DEPOSITION OF NOTARY SHANNON SMITH OF THIS CASE

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MORE ON THIS CASE & FIRM BELOW

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Take Two: *New* Full Deposition of Law Office of David J. Stern’s Cheryl Samons

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Law Offices of David J. Stern, MERS | Assignment of Mortgage NOT EXECUTED but RECORDED

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Cheryl Samons | No Signature, No Notary, 1 Witness…No Problem!

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STERN’S CHERYL SAMONS| SHANNON SMITH Assignment Of Mortgage| NOTARY FRAUD!

In accordance with Title 17 U.S.C. Section 107, any copyrighted work in this message is distributed under fair use without profit or payment for non-profit research and educational purposes only. GRG [Ref. http://www.law.cornell.edu/uscode/17/107.shtml]

Hmm…now doesn’t this ring close to home?

From Paper to Electronic: Exploring the Fraud Risks Stemming From the Use of Technology to Automate the Australian Torrens System

By Rouhshi Low

Interesting points:

In all electronic systems, land title instruments are prepared electronically. This may make it easier for fraudulent persons with access to the system to perpetrate fraudulent alterations, because unlike a physical alteration, an electronic alteration on an electronic document will not leave any physical evidence of the alteration.

In the paper system, the practice of the Land Titles Office manually checking instruments lodged for registration before updating the register may be said to act as a safeguard against this type of fraud, since any alteration of an instrument might leave some form of a physical mark which might then be noticed by the officer and appropriate action may then be taken. Of course the effectiveness of this safeguard depends on the vigilance of the examining officer.

It is observed that these considerations do not arise in the paper registration system. They are unique to an electronic system because of the use of technology to replace the handwritten signature. In the paper system, handwritten signatures can be forged, but there was never a requirement or a need for individuals to keep their signatures safe. It is simply not possible. Replacing handwritten signatures with digital signatures introduces a new element into the process. And because of the potential for fraud whether because the fraudulent person has managed to obtain an existing digital certificate/PSP or circumvented the registration process to obtain one, the use of digital signatures therefore imposes ‘new’ obligations on users as well as the entity responsible for the registration process that do not exist in the paper system. The user is now responsible for keeping the digital certificate/PSP safe. The entity issuing the digital certificate/PSP is responsible for developing and maintaining effective registration processes to minimize the risk of a fraudulent person impersonating an authorised user. In fact, attacking the registration process in this manner is an additional avenue for the fraudulent person to perpetrate identity fraud so that it could be said that in an electronic system, there might be two opportunities for identity fraud: (i) identity fraud of the owner of the land and (ii) identity fraud of an authorized user of the system.

So to perpetrate fraud in an electronic registration system, the solicitor would not even need to forge the victim’s signature, or mislead the client into signing documents, or create false powers of attorney, or fraudulently alter instruments, as is the case in the paper registration system. All that the solicitor would have to do would be to prepare the instrument, digitally sign it and submit it to the Land Titles Office for registration. As noted above, being able to fraudulently use a digital certificate/PSP to digitally sign instruments for lodgement and registration is a new opportunity for fraud in an electronic system. As seen in the discussion here, solicitors will have the greatest opportunity to perpetrate this new type of fraud.

In all the electronic systems, clients no longer sign land title instruments for registration. Rather an authorisation form is signed instead. This change in practice may see a shift in forgery cases – instead of forging the signature of the victim on the land title instrument, fraudulent persons will now have to forge the signature of the victim on the authorisation form.

The concern in abolishing the paper certificate of title in an electronic registration system is that it will result in more identity fraud. When the New Zealand system was introduced, Thomas argued that ‘[T]he absence of an outstanding duplicate certificate of title (or anything in substitution of the same) is argued to be a key flaw in the new system, making it more vulnerable to fraud’.63

But will this be the case? It is argued that identity fraud might be perpetrated in an electronic registration system in the same way as in the paper registration system – when the fraudulent person is able to successfully impersonate the victim of the fraud to convince the authorised user responsible for the transaction that he or she has a right to deal with the land. The difference is that in the paper registration system, since the certificate of title is the document used to evidence a right to deal with the land, identity fraud uses the certificate of title. In an electronic registration system, the manner in which identity fraud may be perpetrated would depend on the system and how identity and right to deal might be established.

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Watch carefully at the latest “Master Plan” the banks have up their sleeves!

Florida Rules of Civil Procedure
RULE 1.540 RELIEF FROM JUDGMENT, DECREES, OR ORDERS

(a) Clerical Mistakes. Clerical mistakes in judgments, decrees, or other parts of the record and errors therein arising from oversight or omission may be corrected by the court at any time on its own initiative or on the motion of any party and after such notice, if any, as the court orders. During the pendency of an appeal such mistakes may be so corrected before the record on appeal is docketed in the appellate court, and thereafter while the appeal is pending may be so corrected with leave of the appellate court.

(b) Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence; Fraud; etc. On motion and upon such terms as are just, the court may relieve a party or a party’s legal representative from a final judgment, decree, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial or rehearing; (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) that the judgment or decree is void; or (5) that the judgment or decree has been satisfied, released, or discharged, or a prior judgment or decree upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment or decree should have prospective application. The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than 1 year after the judgment, decree, order, or proceeding as entered or taken. A motion under this subdivision does not affect the finality of a judgment or decree or suspend its operation. This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, decree, order, or proceeding or to set aside a judgment or decree for fraud upon the court.

Writs of coram nobis, coram vobis, audita querela, and bills of review and bills in the nature of a bill of review are abolished, and the procedure for obtaining any relief from a judgment or decree shall be by motion as prescribed in these rules or by an independent action.

Cases:

Snipes v. Chase Manhattan Mortgage Corp., 885 So. 2d 899, 900 (Fla. 5th DCA 2004)

Suntrust Bank, Inc. v. Hodges, 12 So.3d 1278 (Fla. 4th DCA July 22, 2009)

Challenger Investment Group, LC v. Jones, et. al., 34 Fla. L. Wkly. D1990 (Fla. 3d DCA Sept. 30 2009)

Wells Fargo Bank v. Conaway, No. 09-000145 (Fla. 6th Cir. Jan. 11, 2010)

MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. v. SAUNDERS

2010 ME 79

MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.,
v.
JON E. SAUNDERS et al.

Docket: Cum-09-640.

Supreme Judicial Court of Maine.

Argued: June 15, 2010.

Decided: August 12, 2010.

Michael K. Martin, Esq. Petruccelli, Martin & Haddow 50 Monument Square Portland, Maine 04101, Thomas A. Cox, Esq. (orally), PO Box 1314 Portland, Maine 04104, Attorneys for Belinda and Jon Saunders.

John A. Turcotte, Esq. (orally) Ainsworth, Thelin & Raftice, P.A. 7 Ocean Street PO Box 2412 South Portland, Maine 04116-2412, Attorneys for Mortgage Electronic Registration Systems, Inc.

Panel: SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, MEAD, GORMAN, and JABAR, JJ.

GORMAN, J.

