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COMPLAINT | OCWEN LOAN SERVICING, LLC, v. FIDELITY INFORMATION SERVICES, LLC – Fraudulent Billing and billed Ocwen for money spent for expensive hotels, strip clubs, casinos, and personal gifts

COMPLAINT | OCWEN LOAN SERVICING, LLC, v. FIDELITY INFORMATION SERVICES, LLC – Fraudulent Billing and billed Ocwen for money spent for expensive hotels, strip clubs, casinos, and personal gifts

SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SACRAMENTO

OCWEN LOAN SERVICING, LLC,
Plaintiff,

v.

FIDELITY INFORMATION SERVICES,
LLC,
Defendant

COMPLAINT FOR:
(1) FRAUD AND DECEIT;
(2) NEGLIGENT
MISREPRESENTATION;
(3) VIOLATION OF CALIFORNIA
BUSINESS AND PROFESSIONS
CODE SECTION 17200, ET SEQ.;
(4) BREACH OF CONTRACT;
(5) UNJUST ENRICHMENT; and
(6) DECLARATORY RELIEF
DEMAND FOR JURY TRIAL

NATURE OF THE CASE

1. FIS was retained to conduct a two-year review of Ocwen’s loan servicing practices
in June 2015, at a budgeted-cost of $44.8 million. Throughout the engagement, FIS made
fraudulent or negligent misrepresentations in its monthly invoices to Ocwen about the services
FIS claims to have performed and the expenses FIS claims to have incurred. Whenever Ocwen
questioned the legitimacy of FIS’s invoices, or confronted FIS about their increasing enormity,
FIS reiterated its misrepresentations that the hours and expenses reflected on the invoices were
legitimately worked and incurred. By continuing to represent to Ocwen that its invoices were
legitimate, FIS induced Ocwen to continue to pay millions of dollars for work that was not
performed. FIS did so because it was incentivized to, and because it perceived that it had free
reign to lie to Ocwen without consequence.

2. Ocwen is a mortgage loan servicer subject to regulation in California by the
California Department of Business Oversight (“California DBO”). After raising concerns about
certain of Ocwen’s servicing practices for California loans, the California DBO ordered Ocwen to
undergo a 24-month independent servicing review. The California DBO selected FIS to conduct
the review, with Ocwen bearing the cost, subject to a letter of engagement with FIS (the “LOE”).

3. To secure the engagement, FIS had proposed a budget of $44.8 million to conduct
the 24-month review, which was to include a loan-by-loan review of 50,000 loan files for
California loans serviced by Ocwen.

[…]

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HOW WELLS FARGO’S CUTTHROAT CORPORATE CULTURE ALLEGEDLY DROVE BANKERS TO FRAUD

HOW WELLS FARGO’S CUTTHROAT CORPORATE CULTURE ALLEGEDLY DROVE BANKERS TO FRAUD

Vanity Fair-

Once upon a time, in 1970, long before America’s banking system was dominated by six giant institutions—JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, and Morgan Stanley—Dennis Hambek started working as a messenger at the National Bank of Washington in Ellensburg, Washington. Over the years, as his career advanced from messenger to loan officer to branch manager, he had a front-row seat at the transformation of America’s banking system. That first year, the National Bank of Washington was swallowed up by Pacific National Bank of Seattle, which in 1981 was bought by Los Angeles-based First Interstate Bancorp, which in 1996 was bought by San Francisco-based Wells Fargo, which in 1999—as the consolidation frenzy was reaching its peak—merged with Norwest, a Minneapolis-based bank, in a $34 billion deal.

Wells Fargo, which was founded in 1852 as a stagecoach express to carry valuable goods to and from the gold mines in the West, had a storied brand, so the new, combined company kept that name. But if Norwest’s name didn’t survive, its corporate culture did. Spearheaded by the company’s then C.E.O., Dick Kovacevich, it involved a novel way of thinking about banking.

[VANITY FAIR]

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NY Mayor de Blasio and Comptroller Stringer Announce Plan to Cut Ties With Wells Fargo for City Deposits and Banking Transactions

NY Mayor de Blasio and Comptroller Stringer Announce Plan to Cut Ties With Wells Fargo for City Deposits and Banking Transactions

New York City Mayor Bill de Blasio and Comptroller Scott M. Stringer jointly announced today that they will vote to prohibit New York City from entering into new contracts for deposits with Wells Fargo, as well as suspend the bank’s role as a senior book-running manager for NYC General Obligation and Transactional Finance Authority bond sales.

The New York City Banking Commission, which is scheduled to meet today, and of which the Mayor and the Comptroller are members, approves and oversees the banks that hold City deposits. Currently, Wells Fargo holds contracts with the City to provide banking services, including to operate “Lock Box” services that hold taxes and fees collected by the City. There is approximately $227 million of City dollars held in Wells Fargo accounts currently. Additionally, Wells Fargo acts as a trustee to the New York City Retiree Health Benefits Trust, which has current assets of approximately $2.6 billion. Recently, Wells Fargo received a Federal Community Reinvestment Act (CRA) rating of “needs improvement.” The ban will be revisited only when the bank’s rating is raised.

As such, today the Mayor and Comptroller will vote to prevent agencies from entering into new banking services or related contracts with Wells Fargo, as well as bar agencies from renewing or extending existing contracts on expiration. The City will also suspend the use of Wells Fargo as a senior book-running manager for municipal bonds – a position that allows the bank to take the lead on City bond sales – for one year. The only allowable exemption will be for affordable housing financing, which has a direct benefit to New York City residents.

Mayor de Blasio said: “The rules are very clear: if you fall below ‘satisfactory,’ we will no longer do banking business with you. I encourage Wells Fargo to quickly clean up its act and do right by the millions of customers who trust the bank with their savings. Until then, we will not be entering new contracts with the bank. Thank you to Comptroller Stringer for his partnership on this issue.”

Comptroller Stringer said: “What happened at Wells Fargo was a fraud – and there should be consequences. We need to send a message to this bank and the broader industry that ethics matter. Public trust is a must – and accountability is non-negotiable. That’s why we plan to take action. We have an opportunity to stand up and do the right thing today, and that’s a moment we plan on seizing. I would like to thank Mayor de Blasio and his team for their leadership on the issue.”

pressoffice@cityhall.nyc.gov

(212) 788-2958

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Peters v. THE BANK OF NEW YORK MELLON | FL 2DCA – Because the Bank failed to prove its ownership of the lost note that it attempted to reestablish and enforce, we reverse

Peters v. THE BANK OF NEW YORK MELLON | FL 2DCA – Because the Bank failed to prove its ownership of the lost note that it attempted to reestablish and enforce, we reverse

 

HAZEL N. PETERS a/k/a HAZEL N. JOHNSON; and UNKNOWN TENANT 1 n/k/a DAVE PETERS, Appellants,
v.
THE BANK OF NEW YORK MELLON, f/k/a THE BANK OF NEW YORK, AS TRUSTEE FOR BEAR STEARNS ASSET BACKED SECURITIES TRUST 2006-4, ASSET BACKED CERTIFICATES, SERIES 2006-4, and LEO JOHNSON, Appellees.

Case No. 2D15-2222.
District Court of Appeal of Florida, Second District.
Opinion filed May 26, 2017.
Appeal from the Circuit Court for Lee County; James H. Seals, Senior Judge.

Mark P. Stopa of Stopa Law Firm, Tampa, for Appellant Hazel N. Peters a/k/a Hazel N. Johnson.

Kristen M. Crescenti, Christopher C. O’Brien, and Ronnie J. Bitman, of Pearson Bitman LLP, Maitland, for Appellee The Bank of New York Mellon.

No appearance for Appellee Leo Johnson.

WALLACE, Judge.

Hazel N. Peters, a/k/a Hazel N. Johnson (Ms. Peters), challenges a final judgment of foreclosure in favor of The Bank of New York Mellon (the Bank) entered after a bench trial. Because the Bank failed to prove its ownership of the lost note that it attempted to reestablish and enforce, we reverse.

I. THE FACTS AND THE PROCEDURAL BACKGROUND

On March 13, 1998, Ms. Peters and Leo Johnson executed a note in favor of ContiMortgage Corporation as the Lender. The note was secured by a standard residential mortgage on real property in Lee County, Florida. The mortgage also named ContiMortgage Corporation as the Lender.

On January 28, 2013, the Bank filed the underlying action to foreclose the mortgage and for the reestablishment of the note, which the Bank alleged had been lost. The Bank’s complaint alleged September 18, 2008, as the date that the note went into default. The Bank filed a lost note affidavit dated on October 31, 2006, and executed on behalf of EMC Mortgage Corporation (EMC), a prior holder of the mortgage. In the affidavit, the affiant merely asserted that the note “was lost and has not been paid, satisfied, assigned, pledged, transferred or hypothecated in any way.” The affidavit did not provide any details regarding the date or circumstances of the asserted loss of the note. A copy of the note was attached to the affidavit. The copy of the note did not reflect any indorsements or allonges. The Bank subsequently filed another lost note affidavit executed on behalf of Select Portfolio Servicing, Inc. (SPS), the current servicer for the loan. The copy of the note attached to the SPS affidavit was identical to the copy attached to the EMC affidavit.

Ms. Peters filed an answer and affirmative defenses to the complaint. In her answer, Ms. Peters denied the material allegations of the complaint and asserted numerous affirmative defenses. In pertinent part, Ms. Peters denied that the Bank had standing to enforce the note and mortgage, asserted that the Bank’s action to reestablish the lost note was barred by the applicable statute of limitations, and claimed that the Bank had failed to comply with a condition precedent to foreclosure because it had not notified the borrower of the claimed assignment of the loan within thirty days of the assignment in accordance with section 559.715, Florida Statutes (2012).

The lost note was payable to ContiMortgage Corporation; it had not been indorsed in blank or payable to the order of the Bank. At trial, the Bank sought to establish its ownership of the lost note with a series of four assignments of mortgage. The first assignment, dated April 8, 1998, was from ContiMortgage Corporation to ContiWest Corporation. The second assignment, dated April 7, 1998, was from ContiWest Corporation to Manufacturers and Traders Trust Company. Although the second assignment was dated one day before the first one, it was recorded after the recording of the first one. The third assignment, dated June 28, 2010, was from Manufacturers and Traders Trust Company to EMC. Each of the first three assignments expressly assigned both the mortgage and the note that was secured by it.

