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DJSP Enterprises, Inc. DJSP 401(k) / ERISA Stock Fraud

DJSP Enterprises, Inc. DJSP 401(k) / ERISA Stock Fraud

VIA: LawyersandSettlements.com

DJSP Enterprises, Inc. has been accused of securities fraud. If you are a current or former employee or are a member of any of DJSP Enterprises, Inc. investment plans or profit sharing retirement plans you may be included in this possible DJSP Enterprises, Inc. 401(k) or Employee Retirement Income Security Act (ERISA) class action. If you purchased or held DJSP Enterprises, Inc. stock in one of those plans during the periods Mar-16-10 to May-27-10, you may have a claim.

Under ERISA, DJSP Enterprises, Inc. employees can file a lawsuit against the company for putting stock options at risk. DJSP Enterprises, Inc. employees have a claim if they can prove their employer violated its fiduciary duty to its employees. Fiduciary duty refers to a company’s responsibility to the people who invest in it. If an employer puts the company’s interest ahead of the investors’, it has broken its fiduciary duty. A fiduciary is a person that exercises discretion over the management of plan assets or exercises discretionary control over the administration of the plan.

ERISA is a federal law that sets minimum standards for pension and health plans set up by private businesses. ERISA was designed to protect people who participate in employee benefit plans, including employees with stock options in a company. Stock options are a form of compensation in which employees are given the opportunity to purchase shares of the company stock at a certain price.

DJSP Enterprises, Inc. 401(k) / ERISA Legal Help

If you have suffered from DJSP Enterprises, Inc. 401(k) plan losses, you may qualify for damages or remedies that may be awarded in a possible DJSP Enterprises, Inc. ERISA class action lawsuit. Please click the link below to submit your complaint and we will have a lawyer review your ERISA complaint. If you are NOT a current or former employee of this company, please use this form to register your complaint. Thank you.

Last updated on Jul-21-10


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Posted in case, djsp enterprises, Law Offices Of David J. Stern P.A., lawsuit, settlement1 Comment

$8k to deliver pizzas? I’ll buy that | By Gretchen Morgenson

$8k to deliver pizzas? I’ll buy that | By Gretchen Morgenson

If trust in capital markets is to return, investors must be able to believe due diligence has been conducted

by GRETCHEN MORGENSON 05:55 AM Jul 14, 2010

Investors who lost billions on boatloads of faulty mortgage securities have had a hard time holding Wall Street accountable for selling the things in the first place.

For the most part, banks have said they cannot be called out in court on any of this because they had no idea that so many of these loans went to people who lacked the resources to make even their first mortgage payment.

Wall Street firms were intimately involved in the financing, bundling and sales of these loans, so their defence rings hollow. They provided hundreds of millions of dollars in credit to dubious underwriters and some even had their own people on site at the loan factories. Many Wall Street firms owned mortgage lenders outright.

Because many of the worst lenders are now out of business, investors in search of recoveries have turned to the banks that packaged the loans into securities. But successfully arguing that Wall Street aided lenders in a fraud is tough under United States federal securities laws. This is largely a result of Supreme Court decisions barring investors from bringing federal securities fraud cases that accuse underwriters and other third parties as enablers.

Where there’s a will, however, there’s a way. And state courts are proving to be a more fruitful place for mortgage investors seeking redress, legal experts say.

Late last month, for example, Massachusetts Attorney-General Martha Coakley extracted US$102 million ($140 million) from Morgan Stanley in a case involving Morgan’s extensive financing of loans made by New Century, a notorious and now-defunct lender that was based in California.

Morgan packaged the loans into securities and sold them to clients, even after its due diligence uncovered problems with the underlying mortgages that New Century fed to the firm, Ms Coakley said. In settling the matter, Morgan neither admitted nor denied the allegations. The investigation is continuing.

On Friday, an investment management firm that lost US$1.2 billion in mortgage securities it bought for clients filed suit in Massachusetts state court against 15 banks, accusing them of abetting a fraud.

The firm, Cambridge Place Investment Management of Concord, Massachusetts, purchased US$2 billion in mortgage securities from the banks and it says the banks misrepresented the risks in the underlying loans – both in prospectuses and sales pitches (see box).

The complaint says the banks misled Cambridge Place by maintaining that the mortgages in the securities it bought had met strict underwriting requirements related to the borrowers’ ability to repay the loans. Cambridge also contends it relied on the banks’ claims of having conducted due diligence to verify the quality of the loans bundled into the securities.

Continue Reading…TODAYonline

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in Cambridge Place Investment Management, case, CONTROL FRAUD, investigation, lawsuit, STOP FORECLOSURE FRAUD0 Comments

JUDGE SCHACK DOES IT AGAIN! TOSSES OUT US BANK FORECLOSURE!

JUDGE SCHACK DOES IT AGAIN! TOSSES OUT US BANK FORECLOSURE!

Hasn’t this law firm learned their lesson…time and time again??

Homeowners’ hero judge slaps US Bank

Post staff for NYPOST
Last Updated: 4:42 AM, July 5, 2010
Posted: 12:44 AM, July 5, 2010

Brooklyn’s battling Judge Arthur M. Schack has struck again, giving a Brooklyn homeowner an Independence Day gift — freedom from foreclosure.

The judge, who has steadfastly pressed banks in foreclosure cases to prove they own the troubled mortgage and has tossed cases when banks have failed to do so, has again dismissed a foreclosure case — this time because the lawyer on the case, Steven J. Baum, represented the mortgage broker, the bank that bought the loan and the industry registration service serving as the nominee of the loan.

But Baum’s conflict of interest wasn’t the case’s only problem.

Judge Schack, in his decision, also found that the bank, US Bank, never should have filed the foreclosure action because of an “ineffective assignment of the subject mortgage and note to it.” In other words, it sold the mortgage, and the mortgage was securitized, leaving the company simply as the servicer — but it decided to try and take back the Crown Heights home anyway.

The Post has reported that the actions of the Baum firm in foreclosure cases has caught the eye of the US Trustee, the arm of the Justice Department responsible for monitoring the Bankruptcy Court.

Baum, a Buffalo-based foreclosure mill that filed 12,551 foreclosure actions in New York last year, has been scolded by judges for bringing foreclosure cases without proper documentation.

In this case, a Baum lawyer, Elpiniki Bechakas, signed papers claiming to be an executive of Mortgage Electronic Registration System, or MERS, which was given certain rights to the mortgages by the broker, Fremont Investment and Loan, while simultaneously representing Fremont and US Bank, which filed the foreclosure in July 2009.

“The Court is concerned that the concurrent representation by [the Baum firm] of both assignor MERS, as nominee for Fremont, and assignee plaintiff US Bank is a conflict of interest,” Schack wrote.

Photo Credit: CBS

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in case, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, judge arthur schack, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, robo signer, Steven J Baum, us bank2 Comments

MUST READ… MISSING LINK (s) | BANK OF NEW YORK v. MICHAEL J. RAFTOGIANIS

MUST READ… MISSING LINK (s) | BANK OF NEW YORK v. MICHAEL J. RAFTOGIANIS

Absolutely, positively a MUST READ!

edit: From a reader who makes an excellent point…this case is very important because it turns not on the assignment of mortgage which the court disregards but rather on the failure of the originator to file the mortgage loan lists with SEC-the defendant did not even raise the point that there was also a failure to file with delaware so that the trust was never given assets———most importantly AHMSI seems to have focused on acquisition of other ex lenders servicer portolios that systematically failed to file these lists-this could enable ahmsi to have more potential latitude to allocate/reallocate or even pocket collected monies -it ties in with the comments later last week re junior senior tranche——if there is no clear certainty as to who gets money from foreclosures due to the record breakdown —-then if the money were to go to tranches that have been written off by their owners —–then the servicer can pocket the proceeds———–the servicers are unregulated–who is looking at their allocations?

the real questions now-are the loans actually in the hands of trusts as a matter of law as a result of failed filings and what happens to proceeds of collection of foreclosure proceeds??

These are highlights…

SUPERIOR COURT OF NEW JERSEY

BANK OF NEW YORK, as Trustee for Home Mortgage Investment Trust CHANCERY DIVISION
2004-4 Mortgage-Backed Notes, ATLANTIC COUNTY Series 2004-4 DOCKET NO: F-7356-09

vs.

MICHAEL J. RAFTOGIANIS,

Decided June 29, 2010

This opinion deals with the plaintiff’s right to proceed with an action to foreclose a mortgage which secures a debt evidenced by a negotiable note. The original lender elected to use the Mortgage Electronic Registration System in recording the mortgage by designating that entity, as its nominee, as the mortgagee. The note and mortgage were subsequently securitized, without notice to the borrower. This action to foreclose the mortgage was filed years later, in the name of an entity created as a part of the securitization process. The defendant/borrower challenged plaintiff’s right to proceed with the foreclosure. That challenge, framed as a dispute over “standing,” has given rise to a variety of factual and legal issues typically raised in this type of litigation.

Ultimately, the questions presented were whether plaintiff could establish its right to enforce the obligation evidenced by the note and whether it must establish that it held that right at the time the complaint was filed. The answers to those questions require an understanding of the provisions of the Uniform Commercial Code, the Mortgage Electronic Registration System, the securitization of mortgages and how foreclosure litigation is handled. This opinion addresses those disputes. Ultimately, the court concluded that it was appropriate to require plaintiff to establish that it had physical possession of the note as of the date the complaint was filed. Plaintiff was unable to establish that, either by motion or at trial. Accordingly, the complaint has now been dismissed on terms permitting plaintiff to institute a new action to foreclose, on the condition that any new complaint must be accompanied by an appropriate  certification, confirming that plaintiff is then in possession of the note.

In this case, the defendant borrowed $1,380,000 from American Home Mortgage Acceptance Inc. (hereafter American Home Acceptance) in September 2004. This action to foreclose the mortgage was brought in the name of The Bank of New York, as Trustee for American Mortgage Investment Trust 2004-4 Mortgage Backed Notes, Series 2004-4 in February 2009. In the interim, a variety of transactions took place, involving a number of entities. Those transactions will be discussed in some detail below. Preliminarily, this opinion will discuss the UCC, MERS and the securitization process in more general terms.

How does one become a holder of a negotiable note? In addressing that question it is necessary to distinguish between “transfer” and “negotiation.” It is also necessary to distinguish between the handling of notes payable “to order” and notes payable “to bearer.” In this particular case, it is also necessary to recognize that a note initially made payable “to order” can become a bearer instrument, if it is endorsed in blank. See N.J.S.A. 12A:3-109(c), providing that an instrument payable to an identified person may become payable to bearer if it is endorsed in blank. See also N.J.S.A.12A:3-205(b), describing what qualifies as a blank endorsement, and The Law of Modern Payment 6 Systems and Notes 2.02 at 77-78, Miller and Harrell (2002), noting that an instrument bearing the indorsement “Pay to the order of __________” is a bearer instrument. Such a bearer note can be both transferred and negotiated by delivery alone. See Corporacion Venezolana de Fomento v. Vintero Sales, 452 F. Supp. 1108, 1117 (Dist. Ct. 1978).
Under the UCC, the transfer of an instrument requires that it be delivered for the purpose of giving the person receiving the instrument the right to enforce it. A negotiable note can be transferred without being negotiated. That transfer would be effected by the physical delivery of the note. See N.J.S.A. 12A:3-203(a). In that circumstance, the transferee would not be a holder, as that term is used in the UCC. Such a transferee, however, would still have the right to enforce the note. The UCC deals with that circumstance in the following language: Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the  instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument. N.J.S.A. 12A:3-203(b).

The negotiation of the instrument, on the other hand, requires both a transfer of possession and an endorsement by the holder. An instrument which is payable to bearer may be negotiated by transfer alone. Put otherwise, an instrument payable “to order” can be negotiated by delivery with an endorsement, while an instrument payable “to bearer” can be negotiated by delivery alone. N.J.S.A. 12A:3-201. To enforce the note at issue here as a holder pursuant to N.J.S.A. 12A:3-301, plaintiff would have to establish that it received the note, through negotiation, at the appropriate time. That would require that the note be endorsed prior to or at the time of delivery, either in favor of plaintiff or in blank. N.J.S.A. 12A:3-301 also provides that an instrument may be enforced by “a non holder in possession of the instrument who has the rights of a holder.” How does one obtain that status? That may occur, by example, where a creditor of a holder acquires an instrument through execution. See The Law of Modern Payment Systems and Notes 3.01 Miller and Harrell (2002). More frequently, that status will be created by the “transfer” of the instrument, without negotiation. As already noted, transfer occurs when the instrument is delivered for the purpose of giving the person receiving the instrument the right to enforce it. See N.J.S.A. 12A:3-203(a). The statute also provides that the transfer of the instrument, without negotiation, vests in the transferee the transferor’s right to enforce the instrument. See N.J.S.A. 12A:3-203(b). That circumstance can be illustrated by reference to the dispute presented here. The note at issue, as originally drafted, was payable “to the order of” the original lender. The negotiation of the note, in that form, would require endorsement, either to a designated recipient of the note or in blank. The note, however, could be transferred without an endorsement. Assuming the transfer was for the purpose of giving the recipient the ability to enforce the note, the recipient would become a “nonholder in possession with the rights of a holder.” That would require, however, the physical delivery of the note. A number of cases recognize that there can be constructive delivery or possession, through the delivery of the instrument to an agent of the owner. See Midfirst Bank, SSB v. C.W. Haynes & Company, 893 F. Supp. 1304, 1314-1315 (S.C. 1994); Federal Deposit Insurance Corp. v. Linn, 671 F. Supp. 547, 553 8 (N.D. Ill. 1987); and Corporacion Venezolana de Fomento v. Vintero Sales Corp, 452 F. Supp. 1108, 1117 (S.D.N.Y. 1978). Under either of the provisions of N.J.S.A.12A:3-301 which are at issue here, the person seeking to enforce the note must have possession. That is required to be a holder, and to be a nonholder in possession with the rights of a holder. The application of the provisions of the UCC to the dispute presented here will be discussed below.

MERS The Mortgage Electronic Registration System (hereafter, MERS), is a unique entity. Its involvement in the foreclosure process has been the subject of a substantial amount of litigation throughout the country, resulting in the issuance of a number of reported opinions. Recently, MERS was the focus of a decision of the Supreme Court ofKansas, reported as Landmark National Bank v. Kesler, 289 Kan. 528, 216 P.3d. 158 (Kan. 2009) which is now cited frequently in this court. That opinion reviews the manner in which MERS functions, the potential problems it can create, and some of the competing policy issues presented. The opinion also cites a variety of published opinionsfrom around the country, addressing those same issues.

In essence, MERS is a private corporation which administers a national electronic registry which tracks the transfer of ownership interests and servicing rights in mortgage loans. Lenders participate as members of the MERS system. When mortgage loans are initially placed, the lenders will retain the underlying notes but can arrange for MERS to be designated as the mortgagees on the mortgages which become a part of the public record. In that context, the lenders are able to transfer their interests to others, without having to record those subsequent transactions in the public record. See Mortgage Elec. Reg. Sys. Inc. v. Nebraska Depart. Of Banking, 270 Neb. 529, 530, 704 N.W.2d 784 (2005), cited in Landmark. The process is apparently cost efficient, from the perspective of the lenders. Among other things, the use of MERS permits lenders to avoid the payment of filing fees that might otherwise be required with the filing of multiple assignments. By the same token, it can make it difficult for mortgagors and others to identify the individual or entity which actually controls the debt at any specific time. See Landmark, 216 P.3d. at 168. On occasion, foreclosure actions are also brought in the name of MERS. When MERS is involved, defendant/borrowers often argue there has been a “separation” of the note and mortgage impacting on the plaintiff’s ability to proceed with the foreclosure. That argument has been raised here and will also be addressed below.

SECURITIZATION

This case also involves the securitization of mortgage loans, a practice which is facilitated by the MERS system. Trial courts in this state regularly deal with the foreclosure of mortgages which have previously been securitized. Generally, one or more lenders will sell substantial numbers of mortgage loans they have issued to a pool or trust.