[¶ 1] Jon E. Saunders and Belinda L. Saunders appeal from entry of a summary judgment in the District Court (Bridgton, Powers, J.) in favor of Deutsche Bank National Trust Company^{[ 1 ]} on Mortgage Electronic Registration Systems, Inc.’s (MERS) complaint for foreclosure and sale of the Saunderses’ home, pursuant to 14 M.R.S. §§ 6321-6325 (2009). The Saunderses contend that the court erred in granting summary judgment to the Bank because: (1) MERS did not have a stake in the proceedings and therefore had no standing to initiate the foreclosure action, (2) the substitution of parties could not be used to cure the jurisdictional defect of lack of standing and was therefore improper, and (3) there are genuine issues of material fact.

[¶ 2] We conclude that although MERS is not in fact a “mortgagee” within the meaning of our foreclosure statute, 14 M.R.S. §§ 6321-6325, and therefore had no standing to institute foreclosure proceedings, the real party in interest was the Bank and the court did not abuse its discretion by substituting the Bank for MERS. Because, however, the Bank was not entitled to summary judgment as a matter of law, we vacate the judgment and remand for further proceedings.

I. BACKGROUND

[¶ 3] In June of 2006, Jon Saunders executed and delivered a promissory note in the amount of $258,750 to Accredited Home Lenders, Inc. At the same time, both Jon and Belinda Saunders executed a mortgage document, securing that note, in favor of MERS, solely as “nominee for [Accredited] and [Accredited]’s successors and assigns.”

[¶ 4] When the Saunderses failed to make certain payments on the note, MERS filed a complaint for foreclosure in the District Court on February 4, 2009. The Saunderses filed an answer that denied the complaint’s allegations and asserted, among others, the affirmative defense of lack of standing. MERS moved for summary judgment on its complaint on May 27, 2009. In its accompanying statement of material facts, MERS asserted that it was the “holder” of both the mortgage and the note, but neither indicated whether real property secured the note nor identified the real property of the Saunderses. The Saunderses controverted MERS’s ownership of the note in their opposing statement of material facts, citing admissions that MERS had made pursuant to M.R. Civ. P. 36 that the Bank was in fact the holder of the note. The parties also disputed whether the Saunderses had received proper notice, whether the Saunderses were in default, and the amount owed on the loan. The court denied summary judgment on September 9, 2009, stating only: “Motion for summary judgment is denied as to [MERS], as there are issues of material fact preventing same and [MERS] is not entitled to judgment as a matter of law.”

[¶ 5] One day after the court denied that motion, the Bank moved pursuant to M.R. Civ. P. 25(c) to substitute itself for MERS in the foreclosure proceedings and also filed a reply to the Saunderses’ additional statement of material facts. Just over one week later, the Bank, which was not yet a party, filed a motion to reconsider or amend the order denying MERS’s motion for summary judgment, pursuant to M.R. Civ. P. 59(e), and a motion for further findings pursuant to M.R. Civ. P. 52(b).^{[ 2 ]} In support of its motions, the Bank filed: (1) an undated, two-page allonge indicating that Accredited transferred the note to the Bank, and (2) an assignment indicating that MERS had transferred any rights it had in the note or mortgage to the Bank. These transfers occurred on July 8, 2009, during the course of litigation. The Saunderses opposed both motions and filed a cross-motion for summary judgment arguing that they were entitled to judgment as a matter of law because neither MERS nor the Bank could show that MERS held the note at the time the suit commenced.

[¶ 6] On November 18, 2009, the court granted the Bank’s motion for substitution of parties, denied the Saunderses’ cross-motion for summary judgment, and granted summary judgment to the Bank. On December 16, 2009, the court entered a judgment of foreclosure and sale. The Saunderses filed a timely appeal pursuant to M.R. App. P. 2 and 14 M.R.S. § 1901 (2009).

II. DISCUSSION

A. MERS’s Standing

[¶ 7] The Saunderses contend that MERS had no stake in the outcome of the proceedings and therefore did not have standing to institute foreclosure. We review the threshold “issue of a party’s status for standing to sue de novo.” Lowry v. KTI Specialty Waste Servs., Inc., 2002 ME 58, ¶ 4, 794 A.2d 80, 81. At a minimum, “[s]tanding to sue means that the party, at the commencement of the litigation, has sufficient personal stake in the controversy to obtain judicial resolution of that controversy.” Halfway House Inc. v. City of Portland, 670 A.2d 1377, 1379 (Me. 1996) (citing Sierra Club v. Morton, 405 U.S. 727, 731 (1972)). Typically, a party’s personal stake in the litigation is evidenced by a particularized injury to the party’s property, pecuniary, or personal rights. See, e.g., Tomhegan Camp Owners Ass’n v. Murphy, 2000 ME 28, ¶ 6, 754 A.2d 334, 336; Stull v. First Am. Title Ins. Co., 2000 ME 21, ¶ 11, 745 A.2d 975, 979; cf. Fitzgerald v. Baxter State Park Auth., 385 A.2d 189, 196 (Me. 1978).

[¶ 8] The relationship of MERS to the transaction between the Saunderses and Accredited—mortgagors and the original mortgagee—is “not subject to an easy description” or classification. See Landmark Nat’l Bank v. Kesler, 216 P.3d 158, 164 (Kan. 2009). Then Chief Judge Kaye of the New York Court of Appeals described the role and purpose of MERS thusly:

[MERS’s] purpose is to streamline the mortgage process by eliminating the need to prepare and record paper assignments of mortgage, as had been done for hundreds of years. To accomplish this goal, MERS acts as nominee and as mortgagee of record for its members nationwide and appoints itself nominee, as mortgagee, for its members’ successors and assigns, thereby remaining nominal mortgagee of record no matter how many times loan servicing, or the [debt] itself, may be transferred.

MERSCORP, Inc. v. Romaine, 861 N.E.2d 81, 86 (N.Y. 2006) (Kaye, C.J., dissenting). In Maine, we follow the title theory of mortgages; a mortgage is a conditional conveyance vesting legal title to the property in the mortgagee, with the mortgagor retaining the equitable right of redemption and the right to possession. See Johnson v. McNeil, 2002 ME 99, ¶ 10, 800 A.2d 702, 704. To determine whether MERS has standing in the present case, we must first examine what rights MERS had in the Saunderses’ debt and the mortgage securing that debt.

[¶ 9] In the note that Jon Saunders executed in favor of Accredited, there is no mention of MERS, and the Bank admitted in its statement of material facts that MERS never had an interest in the note. MERS is, however, included in the Saunderses’ mortgage document. The mortgage first defines MERS as:

(C) “MERS” is Mortgage Electronic Registrations Systems, Inc. MERS is a separate corporation that is acting solely as a nominee for Lender and Lender’s successors and assigns. MERS is organized and existing under the Laws of Delaware, and has an address and telephone number of P.O. Box 2026, Flint, MI 48501-2026, tel. (888) 679-MERS. FOR PURPOSES OF RECORDING THIS MORTGAGE, MERS IS THE MORTGAGEE OF RECORD.