The fourth assignment, dated December 7, 2012, was from EMC to the Bank. In pertinent part, the fourth assignment assigned “all of Assignor’s right, title and interest all beneficial interest under a certain Mortgage, dated March 13, 1998, made and executed by Leo Johnson and Hazel N. Johnson fka Hazel N. Peters to ContiMortgage Corporation. …”[1] At trial, Ms. Peters argued that the fourth assignment was insufficient to establish the Bank’s ownership of the lost note because it assigned only the mortgage, not the note. The trial court ruled that the fourth assignment was sufficient to assign the note as well as the mortgage and rejected Ms. Peters’ argument. The trial court admitted the certified copies of the four assignments into evidence over Ms. Peters’ objection.

Counsel for the Bank conceded that the note and mortgage at issue had been the subject of two prior foreclosure actions filed in the Lee County Circuit Court. The first action was filed in 2001; the second was filed in 2004. Notably, both actions, which were subsequently dismissed, included a count for the reestablishment of a lost note. Based on the filing of the prior actions and the first lost note affidavit executed in 2006, Ms. Peters argued that the Bank’s action to reestablish the lost note was barred because it had not been brought within the bar of the five-year statute of limitations set forth in section 95.11(2)(b), Florida Statutes (1997). The trial court rejected this argument, reasoning as follows:

The purpose of the statute of limitations is to try to prevent stale claims, okay, but my belief—and this is going to be the ruling of the Court—that the loss or discovery of the lost instrument is not a claim. It’s an event. It’s nothing that gives rise to a claim that would give rise to [a] cause of action. The only time that there’s going to be a claim resulting from a lost instrument is when it needs to be enforced and that is when it goes into default. So the ruling of the Court . . . is going to be that there is no need once a lost negotiable instrument is discovered as being lost, that they have to file a cause of action to reestablish that note when that note is not being sought to be enforced.

Upon inquiry by counsel as to the effect of the filing of the two prior actions to enforce the lost note on the accrual of the cause of action, the trial court reiterated its ruling that the statute of limitations had not run so as to bar the current action to reestablish the lost note.

The Bank called a single witness at trial, Cynthia Stevens. At the conclusion of the presentation of Ms. Stevens’s testimony, the trial court rejected all of Ms. Peters’ other arguments, including those based on the Bank’s asserted lack of standing and noncompliance with the requirements of section 559.715. The trial court entered the final judgment of foreclosure on April 17, 2015. This appeal followed.

II. MS. PETERS’ APPELLATE ARGUMENTS

On appeal, Ms. Peters raises three points. First, she argues that the Bank failed to prove its standing to enforce the lost note. Second, Ms. Peters contends that the Bank’s claim to reestablish the lost note is barred by the applicable statute of limitations. Third, she asserts that the Bank failed to prove that it gave Ms. Peters written notice of the assignment of the loan at least thirty days before the filing of the underlying action as required by section 559.715.

Ms. Peters’ third point is without merit. See Brindise v. U.S. Bank Nat’l Ass’n, 183 So. 3d 1215, 1219-20 (Fla. 2d DCA), review denied, No. SC16-300, (Fla. Mar. 22, 2016); Nationstar Mortg., LLC v. Summers, 198 So. 3d 1162, 1162 (Fla. 1st DCA 2016) (per curiam affirmance citing Brindise with approval); cf. Bank of Am., N.A. v. Siefker, 201 So. 3d 811, 817-18 (Fla. 4th DCA 2016) (holding that section 559.715 was applicable to the mortgage foreclosure action brought by Bank of America, but that the statute did not operate as a condition precedent to bringing a mortgage foreclosure action). Ms. Peters’ second point regarding the application of the statute of limitations to an action for the reestablishment of a lost promissory note raises an issue that is apparently one of first impression in Florida. Although the statute of limitations issue raises interesting questions, our resolution of Ms. Peters’ first issue makes it unnecessary to address her arguments regarding the statute of limitations. Accordingly, we turn now to the issue of the Bank’s standing to enforce the lost note.

III. DISCUSSION

Our review of a trial court’s ruling regarding whether a foreclosure plaintiff has standing is de novo. See Gonzalez v. BAC Home Loans Servicing, L.P., 180 So. 3d 1106, 1108 (Fla. 5th DCA 2015) (citing Schmidt v. Deutsche Bank, 170 So. 3d 938, 941 (Fla. 5th DCA 2015)). “A trial court’s determination of whether a party has reestablished a lost note is reviewed for sufficiency of the evidence.” Home Outlet, LLC v. U.S. Bank Nat’l Ass’n, 194 So. 3d 1075, 1077 (Fla. 5th DCA 2016) (citing Correa v. U.S. Bank Nat’l Ass’n, 118 So. 3d 952, 956 (Fla. 2d DCA 2013)).

In order to establish its standing, the Bank had to prove either that it was the holder or the owner of the note. See Sorrell v. U.S. Bank Nat’l Ass’n, 198 So. 3d 845, 847 (Fla. 2d DCA 2016). Here, the Bank was not in possession of the note. The note was lost at least as early as October 31, 2006. When the note was lost, it had not been indorsed by the original lender either in blank or to another party.

Section 673.3091, Florida Statutes (2012), sets forth the requirements for a person not in possession of an instrument to enforce it:

(1) A person not in possession of an instrument is entitled to enforce the instrument if:

(a) The person seeking to enforce the instrument was entitled to enforce the instrument when loss of possession occurred, or has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred;

(b) The loss of possession was not the result of a transfer by the person or a lawful seizure; and

(c) The person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.

(2) A person seeking enforcement of an instrument under subsection (1) must prove the terms of the instrument and the person’s right to enforce the instrument. If that proof is made, s. 673.3081 applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.

The Bank could not prove that it was entitled to enforce the note when the loss of possession occurred. Thus, it had to prove that it “ha[d] directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred.” § 673.3091(1)(a). Where, as in this case, the plaintiff cannot prove that it was entitled to enforce a note when it was lost, “the plaintiff may submit evidence of an assignment from the payee to the plaintiff or an affidavit of ownership.” Boumarate v. HSBC Bank USA, N.A., 172 So. 3d 535, 538 (Fla. 5th DCA 2015); see also Focht v. Wells Fargo Bank, N.A., 124 So. 3d 308, 310 (Fla. 2d DCA 2013) (“A plaintiff who is not the original lender may establish standing to foreclose a mortgage loan by submitting a note with a blank or special [i]ndorsement, an assignment of the note, or an affidavit otherwise proving the plaintiff’s status as the holder of the note.”).

The Bank’s proof in this regard depended on the chain of four assignments of mortgage that began with the original lender. Each of the first three assignments expressly included an assignment of the note with the mortgage. However, the fourth assignment from EMC to the Bank omitted the critical language assigning the note along with the mortgage. Because the fourth assignment assigned only the mortgage and not the note, it was insufficient to transfer any interest in the note to the Bank. See Russell v. Aurora Loan Servs., LLC, 163 So. 3d 639, 641-42 (Fla. 2d DCA 2015); Kyser v. Bank of Am., N.A., 186 So. 3d 58, 60 (Fla. 1st DCA 2016); Jelic v. BAC Home Loans Servicing, LP, 178 So. 3d 523, 525 (Fla. 4th DCA 2015); see also Tilus v. AS Michai LLC, 161 So. 3d 1284, 1286 (Fla. 4th DCA 2015) (“[A]n assignment of mortgage, even if executed before the foreclosure action commenced, is insufficient to prove standing where the assignment reflects transfer of only the mortgage, not the note.”).

In support of its standing to enforce the lost note, the Bank asserts that the reference in the operative language of the fourth assignment to “beneficial interest” in the mortgage denotes an inclusion of the note in the assignment as well as the mortgage. The Bank relies on Johns v. Gillian, 184 So. 140 (Fla. 1938), as authority for this proposition. In Johns, the Florida Supreme Court said: “Any form of assignment of a mortgage, which transfers the real and beneficial interest in the securities unconditionally to the assignee, will entitle him to maintain an action for foreclosure.” Id. at 143 (emphasis added). According to the Bank’s reading of Johns, a reference in an assignment to the beneficial interest in a mortgage “actually assigns the Note as well.”

We conclude that the decision in Johns does not support the Bank’s argument regarding standing for two reasons. First, the Court’s recitation of the facts in Johns reflects that the note and other securities at issue had been assigned to the plaintiff in that case by means other than the assignment of mortgage under review. Id. at 141, 144. Thus, the facts in Johns are easily distinguishable from the facts of the case before us. Second, the isolated snippet from the Johns opinion upon which the Bank places its focus—read in the context of the opinion as a whole—does not support the Bank’s position. The Court’s opinion in Johns is consistent with well-established Florida law “that a mortgage is but an incident to the debt, the payment of which it secures, and its ownership follows the assignment of the debt”—not the other way around. Id. at 143.

The Bank also points to the testimony of its trial witness, Ms. Stevens, as being sufficient to establish its ownership of the lost note. Ms. Stevens was a “case manager” employed by SPS. It appeared that SPS took over the servicing of the loan in August 2013. Thus, SPS’s involvement with the loan began approximately six months after the filing of the underlying action in the trial court and almost five years after the loan went into default. After the four assignments of mortgage were admitted into evidence, Ms. Stevens testified that the Bank had acquired an ownership interest in the note “from a person [sic] who [was] entitled to enforce the note.” The Bank did not present any documentary evidence regarding how and when it acquired its claimed ownership interest in the note other than the fourth assignment.[2] Ms. Stevens conceded that when the loan was boarded into SPS’s records, the note had already been lost. Indeed, the first lost note affidavit indicated that the note was lost at least as early as 2006.

Here, Ms. Stevens’s testimony was insufficient to establish the ownership of the note. SPS did not begin servicing the note until August 2013. Obviously, Ms. Stevens had no personal knowledge about the Bank’s claim to have acquired ownership of the note in 2006. Moreover, Ms. Stevens’s testimony in this regard was not supported by the limited documentary evidence about the loan that was available. Because Ms. Stevens’s testimony was not based on personal knowledge and was not supported by any documentation, we conclude that the testimony was insufficient to establish the Bank’s ownership of the lost note. See Tomlinson v. GMAC Mortg., LLC, 173 So. 3d 1121, 1122-23 (Fla. 2d DCA 2015); Home Outlet, 194 So. 3d at 1078; Gonzalez 180 So. 3d at 1108-09; Dixon v. Express Equity Lending Grp., LLLP, 125 So. 3d 965, 967-68 (Fla. 4th DCA 2013).