Interests in that pool or trust are then sold to individual investors, who receive certificates entitling them to share in the funds received as the underlying loans are repaid. That can occur without any notice to the debtors/mortgagors who remain obligated on the original notes. Other entities, generally called “servicers,” are retained to administer the underlying loans. Those servicers or additional “subservicers” will be responsible for collecting and distributing the funds which are due from the debtors/mortgagors. Many are given the authority to institute and prosecute foreclosure proceedings.

The note executed by defendant Raftogianis is clearly a negotiable instrument as that term is defined by the UCC. In the terms of the statute, the note is payable to bearer or to order, and it is payable on demand or at a definite time. While the note contains detailed provisions as to just how payment is to be made, it does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money. See N.J.S.A. 12A:3-104. The note recites that defendant Raftogianis “promises to pay U.S. $1,380,000.00 … plus interest, to the order of the Lender,” then referring to “the Lender” as American Home Acceptance, beginning with payments due in November 2004. See N.J.S.A. 12A:3-104(a)(1), (2) and (3). This note, as originally drafted, was payable “to order.” At some point, however, the note was indorsed in blank. The original note was produced at oral argument on the motion for summary judgment. It contained the following indorsement:

WITHOUT RECOURSE
BY AMERICAN HOME MORTAGE ACCEPTANCE, INC.
_________________________
RENEE BURY
ASST. SECRETARY

Ms. Bury’s original signature was just above her printed name in that indorsement. Defendant had signed the note on September 30, 2004, payable to the order of American Home Acceptance. In that form the note could be transferred by delivery, but could only be negotiated by indorsement. The indorsement in blank, however, would effectively make the note payable “to bearer,” permitting it to be transferred and negotiated by delivery alone, without any additional indorsement. While it was clear the note had been indorsed prior to the time it was presented to the court, presumably as a part of the securitization process, it was not clear just when that occurred, or when the note had been physically transferred from American Home Acceptance to some other individual or entity.

The assignment from MERS was executed and recorded a short time after the complaint was filed. That document is dated February 18, 2009. It is captioned “Assignment of Mortgage.” It recites that MERS, as nominee for American Home Acceptance, transfers and assigns the mortgage at issue to Bank of New York, as Trustee.

The assignment refers to the mortgage as securing the note at issue. It recites the transfer of the mortgage “together with all rights therein and thereto, all liens created or secured thereby, all obligations therein described, the money due and to become due with interest, and all rights accrued or to accrue under such mortgage.” The assignment was executed by one Linda Green, as Vice President of MERS, as nominee for American Home Acceptance. Ms. Green’s signature was notarized. The assignment was recorded with the Atlantic County Clerk on February 24, 2009. It does appear the assignment was intended to indicate that the debt in question had been transferred to the Bank of New York as Indenture Trustee in February 2009. It is now apparent that is not what occurred.

In any event, the matter proceeded in the vicinage based upon the filing of defendant’s contesting answer. While discovery was permitted, the parties apparently elected to forego any formal discovery. Plaintiff filed its motion for summary judgment in January 2010. The motion was based upon a certification from plaintiff’s counsel providing copies of the note, the mortgage and the February 2009 assignment. While the copy of the note provided with the motion did contain the blank indorsement noted above, there was no information provided as to when the note was indorsed, when the note was physically transferred, or where the note was being held. Defendant filed written opposition, challenging the validity of the MERS assignment. Plaintiff responded with a certification executed by a supervisor for American Home Mortgage Servicing, Inc., the servicer for the loans.

THE MERS ASSIGNMENT–THE SEPARATION OF THE NOTE AND MORTGAGE

The issue is framed, at least in part, by the description of MERS as “nominee.” The use of that term, as it is used by MERS, was analyzed in some detail in the decision of the Supreme Court of Kansas in Landmark, a case relied upon by defendant and cited above. Landmark involved a property which was encumbered by two mortgages. The loan provided by Landmark National Bank was secured by a first mortgage payable to it. There was a second mortgage on the property securing a loan that had been provided by Millennia Mortgage Corp. Millennia was a participant in MERS. The second mortgage securing the debt due Millennia was in the name of MERS “solely as nominee” for Millennia. The Millennia mortgage was subsequently transferred or assigned to Sovereign Bank. That transfer was not reflected in the public record. Landmark filed an action to foreclose its first mortgage naming Millennia, but neither MERS nor Sovereign as defendants. No one responded on behalf of Millennia and the matter proceeded through judgment and sale. Sovereign subsequently filed a motion to set aside the judgment, arguing that MERS was a “contingently necessary party” under Kansas law. The trial court concluded that MERS was not a real party in interest and denied the
motion to set aside the judgment. Both the Court of Appeals and the Supreme Court of Kansas affirmed, essentially concluding that MERS did not have any real interest in the underlying debt. Notably, the opinion of the Supreme Court of Kansas recognizes the potential for the separation of interests in a note and related mortgage. In that context, the opinion addressed the use of the term “nominee” in some detail, as follows: The legal status of a nominee, then, depends on the context of the relationship of the nominee to its principal. Various courts have interpreted the relationship of MERS and the lender as an agency relationship. (Citation omitted)
. . .
The relationship that MERS has to Sovereign is more akin to that of a straw man than to a party possessing all the rights given a buyer. A mortgage and a lender have intertwined rights that defy a clear separation of interests, especially when such a purported separation relies on ambiguous contractual language. The law generally understands that a mortgagee is not distinct from a lender: a mortgagee is “[o]ne to whom property is mortgaged: the mortgage creditor, or lender.” Black’s Law Dictionary 1034 (8th ed. 2004). By statute, assignment of the mortgage carries with it the assignment of the debt. K.S.A. 38-2323. Although MERS asserts that, under some situations the mortgage document purports to give it the same rights as the lender, the document consistently refers only to rights of the lender, including rights to receive notice of litigation to collect payments, and to enforce the debt obligation.
The document consistently limits MERS to acting “solely” as the nominee of lender. 289 Kan. 538-540.

While the Landmark court recognized that issues might be raised as to an alleged separation of a note and mortgage, it was not required to address those issues directly. Its analysis of the role MERS plays as nominee, however, supports the conclusion reached by this court with respect to that issue. MERS, as nominee, does not have any real interest in the underlying debt, or the mortgage which secured that debt. It acts simply as an agent or “straw man” for the lender. It is clear to this court that the provisions of the mortgage describing the mortgagee as MERS “as nominee” were not intended to deprive American Home Acceptance of its right to security under the mortgage or to separate the note and mortgage.

It is a fundamental maxim of equity that “[e]quity looks to substance rather than form.” See Applestein v. United Board & Carton Corp., 60 N.J. Super. 333, 348 (Ch.Div. 1960) aff’d o.b., 33 N.J. 72 (1960). The courts have applied that principle in dealing with mortgages in a variety of contexts. So it is that an assignment of a bond or note evidencing a secured obligation will operate as an assignment of the mortgage “in equity.” See 29 New Jersey Practice, Law of Mortgages 11.2, at 748 (Myron C. Weinstein) (2d ed. 2001) (citing Stevenson v. Black, 1 N.J. Eq. 338, 343 (Ch. 1831) and other cases). Conversely, commentators have noted the propriety of treating the assignment of a mortgage, without a specific reference to the underlying obligation, as effectively transferring both interests. But it does not follow that an assignment in terms of the “mortgage” without express reference to the secured obligation is insufficient to transfer the obligation and is therefore a nullity, as some courts have held. As Mr.Tiffany long ago pointed out, The question is properly one of the construction of the language used, and in arriving at the proper construction, evidence of the sense in which that language is ordinarily used is of primary importance. The expression “assignment of  mortgage” is almost universally used, not only by the general public, but also by the Legislature, the courts, and the legal profession, to describe the transfer of the totality of the mortgagee’s rights, that is, his right to the debt as well as to the lien securing it, and to hold, as these cases apparently do, that when one in terms assigns a mortgage, he intends, not an effective transfer of his lien alone, which is an absolute nullity, not only ignores this ordinary use of the term “mortgage”, but is also in direct contravention of the well recognized rule that an instrument shall if possible be construed so as to give it a legal operation. See 29 New Jersey Practice, Law of Mortgages 11.2 at 754(Myron C. Weinstein)(2d ed.2001) (citing 5 Tiffany on Real Property 428-29). It is apparent there was no real intention to separate the note and mortgage at the time those documents were created. American Home Acceptance remained the owner of both the note and mortgage through the date the loan was securitized. It did have the right to transfer its interests when the loan was securitized.

It was entirely appropriate to argue that the February 2009 assignment from MERS, as nominee for American Home Acceptance, to the Bank of New York, as Trustee, was ineffective. From the court’s perspective, that assignment was, at best, a distraction. The actual transfers of interests in the note and mortgage occurred in different ways. There was no reason, however, that plaintiff could not acquire the right to enforce the note and mortgage through those other  transactions. In that context, defendant’s attack on plaintiff’s right to proceed based on the alleged separation of the note and mortgage is rejected.

CONCLUSION

Defendant’s attack on plaintiff’s ability to proceed with the foreclosure based on the alleged “separation” of the note an mortgage was rejected. Plaintiff, however, failed to establish that it was entitled to enforce the note as of the time the complaint was filed.

In this case, there are no compelling reasons to permit plaintiff to proceed in this action. Accordingly, the complaint has been dismissed. That dismissal is without prejudice to plaintiff’s right to institute a new action to foreclose at any time, provided that any new complaint must be accompanied by an appropriate certification, executed by one with personal knowledge of the circumstances, confirming that plaintiff is in possession of the original note as of the date any new action is filed. That certification must indicate the physical location of the note and the name of the individual or entity in possession.

An appropriate order has been entered

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Posted in bank of new york, bogus, breach of contract, case, conspiracy, deutsche bank, fannie mae, foreclosure, foreclosure fraud, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, note, robo signer, securitization, Trusts2 Comments

Couple says bank at fault in foreclosure proceeding

Couple says bank at fault in foreclosure proceeding

I think this is the case for many of us who needed the HELOC when times got tough or for an emergency.

A dispute over a foreclosure is headed for trial.

By: Judy Wiff, Pierce County Herald Published June 29 2010

A dispute over a foreclosure is headed for trial.

A jury trial is set for March 16-17, 2011, in a case brought by Wells Fargo Bank against Deborah and John Sherman II, 434 Court St. North, Prescott. The bank claims the Shermans failed to make payments and now owe $384,236.

According to the Shermans, they had a 10-year draw period on a line of credit, but when they went to withdraw funds, they found the bank had reduced the credit limit based on a “substantial decline” in the value of their property.

“The Shermans have never been behind on a payment and use the line of credit in the running of their business,” wrote their attorney as he challenged the foreclosure action.

Continue reading…here

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in case, heloc0 Comments

The Conclusion…If we could only turn back time: IN THE MATTER OF MERSCORP, INC. v. Romaine, 2005 NY Slip Op 9728 – NY: Supreme Court, Appellate Div., 2nd Dept. 2005

The Conclusion…If we could only turn back time: IN THE MATTER OF MERSCORP, INC. v. Romaine, 2005 NY Slip Op 9728 – NY: Supreme Court, Appellate Div., 2nd Dept. 2005

If we can only turn back time!

2005 NY Slip Op 09728

IN THE MATTER OF MERSCORP, INC., ET AL., appellants-respondents,
v.
EDWARD P. ROMAINE, ETC., ET AL., respondents-appellants.

2004-04735.

Appellate Division of the Supreme Court of New York, Second Department.

Decided December 192005.

Hiscock & Barclay, LLP, Buffalo, N.Y. (Charles C. Martorana of counsel), for appellants-respondents.

Cahn & Cahn, LLP, Melville, N.Y. (Richard C. Cahn and Daniel K. Cahn of counsel), for respondents-appellants.

Bainton McCarthy, LLC, New York, N.Y. (J. Joseph Bainton of counsel), for American Land Title Association, amicus curiae.

Decher, LLP, New York, N.Y. (Joseph P. Forte and Kathleen N. Massey of counsel), for Mortgage Bankers Association, amicus curiae.

Howard Lindenberg, McLean, VA., for Federal Home Loan Mortgage Corporation, amicus curiae, and Kenneth Scott, Washington, D.C., for Federal National Mortgage Association, amicus curiae (one brief filed).

Brigitte Amiri, Brooklyn, N.Y., for South Brooklyn Legal Services, amicus curiae, April Carrie Charney, Jacksonville, FL., for Jacksonville Area Legal Aid, Inc., amicus curiae, and Daniel P. Lindsey, Chicago, IL, for Legal Assistance Foundation of Metropolitan Chicago, amicus curiae (one brief filed).

Before: ROBERT W. SCHMIDT, J.P., BARRY A. COZIER, REINALDO E. RIVERA, STEVEN W. FISHER, JJ.

DECISION & ORDER

ORDERED that the order and judgment is modified, on the law, by (1) deleting the provision thereof denying that branch of the petitioners’ motion for summary judgment which was to compel the Suffolk County Clerk to record and index the subject assignments and discharges, and substituting therefor a provision granting that branch of the motion, and (2) adding thereto a provision declaring that the mortgages, assignments, and discharges which name Mortgage Electronic Registration Systems, Inc., as the lender’s nominee or the mortgagee of record are acceptable for recording and indexing; as so modified, the order and judgment is affirmed insofar as appealed and cross-appealed from, with one bill of costs to the petitioner.

The petitioners, MerscorpInc. (hereinafter Merscorp), and its subsidiary, Mortgage Electronic Registration Systems, Inc. (hereinafter MERS), operate a national electronic registration system (hereinafter the MERS System) for residential mortgages and related instruments (hereinafter MERS Instruments). In essence, lenders who subscribe to the MERS System (hereinafter MERS Members) designate MERS as their nominee or the mortgagee of record for the purpose of recording MERS Instruments in the county where the subject real property is located. The MERS Instruments are registered in a central database, which tracks all future transfers of the beneficial ownership interests and servicing rights among MERS Members throughout the life of the loan.

Merscorp and MERS commenced this hybrid proceeding and action in response to the announcement by the Suffolk County Clerk (hereinafter the Clerk) that, as of May 1, 2001, he would no longer accept MERS Instruments that listed MERS as the mortgagee or nominee of record unless MERS was, in fact, the actual mortgagee. In June 2002 this court granted the motion by Merscorp and MERS to preliminarily compel the Clerk to record MERS Instruments and list MERS as the mortgagee in the County’s alphabetical indexes pending the SupremeCourt’s determination of the hybrid proceeding and action on the merits (see Matter ofMerscorp, Inc. v. Romaine, 295 AD2d 431).

The Supreme Court properly compelled the Clerk to record MERS mortgages (seeKlostermann v. Cuomo, 61 NY2d 525, 539). In short, the Clerk has a statutory duty that is ministerial in nature to record a written conveyance if it is duly acknowledged and accompanied by the proper fee (see Real Property Law §§ 290[3], 291; County Law § 525[1]). Accordingly, the Clerk does not have the authority to refuse to record a conveyance which satisfies the narrowly-drawn prerequisites set forth in the recording statute (see People ex rel. Frost v. Woodbury, 213 NY 51; People ex rel. Title Guar.& Trust Co. v. Grifenhagen, 209 NY 569;Matter of Westminster Hgts. Co. v. Delany, 107 App Div 577, affd 185 NY 539; Putnam v. Stewart, 97 NY 411).

Similarly, Real Property Law § 316-a (1), which only applies to the Suffolk County indexing system, provides that the Clerk must record and index “[e]very instrument affecting real estate or chattels real, situated in the county of Suffolk, which shall be, or which shall have been recorded in the office of the clerk of said county . . . pursuant to the provisions of this act.” Pursuant to Real Property Law § 316-a(2), the Clerk must maintain the indexes so they “contain the date of recording of each instrument, the names of the parties to each instrument and the liber and page of the record thereof” (see also Real Property Law § 316-a[4] and [5]). Thus, the Clerk’s duty to index recorded instruments is mandatory and ministerial in nature.

Contrary to the Supreme Court’s determination, there is no valid distinction between MERS mortgages and MERS assignments or discharges for the purpose of recording and indexing. Pursuant to Real Property Law § 321(1), the discharge document may be signed either by the mortgagee, the person who appears from the public record to be the last assignee, or their personal representatives.