The remaining references to MERS in the mortgage document are in the subsequent sections conveying the mortgage and describing the property conveyed:

[Borrowers] mortgage, grant and convey the Property to MERS (solely as nominee for Lender and Lender’s successors and assigns), with mortgage covenants, subject to the terms of this Security Instrument, to have and to hold all of the Property to MERS (solely as nominee for Lender and Lender’s successors and assigns), and to its successors and assigns, forever.

. . . .

[Borrowers] understand and agree that MERS holds only legal title to the rights granted by [Borrowers] in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender’s successors and assigns) has the right:

(A) to exercise any or all of those rights, including, but not limited to, the right to foreclose and sell the Property; and

(B) to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument.

. . . .

[Borrowers] grant and mortgage to MERS (solely as nominee for Lender and Lender’s successors in interest) the Property described [below].

Each reference to MERS within the Saunderses’ mortgage describes MERS solely as the “nominee” to the lender.

[¶ 10] The only rights conveyed to MERS in either the Saunderses’ mortgage or the corresponding promissory note are bare legal title to the property for the sole purpose of recording the mortgage and the corresponding right to record the mortgage with the Registry of Deeds. This comports with the limited role of a nominee. A nominee is a “person designated to act in place of another, usu[ally] in a very limited way,” or a “party who holds bare legal title for the benefit of others or who receives and distributes funds for the benefit of others.” Black’s Law Dictionary 1149 (9th ed. 2009); see also E. Milling Co. v. Flanagan, 152 Me. 380, 382-83, 130 A.2d 925, 926 (1957) (demonstrating the limited role of a nominee in a contract case). The remaining, beneficial rights in the mortgage and note are vested solely in the lender Accredited and its successors and assigns. The mortgage clearly provides that, by signing the instrument, the Saunderses were “giving [the] Lender those rights that are stated in this Security Instrument and also those rights that Applicable Law gives to Lenders who hold mortgages on real property.” (Emphasis added.) Not one of the mortgage covenants in the document, including the Saunderses’ obligations to make timely payments on the note, pay property taxes, obtain property insurance, and maintain and protect the property, is made to MERS or in favor of MERS. Each promise and covenant gives rights to the lender and its successors and assigns, whereas MERS’s rights are limited solely to acting as a nominee. The Bank argues that MERS’s status as a “nominee” for the lender and as the “mortgagee of record” within the document qualifies it as a “mortgagee” within 14 M.R.S. § 6321. We disagree.

[¶ 11] As discussed above, MERS’s only right is the right to record the mortgage. Its designation as the “mortgagee of record” in the document does not change or expand that right; and having only that right, MERS does not qualify as a mortgagee pursuant to our foreclosure statute, 14 M.R.S. §§ 6321-6325. Section 6321 provides: “After breach of condition in a mortgage of first priority, the mortgagee or any person claiming under the mortgagee may proceed for the purpose of foreclosure by a civil action . . . .” (Emphasis added.) It is a “fundamental rule of statutory interpretation that words in a statute must be given their plain and ordinary meanings.” Joyce v. State, 2008 ME 108, ¶ 11, 951 A.2d 69, 72 (quotation marks omitted); accord Hanson v. S.D. Warren Co., 2010 ME 51, ¶ 12, ___ A.2d ___, ___. The plain meaning and common understanding of mortgagee is “[o]ne to whom property is mortgaged,” meaning a “mortgage creditor, or lender.” Black’s Law Dictionary 1104 (9th ed. 2009). In other words, a mortgagee is a party that is entitled to enforce the debt obligation that is secured by a mortgage.^{[ 3 ]}

[¶ 12] In order to enforce a debt obligation secured by a mortgage and note, a party must be in possession of the note.^{[ 4 ]} See Premier Capital, Inc. v. Doucette, 2002 ME 83, ¶ 7, 797 A.2d 32, 34 (describing a note associated with a mortgage as a negotiable instrument). Pursuant to Maine’s adoption of the Uniform Commercial Code, the only party entitled to enforce a negotiable instrument is:

(1) The holder of the instrument;

(2) A nonholder in possession of the instrument who has the rights of a holder; or

(3) A person not in possession of the instrument who is entitled to enforce the instrument pursuant to section 3-1309 or 3-1418, subsection (4). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.

11 M.R.S. § 3-1301 (2009). MERS does not qualify under any subsection of section 3-1301 because, on this record, there is no evidence it held the note, was in possession of the note, was purporting to enforce a lost, destroyed, or stolen instrument pursuant to 11 M.R.S. § 3-1309 (2009), or was purporting to enforce a dishonored instrument pursuant to 11 M.R.S. § 3-1418(4) (2009).

[¶ 13] Alternatively, the Bank asserts that because the mortgage document itself purported to give MERS the right to foreclose the mortgage, MERS was entitled to enforce the mortgage as the “mortgagee of record.” In other jurisdictions utilizing non-judicial foreclosure, MERS has been able to institute foreclosure proceedings based on its designation in the mortgage as the “mortgagee of record.” See, e.g., In re Huggins, 357 B.R. 180, 184 (Bankr. Mass. 2006) (concluding that MERS had standing to institute foreclosure proceedings pursuant to the statutory power of sale in Massachusetts); Jackson v. Mortg. Elec. Registration Sys. Inc., 770 N.W.2d 487, 500-01 (Minn. 2009) (approving MERS’s ability to commence foreclosure as the legal title holder of the mortgage in non-judicial foreclosure proceedings in Minnesota). These cases are inapposite because non-judicial foreclosures do not invoke the jurisdiction of the courts. Non-judicial foreclosures proceed wholly outside of the judiciary, typically utilizing local law enforcement to evict a mortgagor and gain possession of the mortgaged property.

[¶ 14] Here, MERS sought to foreclose on the Saunderses’ mortgage by filing a lawsuit, and, like any other plaintiff filing suit within our courts, must prove its standing to sue. Halfway House, 670 A.2d at 1379. Because standing to sue in Maine is prudential, rather than of constitutional dimension, we may “limit access to the courts to those best suited to assert a particular claim.” Lindemann v. Comm’n on Govtl. Ethics & Election Practices, 2008 ME 187, ¶ 8, 961 A.2d 538, 541-42 (quoting Roop v. City of Belfast, 2007 ME 32, ¶ 7, 915 A.2d 966, 968). In the present context, MERS, as the complaining party, must show that it has suffered an injury fairly traceable to an act of the mortgagor and that the injury is likely to be redressed by the judicial relief sought. See Collins v. State, 2000 ME 85, ¶ 6, 750 A.2d 1257, 1260 (citing Allen v. Wright, 468 U.S. 737, 751 (1984)); see also Stull, 2000 ME 21, ¶ 11, 745 A.2d at 979.

