

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Gorel v. BANK OF NEW YORK MELLON | FL 5DCA – Bank failed to establish that it was entitled to summary judgment because it failed to properly refute their affirmative defense alleging Bank’s failure to provide them with pre-acceleration notice

Gorel v. BANK OF NEW YORK MELLON | FL 5DCA – Bank failed to establish that it was entitled to summary judgment because it failed to properly refute their affirmative defense alleging Bank’s failure to provide them with pre-acceleration notice

 

ADIEL GOREL AND FLCA TROPICAL HOLDINGS, LLC, Appellants,
v.
THE BANK OF NEW YORK MELLON, ETC., Appellee.

Case No. 5D13-165.
District Court of Appeal of Florida, Fifth District.
Opinion filed December 19, 2014.
Michael E. Rodriguez, of Foreclosure Defense Law Firm, PL, Tampa, for Appellants.

Elizabeth T. Frau and Jeffrey M. Gano, of Ronald R. Wolfe & Associates, PL, Tampa, for Appellee.

PER CURIAM.

Adiel Gorel and FLCA Tropical Holdings, LLC appeal the Final Summary Judgment of Mortgage Foreclosure in favor of The Bank of New York Mellon (Bank). Gorel and FLCA contend that Bank failed to establish that it was entitled to summary judgment because it failed to properly refute their affirmative defense alleging Bank’s failure to provide them with pre-acceleration notice as required by the terms of the mortgage. We agree, reverse the summary judgment under review, and remand this case for further proceedings. See Pavolini v. Williams, 915 So. 2d 251, 253 (Fla. 5th DCA 2005) (“`[T]he plaintiff must either disprove those defenses by evidence or establish their legal insufficiency. Thus, summary judgment is appropriate only where each affirmative defense has been conclusively refuted on the record.’” (citation omitted) (quoting The Race, Inc. v. Lake & River Recreational Props., Inc., 573 So. 2d 409, 410 (Fla. 1st DCA 1991))); see also Haven Fed. Sav. & Loan Ass’n v. Kirian, 579 So. 2d 730, 733 (Fla. 1991) (“A court cannot grant summary judgment where a defendant asserts legally sufficient affirmative defenses that have not been rebutted.”); Gray v. Union Planters Nat’l Bank, 654 So. 2d 1288, 1288 (Fla. 3d DCA 1995) (“`[W]here a defendant pleads an affirmative defense and the plaintiff does not by affidavit contradict or deny that defense, the plaintiff is not entitled to a summary judgment.’” (quoting Johnson & Kirby, Inc. v. Citizens Nat’l Bank of Ft. Lauderdale, 338 So. 2d 905, 906 (Fla. 3d DCA 1976))).

REVERSED and REMANDED.

SAWAYA, PALMER, and LAMBERT, JJ., concur.

NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED.

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New York’s Top Cop Scores as Credit Suisse Faces $10 Billion Mortgage Fraud Suit

New York’s Top Cop Scores as Credit Suisse Faces $10 Billion Mortgage Fraud Suit

BusinessWeek-

Credit Suisse Group AG (CSGN) was ordered to face a $10 billion lawsuit by New York’s attorney general accusing the Swiss bank of fraud in the sales of mortgage-backed securities before the 2008 financial crisis.

A New York State Supreme Court justice rejected the bank’s request to dismiss the case, a move that gives leverage to Attorney General Eric Schneiderman to demand internal bank documents and force a settlement. New York demonstrated the bank may have engaged in misconduct, Justice Marcy Friedman said in a Dec. 24 decision, allowing the suit to head toward trial.

In addition to forcing Zurich-based Credit Suisse to defend itself or settle, the ruling may strengthen Schneiderman’s hand in punishing other banks for bad behavior tied to the recession.

[BUSINESS WEEK]

image: BusinessWeek

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NATIONAL CREDIT UNION ADMINISTRATION BOARD vs U.S. BANK N A, and BANK OF AMERICA, N A |  NCUA Sues Trustees of 99 Mortgage-Backed Securities

NATIONAL CREDIT UNION ADMINISTRATION BOARD vs U.S. BANK N A, and BANK OF AMERICA, N A | NCUA Sues Trustees of 99 Mortgage-Backed Securities

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK

NATIONAL CREDIT UNION
ADMINISTRATION BOARD,
as Liquidating Agent of U.S. Central Federal
Credit Union, Western Corporate Federal Credit
Union, Members United Corporate Federal
Credit Union, Southwest Corporate Federal
Credit Union, and Constitution Corporate
Federal Credit Union,

Plaintiffs,

v.

U.S. BANK NATIONAL ASSOCIATION, and
BANK OF AMERICA, NATIONAL
ASSOCIATION,
Defendants.

COMPLAINT

The National Credit Union Administration Board (“NCUA Board”), acting in its capacity as liquidating agent for each of U.S. Central Federal Credit Union (“U.S. Central”), Western Corporate Federal Credit Union (“WesCorp”), Members United Corporate Federal Credit Union (“Members United”), Southwest Corporate Federal Credit Union (“Southwest”), and Constitution Corporate Federal Credit Union (“Constitution”), (collectively, the “CCUs” and the NCUA Board as liquidating agent for each, the “Plaintiffs”), by and through their attorneys, for this action against U.S. Bank National Association (“U.S. Bank”) and Bank of America, National Association (“Bank of America,” and collectively with U.S. Bank, “Defendants”), alleges as follows:

