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

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

Department of Justice
Office of Public Affairs

FOR IMMEDIATE RELEASE

Wednesday, February 25, 2015

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

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

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

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

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

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

 

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

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

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

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

15-226

Updated February 25, 2015

 

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

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

 

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

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

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

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

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

PROSSER, ZIEGLER, GABLEMAN, JJJ., concur.

ANN WALSH BRADLEY, J.

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

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

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

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

I

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

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

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

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

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

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

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

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

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

II

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

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

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

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

III

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

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

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

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

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

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

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

(c) Terminated utility accounts for the premises.

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

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

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

Wis. Stat. § 846.102(2).

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

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


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

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

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

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

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

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

IV

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

V

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

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

VI

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

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

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

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

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

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

I

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

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

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

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

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

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

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

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

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

Wis. Stat. § 846.10(1).

¶56 Subsection (2) then reads:

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

Wis. Stat. § 846.10(2).

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

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

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

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

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

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

II

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

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

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

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


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

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

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

Id.

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

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

Id., ¶12. The court of appeals added:

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

Id., ¶13.

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

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

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

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

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

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

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

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

III

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

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

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

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

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

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

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

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


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

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

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

(a) Declaration of interest.

(b) Extinguishment or foreclosure of interest of another.

(c) Partition of interest.

(d) Enforcement of interest.

(e) Judicial rescission of contract.

(f) Specific performance of contract or covenant.

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

(h) Restitution.

(i) Judicial conveyance of interest.

(j) Possession.

(k) Immediate physical possession.

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

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

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

(o) Damages.

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

(Emphasis added.)

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

[7] Wisconsin Stat. § 846.101 states:

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

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

[8] Wisconsin Stat. § 846.103 provides:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


Mandelman Matters-

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

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

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

But I am surprised.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Follow the bouncing ball…

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

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How do I know this to be true?

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

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

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

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

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

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

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

 

Mandelman out.