IV. CONCLUSION

We have considered the Bank’s other arguments about standing, and we find them to be without merit. Because the Bank failed to establish its ownership of the lost note, the trial court erred in entering the final judgment of foreclosure. Under these circumstances, we must reverse the final judgment and remand this case to the trial court with directions to enter an involuntary dismissal of the Bank’s complaint. See Wolkoff v. Am. Home Mortg. Servicing, Inc., 153 So. 3d 280, 283 (Fla. 2d DCA 2014); Correa, 118 So. 3d at 956-57.

Reversed and remanded with directions.

SALARIO and ROTHSTEIN-YOUAKIM, JJ., Concur.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED.

[1] We understand that there appears to be one or more words missing from this operative language. But the quote is accurate; we have not inadvertently dropped any words from the quoted language.

[2] The lost note affidavit prepared on behalf of SPS and filed in the underlying action recited, in pertinent part, as follows: “The business records of [SPS] reflect that The Bank of New York, in trust for registered holders of Bear Stearns Asset Backed Securities 2006-4, Asset-Backed Certificates, Series 2006-4 (the “Noteholder”) acquired the Note on or about October 1, 2006. [SPS] services the Note and Mortgage on behalf of and as attorney in fact for the Noteholder.” The business records referenced here were not otherwise identified or described; nor were any copies of the business records attached as exhibits to the affidavit.

 

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Mathis v. NATIONSTAR MORTGAGE, LLC | FL 2DCA- To establish its standing as holder in possession of the note as of the time of trial and as of the time the foreclosure complaint was filed, Nationstar needed to submit both the original note and the original allonge.

Mathis v. NATIONSTAR MORTGAGE, LLC | FL 2DCA- To establish its standing as holder in possession of the note as of the time of trial and as of the time the foreclosure complaint was filed, Nationstar needed to submit both the original note and the original allonge.

 

BYRON E. MATHIS, Appellant,
v.
NATIONSTAR MORTGAGE, LLC; UNKNOWN SPOUSE OF BYRON E. MATHIS; UNKNOWN TENANT IN POSSESSION 1 n/k/a CALVIN GRIFFIN; UNKNOWN TENANT IN POSSESSION 2 n/k/a SHEILA GRIFFIN; UNKNOWN TENANT IN POSSESSION 3 n/k/a TOOKIE SMITH, Appellees.

Case No. 2D15-2782.
District Court of Appeal of Florida, Second District.
Opinion filed May 26, 2017.
Appeal from the Circuit Court for Pinellas County; Marion L. Fleming, Senior Judge.

Michael E. Rodriguez, of Foreclosure Defense Law Firm, P.L., Tampa, for Appellant.

Nancy M. Wallace, of Akerman LLP, Tallahassee; William P. Heller, of Akerman LLP, Fort Lauderdale; and Eric M. Levine, of Akerman LLP, West Palm Beach, for Appellee, Nationstar Mortgage, LLC.

No appearance for remaining Appellees.

WALLACE, Judge.

Byron Mathis challenges a final judgment of foreclosure entered in favor of Nationstar Mortgage, LLC (Nationstar), after a bench trial. He contends that there was insufficient evidence to prove Nationstar’s standing to foreclose as a holder in possession of the note, to which an allonge had been attached, secured by the mortgage. Because Nationstar failed to submit the original allonge to the note for filing in the court file either before or at the time of trial, we reverse.

On May 22, 2007, Mr. Mathis executed a note in favor of Homecomings Financial, LLC (Homecomings Financial), as the lender. The note was secured by a residential mortgage to Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for the lender. Homecomings Financial later indorsed the note to Residential Funding Company, LLC, which in turn indorsed the note to Deutsche Bank Trust Company Americas as Trustee (Deutsche Bank). Deutsche Bank subsequently indorsed the note in blank on an allonge that was attached to the note. MERS assigned the mortgage to Aurora Bank FSB. In turn, Aurora Bank FSB assigned the mortgage to Nationstar on March 21, 2013.

On July 31, 2014, Nationstar filed the underlying action to foreclose the mortgage. Nationstar attached to its complaint a copy of the note and the allonge, as well as a certificate evidencing its possession of the original note. On October 8, 2014, Mr. Mathis filed his answer and affirmative defenses to the complaint. Mr. Mathis denied Nationstar’s allegation that it was in “physical possession of the [n]ote endorsed in blank.” A few weeks later, Nationstar filed the original note in the court file, but failed to file the original allonge.

At trial, Nationstar attempted to prove its standing to foreclose the mortgage. Nationstar introduced several exhibits into evidence, including the mortgage and the original note. Nationstar also brought one of its senior default case specialists to testify that she was familiar with the records regarding Mr. Mathis’s loan and that Mr. Mathis had defaulted on his loan. The case specialist further testified, over Mr. Mathis’s best evidence rule objection,[1] to the following: (1) she was familiar with the original note, (2) the note contained an allonge, (3) the allonge contained a blank indorsement, and (4) Nationstar possessed the allonge. However, Nationstar never produced the original allonge or offered it into evidence.

After Nationstar rested its case, Mr. Mathis immediately moved for an involuntary dismissal. Mr. Mathis argued that Nationstar had not proved its standing to enforce the note because it did not produce the original allonge. Mr. Mathis emphasized that without the original allonge and its blank indorsement, Nationstar did not have standing to foreclose because the note itself was indorsed to Deutsche Bank. In response, Nationstar argued that Mr. Mathis waived his right to raise the issue of standing and that it was a nonholder in possession of the note. Without making any findings, except that Nationstar proved its case by a preponderance of the evidence, the trial court entered a final judgment of foreclosure in favor of Nationstar.

On appeal, Mr. Mathis argues that the trial court erred in ruling that Nationstar had proved its standing to foreclose the mortgage. Specifically, Mr. Mathis contends that Nationstar failed to prove its standing because it did not file the original allonge to the note. In response, Nationstar argues that because it was in possession of the original note indorsed in blank at the time of the commencement of the action in the circuit court, “nothing more is required for standing.” Nationstar further argues that even without the original allonge, it still qualifies as a holder in possession of the note.

Our review of whether a party has standing to foreclose is de novo. Gonzalez v. BAC Home Loans Servicing, L.P., 180 So. 3d 1106, 1108 (Fla. 5th DCA 2015). To prove standing as a holder in possession of the note, a plaintiff must show that it was the holder of the note and mortgage at the time the foreclosure complaint was filed and at the time of trial. See ALS-RVC, LLC v. Garvin, 201 So. 3d 687, 690-91 (Fla. 4th DCA 2016) (citing Kiefert v. Nationstar Mortg., LLC, 153 So. 3d 351, 352 (Fla. 1st DCA 2014)). “A plaintiff who is not the original lender may establish standing to foreclose a mortgage loan by submitting a note with a blank or special endorsement, an assignment of the note, or an affidavit otherwise proving the plaintiff’s status as the holder of the note.” Focht v. Wells Fargo Bank, N.A., 124 So. 3d 308, 310 (Fla. 2d DCA 2013) (footnote omitted) (citing McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012)). Further, “[b]ecause an allonge is essentially part of the note,” it may be necessary for a mortgagee “to file the original allonge along with the original note” to prove standing. Caballero v. U.S. Bank Nat’l Ass’n ex rel. RASC 2006-EMX7, 189 So. 3d 1044, 1046 (Fla. 2d DCA 2016) (citing Isaac v. Deutsche Bank Nat’l Tr. Co., 74 So. 3d 495, 496 n.1 (Fla. 4th DCA 2011)); cf. Purificato v. Nationstar Mortg., LLC, 182 So. 3d 821, 822 (Fla. 4th DCA 2016) (noting that the mortgagee attached a copy of the original note and allonge to its complaint and subsequently produced the originals to prove standing at trial).

In Caballero, this court confronted a similar issue. There, the mortgagee, U.S. Bank, attached copies of the original note, mortgage, and allonge to its foreclosure complaint. 189 So. 3d at 1045. The copy of the allonge bore a special indorsement to U.S. Bank. Id. However, when U.S. Bank later filed the original note, it failed to attach the original allonge. Id. Indeed, instead of attaching the original allonge, U.S. Bank attached an allonge that listed a different loan number. Id. Accordingly, we held that U.S. Bank’s documents were insufficient to establish its standing because U.S. Bank failed to file the original allonge. Id. We reasoned that “[b]ecause an allonge is essentially part of the note, it was necessary for U.S. Bank to file the original allonge along with the original note.” Id. at 1046. Accordingly, we reversed the final judgment of foreclosure, concluding that the documents were insufficient to establish U.S. Bank’s standing. Id.

Here, the same principles apply. To establish its standing as holder in possession of the note as of the time of trial and as of the time the foreclosure complaint was filed, Nationstar needed to submit both the original note and the original allonge.[2] Although Nationstar submitted the original note, it failed to submit the original allonge. Specifically, Nationstar needed to provide the original allonge because it apparently bore a blank indorsement from Deutsche Bank. Such an indorsement was vital to Nationstar’s case because it was the very basis upon which Nationstar claimed to have standing to foreclose the mortgage. Indeed, without the production of the original allonge, the admissible evidence at trial reflected that the original note was still indorsed to Deutsche Bank.[3] Thus, because Nationstar failed to submit the original allonge, there was insufficient evidence to establish Nationstar’s standing to enforce the note.

Furthermore, although the case specialist testified that Nationstar possessed the original allonge and that the allonge contained a blank indorsement, she did not provide any explanation about why the original allonge was unavailable. Accordingly, the case specialist’s testimony regarding the contents of the allonge was inadmissible under the best evidence rule. See §§ 90.952, .953(1), Fla. Stat. (2014) (providing that the original of a negotiable instrument, such as a promissory note, is required to prove the contents of the writing); Rattigan v. Cent. Mortg. Co., 199 So. 3d 966, 967 (Fla. 4th DCA 2016) (holding that even though the bank testified to the contents of the written loan modification, the bank violated the best evidence rule by virtue of its failure to introduce the original written loan modification at trial or “a duplicate with an explanation as to why the original note was unavailable”); see also Heller v. Bank of Am., N.A., 209 So. 3d 641, 643-44 (Fla. 2d DCA 2017) (discussing the best evidence rule).