I. NATURE OF THE ACTION
1. Plaintiffs bring this action against Defendants for violating the Trust Indenture Act of 1939 (the “TIA”), 15 U.S.C. § 77aaa et seq., and, regarding the New York trusts, for violating New York Real Property Law § 124 et seq. (the “Streit Act”) to recover the damages they have suffered because of Defendants’ violations of their statutory and contractual obligations.
2. This action arises out of Defendants’ roles as trustees for 99 trusts identified on Exhibit A that issued residential mortgage-backed securities (“RMBS”).1 Each trust consists of hundreds of individual residential mortgage loans that were pooled together and securitized for sale to investors. Investors purchased certificates issued by the RMBS trust that entitled the investors (or “certificateholders”) to fixed principal and interest payments from the income stream generated as borrowers made monthly payments on the mortgage loans in the trusts.
3. The CCUs purchased the certificates in the trusts identified on Exhibit A at an original face value of approximately $5.8 billion.
4. The certificates’ value was dependent on the quality and performance of the mortgage loans in the trusts and swift correction of any problems with the loans. But, because of the structure of the securitization, certificateholders do not have access to the mortgage loan files or the power to remedy or replace any defective loans. Instead, certificateholders must rely on the trustees to protect their interests.
5. Defendants, as the trustees for the trusts, had contractual and statutory duties to address and correct problems with the mortgage loans and to protect the trusts’ and the certificateholders’ interests. The trustee for each trust has three primary duties. First, the trustee must take possession and acknowledge receipt of the mortgage files, review the documents in the mortgage files, identify any mortgage files that lack a complete chain of title or that have missing documents, and then certify that the mortgage files are complete and accurate. If the trustee identifies defects in the mortgage files, it must notify the appropriate parties and take steps to enforce the responsible party’s obligation to cure, substitute, or repurchase any mortgage loans with defective mortgage files.
6. Second, if the trustee discovers a breach of the representations and warranties concerning the mortgage loans, including but not limited to representations concerning the characteristics of the mortgage borrowers, the collateral for the mortgage loans, and assurances that the mortgage loans were originated in accordance with applicable underwriting criteria, the trustee must notify the appropriate parties and take steps to enforce the responsible party’s obligation to cure, substitute, or repurchase the defective mortgage loans. If the trustee fails to exercise this duty, then the trusts and the certificateholders will suffer losses properly borne by the party responsible for the defective loans.
7. Third, the trustee must act to protect the interests of the trust and the certificateholders when it becomes aware of defaults concerning the trust. Thus, when the trustee discovers a default, or is notified by other parties, such as servicers, of defaults like breaches of representations and warranties with respect to the underlying mortgage loans, the trustee must act prudently to investigate those defaults, notify certificateholders of the defaults, and take appropriate action to address the defaults.
8. Here, Defendants even failed to perform the threshold duties of taking full possession of the original notes and mortgages and properly reviewing the mortgage loan files for irregularities. If they had fulfilled their obligations, a significant percentage of the mortgage loans in the trusts would have been repurchased or substituted.
9. Moreover, an overwhelming number of events alerted Defendants to the fact that the trusts suffered from numerous problems, yet they did nothing. First, the trusts suffered identifies defects in the mortgage files, it must notify the appropriate parties and take steps to enforce the responsible party’s obligation to cure, substitute, or repurchase any mortgage loans with defective mortgage files.
6. Second, if the trustee discovers a breach of the representations and warranties concerning the mortgage loans, including but not limited to representations concerning the characteristics of the mortgage borrowers, the collateral for the mortgage loans, and assurances that the mortgage loans were originated in accordance with applicable underwriting criteria, the trustee must notify the appropriate parties and take steps to enforce the responsible party’s obligation to cure, substitute, or repurchase the defective mortgage loans. If the trustee fails to exercise this duty, then the trusts and the certificateholders will suffer losses properly borne by the party responsible for the defective loans.
7. Third, the trustee must act to protect the interests of the trust and the certificateholders when it becomes aware of defaults concerning the trust. Thus, when the trustee discovers a default, or is notified by other parties, such as servicers, of defaults like breaches of representations and warranties with respect to the underlying mortgage loans, the trustee must act prudently to investigate those defaults, notify certificateholders of the defaults, and take appropriate action to address the defaults.
8. Here, Defendants even failed to perform the threshold duties of taking full possession of the original notes and mortgages and properly reviewing the mortgage loan files for irregularities. If they had fulfilled their obligations, a significant percentage of the mortgage loans in the trusts would have been repurchased or substituted.
9. Moreover, an overwhelming number of events alerted Defendants to the fact that the trusts suffered from numerous problems, yet they did nothing. First, the trusts suffered enormous losses due to the high number of mortgage defaults, delinquencies, and foreclosures caused by defective loan origination and underwriting. Second, highly publicized government investigations and enforcement actions, public and private litigation, and media reports highlighted the mortgage originators’ systematic abandonment and disregard of underwriting guidelines and the deal sponsors’ poor securitization standards in the years leading up to the financial crisis. As summarized below, these actions and reports detail the incredible volume of defective loans and notorious activities of the originators, sponsors, and other players in the RMBS industry. Yet Defendants failed to take steps to preserve their rights or hold the responsible parties accountable for the repurchase or substitution of defective mortgage loans in direct contravention of their obligations as trustees.
10. Finally, Defendants failed to address servicer and/or master servicer defaults and events of default. Defendants knew that the master servicers and servicers were ignoring their duty to notify other parties, including Defendants as trustees, upon the master servicers’ and servicers’ discovery of breaches of the mortgage loan representations and warranties. Despite Defendants’ knowledge of these ongoing defaults and events of default, Defendants failed to act prudently to protect the interests of the trusts and the certificateholders.
11. Defendants’ failures resulted in the trusts and certificateholders suffering losses rightfully borne by other parties. Had Defendants adequately performed their contractual and statutory obligations, breaching loans would have been removed from the loan pools underlying the certificates and returned to the responsible party. Defendants’ improper conduct directly caused losses to certificateholders like the Plaintiffs.
12. Even after ample evidence came to light that the trusts were riddled with defective loans, Defendants shut their eyes to such problems and failed to take the steps necessary to protect the trusts and certificateholders. Defendants failed to act in part because protecting the best interests of the trusts and the certificateholders would have conflicted with Defendants’ interests. As participants in many roles in the securitization process, Defendants were economically intertwined with the parties they were supposed to police.
13. Because of the widespread misconduct in the securitization process, Defendants had incentives to ignore other parties’ misconduct in order to avoid drawing attention to their own misconduct. Thus, Defendants failed and unreasonably refused to take action to protect the trusts and certificateholders against responsible party breaches.
14. Indeed, it is precisely this type of trustee complicity and inaction that led Congress to enact the TIA to “meet the problems and eliminate the practices” that plagued Depression-era trustee arrangements and provide investors with a remedy for trustees that utterly neglect their obligations. See, e.g., 15 U.S.C. § 77bbb(b) (explaining purposes of the TIA in light of problems identified in 15 U.S.C. § 77bbb(a)).
15. To that end, several sections of the TIA impose duties on trustees. First, TIA Section 315(a) provides that, prior to default (as that term is defined in the governing documents), the trustee is liable for any duties specifically set out in the governing documents. 15 U.S.C. § 77ooo(a)(1). Second, TIA Section 315(b) provides that the trustee must give holders of covered securities “notice of all defaults known to the trustee, within ninety days after the occurrence thereof.” 15 U.S.C. § 77ooo(b). Third, Section 315(c) requires a trustee to act prudently in the event of a default (as that term is defined in the governing documents). 15 U.S.C. § 77ooo(c). Finally, the TIA states that “[n]otwithstanding any other provision of the indenture to be qualified, the right of any holder of any indenture security to receive payment of the principal of and interest on such indenture security, on or after the respective due dates expressed in such indenture security . . . shall not be impaired or affected without the consent of such holder.” 15 U.S.C. § 77ppp(b).
16. In addition, Section 124 of the Streit Act imposes a duty upon the trustee to discharge its duties under the applicable indenture with due care to ensure the orderly administration of the trust and to protect the trust beneficiaries’ rights. N.Y. Real Prop. Law § 124. Like the TIA, following an event of default, the Streit Act provides that the trustee must exercise the same degree of skill and care in the performance of its duties as would a prudent person under the same circumstances. N.Y. Real Prop. Law § 126(1).
17. Finally, upon awareness of the various failures discussed in this complaint, the governing agreements require Defendants to exercise their rights and powers using the same degree of care and skill as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
18. Defendants’ failure to perform their duties under the TIA, the Streit Act, and the governing agreements has caused Plaintiffs to suffer enormous damages.

