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

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

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

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

Plaintiffs,

v.

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

COMPLAINT

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

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

[...]

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

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

Executive Summary

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

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

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

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

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

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

[jasmithmonitoring]

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

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

For immediate release:
December 16, 2014

Contact:
Hannah Harrill
919-508-7821

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

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

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

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

There were three fails of other metrics.

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

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

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

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

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

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

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

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

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

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

REPORT:

© 2010-14 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.






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

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

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

I’m glad to hear he was behind this!


Reuters-

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

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

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

[REUTERS]

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New York Regulator Poses Formidable Threat To Mortgage Servicers

New York Regulator Poses Formidable Threat To Mortgage Servicers

Forbes-

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

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

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

[FORBES]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

DOWNLOAD LEGAL DOCUMENTS: Order #1 and Order #2

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

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

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

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

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

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

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

—————————————————————~~——-x

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

-against-

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

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

[..]

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

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

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

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

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

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

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

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

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

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

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

click image below to sign the petition.

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

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

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

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

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

MAY, J.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Reversed and Remanded.

STEVENSON and KLINGENSMITH, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

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

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

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


In These Times-

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

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

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

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

[IN THESE TIMES]

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

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

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


WSJ-

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

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

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

[WALL STREET JOURNAL]

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IN RE WASHINGTON Bankr. Court, D. New Jersey | Morris County homeowner gets a FREE HOUSE

IN RE WASHINGTON Bankr. Court, D. New Jersey | Morris County homeowner gets a FREE HOUSE

 

In Re: GORDON A. WASHINGTON, Chapter 13, Debtor.
GORDON A. WASHINGTON, Plaintiff,
v.
SPECIALIZED LOAN SERVICING, LLC, and THE BANK OF NEW YORK MELLON, as Trustee for the Certificate-holders of the CWABS, Inc., Asset-backed Certificates, Series 2007-5, Defendants.

Case No. 14-14573-TBA, Adv. Pro. No. 14-01319-TBA.
United States Bankruptcy Court, D. New Jersey.
Hearing September 30, 2014.
November 5, 2014.
Walter D. Nealy, Esq., Englewood, NJ, Attorney for Gordon A. Washington.

Charles A. Gruen, Esq., Rosa Amica-Terra, Esq., Law Offices of Charles A. Gruen, Westwood, NJ, Special Counsel for Gordon A. Washington.

David V. Mignardi, Esq., Kenneth J. Flickinger, Esq., Karen B. Olson, Esq., Knuckles, Komosinski & Elliott, LLP, Elmsford, NY, Attorney for Specialized Loan Servicing, LLC, and The Bank of New York Mellon.

MEMORANDUM DECISION

MICHAEL B. KAPLAN, Bankruptcy Judge.

I. INTRODUCTION.

“No one gets a free house.” This Court and others have uttered that admonition since the early days of the mortgage crisis, where homeowners have sought relief under a myriad of state and federal consumer protection statutes and the Bankruptcy Code. Yet, with a proper measure of disquiet and chagrin, the Court now must retreat from this position, as Gordon A. Washington (“the Debtor”) has presented a convincing argument for entitlement to such relief. So, with figurative hand holding the nose, the Court, for the reasons set forth below, will grant Debtor’s motion for summary judgment. These matters come before the Court on a motion and two cross motions for summary

judgment in the adversary complaint filed by Debtor to determine the validity, priority and extent of the mortgage lien on his three-family residence in Madison, New Jersey, against Defendant creditors Specialized Loan Servicing, LLC, and The Bank of New York Mellon (as Trustee for the Certificate-holders of the CWABS, Inc., Asset-backed Certificates, Series 2007-5) (“SLS” and “BoNY”) (collectively “the Defendants,” represented by one counsel). The motions are:

(1) the Debtor’s motion for partial summary judgment based on the argument that the 6-year statute of limitations applicable to suit on a negotiable instrument under N.J.S.A. § 12A:3-118(a) has expired, so that Defendants are out of time to sue on their mortgage note on which Debtor defaulted on or about June 1, 2007 (dkt. 7)[1]; and

(2) the Defendants’ cross motion for partial summary judgment based on the argument that the 20-year statute of limitations applicable to foreclosure of a mortgage under N.J.S.A. § 2A:50-56.1(c) has not expired, so that Defendants may still foreclose the mortgage on which Debtor defaulted on or about June 1, 2007 (dkt. 11); and finally

(3) the Debtor’s cross motion for summary judgment on the mortgage based on the arguments:

(a) that the 6-year statute of limitations applicable to foreclosure of a mortgage in which the maturity date has been accelerated under N.J.S.A. § 2A:50-56.1(a) has expired, so that the Defendants are out of time to sue on either the note or the mortgage; and

(b) that Defendants lack standing to enforce the note and mortgage because the Assignment is defective and because the Defendants waived their interest in the loan under a Settlement Agreement (dkt. 19).

` The Defendants filed a reply brief at dkt. 22.[2] The Court heard oral argument on September 30, 2014 and reserved on the narrow issue of whether N.J.S.A. § 2A:50-56.1(a) and 11 U.S.C. §§ 502(b)(1) and 506(d) operate to make the mortgage unenforceable, to disallow the Defendants’ claim, and to void the mortgage lien so that the Defendants have no claim against the Debtor, the property or the estate.

II. JURISDICTION.

The Court has jurisdiction over these matters under 28 U.S.C. § 1334(b) and the Standing Orders of Reference entered by the United States District Court on July 10, 1984 and amended on October 17, 2013. This is a core proceeding under 28 U.S.C. § 157(b)(2)(A), (B), (K) and (O). Venue is proper in this Court under 28 U.S.C. §§ 1408 and 1409.

III. BACKGROUND.[3]

The acquisition of the property.

On February 27, 2007, the Debtor purchased a three-family home at 11 Walnut Street, Morris County, New Jersey (“Property”), paying a $130,000 deposit and obtaining a 30-year adjustable rate mortgage and note for $520,000 for the balance with first payment due on April 1, 2007 (dkt. 7-2, Debtor’s Certification in Support of Summary Judgment, ¶ 4, Exhibit A, note). The mortgagee was America’s Wholesale Lender (dkt. 7-2, Debtor, ¶ 5, 9). Debtor’s attorney asserts that Countrywide Home Loans served as the mortgage servicer, an assertion disputed by the Defendants (dkt. 7, Debtor SUMF, ¶ 7). Debtor moved into the third-floor apartment and began to renovate the first and second floor apartments to rent (dkt. 7-2, Debtor ¶ 7). During renovation, the first and second floor apartments suffered water damage and became uninhabitable (dkt. 7-2, ¶ 7). Debtor failed to make the July 1, 2007 mortgage payment, and the loan has been in continuous default since that time (dkt. 7-2, Debtor, ¶8).[4]

The bankruptcy case.

The Debtor filed a voluntary Chapter 7 petition on March 12, 2014, along with a motion to convert the case to one under Chapter 13. The case was converted by Order entered on April 9, 2014. The claims bar date was August 18, 2014. Thereafter, the Debtor filed an original Plan on May 19, 2014 (main dkt. 17) and a first modified Plan on August 5, 2014 (main dkt. 25); a confirmation hearing is scheduled presently for November 20, 2014. Each Plan proposes to sell the above property in a short period. The first Plan proposes payments of 12 months @$492 plus $554,000 in the last month; the second Plan proposes payments of 17 months @$492 plus $554,000 in the last month. The Debtor projected the value of the property at $550,000-$600,000 and scheduled the Defendants’ debt at $519,000. The Defendants filed a proof of claim for $920,469 (claim 7-1) (the $519,000 scheduled by the Debtor represents only the principal due) and filed an objection to the Plan because it indicates a short sale with a payoff of only $554,000 in the 18th month (main dkt. 34, ¶5). The Plan suggests (does not state) that Debtor seeks to cram down the note on this three-family home to the value of the property; but the clear aim of this adversary proceeding is to render the Defendants’ note and mortgage not only undersecured but wholly unenforceable.

Debtor scheduled $137,000 in general unsecured claims. Proofs of claim timely filed include, in addition to the claim of Defendants, $15,000 in priority tax claims; $70,000 in general unsecured claims (including $15,000 due a relative); and an additional $63,000 due on a student loan. The Debtor proposes a pro rata distribution to the general unsecured creditors.

The adversary proceeding.

The Debtor filed this adversary proceeding on March 18, 2014 (dkt. 1). The Defendants answered on May 2, 2014 (dkt. 4), and on May 19, 2014 the parties entered a Joint Scheduling Order which scheduled trial for December 5, 2014 (dkt. 5). The Debtor filed the initial motion for partial summary judgment on June 2, 2014, and the cross motions followed. On September 30, 2014, in addition to hearing oral argument on these motions, the Court, on Defendant’s motion, entered an Order which compelled discovery, modified the Joint Scheduling Order and rescheduled trial to February 20, 2015 at 10:00 a.m. (dkt. 23).

The mortgage documents and related pleadings.

The February 1, 2007 Adjustable Rate Note (“the note”) between America’s Wholesale Lender and Debtor stated a principal of $520,000, periodic payments beginning April 1, 2007 at 8.950% interest, and monthly debt service of $4,165.34 (dkt. 7, Exhibit A). The note defined March 1, 2037 as the Maturity Date and provided that any amounts due would be paid on that date (dkt. 7, Exhibit A, ¶ 3(A), Maturity Date). The note contained the following default provisions and remedy:

7. BORROWER’S FAILURE TO PAY AS REQUIRED

. . .

(B) Default

If I do not pay the full amount of each monthly payment on the date it is due, I will be in default.

(C) Notice of Default

If I am in default, the Note Holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date, the Note Holder may require me to pay immediately the full amount of Principal which has not been paid and all the interest that I owe on that amount. The date must be at least 30 days after the date on which the notice is mailed to me or delivered by other means.

(D) No Waiver by Note Holder

Even if, at a time when I am in default, the Note Holder does not require me to pay immediately in full as described above, the Note Holder will still have the right to do so if I am in default at a later time.

(dkt. 7, Exhibit A).

The mortgage, dated February 27, 2007, referenced the note and contained its own default provisions:

NON-UNIFORM COVENANTS. Borrower and Lender further covenant and agree as follows:

22. Acceleration; Remedies. Lender shall give notice to Borrower prior to acceleration following Borrower’s breach of any covenant or agreement in this Security Instrument (but not prior to acceleration under Section 18 [based on borrower's transfer of the property] unless Applicable Law provides otherwise). The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument, foreclosure by judicial proceedings and sale of the Property; (e) the Borrower’s right to reinstate after acceleration and the right to assert in the foreclosure proceeding the non-existence of a default or any other defense of Borrower to acceleration and foreclosure; and (f) any other disclosure required under the Fair Foreclosure Act, codified at Sections 2A:50-53 et seq. of the New Jersey Statutes, or other Applicable Law. If the default is not cured on or before the date specified in the notice, Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may foreclosure this Security Instrument by judicial proceeding. Lender shall be entitled to collect all expenses incurred in pursuing the remedies provided in this Section 22, including, but not limited to, attorneys’ fees and costs of title evidence permitted by Rules of Court.

and

UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows:

. . .

19. Borrower’s Right to Reinstate After Acceleration. If Borrower meets certain conditions, Borrower shall have the right to have enforcement of this Security Instrument discontinued at any time prior to the earliest of: (a) five days before sale of the Property pursuant to any power of sale contained in this Security Instrument; (b) such other period as Applicable law might specify for the termination of Borrower’s right to reinstate; or (c) entry of a judgment enforcing this Security Instrument. Those conditions are that Borrower: (a) pays Lender all sums which then would be due under this Security Instrument and the Note as if no acceleration had occurred; (b) cures any default of any other covenants or agreements; (c) pays all expenses incurred in enforcing this Security Instrument, including, but not limited to, reasonable attorneys’ fees, property inspection and valuation fees, and other fees incurred for the purpose of protecting lender’s interest in the Property and rights under this security Instrument; and (d) takes such action as Lender may reasonably require to assure that Lender’s interest in the Property and rights under this Security Instrument, and Borrower’s obligation to pay the sums secured by this Security Instrument, shall continue unchanged Lender may require that Borrower pay such reinstatement sums and expenses in one or more of the following forms, as selected by the Lender: (a) cash; (b) money order; (c) certified check, bank check, treasurer’s check or cashier’s check, provided any such check is drawn upon an institution whose deposits are insured by a federal agency, instrumentality or entity; or (d) Electronic Funds Transfer. Upon reinstatement by Borrower, this Security Instrument and obligations secured hereby shall remain fully effective as if no acceleration had occurred. However, this right to reinstate shall not apply in the case of acceleration under Section 18 [Transfer of the Property or a Beneficial Interest in Borrower].