Finally, we have considered Nationstar’s alternative arguments about standing, and we find them to be without merit. Therefore, we must reverse the final judgment and remand this case to the trial court with directions to enter an involuntary dismissal of Nationstar’s complaint. See Wolkoff v. Am. Home Mortg. Servicing, Inc., 153 So. 3d 280, 283 (Fla. 2d DCA 2014).

Reversed and remanded with directions.

MORRIS and ROTHSTEIN-YOUAKIM, JJ., Concur.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED.

[1] See §§ 90.952, .953, Fla. Stat. (2014).

[2] We further note that surrendering the original promissory note and allonge was necessary “to remove it from the stream of commerce and prevent the [potential] negotiation of the note to another person.” Heller v. Bank of Am., N.A., 209 So. 3d 641, 644 (Fla. 2d DCA 2017).

[3] Although the note was specially indorsed to Deutsche Bank, such an indorsement does not necessarily preclude Nationstar from enforcing the note. See Bank of N.Y. Mellon Tr. Co., N.A. v. Conley, 188 So. 3d 884, 885 (Fla. 4th DCA 2016) (“Where a bank is seeking to enforce a note which is specially indorsed to another, the bank is a nonholder in possession.” (citing Murray v. HSBC Bank USA, 157 So. 3d 355, 358 (Fla. 4th DCA 2015))). Nevertheless, even if Nationstar had alleged in its complaint that it was a nonholder in possession of the note, there was insufficient evidence at trial to support such a theory.

 

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WELLS FARGO v SWAINE | NYSC – Young Law Group, PLLC Beats NY Mortgage Statute of Limitations, Again! Wells Fargo’s Failed Attempt to Revoke Acceleration.

WELLS FARGO v SWAINE | NYSC – Young Law Group, PLLC Beats NY Mortgage Statute of Limitations, Again! Wells Fargo’s Failed Attempt to Revoke Acceleration.

Judith Swaine (2016)-Mot. Seq. 001- Mtd Sol- 20170505 Sfo Dismissal (1) by DinSFLA on Scribd

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Feds side with lender in Vancouver veteran’s foreclosure fight

Feds side with lender in Vancouver veteran’s foreclosure fight

Oregon Live-

A veteran of four tours of duty in the Middle East, Jacob McGreevey relishes a good fight.

When the longtime Marine became convinced his former lender had illegally foreclosed on his Vancouver home, he didn’t hesitate. He looked up Sean Riddell, his former commanding officer now practicing law in Portland, and asked if he was ready to take on one of the biggest mortgage lenders in the country.

What neither McGreevey nor Riddell anticipated was that PHH Mortgage wasn’t going to be their only adversary. Five months after the U.S. Department of Justice announced a major initiative to crack down on financial institutions taking advantage of active-duty service members, the agency intervened in McGreevey’s case.

But it didn’t come in on the side of the Marine . It went with the lender.

[OREGON LIVE]

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TFH 5/28 | Foreclosure Workshop #34: Bank of Hawaii v. Mostoufi; Stonecrest Acquisitions v. Rundgren — Two Case Illustrations of the Importance of a Borrower’s Right to a Stay Pending Appeal, and How That Right Continues To Be Abused

TFH 5/28 | Foreclosure Workshop #34: Bank of Hawaii v. Mostoufi; Stonecrest Acquisitions v. Rundgren — Two Case Illustrations of the Importance of a Borrower’s Right to a Stay Pending Appeal, and How That Right Continues To Be Abused

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

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Sunday –  May 28

Foreclosure Workshop #34: Bank of Hawaii v. Mostoufi; Stonecrest Acquisitions v. Rundgren — Two Case Illustrations of the Importance of a Borrower’s Right to a Stay Pending Appeal, and How That Right Continues To Be Abused
———————

All lawyers and all judges surely would agree that not every case in the American legal system is decided correctly in the first instance by either federal or state courts.

There are many reasons for such mistakes, some minor and some dispositive, some rare and some recurring, including confusing legal precedents, changing legal precedents, lack of adequate preparation by counsel, overburdening court congestion, variations in levels of judicial knowledge and skill, sometimes the result of simple incompetence, and personal and institutional prejudices of various sorts.

Of particular concern is the celebrated but misplaced view among some appellate judges that their principal mission is to find some way of upholding a lower court judgment in order to maintain confidence in the trial courts in their states, when in fact in many instances only through reversal can such confidence actually be maintained.

And also to the contrary, the recognized existence of mistakes at the trial level is in fact why there are appellate courts in the first place, yielding various percentages of reversals in individual jurisdictions, sometimes fairly high percentages of remands of the judgments of individual trial courts and of the judgments of individual trial level judges.

On this Sunday’s show we will explore these important issues in two foreclosure related cases, pointing out that a stay pending appeal is theoretically considered a matter of right for those suffering an adverse foreclosure result in both judicial and nonjudicial states, and how to request one.

Yet, although the forms of a stay bond can vary, which competing forms every homeowner facing foreclosure would benefit by knowing, they can variously be based, for instance, upon monthly installments representing the fair rental value of the property, or can use the market value of the property itself as complete or partial substitute security.

We will explore the differences in how such stay requests of right are non-uniformly handled nationwide, the resulting effects on individual borrowers and on the American legal system itself, and suggest urgently needed reforms in yet another highly neglected area of foreclosure litigation, although one of the most important for foreclosure defense, yet surprisingly rarely discussed anywhere.

~

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Host: Gary Dubin Co-Host: John Waihee

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CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

EVERY SUNDAY
3:00 PM HAWAII
6:00 PM PACIFIC
9:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
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The Foreclosure Hour 12

 

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Committee Dems Request Information from Deutsche Bank on Russia Money Laundering Scheme and Trump Accounts

Committee Dems Request Information from Deutsche Bank on Russia Money Laundering Scheme and Trump Accounts

Today, Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, Congressman Daniel Kildee (D-MI), Vice Ranking Member of the Committee on Financial Services, Congresswoman Gwen Moore (D-WI), Ranking Member of the Subcommittee on Monetary Policy and Trade, Congressman Al Green (D-TX), Ranking Member of the Subcommittee on Oversight & Investigations, and Congressman Ed Perlmutter (D-CO), Ranking Member of the Subcommittee on Terrorism and Illicit Finance, sent a letter to Deutsche Bank’s Chief Executive Officer requesting information on two internal reviews the Bank reportedly conducted, the first on its 2011 Russian mirror trading scandal, and the second on whether the accounts of President Donald Trump and his family members held at the Bank had any ties to Russia.

“Deutsche Bank’s pattern of involvement in money laundering schemes with primarily Russian participation, its unconventional relationship with the President, and its repeated violations of U.S. banking laws over the past several years, all raise serious questions about whether the Bank’s reported reviews of the mirror trading scheme and Trump’s financial ties to Russia were sufficiently robust,” the lawmakers wrote in the letter.

In March, Ranking Member Waters and Committee Democrats wrote to Chairman Hensarling calling for the Committee to use the full range of its investigative powersto examine Deutsche Bank’s Russian money-laundering operation, and assess the integrity of the U.S. Department of Justice’s ongoing investigation into the scheme, given the Trump Administration’s conflicts of interest in the matter and the revelations of Attorney General Sessions’ communications with the Russian Ambassador. Chairman Hensarling has not responded to this letter to date.

The full text of the letter is below.

May 23, 2017

Mr. John Cryan
Chief Executive Officer
Deutsche Bank, AG
60 Wall Street
New York, NY 10005

Dear Mr. Cryan:

We write seeking information relating to two internal reviews reportedly conducted by Deutsche Bank (“Bank”): one regarding its 2011 Russian mirror trading scandal and the other regarding its review of the personal accounts of President Donald Trump and his family members held at the Bank. What is troubling is that the Bank to our knowledge has thus far refused to disclose or publicly comment on the results of either of its internal reviews. As a result, there is no transparency regarding who participated in, or benefited from, the Russian mirror trading scheme that allowed $10 billion to flow out of Russia. Likewise, Congress remains in the dark on whether loans Deutsche Bank made to President Trump were guaranteed by the Russian Government, or were in any way connected to Russia. It is critical that you provide this Committee with the information necessary to assess the scope, findings and conclusions of your internal reviews.

Deutsche Bank’s failure to put adequate anti-money laundering controls in place to prevent a group of traders from improperly and secretly transferring more than $10 billion out of Russia is concerning.[1] According to press reports, this scheme was carried out by traders in Russia who converted rubles into dollars through security trades that lacked any legitimate economic rationale.[2] The settlement agreements reached between the Bank and the New York Department of Financial Services as well as the U.K. Financial Conduct Authority raise questions about the particular Russian individuals involved in the scheme, where their money went, and who may have benefited from the vast sums transferred out of Russia. Moreover, around the same time, Deutsche Bank was involved in an elaborate scheme known as “The Russian Laundromat,”[3] “The Global Laundromat,” or “The Moldovan Scheme,” in which $20 billion in funds of criminal origin from Russia were processed through dozens of financial institutions.

Press reports indicate that these two schemes, in fact, may have been linked, confirming the need for enhanced scrutiny and transparency to determine who was involved and benefited from such schemes.[4]

Further supporting the need for a public accounting of the Bank’s internal reviews, Deutsche Bank has demonstrated a pattern of regulatory compliance failures and disregard for U.S. law. For example, in April 2015 the Bank pled guilty to criminal charges and was fined $2.5 billion for manipulating the London Interbank Offered Rate (LIBOR), the index rate underlying trillions of dollars of transactions around the globe. Later that year, in November 2015, Deutsche Bank was fined $258 million for processing payments valued at more than $10 billion on behalf of Iranian, Libyan, Syrian, Burmese, and Sudanese entities to evade U.S. sanctions. In December 2016, the Bank was fined $37 million in penalties for misleading clients about their stock orders for certain trades. And in January of this year, Deutsche Bank was fined $7.2 billion by the Department of Justice for deliberately misleading investors in its sale of toxic mortgage backed securities.