[...]

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View all servicers’ National Mortgage Settlement scorecards and corrective action plans

View all servicers’ National Mortgage Settlement scorecards and corrective action plans

Executive Summary

The following summary is an overview of the fourth set of compliance reports that I have filed with the United States District Court for the District of Columbia (the Court) as Monitor of the National Mortgage Settlement. The summary includes:

  • An overview of the process through which my colleagues and I have reviewed the servicers’ performance on the Settlement’s servicing reforms
  • An update on the servicers’ plans to correct issues outlined in this and prior reports
  • Summaries of each servicer’s compliance for the first and second calendar quarters of 2014, including compliance with the four new additional metrics I issued in October 2013
  • An analysis of complaints received from distressed borrowers and the professionals who represent them

I reported a total of three potential violations in the first two quarters of this year, the relevant test periods for this report. In the first quarter of 2014, Bank of America failed Metrics 7 and 19 and Citi failed Metric 20. There were no reported fails in the second quarter of 2014.

In May of 2014, I reported that Green Tree failed eight metrics in the fourth quarter of 2013 and had much work to do. I have since reviewed the corrective action plans Green Tree proposed to address the root causes of these fails and summarized them in this report. Green Tree reported, and I confirmed, that the servicer passed Metrics 10 and 12 in the second quarter of 2014, two of the metrics it previously failed. The six other previously failed metrics will be tested in subsequent test periods.

I filed with the Court an interim report on Ocwen’s progress for the relevant test periods. In May 2014, an Ocwen employee contacted a member of the Monitoring Committee and alleged serious deficiencies in the internal review group (IRG) process, which called into question the IRG’s independence and the integrity of the IRG’s operations. Based on these allegations, I launched an investigation into the claims. After my team and I reviewed numerous documents and interviewed several Ocwen personnel, I concluded that I could not rely on the work of Ocwen’s IRG for the first half of 2014. Therefore, I exercised my authority under the Settlement and tasked McGladrey, an independent accounting firm, to retest Ocwen’s performance on a number of metrics.

Additionally, after reviewing a letter issued by the New York Superintendent of Financial Services, which indicated that the date on certain correspondence from Ocwen to its consumers was incorrect, I directed Ocwen to scope, correct and remediate this letter dating problem. Again, I engaged McGladrey to perform additional work to confirm that Ocwen is complying with the Settlement. McGladrey’s work on both issues is ongoing, and I will report to the Court when it has been completed.

[jasmithmonitoring]

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Monitor: Banks Fail Three Tests, Issues Discovered at Ocwen Joseph Smith reports on NMS compliance, Ocwen consumer relief, and Chase RMBS Settlement

Monitor: Banks Fail Three Tests, Issues Discovered at Ocwen Joseph Smith reports on NMS compliance, Ocwen consumer relief, and Chase RMBS Settlement

For immediate release:
December 16, 2014

Contact:
Hannah Harrill
919-508-7821

Monitor: Banks Fail Three Tests, Issues Discovered at Ocwen Joseph Smith reports on NMS compliance, Ocwen consumer relief, and Chase RMBS Settlement

RALEIGH, N.C. – Joseph A. Smith, Jr., Monitor of the National Mortgage Settlement (NMS), the Ocwen National Servicing Settlement, and JP Morgan Chase Residential Mortgage-Backed Securities Settlement (Chase RMBS Settlement), today released updates on six mortgage servicers’ compliance with the NMS servicing standards, Ocwen’s self-reported progress toward fulfilling its consumer relief requirement under the Ocwen National Servicing Settlement, and JP Morgan Chase’s progress toward fulfilling the consumer relief requirements of the Chase RMBS Settlement.

NMS Compliance
Smith’s Continued Oversight report is a summary of six compliance reports he filed with the United States District Court for the District of Columbia as part of his duties monitoring the NMS. This summary details the results of his tests to determine compliance by Bank of America, Chase, Citi, Green Tree, Ocwen and Wells Fargo with the NMS servicing rules from Jan. 1, 2014 to June 30, 2014.

This is the first report with results for Smith’s four additional metrics created to supplement the original 29 NMS metrics. “The new metrics addressed concerns related to issues involving the loan modification process, single points of contact and billing statement accuracy,” said Smith. “I found that all the servicers tested on these new metrics passed them.”

There were three fails of other metrics.