[¶ 15] Nothing in the trial court record demonstrates that MERS suffered any injury when the Saunderses failed to make payments on their mortgage. When questioned directly at oral argument about what injury MERS had suffered, the Bank responded that MERS did not need to prove injury to foreclose, only that it was a “mortgagee.” As we have already explained, MERS is not a mortgagee pursuant to 14 M.R.S. § 6321 because it has no enforceable right in the debt obligation securing the mortgage. In reality, the Bank was unable to suggest an injury MERS suffered because MERS did not suffer any injury when the Saunderses failed to make payments on their mortgage. See Mortg. Elec. Registration Sys., Inc. v. Neb. Dep’t of Banking & Fin., 704 N.W.2d 784, 788 (Neb. 2005) (stating that “MERS has no independent right to collect on any debt because MERS itself has not extended credit, and none of the mortgage debtors owe MERS any money”). The only right MERS has in the Saunderses’ mortgage and note is the right to record the mortgage. The bare right to record a mortgage is unaffected by a mortgagor’s default. The Bank admitted in its statement of material facts that Accredited had never assigned, transferred, or endorsed the note executed by Jon Saunders to MERS, and represented that Accredited had transferred the note directly to the Bank. Without possession of or any interest in the note, MERS lacked standing to institute foreclosure proceedings and could not invoke the jurisdiction of our trial courts.

B. Substitution of the Bank for MERS

[¶ 16] Having determined that MERS lacked standing, our next inquiry is whether the substitution of the Bank for MERS allowed the proceedings to continue. The Saunderses contend that the substitution of the Bank for MERS pursuant to M.R. Civ. P. 25(c) was improper because: (1) MERS did not have standing, and a substitution of parties cannot be used to cure a jurisdictional defect; and (2) the Bank, as a non-party, cannot file a motion to substitute parties. The Bank argues that the substitution of parties cured any impropriety in MERS commencing the foreclosure proceedings and that M.R. Civ. P. 17(a) prohibits dismissal until there has been a reasonable time to substitute the real party in interest.^{[ 5 ]} We review the grant or denial of a party’s motion to substitute parties pursuant to both M.R. Civ. P. 17(a) and 25(c) for an abuse of the court’s discretion. See M.R. Civ. P. 25(c) (“In case of any transfer of interest, the action may be continued by or against the original party . . . .” (emphasis added)); Tisdale v. Rawson, 2003 ME 68, ¶ 17, 822 A.2d 1136, 1141 (stating that Rule 17 authorizes “a court to substitute an incorrectly named plaintiff with the real party in interest”); Bates v. Dep’t of Behavioral & Developmental Servs., 2004 ME 154, ¶ 38, 863 A.2d 890, 901 (“Judgmental decisions . . . in areas where the court has choices will be reviewed for sustainable exercise of the court’s discretion.”).

[¶ 17] Both Rule 17 and 25 are concerned with ensuring that the real party in interest is conducting the litigation. Rule 17 is used to correct an action that was filed and then maintained by the wrong party, or was filed in the name of the wrong party. See Tisdale, 2003 ME 68, ¶¶ 15-19, 822 A.2d at 1140-42 (approving the court’s substitution of the road commissioner as the plaintiff for an unincorporated association that lacked capacity to sue); Royal Coachman Color Guard v. Marine Trading & Transp., Inc., 398 A.2d 382, 384 (Me. 1979); 1 Field, McKusick, & Wroth, Maine Civil Practice § 17.1 at 348 (2d ed. 1970) (“The purpose of Rule 17(a) is to provide that the plaintiff in an action shall be the person who by the substantive law possesses the right to be enforced.”). Rule 25, in comparison, is used to substitute a second party for the original party when, in the course of litigation or pendency of an appeal, the original party’s interest ends or is transferred, or the original party becomes incompetent. See Estate of Saliba v. Dunning, 682 A.2d 224, 225 n.1 (Me. 1996) (noting the substitution of an estate, pursuant to Rule 25, for the plaintiff after his death during the pendency of the suit); Gagne v. Cianbro Corp., 431 A.2d 1313, 1315 n.1 (Me. 1981) (noting the Rule 25 substitution of Cianbro for the original defendant on appeal after the originally named defendant transferred its interest to Cianbro).

[¶ 18] The present case involves both situations: a suit brought by the wrong party and a transfer of interest mid-litigation. Although the court granted the Bank’s Rule 25(c) motion for substitution, the proper procedural vehicle for substitution in this case was Rule 17(a). See Bouchard v. Frost, 2004 ME 9, ¶ 8, 840 A.2d 109, 111 (indicating we may affirm a judgment on a ground not relied upon by the trial court). Our cases allow the Rule 17(a) substitution of plaintiffs when the correct party is difficult to determine or an understandable mistake has been made and the substitution “does not alter in any way the factual allegations pertaining to events or participants involved in th[e] suit.” Tisdale, 2003 ME 68, ¶¶ 18-19, 822 A.2d at 1142.

[¶ 19] Accredited, as the party entitled to enforce the rights granted in the mortgage, was the real party in interest at the time MERS instituted foreclosure proceedings. Five months after MERS filed for foreclosure, the Bank became the real party in interest when Accredited transferred the Saunderses’ mortgage and note to it. As we had not previously spoken on MERS’s standing to foreclose a residential mortgage, the prosecution of the case in its name is an understandable mistake to which Rule 17(a) can be applied. See Tisdale, 2003 ME 68, ¶ 19, 822 A.2d at 1142. Further, the transfer of interest did not alter the cause of action or create any prejudice to the Saunderses. MERS sought to foreclose on the Saunderses’ real property after they failed to make payments on the note, and the Bank now seeks to foreclose on the same mortgage for their failure to make payments on the same note. See id. (pointing to the unchanged facts and circumstances after substitution). In defending MERS’s motion for summary judgment, the Saunderses themselves argued that the Bank was the proper party to bring this action.^{[ 6 ]} The substitution of parties in this case was proper, and the court did not abuse its discretion by granting the Bank’s motion for substitution. See Bates, 2004 ME 154, ¶ 38, 863 A.2d at 901.

C. Summary Judgment

[¶ 20] Finally, the Saunderses contend that the court erred in granting summary judgment because of the flawed procedure that led to the court’s entry of foreclosure and sale and because there are genuine issues of material fact and summary judgment was inappropriate.^{[ 7 ]} We agree with both contentions.

[¶ 21] First, the procedure leading up to the summary judgment was fatally flawed. Except in certain circumstances not applicable here, substitution relates back to the date of the original complaint, and the effect of the substitution of parties was to treat the Bank as if it had been the party that commenced the litigation. See M.R. Civ. P. 17(a); 1 Field, McKusick, & Wroth, Maine Civil Practice § 17.1 at 349. As previously noted, the Bank filed a motion to alter or amend the order denying MERS’s motion for summary judgment, which the court granted. Our rules do not allow a motion to alter or amend pursuant to M.R. Civ. P. 59(e)—or a motion for further findings of fact pursuant to M.R. Civ. P. 52(b)—in the absence of a final judgment. Because the denial of MERS’s motion for summary judgment in the present case was not a final judgment upon which the Bank could file its motion, the court erred by granting the motion. See Dep’t of Human Servs. v. Hart, 639 A.2d 107, 107 (Me. 1994) (stating the general rule that a “denial of a summary judgment motion does not result in a final judgment”). After substitution, the Bank should have filed its own independent motion for summary judgment with a statement of material facts and supporting affidavits. The Saunderses would then have had the opportunity to respond to the new motion and appropriately defend the foreclosure action against the real party in interest.