As the proponents of a motion for summary judgment, Merscorp and MERS made a prima facie showing that they were entitled to judgment as a matter of law by tendering sufficient evidence to establish that they complied with the applicable recording statutes (see Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851, 853Artistic Landscaping v. Board of Assessors,303 AD2d 699). Once this showing was made, the burden shifted to the Clerk, who failed to raise a triable issue of fact in opposition to the motion (Alvarez v. Prospect Hosp., 68 NY2d 320, 324Zuckerman v. City of New York, 49 NY2d 557, 562).

Since this is a declaratory judgment action, the order and judgment must be modified, inter alia, by adding a declaration that the mortgages, assignments, and discharges which name MERS as the lender’s nominee or the mortgagee of record are acceptable for recording and indexing (see Lanza v. Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied372 US 901).

SCHMIDT, J.P., COZIER, RIVERA and FISHER, JJ., concur.

Posted in case, MERS, Mortgage Bankers Association, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., reversed court decision, securitization0 Comments

This case might have put MERS in the SPOT LIGHT: MATTER OF MERSCORP, INC. v. Romaine, 295 AD 2d 431 – NY: Supreme Court, Appellate Div., 2nd Dept. 2002

This case might have put MERS in the SPOT LIGHT: MATTER OF MERSCORP, INC. v. Romaine, 295 AD 2d 431 – NY: Supreme Court, Appellate Div., 2nd Dept. 2002

295 A.D.2d 431 (2002)

743 N.Y.S.2d 562

In the Matter of MERSCORP, INC., et al., Appellants,
v.
EDWARD P. ROMAINE et al., Respondents.

Appellate Division of the Supreme Court of the State of New York, Second Department.

Decided June 10, 2002.

S. Miller, J.P., Krausman and Cozier, JJ., concur.

Ordered that the order is reversed, without costs or disbursements, and the motion for a preliminary injunction is granted pending the Supreme Court’s determination of the hybrid proceeding and action on the merits.

The petitioners, Merscorp, Inc. (hereinafter Merscorp), and its subsidiary, MortgageElectronic Registration SystemsInc. (hereinafter MERS), operate a national electronicregistration system (hereinafter the MERS System) for residential mortgages and related instruments (hereinafter MERS Instruments). In essence, lenders who subscribe to the MERS System (hereinafter MERS Members) designate MERS as their nominee or the “mortgagee of record” for the purpose of 432*432 recording MERS Instruments in the county where the subject real property is located. The MERS Instruments are registered in a central database, which tracks all future transfers of the beneficial ownership interests and servicing rights among MERS Members. As of May 2001, the MERS System had recorded more than four million MERS Instruments in more than 3,000 counties in all 50 states, including more than 16,000 MERS Instruments in Suffolk County.

On April 5, 2001, the Attorney General issued Informal Opinion No. 2001-2 (2001 Atty Gen [Inf Ops] 2001-2) in response to two questions posed by the Nassau County Clerk regarding the latter’s obligation to record and index MERS Instruments. Although the Attorney General concluded that the Nassau County Clerk had a statutory duty under Real Property Law § 291 to record MERS Instruments if they were duly acknowledged and accompanied by the proper fee, he advised the Nassau County Clerk to list the MERS Instruments in the County’s alphabetical indexes under the names of the actual lenders. Based in part on the Attorney General’s Informal Opinion, the Suffolk County Clerk announced that as of May 1, 2001, he would no longer accept MERS Instruments which listed MERS as the mortgagee or nominee of record unless MERS was, in fact, the actual mortgagee.

Simultaneously with commencing this hybrid proceeding and action, Merscorp and MERS moved, inter alia, for a preliminary injunction to compel the Suffolk County Clerk to record MERS Instruments and list MERS as the mortgagee in the County’s alphabetical mortgagee-mortgagor indexes for recorded conveyances. Although the Supreme Court, Suffolk County (Bivona, J.), granted the request of Merscorp and MERS for a temporary restraining order on May 2, 2001, the same court (Catterson, J.), subsequently denied their request for a preliminary injunction on May 22, 2001.

It is well established that the decision to grant or deny a preliminary injunction lies within the sound discretion of the Supreme Court (see Doe v Axelrod, 73 NY2d 748, 750). In exercising that discretion, however, the Supreme Court must consider several factors, including whether the moving party has established (1) a likelihood of success on the merits, (2) irreparable harm if the injunction is denied, and (3) a balance of the equities in favor of the injunction (see CPLR 6301, 6312 [a]; Grant Co. v Srogi, 52 NY2d 496, 517Clarion Assoc. v Colby Co., 276 AD2d 461). Upon our review of the record, we find that the Supreme Court failed to set forth specific findings with respect to the tripartite test for injunctive relief and 433*433 improvidently exercised its discretion in denying the motion for preliminary injunctive relief.

Merscorp and MERS demonstrated a reasonable probability of success on the merits of its claim for a writ of mandamus to compel the Suffolk County Clerk to record MERS Instruments (see Klostermann v Cuomo, 61 NY2d 525, 539). Contrary to the contention of the Suffolk County Clerk, he has a statutory duty that is ministerial in nature to record a written conveyance if it is duly acknowledged and accompanied by the proper fee (see Real Property Law § 290 [3]; § 291; County Law § 525 [1]). Accordingly, the Clerk does not have the authority to refuse to record a conveyance which satisfies the narrowly drawn prerequisites set forth in the recording statute (see People ex rel. Frost v Woodbury, 213 NY 51; People ex rel. Title Guar. & Trust Co. v Grifenhagen, 209 NY 569; Matter of Westminster Hgts. Co. v Delany, 107 App Div 577, affd 185 NY 539; Putnam v Stewart, 97 NY 411).

This Court notes that the Suffolk County index is governed exclusively by Real Property Law § 316-a. Real Property Law § 316-a (1) provides that the Suffolk County Clerk shall record and index “[e]very instrument affecting real estate or chattels real, situated in the county of Suffolk * * * which shall have been recorded in the office of the [C]lerk of said county * * * pursuant to the provisions of this act” (emphasis supplied). Pursuant to Real Property Law § 316-a (2), the Suffolk County Clerk must maintain the indexes so they “contain the date of recording of each instrument, the names of the parties to each instrument and the liber and page of the record thereof and shall be substantially the forms of the schedules hereto annexed” (emphasis supplied; see also Real Property Law § 316-a [5]).

Therefore, in light of Real Property Law § 316-a, Merscorp and MERS also demonstrated a reasonable probability of success on the merits of their claim to compel the Suffolk County Clerk to perform his ministerial duty to index MERS Instruments as the language of Real Property Law § 316-a is mandatory and not permissive (see Klostermann v Cuomo, supra at 539).

Moreover, to the extent that the Suffolk County Clerk has recorded approximately 16,000 MERS Instruments before May 1, 2001, MERS established irreparable harm to its business operation, the mortgage lending industry, and the general public, in the absence of a preliminary injunction compelling the Suffolk County Clerk to record and index MERS Instruments (see Clarion Assoc. v Colby Co., supraMcLaughlin, Piven, 434*434 Vogel v Nolan & Co., 114 AD2d 165, 174), particularly since Real Property Law § 316-a (8), (9) and (10) sets forth a mechanism for correcting any mistakes in the indexes.

Under these circumstances, a preliminary injunction should be granted to maintain the status quo while the legal issues are determined in a deliberate and judicious manner (see Moody v Filipowski, 146 AD2d 675, 678Incorporated Vil. of Babylon v Anthony’s Water Cafe, 137 AD2d 791, 792Tucker v Toia, 54 AD2d 322, 326).

Goldstein, J., concurs in the result, with the following memorandum:

Although I do not necessarily agree with my colleagues that there is a likelihood of success on the merits, I nevertheless concur in granting a preliminary injunction, as the Supreme Court failed to take into consideration and address the other factors which must be taken into account, namely, irreparable harm to the movant absent the granting of a preliminary injunction, and a balancing of the equities (see Melvin v Union Coll., 195 AD2d 447, 448). Where, as here, the case involves issues of first impression in the courts, it is appropriate to grant a preliminary injunction, “`to hold the parties in status quo while the legal issues are determined in a deliberate and judicious manner'” (Time Sq. Books v City of Rochester, 223 AD2d 270, 278,quoting Tucker v Toia, 54 AD2d 322, 326State of New York v City of New York, 275 AD2d 740Sau Thi Ma v Xuan T. Lien, 198 AD2d 186).

Posted in case, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC.2 Comments

REVERSED Tenants in Common Foreclosure Gonzalez v. Chase Home Finance FL 3rd DCA

REVERSED Tenants in Common Foreclosure Gonzalez v. Chase Home Finance FL 3rd DCA

Here we have a tenant in common case where half owner interest was recorded 7 days before Chase recorded theirs. Therefor it was reversed as Gonzalez interest is superior to Chase.

[ipaper docId=33258855 access_key=key-14rmi8maalepe94lbmi7 height=600 width=600 /]

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in case, Real Estate, reversed court decision2 Comments

FL FORECLOSURE “GROSS” RUBBER STAMP REVERSED! 5th DCA Wells Fargo vs. Lupica 6/2010

FL FORECLOSURE “GROSS” RUBBER STAMP REVERSED! 5th DCA Wells Fargo vs. Lupica 6/2010

We find that the denial of these motions constituted a gross abuse of discretion, we reverse.

[ipaper docId=33016514 access_key=key-xmq2izaefqys3tk7jfz height=600 width=600 /]

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in case, foreclosure, foreclosure fraud, foreclosures, reversed court decision, wells fargo0 Comments

Bank of America Foreclosure Injunction Dissolved by Federal Judge: KCSG Television

Bank of America Foreclosure Injunction Dissolved by Federal Judge: KCSG Television

(Salt Lake City, UT) – Federal Judge Clark Waddoups issued the following court order just before noon Friday.

“The court held a hearing on this matter on June 10, 2010. For the reasons to be explained
in a memorandum decision that the court shall file shortly, the court ORDERS as follows:

Plaintiff’s motions to remand are DENIED;

Plaintiff’s motion to amend the complaint is GRANTED;

Defendants’ motion to vacate the Utah state court’s preliminary injunction order is GRANTED;

Defendants’ motion to expedite the hearing is moot; and consideration of Plaintiff’s motion for partial summary judgment is deferred.

The preliminary injunction of May 22, 2010 issued by the Utah state court is hereby DISSOLVED in its entirety.

John Christian Barlow, attorney for the plaintiff, Peni Cox likely is likely surprised by the court ruling that allows Utah law to be trumped by a nationally charter financial institution that can continue to operate faceless in Utah without registration or offices.

As one state lawmaker told KCSG news, this will only serve to get state lawmakers energized to put an end to homeowners (taxpayers) being victimized by mortgage lenders like the Bank of America who acquired Countrywide Home Loans in a stock deal worth billions and with taxpayer bailout money, he said. Barlow’s arguments fell on deaf ears in federal court allowing ReconTrust Company to continue their foreclosures.

Home owners continue to seek redress through the courts without success against lenders which have bundled the homeowner promissory note with others and sold them as securities through Mortgage Electronic Registration Systems (MERES).

Attorney Barlow was traveling and unavailable for comment to KCSG News as was the plaintiff Peni Cox.

Waddoups Order

[ipaper docId=32914740 access_key=key-1ep6ixrbbhxmzht59w6d height=600 width=600 /]

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bank of america, case, foreclosure, foreclosure fraud, foreclosures0 Comments

“FLORIDA REVERSAL” Ruscalleda vs Hsbc Bank

“FLORIDA REVERSAL” Ruscalleda vs Hsbc Bank

Here we have what appears HSBC foreclosing on a mortgage where another bank has it’s hands on it at another action!

We are seeing a pattern where multiple banks are trying to claim one single mortgage.

[ipaper docId=32868278 access_key=key-1oo0eyc9he2ml1x9nofv height=600 width=600 /]

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in case, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, HSBC, shapiro & fishman pa0 Comments

Judge ARTHUR SCHACK’s COLASSAL Steven J. BAUM “MiLL” SMACK DOWN!! MERS TWILIGHT ZONE!

Judge ARTHUR SCHACK’s COLASSAL Steven J. BAUM “MiLL” SMACK DOWN!! MERS TWILIGHT ZONE!

2010 NY Slip Op 50927(U)

HSBC BANK USA, N.A. AS TRUSTEE FOR NOMURA ASSET-BACKED CERTIFICATE SERIES

2006-AF1,, Plaintiff,
v.
LOVELY YEASMIN, ET. AL., Defendants.

34142/07

Supreme Court, Kings County.

Decided May 24, 2010.

Steven J Baum, PC, Amherst NY, Plaintiff — US Bank.

ARTHUR M. SCHACK, J.

Plaintiff’s renewed motion for an order of reference, for the premises located at 22 Jefferson Street, Brooklyn, New York (Block 3170, Lot 20, County of Kings), is denied with prejudice. The instant action is dismissed and the notice of pendency for the subject property is cancelled. Plaintiff HSBC BANK USA, N.A. AS TRUSTEE FOR NOMURA ASSET-BACKED CERTIFICATE SERIES 2006-AF1 (HSBC) failed to comply with my May 2, 2008 decision and order in the instant matter (19 Misc 3d 1127 [A]), which granted plaintiff HSBC leave:

to renew its application for an order of reference for the premises located at 22 Jefferson Street, Brooklyn, New York (Block 3170, Lot 20, County of Kings), upon presentation to the Court, within forty-five (45) days of this decision and order of:

(1) a valid assignment of the instant mortgage and note to plaintiff, HSBC . . .;

(2) an affirmation from Steven J. Baum, Esq., the principal of Steven J. Baum, P.C., explaining if both MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. [MERS], the assignor of the instant mortgage and note, and HSBC . . . the assignee of the instant mortgage and note, pursuant to 22 NYCRR § 1200.24, consented to simultaneous representation in the instant action, with “full disclosure of the implications of the simultaneous representation and the advantages and risks involved” explained to them;

(3) compliance with the statutory requirements of CPLR § 3215 (f), by an affidavit of facts executed by someone with authority to execute such an affidavit, and if the affidavit of facts is executed by a loan servicer, a copy of a valid power of attorney to the loan servicer, and the servicing agreement authorizing the affiant to act in the instant foreclosure action; and

(4) an affidavit from an officer of plaintiff HSBC . . . explaining why plaintiff HSBC . . . purchased a nonperforming loan from MERS, as nominee for CAMBRIDGE HOME CAPITAL, LLC [CAMBRIDGE].

[Emphasis added]

Plaintiff made the instant motion on January 6, 2009, 249 days subsequent to the May 2, 2008 decision and order. Thus, the instant motion is 204 days late. Plaintiff’s unavailing lateness explanation, in ¶ 16 of plaintiff’s counsel’s January 6, 2009 affirmation of regularity, states:

A previous application has been made for this or like relief but was subsequently denied without prejudice with leave to renew upon proper papers. By Decision and Order of this court dated the 2nd day of May 2008, plaintiff had 45 days to renew its application.

However on June 29, 2008 the Plaintiff permitted the mortgagor to enter into a foreclosure forbearance agreement. Said agreement was entered into with the hope that the Defendant would be able to keep her home. The agreement was not kept by the mortgagor and Plaintiff has since resumed the foreclosure action. The defects of the original application are addressed in the Affirmation attached hereto at Tab F [sic].

June 29, 2008 was 58 days subsequent to May 2, 2008. This was 13 days subsequent to the Court ordered deadline for plaintiff to make a renewed motion for an order of reference. While it’s laudatory for plaintiff HSBC to have granted defendant a forbearance agreement, plaintiff HSBC never notified the Court about this or sought Court approval of extending the 45-day deadline to make the instant motion. However, even if the instant motion was timely, the documents plaintiff’s counsel refers to at Tab F [exhibit F of motion] do not cure the defects the Court found with the original motion and articulated in the May 2, 2008 decision and order.