. . .

(dkt. 7, Exhibit B, ¶¶ 22 and 19). Accompanying the mortgage were an Adjustable Rate Rider and a 1-4 Family Rider which included at paragraph H an absolute assignment of rents (dkt. 7 Exhibit B, Mortgage). Both accompanying documents were dated February 27, 2007.

The mortgage was assigned by MERS as Nominee for America’s Wholesale Lender to co-Defendant The Bank of New York [as Trustee] for the Benefit of the Certificate-holders, CWABS Inc. Asset-Backed Certificates Series 2007-5 (“BoNY”) for $1.00 by an Assignment of Mortgage effective November 12, 2007 but recorded on September 9, 2008 (dkt. 7, Exhibit L, “the Assignment”).

The Assignment recites the original amount of the mortgage as $520,000 and states in relevant part:

And the Assignor covenants that there is now due and owning upon the Mortgage and the Bond, Note or other obligation secured thereby, the sum of $519,132.54 Dollars principal with interest thereon to be computed at the rate of 8.950 percent per year from June 1, 2007, along with such other sums as may be collectible, and that there are no set-offs, counterclaims or defenses against the Mortgage or the Bond, Note or other obligation, in law or in equity, nor have there been any modifications or other changes in the original terms thereof, other than as stated in this Assignment.

(dkt. 7, Exhibit L).[5] Debtor relies in part on this language in the Assignment for the proposition that the Defendants accelerated the maturity date of the note and mortgage to June 1, 2007 (dkt. 19-13, Debtor’s response to Defendants’ SUMF, ¶ 5; dkt 19-13, Debtor’s Counterstatement of Undisputed Material Facts, ¶ 5, 13; dkt. 19-1, Debtor’s certification in support of cross motion, ¶¶ 6, 9-10, 13; dkt. 19-14, Debtor’s brief in support of cross motion, pp. 1, 2, 8, 12, 14, 16-17).

On December 14, 2007, the Defendants filed a foreclosure Complaint in Superior Court of New Jersey, Chancery Division, Morris County, Dkt. No. F-34837-07 (dkt. 7, Exhibit E) (“the Complaint”). The Complaint described the loan as “an obligation (note) to secure the sum of $520,000.00 payable on March 1, 2037″ (dkt. 7, Exhibit E, ¶ 1). The Complaint continues in relevant part:

8. The Defendants named in Paragraphs 1 and 2 above, or their grantee or grantees, if any has failed to make the installment payment due on June 1, 2007, and all payments becoming due thereafter. Therefore the loan has been in default since July 1, 2007, and said payments have remained unpaid for more than 30 days from the date of the mailing of the Notice of Default to the obligor, and are still unpaid. Plaintiff herein, by reason of said default, elected that the whole unpaid principal sum due on the aforesaid obligation and mortgage referred to in Paragraphs 1 and 2 above, with all interest and advances made, shall be now due (Emphasis added).

. . .

10. Notice of Intention to Foreclose was sent in compliance with the Fair Foreclosure Act more than 31 days prior to filing of the complaint.

(dkt. 7, Exhibit E, ¶¶ 8, 10). Debtor also relies on ¶ 8 in the Complaint for the proposition that the Defendants accelerated the maturity date of the loan to June 1, 2007 (dkt. 7, Debtor’s SUMF, ¶ 11; dkt. 7-2, Debtor’s certification in support of motion, ¶ 12; dkt. 7-22, Debtor’s brief, p. 3). The Debtor filed his Answer on February 8, 2008 and in it neither admitted nor denied the allegations in ¶ 8 but denied the allegations in ¶ 10 (dkt. 7, Exhibit F (Answer), ¶¶ 8, 10).

Defendants concur that the payment default occurred on July 1, 2007 (the interest default having occurred on June 1, 2007) but dispute the acceleration date (dkt. 11-2, July 29, 2014 affidavit of Cynthia Wallace for SLS in support of Defendants’ crossmotion, ¶ 4b; dkt. 11-3, affidavit of Matthew R. Stahlhut for BoA in support of Defendants’ crossmotion, ¶ 7). Defendants “assert that the subject loan . . . was accelerated on December 14, 2007 upon the filing of the 2007 Foreclosure Complaint” (dkt. 11-1, Defendants’ response to Debtor’s SUMF, ¶ 8, also ¶ 11; dkt. 11-1 Defendants’ Counterstatement of Undisputed Material Facts, ¶ 5). As explained below, whether the default and acceleration date is reckoned as June 1, 2007, July 1, 2007 or December 14, 2007, does not affect the outcome of this case.

By Return Notice dated October 28, 2010, the Office of Foreclosure returned the foreclosure judgment package to BoNY with extensive deficiencies noted, including at ¶ 23, “One attorney certified copy of each of the following must be submitted: bond or note, recorded mortgage, assignments(s), if any” (dkt. 7, Exhibit H, “Return Notice” dated October 28, 2010). BoNY filed a Notice of Lis Pendens dated February 5, 2013, recorded on February 7, 2013 (dkt. 7, Exhibit M, “Notice of Lis Pendens”).

On May 31, 2013, the Superior Court Clerk’s Office issued a notice of intent to dismiss the foreclosure case without prejudice for lack of prosecution within 30 days unless the plaintiff produced one of the following documents: amended complaint; request for default or motion to enter default out of time; motion to: strike answer, enter judgment or for summary judgment; proof of bankruptcy filing or other condition that stays the case; affidavit or certification asserting that failure to file or take the next required action is due to exceptional circumstances” (dkt. 7, Exhibit I, “Foreclosure Dismissal Notice”). Counsel for BoNY responded on June 21, 2013 that he intended to file an Order to Show Cause to obtain more time (dkt. 7, Exhibit J, Certification of John Caporale, Esq.). On July 5, 2013, the Superior Court Clerk’s Office issued a Foreclosure Dismissal Order, dismissing the Defendants’ complaint for lack of prosecution without prejudice and with the provision, “Reinstatement of the matter after dismissal may be requested by a motion for good cause” (dkt. 7, Exhibit K) (“Foreclosure Dismissal Order”). BoNY caused a Discharge of Lis Pendens to be recorded on August 21, 2013 (dkt. 7, Exhibit N, “Discharge of Lis Pendens”).

Thus, to date, the Defendants have not obtained a Final Judgment of Foreclosure. Moreover, Defendants admit the dismissal of the foreclosure Complaint without prejudice (dkt. 11-1, response to Debtor’s SUMF, ¶¶ 17, 19).[6] Debtor certifies that Defendants’ failure to produce the original note, mortgage or assignment was the primary basis for the dismissal (dkt. 7-2, Debtor, ¶¶ 14, 17, 20) and contends that BoNY never produced the original note during the foreclosure proceedings (dkt. 7-22, Debtor’s brief, p. 4), citing N.J. R. 4:64-2(a) (which requires production of original documents in support of foreclosure judgment). Following inspection of Defendants’ files on October 7, 2014, the Debtor appears to concede that Defendants have the original note[7], but challenged the absence of an Allonge which Defendants assert does not exist (dkt. 25, Debtor’s October 9, 2014 letter to the Court; dkt. 26, Defendants’ October 10, 2014 responsive letter to the Court). The basis for the dismissal of the foreclosure proceeding and whether Defendants possess an Allonge have little or no bearing on the Court’s decision in this matter.

IV. DISCUSSION.

The Parties’ Positions

The Debtor initially argued that BoNY’s claim for action on the note accrued on June 1, 2007, when BoNY declared the default and accelerated the loan. The Debtor asserted that N.J.S.A. § 12A:3-118(a) serves as the statute of limitations for bringing an action on the note as a negotiable instrument (dkt. 7-22, Debtor’s brief, pp. 12-13).[8] Inasmuch as the statute of limitations under N.J.S.A. § 12A:3-118(a) runs six years after the due date or the accelerated due date, the Debtor posited that BoNY was time-barred from enforcing the note and that the Debtor should be granted summary judgment as a matter of law, declaring the note unenforceable.

In their cross motion, the Defendants conceded that the 6-year statute of limitations for enforcement of the note had run but argued that enforcement of the mortgage is subject to a 20-year statute of limitations recognized as a common law matter in Security Nat’l Partners Ltd. P’ship v. Mahler, 336 N.J. Super. 101, 107, cert den., 169 N.J. 607 (2001) (“Mahler“) and later codified at N.J.S.A. § 2A:50-56.1(c) (“Statute of limitations relative to foreclosure proceedings”) (dkt. 11-14, Defendants’ brief, p. 4). Defendants submit that that they are entitled to foreclose on the property and to apply the sale proceeds to their debt but admit that they are unlikely to be able to enforce any deficiency against the Debtor.[9] In re Pecora, 297 B.R. 1, 3 (Bankr. W.D.N.Y. 2003) (distinguishing debtor liability for the mortgage debt from the persistence of the mortgagee’s lien, citing Dewsnup v. Timm, 502 U.S. 410, 417-18 (1992) and Johnson v. Home State Bank, 501 U.S., 78, 84-85 (1991)). The Defendants contend that the Trust is entitled to summary judgment because there is no genuine issue of material fact and they can enforce the mortgage as a matter of law.

In his cross motion, Debtor argues that Defendants’ declaration of default and acceleration (which both parties acknowledge with respect to the note, supra) advanced the maturity date of the mortgage to June 1, 2007 so that under N.J.S.A. § 2A:50-56.1(a), which requires the mortgagee to file a foreclosure action within 6 years of the maturity date of the mortgage, Defendants cannot pursue foreclosure of the Property (dkt. 19-14, pp. 12-18; dkt. 7, Exhibits L and E). Whether the accelerated maturity of the mortgage is found to be July 1, 2007, or December 14, 2007 (as urged by Defendants), the Defendants are still out of time under Debtor’s interpretation of N.J.S.A. § 2A:50-56.1(a) to file a foreclosure complaint.

In their response, the Defendants press Mahler and make the bare assertion that the lender-accelerated date does not satisfy the requirement in N.J.S.A. § 2A:50-56.1(a) of a “maturity date set forth in the mortgage or the note, bond, or other obligation secured by the mortgage, whether the date is itself set forth or may be calculated from information contained in the mortgage or note, bond, or other obligation.” N.J.S.A. § 2A:50-56.1(a) (emphasis added); (dkt. 22, Defendants’ reply brief, pp. 6-7). The question for the Court is whether acceleration of the note and mortgage advanced the maturity date so that N.J.S.A. § 2A:50-56.1(a) cuts off the Defendants’ cause of action, and whether this statute, effective August 6, 2009, applies to the instant case.

The Fair Foreclosure Act and N.J.S.A. § 2A:50-56.1

N.J.S.A. § 2A:50-53 through-68, “Foreclosure of Residential Mortgages” (“Fair Foreclosure Act,” or “FFA”), was approved on September 5, 1995, effective on December 4, 1995 and applicable “`to foreclosure actions commenced on or after that date.’” N.J.S.A. § 2A:50-53, citing L. 1995, c. 244, § 19 (a note to the Act). The Legislature made part of the body of the statute the finding and declaration that it is “public policy of this State that homeowners should be given every opportunity to pay their home mortgages” and that mortgagees benefit when defaulted loans return to performing status. N.J.S.A. § 2A:50-54. The FFA defines “residential mortgage” as one secured by a property with not more than 4 dwelling units, “one of which shall be, or is planned to be, occupied by the Debtor or a member of the Debtor’s immediate family as the Debtor’s or member’s residence at the time the loan is originated” and therefore applies to the 3-dwelling-unit residence occupied by the Debtor when the loan originated. N.J.S.A. § 2A:50-55 (“Definitions”); (dkt 7-2, Debtor, ¶ 7).