[¶ 22] Second, the summary judgment record does not support the Bank’s entitlement to judgment as a matter of law. See Chase Home Fin. LLC v. Higgins, 2009 ME 136, ¶ 10, 985 A.2d 508, 510. “We review the grant of a motion for summary judgment de novo,” and view “the evidence in the light most favorable to the party against whom judgment has been entered to decide whether the parties’ statements of material facts and the referenced record evidence reveal a genuine issue of material fact.” Wells Fargo Home Mortg., Inc. v. Spaulding, 2007 ME 116, ¶ 19, 930 A.2d 1025, 1029; see also Salem Capital Grp., LLC v. Litchfield, 2010 ME 49, ¶ 4, ___ A.2d ___, ___. We consider “only the portions of the record referred to, and the material facts set forth, in the [M.R. Civ. P. 56(h)] statements to determine whether . . . the successful party was entitled to a judgment as a matter of law.” Higgins, 2009 ME 136, ¶ 10, 985 A.2d at 510 (quotation marks omitted). Further, we have said that

[i]n the unique setting of summary judgment, strict adherence to the Rule’s requirements is necessary to ensure that the process is both predictable and just. Even when a hearing is held in a summary judgment motion, the only record that may be considered is the record created by the parties’ submissions.

Deutsche Bank Nat’l Trust Co. v. Raggiani, 2009 ME 120, ¶ 7, 985 A.2d 1, 3; see also Camden Nat’l Bank v. Peterson, 2008 ME 85, ¶ 21, 948 A.2d 1251, 1257 (stating that a mortgagee seeking foreclosure must strictly comply with all the steps required by the foreclosure statute).

[¶ 23] In Higgins, we outlined the minimum facts, “supported by evidence of a quality that could be admissible at trial [that] must be included in the mortgage holder’s statement[] of material facts.” 2009 ME 136, ¶ 11, 985 A.2d at 510-11. Pursuant to 14 M.R.S. § 6321, a party attempting to foreclose a mortgage must provide proof of the existence of a mortgage and its claim on the real estate and intelligibly describe the mortgaged premises, including the street address of the mortgaged property, if any, and the book and page number of the recorded mortgage. See also Higgins, 2009 ME 136, ¶ 11, 985 A.2d at 510-11 (explaining the remaining facts that must be submitted in the statements of material facts before foreclosure can proceed by summary judgment).

[¶ 24] The requirements of a street address and the book and page number were added to section 6321 after the commencement of foreclosure, but before the Bank filed its motion to alter or amend the judgment pursuant to M.R. Civ. P. 59(e). See P.L. 2009, ch. 402, § 17 (effective June 15, 2009). The prior version of the statute, in effect at the time MERS filed for foreclosure, only required the complaint to “describe the mortgaged premises intelligibly.” 14 M.R.S. § 6321 (2008). As we explained in Higgins, amendments to the foreclosure statute apply to all summary judgment motions filed after their effective date, regardless of the date foreclosure proceedings commenced. 2009 ME 136, ¶ 11 n.2, 985 A.2d at 510.

[¶ 25] In the present case, even if the Bank’s motion to alter or amend were deemed procedurally sound, it would fail under either standard because it failed to include any mention of the location of the mortgaged property in its statement of material facts. While the book and page number—but not the mortgaged property’s address—were included in the affidavit supporting one of MERS’s original statements of material fact, facts not set forth in the parties’ statements of material facts are not part of the summary judgment record and not properly before us on appeal. See M.R. Civ. P. 56(h)(1); Higgins, 2009 ME 136, ¶ 12, 985 A.2d at 511 n.4. Viewed in the light most favorable to the Saunderses, the summary judgment record does not establish what property owned by the Saunderses actually secures the mortgage and the court erred by granting summary judgment to the Bank. See 14 M.R.S. § 6321 (2009); Higgins, 2009 ME 136, ¶ 13, 985 A.2d at 512.

III. CONCLUSION

[¶ 26] In summary, we hold that MERS could not institute this foreclosure action and invoke the jurisdiction of our courts because it lacks an enforceable right in the debt that secures the mortgage. Although MERS lacked standing in the present case, the jurisdictional flaw was corrected when the court appropriately granted the Bank’s motion for substitution. The court erred, however, in granting the Bank’s “renewed” motion for summary judgment, both because the Rules of Civil Procedure do not allow for reconsideration or amendment in the absence of a final judgment, and because the motion, even as amended, did not support a conclusion that the Bank was entitled to judgment as a matter of law.

The entry is:

Judgment vacated. Remanded to the District Court for further proceedings consistent with this opinion.

This copy provided by Leagle, Inc.

VIA: ForeclosureHamlet & 4closureFraud

Dismissed With PREJUDICE!

Court finds convincing evidence that Wamu, Chase and Fishman & Shapiro committed fraud on this court!

JP MORGAN V. POCOPANNI DUVAL, COUNTY FLORIDA CASE NO.: 16-2008-CA-3989

[ipaper docId=35835555 access_key=key-31q8zmp0797mp741isl height=600 width=600 /]

Scratch this record!!!!! Need help go to MERS!!

Last week Fannie Mae asked treasury for $1.5 billiion in assistance …now comes Freddie with loss and seeks aid.

You know this is outrageous! They applaud MERS and write recommendations of how they are excited with MERS but yet MERS does nothing but conceal information from the borrowers and has secret agreements with the possible beneficiaries of these loans. MERS takes tax dollars away from our schools, children, counties etc.

While we are on this subject of counties and states, why are they crying bankruptcy and major cut backs…how about ending the MERS sham and go after the fees that you cry about with them? Who does this benefit? Not us but the Mortgage Banking Industry and Wall Street so called Lending Institutions.

All these problems came about the same time MERS came to existence…now tell me something? Isn’t this a tad of a coincidence these issues became at the same time sub-prime loans hit peak?

By now we all have witness the Foreclosure Barons you have as designated counsel and what do you plan to do about it? No matter what dots there are, both Fannie and Freddie have a connection?

Why was all this NEVER a REAL PROBLEM in the past with assignments…lets say prior to 1998? Hmmm…

We are no fools.

CONGRESS IS COVERING UP! SHAM…SCANDAL!

Janet Tavakoli of Tavakoli Structured Finance tells what she thinks of recent fines the SEC has imposed on Wall Street giants and where she would like future investigations take place.

By Michael Hudson | August 06, 2010

Fannie Mae executives bungled their stewardship of the federal government’s massive foreclosure-prevention campaign, creating a bureaucratic muddle characterized by “mismanagement and gross waste of public funds,” according to a whistleblower lawsuit by a former Fannie Mae executive and consultant.

Caroline Herron, a former Fannie vice president who returned to the mortgage giant in 2009 as a high-level consultant, claims that the homeowner-relief effort was marred by delays, missteps and executives preoccupied with their institution’s short-term financial interests.

“It appeared that Fannie Mae officers were focused on maximizing incentive payments available to Fannie Mae under various federal programs – even if this meant wasting taxpayer money and delaying the implementation of high-priority Treasury programs,” she claims in the lawsuit.