Ocwen Compliance
“In May, an Ocwen employee contacted me through the Monitoring Committee and identified serious deficiencies in Ocwen’s internal review group process,” said Smith. “The Monitoring Committee and I took the claims seriously, and I launched an investigation, during which my team and I reviewed thousands of documents and interviewed nine Ocwen executives and employees. As a result, I retained an independent auditing firm to review and retest the Ocwen internal review group (IRG)’s work. This work is ongoing, and I will report on Ocwen’s performance for the period covered in these reports when it is complete. I appreciate this whistle-blower’s integrity.

“I have since further strengthened my review process of all servicers’ IRGs. Among other enhancements, I added interviews with multiple employees at various levels, additional reviews at various steps in the testing process, and the establishment of an Ethics Hotline so that any concerned IRG employee can reach my team quickly and anonymously if he or she has any concerns.

“The Monitoring Committee has been active and constructive in the monitoring process since the beginning of the NMS and I consulted with it during the course of my investigation into Ocwen’s practices.” The Monitoring Committee is composed of representatives from 15 states, the U.S. Department of Housing and Urban Development and the U.S. Department of Justice.

Smith also engaged Ocwen about the New York State Superintendent of Financial Services’ concerns about incorrect dates on some of Ocwen’s correspondence with customers, as this letter dating issue impacts the NMS.

“Many NMS standards and metrics have timeline requirements, so it was important to me to investigate Ocwen’s work in this area,” said Smith. “Ocwen has agreed to five remedial actions to date, which I include in this report. I also charged the same independent firm with determining the scope of the issue, assessing the reliability of Ocwen’s systems, and retesting relevant metrics.

“Ocwen has cooperated throughout the IRG and letter dating investigations and the ongoing work.”

Ocwen Consumer Relief under the Ocwen National Servicing Settlement
Smith also released an update on Ocwen’s $2 billion in first lien principal reduction obligation. Ocwen self-reported that it has completed $1.5 billion to borrowers through September 30, 2014. This is the first update on Ocwen’s consumer relief progress, and the Monitor has not yet credited these numbers. The Ocwen consumer relief data can be found here.

Chase RMBS Consumer Relief
In addition, Smith released a report on Chase’s progress toward providing $4 billion in consumer relief as part of the Chase RMBS Settlement. Chase’s review group asserted to the Monitor that it provided almost $1.4 billion in credited relief in the third quarter of 2014 and more than $2.2 billion in credited relief to date. Chase reports that it has provided $13.8 billion dollars in gross modifications and lending to 111,924 borrowers as of September 30, 2014. The Monitor has credited more than $868 million and is reviewing the additional work Chase and its internal review group (HRG) asserted. He will report the results of his testing in his report to the public next quarter.

About the Office of Mortgage Settlement Oversight More information about the National Mortgage Settlement and the Ocwen National Servicing Settlement is available at www.nationalmortgagesettlement.com. Further information about Joseph Smith and the Office of Mortgage Settlement Oversight is available at www.mortgageoversight.com.

About the Chase RMBS Settlement
More information about the Chase RMBS Settlement is available at https://www.jasmithmonitoring.com/chase. Further information about Joseph A. Smith, Jr. is available a https://www.jasmithmonitoring.com.

REPORT:

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Dan Alter: The legal mastermind behind New York’s record bank fines

Dan Alter: The legal mastermind behind New York’s record bank fines

WOW! Good for him. I supplied him with a ton of info at one point and then it went silent.

I’m glad to hear he was behind this!


Reuters-

Billions of dollars have flowed to New York state coffers thanks to headline-grabbing settlements with global banks announced by Governor Andrew Cuomo and Benjamin Lawsky, New York’s first superintendent of financial services.

But little attention has been focused on Daniel Alter, the 49-year-old legal mastermind behind many of the deals.

Sources close to the settlements describe Alter, general counsel at New York’s Department of Financial Services (DFS), as instrumental to crafting strategies that leverage the three-year-old agency’s unique powers to extract large and sometimes painful penalties from major banks.

[REUTERS]

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New York Regulator Poses Formidable Threat To Mortgage Servicers

New York Regulator Poses Formidable Threat To Mortgage Servicers

Forbes-

Benjamin Lawsky, a relatively unknown New York State regulator, has put the fast-growing non-bank mortgage servicing industry’s business model in jeopardy. Look no further than Ocwen Financial for proof of a servicing segment that remains marred in uncertainty.

Ocwen is reeling following a dispute with Lawsky that killed a promising a $39 billion acquisition of Wells Fargo’s servicing rights. News of the cancelled deal in mid-November sent the company’s shares down as much as 67 percent from their 52-week high. The stock has recovered slightly, but is still off more than 50 percent from a December 2013 high of $58.07.

Now, investors are left wondering whether the servicer – likened to a shark – will be allowed to continue feeding on new mortgages.

[FORBES]

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Bank of America foreclosure dismissal moves forward $70M jury trial against bank

Bank of America foreclosure dismissal moves forward $70M jury trial against bank

(PR NewsChannel) / December 2, 2014 / PALM BEACH, Fla.

TJ Fisher with Colonel Dudley Boudreaux Waddlesworth, Lady Scotus Cornelia LaRue and Madame Calliope de Bourbon
TJ Fisher with Colonel Dudley Boudreaux Waddlesworth, Lady Scotus Cornelia LaRue and Madame Calliope de Bourbon
.

Bank of America (NYSE:BAC) dropped their foreclosure case against author TJ Fisher at a recent bench trial after bank attorneys missed a court deadline and Motion-in-limine hearing and were barred from presenting documents or witnesses. Judge Catherine M. Brunson of the 15th Judicial Circuit of Florida signed the foreclosure dismissal order and also presides over Fisher’s long-running $70 million legal battle against the nation’s second-biggest bank as a defendant. The tangled cases play out in the same courtroom, each case jockeying for crucial court-calendar scheduling and rulings.

“The foreclosure dismissal is a miracle I’m grateful for,” Fisher says. “Bank of America intended to heave-ho me from my home before a jury hears my main case against the bank. They’re stopped, for now,” Fisher says.

Fisher met financial and personal ruin after ex-Baltimore Raven’s football player Michael McCrary sued her for $60 million and obtained a subsequent default judgment. The salacious scandal over convoluted Bank of America 2006 transactions between the bank and Fisher’s husband embroiled the author after the bank opened an unverified limited liability company account and took in deposit monies that permeated Fisher’s marital life.