In addition to the internal review conducted on the mirror trading scheme, Deutsche Bank also reportedly conducted an internal review of the personal accounts of President Trump and his family members, several of whom serve as official advisors to the President. Press reports citing unnamed sources indicate that this review was done to determine if loans made to him were backed by guarantees from the Russian Government, or were in any way connected to Russia, as they were made in “highly unusual circumstances.”[5] At a time when nearly all other financial institutions refused to lend to Trump after his businesses repeatedly declared bankruptcy, Deutsche Bank continued to do so–even after the President sued the Bank and defaulted on a prior loan from the Bank —to the point where his companies now owe your institution an estimated $340 million.[6] Press reports indicate that Deutsche Bank is reluctant to share any information related to its investigation including what prompted the internal review, who had undertaken it, or what its findings had been. Only with full disclosure can the American public determine the extent of the President’s financial ties to Russia and any impact such ties may have on his policy decisions.

Deutsche Bank’s pattern of involvement in money laundering schemes with primarily Russian participation, its unconventional relationship with the President, and its repeated violations of U.S. banking laws, all raise serious questions about whether the Bank’s reported reviews of the trading scheme and Trump’s financial ties to Russia were completely thorough.

In furtherance of this Committee’s oversight responsibilities and in the interest of the public’s right to understand the extent of the President’s financial entanglements with Russia, please:

  1. Publicly affirm that the Bank has completed a thorough and rigorous review of both the 2011 Russian mirror trading scheme as well as of President Trump’s accounts and those of his family members;
  2. Provide the Committee with copies of any document, record, memo, correspondence, or other communication related to the 2011 Russian mirror trading scheme, including:
    a. The scope, purpose, findings, and conclusions of the Bank’s internal review;
    b. The names of all individuals and entities who participated in and benefited from the 2011 scheme, including but not limited to, individuals who are either subject to U.S. sanctions or are politically exposed persons as defined by guidance issued by the Federal Financial Institutions Examination Council;
    c. The origin, ultimate destination, and any beneficiaries of the funds transferred from Russia;
    d. The extent to which any party who participated in, or benefited from, the 2011 scheme continue to maintain accounts or a relationship with Deutsche Bank;
    e. The procedures your firm has in place, at account opening and on an ongoing basis, to manage the risks associated with customers connected to individuals known to be at high-risk for engaging in bribery, corruption, and money laundering;
    f. A list of employees within Deutsche Bank found to be involved in facilitating the 2011 scheme and the actions taken by Deutsche Bank to hold such individuals accountable; and
    g. The Bank’s analysis of any connections between the 2011 scheme and the broader scheme known as “The Global Laundromat,” “The Russian Laundromat,” or “The Moldovan Scheme,” including the involvement of Deutsche Bank employees and customers.
  3. Provide the Committee with copies of any document, record, memo, correspondence, or other communication related to the internal review of the personal accounts of the President and his family, including:
    a. A discussion of the scope, purpose, findings and conclusions of the review;
    b. All communications and documentation relating to the underwriting of each loan made to President Trump and his immediate family members, including all assets and guarantees used to collateralize such loans;
    c. The timeframe when Deutsche Bank determined that Trump was a politically exposed person; and
    d. All due diligence conducted by the Bank required by the Bank Secrecy Act regarding Trump’s potential ties to senior Russian political leaders, oligarchs, and organized crime leaders, as well as potential violations of U.S. sanctions and anti-bribery statutes.
  4. Appoint an independent auditor to verify the results of the review of the personal accounts of the President and his family and disclose the results of the auditor’s findings to the Committee as soon as reasonably practicable.
If you have any questions regarding the scope of this request or the format of your response, please contact Jennifer Read or Kirk Schwarzbach of Committee staff at 202-225-4247. Please respond to this letter and provide the requested documentation no later than June 2, 2017.

Sincerely,

Honorable Maxine Waters
Honorable Daniel Kildee
Honorable Gwen Moore
Honorable Al Green
Honorable Ed Perlmutter

_________________
Footnotes:

1: New York Department of Financial Services, Consent Order Under New York Banking Law §§ 39, 44 and 44-a, (January 30, 2017), available athttp://www.dfs.ny.gov/about/ea/ea170130.pdf
2: Suzi Ring, Deutsche Bank’s Bill for Russia Trades Reaches $629 million, Bloomberg, available at https://www.bloomberg.com/news/articles/2017-01-31/deutsche-bank-fined-204-million-over-money-laundering-failings
3: Luke Harding and Nick Hopkins, Bank that lent $300m to Trump linked to Russian money laundering scam, The Guardian (March 21, 2017), available athttps://www.theguardian.com/world/2017/mar/21/deutsche-bank-that-lent-300m-to-trump-linked-to-russian-money-laundering-scam
4: Ed Cesar, Deutsche Bank, Mirror Trades, and More Russian Threads, The New Yorker (March 29, 2017), available at:http://www.newyorker.com/business/currency/deutsche-bank-mirror-trades-and-more-russian-threads
5: Luke Harding, et.al., Deutsche Bank examined Donald Trump’s account for Russia links, The Guardian (February 16, 2017), available athttps://www.theguardian.com/us-news/2017/feb/16/deutsche-bank-examined-trump-account-for-russia-links
6: Jean Eaglesham and Lisa Schwartz, Trump’s Debts Are Widely Held on Wall Street, Creating New Potential Conflicts, The Wall Street Journal (January 5, 2017), available at https://www.wsj.com/articles/trump-debts-are-widely-held-on-wall-street-creating-new-potential-conflicts-1483637414

###
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Wells Fargo must guarantee class-action settlement will fully repay customers, judge says

Wells Fargo must guarantee class-action settlement will fully repay customers, judge says

LA TIMES-

Wells Fargo & Co. may have to cough up more than $142 million to settle a bevvy of class-action lawsuits in connection with its unauthorized-accounts scandal.

A federal judge in San Francisco said late Wednesday that he would approve a settlement deal reached by the bank and plaintiffs’ attorneys, but only if they agree to several conditions — including a guarantee that all customers will be fully compensated for their losses.

The two sides had previously agreed that the bank would pay $142 million to compensate customers for fees and other damages related to millions of unauthorized checking, savings and credit card accounts.

[LA TIMES]

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DWORK v EXECUTIVE ESTATES OF BOYNTON BEACH HOMEOWNERS ASSOC., INC. |  4DCA- 720.305(2)(b), Florida Statutes (2013) – strict compliance with the notice provision of the statute was a necessary prerequisite for HOA to impose fines

DWORK v EXECUTIVE ESTATES OF BOYNTON BEACH HOMEOWNERS ASSOC., INC. | 4DCA- 720.305(2)(b), Florida Statutes (2013) – strict compliance with the notice provision of the statute was a necessary prerequisite for HOA to impose fines

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

JONATHAN MITCHELL DWORK a/k/a JONATHAN M. DWORK,
Appellant,

v.

EXECUTIVE ESTATES OF BOYNTON BEACH HOMEOWNERS
ASSOCIATION, INC.,
Appellee.

No. 4D16-1698

[May 24, 2017]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Peter D. Blanc, Judge; L.T. Case No. 2014CA006070
XXXXMB.

Jonah M. Wolfson of Wolfson Law Firm, LLP, Miami, for appellant.

Peter J. Sosin of Sosin Law, PLLC, Boca Raton, for appellee.
KLINGENSMITH, J.

Jonathan M. Dwork (“appellant”) asks this court to decide whether
Executive Estates of Boynton Beach Homeowners Association (“HOA”)
was obligated under section 720.305(2)(b), Florida Statutes (2013), to
provide him with fourteen days’ notice of a hearing on alleged violations
of maintenance requirements before imposing fines, or whether HOA
could be entitled to money damages for unpaid fines so long as it
substantially complied with the statute’s notice provision. We find that
strict compliance with the notice provision of the statute was a necessary
prerequisite for HOA to impose fines. Accordingly, because HOA
provided appellant with only thirteen days’ notice of the hearing, we
reverse the money damages awarded to HOA for the unpaid fines.

Appellant owns and resides in a single family house within HOA’s
development. HOA’s governing documents require all homeowners to
keep their roofs and driveways clean and their fences in good condition.
HOA notified appellant of his violations of these requirements multiple
times over the preceding years, but he neither fixed them nor responded
to any of the notices. In 2013, after an inspection confirmed the
continued existence of these maintenance violations, HOA informed
appellant of the violations by certified letter and provided a thirty-day
cure period to bring the property into compliance. Not receiving an
answer, HOA sent another certified letter providing for an additional
fifteen days to comply. Appellant was completely unresponsive to HOA’s
repeated attempts to contact and notify him.

On May 23, 2013, HOA sent appellant another notice by both regular
and certified mail informing him that thirteen days later on June 5 a
hearing would take place before the fine committee to consider his
maintenance violations. In compliance with its bylaws, HOA also posted
the notice on a bulletin board at the development’s clubhouse. Again,
the copy of the notice sent by certified mail was returned unclaimed. The
fine committee meeting commenced as scheduled on June 5, with the
committee voting to impose fines on appellant for three violations. HOA’s
board ratified the committee’s decision on June 25. Two days later, HOA
sent appellant another letter, informing him of the committee’s decision
and that starting on July 2, he would be fined $25 per day for each of the
three violations if they were not remedied. As was the practice, appellant
neither responded to the letter nor remedied the violations.

On September 5, 2013, HOA’s attorneys mailed appellant a letter
demanding payment of the fines and informing him that a lien would be
recorded on his property if the fines remained unpaid. Appellant neither
responded nor remedied the violations. On January 27, 2014, HOA’s
attorneys mailed appellant another letter informing him that they were
recording a lien on his property for $7,500.00 as the full amount of the
accrued fines, which was the maximum allowed ($2,500.00 fine for each
violation), plus fees and costs incurred, totaling $8,135.00. This certified
letter also went unclaimed. On January 29, 2014, the clerk recorded the
lien on appellant’s property in the public records. Appellant never
contacted HOA regarding the lien.

HOA then filed a two-count complaint against appellant for
foreclosure and damages, as well as attorney’s fees and costs. The first
count sought to foreclose on the claim of lien for fines imposed as
assessments for violations of HOA’s declaration of covenants, articles of
incorporation, and rules. The second count sought a judgment for
money damages in the amount of $7,500 for failure to pay those same
fines. The cause went to a non-jury trial in April 2016, whereupon the
court entered final judgment. On the first count, the court denied
foreclosure since the thirteen-day notice provided to appellant by HOA
did not comply with the fourteen-day notice provision of section
720.305(2)(b) or HOA’s declarations and bylaws, thereby rendering the
HOA unable to enforce its claim of lien against appellant’s property.
However, despite HOA’s failure to strictly comply with the statutory
notice provision, the court awarded money damages to HOA on its
second count, reasoning that the “equities of this cause [were] with [HOA]
and against [appellant].” The court also granted HOA entitlement to
reasonable fees and costs. This appeal followed.
As this is a matter of statutory interpretation, we review the
application of section 720.305 de novo. Miles v. Parrish, 199 So. 3d
1046, 1047 (Fla. 4th DCA 2016).