Herron alleges that Fannie Mae officials terminated her $200-an-hour consulting work in January because she raised questions about how it was administering the federal government’s push to help homeowners avoid foreclosure, known as the Home Affordable Modification Program, or HAMP.

Continue Reading…PublicIntegrity.org

By CARRICK MOLLENKAMP And SERENA NG

Federal probes of the collapsed mortgage-bond boom are shedding light on how Wall Street firms sometimes created securities and sold them to one set of investors, while advising others to bet against them.

One firm that was a major player in mortgage securities, Deutsche Bank AG, illustrates a pattern investigators are looking at. While creating and selling mortgage securities to some of its clients, the big German bank was not only advising other clients to bet the other way, but also sometimes doing so itself.

A Deutsche trader helped create an index that made it easy to bet against housing, and the bank itself then used the index to do just that.

After the collapse of mortgage securities led to a costly bailout of the firm that insured many such securities—American International Group Inc.—some of the federal cash that was sunk into AIG flowed to Deutsche, to cover bearish bets by its hedge-fund clients.

Deutsche’s actions are a vivid example of potential conflicts on Wall Street—the way big financial firms play both sides of the fence with investors. The issue became more extreme during the mortgage bubble and subsequent bust because of the size of the bets on Wall Street and subsequent losses on Main Street.

Regulators now are grappling with whether the business-as-usual conduct at financial firms merely looks bad in hindsight, or whether there were misrepresentations or other legal issues that need to be further investigated and guarded against in the future. “This is a gray area that we need more investigation into,” says Andrew Lo, a finance professor at Massachusetts Institute of Technology and a hedge-fund manager.

Deutsche says that helping investors bet either way—either for or against an asset—is part of doing business for a securities firm.

“Some clients sought more exposure to the housing market, while others sought less,” a spokesman for Deutsche said. “We served clients whatever their investment objective, but only after being satisfied that they had arrived at their view after thorough consideration.”

Continue reading …The Wall Street Journal

By David Ellis, staff writer July 29, 2010: 3:57 PM ET

NEW YORK (CNNMoney.com) — Citigroup said Thursday it would pay $73 million to settle charges by the Securities and Exchange Commission that the bank, as well as two of its executives, misled investors about the company’s exposure to the subprime mortgage market.

Wall Street’s top regulator said Citigroup repeatedly made misleading statements in investor presentations and in public filings about the actual size of assets it controlled that were backed by subprime mortgages.

Between July and mid-October 2007, the company maintained its holdings of what have now been dubbed “toxic assets”, stood at $13 billion, when in fact the number was closer to $50 billion, according to the SEC.

“The rules of financial disclosure are simple — if you choose to speak, speak in full and not in half-truths,” Robert Khuzami, director of the SEC’s Division of Enforcement, said in a statement.

Continue reading….CNN

KABOOM!!! This will send out shock waves.

After last week’s lawsuit filed on behalf of investors for possible securities fraud violations against DJSP Enterprises and another pending. I present to you another Class Action filed 7/26/2010 this time against the Law Offices of David J. Stern P.A., David J. Stern and MERSCORP, Inc..

Mr. Trent totally “gets it” and in this complaint he outlines and points out what we all have a hard time piecing together.

Here are excerpts of the complaint:

Beginning in or about 1999, the Defendant Firm joined with Defendant Merscorp, Inc., and other conspirators in the fraudulent scheme and RICO enterprise herein complained of. The employees of the Defendant Firm, including many licensed attorneys, have become skilled in using the artifice of MERS to sabotage the judicial process to the detriment of borrowers, and, over the past several years, have routinely relied upon MERS to do just that.

As Stern boasted to a room of investors at a recent promotional event, recent “direct source initiatives” by the larger lenders increasingly enable the Defendant Firm, DJSP, and other entities recently formed by Stern to take mortgages “from cradle to the grave.”

The whole purpose of MERS is to allow “servicers” to pretend as if they are someone else: the “owners” of the mortgage, or the real parties in interest. In fact they are not. The standard MERS/Stern complaint contains a lie about this very subject. While the title of the standard complaint makes reference to “lost loan documents,” in the body of the standard complaint, the Defendant Firm alleges that the plaintiff is the “owner and holder” of the note and mortgage. Both cannot be true unless the words used are given new meanings.

With the oversight of Defendant Merscorp and its unknown principals, the MERS artifice and enterprise evolved into an “ultra-fictitious” entity, which can also be understood as a “meta-corporation.” To perpetuate the scheme, MERS was and is used in a way so that to the average consumer, or even legal professional, can never determine who or what was or is ultimately receiving the benefits of any mortgage payments. The conspirators set about to confuse everyone as to who owned what. They created a truly effective smokescreen which has left the public and most of the judiciary operating “in the dark” through the present time.

The preparation, filing, and prosecution of the complaints to “Foreclose Mortgage and to Enforce Lost Loan Documents” were each predicate acts in the pattern of racketeering activity herein complained of, and were actions taken in furtherance of the MERS enterprise. The actions could not have been brought by the Defendant Firm without the MERS artifice and the ability to generate any necessary “assignment” which flowed from it.

By engaging in a pattern of racketeering activity, specifically “mail or wire fraud,” the Defendants subject to this Count participated in a criminal enterprise affecting interstate commerce. In addition to the altered postmarks described below, the mail fraud is the sending of the fraudulent assignments and pleadings to the clerks of court, judges, attorneys, and defendants in foreclosure cases. These Defendants intentionally participated in a scheme to defraud others, including the Plaintiff and the other Class Members, and utilized the U.S. Mail to do so.

These documents were executed by an “Assistant Secretary” or “Vice President,” apparently of MERS. In reality, the person executing the assignments had no knowledge whatsoever of the truth of their contents, and was simply an employee of the Defendant Firm.

Altering common hardware and/or software used by the Defendant Firm so that envelopes used to mail important legal documents, such as final judgments, to defendants contain no date of mailing in the postmark and intentionally delaying in sending the mail until defendants have lost their rights. (Exhibit F). These predicate acts constitute “mail fraud.”

Here is an explanation from David J. Stern of the continuing foreclosure rout:

One of my favorite questions from one of my believers, one of my investors on the first call-in, “What inning are we in? If this was a baseball game, what inning are we in?” And my response is, we’re only in the 2nd inning. We still have 3 innings of foreclosures left, and after the foreclosures, we have 3 innings of REO liquidation and as the REO liquidations pan out, we get into the re-fi and we get into the origination.
[ . . . ]
So yeah, we’re in the 2nd inning, but guess what – when we get to the 9th inning, it’s going to be a doubleheader and we got a second game coming. So when people say, “Oh my God, the economy is bad!” I’m like, “Oh my God, it’s great.” I mean, I hate to hear people are losing their homes and credit isn’t available and credit is such that they can’t re-fi, but if you are in our niche, it’s what we do and it’s what we want to see.

[ipaper docId=34959419 access_key=key-zii1wo2j5d6enxmd05b height=600 width=600 /]

Thank you attorney Kenneth Eric Trent P.A. from Ft. Lauderdale , FL !