 

~~~

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

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

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Posted in STOP FORECLOSURE FRAUD1 Comment

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

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

Bill Moyers-

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

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

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

[BILL MOYERS]

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






Posted in STOP FORECLOSURE FRAUD0 Comments

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

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

Decided on February 11, 2015

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

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

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

v

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

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

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

DECISION & ORDER

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

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

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

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

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

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

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

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

ENTER:

Aprilanne Agostino

Clerk of the Court

Down Load PDF of This Case

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






Posted in STOP FORECLOSURE FRAUD1 Comment

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

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

Rolling Stone-

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

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

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

[ROLLING STONE]

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






Posted in STOP FORECLOSURE FRAUD1 Comment

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

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

National Mortgage Registry
“NMR”
 
February 7, 2015. 

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

What is NATIONAL MORTGAGE REGISTRY?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

That is the first step. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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






Posted in STOP FORECLOSURE FRAUD0 Comments

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

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

February 5, 2015

Contact: Matt Anderson, 212-709-1691

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

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

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

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

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

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

Region Borrowers Receiving Restitution Payments
Capital Region

140

Central New York

90

Mid-Hudson

148

Long Island

270

Mohawk Valley

28

New York City

220

North Country

15

Finger Lakes

220

Southern Tier

58

Western New York

141

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

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

###

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Posted in STOP FORECLOSURE FRAUD0 Comments

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

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

Decided on February 4, 2015

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

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

2013-06616
(Index No. 34089/09)

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

v

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

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

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

DECISION & ORDER

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

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

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

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

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

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

Aprilanne Agostino

Clerk of the Court

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BENEFICIAL HOMEOWNER SERVICE CORP., vs TOVAR | NY Statute of Limitations Foreclosure Dismissal

BENEFICIAL HOMEOWNER SERVICE CORP., vs TOVAR | NY Statute of Limitations Foreclosure Dismissal

SUPREME COURT OF THE STATE OF NEW YORK
I.A.S. PART XVIII SUFFOLK COUNTY

PRESENT:
HON. STEPHEN M. BEHAR

BENEFICIAL HOMEOWNER SERVICE CORP.,
Plaintiff,

-against-

THERESA A. TOVAR A/K/ A THRESA TOVAR; ET AL.,
Defendants.

In this foreclosure action, Defendant, Tovarl
, moves for an Order, pursuant to CPLR 3211 (a)
(5), dismissing Plaintiffs Complaint, with prejudice, on the ground that the Complaint is time baITed
pursuant to the six-year statute of limitations [see CPLR S 213 (4)], together with an award of