At the time when HOA sent appellant the hearing notice, section
720.305(2)(b) provided that “[a] fine or suspension may not be imposed
without at least 14 days’ notice to the person sought to be fined or
suspended and an opportunity for a hearing before a committee.”1
As to the first count for foreclosure on the claim of lien, the court
properly denied relief. Pursuant to section 720.305(2)(b), HOA was
required to provide appellant with at least fourteen days’ notice of the
fine committee hearing.

Section 720.305(2)(b) is protective, and the notice requirement
functions as a condition precedent to the attachment of a lien. This time
requirement for the notice is no mere technicality. Failure to provide
sufficient time to prepare a defense to a claim of violation deprives the
homeowner of due process, thus negating the validity of any resulting
lien obtained from such noncompliance.

Nothing in the wording of the statute implies that compliance with the
time requirement is discretionary. Since section 720.305(2)(b) is clear
and unambiguous, the statute must be strictly construed. See Miles,
199 So. 3d at 1048 (“As with the interpretation of any statute, the
starting point of analysis is the actual language of the statute. If the
language is clear and unambiguous, there is no need to resort to the
rules of statutory construction; the statute must be given its plain and
obvious meaning.” (quoting Conservation All. of St. Lucie Cty., Inc. v. Fla.
Dep’t of Envtl. Prot., 144 So. 3d 622, 624 (Fla. 4th DCA 2014)) (internal
quotation marks omitted)).

The Florida Supreme Court has held that liens which are “purely
creatures of statute” can only be acquired, created, or attached to
property if the statutes from which they derive are strictly followed. See
Aetna Cas. & Sur. Co. v. Buck, 594 So. 2d 280, 281 (Fla. 1992); Stresscon
v. Madiedo, 581 So. 2d 158, 160 (Fla. 1991) (“Because the acquisition of
a mechanic’s lien is purely statutory, there must be strict compliance
with the mechanics’ lien law in order to acquire such a lien.”); see also
Stock Bldg. Supply of Fla., Inc. v. Soares Da Costa Constr. Servs., 76 So.
3d 313, 316 (Fla. 3d DCA 2011); Delta Fire Sprinklers, Inc. v. OneBeacon
Ins. Co., 937 So. 2d 695, 698 (Fla. 5th DCA 2006) (“A construction lien is
‘purely a creature of the statute,’ and because it is of this nature,
persons seeking its benefits must strictly comply with the requirements
of the construction lien law.”).

HOA argues that substantial compliance with section 720.305(2)(b)
was sufficient, especially since appellant was not prejudiced by the lack
of an extra day’s notice. Here, however, the substantial compliance
argument fails because the statute specifically requires without exception
at least fourteen days’ written notice of a scheduled hearing. As the
Stresscon court observed in holding that nothing in the language of
section 713.16(2), Florida Statutes, permitted “either substantial
compliance or lack of prejudice to be considered in determining the
validity of a [mechanics’] lien”:

The fact that no prejudice has been nor can be shown is
not the determining factor in this case; nor is it significant
that Stresscon substantially complied with the mechanics’
lien law. The courts have permitted substantial compliance
or adverse effect to be considered in determining the validity
of a lien when there are specific statutory exceptions which
permit their consideration.
581 So. 2d at 160 (emphasis added).

Section 720.305 does not contain any “specific statutory exceptions
which permit” the trial court to consider substantial compliance with the
notice requirement or lack of prejudice to the person sought to be fined.
Where a statute’s language is clear and unambiguous, the power to
construe it does not exist. Cimino v. Am. Airlines, Inc., 183 So. 3d 1242,
1244 (Fla. 4th DCA 2016). Because section 720.305(2)(b) is
unambiguous as to its fourteen-day written notice requirement and does
not contain any exceptions permitting considerations of substantial
compliance or lack of prejudice, we must reject HOA’s contention that its
thirteen days’ written notice to appellant sufficed to satisfy the statute’s
straightforward notice requirement.

Where notice does not meet that requirement, a lien under this
statute cannot attach to property. The trial court was therefore correct
in ruling that proper notice had to be given by HOA in strict compliance
with the statutory requirements to perfect its entitlement to a lien. Yet,
for these same reasons, the trial court erred in awarding money damages
to HOA for unpaid fines based on what it perceived to be the “equities” of
the case. Section 720.305(2)(b) explicitly provides that no fine may be
imposed without at least fourteen days’ notice to the person sought to be
fined. The statute does not provide a basis for the court to fashion an
equitable remedy. Here, the court based its $7,500.00 award to HOA on
the maximum amount of accrued fines that HOA could impose; but
without strict compliance with the notice provision of the statute, HOA’s
imposition of those fines were null.

Additionally, the substantial compliance argument is inapplicable
because as the party seeking affirmative relief under the lien statute,
HOA had to strictly comply with the statute’s provisions. See Hiller v.
Phoenix Assocs. of S. Fla., Inc., 189 So. 3d 272, 274 (Fla. 2d DCA 2016);
Sasso Air Conditioning, Inc. v. United Cos. Lending Corp., 742 So. 2d 468,
470 (Fla. 4th DCA 1999).

In other contexts, a procedural irregularity regarding notice that does
not injure or harm the complaining party might not result in setting
aside a claim. Generally, notice provisions of a statute should be applied
in a way to further the main purpose of those requirements; that is, to
apprise interested parties of the pendency of the action and afford them
an opportunity to present their objections and defenses at a hearing.
The evidence in this case was clear that appellant had actual notice of
the hearing, yet continued with his longstanding practice of ignoring it in
the same way he did with all the prior notices. While the trial court was
correct in its view that the equities in this case certainly favored HOA,
case law nonetheless compels us to hold that HOA was required to
strictly comply with the dictates of section 720.305(2)(b) to perfect its
ability to impose and collect the fines. Accordingly, we reverse the final
judgment and remand for entry of final judgment in favor of appellant.

Reversed and Remanded.

MAY and KUNTZ, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

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The Case That Could Doom Elizabeth Warren’s Wall Street Watchdog

The Case That Could Doom Elizabeth Warren’s Wall Street Watchdog

Bloomberg-

Since the day it was created, Democrats loved it, Republicans hated it and Wall Street, at best, tolerated it.

The fate of the Consumer Financial Protection Bureau and its chief, Richard Cordray, is in the hands of a Washington appeals court that will hear arguments Wednesday. The CFPB asked the court to reconsider its 2016 decision involving the agency’s punishment of New Jersey mortgage company PHH Corp. The outcome could take months. It’s expected to provide ammunition for one side or the other in the years-long tug of war over the agency’s existence.

Democrats defend the CFPB, the brainchild of Massachusetts Senator Elizabeth Warren, as a Wall Street watchdog necessary to advocate for ordinary Americans in the aftermath of the worst economic downturn in 75 years. They say it’s returned nearly $12 billion to customers who’ve been shortchanged.

[BLOOMBERG]

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More Bond Traders Sued By The SEC For Alleged Fraudulent Misrepresentations Relating To MBS Prices

More Bond Traders Sued By The SEC For Alleged Fraudulent Misrepresentations Relating To MBS Prices

Lexology-

On May 15, 2017, the Securities and Exchange Commission sued two commercial mortgage backed securities (“CMBS”) traders for securities fraud allegedly committed while buying and selling CMBS on behalf of a large broker-dealer during the course of their employment at the firm. SEC v. Chan, S.D.N.Y, 1:17-cv-3605; SEC v Im, S.D.N.Y, 1:17-cv-3613. These are the latest in a slew of recent lawsuits that have been brought by the SEC and DOJ as part of a federal crackdown on allegedly deceptive bond trading practices, but the DOJ is notably absent from this latest case.

The SEC’s complaints against the two traders, Kee Chan and James Im, allege that in the course of acting as an intermediary on trades with customers who sought to buy and sell CMBS on the secondary market, the traders deliberately misled and lied to customers about (1) the prices at which their firm bought or sold securities involved in trades, (2) the bids and offers the firm made or received on such securities, (3) the compensation the firm would receive for intermediating the trades, and/or (4) who owned the securities at issue, often pretending that they were still negotiating over a security with third-party sellers when the firm had, in fact, already acquired the security. SEC v. Chan, S.D.N.Y, 1:17-cv-3605, Compl. at 2 [ECF No. 1] (May 15, 2017); SEC v Im, S.D.N.Y, 1:17-cv-3613, Compl. at 2 [ECF No. 1] (May 15, 2017). The Complaints also allege that Chan sent an altered email to a customer in order to “corroborate” a lie about what he bid for a security, and that Im bragged to a seller about his purposeful deception of the buyer. Id. The SEC alleges these improper practices generated hundreds of thousands of dollars in ill-gotten trading profits for the traders’ CMBS desk—profit that the SEC claims was passed on to Im and Chan in the form of bonuses and compensation. Id. at 2-3. The Complaints seek judgments ordering permanent injunctive relief, disgorgement with prejudgment interest, and civil monetary penalties.

On May 16, 2017, Chan settled the claims against him without admitting or denying the allegations in the SEC’s Complaint by agreeing to disgorge $51,965, pay prejudgment interest in the amount of $11,758, and pay a civil penalty of $150,000. SEC v. Chan, S.D.N.Y, 1:17-cv-3605, Consent Judgment at 1, 3 [ECF No. 7] (May 16, 2017). Im is contesting the claims against him, and will likely argue (among other things) that any misstatements he made were immaterial to investors.

[LEXOLOGY]

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TFH 5/21 | Foreclosure Workshop #33: Nationstar Mortgage LLC v. Akepa Properties LLC — When Is a Foreclosing Plaintiff’s Lack of Standing Jurisdictional, resulting in Dismissal?

TFH 5/21 | Foreclosure Workshop #33: Nationstar Mortgage LLC v. Akepa Properties LLC — When Is a Foreclosing Plaintiff’s Lack of Standing Jurisdictional, resulting in Dismissal?