The FFA codifies the mortgagee’s obligation to give borrowers precise notice of the mortgagee’s intention to foreclose and the borrowers’ opportunities to cure defaults. U.S. Bank Nat’l Ass’n. v. Guillaume, 209 N.J. 449, 469-70 (2012). The statute acknowledges acceleration of the maturity date as a consequence of default and de-acceleration as a consequence of curing default:

2A:50-56. Written notice of intent to foreclose; contents

a. Upon failure to perform any obligation of a residential mortgage by the residential mortgage debtor and before any residential mortgage lender may accelerate the maturity of any residential mortgage obligation and commence any foreclosure or other legal action to take possession of the residential property which is the subject of the mortgage, the residential mortgage lender shall give the residential mortgage debtor notice of such intention at least 30 days in advance of such action as provided in this section.

N.J.S.A. § 2A:50-56(a) (West 2000 and Supp. 2014) (emphasis added). N.J.S.A. § 2A:50-57 provides:

2A:50-57. Right to cure default; procedure

a. Notwithstanding the provisions of any other law to the contrary . . . the debtor. . . shall have the right at any time, up to the entry of final judgment or the entry by the office or the court of an order of redemption pursuant to [N.J.S.A. § 2A:50-56], to cure the default, de-accelerate and reinstate the residential mortgage by tendering the amount or performance specified in subsection b. of this section. . . .

d. Cure of a default reinstates the debtor to the same position as if the default had not occurred. It nullifies, as of the date of cure, any acceleration of any obligation under the mortgage, note or bond arising from the default.

N.J.S.A. § 2A:50-57 (West 2000 and Supp. 2014) (emphases added). “Acceleration” and “maturity” are not otherwise defined in the statute. Certain courts view as axiomatic the proposition that acceleration advances the maturity date of the debt. Bank v. Kim, 361 N.J. Super. 331, 344 (App Div. 2003) (“In pursuit of this objective [of encouraging homeowners to cure mortgage defaults], N.J.S.A. 2A:50-56 sets forth in considerable detail the steps required of a lender seeking to accelerate maturity and foreclose a residential mortgage upon the debtor’s failure to perform an obligation under the mortgage”); In re LHD Realty Corp., 726 F.2d 327, 330 (7th Cir. 1984) (determining that a mortgagee loses its right to a prepayment premium when it decides to accelerate a debt “because acceleration, by definition, advances the maturity date of the debt so that payment thereafter is not prepayment but instead is payment made after maturity”); cited in Westmark Comm. Mtge. Fund IV, 362 N.J. Super. 336, 345, 346-47 (App. Div. 2003) (which ultimately decided that prepayment premium was due and payable notwithstanding acceleration because the parties had bargained for it).

Shortly after the Fair Foreclosure Act was enacted, the Appellate Division of the Superior Court of New Jersey in Security Nat’l Partners Ltd. P’shp v. Mahler, 336 N.J. Super. 101, 105 (App. Div. 2000), cert. den., 169 N.J. 607 (2001) addressed the absence of a statute of limitations for foreclosure actions in New Jersey (“this State has never had a statute of limitations expressly referring to mortgage foreclosures”). In Mahler, the parties entered the note and mortgage on June 22, 1988 with final payment due June 22, 2003; the debtors defaulted on March 22, 1989; and the lender filed a foreclosure complaint on August 8, 1990. Id. at 103. After the complaint was filed, the debt was transferred multiple times, and the second-to-last assignee unilaterally dismissed the complaint. On June 26, 1996, the last assignee, the plaintiff-appellant, refiled the complaint which the chancery court dismissed as untimely. Id. at 103. The Appellate Division in Mahler reiterated the distinction between action on the note and action on the mortgage and declared that the lender’s time to sue on the note, governed by the 6-year statute of limitations in N.J.S.A. § 12A:3-118(a), had run. Mahler, 336 N.J. Super. at 105. The court rejected the borrowers’ argument that the same 6-year statute governed suits on the mortgage. Id. at 105.

The Appellate Division in Mahler observed that New Jersey common law had developed a 20-year limitation period for a suit on a mortgage

by borrowing and applying the twenty-year limitation period in certain adverse possession statutes. The concept was that a mortgagor in possession or control of the mortgaged property, who failed to make required payments under the mortgage, was in “adverse possession” of the property since—by his conduct—he was denying the mortgagee’s claim of ownership and right to possession.

Mahler, 336 N.J. Super. at 106.

The Appellate Division in Mahler reiterated that, apart from non-payment throughout the limitations period, the debtor is not required to take any other action to establish adverse possession. Mahler, 336 N.J. Super. at 107. The court in Mahler concluded that a foreclosure action is time-barred if not commenced within 20 years after the debtor’s default; declared that the time had not run in its case; and echoed the request in a well-known treatise that New Jersey adopt a statute of limitations for mortgage foreclosure actions. Mahler, 336 N.J. Super. at 106-107, 108; 30 New Jersey Practice, Law of Mortgages § 298, at 196 (Roger A. Cunningham & Saul Tischler) (1975).

In response to Mahler, the New Jersey Legislature promulgated as part of the Fair Foreclosure Act N.J.S.A. § 2A:50-56.1 (“Statute of limitations relative to foreclosure proceedings”), effective August 6, 2009:

2A:50-56.1 Statute of limitations relative to foreclosure proceedings.

An action to foreclose a residential mortgage shall not be commenced following the earliest of:

a. Six years from the date fixed for the making of the last payment or the maturity date set forth in the mortgage or the note, bond, or other obligation secured by the mortgage, whether the date is itself set forth or may be calculated from information contained in the mortgage or note, bond, or other obligation, except that if the date fixed for the making of the last payment or the maturity date has been extended by a written instrument, the action to foreclose shall not be commenced after six years from the extended date under the terms of the written instrument;

b. Thirty-six years from the date of recording of the mortgage, or, if the mortgage is not recorded, 36 years from the date of execution, so long as the mortgage itself does not provide for a period of repayment in excess of 30 years; or

c. Twenty years from the date on which the debtor defaulted, which default has not been cured, as to any of the obligations or covenants contained in the mortgage or in the note, bond, or other obligation secured by the mortgage, except that if the date to perform any of the obligations or covenants has been extended by a written instrument or payment on account has been made, the action to foreclose shall not be commenced after 20 years from the date on which the default or payment on account thereof occurred under the terms of the written instrument.

N.J.S.A. § 2A:50-56.1 (West 2000 and Supp. 2013) (emphasis added).

As explained in the Assembly Financial Institutions and Insurance Committee Statement, Senate, No. 250-L. 2009, c. 105 (“the Committee Statement”) accompanying the bill which became N.J.S.A. § 2A:50-56.1, the statute “in part, codifies the holding in Security National Partners Limited Partnership v. Mahler, 336 N.J. Super. 101 (App. Div. 2000).” The Committee Statement in an October 6, 2008 report says:

The Assembly Financial Institutions and Insurance Committee reports favorably Senate Bill 250 (1R).

This bill supplements the “Fair Foreclosure Act,” P.L.1995, c.244 (C.2A:50-53 et seq.) by applying a statute of limitations to residential mortgage foreclosure actions. The bill is intended to address some of the problems caused by the presence on the record of residential mortgages which have been paid or which are otherwise unenforceable. These mortgages constitute clouds on title which may render real property titles unmarketable and delay real estate transactions. The bill provides that a foreclosure action must be commenced by the earliest of: (1) six years from the date of maturity on the mortgage or other obligation secured by the mortgage, matching the six-year statute of limitations on actions based on contract law; (2) 36 years from the date of recording or execution of the mortgage, provided the mortgage itself does not provide for a period of repayment in excess of 30 years, again relying upon the six-year statute of limitations for contract law; or (3) 20 years from the date of default by the debtor on the mortgage or other obligation secured by the mortgage, matching the 20-year statute of limitations on adverse possession actions. Thus, the bill allows a determination that certain mortgages are not clouds on title because a party can no longer bring an action to foreclose them beyond the bill’s expressly stated statute of limitations, as borrowed from actions in contract law or adverse possession, as applicable.

The bill, in part, codifies the holding in Security National Partners Limited Partnership v. Mahler, 336 N.J. Super. 101 (App. Div. 2000) which applied a 20-year statute of limitations to a residential mortgage foreclosure action based on a default due to nonpayment. In its decision, the court noted that since there is currently no statute of limitations expressly applicable to mortgage foreclosures in these situations, courts have resorted to drawing analogies to adverse possession statutes which bar rights of entry onto land after 20 years. This bill would resolve the uncertainties surrounding this area of law by providing a specific statute of limitations of 20 years from the date of the default by the debtor.

(cited at N.J.S.A. § 2A:50-56.1 (West 2000 and Supp. 2013)) (emphases added).

While federal courts allow recourse to legislative history to interpret a statute only if the text is “ambiguous or otherwise unclear,” the New Jersey Supreme Court has encouraged the use of “extrinsic aids” to interpretation. Compare U.S. v. Cheeseman, 600 F.3d 270, 285-86 (3d Cir.), cert den., ___ U.S. ___, 131 S. Ct. 636 (2010) (concurring) with Nat’l Waste Recycling, Inc. v. Middlesex Cty. Improvement Auth., 150 N.J. 209, 224 (1997); but see U.S. Bank. Nat’l Ass’n. v. Guillaume, 209 N.J. at 471-72 (the court must construe a statute from its plain language; stop the “`interpretive process’” if there is no ambiguity, and “`not resort to extrinsic interpretive aids when the statute is clear and unambiguous’”) (internal citations omitted). The legislative history accompanying N.J.S.A. § 2A:50-56.1(a) provides a limited measure of guidance as to whether the maturity referenced in the statute includes an accelerated maturity date. The Committee Statement notes that the six-year limitations period “match[es] the six-year statute of limitations on actions based on contract law.” If the foreclosure statute is meant to parallel N.J.S.A. § 2A:14-1, that statute is neutral on acceleration and maturity:

Every action at law . . . for recovery upon a contractual claim or liability, express or implied, not under seal, or upon an account other than one which concerns the trade or merchandise between merchant and merchant, their factors, agents and servants, shall be commenced within 6 years next after the cause of any such action shall have accrued [except for action on breach of sale governed by N.J.S.A. § 12A:2-275].

N.J.S.A. § 2A:14-1 (“Limitation of Actions/Adverse Possession/Various Actions/Six Years”). If the foreclosure statute is meant to parallel N.J.S.A. § 12A:3-118 (“Negotiable Instruments/ General Provisions and Definitions/Statute of Limitations”), there is a stronger argument that an accelerated maturity date applies and starts the running of the statute of limitations:

Except as provided in subsection e. of this section, an action to enforce the obligation of a party to pay a note payable at a definite time must be commenced within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date.

N.J.S.A. § 12A:3-118(a) (emphasis added) (As stated earlier Uniform Commercial Code cmt. 2 to this section iterates, “If the note is payable at a definite time, a six-year limitations period starts at the due date of the note, subject to prior acceleration.”)

The Application of N.J.S.A. § 2A:50-56.1 to this Case

N.J.S.A. § 2A:50-56.1 went into effect on August 6, 2009 (West 2000 and Supp. 2014). The statute does not state whether the effective date is measured against the date of the mortgage, the date of the default, or the date on which the foreclosure action is filed. The parent Fair Foreclosure Act became effective on the 90th day after its September 5, 1995 enactment (effective December 4, 1995) and “appl[ied] to foreclosure actions commenced on or after the effective date.” N.J.S.A. § 2A:50-53, citing L. 1995, c. 244, § 19 (a note to the Act) (emphasis added). If the amendment at N.J.S.A. § 2A:50-56.1 is presumed to measure effectiveness in the same manner, then the statute does apply to the instant case in which the Defendants have not yet filed a viable foreclosure complaint.