attomeys’ fees, costs, and disbursements, pursuant to RPL 9 282, in the amount of $7640.00.

PROCEDURAL HISTORY

THE PRIOR “2007″ FORECLOSURE ACTION

Based on Defendant’s alleged default of February 16,2007, Plaintiff accelerated the
Consolidated Mortgage and Consolidated Note herein by commencing a foreclosure action (hereinafter
the “2007 action”). Said action was filed on October 4, 2007, under Index No.: 31069/2007. (See,
infra Ex. 1of Defendant’s April 17,2014 Affim1ation in Support).

On February 4,2008, the Court (Malia, J., presiding) granted Plaintiff’s application for a
default Judgment and for an Order of Reference (mot. seq. 001) (See, infra Ex. 2 of Defendant’s April
17,2014 Affirmation in Support). On September 22, 2008, the Court (Malia, J., presiding) granted
Plaintiff’s application for a Judgment of Foreclosure and Sale (mot. seq. 004) (id.).

On April 30, 2009, Defendant filed a Chapter 13 Bankruptcy petition (See, infra Ex. 4 of
Defendant’s August 20, 2014 Reply Memorandum at Law). On July 14,2009, Defendant’s Chapter 13
Bankruptcy case was dismissed and the automatic bankruptcy stay was terminated (See, infra Ex. 2 of
Defendant’s August 20,2014 Reply Memorandum at Law). •

On January 26,2010, Defendant filed an Order to Show Cause (mot. seq. 005), pursuant to
CPLR 5015 (4), seeking to dismiss Plaintiff’s 2007 action based on the improper service of the
complaint therein. Defendant’s application was granted on May 6,2010. (See, infra Ex. 1 of
Defendant’s August 20,2014 Reply Memorandum at Law). Thereafter, on April 3, 2012, Plaintiff filed
an unopposed motion to discontinue the 2007 action (mot. seq. 006), which was granted by the Court
on April 20, 2012 (See, infra Ex. 4 of Defendant’s August 20, 2014 Reply Memorandum at Law).2

PLAINTIFF’S INSTANT “2014″ FORECLOSURE ACTION

Plaintiff filed the instant and second foreclosure action (the “2014 action”) on February 21,
2014, under Index No.: 061092/2014. (See, infra Ex. 1 of Defendant’s August 20, 2014 Reply
Memorandum at Law). The instant action min’ors the 2007 action, in that it claims the same Plaintiff
against the same Defendant, based on the same previously accelerated Consolidated Mortgage and
Note.

Defendant argues that by filing the 2007 action, Plaintiff effectively accelerated the subject
Consolidated Mortgage and Consolidated Note, rendering October 4,2007 the “Acceleration Date” for
the statute of limitation purposes. Using the October 4,2007 acceleration date, Plaintiff could only
satisfy the statute oflimitation herein by re-filing the action (once dismissed) on or before October 3,
2013.

DECISION & ORDER

“On a motion to dismiss a complaint pursuant to CPLR 3211 (a) (5) on statute of limitations
grounds, the moving defendant must establish, prima facie, that the time in which to commence the
action has expired.” Lake v. NY Hasp. Med. Ctr. of Queens, 119AD3d 843 [2d Dept 2014. If the
defendant meets that burden, it is then incumbent upon plaintiff to raise a question of fact as to whether
the statute of limitations was tolled or was otherwise inapplicable, or whether it actually commenced
the action within the applicable limitations period. Reid v. Inc. Vii. of Floral Park, 107 AD3d 777, 778
[2d Dept 2013].

It is well settled that an action to foreclose a mortgage may be brought to recover unpaid sums
which were due within the six-year period immediately preceding the commencement of the action.
See, CPLR S 213 (4); Wells Fargo Bank, N.A. v. Burke, 94 AD3d 980, 982 [2d Dept 2012]. “[W]ith
respect to a mortgage payable in installments, there are ‘separate causes of action for each installment
accrued, and the Statute of Limitations [begins] to run, on the date each installment [becomes] due’”
Wells Fargo Bank, N.A. v. Cohen, 80 AD3d 753, 754 [2d Dept 2010]. “However, ‘even if a mortgage
is payable in installments, once a mortgage debt is accelerated, the entire amount is due and the Statute
of Limitations begins to run on the entire debt’.” Burke, 94 AD3d at 982. “The filing of the summons
and complaint and lis pendens in an action accelerate[s] the note and mortgage.” Clayton Nat’l, fnc. v.
Guidi, 307 AD2d 982, 982 [2d Dept 2003]. “Once the mortgage debt [is] accelerated, the borrowers’
right and obligation to make monthly installments cease[s] and all sums bec[ome] immediately due and
payable.” Fed. Nat’l Mtge. Ass’n v. Mebane, 208 AD2d 892,894 [2d Dept 1994].

Here, the Defendant has met her prima facie showing that Plaintiff s instant foreclosure action
was commenced after the applicable statute of limitation period, demonstrating an entitlement to the
dismissal of the instant action, with prejudice, pursuant to CPLR S 213 (4) and CPLR 3211 (a) (5).
Reid, 107 AD3d at 778.

After reviewing Plaintiffs counsel unsuccessful attempt to rebut Defendant’s prima facie
showing, this Court finds that the instant action has been filed after the applicable statute of limitation
period, and therefore, must be dismissed.

Plaintiff unsuccessfully argues that Defendant’s Chapter 13 Bankruptcy filing tolled the applicable
statute of limitations herein.

The tolling of a statute of limitation period pursuant to CPLR S 204 (a) only applies when a “stay”