Background

Defendant LOVELY YEASMIN borrowed $624,800.00 from CAMBRIDGE on May 10, 2006. The note and mortgage were recorded by MERS, as nominee for CAMBRIDGE, for purposes of recording the mortgage, in the Office of the City Register, New York City Department of Finance, on May 23, 2006, at City Register File Number (CRFN) XXXXXXXXXXXXX. Then, MERS, as nominee for CAMBRIDGE, assigned the mortgage to plaintiff HSBC on September 10, 2007, with the assignment recorded in the Office of the City Register, on September 20, 2007, at CRFN XXXXXXXXXXXXX. The assignment was executed by “Nicole Gazzo, Esq., on behalf of MERS, by Corporate Resolution dated 7/19/07.” Neither a corporate resolution nor a power of attorney to Ms. Gazzo were recorded with the September 10, 2007 assignment. Therefore, the Court found the assignment invalid and plaintiff HSBC lacked standing to bring the instant foreclosure action. Ms. Gazzo, the assignor, according to the Office of Court Administration’s Attorney Registration, has as her business address, “Steven J. Baum, P.C., 220 Northpointe Pkwy Ste G, Buffalo, NY 14228-1894.” On September 10, 2008, the same day that Ms. Gazzo executed the invalid assignment for MERS, as nominee for CAMBRIDGE, plaintiff’s counsel, Steven J. Baum, P.C., commenced the instant action on behalf of purported assignee HSBC by filing the notice of pendency, summons and complaint in the instant action with the Kings County Clerk’s Office. The Court, in the May 2, 2008 decision and order, was concerned that the simultaneous representation by Steven J. Baum, P.C. of both MERS and HSBC was a conflict of interest in violation of 22 NYCRR § 1200.24, the Disciplinary Rule of the Code of Professional Responsibility entitled “Conflict of Interest; Simultaneous Representation,” then in effect. Further, plaintiff’s moving papers for an order of reference and related relief failed to present an “affidavit made by the party,” pursuant to CPLR § 3215 (f). The instant application contained an “affidavit of merit and amount due,” dated November 16, 2007, by Cathy Menchise, “Senior Vice President of WELLS FARGO BANK, N.A. D/B/A AMERICA’S SERVICING COMPANY, Attorney in Fact for HSBC BANK USA, N.A. AS TRUSTEE FOR NOMURA ASSET-BACKED CERTIFICATE SERIES 2006-AF1.” Ms. Menchise stated “[t]hat a true copy of the Power of Attorney is attached hereto.” Actually attached was a photocopy of a “Limited Power of Attorney,” dated July 19, 2004, from HSBC, appointing WELLS FARGO BANK, N.A. as its attorney-in-fact to perform various enumerated services, by executing documents “if such documents are required or permitted under the terms of the related servicing agreements . . . in connection with Wells Fargo Bank, N.A.[‘s] . . . responsibilities to service certain mortgage loans . . . held by HSBC . . . as Trustee of various trusts.” The “Limited Power of Attorney” failed to list any of these “certain mortgage loans.” The Court was unable to determine if plaintiff HSBC’s subject mortgage loan was covered by this “Limited Power of Attorney.” The original motion stated that defendant YEASMIN defaulted on her mortgage payments by failing to make her May 1, 2007 and subsequent monthly loan payments. Yet, on September 10, 2007, 133 days subsequent to defendant YEASMIN’S alleged May 1, 2007 payment default, plaintiff HSBC took the ssignment of the instant nonperforming loan from MERS, as nominee for CAMBRIDGE. Thus, the Court required, upon renewal of the motion for an order of reference, a satisfactory explanation of why HSBC purchased a nonperforming loan from MERS, as nominee for CAMBRIDGE.

Plaintiff HSBC needed “standing” to proceed in the instant action. The Court of Appeals (Saratoga County Chamber of Commerce, Inc. v Pataki, 100 NY2d 801, 912 [2003]), cert denied 540 US 1017 [2003]), held that “[s]tanding to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress.” In Carper v Nussbaum, 36 AD3d 176, 181 (2d Dept 2006), the Court held that “[s]tanding to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request.” If a plaintiff lacks standing to sue, the plaintiff may not proceed in the action. (Stark v Goldberg,297 AD2d 203 [1d Dept 2002]). “Since standing is jurisdictional and goes to a court’s authority to resolve litigation [the court] can raise this matter sua sponte.” (Axelrod v New York State Teachers’ Retirement System, 154 AD2d 827, 828 [3d Dept 1989]).

In the instant action, the September 10, 2007 assignment from MERS, as nominee for CAMBRIDGE, to HSBC was defective. Therefore, HSBC had no standing to bring this action. The recorded assignment by “Nicole Gazzo, Esq. on behalf of MERS, by Corporate Resolution dated 7/19/07,” had neither the corporate resolution nor a power of attorney attached. Real Property Law (RPL) § 254 (9) states: Power of attorney to assignee. The word “assign” or other words of assignment, when contained in an assignment of a mortgage and bond or mortgage and note, must be construed as having included in their meaning that the assignor does thereby make, constitute and appoint the assignee the true and lawful attorney, irrevocable, of the assignor, in the name of the assignor, or otherwise, but at the proper costs and charges of the assignee, to have, use and take all lawful ways and means for the recovery of the money and interest secured by the said mortgage and bond or mortgage and note, and in case of payment to discharge the same as fully as the assignor might or could do if the assignment were not made. [Emphasis added]

To have a proper assignment of a mortgage by an authorized agent, a power of attorney is necessary to demonstrate how the agent is vested with the authority to assign the mortgage. “No special form or language is necessary to effect an assignment as long as the language shows the intention of the owner of a right to transfer it [Emphasis added].” (Tawil v Finkelstein Bruckman Wohl Most & Rothman, 223 AD2d 52, 55 [1d Dept 1996]). (See Suraleb, Inc. v International Trade Club, Inc., 13 AD3d 612 [2d Dept 2004]). To foreclose on a mortgage, a party must have title to the mortgage. The instant assignment was a nullity. The Appellate Division, Second Department (Kluge v Fugazy, 145 AD2d 537, 538 [2d Dept 1988]), held that a “foreclosure of a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity.” Citing Kluge v Fugazy, the Court inKatz v East-Ville Realty Co. (249 AD2d 243 [1d Dept 1998]), held that “[p]laintiff’s attempt to foreclose upon a mortgage in which he had no legal or equitable interest was without foundation in law or fact.” Plaintiff HSBC, with the invalid assignment of the instant mortgage and note from MERS, lacked standing to foreclose on the instant mortgage. The Court, in Campaign v Barba (23 AD3d 327 [2d Dept 2005]), held that “[t]o establish a prima facie case in an action to foreclose a mortgage, the plaintiff must establish the existence of the mortgage and the mortgage note, ownership of the mortgage, and the defendant’s default in payment [Emphasis added].” (See Household Finance Realty Corp. of New York v Wynn, 19 AD3d 545 [2d Dept 2005]; Sears Mortgage Corp. v Yahhobi, 19 AD3d 402 [2d Dept 2005]; Ocwen Federal Bank FSB v Miller, 18 AD3d 527 [2d Dept 2005]; U.S. Bank Trust Nat. Ass’n v Butti, 16 AD3d 408 [2d Dept 2005]; First Union Mortgage Corp. v Fern, 298 AD2d 490 [2d Dept 2002]; Village Bank v Wild Oaks Holding, Inc., 196 AD2d 812 [2d Dept 1993]). Even if plaintiff HSBC can cure the assignment defect, plaintiff’s counsel has to address his conflict of interest in the representation of both assignor MERS, as nominee for CAMBRIDGE, and assignee HSBC. 22 NYCRR § 1200.24, of the Disciplinary Rules of the Code of Professional Responsibility, entitled “Conflict of Interest; Simultaneous Representation,” states in relevant part: (a) A lawyer shall decline proffered employment if the exercise of independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, or if it would be likely to involve the lawyer in representing differing interests, except to the extent permitted under subdivision (c) of this section. (b) A lawyer shall not continue multiple employment if the exercise of independent professional judgment in behalf of a client will be or is likely to be adversely affected by the lawyer’s representation of another client, or if it would be likely to involve the lawyer in representing differing interests, except to the extent permitted under subdivision (c) of this section. (c) in the situations covered by subdivisions (a) and (b) of this section, a lawyer may represent multiple clients if a disinterested lawyer would believe that the lawyer can competently represent the interest of each and if each consents to the representation after full disclosure of the implications of the simultaneous representation and the advantages and risks involved. [Emphasis added]

The Court, upon renewal of the instant motion for an order of reference wanted to know if both MERS and HSBC were aware of the simultaneous representation by plaintiff’s counsel, Steven J. Baum, P.C., and whether both MERS and HSBC consented. Upon plaintiff’s renewed motion for an order of reference, the Court required an affirmation by Steven J. Baum, Esq., the principal of Steven J. Baum, P.C., explaining if both MERS and HSBC consented to simultaneous representation in the instant action with “full disclosure of the implications of the simultaneous representation and the advantages and risks involved.” The Appellate Division, Fourth Department, the Department, in which both Ms. Gazzo and Mr. Baum are registered (In re Rogoff, 31 AD3d 111 [2006]), censured an attorney for, inter alia, violating 22 NYCRR § 1200.24, by representing both a buyer and sellers in the sale of a motel. The Court, at 112, found that the attorney “failed to make appropriate disclosures to either the sellers or the buyer concerning dual representation.” Further, the Rogoff Court, at 113, censured the attorney, after it considered the matters submitted by respondent in mitigation, including: that respondent undertook the dual representation at the insistence of the buyer, had no financial interest in the transaction and charged the sellers and the buyer one half of his usual fee. Additionally, we note that respondent cooperated with the Grievance Committee and has expressed remorse for his misconduct. Then, if counsel for plaintiff HSBC cures the assignment defect and explains his simultaneous representation, plaintiff HSBC needs to address the “affidavit of merit” issue. The May 2, 2008 decision and order required that plaintiff comply with CPLR § 3215 (f) by providing an “affidavit made by the party,” whether by an officer of HSBC, or someone with a valid power of attorney from HSBC, to execute foreclosure documents for plaintiff HSBC. If plaintiff HSBC presents a power of attorney and it refers to a servicing agreement, the Court needs to inspect the servicing agreement. (Finnegan v Sheahan, 269 AD2d 491 [2d Dept 2000];Hazim v Winter, 234 AD2d 422 [2d Dept 1996]; EMC Mortg. Corp. v Batista, 15 Misc 3d 1143 [A] [Sup Ct, Kings County 2007]; Deutsche Bank Nat. Trust Co. v Lewis, 4 Misc 3d 1201 [A] [Sup Ct, Suffolk County 2006]).

Last, the Court required an affidavit from an officer of HSBC, explaining why, in the middle of our national mortgage financial crisis, plaintiff HSBC purchased from MERS, as nominee for CAMBRIDGE, the subject nonperforming loan. It appears that HSBC violated its corporate fiduciary duty to its stockholders by purchasing the instant mortgage loan, which became nonperforming on May 1, 2007, 133 days prior to its assignment from MERS, as nominee for CAMBRIDGE, to HSBC, rather than keep the subject mortgage loan on CAMBRIDGE’s books.

Discussion

The instant renewed motion is dismissed for untimeliness. Plaintiff made its renewed motion for an order of reference 204 days late, in violation of the Court’s May 2, 2008 decision and order. Moreover, even if the instant motion was timely, the explanations offered by plaintiff’s counsel, in his affirmation in support of the instant motion and various documents attached to exhibit F of the instant motion, attempting to cure the four defects explained by the Court in the prior May 2, 2008 decision and order, are so incredible, outrageous, ludicrous and disingenuous that they should have been authored by the late Rod Serling, creator of the famous science-fiction televison series, The Twilight Zone. Plaintiff’s counsel, Steven J. Baum, P.C., appears to be operating in a parallel mortgage universe, unrelated to the real universe. Rod Serling’s opening narration, to episodes in the 1961-1962 season of The Twilight Zone (found at www.imdb.com/title/tt005250/quotes), could have been an introduction to the arguments presented in support of the instant motion by plaintiff’s counsel, Steven J. Baum, P.C. — “You are traveling through another dimension, a dimension not only of sight and sound but of mind. A journey into a wondrous land of imagination. Next stop, the Twilight Zone.” With respect to the first issue for the renewed motion for an order of reference, the validity of the September 10, 2007 assignment of the subject mortgage and note by MERS, as nominee for CAMBRIDGE, to plaintiff HSBC by “Nicole Gazzo, Esq., on behalf of MERS, by Corporate Resolution dated 7/19/07,” plaintiff’s counsel claims that the assignment is valid because Ms. Gazzo is an officer of MERS, not an agent of MERS. Putting aside Ms. Gazzo’s conflicted status as both assignor attorney and employee of assignee’s counsel, Steven J. Baum, P.C., how would the Court have known from the plain language of the September 10, 2007 assignment that the assignor, Ms. Gazzo, is an officer of MERS? She does not state in the assignment that she is an officer of MERS and the corporate resolution is not attached. Thus, counsel’s claim of a valid assignment takes the Court into “another dimension” with a “journey into a wondrous land of imagination,” the mortgage twilight zone. Next, plaintiff’s counsel attached to exhibit F the July 17, 2007 “Agreement for Signing Authority” between MERS, Wells Fargo Home Mortgage, a Division of Wells Fargo Bank NA (WELLS FARGO), a MERS “Member” and Steven J. Baum, P.C., as WELLS FARGO’s “Vendor.” The parties agreed, in ¶ 3, that “in order for Vendor [Baum] to perform its contractual duties to Member [WELLS FARGO], MERS, by corporate resolution, will grant employees of Vendor [Baum] the limited authority to act on behalf of MERS to perform certain duties. Such authority is set forth in the Resolution, which is made a part of this Agreement.” Also attached to exhibit F is the MERS corporate resolution, certified by William C. Hultman, Corporate Secretary of MERS, that MERS’ Board of Directors adopted this resolution, effective July 19, 2007, resolving:

that the attached list of candidates are employee(s) of Steven J. Baum, P.C. and are hereby appointed as assistant secretaries and vice presidents of Mortgage Electronic Registration Systems, Inc., and as such are authorized to: Execute any and all documents necessary to foreclose upon the property securing any mortgage loan registered on the MERS System that is shown to be registered to the Member . . . Take any and all actions and execute all documents necessary to protect the interest of the Member, the beneficial owner of such mortgage loan, or MERS in any bankruptcy proceedings . . . Assign the lien of any mortgage loan registered on the MERS System that is shown to be registered to Wells Fargo.