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

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.

.

Sunday –  May 21

TFH 5/21 | Foreclosure Workshop #33: Nationstar Mortgage LLC v. Akepa Properties LLC — When Is a Foreclosing Plaintiff’s Lack of Standing Jurisdictional, resulting in Dismissal?
———————

For nearly a decade following the mortgage crisis of 2008, both federal and state courts with few exceptions until very recently have completely ignored defects in a foreclosing plaintiff’s “standing,” that is, its actual ownership of defendant borrower’s promissory note.

Even to this day, in California nonjudicial and judicial foreclosure enforcement litigation, lack of such standing is no defense.

Despite borrowers’ early pleas to “show me the note,” courts generally have similarly blocked borrowers from using any lack of standing defense, especially for example in securitized trust foreclosures, ruling that borrowers are not third-party beneficiaries of pooling and servicing trust agreements and therefore “lack standing to attack standing.”

It continues to remain puzzling how courts can enter foreclosure decrees and throw borrowers and their families out of their homes in summary judgment proceedings and later in effect forfeit equity in their homes through forced auction sales where foreclosing plaintiffs have not shown that they even own the mortgage loan or especially where there are genuine issues of material fact in dispute whether they in fact do.

Only recently have a dozen or so state appellate courts held that borrowers do have standing to challenge a foreclosing plaintiff’s standing, specifically its ownership of the borrower’s promissory note at the time that a foreclosure complaint is filed, but those States are still in the minority.

But even in those states where borrowers now have that right, it is still unclear when that defense can be raised, and when it is considered jurisdictional, and what controlling evidentiary standards are applicable.

Can that defense be raised and how, for instance, during a foreclosure case, after a summary judgment is granted, prior to an action sale, on appeal, and/or as a collateral attack on a past foreclosure judgment?

And what effect does the doctrine of res judicata have on the defense of lack of standing? And the defense of lack of indispensable party? And the defense of lack of real party in interest? And the federal Fair Debt Collection Practices Act?

Moreover, who has the burden of proof regarding such lack of standing and how is that proven or disproved?

In this Sunday’s show, we will explore such related issues and explain what is actually happening in those States whose appellate courts have allowed such standing objections and how that doctrine still is being artificially limited if not completely ignored by trial courts even in those States.

We will also explain how once again the American legal system is handicapped in this area as well by The Rule Ritual and the penchant to look for problems for our solutions rather than solutions for our problems as discussed on prior shows.

We will also explore, time permitting, ways in which the defense of lack of standing might alternatively be more effectively presented to courts in other defense formats.

~

.
Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

EVERY SUNDAY
3:00 PM HAWAII
6:00 PM PACIFIC
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The Foreclosure Hour 12

 

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Lima v. DEUTSCHE BANK NATIONAL TRUST COMPANY, Court of Appeals, 9th Circuit |   violated Hawaii Revised Statutes (HRS) § 480-2, which prohibits “unfair or deceptive acts or practices in the conduct of any trade or commerce.”

Lima v. DEUTSCHE BANK NATIONAL TRUST COMPANY, Court of Appeals, 9th Circuit | violated Hawaii Revised Statutes (HRS) § 480-2, which prohibits “unfair or deceptive acts or practices in the conduct of any trade or commerce.”

 

LIONEL LIMA, Jr.; BARBARA-ANN DELIZO-LIMA; CALVIN JON KIRBY III, individually and on behalf if all those similarly situated, Plaintiffs-Appellants,
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY; THE LAW OFFICE OF DAVID B. ROSEN; DAVID B. ROSEN, Defendants-Appellees.
EVELYN JANE GIBO, individually and on behalf of all others similarly situated, Plaintiff-Appellant,
v.
U.S. BANK N.A.; THE LAW OFFICE OF DAVID B. ROSEN; DAVID B. ROSEN, Defendants-Appellees.

Nos. 13-16091, 13-16092.
United States Court of Appeals, Ninth Circuit.
Argued Submitted October 16, 2015 Honolulu, Hawaii.
Filed May 11, 2017.
Appeal from the United States District Court for the District of Hawaii; D.C. Nos. 1:12-cv-00509-SOM-RLP, 1:12-cv-00514-SOM-RLP, Susan Oki Mollway, District Judge, Presiding

Before: O’SCANNLAIN, TALLMAN, and M. SMITH, Circuit Judges.

NOT FOR PUBLICATION

MEMORANDUM[*]

In these consolidated appeals, plaintiffs Lionel Lima, Jr., Barbara-Ann Delizo-Lima, Calvin Jon Kirby II, and Evelyn Jane Gibo (collectively, Plaintiffs) contend that defendants Deutsche Bank National Trust Company (Deutsche), U.S. Bank N.A. (U.S. Bank), and David B. Rosen and The Law Office of David B. Rosen (collectively, Rosen) violated Hawaii Revised Statutes (HRS) § 480-2, which prohibits “unfair or deceptive acts or practices in the conduct of any trade or commerce.” The allegedly offending practices were undertaken in connection with nonjudicial foreclosure sales of Plaintiffs’ homes wherein Deutsche and U.S. Bank were the mortgagees. Plaintiffs allege that the defendants engaged in the practice of (1) delivering limited warranty deeds to third-party auction purchasers, despite advertising that all auction purchasers would receive title through less valuable quitclaim deeds; and (2) postponing foreclosure sales, and thereafter holding such sales on unpublished dates, particularly when Rosen was involved in executing the sales.

Three issues raised in these appeals are identical to those raised in Bald v. Wells Fargo Bank, N.A., No. 13-16622, a memorandum concerning which was filed April 24, 2017: (1) whether Plaintiffs have standing as “consumers” pursuant to HRS § 480-2; (2) whether defendants’ practices of advertising sale by quitclaim deeds, and orally postponing auction sales, were unfair or deceptive within the meaning of HRS § 480-2; and (3) whether Plaintiffs sufficiently alleged injury and causation. For the reasons stated in the Bald memorandum disposition, we hold that (1) Plaintiffs have standing as consumers vis-à-vis Deutsche and U.S. Bank; and (2) Plaintiffs adequately pleaded that Deutsche’s and U.S. Bank’s advertising and postponement practices were unfair within the meaning of HRS § 480-2.

Two additional issues are raised in the appeals in this case: (1) whether Plaintiffs adequately alleged Deutsche’s and U.S. Bank’s liability; and (2) whether Plaintiffs stated a claim against Rosen. We hold that Plaintiffs adequately alleged Deutsche’s and U.S. Bank’s liability, but did not state a claim against Rosen.

I.

Deutsche argues that the Lima First Amended Complaint (FAC) fails to adequately plead that Deutsche was responsible for the acts allegedly constituting HRS § 480-2 violations, or the existence of an agency relationship between Deutsche and anyone else with regard to the alleged conduct. However, Plaintiffs adequately alleged direct involvement by Deutsche, including that it (1) was the mortgagee and the sole holder of the power of sale for the Lima property, (2) exercised the rights of a mortgagee through a nominee for the Kirby Property, (3) caused the notice of sale to be published for the Kirby and Lima properties, (4) postponed the sale for the Kirby property, (5) advertised the Lima sale by quitclaim deed, and (6) provided a limited warranty deed to the successful bidder in the Lima property sale. To the extent Deutsche utilized the services of others to perform these acts, it is plausible that Deutsche is liable for those acts under an agency theory. See Courbat v. Dahana Ranch, Inc., 141 P.3d 427, 436 n.10 (Haw. 2006) (noting, in an HRS § 480-2 case, “that an owner is responsible for the representations of his agent made within the scope of his agent’s selling authority”).

Similarly, U.S. Bank argues that Plaintiffs failed to allege that U.S. Bank itself carried out the complained-of acts. U.S. Bank argues that the foreclosure-related acts described in Gibo’s FAC were performed by loan servicers, not trustees for mortgage-backed securities trusts, such as U.S. Bank. U.S. Bank notes that the Gibo Mortgage stated that the “loan servicer” performs “mortgage loan servicing obligations under the Note,” and cites a treatise and cases observing that loan servicers handle foreclosures. U.S. Bank further argues that Mortgage Electronic Registration Systems, Inc. was the mortgagee and that lawyers performed some of the foreclosure-related acts.

However, the recorded Notice of Mortgagee’s Intention to Foreclose Under Power of Sale states that U.S. Bank is the mortgagee, and the Notice is signed by an officer of U.S. Bank. Similarly, the Mortgagee’s Affidavit of Foreclosure Sale Under Power of Sale lists U.S. Bank as the mortgagee, swears that the signatory is “duly authorized to represent or act on behalf of US BANK NATIONAL ASSOCIATION AS TRUSTEE hereinafter `foreclosing mortgagee,'” and details the acts taken in connection with the foreclosure, including the postponement of the auction and the eventual sale. Accordingly, U.S. Bank’s argument that it was not responsible for the alleged acts is without merit. To the extent that others performed the acts, the FAC adequately alleges U.S. Bank’s liability under an agency theory. See Courbat, 141 P.3d at 436 n.10.

II.

Plaintiffs ague that they adequately stated an HRS § 480-2 claim against Rosen due to his involvement in the foreclosure sales. Recently, the Hawaii Supreme Court in Hungate v. Law Office of David B. Rosen, 391 P.3d 1, 20 (Haw. 2017), held that the state circuit court properly dismissed the plaintiff’s § 480-2 claim against Rosen, who acted as Deutsche’s attorney in a nonjudicial foreclosure sale of the plaintiff’s home where Deutsche was mortgagee. The Court concluded that allowing the plaintiff to sue Rosen, the attorney for the plaintiff’s opponent, for alleged § 480-2 violations carried the potential that an attorney’s representation of his client would be compromised by fear of suit from a party opponent. Id. at 19-20; see also Buscher v. Boning, 159 P.3d 814, 832 (Haw. 2007) (noting that an attorney generally owes no duty to his clients’ adversaries). The same logic applies here, where the claims brought against Rosen were in connection with Rosen’s work as an attorney for Plaintiffs’ opponents in conducting nonjudicial foreclosures of Plaintiffs’ homes. Accordingly, we affirm the dismissal of all claims against Rosen.

For the foregoing reasons, we REVERSE the district court’s order granting the motion to dismiss with respect to claims against Deutsche and U.S. Bank, and AFFIRM dismissal with respect to claims against Rosen. We REMAND for proceedings consistent with this memorandum. Each party shall bear its own costs on appeal.