affects “the commencement of an action”. As such, Plaintiff does not benefit of any tolling of the
statute of limitation period under CPLR S 204 (a) because Defendant’s Chapter 13 Bankruptcy filing
did not stay Plaintiffs ability to commence an action. Indeed, Plaintiff had already commenced the
action on October 4,2007, whereas Defendant filed for Bankruptcy protection in April, 2009. See, e.g.,
Saini v. Cinelli Enters., 289 AD2d 770, 772 [3Td Dept 2001], Iv denied 98 NY2d 602 [2002] (“With
regard to the claimed effect of defendant’s bankruptcy filing on the Statute of Limitations, we find that
it neither renewed nor tolled the six-year Statute of Limitations. The first action had been discontinued
prior to the time that defendant filed its bankruptcy petition in December 1997 and the bankruptcy
petition was dismissed in December 1998, long before this second foreclosure action was commenced
and, thus, the bankruptcy proceeding never operated to toll a pending foreclosure action.”).

Accordingly, Plaintiffs counsel’s argument that the Defendant’s bankruptcy filing stayed and/or
otherwise tolled the applicable statute of limitations herein is unsupported by the facts of this case.

Plaintiff next argues that the applicable statute of limitations was suspended by Governor
Cuomo’s Executive Order’s No.’s 52 & 81 (Hanusek Aff. ~ 6, Ex. B). This argument is also
unavailing.

Plaintiff contends that Governor Cuomo’s Executive Order’s 52 and 81 (hereinafter “9 NYCRR
S 8.52″ and “9 NYCRR S 8.81 “, respectively) added “an additional 143 days to the statute of
limitations expiration of October 4, 2013,” (Hanusek Aff. ,r 6).

This Court disagrees. 9 NYCRR S 8.52 temporarily suspended “[s]ection 201 of the [CPLR],
so far as it bars actions whose limitation period concludes during the period,” between October 26,
2012 See, infra Ex. 5 of Defendant’s August 20, 2014 Reply Memorandum at Law) (emphasis added),
and December 25,2012 (See, infra Ex. 5 of Defendant’s August 20, 2014 Reply Memorandum at Law).
Simply put, 9 NYCRR SS 8.52 and/or 8.81 suspended any statute oflimitations under section 201 of
the CPLR if and/or when the statutory time period for an action to be commenced expired between
October 26,2012 and December 25,2012. Here, indisputably, upon Plaintiffs counsel’s own
concession, the statute of limitations would not expire until October 4,20133. (Hanusek Aff. ’16).
Since the applicable statute of limitations for the commencement of this action expired on or
before October, 2013, 9 NYCRR SS 8.52 and/or 8.81 did not suspend the statute of limitation period
herein.

Plaintiff argues that the mandatory default notices sent by Plaintiff constitute a revocation of the
previous acceleration (Hanusek Aff. ’19, Ex. C). This contention also fails to persuade the Court.
The Second Department has again and again opined that without an affirmative and unambiguous
act by a lender to revoke a prior acceleration, the acceleration remains undisturbed and the limitations
statute still runs. UMLIC VP, LLC v. Mel/ace, 19 AD3d 684, 684 [2d Dept 2005]; Guidi, 307 AD2d at
982; Lavin v. Elmakiss, 302 AD2d 638, 639 [2d Dept 2003]. Strictly from a procedural standpoint, the
Court notes that Plaintiffs opposition is supported only by the affirmation of Plaintiffs attorney,
unsupported by any affidavit from an individual with personal knowledge. As such, Plaintiff has
“presented insufficient evidence to [meet its burden which requires it to] raise a triable issue of fact as
to whether the statute of limitations was tolled” (Educ. Res. Inst., Inc. v. Piazza, 17 AD3d 513, 515 [2d
Dept 2005]), let alone establish whether Plaintiff has made an affirmative and unambiguous act to
revoke a prior acceleration.

The Court further notes, without comment, that the 90 day default notices specifically state that
“[IIJnder New York State Law, we are required to send you this notice," and "[wJe are sending yo II
this notice as required by New York State law." (See, infra Ex. 4 of Defendant's August 20, 2014
Reply Memorandum at Law) (emphasis added). Failure to provide these mandatory notice would
mandate dismissal of the action for failure to satisfy the statutory conditions precedent as set forth in
RPAPL S 1304. In Aurora Loan Servs., LLC v. Weisblum, 85 AD3d 95, 103 [2d Dept 2011], the Court
held: “[P]roper service of the RPAPL 1304 notice containing the statutorily-mandated content is a
condition precedent to the commencement of the foreclosure action. The plaintiffs failure to show
strict compliance requires dismissal.” Given the mandatory nature of the notices attached, the Court is
hard-pressed to find or imply an intent on the part of the Plaintiff to revoke any prior acceleration of the
Consolidated Note and Mortgage herein; especially, when such assertion is not supported by an
 Affidavit of an individual With personal knowledge of the facts surrounding said alleged revocation.

Moreover, the Court of Appeals has held that once a mortgagee makes the election to file a
foreclosure summons and complaint, thus accelerating the mortgage debt due and owed in full, said
election is “final and irrevocable … and not subject to change at the option of the [mortgagee],”