Then, the resolution certifies five Steven J. Baum, P.C. employees [all currently admitted to practice in New York and listing Steven J. Baum, P.C. as their employer in the Office of Court Administration Attorney Registry] as MERS officers. The five are Brian Kumiega, Nicole Gazzo, Ron Zackem, Elpiniki Bechakas, and Darleen Karaszewski. The language of the MERS corporate resolution flies in the face of documents recorded with the City Register of the City of New York. The filed recordings with the City Register show that the subject mortgage was owned first by MERS, as nominee for CAMBRIDGE, and then by HSBC as Trustee for a Nomura collateralized debt obligation. However, if the Court follows the MERS’corporate resolution and enters into a new dimension of the mind, the mortgage twilight zone, the real owner of the subject mortgage is WELLS FARGO, the MERS Member and loan servicer of the subject mortgage, because the corporate resolution states that the Member is “the beneficial owner of such mortgage loan.” The MERS mortgage twilight zone was created in 1993 by several large “participants in the real estate mortgage industry to track ownership interests in residential mortgages. Mortgage lenders and other entities, known as MERS members, subscribe to the MERS system and pay annual fees for the electronic processing and tracking of ownership and transfers of mortgages. Members contractually agree to appoint MERS to act as their common agent on all mortgages they register in the MERS system.” (MERSCORP, Inc. v Romaine, 8 NY3d 90, 96 [2006]). Next, with respect to Ms. Gazzo’s employer, Steven J. Baum, P.C, and its representation of MERS, through Ms. Gazzo, the Court continues to journey through the mortgage twilight zone. Also, attached to exhibit F of the instant motion is the August 11, 2008 affirmation of Steven J. Baum, Esq., affirmed “under the penalties of perjury.” Mr. Baum states, in ¶ 3, that “My firm does not represent HSBC . . . and MERS simultaneously in the instant action.” Then, apparently overlooking that the subject notice of pendency, summons, complaint and instant motion, which all clearly state that Steven J. Baum, P.C. is the attorney for plaintiff HSBC, Mr. Baum states, in ¶ 4 of his affirmation, that “My firm is the attorney of record for Wells Fargo Bank, N.A., d/b/a America’s Servicing Company, attorney in fact for HSBC Bank USA, N.A., as Trustee for Nomura Asset-Backed Certificate Series 2006-AF1. My firm does not represent . . . [MERS] as an attorney in this action.” In the mortgage world according to Steven J. Baum, Esq., there is a fine line between acting as an attorney for MERS and as a vendor for a MERS member. If Mr. Baum is not HSBC’s attorney, but the attorney for WELLS FARGO, why did he mislead the Court and defendants by stating on all the documents filed and served in the instant action that he is plaintiff’s attorney for HSBC? Further, in ¶ 6 of his affirmation, he states “Nowhere does the Resolution indicate that Ms. Gazzo, or my firm, or any attorney or employee of my firm, shall act as an attorney for MERS. As such I am unaware of any conflict of interest of Steven J. Baum, P.C. or any of its employees, in this action.” While Mr. Baum claims to be unaware of the inherent conflict of interest, the Court is aware of the conflict. ¶ 3 of the MERS “Agreement for Signing Authority,” cited above, states that “in order for Vendor [Baum] to perform its contractual duties to Member [WELLS FARGO], MERS, by corporate resolution, will grant employees of Vendor [Baum] the limited authority to act on behalf of MERS to perform certain duties. Such authority is set forth in the Resolution, which is made a part of this Agreement.” As the Court continues through the MERS mortgage twilight zone, attached to exhibit F is the June 30, 2009-affidavit of MERS’ Secretary, William C. Hultman. Mr. Hultman claims, in ¶ 3, that Steven J. Baum, P.C. is not acting in the instant action as attorney for MERS and, in ¶ 4, Ms. Gazzo in her capacity as an officer of MERS executed the September 10, 2007 subject assignment “to foreclose on a mortgage loan registered on the MERS System that is being serviced by Wells Fargo Bank, N.A.” Thus, Mr. Hultman perceives that mortgages registered on the MERS system exist in a parallel universe to those recorded with the City Register of the City of New York. While Mr. Hultman waives, in ¶ 9, any conflict that might exist by Steven J. Baum, P.C. in the instant action, neither he nor Mr. Baum address whether MERS, pursuant to 22 NYCRR § 1200.24, consented to simultaneous representation in the instant action, with “full disclosure of the implications of the simultaneous representation and the advantages and risks involved” explained to MERS. Then, attached to exhibit F, there is the June 11, 2008-affidavit of China Brown, Vice President Loan Documentation of WELLS FARGO. This document continues the Court’s trip into “a wondrous land of imagination.” Despite the affidavit’s caption stating that HSBC is the plaintiff, Mr. or Ms. Brown (the notary public’s jurat refers several times to China Brown as “he/she”), states, in ¶ 4, that “Steven J. Baum, P.C. represents us as an attorney of record in this action.” The Court infers that “us” is WELLS FARGO. Moving to the third issue that plaintiff was required to address in the instant motion, compliance with the statutory requirements of CPLR § 3215 (f) with an affidavit of facts executed by someone with authority to execute such an affidavit, plaintiff’s instant motion contains an affidavit of merit, attached as exhibit C, by Kim Miller, “Vice President of Wells Fargo Bank, N.A. as Attorney in Fact for HSBC,” executed on December 8, 2008, 220 days after my May 2, 2008 decision and order. The affidavit of merit is almost six months late. Again, plaintiff attached a photocopy of the July 19, 2004 “Limited Power of Attorney” from HSBC [exhibit D], which appointed WELLS FARGO as its attorney-in-fact to perform various enumerated services, by executing documents “if such documents are required or permitted under the terms of the related servicing agreements . . . in connection with Wells Fargo[‘s] . . . responsibilities to service certain mortgage loans . . . held by HSBC . . . as Trustee of various trusts.” Further, the “Limited Power of Attorney” fails to list any of these “certain mortgage loans.” Therefore, the Court is unable to determine if the subject mortgage loan is one of the mortgage loans that WELLS FARGO services for HSBC. The “Limited Power of attorney” gives WELLS FARGO the right to execute foreclosure documents “if such documents are required or permitted under the terms of the related servicing agreements.” Instead of presenting the Court with the “related servicing agreement” for review, plaintiff’s counsel submits copies of the cover page and redacted pages 102, 104 and 105 of the October 1, 2006 Pooling and Servicing Agreement between WELLS FARGO, as Master Servicer, HSBC, as Trustee, and other entities. This is in direct contravention of the Court’s May 2, 2008-directive to plaintiff HSBC that it provides the Court with the entire pooling and servicing agreement upon renewal of the instant motion. Thomas Westmoreland, Vice President Loan Documentation of HSBC, in ¶ 10 of his attached June 13, 2008-affidavit, also in exhibit F, claims that the snippets of the pooling and servicing agreement provided to the Court are “a copy of the non-proprietary portions of the Pooling and Servicing Agreement that was entered into when the pool of loans that contained the subject mortgage was purchased.” The Court cannot believe that there is any proprietary or trade secret information in a boilerplate pooling and servicing agreement. If plaintiff HSBC utilizes an affidavit of facts by a loan servicer, not an HSBC officer, to secure a judgment on default, pursuant to CPLR § 3215 (f), then the Court needs to examine the entire pooling and servicing agreement, whether proprietary or non-p

roprietary, to determine if the pooling and servicing agreement grants authority, pursuant to a power of attorney, to the affiant to execute the affidavit of facts.

Further, there is hope that Mr. Westmoreland, unlike Steven J. Baum, Esq., is not in another dimension. Mr. Westmoreland, in ¶ 1 of his affidavit, admits that HSBC is the plaintiff in this action. However, with respect to why plaintiff HSBC purchased the subject nonperforming loan, Mr. Westmoreland admits to a lack of due diligence by plaintiff HSBC. His admissions are straight from the mortgage twilight zone. He states in his affidavit, in ¶’s 4-7 and part of ¶ 10: 4. The secondary mortgage market is, essentially, the buying and selling of “pools” of mortgages. 5. A mortgage pools is the packaging of numerous mortgage loans together so that an investor may purchase a significant number of loans in one transaction. 6. An investigation of each and every loan included in a particular mortgage pool, however, is not conducted, nor is it feasible. 7. Rather, the fact that a particular mortgage pool may include loans that are already in default is an ordinary risk of participating in the secondary market . . . 10. . . . Indeed, the performance of the mortgage pool is the measure of success, not any one individual loan contained therein. [Emphasis added] The Court can only wonder if this journey through the mortgage twilight zone and the dissemination of this decision will result in Mr. Westmoreland’s affidavit used as evidence in future stockholder derivative actions against plaintiff HSBC. It can’t be comforting to investors to know that an officer of a financial behemoth such as plaintiff HSBC admits that “[a]n investigation of each and every loan included in a particular mortgage pool, however, is not conducted, nor is it feasible” and that “the fact that a particular mortgage pool may include loans that are already in default is an ordinary risk of participating in the secondary market.”

Cancelling of notice of pendency

The dismissal with prejudice of the instant foreclosure action requires the cancellation of the notice of pendency. CPLR § 6501 provides that the filing of a notice of pendency against a property is to give constructive notice to any purchaser of real property or encumbrancer against real property of an action that “would affect the title to, or the possession, use or enjoyment of real property, except in a summary proceeding brought to recover the possession of real property.” The Court of Appeals, in 5308 Realty Corp. v O & Y Equity Corp. (64 NY2d 313, 319 [1984]), commented that “[t]he purpose of the doctrine was to assure that a court retained its ability to effect justice by preserving its power over the property, regardless of whether a purchaser had any notice of the pending suit,” and, at 320, that “the statutory scheme permits a party to effectively retard the alienability of real property without any prior judicial review.” CPLR § 6514 (a) provides for the mandatory cancellation of a notice of pendency by: The Court, upon motion of any person aggrieved and upon such notice as it may require, shall direct any county clerk to cancel a notice of pendency, if service of a summons has not been completed within the time limited by section 6512; or if the action has beensettled, discontinued or abated; or if the time to appeal from a final judgment against the plaintiff has expired; or if enforcement of a final judgment against the plaintiff has not been stayed pursuant to section 551. [emphasis added] The plain meaning of the word “abated,” as used in CPLR § 6514 (a) is the ending of an action. “Abatement” is defined (Black’s Law Dictionary 3 [7th ed 1999]) as “the act of eliminating or nullifying.” “An action which has been abated is dead, and any further enforcement of the cause of action requires the bringing of a new action, provided that a cause of action remains (2A Carmody-Wait 2d § 11.1).” (Nastasi v Natassi, 26 AD3d 32, 40 [2d Dept 2005]). Further, Nastasi at 36, held that the “[c]ancellation of a notice of pendency can be granted in the exercise of the inherent power of the court where its filing fails to comply with CPLR § 6501 (see 5303 Realty Corp. v O & Y Equity Corp., supra at 320-321; Rose v Montt Assets, 250 AD2d 451, 451-452 [1d Dept 1998]; Siegel, NY Prac § 336 [4th ed]).” Thus, the dismissal of the instant complaint must result in the mandatory cancellation of plaintiff HSBC’s notice of pendency against the property “in the exercise of the inherent power of the court.”

Conclusion

Accordingly, it is ORDERED, that the renewed motion of plaintiff, HSBC BANK USA, N.A. AS TRUSTEE FOR NOMURA ASSET-BACKED CERTIFICATE SERIES 2006-AF1, for an order of reference, for the premises located at 22 Jefferson Street, Brooklyn, New York (Block 3170, Lot 20, County of Kings), is denied with prejudice; and it is further

ORDERED, that the instant action, Index Number 34142/07, is dismissed with prejudice; and it is further

ORDERED that the Notice of Pendency in this action, filed with the Kings County Clerk on September 10, 2007, by plaintiff, HSBC BANK USA, N.A. AS TRUSTEE FOR NOMURA ASSET-BACKED CERTIFICATE SERIES 2006-AF1, to foreclose a mortgage for real property located at 22 Jefferson Street, Brooklyn New York (Block 3170, Lot 20, County of Kings), is cancelled.

This constitutes the Decision and Order of the Court.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in case, cdo, concealment, conspiracy, corruption, dismissed, foreclosure, foreclosure fraud, foreclosure mills, forensic mortgage investigation audit, HSBC, investigation, judge arthur schack, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, note, reversed court decision, robo signer, robo signers, securitization, Supreme Court1 Comment

Deutsche Bank National Trust Co. YOU HAVE NO STANDING: YOUR DISMISSED! Deutsche v. Stevens NY SLIP OP 50909(U) 5/18/2010

Deutsche Bank National Trust Co. YOU HAVE NO STANDING: YOUR DISMISSED! Deutsche v. Stevens NY SLIP OP 50909(U) 5/18/2010

2010 NY Slip Op 50909(U)

DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE UNDER THE POOLING AND SERVICING AGREEMENT DATED AS OF FEBRUARY 1, 2007, GSAMP TRUST 2007-FM2, Plaintiff,
v.
WILHELMENA STEVENS, Defendant.

15862/08.

Supreme Court, Kings County.

Decided May 18, 2010.

Jeffrey A Kosterich & Assoc, Plaintiff Attorney.

Wilhelmena Stevens Pro se, Defendant Attorney.

YVONNE LEWIS, J.

The plaintiff, Deutsche Bank National Trust Company moves for an order granting it summary judgment, appointing a referee to compute, deleting from the caption the remaining defendants sued herein as “JOHN DOE ONE” through “JOHN DOE TEN” and awarding plaintiff costs and sanctions for frivolous conduct pursuant to 22 NYCRR § 130.

Plaintiff commenced this action on June 2, 2008 to foreclose a mortgage executed by defendant Wilhelmena Stevens on October 26, 2006 and encumbering the property at 517 Christopher Street in Brooklyn. The mortgage was given to secure a loan from Fremont Investment & Loan (Fremont) in the amount of $225,000.00. The plaintiff became the holder of the mortgage by assignment from MERS (as nominee of Fremont) dated June 11, 2008.

In response to the summons and complaint, Ms. Stevens sent the plaintiff’s counsel a handwritten letter, dated June 16, 2008, wherein she stated, in sum and substance, that her loan originated with Fremont, that The plaintiff’s name was not mentioned anywhere in the loan documents and that she desired proof as to The plaintiff’s status as the mortgagor.

When a court is deciding a motion for summary judgment, it can search the record and, even in the absence of a cross motion, may grant summary judgment to a non-moving party (CPLR 3212[b]; Dunham v Hilco Constr. Co., Inc., 89 NY2d 425 [1996]).

“Where the plaintiff is the assignee of the mortgage and the underlying note at the time the foreclosure action was commenced, the plaintiff has standing to maintain the action” (Federal Natl. Mtge. Assn. v Youkelsone, 303 AD2d 546, 546-547 [2003]; see Natl. Mtge. Consultants v Elizaitis, 23 AD3d 630, 631 [2005]). On the other hand, “foreclosure of a mortgage may not be brought by one who has no title to it” (Kluge v Fugazy, 145 AD2d 537, 538 [1988]) and an assignee of such a mortgage does not have standing to foreclose unless the assignment is complete at the time the action is commenced (see Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204 [2009]Lasalle Bank Nat. Assn. v Ahearn, 59 AD3d 911 [2009]).

Since it is clear from the face of the summons that this action was commenced on June 2, 2008, which is prior to the date of the mortgage assignment, and the record contains no proof demonstrating that there was a physical delivery of the mortgage prior to June 2, 2008, this court finds that The plaintiff has no standing to maintain this action.

Accordingly, The plaintiff’s motion is denied in all respects, and this action is dismissed without prejudice (see Citigroup Global Markets Realty Corp. v Randolph Bowling, 25 Misc 3d 1244[A], 2009 NY Slip Op 52567[U] [2009]).

The foregoing constitutes the decision and order of the court.

Posted in case, concealment, conspiracy, dismissed, foreclosure, foreclosure fraud, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, reversed court decision0 Comments

MERS DOUBLE ASSIGNMENT AMNESIA? Oh MS. BAILEY!! IN RE MORENO, Bankruptcy Court, D. Massachusetts, Eastern Div. 2010

MERS DOUBLE ASSIGNMENT AMNESIA? Oh MS. BAILEY!! IN RE MORENO, Bankruptcy Court, D. Massachusetts, Eastern Div. 2010

In re: SIMEON MORENO, Chapter 13, Debtor

Case No. 08-17715-FJB.

United States Bankruptcy Court, D. Massachusetts, Eastern Division.

May 24, 2010.

MEMORANDUM OF DECISION ON MOTION OF PROPERTY ASSET MANAGEMENT, INC. FOR RELIEF FROM THE AUTOMATIC STAY

FRANK J. BAILEY, Bankruptcy Judge

In the Chapter 13 case of debtor Simeon Moreno, Property Asset Management, Inc. (“PAM”), claiming to be the assignee of a mortgage originally given by the debtor to Mortgage Electronic Registration Systems, Inc. (“MERS”) as nominee for lender GE Money Bank, moved for relief from the automatic stay to foreclose the mortgage. Moreno initially opposed the motion but then withdrew his objection, whereupon the Court granted the relief requested. Months later, at Moreno’s request, the Court vacated the order granting relief from stay and scheduled an evidentiary hearing on the Motion for Relief from Stay for the limited purpose of reconsidering whether PAM had an interest in the mortgage it sought to foreclose and, to that extent, standing to seek relief from stay.[1] Having held the evidentiary hearing and received proposed findings and conclusions, the Court now enters the following findings of fact and conclusions of law.

Findings of Fact and Procedural History

On January 23, 2007, Moreno executed a promissory note in the principal amount of $492,000, payable to lender GE Money Bank. GE subsequently endorsed the note in blank, whereupon possession of the note was transferred through a series of holders and ultimately to Lehman Brothers Holdings, Inc. (“LBHI”), who held the note when PAM filed its Motion for Relief from Stay and continues to hold it now.[2] LBHI, through one of its employees and through LBHI’s attorney, who not coincidentally also is PAM’s attorney in the present matter, produced the original note at the evidentiary hearing. PAM is not now a holder of the note or an entity for whose benefit another has held the note.