Edit: From a viewer who makes it clear.

The GSE rule is: A borrower is denied equal access to government supported financial markets for seven years unless the borrower “waives” rights to challenge servicer claims? This is a direct attempt to deprive an individual of access to the legal system in order to redress grievances. This is an unconstitutional exercise of power by these quaisi-govt authorities controlled by government. If the govt cannot do that in its own name–how can it be proper to do it under a nameplate of an entity owned and controlled by the government. Aside from implications in respect of civil liberties, it is not even good financial policy for servicers and lenders to be automatically released of liability for predatory lending and collection activities. This rule can have only one effect and that is to encourage more abuses. This is tantamount to abolishing judicial oversight of lending abuses.

By: Carrie Bay 07/26/2010 DSNEWS

Goldman Sachs disclosed the list of companies to the Senate Finance Committee after a threat of subpoena from Sen. Chuck Grassley, R-Ia.

Asked the significance of the list, Grassley said, “I hope it’s as simple as taxpayers deserve to know what happened to their money.”

He added, “We thought originally we were bailing out AIG. Then later on … we learned that the money flowed through AIG to a few big banks, and now we know that the money went from these few big banks to dozens of financial institutions all around the world.”

Grassley said he was reserving judgment on the appropriateness of U.S. taxpayer money ending up overseas until he learns more about the 32 entities.

Goldman Sachs (GS) received $5.55 billion from the government in fall of 2008 as payment for then-worthless securities it held in AIG. Goldman had already hedged its risk that the securities would go bad. It had entered into agreements to spread the risk with the 32 entities named in Friday’s report.

Overall, Goldman Sachs received a $12.9 billion payout from the government’s bailout of AIG, which was at one time the world’s largest insurance company.

Goldman Sachs also revealed to the Senate Finance Committee that it would have received $2.3 billion if AIG had gone under. Other large financial institutions, such as Citibank, JPMorgan Chase and Morgan Stanley, sold Goldman Sachs protection in the case of AIG’s collapse. Those institutions did not have to pay Goldman Sachs after the government stepped in with tax money.

Shouldn’t Goldman Sachs be expected to collect from those institutions “before they collect the taxpayers’ dollars?” Grassley asked. “It’s a little bit like a farmer, if you got crop insurance, you shouldn’t be getting disaster aid.”

Goldman had not disclosed the names of the counterparties it paid in late 2008 until Friday, despite repeated requests from Elizabeth Warren, chairwoman of the Congressional Oversight Panel.

“I think we didn’t get the information because they consider it very embarrassing,” Grassley said, “and they ought to consider it very embarrassing.”

Continue reading…USA Today

Continue reading …POLITICO

By DinSFLA

What does Car Insurance and Credit Scores have in common? DISCRIMINATION!

If the government does not step up with a plan to make sure this does not continue, other crisis will begin to brew.

AMERICA will take the roads uninsured because they cannot afford the rates and they still need to get to work and shop for food!

Once our survival instincts kick in nothing else matters but food, clothes and shelter. Get my point?

So this being said and with the high rate of foreclosures out there. Who is going to have stellar credit for car insurance?

The same goes with Employers and Home Insurance!

Enough is Enough…We are suppose to be the Land of The Free not The Controlled and Abused!

THIS NEEDS TO BE EVALUATED IMMEDIATELY! THIS AFFECTS EVERYONE!

Arkansas and Oregon Lead the Way

The attorneys general of Arkansas and Oregon have both filed suits against a leading car insurance company for failing to disclose “adverse actions” taken against customers based on their credit. Five other states have joined them in seeking national clarification on the matter. But this begs the question, “Why would car insurance companies not tell you that your credit was impacting your rates?”

The answer is simple: Every car insurance company treats its customers’ credit differently. A study by Consumer Reports showed a nearly forty percent difference between how two car insurance companies viewed the same bad-credit customer. And that’s two car insurance companies that actually use credit reports – some don’t. In that case, you could save up to forty-seven percent on your car insurance rates!

Now, if this is only a piece of the American Pie that was created…Imagine this is a fraction of the 8 million waiting in the shadow foreclosure inventory looming in the highest states such as Arizona, California, Florida etc. Sellers need to price their homes aggressively or risk losing to these shadows.

In my opinion what these banks are doing now is committing fraud. Why? Because they are not disclosing this inventory and are making loans to unsuspecting buyers when they know for a FACT the values are still heading south!

A Housing Price Collapse in Queens New York Is Almost Certain

Posted by Keith Jurow 06/21/10 8:00 AM EST

Many commentators continue to describe the housing market in Queens as surprisingly resilient.  Hardly any has warned of a possible collapse.  Is this a disservice to both sellers and buyers?  Let’s take a close look and see.

Introduction to the Queens Housing Market

The borough of Queens in New York City has a population of roughly 2.2 million.  For nearly a century, it has been the bastion of the middle class in the Big Apple.  To put things in perspective, you could have bought a nice two-story attached brick house in south Queens for $16,000 in 1950.  Twenty-five years later, the cost of this same house was still under $30,000.

That began to change as inflation soared into double digits in the late 1970s. At the start of the new millennium, the median price of home sales in Queens had climbed to roughly $168,000 according to trulia.com.  During the bubble years of 2003-2006, home sales soared in Queens and throughout New York City (NYC).  Prices really skyrocketed.

Between 1996 and 2006, the annual number of first lien purchase mortgages originated in NYC more than doubled.  Citywide, a record of more than 50,000 owner-occupied homes were sold in 2006.  That year, the median size of a first lien purchase mortgage climbed to $384,000 according to the Furman Center for Real Estate and Urban Policy.  That nice brick house in south Queens actually sold in 2005 for a whopping $360,000.

As we saw in a previous REAL ESTATE CHANNEL article, the mortgage problem was exacerbated by the growing use of piggyback second liens to cover the 15-20% of the purchase price which the first mortgage did not.  In 2006, 28% of all New York City buyers took out piggyback seconds.  The Furman Center found that 43% of purchasers with incomes from $100,000 to $150,000 used a piggyback second mortgage.

According to trulia, home sales in Queens soared to a record of more than 20,000 in 2005.  The following year, the median price of all existing homes sold reached roughly $500,000.

While most bubble housing markets weakened in 2006 and then plunged in 2007-2008, the NYC market remained relatively robust because of the roaring stock market.  But quite unnoticed, sales volume began declining.  After the stock market peaked in the summer of 2007, the housing market began to unravel.

The Looming Default Disaster in Queens

According to RealtyTrac.com, as of June 16 there were 9,054 Queens residences which the banks had placed into default since the middle of February 2009.  Of these, 2,550 have been in default for more than a year.  None has been foreclosed by the banks yet.  Every one of these owners who is occupying the property has been living basically rent-free since stopping the mortgage payment.

More than 4,000 of these homes have outstanding mortgage debts in excess of $400,000.  Over 2,500 have mortgage liens of more than $500,000.