Kilpatrick v. Germania Life Ins. Co., 183 NY 163, 168 [1905]. Notwithstanding, the Second
Department has recently opined that “a lender may revoke its election to accelerate all sums due under
an optional acceleration clause in a mortgage provided that there is no change in the borrower’s
position in reliance thereon. ” Mebane, 208 AD2d at 894 (citation omitted); but, in Patella, 279 AD2d
at 604, the Court held: “Although a lender may revoke its election to accelerate the mortgage, the
dismissal of the prior foreclosure action by the court did not constitute an affirmative act by the lender.
revoking its election to accelerate, and the record is barren of any affirmative act of revocation
occurring during the six-year Statute of Limitations period subsequent to the initiation of the prior
action.” (internal citations omitted). In Mebane, 208 AD2d at 894, the Court held: “[T]he record is
barren of any affim1ative act of revocation occurring within the six-year Statute of Limitations period
subsequent to the service of the complaint in the prior foreclosure action, wherein the holder of the
mortgage notified the borrowers of its election to accelerate. The prior foreclosure action was never
withdrawn by the lender, but rather, dismissed sua sponte by the court. It cannot be said that a
dismissal by the court constituted an affirmative act by the lender to revoke its election to accelerate.
Indeed, rather than seeking to revoke the prior election to accelerate, the plaintiff made a failed attempt
in 1991 to revive the prior foreclosure action, and, in fact, in its complaint in the instant action
commenced in 1992, the plaintiff continues to seek recovery of the entire mortgage debt pursuant to the
acceleration clause.” (internal citations omitted).

Upon the foregoing, the Court must hold that the mere act of serving mandatory default notices
together with summons and complaint, without more, cannot and does not constitute a de facto
revocation of a prior election to accelerate the mortgagor’s obligation under the Note and Mortgage.
Plaintiff also argues that the previous acceleration of the Note and Mortgage obligation (via the
filing of the 2007 action) was invalided by the Court’s subsequent determination (prompting the
dismissal of the 2007 action) that service of the Summons and Complaint was either improper or,
worse yet, never effectuated. (Hanusek Aff. ‘(10). This contention also fails in the eyes of the Court.

The Second Department has already held that: “[c]ontrary to the plaintiffs contention, the
dismissal of the 1992 action for lack of personal jurisdiction did not constitute an affirmative act by the
lender to revoke its election to accelerate.” Guidi, 307 AD2d at 982; accord Wydallis v. United States
Fid. & Guar. Co., 63 NY2d 872, 873 [1984] (“[w]here a prior action is dismissed for want of personal
jurisdiction, [CPLR S 205] cannot be applied to extend the period of limitations.”). Accordingly,

Plaintiffs latest contention, without more, must fail as a matter of law.

Plaintiffs final argument is that pursuant to GOL S 17-105 (1), Defendant’s Bankruptcy filing
caused the six (6) year statute of limitations to restart anew (Hanusek Aff. ~ 11).
Contrary to Plaintiffs contention, the listing of a mortgage as a secured debt on a bankruptcy
petition does not, in and of itself, constitute and affirmative act to re-acknowledge a debt under GOL S
17-105 (1). Erlichman v. Ventura, 271 AD2d 481, 482 [2d Dept 2000] (“[T]he listing of the debt on
[defendant's] bankruptcy petition did not constitute written acknowledgment of the debt with the intent
to pay so as to remove any Statute of Limitations bar to recovery.”) (internal citations omitted); see
Saini, 289 AD2d at 772 (“[T]he fact that defendant listed this mortgage on its schedule of secured
claims on its disclosure statement to its bankruptcy petition did not constitute a promise to pay the
mortgage so as to renew or extend the Statute of Limitations but, rather, signified defendant’s intent not
to pay it.”) (internal citations omitted); accord Petito v. Piffath, 85 NY2d 1, 8-9 [1994], cert denied
516 US 864 [1995].

In light of the foregoing, this Court must conclude that Plaintiffs proffered excuses for having
failed to file the instant action within six years of the first acceleration of the Note and Mortgage
obligation herein (as revealed by the filing of the 2007 action) are untenable. Defendant’s application
herein to dismiss the instant action pursuant to CPLR 3211 (a) (5) and CPLR 213 (4) is therefore
granted.

Defendant’s request for an award of attorney’s fees, however, is denied. Defendant has not
established an entitlement to fees (see RPLS 282) under the facts and circumstances of this case.

Accordingly, it is therefore

ORDERED, that Defendant instant motion is granted only to the extent that the within action is
dismissed and the notice of pendency filed with the County Clerk under the within index number is
vacated; and it is further

ORDERED, that Defendant’s remaining requests, including her request for an award of counsel
fees pursuant to RPLS 282, are denied; and it is further