Defendants contended at the September 30, 2014 hearing that a foreclosure complaint filed now should “relate back” to the complaint filed on December 14, 2007 and dismissed without prejudice on July 5, 2013 (dkt. 7, Exhibits E and K). In the unsolicited letter of October 9, 2014, Debtor argued that a foreclosure action filed now would not “relate back” to the original proceeding because the Defendants discharged the lis pendens and failed to appeal the July 5, 2013 dismissal, with the 45-day appeal period having expired (dkt. 25, October 9, 2014 letter to the court; N.J.R. 4:37-1, cmt. 1.2; N.J.R. 4:37-2(a), cmt. 4; O’Loughlin v. Nat’l Comm. Bank, 338 N.J. Super. 592, 603 (App. Div.), cert. den., 169 N.J. 606 (2001) (“[a] dismissal without prejudice adjudicates nothing and does not constitute a bar to re-institution of the action, subject to the constraint imposed by the statute of limitations”) (affirming the dismissal of a complaint in part because plaintiff failed to refile by the deadline stipulated in a consent order, citing the comment to N.J.R. 4:37-1). In their reply letter, the Defendants did not respond to the Debtor’s challenge to their “relation back” argument (dkt. 26, October 26, 2014 letter to the Court).

To the extent that N.J.S.A. § 2A:50-56.1 applies to this case only if given retroactive application, this statute meets the criteria for retroactive application reiterated in James v. N.J. Mfrs. Ins. Co., 216 N.J. 552, 558, 563 (2014). In New Jersey, statutes are given prospective application (1) unless “`the Legislature intended to give the statute retroactive application’” and (2) provided retroactive application does not “`result in either an unconstitutional interference with vested rights or a manifest injustice.’” James, 216 N.J. at 563, quoting In re D.C., 146 N.J. 31, 50 (1996) and Phillips v. Curiale, 128 N.J. 608, 617 (1992) (other internal citations omitted by James). The court in James, collecting other cases, expanded the first prong to three circumstances:

(1) that the Legislature expressed or implied its intent for retroactivity (necessity for fulfilling a legislative goal; unworkability without retroactive application);

(2) that the amendment is merely curative or clarifying rather than representing a change in existing law; or

(3) that the expectations of the parties warrant retroactivity.

James, 216 N.J. at 563. If any of these circumstances exists, the Court still examines whether retroactive application would result in “manifest injustice,” meaning that “`the parties relied on prior law to their detriment, such that retroactive application would cause a “deleterious and irrevocable” result.’” James, 216 N.J. at 565, quoting Gibbons v. Gibbons, 86 N.J. 515, 523-24 (1981). Myron Weinstein in New Jersey Practice indicated that giving the broadest application to N.J.S.A. § 2A:50-56.1 fulfills legislative purpose:

It is not clear whether the statute is retroactive or whether it only applies to mortgages or defaults after the effective date. If so, its benefits would be greatly reduced, as one of its stated purposes is to remove mortgage constituting “clouds on title which may render real property titles unmarketable and delay real estate transactions.

Myron, Weinstein. Law of Mortgages. 29 New Jersey Practice § 13.16 (“Statute of Limitations”) (emphasis added). By any prospective or retroactive measure of effectiveness, N.J.S.A. § 2A:50-56.1 applies to the instant case.

The Defendants accelerated the maturity date of the loan to the June 1, 2007 default date, as acknowledged in the Assignment (dkt. 7, Exhibit L).[10] Moreover, neither the Debtor nor the Defendants have taken any measures under the note or mortgage, or under the Fair Foreclosure Act, to de-accelerate the debt, and the Defendants have further failed to file a foreclosure complaint within 6 years of the accelerated maturity date as required by N.J.S.A. § 2A:50-56.1(a). Accordingly, the Defendants are now time-barred from filing a foreclosure complaint and from obtaining a final judgment of foreclosure.

The Disallowance of the Defendants’ Proof of Claim and Avoidance of the Underlying Mortgage.

On July 17, 2014, the Defendants timely filed secured proof of claim 7-1 under 11 U.S.C. § 501(a) for $920,469.86 based on their note and mortgage (the claims bar date was August 18, 2014). A claim in bankruptcy is a “right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.” 11 U.S.C. § 101(5)(A). Debt is “liability on a claim.” 11 U.S.C. § 101(12). Moreover, pursuant to 11 U.S.C. § 102(2), a claim against the Debtor’s property also constitutes a claim against the Debtor. Thus, while Defendants have only in rem claims, having failed to sue on the note within the six years permitted under the statute, such claims remain claims against the Debtor in this bankruptcy proceeding.

11 U.S.C. § 502(a) controls the claims allowance process: “A claim or interest, proof of which is filed under section 501 of this title, is deemed allowed, unless a party in interest . . . objects.” 11 U.S.C. § 502(a). Debtor’s adversary complaint includes a demand which constitutes an objection to the Defendants’ proof of claim: “Determine that Defendants have no allowed secured claim” (dkt. 1, “Request for Relief, p. 4, ¶ b) and triggers the Court’s review. 11 U.S.C. § 502(b) governs unenforceability of claims and states in relevant part:

(b) Except as provided in subsections (e)(2), (f), (g), (h) and (i) of this section [not relevant here] if such objection to a claim is made, the court, after notice and a hearing, shall determine the amount of such claim in lawful currency of the United States as of the date of the filing of the petition, and shall allow such claim in such amount, except to the extent that—

(1) such claim is unenforceable against the debtor and property of the debtor, under any agreement or applicable law for a reason other than because such claim is contingent or unmatured.

11 U.S.C. § 502(b)(1) (emphasis added). 11 U.S.C. § 506 controls the allowance of secured claims and provides that, if the claim underlying the lien is disallowed, then the lien is void:

(a)(1) An allowed claim of a creditor secured by a lien on property in which the estate has an interest, or that is subject to setoff under section 553 of this title, is a secured claim to the extent of the value of such creditor’s interest in the estate’s interest in such property, or to the extent of the amount subject to setoff, as the case may be, and is an unsecured claim to the extent that the value of such creditor’s interest or the amount so subject to setoff is less than the amount of such allowed claim. Such value shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property, and in conjunction with any hearing on such disposition or use or on a plan affecting such creditor’s interest.

. . .

(d) To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void, unless [conditions not relevant here exist].

11 U.S.C. § 506(a)(1) and (d)(emphasis added).

As explained above, by application of N.J.S.A. § 2A:50-56.1(a) and (c), the Defendants are time-barred under New Jersey state law from enforcing either the note or the accelerated mortgage. As a result, Defendants’ proof of claim 7 must be disallowed under 11 U.S.C. § 502(b)(1) as unenforceable against the Debtor or against Debtor’s property under applicable state law. Having determined that Defendants do not have an allowed secured claim, the underlying lien is deemed void pursuant to 11 U.S.C. §§ 506(a)(1) and (d).[11]

V. CONCLUSION.

In light of Defendants’ acceleration of the maturity date of the underlying debt as of June 1, 2007, and because neither Debtor nor Defendants took any action under either the mortgage instruments, or the Fair Foreclosure Act, to de-accelerate the maturity date, Defendants’ right to file a foreclosure complaint expired 6 years after the June 1, 2007 acceleration date under N.J.S.A. § 2A:50-56.1(a). Given that Defendants’ putative secured claim is unenforceable under 11 U.S.C. § 502(b)(1), by applicable New Jersey statute, their mortgage lien is void under 11 U.S.C. § 506(d), and the Debtor retains the property, free of any claim of the Defendants. Debtor is to submit a form of judgment. The Court will proceed to gargle in an effort to remove the lingering bad taste.

[1] Docket references are to adv. pro. no. 14-1319 unless stated otherwise. Debtor provided a signed Rule 56.1 Statement of Undisputed Material Facts (“Debtor SUMF”) at dkt. 8 to replace the unsigned copy at dkt. 7, but this opinion refers to the Debtor’s SUMF at dkt. 7 for consistency with the other elements of Debtor’s motion.

[2] At dkt. 22, p. 1, n.1, the Defendants note the procedural impropriety of the Debtor having filed a cross motion to a cross motion. The Court considers the Debtor’s cross motion at dkt. 19 as opposition to the Defendants’ cross motion, and the Defendants’ reply memorandum at dkt. 22 as a response thereto. For consistency with the docket entries, however, this opinion cites to Debtor’s dkt. 19 as to the `cross motion.’

[3] The facts recited herein are undisputed by any of the parties.

[4] Debtor believes that a friend made the July 1, 2007 payment but has not pressed or proven that point (dkt. 7-2, Debtor, ¶ 8). The unassailable fact that Debtor went into default within 90 days of the loan closing makes this decision even less palatable. 4

[5] The Defendants also provided a copy of this recorded Assignment at dkt. 11, Exhibit C. Debtor questions the authenticity and effectiveness of the Assignment generally, because a different version of it, unrecorded and bearing different officer signatures, was attached to the foreclosure complaint, infra (dkt. 19, Exhibit 3, “Unrecorded Assignment”). Both the recorded and the Unrecorded Assignment contain the clause accelerating the debt to June 1, 2007.

Matthew R. Stahlhut, officer at Bank of America (“BoA”), asserts that BoA serviced the loan from its inception through transfer of servicing rights on November 16, 2013 to defendant-servicer SLS (dkt. 11-3, Stahlhut cert., ¶5). Defendants provide an Amended Assignment of Mortgage signed on December 31, 2013, recorded on January 8, 2014, purportedly to correct the name of BoNY (dkt. 11, Exhibit D, “Amended Assignment”). The Amended Assignment is different in format from the original Assignment and does not contain the acceleration clause.

[6] In response to Debtor’s SUMF, ¶ 16, that the Defendants “never obtained a judgment against the Homeowner in the 2007 Foreclosure Complaint,” Defendants assert without documentary evidence or certified response that they obtained “summary judgment,” but that judgment (not provided) appears simply to have stricken the Debtor’s answer (dkt. 11-1, Defendant’s response to Debtor’s SUMF, ¶ 16).

[7] Cynthia Wallace, an officer of SLS, certifies that CWABS, Inc., Asset-Backed Certificates, Series 2007-5 (“the Trust”) “maintain[s] . . . through its custodian” the note, mortgage, assignment, and corrective assignment signed December 31, 2013 and recorded on January 8, 2014 (dkt. 11-2, Wallace cert. ¶¶ 1, 3 and dkt. 11, Exhibits A, B, C, D).

[8] N.J.S.A. § 12A:3-118(a) provides: “Except as provided in subsection e. of this section, an action to enforce the obligation of a party to pay a note payable at a definite time must be commenced within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date.” N.J.S.A. § 12A:3-118(a) (emphasis added). Uniform Commercial Code cmt. 2 to this section iterates, “If the note is payable at a definite time, a six-year limitations period starts at the due date of the note, subject to prior acceleration.”

[9] Defendants state that the 6-year statute of limitations would obviate any deficiency claim, but Debtor’s eventual discharge in Chapter 13 or Chapter 7 would also relieve him of personal liability for the debt. N.J.S.A. § 2A:50-52 (“No deficiency judgment”) also prohibits deficiency judgments on foreclosures under this statute.

[10] Whether the default were measured from July 1, 2007 or from the December 14, 2007 filing date of the foreclosure complaint, the statute of limitations under N.J.S.A. § 2A:50-56.1 has still run.

[11] In as much as the Court finds that the Defendants are time-barred from enforcing the note or the mortgage, it is not necessary to address Debtor’s arguments that Defendants lack standing to enforce the note and mortgage based on alleged defects in the Assignment or the alleged impact of a Settlement Agreement.

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Morris County homeowner, facing foreclosure, gets a free house instead

Morris County homeowner, facing foreclosure, gets a free house instead

NJ-

In what may be a first in New Jersey, a Morris County man who defaulted on his $520,000 mortgage in 2007 has instead won the right to retain ownership of his house, according to court records.

Earlier this month, Gordon A. Washington of Madison won a challenge against creditors Specialized Loan Servicing LLC and Bank of New York Mellon to collect the debt, saying they failed to file a viable foreclosure complaint within a six-year statute of limitations.

In his written opinion, Judge Michael B. Kaplan repeatedly expressed his reluctance to nullify the mortgage agreement — stating he did so with a “figurative hand holding the nose” — but, nonetheless, he ruled in favor of Washington by voiding the mortgage lien.