[*] This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.

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UNGA v JPMORGAN CHASE | HAWAII ICA – Vacate the Order Granting Plaintiff’s Motion for Summary Judgment … Dismiss for Lack of Jurisdiction

UNGA v JPMORGAN CHASE | HAWAII ICA – Vacate the Order Granting Plaintiff’s Motion for Summary Judgment … Dismiss for Lack of Jurisdiction

Congratulations to gdubin@dubinlaw.net

 

028550503 (1) by DinSFLA on Scribd

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Steve Mnuchin’s Former Financial Freedom Settles Alleged Liability for Servicing of Federally Insured Reverse Mortgage Loans for $89 Million

Steve Mnuchin’s Former Financial Freedom Settles Alleged Liability for Servicing of Federally Insured Reverse Mortgage Loans for $89 Million

FOR IMMEDIATE RELEASE
Tuesday, May 16, 2017

Financial Freedom Settles Alleged Liability for Servicing of Federally Insured Reverse Mortgage Loans for $89 Million

Financial Freedom has agreed to a settlement with the United States of more than $89 million to resolve allegations that it violated the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) in connection with its participation in a federally insured Home Equity Conversion Mortgages (HECM) or ‘reverse mortgage’ program, the Justice Department announced today. Financial Freedom is headquartered in Austin, Texas.

“The Department of Justice is committed to ensuring that those who participate in federal mortgage insurance programs comply with requirements essential to the success of its programs,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Among these requirements are the deadlines imposed by the Federal Housing Administration (FHA) on those who service government insured mortgages. Those deadlines are designed to protect the government’s collateral and stop the unnecessary loss of government funds and resources.”

Through ‘reverse mortgage’ loans, older people are able to access the equity in their homes by borrowing money against the equity they have built in their home. To encourage reverse mortgage loans, the FHA protects lenders from loss by providing mortgage insurance. Under FHA’s program, a loan becomes due and payable when the home is sold or vacant for more than 12 months or upon the death of the homeowner, whichever comes first. The lender is repaid the amount of the loan, including the costs of servicing the loan and any interest that accrues on lender expenses after a loan becomes due and payable. FHA will reimburse a lender that is unable to recoup the full amount of the loan. In order to claim recoupment, the servicer is required to meet a number of regulatory requirements and deadlines.

The United States alleged that Financial Freedom sought to obtain insurance payments for interest from FHA despite failing to properly disclose on the insurance claim forms it filed with the agency that the mortgagee was not eligible for such interest payments because it had failed to meet various deadlines relating to appraisal of the property, submission of claims to HUD, and pursuit of foreclosure proceedings. As a result, from March 31, 2011 to August 31, 2016, the mortgagees on the relevant reverse mortgage loans serviced by Financial Freedom allegedly obtained additional interest that they were not entitled to receive.

The United States’ investigation arose from a declaration filed pursuant to FIRREA by Sandra Jolley, a consultant for the estates of borrowers who took out HECM loans. Under FIRREA, whistleblowers may file declarations concerning alleged violations of the statute and may obtain a share of the recovery. Ms. Jolley will receive $1.6 million from the settlement.

“This settlement represents our office’s continued commitment to protecting the financial solvency of vital financial programs designed to benefit America’s seniors,” said Acting U.S. Attorney Stephen Muldrow of the Middle District of Florida. “HECM servicers must be held accountable for failing to adhere to FHA requirements that are designed to ensure the continued viability of the HECM program. We are pleased that Financial Freedom agreed to accept financial responsibility for these failures.”

“Today’s settlement agreement resolves allegations that this lender failed to comply with FHA servicing requirements and sought to receive financial gains that it was not legally entitled to,” said HUD Inspector General David A. Montoya. “These actions today demonstrate our continued commitment to address and halt business practices that pose a serious risk to the FHA program and the public’s trust in HUD administered programs.”

The settlement was the result of the coordinated efforts of the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Middle District of Florida, and the Department of Housing and Urban Development’s Office of Inspector General and Office of General Counsel. The case was handled by Assistant U.S. Attorney Kyle Cohen, along with Trial Attorneys Sean O’Donnell and Christopher Reimer of the Department of Justice Civil Frauds Section.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Topic(s):
False Claims Act
Financial Fraud
image: Scott-Applewhite-AP
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Philadelphia sues Wells Fargo, alleges predatory lending

Philadelphia sues Wells Fargo, alleges predatory lending

Reuters-

The City of Philadelphia sued Wells Fargo & Co on Monday, accusing the largest U.S. mortgage lender of predatory lending, which violates the federal Fair Housing Act.

The lawsuit came two weeks after the U.S. Supreme Court, in a case also involving Wells Fargo, said cities can sue lenders for alleged discrimination that causes many defaults by minority borrowers, and harms cities through lower property tax revenue and increased costs to combat crime and blight.

Philadelphia’s complaint adds to legal woes afflicting San Francisco-based Wells Fargo, which has since September been beset by a scandal over its employees’ creation of unauthorized customer accounts to meet sales goals.

[REUTERS]

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RBS CEO sees potential to settle major U.S. mortgage probe

RBS CEO sees potential to settle major U.S. mortgage probe

Reuters-

Royal Bank of Scotland (RBS.L) Chief Executive Ross McEwan said the bank is in talks to settle one of the two major U.S. investigations into allegations it mis-sold mortgage-backed securities that it needs to overcome before the British government can sell its shares in the bailed-out bank.

McEwan has been trying to clean up RBS’s balance sheet and end a string legal cases against the bank. This would open the way for the government to sell its more than 70 percent stake in RBS held since it had to step in with a more than 45 billion pound ($57.83 billion) bailout during the financial crisis.

The CEO said the bank could settle a multibillion-dollar lawsuit by the U.S. Federal Housing Finance Agency separately from an investigation by the Department of Justice (DOJ), which has stalled because of changes in the U.S. government since the election of President Donald Trump.

“They are quite separate … and we are in discussions with them and we are not in discussions with the DOJ other than them still seeking information,” McEwan told reporters at bank’s annual shareholder meeting in Edinburgh.

[REUTERS]

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TFH 5/14 | Rebroadcast of “Ten Hidden Secrets of Securitized Trusts They Desperately Do Not Want You or Your Judge To Know.”

TFH 5/14 | Rebroadcast of “Ten Hidden Secrets of Securitized Trusts They Desperately Do Not Want You or Your Judge To Know.”

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

.

.

Sunday –  May 14

Rebroadcast of “Ten Hidden Secrets of Securitized Trusts They Desperately Do Not Want You or Your Judge To Know.”

———————

The principal instrument for the carrying out of the incredibly large scale mortgage fraud in the United States in recent decades has been the appearance of virtually invisible “Securitized Trusts” parading mysteriously as plaintiffs in foreclosure cases.

More than any other weakness in the judicial handling of foreclosure cases throughout the United States has been the complete ignorance among foreclose judges as to what these relatively new entities coming before them really are.

They have no real office locations or office signs, existing only in cyberspace and court docket sheets.

It is virtually impossible to even find anyone claiming to be their Trustees or their managers. They moreover have no employees.

You cannot even locate any real telephone numbers or email addresses for any of them.

Instead, they operate through others variously called loan servicers, MERS signing officers, foreclosure attorneys, and declarants — shielding from view intentionally what in all fairness can be called organized crime on steroids.

Several state and less frequently some federal judges — finally — are asking who or what these Securitized Trusts really are.

Are they actually in court cases the real parties in interest?

Do they have any legal capacity to sue for foreclosure?

Do they actually own the notes and mortgages as they claim?

What do they really do with the foreclosure monies and/or properties awarded to them?

For this reason, it seems worthwhile to rebroadcast at this critical time our June 19, 2016 show, first exposing the ten secrets of securitized trusts, especially for all of our new listeners.

Please join us this Sunday and help us educate the American Judiciary as it begins inevitably to awaken, however slowly, to the corrupt realities and elaborate pretense of Securitized Trusts.

One could be coming to your home shortly.

~

.
Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

EVERY SUNDAY
3:00 PM HAWAII
6:00 PM PACIFIC
9:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
iHEART RADIO

The Foreclosure Hour 12

 

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Wall Street’s obscene spending confessions: From a $150K backyard golf course to a $100K ‘sin tax’

Wall Street’s obscene spending confessions: From a $150K backyard golf course to a $100K ‘sin tax’

CNBC-

“What’s the point of having f— you money if you never say f— you?” – Bobby Axelrod (Damien Lewis) in the Showtime series “Billions”

F— you money is a common expression on Wall Street. You work hard to earn that obscene paycheck so f— you, I’m going to spend hard, too. Bobby Axelrod’s No. 2 at Axe Capital, “Wags,” is famous for one-liners about indulgence like “Yo, b—-es! Saddle up. Body shots and sushi at the strip joint, on me.”

Real-life hedgies like Wags know f— you money is offensive and they don’t care. Spend it if you got it.

“Why not?” a portfolio manager responded when asked why he spends so extravagantly. “It’s simple math, I make a lot so I spend a lot. If the AmEx bill comes in under $20K, I wonder what I did wrong that month.”

[CNBC]

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Regulator warns Fannie, Freddie may need to draw on Treasury funds next year

Regulator warns Fannie, Freddie may need to draw on Treasury funds next year

Washington Examiner-

Fannie Mae and Freddie Mac’s government overseer warned Congress Thursday that the two bailed-out mortgage giants face the possibility of having to draw billions of dollars from the Treasury Department by next year, a risk that could roil markets if that borrowing is seen as another bailout.

Mel Watt, the director of the Federal Housing Finance Agency, told a panel of senators Thursday that the government-sponsored enterprises will see their capital buffer reduced to zero under law by the start of next year, leaving the companies at the mercy of markets. Any losses would force them to draw on their line of credit at the Treasury that was created when they were bailed out nearly a decade ago, creating the perception of a taxpayer bailout even if not the reality.

“We reasonably foresee that this could erode investor confidence” in the $5 trillion market of mortgage securities backed by the two companies, Watt warned the Senate Banking Committee. “This could stifle liquidity in the mortgage-backed securities market and could increase the cost of mortgage credit for borrowers.”

Watt told the senators not to be surprised by any steps he might take to prevent that outcome, such as suspending dividend payments from Fannie and Freddie to the Treasury.

[WASHINGTON EXAMINER]

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