ORDERED, that Defendant, or her counsel, must serve a copy of this Decision and Order together
with notice of its entry upon Plaintiffs counsel and upon the County Clerk’s office within twenty (20)
days of its receipt hereof.

The foregoing constitutes the Decision and Order of the Court.

Dated: December 22,2014
Central Islip, NY
Hon. Stephen

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Two Judges Who Get It About Banks

Two Judges Who Get It About Banks

New York Times-

Big banks hold great sway in Washington these days, far more than troubled homeowners do. But outside the Beltway, many people remain caught in the maw of the financial giants, which is why it is heartening when some judges step into the fray.

Consider two opinions involving Wells Fargo, a bank that enjoys a somewhat better reputation than many of its peers. On Monday, a judge in a state court in Missouri ordered Wells to pay over $3 million in punitive damages and other costs for abusing a borrower. Then, on Thursday, a judge in Federal Bankruptcy Court in suburban New York ruled on behalf of another borrower, concluding that there was substantial evidence Wells Fargo forged documents when it foreclosed on a property.

It was not a good week on the litigation front for Wells Fargo.

[NEW YORK TIMES]

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NY Federal judge slams Wells Fargo for forged mortgage docs

NY Federal judge slams Wells Fargo for forged mortgage docs

NY POST-

Judge Robert Drain has a message for Wells Fargo: “Forged” foreclosure documents don’t cut it in New York’s federal courts.

In a stunning 30-page decision on January 28, Drain, a federal bankruptcy judge in New York’s Southern District, blasted Wells Fargo, America’s largest mortgage servicer, for false documents it used in trying to prove its right to foreclose on Westchester County resident Cynthia Carrsow Franklin’s home.

Drain shredded Wells Fargo’s arguments regarding two crucial documents needed to prove ownership of a loan: an indorsement (another term for endorsement) on a note and an assignment of mortgage.

[NEW YORK POST]

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In re: Cynthia Carrsow-Franklin | ORDER SDNY BK Judge Drain: ROBO-SIGNER ADMITS TO MANUFACTURING DOCS…30 pages of “Sock’em” delivered to Wells Fargo and Freddie Mac.

In re: Cynthia Carrsow-Franklin | ORDER SDNY BK Judge Drain: ROBO-SIGNER ADMITS TO MANUFACTURING DOCS…30 pages of “Sock’em” delivered to Wells Fargo and Freddie Mac.

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK

In re:
Chapter 13
Cynthia Carrsow-Franklin
Debtor.

MEMORANDUM OF DECISION ON DEBTOR’S OBJECTION TO CLAIM OF WELLS FARGO BANK, NA

 

APPEARANCES: Garvey, Tirelli & Cushner, Ltd., by Linda M. Tirelli, for the debtor
Hogan Lovells US LLP, by David Dunn and Nocole E. Schiavo, for Wells Fargo Bank, NA
HON. ROBERT D. DRAIN, UNITED STATES BANKRUPTCY JUDGE

EXCERPT:
It appears from Mr. Kennerty’s deposition transcript, although his testimony on this point was at
times quite evasive, that during the period in question in 2010 he signed on average between 50 and
150 original documents a day in connection with Wells Fargo’s administration and enforcement of
defaulted loans. Deposition Transcript, dated October 15, 2012, of Herman John Kennerty (“Dep. Tr.”)
at 89?92. This was part of his duties as the Wells Fargo manager in charge of “default documents.” Id. at
44. In other words, on a daily basis Mr. Kennerty and his team, members of which he also testified
signed a like number of documents each day, id., processed a large volume of loan documents for
enforcement with very little thought about what they were doing. It is not clear that Mr. Kennerty fully
understood the legal consequences of signing these documents; for example, he testified when shown
the Assignment of Mortgage that he executed it not on behalf of the assigning party but, rather, on
behalf of the party “in getting the assignment,” although he also testified that “I’m – I’m not an
attorney, but the way I understand this document, it was assigning the mortgage, taking it out of MERS’
name and putting into Wells Fargo Bank’s name.” Id. at 93?4. It is clear, however, that he pretty much
signed whatever outside counsel working on the default put in front of him and that these documents
often included assignments, including the Assignment of Mortgage, drafted by Wells Fargo’s outside
enforcement counsel to fill in missing gaps in the record.

Thus, in describing the work of his “assignment team” Mr. Kennerty stated, “[I]f there was not
an assignment in there [that is, in Wells Fargo’s loan file] then they would – excuse me, they would
advise the attorney that we did not have it, that they would need to draft the – the appropriate
assignment.” Id. at 116. See also id. at 76 (“[I]f the assignment needed to be created they would have
advised the attorney, the requesting attorney to – that we did not have the assignment in the collateral
file, then they needed to draw up the appropriate document.”); id. at 121 (“Once it [that is, the
collateral file] was received then they would check to see if it was something that could be used or not