[NJ.com]

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Goldman Sachs Mtge. Co. v Mares| NYSC – Physical delivery of the note FAIL, Affidavit FAIL, Assignment FAIL, Allonge FAIL, Power of Attorney FAIL

Goldman Sachs Mtge. Co. v Mares| NYSC – Physical delivery of the note FAIL, Affidavit FAIL, Assignment FAIL, Allonge FAIL, Power of Attorney FAIL

Decided on November 14, 2014

Supreme Court, Tompkins County

 

Goldman Sachs Mortgage Company, Plaintiff,

against

John F. Mares, Ann F. Mares, “JOHN DOE No.1″ through JOHN DOE #12″, the last twelve names being fictitious and unknown plaintiff, the persons or parties intended being the tenants, occupants, persons or corporations, if any, having or claiming an interest in or lien upon the premises, described in the complaint, Defendants.
2014-0201

LEOPOLD & ASSOCIATES, PLLC
By: Julie L. Mer, Esq.
Attorneys for Plaintiff
80 Business Park Drive, Suite 110
Armonk, New York 10504

RICHARD P. RUSWICK, ESQ.
Attorney for Defendants
401 East State Street, Suite 306
Ithaca, New York 14850
Robert C. Mulvey, J.

The plaintiff has brought this motion seeking summary judgment and an order of reference in this residential mortgage foreclosure action. The defendants, John F. Mares and Ann F. Mares, have submitted papers in opposition to the relief requested by the plaintiff and they have cross-moved for an order granting them summary judgment and dismissal of the plaintiff’s complaint. The plaintiff has submitted reply papers as well as papers in opposition to the defendants’ cross-motion.

The record indicates that the defendants executed a note and mortgage on or about September 30, 2005 in connection with their purchase of real property located at 170 Buck Road in Lansing, New York. The mortgage was given to Mortgage Electronic Registrations Systems, Inc. (MERS) as mortgagee and nominee for the lender, Freestone Enterprises, Inc. The note was given to Freestone Enterprises, Inc.

The record reflects that subsequent thereto, said mortgage and note were assigned by written assignment to various entities, including ultimately the plaintiff herein. On or about October 22, 2008, said mortgage and note were assigned by MERS to AmTrust Bank f/k/a Ohio Savings Bank. Thereafter, on or about August 5, 2009, AmTrust Bank f/k/a Ohio Savings Bank assigned said mortgage and note to MTGLQ Investors, LP C/O Litton Loan Servicing. Further, on or about March 28, 2012, MTGLQ Investors, LP assigned the mortgage and note herein to the plaintiff, Goldman Sachs Mortgage Company. An allonge to the note dated September 30, 2005 and executed by Barrie Beverly, Secretary/Treasurer of Freestone Enterprises, Inc. also indicates that Freestone transferred its interest in the note to Ohio Savings Bank.

The plaintiff commenced this action by the filing of a summons and complaint herein, together with a certificate of merit, on or about March 4, 2014. Issue was joined in the action by the service and filing of an answer by the defendants, John F. Mares and Ann F. Mares, on or about April 2, 2014. The defendants’ answer contains general denials of the material allegations of the complaint, raises various defenses to the action and asserts a counterclaim seeking dismissal of the complaint and discharge of the underlying mortgage upon the ground that the plaintiff did not commence this action to foreclose within six years of the date the action accrued. The plaintiff filed a reply to the counterclaim.

The plaintiff has now brought this motion seeking summary judgment against the defendants and an order of reference. The plaintiff has submitted the affidavit of Richard Work, a Contract Management Coordinator for Ocwen Loan Servicing, LLC, the servicer for the plaintiff herein, sworn to June 11, 2014, and the affirmation of plaintiff’s counsel, Marcelo E. Martinez, Esq. dated June 25, 2014, together with exhibits attached thereto in support of the motion. The plaintiff contends that the defendants defaulted in making payments under the terms [*2]of the mortgage in June of 2007 and that subsequent thereto all amounts due under the note and mortgage were accelerated. Further, the plaintiff argues that the papers submitted in support of the motion are sufficient to make a prima facie showing of entitlement to summary judgment against the defendants and an order of reference in this foreclosure action.

The defendants oppose the plaintiff’s motion for summary judgment and assert that their cross-motion seeking summary judgment and dismissal of the plaintiff’s complaint should be granted. The defendants claim that the plaintiff’s action is barred by the six-year statute of limitations. They argue that the action accrued upon the issuance of the notice of default and demand letter sent to them on or about June 4, 2007 by AmTrust Bank, the plaintiff’s predecessor in interest, and that the plaintiff failed to commence this action within six years of that accrual.

The defendants also contend that the plaintiff’s motion should be denied on the ground that the plaintiff failed to include allegations in its complaint regarding its corporate status and the identity of the state or country under whose laws it was created as is required by the provisions of CPLR 3015(b). Further, the defendants argue that the plaintiff’s motion for summary judgment is premature and that they should be allowed discovery on the status of the plaintiff as the holder of the note and mortgage and the validity of the purported assignments. The defendants claim that the papers submitted in support of the plaintiff’s motion are not sufficient to establish the plaintiff’s standing to bring this foreclosure action. The defendants question whether the affidavit submitted by Richard Work is sufficient since the record indicates that he is an employee of Ocwen Loan Servicing, LLC, rather than the plaintiff, and they argue that it is unclear whether he has personal knowledge of the facts. The defendants also point out that the assignment of mortgage given by MTGLQ Investors, LP to the plaintiff and the undated allonge to the underlying note made by MTGLQ Investors, LP transferring the note to the plaintiff were executed by different individuals, Lynn Bluege-Rust and Richard Williams, Vice President, Litton Loan Servicing LP, respectively, each as Attorney-in-Fact for MTGLQ Investors, LP, but that the power of attorney documents purporting to grant said individuals the authority to execute same have not been provided by the plaintiff.

Upon review and consideration of the papers submitted, the Court has determined that the plaintiff’s motion for summary judgment and an order of reference should be denied without prejudice to renew and the defendants’ cross-motion seeking summary judgment and dismissal of the plaintiff’s complaint should also be denied.

Summary judgment is a drastic remedy, but may be awarded when no issues of fact exist. (see, CPLR 3212 [b]; Andre v. Pomeroy, 35 NY2d 361, 364). In order to be successful on a motion for summary judgment, the moving party must make a prima facie showing of entitlement to judgment as a matter of law by providing sufficient evidence to demonstrate the absence of any material issues of fact. Winegrad v. New York University Medical Center, 64 NY2d 851, 853. Failure on the part of the moving party to make such a prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers. Alvarez v. Prospect Hospital, 68 NY2d 320, 324. However, once such a showing has [*3]been made, the burden shifts to the party opposing the motion to produce evidence in admissible form that is sufficient to establish that material issues of fact exist which require a trial. Alvarez v. Prospect Hospital, supra, 68 NY2d at p. 324; Zuckerman v. City of New York, 49 NY2d 557, 562.

First, with respect to the plaintiff’s motion, the Court finds that the plaintiff has failed to make a prima facie showing of entitlement to summary judgment and an order of reference since it has failed to adequately demonstrate that it has standing to bring this foreclosure action. Where, as here, the plaintiff’s standing or legal capacity to sue has been challenged in the pleadings, the plaintiff must prove its standing in order to be entitled to relief. (see U.S. Bank National Association v. Faruque, 120 AD3d 575). The plaintiff must then demonstrate that 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). “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 752, 754. In this instance, the Court finds that the conclusory statement contained in Mr. Work’s affidavit regarding the plaintiff’s possession of the note lacks any details of a physical delivery of the note and thus fails to establish that the plaintiff had physical possession of the note prior to the commencement of the action. (see U.S. Bank National Association v. Faruque, supra at 633; Deutsche Bank National Trust Company v. Haller, 100 AD3d 680, 682; cf. Aurora Loan Servicing, LLC v. Taylor, 114 AD3d 627). Moreover, to the extent that the plaintiff relies upon the assignment of mortgage and allonge documents attached to the plaintiff’s motion papers to establish standing, the Court finds that such documentary evidence is insufficient since it does not include a copy of the power of attorney or instrument granting authority for any of the documents that were executed by an attorney-in-fact or authorized agent. (see Deutsche Bank National Trust Company v. Haller, supra at 682; Bank of New York v. Alderazi, 28 Misc 2d 376, 379-380).

As to the defendants’ cross-motion seeking summary judgment and dismissal of the complaint, the Court has determined that said motion should be denied since it finds that the plaintiff’s action herein was timely commenced and the defendants have not otherwise demonstrated their entitlement to a dismissal of the complaint.

“It is well settled that, even if a mortgage is payable in installments, once the mortgage debt is accelerated, the entire amount is due and the Statute of Limitations begins to run on the entire debt.” EMC Mortgage Corp. v. Patella, 279 AD2d 604, 605. An election to accelerate the mortgage must consist of a notice of election to the mortgagor or some overt act manifesting such an election. (see 466 W. 44th Street, Inc. v. Riverland Holding Corp., 267 A.D. 135, 137). Such an acceleration must be clear and unequivocal. (see Sarva v. Chakravorty, 34 AD3d 438, 439). In this instance, the notice of default letter sent to the defendants on or about June 4, 2007, by AmTrust Bank, the plaintiff’s predecessor in interest, demanded only the amounts then due or to become due and indicated that failure to pay the total amount past due may result in [*4]acceleration of the sums secured by the mortgage. In this Court’s view, such letter did not constitute a clear and unequivocal acceleration of the entire mortgage debt.

It is undisputed, however, that on or about March 6, 2009, the plaintiff’s predecessor in interest, AmTrust Bank, commenced a mortgage foreclosure action against the defendants herein by the filing of a summons and complaint with the Tompkins County Clerk (Tompkins County Index No. 2009-0260). That action was based upon a default in connection with the underlying note and mortgage herein. The commencement of that foreclosure action constituted an acceleration of the underlying mortgage debt herein. (see EMC Mortgage Corp. v. Smith, 18 AD3d 602). The acceleration of the underlying mortgage debt herein having occurred on or about March 6, 2009, the Court finds that the commencement of the plaintiff’s action on March 4, 2014 was within the six-year statute of limitations (CPLR 213 [4]) and was, therefore, timely.

Further, to the extent that the defendants seek dismissal of the plaintiff’s complaint upon grounds that the plaintiff failed to comply with the provisions of CPLR 3015 (b), such relief is denied. The plaintiff’s complaint is subject to amendment and the defendants have failed to demonstrate that they were prejudiced by such noncompliance. (see Dari-Delite v. Priest & Baker, Inc., 50 Misc 2d 654; Horizon Staffing Solutions, Inc. v Schwartz, 17 Misc 3d 1127A). The Court also notes that the plaintiff’s reply papers contain documentary evidence which indicates that the plaintiff is a domestic limited partnership located in New York County.

Lastly, with respect to the defense raised by the defendants that they have received a Chapter 7 discharge in bankruptcy and are not personally liable for any mortgage deficiency, the plaintiff, through its counsel, has indicated that it will honor the discharge and not pursue the defendants for any mortgage deficiency.

Accordingly, for the reasons set forth above, it is

ORDERED that the plaintiff’s motion seeking summary judgment and an order of reference is hereby denied, without prejudice to renew, and it is further

ORDERED that the defendants’ cross-motion seeking summary judgment and dismissal of the plaintiff’s complaint is denied, and it is further

ORDEREDthat, to the extent the defendants wish to conduct discovery relative to the authority held by those individuals who executed an assignment of mortgage or an allonge to the note as an attorney-in-fact or an authorized agent, they are hereby granted 90 days from the date of this Decision and Order to complete such discovery and the plaintiff may not renew its motion herein until any such requested discovery is completed.

This shall constitute the Decision and Order of the Court. No costs are awarded on the motions.

Signed this 14th day of November, 2014 at Ithaca, New York.

______________________________

Hon. Robert C. Mulvey, J.S.C.

 

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Bank of America, Citigroup Said to Sell Soured Home Loans

Bank of America, Citigroup Said to Sell Soured Home Loans

Idiots to even think about this purchase!