The bank’s account opening triggered a seven-year nightmare and legal-quagmire odyssey through 14 civil courts for Fisher. Her life in shambles with debt and an impossible-to-pay $33.3 million judgment, Fisher fought back but could not get out from behind-the-eight-ball untenable situation she was thrust into. She sued Bank of America in 2011 for negligence and responsibility.

The former-NFLer dogged Fisher for years until his parallel suit against Bank of America finally netted him an eight-figure bank settlement, after Fisher sued the bank. Once receiving settlement for the same account opening he sued Fisher over, McCrary refused to extinguish his duplicate claim and legally valid judgment against her. McCrary and his lawyers remain intent on extracting the proverbial pound after pound of flesh and millions of dollars more from Fisher for McCrary’s soured business relationship with her husband that pocketed the ex-gridiron an eight million plus profit. McCrary wants more.

The powerful, influential and well-financed bank that consistently ranks as one of American’s most hated banks with a high rate of customer dissatisfaction has dodged and delayed a jury trial for nearly four years in Fisher’s headliner case against the bank while simultaneously pursuing foreclosing her from her home. Fisher’s attorney Patrick W. Maraist, Esq. filed a 63-page Motion for Continuance in the foreclosure case to stay the foreclosure on the “unclean hands” doctrine and the bank’s ongoing “bad faith” tactics to stonewall discovery and stall justice. Maraist did not have to obtain a court injunction to block foreclosure, this time around. A string of judicial rulings favorable to Fisher rendered his motion unessential.

TJ Fisher and Miss Marion Colbert of Tremé, New OrleansTJ Fisher and Miss Marion Colbert of Tremé, New Orleans
.

“Countless prayers have been said on my behalf and candles lit by people from all walks of life—many in far worse predicaments than me. That’s very humbling. The collective strength and power of my well-wishers enables me to keep going, and I give thanks for my blessings. The bank bets on grounding me down to dust. They’re wrong. They miscalculated. I’m not going away. I live another day to fight Goliath.”

The improper financial dealings and bank accounts set up by the bank’s Palm Beach Vice-President and Branch Manager Peter Kafouros and Fisher’s husband are the heart and underbelly of Fisher’s Bank of America lawsuit. She seeks compensation for her actual damages and loss suffered and funds to extinguish outstanding financial and judgment debt. This does not include pain and suffering for what she has endured and irreparable harm caused.

Fisher’s case against the financial behemoth was originally scheduled to begin August 18 with a five-day trial set before a six-panel jury. The bank lost its 11th hour Motion for Summary Judgment and then requested and received a continuance days before the trial was to commence. The postponement allowed the bank’s competing ancillary foreclosure action to bump ahead on the court docket. This rescheduling subjected Fisher to the possibility of no roof over her head and being forced into a bankruptcy filing before America’s “Banking Royalty” of Wall Street ever faced a jury for its alleged financial wrongdoings that unraveled Fisher’s life.

The foreclosure reprieve means Fisher’s case against Bank of America remains in state court and jury-bound, for the moment. The revolving door of legal motions and court hearings continues. “It takes a toll,” Fisher says. “I’ve fought for years and years without resources and tens of millions of debt to get a jury trial.”

Atypical Palm Beacher Fisher fits no mold. Fisher previously divided her time between Palm Beach and New Orleans and before losing her historic Bourbon Street house during seven years of litigation. She credits the people and places of New Orleans for lessons learned in resiliency. Fisher says that her faith, determination, spunk and spirit cannot be obliterated.

Fisher looks to her longtime 86-year-old friend and role model Miss Marion Colbert of Tremé for inspiration. Miss Marion has known extreme post-Hurricane Katrina tragedy and loss and hardship that few can comprehend. “You can’t argue with God,” Miss Marion recently warned Fisher during a visit to her home, “he makes the decisions.” Miss Marion remains a beloved, elegant and stalwart matriarch of the 200-year-old Faubourg Tremé community. She presides over the heart of Creolé culture. Everyone listens to Miss Marion.

For now, resilient litigant Fisher has her reprieve. Her major lawsuit moves closer to jury trial where fair and dispassionate jury members will hear the size and scope of Fisher’s damages and deliver judgment on the behavior of Too Big To Fail banking titan Bank of America.

TJ Fisher at her 2008 Faulkner Society book signing and “Juleps in June” benefit with Miss Marion Colbert and Ron Boykins, Upper Garden District, New OrleansTJ Fisher at her 2008 Faulkner Society book signing and “Juleps in June” benefit with Miss Marion Colbert and Ron Boykins, Upper Garden District, New Orleans
.

Fisher says she is a victim of banking negligence and owes no penitence to McCrary, merely the default judgment dollars a Baltimore court awarded him against her for the bank account Bank of America wrongly opened and then settled with him over. Her lawsuit begs the question many ask of the bank’s activities and breaches of federal regulations: “Did Bank of America really do that?” Jurors will have an opportunity to see and hear witness testimony, examine documents, learn of missing documents and review Banker Kafouros’ video-taped deposition about the trillion-dollar bank’s business practices. Impartial “finders of fact” will look at evidence and pass verdict on one of the country’s Big Four banks.

Fisher says the bank’s pleadings and court arguments seek to tar and feather her, akin to attacking and blaming the victim, perhaps in a hope that jurors will not understand her case’s dramatic twists and turns and nuclear fallout. “Bank lawyers constantly call me ‘THE Fishers’ like I’m a two-headed beast and point at me backwards during court hearing proceedings,” Fisher says. That does not deter her from pursuing justice. Fisher concludes juries are not easily fooled. She believes jurors will clearly grasp how Bank of America actions and inaction sucked her into an inescapable purgatory train wreck.

Fisher offers regular poignant glances into her ongoing struggles, updating those who follow her case and story.