used; and, if it’s something that was in the file, but couldn’t be used then they would advise the
requesting attorney to go ahead and draft the actual document.”).

Because Wells Fargo does not rely on the Assignment of Mortgage to prove its claim, the
foregoing evidence is helpful to the Debtor only indirectly, insofar as it goes to show that the blank
indorsement, upon which Wells Fargo is relying, was forged. Nevertheless it does show a general
willingness and practice on Wells Fargo’s part to create documentary evidence, after?the?fact, when
enforcing its claims, WHICH IS EXTRAORDINARY.19

Moreover, Mr. Kennerty’s testimony does not stop at describing manufactured mortgage
assignments. He also testified that his “assignment team’s” duties were not limited to processing
assignments, including, when determined necessary, creating them; in addition, the “assignment team”
included people tasked with endorsing notes. Id. at 136. His testimony on this issue is critical and will
be quoted at length:

Q. Okay. Did your department endorse notes?
A. Yes.
Q. Okay. And how was it that your department would come to endorse
notes?
A. I don’t recall the specific process, but to the best of my recollection
there’s usually a – in – usually a – blank endorsement on – on the notes and there would
– and then based on that they would complete the endorsement.
Q. So when you say they would complete the endorsement, who is they?
A. I’m sorry. There was a – there – there were some processors that would
perform that task.
Q. Okay. When you say complete the endorsement, what do you mean by
that?
A. They would execute a note endorsement, a new note endorsement if
there was a blank one on there.
Q. And they would do that with the original note from the collateral file?
A. To the best of my recollection, yes.
Q. Okay. And at whose request would the processors perform that
function?
A. Again, to the best of my recollection, it would be done at the – either
the foreclosure attorney’s request or the bankruptcy attorney’s request.
Id. at 129?31.
Mr. Kennerty then testified about the process for receiving such requests from outside
enforcement attorneys and how one or two people in his department had the job of endorsing notes.
Id. at 131?32. When questioned about how often such requests were made, whether on a daily basis or
on rare occasions, Mr. Kennerty replied, “To the best of my recollection, it was on a regular basis.” Id. at
133. He also testified about the information system or systems at Wells Fargo where such requests
might be made and maintained.20 Id. at 133?34.
He then testified as follows:
Q. And the actual procedure for endorsing an original note, if you could
just walk me through that process. What would the processor do?
A. To the best of my recollection, they would – the request would come in.
Again, we would check to see if we had the collateral file. If we – if we had it and
depending on the status of the – of the loan itself, if we had the note then we could
check to see, you know, what was actually on the note to see what needed to be done.
If we did not have the collateral file then they would work – that processor would work
with the collateral file ordering team to reach out with the appropriate attorney or, I’m
sorry, the appropriate custodian to obtain the collateral file. And then they would look
to – once the file came in they would look to ensure that the original note was in there
and check to see if there was any endorsement on the back of the note.
Q. Okay. And if there wasn’t how would they go about – how would the
processor go about endorsing the note?
A. I don’t recall specifically how they completed that particular task.
Q. Was it a rubber stamp? Was it somebody signing? How was it?
A. To the best of my recollection, a stamp was involved but then it had to
be signed.
Q. Okay. And if an endorsement was coming from an entity that no longer
existed how would it be signed?
A. I do not recall.
Id. at 135?36 (emphasis added).
Later in his deposition, Mr. Kennerty was shown the two forms of the Note attached to Claim
Nos. 1?1 and No. 1?2, respectively, and testified that he did not know how or when the indorsements
were placed on them. Id. at 142?44. He did have this to say, however:
Q. Now, if any one of these endorsements were a rubber stamp and
produced by your department would there be a record of that somewhere?
Mr. Cromwell: Objection; misstates his testimony.
Witness. I – the term rubber stamp is a – not accurate because although the –
a stamp to produce the ‘pay to order of’ was used, the term to me, use of a rubber
stamp, means it was signed, there was a signature on the – on the stamp itself and that
– to my recollection, that was not the case.
Id. at 143?44. Mr. Kennerty said nothing more that was relevant to the issue of whether Wells Fargo
forged the blank ABN Amro indorsement, with the exception of stating that “I am not familiar with
Margaret Bezy,” id. at 143, who has not been identified as ever having been an employee of Wells Fargo
and presumably was an employee of ABN Amro.

[...]

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Emigrant Sav. Bank -Brooklyn / Queens v Doliscar | NY Appeals Court – Thus, the allonge presented a triable issue of fact as to whether the plaintiff was the holder or assignee of both the note and mortgage prior to its commencement of this action