Bloomberg-

Bank of America Corp. and Citigroup Inc. (C) are selling multiple pools of soured U.S. mortgages to meet demand from investment firms that are pushing prices higher, according to three people with knowledge of the matter.

Bank of America put about $1 billion of troubled debt on the market last week, consisting of nonperforming loans and some where payments have resumed, said the people, who asked not to be identified because the offerings are private. The Charlotte, North Carolina-based lender also is marketing about $1 billion of soured home loans with Wells Fargo & Co., according to one of the people. Citigroup is separately selling about $1 billion of nonperforming and re-performing mortgages, the people said.

Dan Frahm, a spokesman for Bank of America, and Mark Costiglio, a spokesman for Citigroup in New York, declined to comment on the loan sales. Elise Wilkinson, a spokeswoman for San Francisco-based Wells Fargo, also declined to comment.

[BLOOMBERG]

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MEMO: Drafting Committee Members, Advisors and Observers, Proposed Home Foreclosure Procedures Act

MEMO: Drafting Committee Members, Advisors and Observers, Proposed Home Foreclosure Procedures Act

The Banksters are coming!

It’s clear that today’s policies create winners and losers. The winners include real estate agents and home builders, who want to increase borrowing and sell ever-larger and more expensive homes. The losers, as we saw in the financial crisis, are borrowers of modest means who are lured into financing arrangements they can’t afford. When the result is foreclosure and eviction, one of the central goals of homeownership — building equity — is undone.

MEMORANDUM TO: Drafting Committee Members, Advisors and Observers, Proposed Home Foreclosure Procedures Act FROM: Bill Breetz, Chair DATE: November 7, 2014 RE: November 14-15, 2014 Drafting Committee meeting
Palmer House Hilton, 17 E. Monroe Street, Chicago, IL 20036
(312) 726-7500

Contents
Introduction Page 1
Appendix A – the Agenda Page 2
Comments on this Draft Page 3
Additional Observations regarding Holder In Due Course Page 10 Developments in The Field Since Our Last Meeting Page 13 (with a summary of the Exhibits)
List of Exhibits Page 20

II COMMENTS ON THIS DRAFT

You should have already received both a redlined and clean draft of the most recent version of the Home Foreclosure Procedures Act from the Chicago office for consideration at our Chicago meeting. With that same email, you should also have received an extensive letter from Mark Greenlee of the Federal Reserve Bank of Cleveland.

Once again, that draft represents the work of our two excellent co-Reporters – James Charles Smith of the University of Georgia Law School and Alan White of CUNY Law School in New York City – and several conference calls between the Co-Reporters, American Bar Association Advisor Barry Nekritz and me. I continue to be most grateful for Jim, Alan and Barry’s scholarship, drafting efforts and pragmatic approach to the drafting challenges we face in what remains a highly important subject.

The current draft is based on the draft considered at the annual meeting of the ULC this past July. All the amendments to that draft – as shown in the redlined version that you have – come from three sources.

First, they reflect the comments and debate which the Committee received at the annual meeting.

Second, a considerable number of amendments were generated from the several discussions of the draft among the co-Reporters, Barry Nekritz and me. Third, we received substantial proposed amendments from the Style Committee developed at its September meeting, and which were discussed in a day-long meeting with Judge Yeakel (Chair of the Style Committee), the co-Reporters, the ABA Advisor and me. All of us who met with Judge Yeakel appreciate the work of the Style Committee; their efforts have substantially enhanced the readability and clarity of the draft As always, the draft reflects substantial policy issues and I touch on those issues below. However, this draft contains many fewer policy differences compared to earlier drafts, as we have resolved many of them (at least for the moment) in earlier meetings.

[...]

Down Load PDF of This Case

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US BANK NA v. Williams, 2014 NY Slip Op 7349 – NY: Appellate Div., 2nd Dept. | sanctions were appropriate, and, in effect, that US Bank still was obligated pursuant to CPLR 3408(f) to negotiate in good faith

US BANK NA v. Williams, 2014 NY Slip Op 7349 – NY: Appellate Div., 2nd Dept. | sanctions were appropriate, and, in effect, that US Bank still was obligated pursuant to CPLR 3408(f) to negotiate in good faith

2014 NY Slip Op 07349

US BANK NATIONAL ASSOCIATION, ETC., Appellant,
v.
FAY WILLIAMS, Respondent, ET AL., Defendants.

2014-00206, Index No. 3685/10.
Appellate Division of the Supreme Court of New York, Second Department.

Decided October 29, 2014.
Hogan Lovells US LLP, New York, N.Y. (David Dunn, Chava Brandriss, and Allison Funk of counsel), for appellant.

Jaime Lathrop, Brooklyn, N.Y. (David Lavery of counsel), for respondent.

Before: Peter B. Skelos, J.P., Sheri S. Roman, Sylvia O. Hinds-Radix, Hector D. Lasalle, JJ.

DECISION & ORDER

ORDERED that the order dated November 18, 2013, is modified, on the law, on the facts, and in the exercise of discretion, (1) by deleting the provision thereof directing the plaintiff to submit a proposed loan modification order to the defendant Fay Williams and the court, (2) by deleting the provision thereof canceling interest accrued between the date of the initial settlement conference in June 2010 and the date that the parties agree to a loan modification, and substituting therefor a provision canceling interest accrued between the date of the initial settlement conference in June 2010 and the date on which settlement negotiations recommence, (3) by deleting the provision thereof barring the plaintiff from charging the defendant Fay Williams any attorney’s fees or costs incurred in this action, and substituting therefor a provision barring the plaintiff from charging the defendant Fay Williams any attorney’s fees or costs incurred in this action between the date of the initial settlement conference in June 2010 and the date on which settlement negotiations recommence, (4) by deleting the provision thereof directing the plaintiff, within 60 days, to provide the defendant Fay Williams with a payoff statement which incorporates the cancellation of interest from June 2010 and which does not assess any attorney’s fees or costs incurred in this action, and substituting therefor a provision directing the plaintiff, within 60 days from service upon it of a copy of this decision and order, to provide the defendant Fay Williams with a payoff statement which incorporates the cancellation of interest accrued between the date of the initial settlement conference in June 2010 and the date on which settlement negotiations recommence and which does not assess any attorney’s fees or costs between the date of the initial settlement conference in June 2010 and the date on which settlement negotiations recommence, (5) by deleting the provision thereof denying that branch of the plaintiff’s motion which was to reject the referee’s report and substituting therefor a provision granting that branch of the plaintiff’s motion to the extent indicated hereinabove, and (6) by deleting the provision thereof confirming stated portions of the referee’s report and substituting therefor a provision confirming those stated portions to the extent indicated hereinabove; as so modified, the order dated November 18, 2013, is affirmed insofar as appealed from, with one bill of costs to the defendant Fay Williams, and the matter is remitted to the Supreme Court, Kings County, for further proceedings consistent herewith.

In June 2006, the defendant Fay Williams and nonparty Credit Suisse Financial Corporation (hereinafter Credit Suisse) agreed to an adjustable rate mortgage loan in the sum of $516,800 for property located in Brooklyn (hereinafter the property). The terms of the mortgage note provided that in the event of default, Williams would pay the mortgagee’s attorney’s fees and costs. The defendant Mortgage Electronic Registration Systems (hereinafter MERS) recorded the mortgage as nominee for Credit Suisse. In July 2009, Williams allegedly defaulted on the mortgage note. In February 2010, MERS purportedly assigned the mortgage note to the plaintiff, US Bank National Association, as Trustee for CSMC ARMT 2006-3 (hereinafter US Bank).

In February 2010, US Bank commenced this action to foreclose on the mortgage. US Bank never appeared for mandatory conferencing. Instead, nonparty servicer ASC/Wells retained nonparty Steven J. Baum, P.C. (hereinafter Baum, and hereinafter collectively with ASC/Wells and US Bank, the foreclosing parties), to prosecute the action and participate in foreclosure conferencing. Between June 2010 and July 2011, Baum and Williams participated in 10 settlement conferences, during which Baum represented that Williams might qualify for loan modification via the federal Home Affordable Modification Program (hereinafter HAMP) and repeatedly asked her to submit additional documentation regarding the HAMP application. In July 2011, the foreclosing parties advised the Supreme Court that, notwithstanding their prior representations, US Bank had denied review of Williams’s HAMP application because it was contractually prohibited by a 2006 Pooling and Servicing Agreement (hereinafter PSA) from modifying the interest rate or term of the mortgage.

In a referee’s report dated May 8, 2012, the referee found, inter alia, that the foreclosing parties failed to negotiate in good faith for more than a year, prolonged the workout process, and wasted judicial resources by causing Williams to submit multiple HAMP applications and to attend numerous settlement conferences, even though they knew the PSA prohibited US Bank from modifying the applicable interest rate or term. Accordingly, the referee recommended an order (1) directing ASC/Wells to review Williams for an affordable loan modification under HAMP using payoff figures from June 2010 and to submit a proposed modification offer to Williams and the court; (2) directing the parties to appear for a hearing to determine whether to impose sanctions against the foreclosing parties for failure to negotiate in good faith; (3) barring US Bank from recovering an attorney’s fee and costs from Williams; and (4) tolling all interest accrued on the mortgage note between the initial conference date in June 2010 and the date on which the parties enter into a loan modification agreement.

By order dated July 2, 2012 (hereinafter the July 2012 order), the Supreme Court, on its own initiative, in effect, confirmed the relevant provisions of the referee’s report. In September 2012, the Supreme Court directed the parties to make a further attempt at modification. The foreclosing parties subsequently refused to offer loan modification to Williams due to US Bank’s refusal to allow reductions in the interest and term. On or about April 23, 2013, US Bank provided a payoff statement to Williams which included interest accrued since June 2010 and an attorney’s fee incurred in the action.

On or about July 5, 2013, Williams moved to hold US Bank in civil contempt based on its failure to comply with the provisions of the July 2012 order directing it, in effect, to provide a payoff statement excluding accrued interest since the date of the initial settlement conference in June 2010 and charges for an attorney’s fee and costs. US Bank opposed the motion and moved to vacate the July 2012 order and reject the referee’s report. The Supreme Court accepted US Bank’s contention that it had no notice of the referee’s report or of the court’s order confirming it, and thus, the court treated US Bank’s motion as a timely motion to reject the referee’s report.

In the order appealed from, the Supreme Court, in effect, denied Williams’s motion to hold US Bank in civil contempt and denied that branch of US Bank’s motion which was to reject the referee’s report. The Supreme Court also, in effect, granted that branch of US Bank’s motion which was to vacate the July 2012 order and, thereupon, confirmed the referee’s report to the extent of directing US Bank to review Williams for an affordable mortgage loan modification pursuant to the HAMP using payoff figures from June 2010 and to submit a proposed loan modification order to Williams and the court, canceling all interest accrued on the subject mortgage loan between the date of the initial settlement conference in June 2010 and the date that the parties agree to a loan modification, barring US Bank from charging Williams any attorney’s fees or costs incurred in this action, and directing US Bank, within 60 days, to provide Williams with a payoff statement which incorporates the cancellation of interest from June 2010 and which does not assess any attorney’s fees or costs incurred in this action. US Bank appeals.

“A foreclosure action is equitable in nature and triggers the equitable powers of the court” (Norwest Bank Minn., NA v E.M.V. Realty Corp., 94 AD3d 835, 836; see Notey v Darien Constr. Corp., 41 NY2d 1055, 1055-1056; Mortgage Elec. Registration Sys., Inc. v Horkan, 68 AD3d 948, 948). “Once equity is invoked, the court’s power is as broad as equity and justice require’” (Mortgage Elec. Registration Sys., Inc. v Horkan, 68 AD3d at 948, quoting Norstar Bank v Morabito, 201 AD2d 545, 546).

The record supports the referee’s finding that the foreclosing parties failed to negotiate in good faith. Thus, the Supreme Court properly directed US Bank to review Williams for HAMP modification, in light of the referee’s findings, in effect, that it had thus far failed to fulfill its statutory obligation to do so (see Wells Fargo Bank, N.A. v Meyers, 108 AD3d 9, 23).