Fisher’s “David” attorney Maraist will argue a pre-trial 3-1/2 hour hearing before Judge Brunson as to why the “Goliath” bank and its Liebler, Gonzalez & Portuondo law firm should be severely penalized and defaulted for the bank’s numerous discovery failures and apparent arrogant disregard for court rulings. The bank continues to ignore and defy Brunson’s September 12 order to make available to Fisher 100,000 pages of undisclosed relevant documents the bank previously hid and refused to produce. The default hearing against the bank was previously set for November 12 but cancelled and reset for January.

The Liebler law firm not only represents Bank of America in Fisher’s case against the bank but is also the legal counsel on a Bank of America mortgage pass-through foreclosure action against Fisher’s home.

Recent Bank of America scandals include a blockbuster settlement of $16.65 billion this summer with the Justice Department over the bank’s selling of mortgage securities, and a settlement this month over the alleged manipulation of foreign-exchange rates.

Others say Fisher inspires them with her stamina and faith, her smile and strength, her grace and elegance and a large dose of zany humor while fighting a giant under impossible circumstances.

Fisher tries to live by Miss Marion’s motto “a smile goes a long way” and her “shake-shake-shake the devil off your back” philosophy. Miss Marion, a lifelong St. Augustine Catholic Church of New Orleans parishioner, was Brennan’s restaurant beloved powder room attendant for 35 years before the French Quarter landmark abruptly closed under new ownership last year.

“Miss Marion is a wise woman. I made promises to her about my lawsuit and St. Augustine that I intend to keep,” Fisher says.

Ticktin Law Group attorneys Michael Vater and Tim Quinones represented Fisher in the dismissed foreclosure action. They also represent Fisher in the ongoing second Bank of America mortgage foreclosure case.

“This is a movie of the week,” Fisher says, “an epic Book-of-Job size fall from grace, but also resiliency and redemption and laying down the missing pieces in an unfinished jigsaw puzzle that will complete the picture to allow a jury to discipline the bank.”

Fisher says she can never return to the person she was at the onset of McCrary suing her. “Change is a natural part of life. Nobody’s life or circumstances remain forever flat, no matter

TJ Fisherat the Margaret Statue, Lower Garden District, New OrleansTJ Fisherat the Margaret Statue, Lower Garden District, New Orleans
.

what, it’s a part of the human condition and survival.” She has learned to roll with the punches but anticipates a reversal of fortunes in the near future. “If you have a home, you can handle what life throws you. My own experiences have solidified the importance of supporting causes that aid the homeless and help keep families in their home.”

She adds, “Tragic life occurrences and ‘everyday life issues’ like illness, injury, job loss, accidents, natural disasters, unpaid bills, no income and foreclosure render people homeless. As many as 3.5 million Americans are homeless each year, more than one million of these are children, and on any given night, more than 300,000 children are homeless.”

Fisher, who has worked tirelessly to overcome insurmountable to odds get this far, believes her litigation will soon end with victory. She hopes to share that victory with others. She expects a return to financial strength and self-sufficiency and looks forward to getting back to writing books, philanthropy and making movies instead of fighting lawsuits.

Fisher also looks to the one of America’s greatest heroines, philanthropists and lifelong champion of the destitute “Mother of Orphans” Margaret Haughery (1813–1882) for strength and inspiration. She has pledged to aid in the restoration of the Irish “Angel of the Delta” and “Bread Woman of New Orleans” 1800s marble monument and to continue her legacy.

For more information on TJ Fisher, please visit: TJ Fisher.com and TJ Fisher.net.

DOWNLOAD LEGAL DOCUMENTS: Order #1 and Order #2

MEDIA CONTACT:
Anne ?O’Brien
PR firm: Bourbon Media
Email: bourbonmedia@gmail.com
Phone: (504) 408-1535

Direct link:  http://www.prnewschannel.com/2014/12/02/bank-of-america-foreclosure-dismissal-moves-forward-70m-jury-trial-against-bank/SOURCE:  TJ Fisher

This press release is distributed by PR NewsChannel. Your News. Everywhere.

- See more at: http://www.prnewschannel.com/2014/12/02/bank-of-america-foreclosure-dismissal-moves-forward-70m-jury-trial-against-bank/#sthash.PXLr0HdC.dpuf

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U.S. Bank N.A. v Merrill Lynch Mtge. Lending, Inc.| NYSC – U.S. Bank seeks a corporate witness for deposition regarding two matters…Securitzation and potential documents and custodians concerning Merrill’s servicing and breach notification policies

U.S. Bank N.A. v Merrill Lynch Mtge. Lending, Inc.| NYSC – U.S. Bank seeks a corporate witness for deposition regarding two matters…Securitzation and potential documents and custodians concerning Merrill’s servicing and breach notification policies

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK : PART 45

—————————————————————~~——-x

U.S. BANK NATIONAL ASSOCIATION, not in its
individual capacity, but as trustee for MERRILL LYNCH
MORTGAGE INVESTORS TRUST, SERIES 2006-RM4
and MERRILL LYNCH MORTGAGE INVESTORS
TRUST, SERIES 2006-RM5,
Plaintiff,

-against-

MERRILL LYNCH MORTGAGE LENDING,
INC., MERRILL LYNCH MORTGAGE INVESTORS,
INC. and BANK OF AMERICA, NATIONAL
ASSOCIATION,
Defendants.

EXCERPT:
The first category of documents that U.S. Bank seeks are those concerning (1) Merrill’s
internal assessment of its repurchase liability with respect to the ResMAE loans that collateralize
the two trusts (Trusts) at issue, and (2) Merrill’s generally-applicable policies and procedures for
repurchasing securitized loans since 2005.

[..]

VIII. Corporate witnesses
Finally, U.S. Bank seeks a corporate witness for deposition regarding two matters: 1)
potential documents and custodians for the 15 representative securitization deals discussed
above, and 2) potential documents and custodians concerning Merrill’s servicing and breach
notification policies. U.S. Bank is entitled to depose representatives of Merrill with knowledge
of the location of relevant documents and the identities of relevant custodians. Merrill must
designate a corporate witness for each of these matters.

ORDERED that the motion to compel the production of documents is granted.

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California Reinvestment Coalition: Join Us in Telling Bank Regulators: We Need a Cop on the Beat!

California Reinvestment Coalition: Join Us in Telling Bank Regulators: We Need a Cop on the Beat!