To secure the promissory note, Moreno gave a mortgage on the real property at 5 Maple Street, West Roxbury, Massachusetts (the “Property”) to MERS as nominee for GE (the “Mortgage”). The Mortgage specifies that MERS “is a separate corporation that is acting solely as a nominee for [GE] and [GE’s] successors and assigns. MERS is the mortgagee under this security instrument.” The Mortgage further provides that Moreno does hereby mortgage, grant and convey to MERS (solely as nominee for [GE] and [GE’s] successors and assigns) and to the successors and assigns of MERS, with power of sale, the [Property]. . . . Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for [GE] and [GE’s] successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of [GE] including, but not limited to, releasing and canceling this Security Instrument.

The Mortgage was duly recorded.

MERS administers an electronic registry to track the transfer of ownership interest and servicing rights in mortgage loans. With respect to certain loans of which its members are the beneficial owners, MERS also serves as mortgagee of record and holds legal title to the mortgages in a nominee capacity. MERS remains the mortgagee of record when beneficial ownership interests or servicing rights are sold from one member of the MERS system to another. When the beneficial interest in a mortgage loan is transferred from one member of the MERS system to another, MERS tracks the transfer through its internal records. When rights are transferred from a member of the MERS system to a non-member, MERS executes and records an assignment from MERS to the non-member.

To facilitate the execution of the assignments from MERS, MERS designates “certifying officers,” who are typically employees of MERS member firms. MERS authorizes these employees, through formal corporate resolutions, to execute assignments on behalf of MERS. On or about January 6, 2005, MERS, through a document entitled Corporate Resolution and issued by its board of directors, authorized Denise Bailey, an employee of Litton Loan Servicing L.P. (“Litton”), a member of MERS, to execute such assignments on behalf of MERS. In the language of the authorizing document (the “MERS Authorization”),[3] Ms. Bailey was authorized to, among other things, “assign the lien of any mortgage loan naming MERS as the mortgagee when the Member [Litton] is also the current promissory note-holder, or if the mortgage loan is registered on the MERS System, is shown [sic] to be registered to the Member”[4]; and Ms. Bailey was further authorized to “take any such actions and execute such documents as may be necessary to fulfill the Member’s servicing obligations to the beneficial owner of such mortgage loan (including mortgage loans that are removed from the MERS System as a result of the transfer thereof to a non-member of MERS).” In each instance, Bailey’s authority to act is dependent on the existence of a specified relationship of Litton, the MERS member for whom she is employed, to the loan in question.

The Moreno loan was entered into the MERS tracking database in the ordinary course of business. Thereafter, MERS tracked the beneficial interest in the loan. The beneficial interest was transferred from G.E. Money Bank to WMC Mortgage Corporation; then, on September 19, 2007, from WMC Mortgage Corporation to Aurora Bank FSB (formerly known as Lehman Brothers Bank FSB), and then, on July 30, 2008, from Aurora Bank FSB to LBHI. Aurora Bank was at all relevant times a wholly-owned subsidiary of LBHI.

With respect to the Moreno Mortgage, MERS remained the mortgagee of record until, on or about April 30, 2008, MERS, acting through Denise Bailey, assigned the Mortgage to PAM. At the time, Aurora Bank FSB was the beneficial owner of the loan. In executing the MERS assignment to PAM, Ms. Bailey purported to be acting under her MERS Authorization.

The MERS Authorization limited Ms. Bailey’s authority to act for MERS to matters with respect to which Litton was involved in at least one of the ways specified in the above-quoted language from the MERS Authorization. There is evidence, and I find, that Aurora Bank FSB had requested that Litton transfer the loan from MERS to PAM in anticipation of foreclosure. However, PAM has adduced no evidence that Litton had any specified connection to this loan at the time it executed this assignment. There is no evidence that Litton was then (or at any time) the servicer of the loan for Aurora Bank or that Litton was registered as servicer of the loan in the MERS system.[5] (PAM does not contend that Litton was the holder of the promissory note or the owner of the beneficial interest in the loan.)

Scott Drosdick, a vice-president of LBHI and witness for PAM at the evidentiary hearing, testified that Aurora Bank’s instruction to Litton to transfer the mortgage to PAM was later “ratified by LBHI.” Drosdick did not explain what he meant by this, precisely how and when this ratification occurred. Absent such evidence and clarification, this testimony is too vague to have any definite meaning; accordingly I give it no weight.

By a master servicing agreement dated February 1, 1999, LBHI engaged Aurora Loan Services, Inc., now known as Aurora Loan Services LLC (“ALS”), as master servicer of certain loans, including eventually the present Moreno loan. In turn, ALS engaged Litton to service certain loans, including eventually this same loan.

After Bailey executed the MERS assignment to PAM, Bailey executed another assignment of the same mortgage from MERS to LBHI. This second assignment was never recorded; nor is there evidence that it was ever delivered by MERS to LBHI.

Moreno filed a petition for relief under Chapter 13 of the Bankruptcy Code on October 13, 2008, commencing the present bankruptcy case. On November 13, 2008, LBHI, acting through its servicer Litton Loan Servicing, LP, filed a proof of claim in this case; the proof of claim asserts a claim, secured by real estate, in the total amount of $530,168.04, the same secured claim as PAM now seeks relief from stay to enforce by foreclosure. On the proof of claim form itself, Litton actually identifies the creditor claimant as simply “Litton,” but on an explanatory document attached to the proof of claim form, Litton states that the claim is filed by “Litton Loan Servicing, LP, as Servicing Agent for Lehman Brothers Holdings Inc.” The proof of claim does not mention PAM or indicate in any way that the mortgage securing the claim is held by anyone other than LBHI.

On March 31, 2009, and at LBHI’s direction, PAM filed the present motion for relief from the automatic stay, seeking relief from the automatic stay to foreclose and to preserve its rights as to a potential deficiency. PAM intends and is obligated to remit the proceeds of the intended foreclosure sale to Aurora Loan Services LLC, as servicer for LBHI. Regarding ownership of the note and Mortgage, PAM stated in the motion only that it was the holder of a mortgage originally given by Moreno to MERS, that the mortgage secured a note given by Moreno to GE, and that MERS had assigned the mortgage to PAM. PAM did not indicate that LBHI was the current holder of the note or that it held the mortgage as nominee for the benefit of LBHI or of any other entity. The motion did not mention LBHI.

Moreno filed a response to the motion, in essence an objection, in which he expressly admitted PAM’s allegation that his prepetition arrearage was $39,442.49 and, by lack of denial, tacitly admitted that Moreno was some four months in arrears on his postpetition payments under the mortgage. By these allegations and admissions, PAM has established that Moreno is in default on his mortgage loan obligations; the Court rejects Moreno’s request for a finding that PAM has not established a default. The response made no issue of PAM’s standing to foreclose or to seek relief from stay and did not dispute PAM’s allegations regarding ownership of the note and Mortgage. In any event, before a hearing was held on the motion, Moreno, through counsel, withdrew his objection. Consequently, on April 28, 2009, and without a hearing or any review of apparent inconsistencies in the bankruptcy record concerning ownership of the mortgage and note, the court granted PAM relief from the automatic stay to foreclose and to preserve its rights as to a potential deficiency.

PAM had not yet foreclosed when, on December 2, 2009 and by new counsel, Moreno filed an adversary complaint against PAM and, with it, a motion for preliminary injunction. The complaint sought among other things (i) an order invalidating the mortgage on account of irregularities in its origination and (ii) a declaration that PAM was not the holder of the mortgage and note. In the motion for preliminary injunction, Moreno asked that the foreclosure be stayed, or that the automatic stay be reimposed, pending disposition of the adversary proceeding. On December 7, 2009, after a hearing on the motion for preliminary injunction, the Court found that the motion was, in part, essentially one to vacate the order granting relief from the automatic stay, vacated that order, and scheduled an evidentiary hearing on the motion for relief. The order specified that the sole issue at the evidentiary hearing would be PAM’s standing to seek relief from the automatic stay, all other issues under 11 U.S.C. § 362(d) being deemed established. After discovery, the evidentiary hearing was held on April 8, 2010, and, with the submission of proposed findings and conclusions, the matter was then taken under advisement.

Discussion

As the party seeking relief from stay to foreclose a mortgage on the debtor’s property, PAM bears the burden of proving that it has authority under applicable state law to foreclose the mortgage in question and, by virtue of that authority, standing to move for relief from the automatic stay to foreclose. PAM contends that it has such authority and standing because, although it does not hold the promissory note that the mortgage secures, it does have title to the mortgage itself; and it holds that title as nominee of and for the benefit of the note holder, LBHI, and is foreclosing for LBHI. In these circumstances, PAM contends, a mortgagee has a right under Massachusetts law to foreclose for the benefit of the note holder and therefore standing to move for relief from stay to foreclose. The Debtor objects, arguing (among other things) that Massachusetts law prohibits foreclosure by one who holds only the mortgage and not the note it secures. I need not address the merits of this and other objections because, even if the theory is a valid one, it requires proof that PAM is the present title holder of the mortgage, and PAM has not carried its burden in this regard.

To show that it presently holds the mortgage, PAM must show a valid assignment of the mortgage from MERS to itself. PAM contends that it holds the mortgage by assignment from MERS. Accordingly, PAM must show that the assignment, which was executed for MERS by Denise Bailey, was within the scope of Bailey’s limited authority to act for MERS.

Ms. Bailey’s authority to act for MERS is defined in the MERS Authorization in seven enumerated paragraphs. In each, Ms. Bailey’s authority to act is dependent on the existence of a specified relationship of Litton, the MERS member by whom she is employed, to the loan in question. PAM has submitted no evidence of the existence of any such relationship. The beneficial owner of the loan at the time of the assignment was Aurora Bank FSB, but there is no evidence that Litton was at the time the servicer of the loan for Aurora Bank FSB or was registered with MERS as such. The Court does not find that Aurora Bank FSB had not retained Litton as its servicer; there is simply no evidence on the issue. But the burden is on PAM to prove that it had, and PAM has not adduced evidence to that effect.

Accordingly, by a separate order, the Court will deny PAM’s motion for relief from the automatic stay without prejudice to renewal upon proper proof.

[1] All other issues were resolved upon entry of the original order granting relief from stay. No cause has been adduced to revisit any but the narrow issue of standing.

[2] Moreno contends that LBHI, which is in bankruptcy proceedings of its own, may have sold its interest in the note through a court-approved sale in its bankruptcy case. However, Moreno does not contend that possession of the note has passed from LBHI to the alleged purchaser (or any nominee of the purchaser), and therefore the alleged possible sale is irrelevant, as possession undisputedly remains in LBHI. In any event, Moreno attempted to establish the fact of the alleged sale by designating certain documents on the docket of the LBHI case and asking the Court to take judicial notice of these and then to find them on its own and to determine from them whether the promissory note in question was among the assets transferred. Having found the alleged sale to be irrelevant, the Court declined to take judicial notice of the bankruptcy documents. However, the proffer also failed for two additional reasons: first, that Moreno did not take a position as to whether a sale did occur, only that the Moreno note may have been among those transferred in the sale; and second, even if the court had taken judicial notice as requested, it remained Moreno’s obligation, which he has not fulfilled, to produce the documents in question and to explain in the first instance how one would conclude from them that the asset in question was among those transferred.

[3] MERS Corporate Resolution, attached to Bailey Affidavit as Exhibit 1.

[4] The grammatical difficulty in this second clause is native to the authorizing document.

[5] The original affidavit of Scott Drosdick includes the following two sentences:

By Master Servicing Agreement dated February 1, 1999, LBHI engaged Aurora Bank FSB (f/k/a Lehman Brothers Bank FSB), to master service, among other things, the Loan [the Moreno loan]. In turn, Aurora Bank FSB engaged Litton pursuant to a Flow Subservicing Agreement dated October 1, 2007, to service the loan.”

By an amendment to the affidavit and in testimony, Drosdick later amended his affidavit to correct this passage by striking Aurora Bank FSB from the first sentence and in its place inserting Aurora Loan Services LLC. Drosdick did not expressly change the second sentence, but that sentence, which begins with the critical words “in turn,” would be nonsensical unless the same substitution—Aurora Loan Services LLC for Aurora Bank FSB—were also made in the second sentence. Therefore, though the second sentence might perhaps be read in isolation as evidence that Litton was servicing the loan for Aurora Bank FSB at the time when Bailey executed the assignment, that sentence cannot credibly be so construed.

Posted in bankruptcy, case, concealment, conspiracy, corruption, foreclosure, foreclosure fraud, forensic loan audit, lehman brothers, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, note, reversed court decision, robo signer, robo signers0 Comments

Mortgage holders sue bank in CLASS ACTION:

Mortgage holders sue bank in CLASS ACTION:

From: b.daviesmd6605

BY STAFF,  CITY NEWS SERVICE OCLNN.com
Wednesday, May 19, 2010

SANTA ANA – Distressed homeowners packed an appellate court hearing Tuesday as their attorney tried to persuade justices a 2008 California law should force banks to work harder to ease the terms of their mortgages.

Attorney Moses S. Hall argued before the three appellate court justices in the Fourth District’s Santa Ana courtroom that banks holding the loans of his clients are not complying with a state law compelling them to try to negotiate modified mortgages.

Attorney Justin D. Balser, representing the RPI Quality Loan Service Corp., argued the homeowners cannot bring the class-action lawsuit to the courts and must rely on the California Attorney General’s Office to enforce the law.

The appellate court justices appeared skeptical of that claim and queried him why people could not sue to have their rights enforced in the courts.

Balser argued that letting residents try to enforce the law in the courts would lead to a “flood of lawsuits.”

“This is the only statute of its kind in the nation,” Balser said.

Attorney Melissa Coutts, who also represented RPI, said she was looking for the appellate justices to provide guidance on the law, which she argued was too vague.

“If there was a specific remedy (in the law), we wouldn’t be here,” Hall responded. “There’s nothing to help keep people in their homes.”

Terry and Mike Mabry filed their class-action lawsuit after they said their lenders refused to help them save their home in Corona.

The two had invested in 13 properties, which they rented, but when the economy soured their found themselves struggling to keep up with mortgage payments as renters left or demanded lower rent, they said. They ended up losing some of the properties and others were lost in short sales, they said.

However, when it looked like they wouldn’t be able to afford the adjustable rate mortgage on their own home they contacted their lender and were told they could not renegotiate the terms unless they missed at least two payments, Terry Mabry said. The couple had not missed any payments, she said.

“When we reached out for help we were hit with one wall after the other,” Terry Mabry said. “The bankers led us to believe they were working with us, but they weren’t. All we wanted was to be helped.”

Terry Mabry argues that all the state law was meant to do was give homeowners a chance to work with the lenders to save their houses and is not a guarantee.

“The law was meant to create a discussion, not to guarantee a solution,” Terry Mabry said. “But we never even got to the discussion point. That’s the most frustrating part.”

The Mabrys thought they were in serious negotiations until they returned home one day to find a notice to sell their home floating around the front lawn.

Carlos and Maria Hernandez of Lake Forest also thought they were going to save the home they bought 5 years ago after they were put in a home-loan modification program for eight months.

“The next thing we know we were given a notice that the house was already sold,” Carlos Hernandez said.

“We put all of our savings in that house,” Hernandez said. “We want to stay in it because it’s for the future of our kids.”

Carlos Hernandez had trouble making mortgage payments because he lost his job, but was able to keep up with the new payments, he said.

The Mabrys and Hernandezes remain in their homes as appellate court justices consider the lawsuit.

Read more: http://www.oclnn.com/orange-county/2010-05-19/business/mortgage-holders-sue-bank-in-class-action#ixzz0p84ayuW5

Posted in case, conspiracy, foreclosure, foreclosure fraud, foreclosure mills, forensic loan audit, Mortgage Foreclosure Fraud, mortgage modification0 Comments

REJECTED, REVERSED, LACK OF STANDING, ASSIGNMENT ERROR: Bank of New York v. GINDELE, 2010 Ohio 542 – Ohio: Court of Appeals, 1st Dist., Hamilton

REJECTED, REVERSED, LACK OF STANDING, ASSIGNMENT ERROR: Bank of New York v. GINDELE, 2010 Ohio 542 – Ohio: Court of Appeals, 1st Dist., Hamilton

2010 Ohio 542

Bank of New York, As Trustee For the Certificate Holders Cwalt, Inc., Alternative Loan Trust 2006-40T1, Mortgage Pass-Through Certificates, Series 2006-40T1, Plaintiff-Appellee,
v.
Jamie L. Gindele and Gary Gindele, Defendants-Appellants.