However, the Supreme Court erred in directing US Bank to submit a proposed loan modification order to Williams and the court, as the court was without authority to force parties to reach an agreement (see Flagstar Bank, FSB v Walker, 112 AD3d 885, 886; Wells Fargo Bank, N.A. v Meyers, 108 AD3d at 20, 22).

Contrary to US Bank’s contention, the Supreme Court providently exercised its discretion canceling certain interest accrued on the mortgage note after June 2010. “In an action of an equitable nature, the recovery of interest is within the court’s discretion. The exercise of that discretion will be governed by the particular facts in each case, including any wrongful conduct by either party” (Dayan v York, 51 AD3d 964, 965 [citations omitted]; see CPLR 5001[a]; Norwest Bank Minn., NA v E.M.V. Realty Corp., 94 AD3d at 837; Danielowich v PBL Dev., 292 AD2d 414, 415). The record demonstrates that the foreclosing parties repeatedly represented to the referee and to Williams that they were considering Williams for HAMP loan modification and repeatedly demanded that Williams submit additional documentation in support of that application, notwithstanding the prohibition against such a modification in the PSA, which they did not disclose until approximately 13 months after negotiations began. Under these circumstances, the Supreme Court providently exercised its discretion in finding that US Bank was not entitled to collect interest accrued as a result of its wrongful conduct (see generally US Bank N.A. v Sarmiento, ___ AD3d ___, 2014 NY Slip Op 05533 [2d Dept 2014]; Norwest Bank Minn., NA v E.M.V. Realty Corp., 94 AD3d at 836; Dayan v York, 51 AD3d at 965).

However, the Supreme Court improvidently exercised its discretion in canceling interest accrued between June 2010 and until such date as the parties agreed to loan modification, as the Supreme Court lacked authority to force US Bank to agree to modify the mortgage note (see Wells Fargo Bank, N.A. v Meyers, 108 AD3d at 20; Flagstar Bank, FSB v Walker, 112 AD3d at 886). Rather, the court should have directed cancellation of interest accrued between June 2010 and the date on which settlement negotiations recommence (see Wells Fargo Bank, N.A. v Meyers, 108 AD3d at 20; Norwest Bank Minn., NA v E.M.V. Realty Corp., 94 AD3d at 837; Dayan v York, 51 AD3d at 965-966; Preferred Group of Manhattan, Inc. v Fabius Maximus, Inc., 51 AD3d 889, 890; Danielowich v PLB Dev., 292 AD2d at 415).

Further, the Supreme Court erred in barring US Bank from charging Williams an attorney’s fee and costs incurred as a result of the action, as that provision of the order constituted an improper attempt to rewrite the mortgage note. Instead, upon its finding that the Referee’s report was supported by the record, that sanctions were appropriate, and, in effect, that US Bank still was obligated pursuant to CPLR 3408(f) to negotiate in good faith, the court should have barred US Bank from charging Williams an attorney’s fee and costs incurred between the date of the initial settlement conference and the date on which settlement negotiations recommence (see Norwest Bank Minn., NA v E.M.V. Realty Corp., 94 AD3d at 837; Dayan v York, 51 AD3d at 965-966; Preferred Group of Manhattan, Inc. v Fabius Maximus, Inc., 51 AD3d at 890; Danielowich v PLB Dev., 292 AD2d at 415).

US Bank’s remaining contentions are without merit.

SKELOS, J.P., ROMAN, HINDS-RADIX and LASALLE, JJ., concur.

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Loretta Lynch’s Wall Street friends: What you should know about AG nominee’s finance past

Loretta Lynch’s Wall Street friends: What you should know about AG nominee’s finance past

Salon-

Despite all the unabashed punditry, relatively little is known by the country about Loretta Lynch, the low-profile U.S. Attorney for the Eastern District of New York, who President Obama nominated on Saturday to replace Eric Holder as Attorney General. We’ve heard about the cases Lynch has prosecuted for the government, from the police shooting of Haitian immigrant Abner Louima to public corruption cases against the likes of Rep. Michael Grimm (R-NY).

But what’s less known is Lynch’s career in the private sector. After reviewing her record in this capacity, it’s not that she’s openly corrupted by the forces that increasingly rule our government, so much as she’s marinated in their worldview, in their cultural milieu. To ask her to take on powerful interests in finance would be like asking someone to rat out their friends.

Lynch’s first job was as a litigation associate at Cahill Gordon & Reindel in the mid-1980s. Their litigation department includes the legendary First Amendment lawyer Floyd Abrams, who defended the New York Times in the Pentagon Papers case (Abrams subsequently argued the Citizens United case, on “campaign money is speech” grounds). But it also does a great deal of white-collar defense in securities and antitrust law, representing companies like AIG, HSBC, Credit Suisse, Bank of America and more. It’s a corporate law firm.

[SALON]

image: Reuters/Yuri Gripas

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Panel Faults Flagrant Disregard of Precedent (Justice Arthur Schack)

Panel Faults Flagrant Disregard of Precedent (Justice Arthur Schack)

Perhaps if these judges did their research and weren’t bank friendly, they would have seen exactly what Judge Schack learned.


New York Law Journal-

A Brooklyn appellate court has once again upset a ruling by a trial court judge, saying he “flagrantly ignore[d]” precedent.

In Deutsche Bank National Trust Company v Islar, 2013-06996, the Appellate Division, Second Department, on Wednesday reversed Brooklyn Supreme Court Justice Arthur Schack (See Profile) and ordered the case to be reassigned to a new judge.

Schack had denied a summary judgment motion from the lender, Deutsche Bank National Trust Company, on grounds that the plaintiff had not demonstrated its standing to foreclose on the mortgage.

Read more: http://www.newyorklawjournal.com/id=1202675644543/Panel-Faults-Flagrant-Disregard-of-Precedent#ixzz3IhXtjWMb

image: NYLJ/Rick Kopstein

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Onewest Bank FSB v Escobar | NYSC – “cannot confirm that the affidavit submitted was properly executed and notarized,” and that “…can neither confirm nor deny the accuracy of the notarizations contained in the prior affidavit submitted… to the court.”

Onewest Bank FSB v Escobar | NYSC – “cannot confirm that the affidavit submitted was properly executed and notarized,” and that “…can neither confirm nor deny the accuracy of the notarizations contained in the prior affidavit submitted… to the court.”

Decided on October 22, 2014

Supreme Court, Suffolk County

 

Onewest Bank FSB, Plaintiff(s),

against

Elmer O. Escobar, TOWN SUPERVISOR TOWN OF ISLIP, MILAGRO FUENTES, JUANA REYES, Defendant(s).

30234-2009

Stein, Wiener & Roth, LLP
Attorneys for Plaintiff
One Old Country Road, Suite 113
Carle Place, New York 11514

Elmer O. Escobar
Defendant Pro Se
923 Greenlawn Avenue
Islip Terrace, New York 11752
Peter H. Mayer, J.

Upon the reading and filing of the following papers in this matter: (1) Notice of Motion by the plaintiff, dated October 17, 2012, and supporting papers; and now

UPON DUE DELIBERATION AND CONSIDERATION BY THE COURT of the foregoing papers, the motion is decided as follows: it is

ORDERED that the plaintiff’s motion (004) which seeks, inter alia, an order vacating the Court’s July 9, 2010 Order of Reference and granting a new Order of Reference, is hereby denied for the reasons set forth herein; and it is further

ORDERED that the plaintiff shall appear by Gerald Roth, Esq. in the Courtroom of the undersigned on December 18, 2014 at 9:30 a.m. for a Hearing to determine what, if any, sanctions should be imposed by the Court upon the plaintiff pursuant to 22 NYCRR 130-1.1, et. seq.; and it is further

ORDERED that at the time of the scheduled Hearing, plaintiff shall produce for the Court’s review those documents identified herein below; and it is further

ORDERED that at the time of the Hearing, plaintiff shall produce the individuals identified herein below for the purpose of providing sworn testimony upon inquiry by the Court; and it is further

ORDERED that counsel for the plaintiff shall serve a copy of this Order upon all parties and the Referee via First Class Mail, and shall promptly thereafter file the affidavit(s) of such service with the County Clerk and provide to the Court a copy of said affidavit(s) at the time of the scheduled Hearing.

The plaintiff’s motion (004) seeks an order vacating the Court’s prior Order of Reference, granted on July 9, 2010 and filed with the County Clerk on August 2, 2010, and upon vacatur, granting, inter alia, a new Order of Reference. The basis upon which the plaintiff seeks such relief is set forth solely in plaintiff’s counsel’s Affirmation in Support, which states in relevant part:

2.[W]e are unable to move forward with the action, as we cannot confirm that the affidavit submitted by plaintiff in support of its original application was properly executed and notarized, as required, inter alia, pursuant to the October 20, 2010 Administrative Order of the Chief Administrative Judge (AO/548/10, as amended by AO/431/11).

3.As such, plaintiff seeks relief herein vacating and setting aside the Order of Reference signed by the court on July 09, 2010. In addition, this application seeks a new Order of Reference to be granted in its place, supported by the new affidavit of merit of Steve Irwin sworn to on September 13, 2012 and annexed hereto, as well as by the Attorney Affirmation required under AO/431/11.

In addition to the Attorney’s Affirmation in Support, counsel submits an Attorney [*2]Affirmation pursuant to AO/431/11 in which he refers to Steve Irwin as the representative with whom he communicated to confirm the purported factual accuracy of the allegations set forth in the complaint. In this regard, the Affirmation states:

3.Plaintiff’s representative can neither confirm nor deny the accuracy of the notarizations contained in the prior affidavit submitted in support of the prior applications made to the court. As such, the undersigned will be requesting the court to vacate the prior Order of Reference granted in this action. In furtherance thereof, Plaintiff’s representative has confirmed the factual accuracy of and the accuracy of the notarizations contained in the supporting affidavit and documents submitted in support of its application to vacate the prior Order of Reference, and in support of the application for a new Order of Reference.

No factual basis is provided to explain why plaintiff “cannot confirm that the affidavit submitted by plaintiff in support of its original application was properly executed and notarized,” or why “[p]laintiff’s representative can neither confirm nor deny the accuracy of the notarizations contained in the prior affidavit submitted in support of the prior applications made to the court.”

Counsel’s representations in both of his Affirmations refer to an affidavit of merit and perhaps another supporting affidavit from Steve Irwin. There are no such sworn statements from Mr. Irwin or any other plaintiff representative annexed to plaintiff’s motion papers. Consequently, all of the purported facts in support of the specific relief sought in plaintiff’s motion are set forth merely in an attorney affirmation. It is axiomatic that the affirmation of a party’s attorney, standing alone, is insufficient where he or she has no personal knowledge of the alleged facts set forth in support of a motion (see Zuckerman v City of New York, 49 NY2d 557, 427 NYS2d 595 [1980]; Currie v Wilhouski, 93 AD3d 816, 941 NYS2d 218 [2d Dept 2012]; Warrington v Ryder Truck Rental, Inc., 35 AD3d 455, 826 NYS2d 152 [2d Dept 2006]; Palo v Principio, 303 AD2d 478, 76 NYS2d 623 [2d Dept 2003]; Falkowitz v Peters, 294 AD2d 330, 741 NYS2d 725 [2d Dept 2002]).

Also absent from plaintiff’s current motion is a copy of plaintiff’s previous motion papers which plaintiff caused the Court to rely upon in granting the July 9, 2010 Order of Reference. In relevant part, 22 NYCRR §202.7(a) states that “[t]here shall be compliance with the procedures prescribed in the CPLR for the bringing of motions.” In this regard, CPLR 2214 sets forth the requirements for furnishing papers to the court. CPLR 2214(a) requires that a “notice of motion shall specify the time and place of the hearing on the motion, the supporting papers upon which the motion is based, the relief demanded and the grounds therefor” (emphasis added). Similarly, CPLR 2214(c) states that “[e]ach party shall furnish to the court all papers served by him. The moving party shall furnish at the hearing all other papers not already in the possession of the court necessary to the consideration of the questions involved” (emphasis added). Notwithstanding these requirements, plaintiff fails to submit a copy of the prior motion papers, including the affidavit which plaintiff caused the Court to rely on in granting the Order of Reference, but which plaintiff now admits was unreliable when submitted. Failure to submit the prior motion precludes the Court from even knowing the identity of the affiant on the prior affidavit of merit.