Emigrant Sav. Bank -Brooklyn / Queens v Doliscar | NY Appeals Court – Thus, the allonge presented a triable issue of fact as to whether the plaintiff was the holder or assignee of both the note and mortgage prior to its commencement of this action

Decided on January 28, 2015

SUPREME COURT OF THE STATE OF NEW YORK

Appellate Division, Second Judicial Department

PETER B. SKELOS, J.P.
LEONARD B. AUSTIN
SANDRA L. SGROI
HECTOR D. LASALLE, JJ.

2013-01362
(Index No. 15801/11)

[*1]Emigrant Savings Bank-Brooklyn/Queens, appellant,

v

Johanne Doliscar, respondent, et al., defendants.

Stagg, Terenzi, Confusione & Wabnik, LLP, Garden City, N.Y. (Ronald P. Labeck and Patrique P. Denize of counsel), for appellant.

Robert A. Carrozzo, Farmingdale, N.Y., for respondent.

DECISION & ORDER

In an action to foreclose a mortgage, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Queens County (Rosengarten, J.), entered October 19, 2012, as denied its motion for summary judgment on the complaint and for an order of reference.

ORDERED that the order is affirmed insofar as appealed from, with costs.

In June 2008, the defendant Johanne Doliscar executed a note memorializing a loan in the sum of $265,000 from Emigrant Mortgage Company, Inc. (hereinafter EMC). The note was secured by a mortgage on Doliscar’s residence in Queens. In November 17, 2009, EMC executed a written assignment, assigning the mortgage and note to the plaintiff, Emigrant Savings Bank-Brooklyn/Queens.

On July 1, 2011, the plaintiff commenced this foreclosure action, alleging that it was the holder of the note and mortgage, pursuant to the written assignment dated November 17, 2009, and that it was “in possession of the original note, an allonge in blank, and other loan documents.” In her answer, Doliscar alleged that the plaintiff could not prove that it was the lawful holder of the note and, thus, was not entitled to maintain this action. The plaintiff moved for summary judgment on the complaint and for an order of reference appointing a referee to compute the sums allegedly due and owing under the subject note and mortgage. The Supreme Court, inter alia, denied the plaintiff’s motion.

A plaintiff has standing if it is the holder or assignee of both the subject mortgage and of the underlying note when the action is commenced (see Aurora Loan Servs., LLC v Taylor, 114 AD3d 627; HSBC Bank USA v Hernandez, 92 AD3d 843). ” 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’” (HSBC Bank USA v Hernandez, 92 AD3d at 844, quoting U.S. Bank, N.A. v Collymore, 68 AD3d 752, 754).

In opposition to the plaintiff’s prima facie showing of entitlement to judgment as a matter of law, Doliscar raised a triable issue of fact as to whether the plaintiff had standing to [*2]prosecute this action. Specifically, Doliscar raised triable issues of fact as to whether, prior to the commencement of this action on July 1, 2011, a written assignment of the mortgage and note allegedly delivered to the plaintiff was executed and drafted in a form sufficient to effectuate the assignment, and whether, prior to the commencement of the action, the actual note was physically delivered to the plaintiff (see HSBC Bank USA v Hernandez, 92 AD3d at 844; Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 108; cf. Aurora Loan Servs., LLC v Taylor, 114 AD3d 627). The written assignment was made in blank, and there remain triable issues of fact as to when the written assignment was actually drafted and executed, and when the plaintiff took possession of the written assignment. Accordingly, there are triable issues of fact as to whether an assignment was made, or intended to be made, to the plaintiff (see generally Lichtenstein v Eljohnan, Inc., 161 AD2d 397, 398) prior the commencement of the action. Moreover, an allonge to the note that is included in the record was not only undated, but was both endorsed by EMC to the plaintiff and then endorsed in blank by the plaintiff, raising triable issues of fact as to whether the note was actually assigned to the plaintiff and, if so, whether the plaintiff had already reassigned the note to yet another party. Thus, the allonge presented a triable issue of fact as to whether the plaintiff was the holder or assignee of both the note and mortgage prior to its commencement of this action (see Deutsche Bank Natl. Trust Co. v Barnett, 88 AD3d 636, 638).

Accordingly, the Supreme Court properly denied the plaintiff’s motion for summary judgment on the complaint and for an order of reference.

In light of our determination, we need not address the parties’ remaining contentions.

SKELOS, J.P., AUSTIN, SGROI and LASALLE, JJ., concur.
ENTER:

Aprilanne Agostino

Clerk of the Court

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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/

###
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.

[...]

Down Load PDF of This Case

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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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