Last week, Senator Elizabeth Warren asked the president of the New York Federal Reserve Bank  if he thought of himself as a cop on the street when it comes to regulating banks.  He responded that no, he thought of himself more as a “fire marshal.”

Really?   After dozens of Wall Street scandals, one of the bank’s main regulators doesn’t think of himself as a cop on the beat?  

Help the California Reinvestment Coalition send a message to the New York Federal Reserve that we do need a “Cop on the Beat?”

One of the ways the New York Fed could immediately demonstrate that Main Street is more important than Wall Street is by holding public hearings about a proposed Too Big To Fail Bank merger in California.

This merger, if approved, would combine two troubled banks (OneWest- the new version of IndyMac, which was the 3rd largest bank failure in our country, costing the FDIC $10 billion and counting) and CIT Group (borrowed $2.3 billion from the US government that it will never have to pay back because it declared bankruptcy) to create another Too Big To Fail bank.  The California Reinvestment Coalition, along with over 50 other organizations in California and organizations and consumers throughout the US, is opposing this merger and asking the regulators to hold hearings.

Regulators need to hear from consumers. Can you sign our petition, telling bank regulators that we DO need a “Cop on the Beat”?

If you personally have any experience with IndyMac Bank, OneWest Bank, Financial Freedom (reverse mortgage servicer subsidiary of OneWest), or if  your OneWest morgage was transferred to Ocwen, another troubled firm, please tell the regulators about your experiences, and please join CRC in asking for hearings on this merger.

click image below to sign the petition.

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Sample v. WELLS FARGO BANK, NA, Fla: Dist. Court of Appeals, 4th Dist. 2014 || While we disagree with him about thirteen of (the defenses) them, WE DO AGREE WITH THAT ONE of the affirmative defenses precluded the entry of summary judgment.

Sample v. WELLS FARGO BANK, NA, Fla: Dist. Court of Appeals, 4th Dist. 2014 || While we disagree with him about thirteen of (the defenses) them, WE DO AGREE WITH THAT ONE of the affirmative defenses precluded the entry of summary judgment.

WILLIAM C. SAMPLE, Appellant,
v.
WELLS FARGO BANK, N.A., Appellee.

No. 4D13-2883.
District Court of Appeal of Florida, Fourth District.
November 12, 2014.
Ronnie D. Dykes of Ronnie D. Dykes, P.A., Boca Raton, for appellant.

Amanda Renee Murphy of Butler & Hosch, P.A., Orlando, for appellee.

MAY, J.

A borrower appeals a final summary judgment of foreclosure. He argues the trial court erred in entering summary judgment because the bank failed to overcome his fourteen affirmative defenses. While we disagree with him about thirteen of them, we do agree that one of the affirmative defenses precluded the entry of summary judgment. We therefore reverse and remand.

The borrower and Mortgage Electronic Registration Systems, Inc., acting solely as nominee for Countrywide Bank, N.A. (“MERS”), executed a mortgage and note. When the borrower failed to pay his monthly payment, MERS sent a notice of default to the borrower.

Several months later, MERS executed an assignment of mortgage in favor of the bank. The bank filed a complaint seeking to foreclose the mortgage, reestablish the lost note, reform the mortgage, and for damages on the promissory note. The bank voluntarily dismissed the lost note count and filed the original note, mortgage, and assignment of mortgage. The borrower propounded a request for production; the bank moved for a protective order.

More than three years later, the bank moved for summary judgment. In support of its motion, the bank filed the payment history, affidavit of costs, and affidavit of indebtedness. The borrower then filed an answer and asserted fourteen affirmative defenses. The bank moved to strike the affirmative defenses and in the alternative replied to them. The borrower filed an opposition to summary judgment, a motion for continuance and mediation, and a motion to compel better responses to his request for production.

The trial court heard the bank’s motion and entered a final summary judgment for the bank. The final judgment contained the legal description requested in the reformation count of the complaint. The trial court did not rule on the borrower’s affirmative defenses, the bank’s motion for protective order, or the borrower’s motion to compel better responses. The borrower moved for rehearing or to set aside the order, which was denied. The borrower now appeals.

The borrower argues error in the entry of final summary judgment because of his asserted affirmative defenses and pending discovery. The bank responds that the affirmative defenses lacked the requisite specificity to be legally sufficient and were refuted. The bank also asserts that having met its burden to provide competent evidence in support of its complaint, the borrower failed to show the existence of a genuine issue of material fact.

We have de novo review. McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 172 (Fla. 4th DCA 2012).

“When a party raises affirmative defenses, . . . `summary judgment should not be granted where’” the affirmative defenses are not refuted. Alejandre v. Deutsche Bank Trust Co. Ams., 44 So. 3d 1288, 1289 (Fla. 4th DCA 2010) (quoting Cufferi v. Royal Palm Dev. Co., 516 So. 2d 983, 984 (Fla. 4th DCA 1987)). “[T]he plaintiff must either factually refute the alleged affirmative defenses or establish that they are legally insufficient to defeat summary judgment.” Knight Energy Servs., Inc. v. Amoco Oil Co., 660 So. 2d 786, 788 (Fla. 4th DCA 1995) (citing Cufferi, 516 So. 2d at 984).

In his fourteenth affirmative defense, the borrower asserted that the mortgage attached to the complaint did not contain the legal description of his property, prohibiting the bank from foreclosing on it. The bank pled a count for reformation of the mortgage, but the motion for summary judgment did not request reformation of the mortgage. And, the record, including the bank’s affidavits, failed to either prove reformation of the mortgage or refute the borrower’s affirmative defense.

The bank admitted the mortgage did not include an accurate legal description, and alleged the inaccurate legal description was a mutual mistake. The bank now asserts that its motion for summary judgment asserted the lack of any genuine issue of material fact and was sufficient to reform the mortgage. However, the borrower denied the bank’s allegation of a mutual mistake and asserted the incorrect legal description as his fourteenth affirmative defense.

The fourteenth affirmative defense was clear and specific. Although one of the bank’s affidavits attested that the complaint’s allegations were true and correct, the affiant did not, and could not, attest that the incorrect legal description was a mutual mistake. That is because one person cannot attest to another person’s knowledge. See West Edge II v. Kunderas, 910 So. 2d 953, 954 (Fla. 2d DCA 2005). In short, a genuine issue of material fact existed, precluding summary judgment.