Appeal No. C-090251.

Court of Appeals of Ohio, First District, Hamilton County.

Date of Judgment Entry on Appeal: February 19, 2010.

James S. Wertheim, Rose Marie L. Fiore, and McGlinchey Stafford, PLLC, for Plaintiff-Appellee.

James J. Slattery, Jr., for Defendants-Appellants.

DECISION.

WILLIAM L. MALLORY, Judge.

{¶1} Defendants-appellants Jamie and Gary Gindele appeal the summary judgment entered for plaintiff-appellee Bank of New York on its foreclosure complaint. On appeal, the Gindeles argue that Bank of New York did not acquire its interest until after the foreclosure complaint had been filed, and that under our holding in Wells Fargo Bank, N.A. v. Byrd,[1] Bank of New York’s complaint should have been dismissed without prejudice. We agree.

{¶2} In Byrd, we held that “in a foreclosure action, a bank that was not the mortgagee when suit was filed cannot cure its lack of standing by subsequently obtaining an interest in the mortgage.”[2] At oral argument in this case, Bank of New York has repeated its assertion that it had an existing interest in the property at issue when it filed suit, but the record does not support this assertion.

{¶3} A thorough review of the record reveals that the sole indication of its interest as mortgagee is an after-acquired assignment; and the bank failed to produce any evidence in the trial court affirmatively establishing a preexisting interest. Bank of New York has also asserted both that it had acted as an agent, and that its predecessor in interest had later ratified its foreclosure complaint. But because at the time of filing neither agency nor ratification had been alleged or documented, we will not entertain this argument on appeal.

{¶4} We likewise reject Bank of New York’s argument that the real party in interest when the lawsuit was filed was later joined by the Gindeles. We are convinced that the later joinder of the real party in interest could not have cured the Bank of New York’s lack of standing when it filed its foreclosure complaint. This narrow reading of Civ.R. 17 comports with the intent of the rule. As other state and federal courts have noted, Civ.R. 17 generally allows ratification, joinder, and substitution of parties “to avoid forfeiture and injustice when an understandable mistake has been made in selecting the parties in whose name the action should be brought.”[3] “While a literal interpretation of * * * Rule 17(a) would make it applicable to every case in which an inappropriate plaintiff was named, the Advisory Committee’s Notes make it clear that this provision is intended to prevent forfeiture when determination of the proper party to sue is difficult or when an understandable mistake has been made. When determination of the correct party to bring the action was not difficult and when no excusable mistake was made, the last sentence of Rule 17(a) is inapplicable and the action should be dismissed.”[4]

{¶5} In this case, the record does not reflect any understandable mistake by Bank of New York; there is no indication that the identity of the proper party was difficult to ascertain; and there is no documentary proof that Bank of New York owned an enforceable interest when it filed its foreclosure complaint.

{¶6} In a foreclosure action, absent understandable mistake or circumstances where the identity of a party is difficult or impossible to ascertain, a bank that was not the mortgagee when suit was filed cannot cure its lack of standing by subsequently obtaining an interest in the mortgage. Bank of New York failed to establish an enforceable interest that existed at the time it filed suit, and it has not alleged or proved understandable mistake or that the identity of the proper party was not readily ascertainable. Bank of New York’s complaint in foreclosure should have been dismissed without prejudice under Byrd.

{¶7} The Gindeles’ assignment of error is sustained, the judgment favoring Bank of New York is reversed, and this cause is remanded for further proceedings in accordance with this decision.

Judgment reversed and cause remanded.

Cunningham, P.J., and Dinkelacker J., concur.

[1] 178 Ohio App.3d 285, 2008-Ohio-4603, 897 N.E.2d 722.

[2] Id. at ¶16.

[3] Ohio Central RR. Sys. v. Mason Law Firm Co., LPA, 182 Ohio App.3d 814, 2009-Ohio-3238, 915 N.E.2d 397, quoting Agri-Mark, Inc. v. Niro, Inc. (D.Mass.2000), 190 F.R.D. 293; see, also, Fed.R.Civ.P. 17 Advisory Committee Note.

[4] Id.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bank of new york, case, concealment, foreclosure, foreclosure fraud, reversed court decision0 Comments

CASE FILE California BANKRUPTCY In Re HUBBEL and PEREZ RELIEF FROM STAY DENIED TILA QUESTION N.D.Cal.-03506637146

CASE FILE California BANKRUPTCY In Re HUBBEL and PEREZ RELIEF FROM STAY DENIED TILA QUESTION N.D.Cal.-03506637146

TILA Rescission, BK Court questions validity of “Creditor’s” claims, BAP Affirms denial of relief from stay.

source:PhilUp

[scribd id=31186546 key=key-rp33ydl7iw1b0nq18ed mode=list]

non edited version: CASE FILE California BANKRUPTCY In Re HUBBEL and PEREZ RELIEF FROM STAY DENIED TILA QUESTION2

Posted in bankruptcy, case, tila0 Comments

CALIFORNIA Decisions Against MERS, NOT A CALIFORNIA CORPORATION, NOT A FOREIGN BANK MAKING MORTGAGES!

CALIFORNIA Decisions Against MERS, NOT A CALIFORNIA CORPORATION, NOT A FOREIGN BANK MAKING MORTGAGES!

From B.DaviesMd6605

MERS IS LOOSING BIG TIME. THEY ARE A SCAM PRODUCED TO CHEAT AMERICANS AND THOSE WHO WORK IN REAL ESTATE RECORDS FROM MILLIONS OF DOLLARS BY NOT DOING ASSIGNMENTS. THIS FACILITATED CORRUPTION AND PREDATORY LENDING BY BUILDERS, THEIR LENDERS, AND OTHERS., THIS NEEDS TO END, WE WILL MAKE SURE IT DOES. THOSE PREDATORY ATTORNEYS WHO KNOW THIS FRAUD WILL BE HELD ACCOUNTABLE. THE DOJ IS INVESTIGATING AND THE END WILL COME.

[ipaper docId=31736973 access_key=key-201b6nhrr2kyk67eb15y height=600 width=600 /]

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in case, foreclosure fraud, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC.4 Comments

VICTORY IN KEY WEST: JUDGE DISMISSES FORECLOSURE FILED BY FLORIDA DEFAULT LAW GROUP FOR FAILURE TO COMPLY WITH DISCOVERY AND COURT ORDERS

VICTORY IN KEY WEST: JUDGE DISMISSES FORECLOSURE FILED BY FLORIDA DEFAULT LAW GROUP FOR FAILURE TO COMPLY WITH DISCOVERY AND COURT ORDERS

DISMISSED!

May 20, 2010

Today, a Key West, Florida Circuit Court Judge dismissed a foreclosure action filed by Florida Default Law Group (FDLG), which was representing Bank of New York as the alleged “Trustee” of a Bear Stearns securitized mortgage loan trust. The borrower, who was represented by FDN’s Jeff Barnes, Esq., had served discovery on FDLG in late February, 2009. FDLG filed one of its form “open ended” Motions for Extension of Time to respond to the discovery (that being with no date certain for the response). FDLG failed to respond to Mr. Barnes’ good-faith request as to how much time FDLG needed to respond to the borrower’s discovery. The first “response” from FDLG came over 13 months later when FDLG objected to practically everything which Mr. Barnes asked for.

FDLG also failed to comply with the Court’s Pretrial Order, and had a history in the case of violating court orders and actually paid sanctions on prior Motion filed by Mr. Barnes. The Court dismissed the case and conditioned any re-filing on full compliance with Mr. Barnes’ discovery and the Court’s Orders.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bear stearns, case, dismissed, FDLG, florida default law group, foreclosure fraud1 Comment

"Fla. 3rd DCA REVERSED" Mortgage Electronic Registration Systems, Inc., Appellant, vs. Oscar Revoredo, et al., Appellees. 2007

"Fla. 3rd DCA REVERSED" Mortgage Electronic Registration Systems, Inc., Appellant, vs. Oscar Revoredo, et al., Appellees. 2007

Third District Court of Appeal
State of Florida, January Term, A.D. 2007

Opinion filed March 14, 2007.
Not final until disposition of timely filed motion for rehearing.
No. 3D05-2572
Lower Tribunal Nos. 05-11570; 05-2425; 05-12531; 05-15138
Mortgage Electronic Registration Systems, Inc.,
Appellant,
vs.
Oscar Revoredo, et al.,
Appellees.

An Appeal from the Circuit Court for Miami-Dade County, Jon I. Gordon, Judge.

Morgan, Lewis & Bockius and Robert M. Brochin, for appellant.

Jose A. Fuentes (Plantation), for appellees.

Greenberg Traurig and Elliot H. Scherker and Daniel M. Samson for Amicus Curiae Chase Home Finance LLC.

April Carrie Charney (Jacksonville) for Amicus Curiae Jacksonville Area Legal Aid, Inc.

Before FLETCHER and WELLS, JJ., and SCHWARTZ, Senior Judge.

SCHWARTZ, Senior Judge.

As in, and on the authority of, Mortgage Electronic Registration Systems, Inc. v. Azize, ___ So. 2d ____ (Fla. 2d DCA Case no. 2D05-4544, opinion filed, February 21, 2007)[32 Fla. L. Weekly D546], which involved a very similar procedural situation1 and the identical question of law, we reverse the dismissal below of a mortgage foreclosure action brought by Mortgage Electronic Registration Systems, Inc., entered on the asserted but erroneous conclusion that MERS, which acts essentially as a collection and litigation agent for the current owner of notes and mortgages, see Phyllis K. Slesinger & Daniel McLaughlin, Mortgage Electronic Registration System, 31 Idaho L. Rev. 805 (1995), could not establish its standing to proceed.

Although there is little to add to the Second District’s discussion of the issue, with which we entirely agree,2 we do note that this decision is in accord with

1 Unlike Azize, the trial court here went so far as to strike MERS’s pleadings as sham. Even if we were to reach an opposite conclusion on the merits, we do not think that the circumstances of this case, in which the court considered improper MERS’s perhaps disingenuous attempt to claim the status of a conventional “actual” mortgagee, would justify such a ruling. See Cromer v. Mullally, 861 So. 2d 523 (Fla. 3d DCA 2003).

2 Despite the existence of ambiguous language in the Second District opinion as to whether MERS was the “owner and holder of the note and the mortgage” in the clear majority of cases which have considered the question of MERS’s standing to maintain mortgage foreclosure proceedings. See, e.g., In re Huggins, ___ B.R. ____ (Bankr. D. Mass. Case no. 05-18826, opinion filed, December 14, 2006); In re Sina, No. A06-200, 2006 WL 2729544 (Minn. Ct. App. Sept. 26, 2006)(unpublished); Mortgage Elec. Registration Sys., Inc. v. Ventura, No. CV 054003168S, 2006 WL 1230265 (Conn. Super. Ct. April 20, 2006)(unpublished); Mortgage Elec. Registration Sys., Inc. v. Leslie, No. CV044001051, 2005 WL 1433922 (Conn. Super. Ct. May 25, 2005)(unpublished); but cf. LaSalle Bank Nat’l Ass’n v. Lamy, 824 N.Y.S.2d 769 (N.Y. Sup. Ct. 2006)(unreported table decision). To the extent that courts have encountered difficulties with the question, and have even ruled to the contrary of our conclusion, the problem arises from the difficulty of attempting to shoehorn a modern innovative instrument of commerce into nomenclature and legal categories which stem essentially from the medieval English land law. See MERSCORP, Inc. v. Romaine, 8 N.Y.3d 90, 101, 828

question, see Azize, ___ So. 2d at ____ [32 Fla. L. Weekly at D547], we apply the holding that the thing called MERS, see R.K. Arnold, Yes, There is Life on MERS, 11 Prob. & Prop. 32 (July/August 1997), does not lack standing to foreclose to the facts of this case, in which it is clear that, in accordance with the usual practice, MERS was only the holder (by delivery) of the note. See Dasma Invs., LLC v. The Realty Assocs. Fund III, L.P., 459 F. Supp. 2d 1294 (S.D. Fla. 2006). Although it was called the “mortgagee” in the instrument and acted on behalf of the most recent purchaser-assignee-lender, however, MERS was not – again, as usual – its “owner.” We simply don’t think that this makes any difference. See Fla. R. Civ. P. 1.210(a)(action may be prosecuted in name of authorized person without joining party for whose benefit action is brought); 37 Fla. Jur. 2d Mortgages § 519 (2007)(mortgage security follows the note).

N.Y.S.2d 266, 271, 861 N.E.2d 81, ____ (N.Y. 2006)(Kaye, C.J., dissenting in part)(“It is the incongruity between the needs of the modern electronic secondary mortgage market and our venerable real property laws regulating the market that frames the issue before us.”). Because, however, it is apparent – and we so hold – that no substantive rights, obligations or defenses are affected by the use of the MERS device, there is no reason why mere form should overcome the salutary substance of permitting the use of this commercially effective means of business. See 22 Fla. Jur. 2d Equity § 64 (2007).

Accordingly, the orders under review are reversed and the cause is remanded for further proceedings to foreclose the mortgage in question.

Reversed and remanded.

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Posted in case, MERS, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., reversed court decision0 Comments

THE REAL EMPLOYERS OF THE SIGNERS OF MORTGAGE ASSIGNMENTS TO TRUSTS: BY Lynn E. Szymoniak, Esq.

THE REAL EMPLOYERS OF THE SIGNERS OF MORTGAGE ASSIGNMENTS TO TRUSTS: BY Lynn E. Szymoniak, Esq.

THE REAL EMPLOYERS OF THE SIGNERS OF

MORTGAGE ASSIGNMENTS TO TRUSTS

BY Lynn E. Szymoniak, Esq., Editor, Fraud Digest (szymoniak@mac.com),

April 15, 2010

On May 11, 2010, Judge Arthur J. Schack, Supreme Court, Kings County, New York, entered an order denying a foreclosure action with prejudice. The case involved a mortgage-backed securitized trust, SG Mortgage Securities Asset Backed Certificates, Series 2006-FRE2. U.S. Bank, N.A. served as Trustee for the SG Trust. See U.S. Bank, N.A. v. Emmanuel, 2010 NY Slip Op 50819 (u), Supreme Court, Kings County, decided May 11, 2010. In this case, as in hundreds of thousands of other cases involving securitized trusts, the trust inexplicably did not produce mortgage assignments from the original lender to the depositor to the securities company to the trust.

This particular residential mortgage-backed securities trust in the Emmanuel case had a cut-off date of July 1, 2006. The entities involved in the creation and early agreements of this trust included Wells Fargo Bank, N.A., as servicer, U.S. Bank, N.A. as trustee, Bear Stearns Financial Products as the “swap provider” and SG Mortgage Securities, LLC. The Class A Certificates in the trust were given a rating of “AAA” by Dominion Bond Rating Services on July 13, 2006.

The designation “FRE” in the title of this particular trust indicates that the loans in the trust were made by Fremont Investment & Loan, a bank and subprime lender and subsidiary of Fremont General Corporation. The “SG” in the title of the trust indicates that the loans were “securitized” by Signature Securities Group Corporation, or an affiliate.

Fremont, a California-based corporation, filed for Chapter 11 bankruptcy protection on June 19, 2008, but continued in business as a debtor-in-possession. On March 31, 2008, Fremont General sold its mortgage servicing rights to Carrington Capital Management, a hedge fund focused on the subprime residential mortgage securities market. Carrington Capital operated Carrington Mortgage Services, a company that had already acquired the mortgage servicing business of New Century after that large sub-prime lender also filed for bankruptcy. Carrington Mortgage Services provides services a portfolio of nearly 90,000 loans with an outstanding principal balance of over $16 billion. Nearly 63% of the portfolio is comprised of adjustable rate mortgages. Mortgage servicing companies charge  substantially higher fees for servicing adjustable rate mortgages than fixed-rate mortgages. Those fees, often considered the most lucrative part of the subprime mortgage business, are paid by the securitized trusts that bought the loans from the original lenders (Fremont & New Century), after the loans had been combined into trusts by securities companies, like Financial Assets Securities Corporation, SG and Carrington Capital.