With regard to plaintiff’s Notice of Motion, it is devoid of any reference to a statute upon which plaintiff relies in seeking the requested vacatur. Counsel’s Affirmations in support are also devoid of any statute or case authority as a basis for the relief plaintiff seeks. Although there is no requirement that a notice of motion list the statute or regulation that is the basis of the motion, at least some grounds must be mentioned (see Shields v Carbone, 99 AD3d 1100, 955 NYS2d 216 [3d Dept 2012]; Matter of Blauman-Spindler v Blauman, 68 AD3d 1105, 892 NYS2d 143 [2d Dept 2009]). Here, plaintiff states no grounds for the vacatur in its Notice of Motion, and cites no statutory or case authority in support of the requested relief.

Notwithstanding the above, it appears that plaintiff is seeking CPLR 5015(a)(5) vacatur of the original Order of Reference granted in plaintiff’s favor. CPLR 5015(a)(5) states in relevant part that “[t]he court which rendered a judgment or order may relieve a party from it upon such terms as may be just, on motion of any interested person with such notice as the court may direct, upon the ground of . . . reversal, modification or vacatur of a prior judgment or order upon which it is based.”

Generally, absent the circumstances outlined in CPLR 5015, such as newly discovered evidence, fraud, lack of jurisdiction, etc., a court order from which no appeal is taken ought to remain inviolate (Nash v The Port Auth. of NY and N.J., 22 NY3d 220, 980 NYS2d 880 [2013]; Matter of Huie, 20 NY2d 568, 285 NYS2d 610 [1967]; Glicksman v. Bd. of Educ./Central School Bd. of Comsewogue UFSD, 278 AD2d 364, 717 NYS2d 373 [2d Dept 2000]; Pigno v Bunim, 74 AD2d 567, 424 NYS2d 289 [2d Dept 1980]). It has been held that when a movant is not an aggrieved party seeking to change the legal effect of a trial court’s order, there is no basis for a motion to renew a prior motion ruled upon in the party’s favor (see Golden v Barker, 223 AD2d 769, 636 NYS2d 444 [3d Dept 1996]). Similarly, the procedure for relief under CPLR 5015(a) envisions the making of a motion by the aggrieved party (see Levine v Berlin, 46 AD2d 902, 362 NYS2d 186 [2d Dept 1974]; Peters v Berkeley, 219 AD 261, 219 NYS 709 [1st Dept 1927]).

Trial courts do have inherent discretionary and statutory power to set aside their own judgments on appropriate grounds, for sufficient reason and in the interests of substantial justice, and the court’s inherent power of vacatur is not limited to the grounds set forth in CPLR 5015 (see Gurin v. Pogge, 112 AD3d 1028, 976 NYS2d 604 [3d Dept 2013]; McMahon v City of New York, 105 AD2d 101, 483 NYS2d 228 [1st Dept 1984]; JP Morgan Chase Bank, N.A. v Lupinacci, 2013 NY Slip Op 33625(U) [Sup Ct, Suffolk County 2013]). However, before exercising its discretionary power to vacate its own July 9, 2010 Order of Reference, the Court must have adequate proof that appropriate grounds to do so exist and that the interests of substantial justice would be served if vacatur is granted. Without a complete copy of the prior motion papers and identification of the specific inadequacies in the previously submitted proofs, the Court is unable to properly make such a determination. More importantly, plaintiff now acknowledges that plaintiff “cannot confirm that the affidavit submitted by plaintiff in support of its original application was properly executed and notarized,” and that “[p]laintiff’s representative can neither confirm nor deny the accuracy of the notarizations contained in the prior affidavit submitted in support of the prior applications made to the court.”

The equivocal assertions by plaintiff not only preclude granting of the requested relief, but may constitute a basis for a finding of frivolous conduct. In relevant part, 22 NYCRR 130-1.1(a) provides that “the court, in its discretion may impose financial sanctions upon any party or attorney in a civil action or proceeding who engages in frivolous conduct as defined in [130-1.1(c) of] this Part . . .”. Also, 22 NYCRR 130-1.1(b) states: “The Court, as appropriate, may make such award of costs or impose such financial sanctions against either an attorney or party to the litigation or against both.”

If plaintiff now “cannot confirm that the affidavit submitted by plaintiff in support of its original application was properly executed and notarized,” then submission of that affidavit in the first instance may constitute frivolous conduct as contemplated by 22 NYCRR 130-1.1(c). Similarly, stating that “[p]laintiff’s representative can neither confirm nor deny the accuracy of the notarizations contained in the prior affidavit” implies that plaintiff may have committed frivolous conduct on two fronts. On one hand, submitting the prior motion with an affidavit that was not accurate when submitted, or whose accuracy can not now be confirmed, may constitute frivolous conduct. On the other hand, submitting this present motion to vacate, where the plaintiff can not and does not deny the accuracy of the prior affidavit the Court relied upon in granting the prior order, would be a waste of judicial resources in seeking vacatur of that prior order and may constitute frivolous conduct for submitting a frivolous motion.

Based upon the foregoing, the plaintiff’s motion is denied in all respects.

Plaintiff shall appear in the Courtroom of the undersigned on December 18, 2014 for a Hearing to determine what, if any, sanctions should be imposed upon the plaintiff pursuant to 22 NYCRR 130-1.1, et. seq. At the time of the Hearing, plaintiff shall produce the following documents for Court review:

(1)a complete copy of plaintiff’s plaintiff’s prior motion for an order of reference, and all supporting documents, which resulted in the July 9, 2010 Order of Reference that plaintiff now seeks to vacate; and

(2)the Affidavit of Merit of Steve Irwin, which is referred to but not included with plaintiff’s present motion papers

Plaintiff shall also produce at the time of the Hearing the following individuals, along with proof of their identity, for the purpose of providing sworn testimony upon inquiry by the Court:

(1)all individuals who constitute “we” as referred to in paragraph 2 of plaintiff’s counsel’s Affirmation in Support;

(2)plaintiff’s representative, Steve Irwin, as well as any other plaintiff’s representatives with whom counsel communicated to confirm the purported factual accuracy of the allegations set forth in the complaint as required by AO/431/11;

(3)the individual or individuals who executed all affidavits submitted in support of plaintiff’s prior motion for an order of reference, which resulted in the July 9, 2010 Order of Reference that plaintiff now seeks to vacate, including but not limited to, the affiant who executed [*3]the affidavit of merit in the July 9, 2010 Order of Reference;

(4)the individual or individuals who notarized all documents submitted in support of plaintiff’s prior motion for an order of reference, which resulted in the July 9, 2010 Order of Reference plaintiff now seeks to vacate;

(5)the attorney or attorneys who signed Affirmations in support of plaintiff’s prior application for an order of reference, which resulted in the July 9, 2010 Order of Reference plaintiff now seeks to vacate;

(6)the individual or individuals who notarized Steve Irwin’s Affidavit of Merit, which is referred to but not included with plaintiff’s current motion papers.

This constitutes the Decision and Order of the Court.
Dated:October 22, 2014

Peter H. Mayer, J.S.C.

[ ] FINAL DISPOSITION[ X ] NON FINAL DISPOSITION

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Supreme Court holds oral argument in Jesinoski v. Countrywide Home Loan

Supreme Court holds oral argument in Jesinoski v. Countrywide Home Loan

H/T Public Citizen-

The Supreme Court held oral argument yesterday in Jesinoski v. Countrywide Home Loan, a case potentially important to consumers and their advocates. The question presented is

Does a borrower exercise his right to rescind a transaction in satisfaction of the requirements of Section 1635 [of the Truth in Lending Act] by “notifying the creditor” in writing within three years of the consummation of the transaction, as the Third, Fourth, and Eleventh Circuits have held, or must a borrower file a lawsuit within three years of the consummation of the transaction, as the First, Sixth, Eighth, Ninth, and Tenth Circuits have held?

Go here to read the oral argument transcript, and note that on page 50 Justice Sotomayor talks about how issues in the case might have worked out with respect to her own loans.

Via Scotus Blog-

Date Proceedings and Orders
Dec 6 2013 Petition for a writ of certiorari filed. (Response due January 6, 2014)
Jan 2 2014 Order extending time to file response to petition to and including February 12, 2014.
Jan 23 2014 Order extending time to file response to petition to and including March 14, 2014.
Mar 14 2014 Brief of respondents Countrywide Home Loans, Inc., et al. in opposition filed. VIDED.
Apr 2 2014 DISTRIBUTED for Conference of April 18, 2014.
Apr 2 2014 Reply of petitioner Larry D. Jesinoski, and Cheryle Jesinoski filed. (Distributed)
Apr 21 2014 DISTRIBUTED for Conference of April 25, 2014.
Apr 28 2014 Petition GRANTED.
May 15 2014 The time to file the joint appendix and petitioners’ brief on the merits is extended to and including July 15, 2014.
May 16 2014 The time to file respondents’ brief on the merits is extended to and including September 16, 2014.
Jul 15 2014 Joint appendix filed. (Statement of costs filed)
Jul 15 2014 Brief of petitioners Larry D. Jesinoski, et ux. filed.
Jul 15 2014 Consent to the filing of amicus curiae briefs, in support of either party or of neither party, received from counsel for the petitioners.
Jul 15 2014 Consent to the filing of amicus curiae briefs, in support of either party or of neither party, received from counsel for the respondents.
Jul 22 2014 Brief amicus curiae of the United States filed.
Jul 22 2014 Brief amici curiae of AARP, et al. filed.
Jul 22 2014 Brief amici curiae of States of New York, et al. filed.
Aug 21 2014 Motion of the Solicitor General for leave to participate in oral argument as amicus curiae and for divided argument filed.
Sep 4 2014 SET FOR ARGUMENT on Tuesday, November 4, 2014.
Sep 8 2014 Record requested from U.S.C.A. 8th Circuit.
Sep 15 2014 Record received from U.S.C.A. 8th Circuit. 1-Box.
Sep 16 2014 Brief of respondents Countrywide Home Loans, Inc., et al. filed.
Sep 17 2014 Brief amici curiae of American Bankers Association, et al. filed.
Sep 19 2014 CIRCULATED
Sep 23 2014 Brief amicus curiae of Professor Richard R.W. Brooks filed. (Distributed)
Sep 23 2014 Brief amicus curiae of Structured Finance Industry Group, Inc. filed. (Distributed)
Oct 14 2014 Motion of the Solicitor General for leave to participate in oral argument as amicus curiae and for divided argument GRANTED.
Oct 16 2014 Reply of petitioners Larry D. Jesinoski, et ux. filed. (Distributed)
Nov 4 2014 Argued. For petitioners: David C. Frederick, Washington, D. C.; and Elaine J. Goldenberg, Assistant to the Solicitor General, Department of Justice, Washington, D. C. (for United States, as amicus curiae.) For respondents: Seth P. Waxman, Washington, D. C.
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Wells Fargo V Allen | NYSC – Judge Orders Wells Fargo to Bring in Two Witness Concerning the Accuarcy of Their Affidavits.

Wells Fargo V Allen | NYSC – Judge Orders Wells Fargo to Bring in Two Witness Concerning the Accuarcy of Their Affidavits.

NEW YORK SUPREME COURT — QUEENS COUNTY

WELLS FARGO

against

Keith C. Allen, Zola Allen,
et. al.,

Excerpt:
Therefore, it is hereby ORDERED, that plaintiff produce Amanda Weatherly, Vice Preisident of Loan Documentation For Wells Fargo Bank, and that she appear, for the aforementioned hearing to give testimony regarding her affidavit; and it is further,

ORDERED, that plaintiff produce Razije Haxhiu Maverigi, and that he appear, for the aforementioned hearing to give testimony regarding his letter dated October 28, 2013 addressed to Allen and regarding the ownership of the subject of the loan, and it is further,

ORDERED, that plaintiff bring to the hearing for this court’s examination the ORIGINAL note for the subject loan.

Down Load PDF of This Case

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