“A court of equity has the power to reform a written instrument where, due to a mutual mistake, the instrument as drawn does not accurately express the true intention or agreement of the parties to the instrument.” Providence Square Ass’n, Inc. v. Biancardi, 507 So. 2d 1366, 1369 (Fla. 1987) (citations omitted). “This principle . . . can be applied to correct an erroneous land description in order to protect a person’s rights in real property.” Id. (citations omitted). This does not however eliminate the requirement that the motion for summary judgment state with particularity the grounds upon which it is based. Gee v. U.S. Bank Nat’l Ass’n, 72 So. 3d 211, 214 (Fla. 5th DCA 2011) (quoting Fla. R. Civ. P. 1.510(c)).

In Willis v. Bank of New York Mellon, 115 So. 3d 1075 (Fla. 4th DCA 2013), we addressed a similar issue. The trial court granted reformation of a mortgage to include a correct legal description as part of a summary judgment of foreclosure. Id. at 1075. “The appellee [b]ank’s motion for summary judgment and accompanying notice, however, did not raise the issue of reformation as an issue to be addressed at the summary judgment hearing. Because of the lack of notice, the court erred in reforming the mortgage to add a legal description.” Id. (citation omitted).

Here, the bank’s motion for summary judgment was likewise insufficient to put the borrower on notice of the bank’s intention to reform the mortgage. Because the motion failed to provide notice to the borrower, and because the bank failed to prove reformation or refute the affirmative defense of an incorrect legal description, the trial court erred in entering final summary judgment.

We therefore reverse the final summary judgment of foreclosure and remand the case for further proceedings. We find no merit in the other issues raised.

Reversed and Remanded.

STEVENSON and KLINGENSMITH, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

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Loan Servicer Busted for Backdating, But Foreclosure Victims Say Shenanigans Haven’t Stopped

Loan Servicer Busted for Backdating, But Foreclosure Victims Say Shenanigans Haven’t Stopped

There is no stopping them. It’s going to take a President with some guts to put an end to fraud and corruption inside the government itself.


In These Times-

On October 24, Ron Faris, CEO of Ocwen Financial, made an unusual move for the head of a $2 billion-a-year corporation: He apologized. Specifically, he sent out a mea culpa-filled open letter addressing the 2.7 million homeowners whose mortgages are serviced by Ocwen, apologizing for a glitch that backdated time-sensitive letters. “Letters were dated when the decision was made to create the letter versus when the letter was actually created,” Faris confessed. The missive came on the heels of well-publicized allegations by New York’s Dept of Financial Services (DFS) accusing the company of doing just that, and suggesting that the delayed loan modification letters may have resulted in foreclosures. At first, Faris claimed that only 283 New York homeowners had been impacted. However, he quickly retreated from that number after DFS said the number could be higher, way higher—perhaps in the “hundreds of thousands”—and not confined to New York.

The Faris letter was clearly damage control, an attempt to staunch the bleeding and send a message to the investment community following a Moody’s credit downgrade and a precipitous drop in Ocwen stock, which dropped to $19.04 on October 23 and fell again to $18.55 on October 27, the lowest price since June 2012.

This isn’t the first time that Ocwen has had to circle the wagons in response to jabs and uppercuts by New York DFS Superintendent Ben Lawsky, who’s developed a reputation as somewhat of a regulatory Popeye, taking on the servicing industry with a zeal matched only by Sen. Elizabeth Warren and a few other left-minded Congress members. Lawsky’s prime targets have been non-bank servicers like Ocwen—companies that saw a cash cow in the growing desire of mega-banks like Wells Fargo and Bank of America to shed their so-called “toxic” sub-prime mortgage portfolios in the wake of litigation and regulation from 2010’s “Foreclosuregate.” As Lawsky noted in an address earlier this year to the New York Bankers Association, these non-bank mortgage servicers have bought up a significant share of U.S. mortgages:

[In 2011, all of the ten largest mortgage servicers were traditional banks. Today, four of the top ten are non-banks. And those four non-bank firms alone service more than a trillion dollars of loans—10 percent of the residential mortgage market, and climbing.

[IN THESE TIMES]

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Elizabeth Warren & Joe Manchin: The Fed Needs Governors Who Aren’t Wall Street Insiders

Elizabeth Warren & Joe Manchin: The Fed Needs Governors Who Aren’t Wall Street Insiders

Include the Attorney Generals as well and pretty much throw mostly all of Congress in this too.


WSJ-

We joined the Senate Banking Committee to try to make the banking system work better for American families. That’s why we’re concerned that the Federal Reserve—our first line of defense against another financial crisis—seems more worried about protecting Wall Street than protecting Main Street. Fortunately, this is one problem the Obama administration can start fixing today by nominating the right people to fill the two vacancies on the Fed’s Board of Governors.

The Board of Governors is responsible for supervising the country’s biggest banks. It’s also responsible for overseeing the regional Federal Reserve banks, including the Federal Reserve Bank of New York. For decades, the Board of Governors and the New York Fed have been responsible for supervising Wall Street banks, but after the 2008 crisis and the regulatory lapses it revealed, Congress gave the Fed even more oversight authority. According to the new chair of the Board of Governors, Janet Yellen , the Fed’s obligation to supervise the big banks is now “just as important” as its better-known obligation to set interest rates and conduct the country’s monetary policy.

Two recent reports highlight that the Fed isn’t very good at supervising certain banks. In September, Carmen Segarra, a former bank examiner at the Federal Reserve Bank of New York, released secret recordings she had made of meetings at the New York Fed in 2012. The recordings revealed that New York Fed employees had identified concerns with a proposed Goldman Sachs deal with Banco Santander , calling it “legal but shady.” The New York Fed didn’t attempt to make Goldman address these concerns. The recordings also showed Ms. Segarra’s superiors pressuring her to soften her finding that Goldman did not comply with federal regulations on conflicts of interest. While the recordings offered important new insights, they ultimately confirmed the old suspicion that the Fed is too cozy with big banks to provide the kind of tough oversight that’s needed.

[WALL STREET JOURNAL]

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