Carrington Capital in Greenwich, Connecticut, is headed by Bruce Rose, who left Salomon Brothers in 2003 to start Carrington. At Carrington, Rose packaged $23 billion in subprime mortgages. Many of those securities included loans originated by now-bankrupt New Century Financial. Carrington forged unique contracts that let it direct any foreclosure and liquidations of the underlying loans. Foreclosure management is also a very lucrative part of the subprime mortgage business. As with servicing adjustable rate mortgages, the fees for the foreclosure management are paid ultimately by the trust. There is little or no oversight of the fees charged for the foreclosure actions. The vast majority of foreclosure cases are uncontested, but the foreclosure management firms may nevertheless charge the trust several thousand dollars for each foreclosure of a property in the trust.

The securities companies and their affiliates also benefit from the bankruptcies of the original lenders. On May 12, 2010, Signature Group Holdings LLP, (“SG”) announced that it had been chosen to revive fallen subprime mortgage lender Freemont General, once the fifth-largest U.S. subprime mortgage lender. A decision to approve Signature’s reorganization plan for Fremont was made through a bench ruling issued by the U.S. Bankruptcy Court in Santa Ana, CA. The bid for Fremont lasted nearly two years, with several firms competing for the acquisition.

The purchase became much more lucrative for prospective purchasers in late March, 2010, when Fremont General announced that it would settle more than $89 million in tax obligations to the Internal Revenue Service without actually paying a majority of the back taxes. The U.S. Bankruptcy Court for the Central District of California, Santa Ana Division, approved a motion that allowed Fremont General to claim a net operating loss deduction for 2004 that is attributable for its 2006 tax obligations, according to a regulatory filing with the Securities and Exchange Commission.

In addition, Fremont General will deduct additional 2004 taxes, because of a temporary extension to the period when companies can claim the credit. The extension from two years to five went into effect when President Obama signed the Worker, Homeownership, and Business Assistance Act of 2009. While approved by the bankruptcy court judge, the agreement must also meet the approval of the Congressional Joint Committee on Taxation, but according to the SEC filing, both Fremont General and the IRS anticipate that it will be approved. In all, Fremont’s nearly $89.4 million tax assessment was reduced to about $2.8 million, including interest. In addition, as a result of the IRS agreement, a California Franchise Tax Board tax claim of $13.3 million was reduced to $550,000.

Another development that made the purchase especially favorable for SG was the announcement on May 10, 2010, that Federal Insurance Co. has agreed to pay Fremont General Corp. the full $10 million loss limits of an errors and omissions policy to cover subprime lending claims, dropping an 18-month battle over whether the claims were outside the scope of its bankers professional liability policies.

All of these favorable developments are part of a long history of success for Craig Noell, the head of Signature Group Holdings, the winning bidder for Fremont. Previously, as a member of the distressed investing area at Goldman Sachs, Noell founded and ran Goldman Sachs Specialty Lending, investing Goldman’s proprietary capital in “special situations opportunities.”

Bruce Rose’s Carrington Mortgage Services and Craig Noell’s Signature Group Holdings are part of the story of the attempted foreclosure on Arianna Emmanuel in Brooklyn, New York. U.S. Bank, N.A., as Trustee for SG Mortgage Securities Asset-Backed Certificates, Series 2006 FRE-2 attempted to foreclose on Arianna Emmanuel. The original mortgage had been made by Fremont Investment & Loan (the beneficiary of the $100 milion tax break and the $10 million insurance payout discussed above).

To successfully foreclose, the Trustee needed to produce proof that the Trust had acquired the loan from Fremont. At this point, the document custodian for the trust needed only to produce the mortgage assignment. The securities company that made the SG Trust, the mortgage servicing company that serviced the trust and U.S. Bank as Trustee had all made frequent sworn statements to the SEC and shareholders that these documents were safely stored in a fire-proof  vault.

Despite these frequent representations to the SEC, the assignment relied upon by U.S. Bank, the trustee, was one executed by Elpiniki Bechakas as assistant secretary and vice president of MERS, as nominee for Freemont. In foreclosure cases all over the U.S., assignments signed by Elpiniki Bechakas are never questioned. But on May 11, 2010, the judge examining the mortgage assignment was the Honorable Arthur J. Schack in Brooklyn, New York.

Bechakas signed as an officer of MERS, as nominee for Fremont, representing that the property had been acquired by the SG Trust in June, 2009. None of this was true. Judge Schack determined sua sponte that Bechakas was an associate in the law offices of Steven J. Baum, the firm representing the trustee and trust in the foreclosure. Judge Schack recognized that the Baum firm was thus working for both the GRANTOR and GRANTEE. Judge Schack wrote, “The Court is concerned that the concurrent representation by Steven J. Baum, P.C. of both assignor MERS, as nominee for FREMONT, and assignee plaintiff U.S. BANK is a conflict of interest, in violation of 22 NYCRR § 1200.0 (Rules of Professional Conduct, effective April 1, 2009) Rule 1.7, “Conflict of Interest: Current Clients.”

Judge Schack focused squarely on an issue that pro se homeowner litigants and foreclosure defense lawyers often attempt to raise – the authority of the individuals signing mortgage assignments that are used by trusts to foreclose. In tens of thousands of cases, law firm employees sign as MERS officers, without disclosing to the Court or to homeowners that they are actually employed by the law firm, not MERS, and that the firm is being paid and working on behalf of the Trust/Grantee while the firm employee is signing on behalf of the original lender/Grantor.

Did the SG Trust acquire the Emmanuel loan in 2006, the closing date of the trust, or in 2009, the date chosen by Belchakas and her employers? There are tremendous tax advantages being claimed by banks and mortgage companies based on their portfolio of nonperforming loans. There are also millions of dollars in insurance payouts being made ultimately because of non-performing loans. There are substantial fees being charged by mortgage servicing companies and mortgage default management companies – being paid by trusts and assessed on homeowners in default. The question of the date of the transfer is much more than an academic exercise.

As important as the question of WHEN, there is also the question of WHAT – what exactly did the trust acquire? What is the reason for the millions of assignments to trusts that flooded recorders’ offices nationwide starting in 2007 that were prepared by law firm employees like Bechakas or by employees of mortgage default companies or document preparation companies specializing is providing “replacement” mortgage documents. Why, in judicial foreclosure states, are there thousands of Complaints for Foreclosure filed with the allegations: “We Own the Note; we had the note; we lost the note.” Why do bankruptcy courts repeatedly see these same three allegations in Motions For Relief of Stay filed by securitized trusts attempting to foreclose? If the assignments and notes are missing, has the trust acquired anything (other than investors’ money, tax advantages and insurance payouts)? In many cases, the mortgage servicing company does eventually acquire the property – often by purchasing the property after foreclosure for ten dollars and selling it to the trust that had claimed ownership from the start.

Where are the missing mortgage assignments?

Posted in bear stearns, case, concealment, conspiracy, foreclosure fraud, foreclosure mills, forensic loan audit, fraud digest, goldman sachs, Lynn Szymoniak ESQ, MERS, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, robo signer, S.E.C.0 Comments

*REVERSED* Patricia A. Arango of the Law Offices of Marshall C. Watson, P.A., Fort Lauderdale, for Appellee-Aurora Loan Services, LLC., MERS "FINAL JUDGMENT REVERSED"!!

*REVERSED* Patricia A. Arango of the Law Offices of Marshall C. Watson, P.A., Fort Lauderdale, for Appellee-Aurora Loan Services, LLC., MERS "FINAL JUDGMENT REVERSED"!!

PIERRE ELLIOTT and LISA ELLIOTT, Appellants,
v.
AURORA LOAN SERVICES, LLC, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., as nominee and STONEBROOK ESTATES COMMUNITY ASSOCIATION, INC., Appellees.

No. 4D08-4362.

District Court of Appeal of Florida, Fourth District.

April 7, 2010.

Nathaniel E. Green of Nathaniel E. Green, P.A., Fort Lauderdale, for appellants.

Patricia A. Arango of the Law Offices of Marshall C. Watson, P.A., Fort Lauderdale, for Appellee-Aurora Loan Services, LLC.

TAYLOR, J.

Pierre and Lisa Elliott appeal a final judgment of foreclosure entered for Aurora Loan Services, LLC (Aurora). Because the trial court erred in denying the Elliotts’ verified motion to vacate default and, consequently, erred in entering the final judgment of foreclosure, we reverse.

On March 7, 2008, Aurora filed a complaint against the Elliotts to foreclose on their mortgage. The Elliotts received the summons and complaint on March 11, 2008. According to their verified motion, on March 11, 2008, Lisa Elliott contacted Aurora’s attorney, as directed in a letter attached to the complaint. The attorney instructed they call Aurora directly. The Elliotts did so and they then began a workout agreement. Lisa Elliott, in the verified motion, stated that they reached a proposed “Special Forbearance Agreement” with Aurora, dated June 27, 2008.

Due to the Elliotts’ failure to file any papers, Aurora moved for an entry of default against the Elliotts, which was entered on May 21, 2008. Further, on May 21, 2008, Aurora filed a Motion for Summary Judgment and Motion for Attorneys Fee’s and Memorandum (along with supporting affidavits).

Lisa Elliott stated in the verified motion that they discovered the entry of default for the first time on August 27, 2008. They filed their Verified Motion to Vacate Default with Proposed Answer and Affirmative Defenses on September 3, 2008.

At the hearing on September 24, 2008, the trial court denied the Elliotts’ verified motion to vacate default and granted Aurora’s motion for summary judgment. The court then entered the final judgment of foreclosure.[1]

The Elliotts argue the court erred by denying their verified motion to vacate default. “`An order denying a motion to vacate a default is reviewed under an abuse of discretion standard.'” Jeyanandarajan v. Freedman, 863 So. 2d 432, 433 (Fla. 4th DCA 2003) (quoting Lloyd’s Underwriter’s at London v. Ruby, Inc., 801 So. 2d 138, 139 (Fla. 4th DCA 2001)).

Florida Rule of Civil Procedure 1.500(a) (2008) provides that a clerk may enter a default against a party who fails to file any papers or pleadings. The court may set aside this default, however, under Rule 1.540(b). Fla. R. Civ. P. 1.500(d). “`Florida public policy favors the setting aside of defaults so that controversies may be decided on the merits.'” Jeyanandarajan, 863 So. 2d at 433 (quoting Lloyd’s Underwriter’s, 801 So. 2d at 139).

Rule 1.540(b) provides that if the terms are just, the court may relieve a party from a final order for mistake, inadvertence, surprise, or excusable neglect. To set aside the default pursuant to this rule, the court must determine: “(1) whether the defendant has demonstrated excusable neglect in failing to respond[;] (2) whether the defendant has demonstrated a meritorious defense; and (3) whether the defendant, subsequent to learning of the default, had demonstrated due diligence in seeking relief.” Halpern v. Houser, 949 So. 2d 1155, 1157 (Fla. 4th DCA 2007) (citing Schwartz v. Bus. Cards Tomorrow, Inc., 644 So. 2d 611, 611 (Fla. 4th DCA 1994)). Because the Elliotts demonstrated these elements, the court abused its discretion in denying their motion to vacate the default.

Excusable neglect is found “where inaction results from clerical or secretarial error, reasonable misunderstanding, a system gone awry or any other of the foibles to which human nature is heir.” Somero v. Hendry Gen. Hosp., 467 So. 2d 1103, 1106 (Fla. 4th DCA 1985). Although ignorance of the law and failure to understand consequences are not viable excuses, “a reasonable misunderstanding between attorneys regarding settlement negotiations does constitute excusable neglect sufficient to vacate a default.” Gables Club Marina, LLC v. Gables Condo. & Club Ass’n, Inc., 948 So. 2d 21, 23-24 (Fla. 3d DCA 2006). In Gables Club, the parties’ attorneys were engaged in settlement talks, and the court found it reasonable that the defendant believed it need not file an answer to the plaintiff’s complaint. Id. at 24.

“`Excusable neglect must be proven by sworn statements or affidavits.'” Geer v. Jacobsen, 880 So. 2d 717, 720 (Fla. 2d DCA 2004) (quoting DiSarrio v. Mills, 711 So. 2d 1355, 1356 (Fla. 2d DCA 1998)). Here, the Elliotts filed a verified motion containing properly sworn statements, as follows:

2. Defendants were served with summons and complaint on or about March 11, 2008.

3. On or about March 11, 2008 I, Lisa Elliott, contacted the attorney for AURORA at XXX-XXX-XXXX to discuss resolution of the complaint. I was instructed to contact the lender.

4. I contacted AURORA and began a workout agreement which lead to a proposed “Special Forbearance Agreement” dated June 27, 2008. See attached letter from Aurora Loan Services marked Exhibit “A”.

Aurora filed no refuting affidavits or other evidence to rebut the Elliotts’ claims that the parties were engaged in settlement negotiations.[2]

In Gibson Trust, Inc. v. Office of the Attorney General, 883 So. 2d 379, 382 (Fla. 4th DCA 2004), we vacated the default entered by the trial court, stating that “[b]ecause the defendants’ affidavits were uncontradicted and established that there was a `misunderstanding’ regarding whether an extension had been agreed upon, we conclude that excusable neglect was shown.” Similarly, here, the Elliotts’ verified motion indicates they began a workout agreement with Aurora, which led to a proposed “Special Forbearance Agreement.” Aurora failed to file any affidavits refuting this. Therefore, the Elliotts’ uncontradicted verified motion established excusable neglect.

A meritorious defense is established where a “proposed answer [is] attached to its motion to vacate, which answer sets out in detail a number of affirmative defenses.” Fortune Ins. Co. v. Sanchez, 490 So. 2d 249, 249 (Fla. 3d DCA 1986). We similarly held that where a party “immediately filed a proposed answer with affirmative defenses upon receipt of the plaintiffs’ motion to set the cause for trial on damages,” the meritorious-defense and due-diligence elements were met. Broward County v. Perdue, 432 So. 2d 742, 743 (Fla. 4th DCA 1983). The Elliotts’ verified motion to vacate default contained a proposed answer and affirmative defenses, which met the meritorious-defense element.

Finally, due diligence, which is a test of reasonableness, must be evaluated based on the facts of the particular case. Franklin v. Franklin, 573 So. 2d 401, 403 (Fla. 3d DCA 1991). Due diligence must be established with evidence, which includes a sworn affidavit. Cedar Mountain Estates, LLC v. Loan One, LLC, 4 So. 3d 15, 17 (Fla. 5th DCA 2009).

Here, although the default was entered on May 21, 2008, Lisa Elliott, in the verified motion, stated that they discovered the default for the first time on August 27, 2008. Again, this sworn allegation was not refuted by Aurora. Upon discovering the default, the Elliotts filed the verified motion to vacate the default, along with the proposed answer and affirmative defenses; it was dated August 28, 2008, but not rendered with the clerk of court until September 3, 2008. Only six days elapsed between the time the default was discovered and the time the motion to vacate was filed. It has been held that six-day, sevenday, and fifteen-day time lapses between the discovery of a default and the filing of a motion to vacate that default showed due diligence. See Allstate Floridian Ins. Co. v. Ronco Inventions, LLC, 890 So. 2d 300, 303 (Fla. 2d DCA 2004) (citing Goodwin v. Goodwin, 559 So. 2d 109 (Fla. 2d DCA 1990) (six-day delay)); Coquina Beach Club Condo. Ass’n v. Wagner, 813 So. 2d 1061 (Fla. 2d DCA 2002) (seven-day delay); Marshall Davis, Inc. v. Incapco, Inc., 558 So. 2d 206 (Fla. 2d DCA 1990) (fifteen-day delay)). Thus, the Elliotts exercised due diligence by filing the motion to vacate the default within six days of discovery of the default.

Because the Elliotts demonstrated the elements necessary to set aside the default, the trial court abused its discretion in denying their motion and subsequently entering the final judgment of foreclosure.

Accordingly, we reverse the final judgment of foreclosure and order denying the Elliotts’ motion to vacate the default.

Reversed and Remanded.

FARMER and MAY, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

[1] The foreclosure sale was set for November 26, 2008, but the parties agreed to stay the case and cancel the sale pending this appeal.

[2] Although the Gables Club court states that there must have been a “reasonable misunderstanding between attorneys,” this is met because the Elliotts were proceeding pro se.

Posted in case, foreclosure fraud, foreclosure mills, law offices of Marshall C. Watson pa, marshall watson, MERS, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., reversed court decision0 Comments

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