When RealtyTrac is unable to obtain the outstanding mortgage debt figure, it lists the amount for which the owner is in arrears.  Here is the real shocker.  More than 3,500 properties have arrearages listed, some as high as $100,000.  Roughly 280 of these owners owe anywhere from $25,000 to $100,000 in delinquent mortgage payments.  Those with arrearages of roughly $100,000 have not paid a cent to the lender in about three years.  Nice deal isn’t it?  Let’s not feel too sorry for these poor folks.

Without a doubt, the word has spread throughout Queens that the banks are not foreclosing on owners who stop making mortgage payments.  It is not very surprising, then, that an incredible 11.2% of all borrowers are now delinquent in their payments by 60 days or more.  This figure comes from Trans Union, the credit-reporting firm, which puts out a quarterly mortgage delinquency study based on a database of 27 million anonymous credit reports.  That is up from only 7.2% a year earlier.  The chart below shows how the serious delinquency rate has skyrocketed in the last three years.

How many delinquent owners are we talking about?  The borough has roughly 250,000 single-family homes and another 240,000 units in 2-4 family houses owned by investors.  Even assuming that roughly 1/3 of these owners are mortgage-free, at least 25,000 properties are seriously delinquent now.  We know from Core Logic’s monthly mortgage report that nearly all of these seriously delinquent borrowers will eventually default.  That is 25,000 additional properties which will eventually have to be foreclosed and repossessed by the banks.  Meanwhile, they are living rent-free and pocketing perhaps $3,000-$4,000 a month.  Investors who own 2-4 family houses may also still be collecting rent.  Sort of makes your blood boil, doesn’t it?

What About the Foreclosed Properties Owned by the Banks?

You would think that with so many delinquent and defaulted homeowners in Queens, there would now be a huge number of homes owned by the banks and sitting in their inventory (REOs).  Wrong.

RealtyTrac showed a total of only 1,389 homes in the banks’ repossessed inventory as of June 16.  Nearly 400 have an outstanding mortgage debt exceeding $500,000.  Dozens of these properties have been owned by the banks for more than two years.

You may have read something lately about how banks nationwide are unloading their REOs at a faster pace now.  Not in Queens.  RealtyTrac lists a total of 12 properties which the banks have up for sale now.  That’s right – 12.  Why only twelve?  Who knows?  The banks are clearly concerned that if they dump too many of their REOs onto a housing market that is now so thin, this will severely depress prices.  They would also have to write down the actual losses on their balance sheet.

What is the State of the Housing Market Now in Queens?

As of June 16, Trulia listed 12,777 properties for sale.  Of these, 672 were added in the previous seven days.  The average listing price was $438,000.

Are homes selling now in Queens?  Hardly.  According to MDA DataQuick, which culls its figures from county recorder offices, the median price of all new and existing single-family homes and condos sold in the first quarter of 2010 was $403,000.  That isn’t too bad a drop from the peak, right?  The problem is that only 1420 new and existing single-family properties were sold during this latest quarter.  That is an average of only 473 per month.  We are talking about a county with 2.2 million people and nearly 500,000 housing units (excluding multi-family apartment buildings).

By way of comparison, let’s take a look at Houston with a population slightly smaller than Queens.  According to the Houston Association of Realtors, sales of all existing homes in the Greater Houston area in May totaled 6,659.  Why such a difference?  Simple.  The median price of Houston sales was only $155,000.

With the market in Queens so awful, are home sellers cutting their asking price?  Not really.  Trulia reveals that only 24% of all homes listed there now have had the asking price dropped by the owner since being posted on the website.  That seems crazy, doesn’t it?  True, some of these owners are probably not what we might call serious sellers.  They don’t have to sell and are just “testing the waters.”

What about those who either really want to sell their home or are distressed and must sell the property?  Don’t they need to lower their asking price, perhaps substantially, in order to find a buyer?  Absolutely.

Even more important, what happens when the banks start putting into default the 25,000 seriously delinquent homeowners and foreclosing on the 9,000+ properties currently in default?  This overhang waits like a potential tsunami that we know will follow when an earthquake measuring 9.1 erupts underwater as it did in late 2004.

Sooner or later, the banks will have to begin whittling down the growing number of delinquent and defaulted properties in Queens.  What will happen to prices when the banks finally start to place this potentially enormous REO inventory on the market?  Simple.  Prices will plunge.  Make no mistake, it will be ugly.

Those who currently have their home on the market in Queens need to see what’s coming down the road.  If they refuse to lower their asking price substantially, they will almost certainly regret that decision in the next year or two.  Furthermore, prospective buyers probably ought to seriously consider whether waiting might be the more prudent course of action.

To a lesser extent, this analysis also applies to the three other outlying boroughs of Brooklyn, the Bronx, and Staten Island.

This is a case where Plaintiff’s counsel aggressively sought to have all foreclosures stopped due to no standing. He states Thats why the MERS system tried to be a nationwide system. “One Size Fits All Doesn’t Work”!

[ipaper docId=32239392 access_key=key-12qtvlfzvjvmbajyve1p height=600 width=600 /]

CAPITAL ONE, N.A., as successor by merger to Chevy Chase Bank, F.S.B., Petitioner,
v.
DOUGLAS R. FORBES, Respondent.

Case No. 2D09-4735.

District Court of Appeal of Florida, Second District.

Opinion filed May 12, 2010.

Carrie Ann Wozniak of Akerman Senterfitt, Orlando, for Petitioner.

Nicole E. Durkin of Deeb & Durkin, P.A., St. Petersburg, for Respondent.

LaROSE, Judge.

Capital One, N.A. (the Bank), seeks a writ of certiorari to quash a protective order that allows the disclosure of trade secrets to Mr. Forbes’s consultants and experts. The Bank also asks us to quash the trial court’s order because it did not sufficiently limit the scope of discovery.

Factual Background

The Bank filed a mortgage foreclosure action against Mr. Forbes. Allegedly, Mr. Forbes breached a construction loan agreement. Mr. Forbes filed a counterclaim alleging breach of contract, anticipatory breach of contract, and fraud in the inducement.

Mr. Forbes requested documents from the Bank. It produced responsive documents except, as relevant here, for requests ten and thirteen:

10. All technical and administrative manuals used in the internal communications system of Lender, or through which Lender policies, practices and procedures were communicated to its bank officers, employees, agents, partners, managers and/or “staff,” effective during the period from January 1, 2006 through the present, including, but not limited to, those manuals relating to construction or developer financing.

. . . .

13. All complaints, claims or protests brought in any judicial forum, arbitration proceeding, or industry dispute resolution forum by Lender clients or third parties against Lender alleging any breach of obligations, terms, conditions, or responsibilities by Lender in the conduct or exercise of its responsibilities and obligations with respect to or arising from engaging in the business of banking within the preceding five (5) years.

The Bank sought a protective order. The Bank argued that its construction-lending manual is a trade secret requiring adequate measures to protect against improper dissemination. There appears to be no dispute that the manual is a trade secret. The Bank also argued that other complaints, claims, or protests made against the Bank in any forum in the past five years were irrelevant, not reasonably calculated to lead to the discovery of any admissible evidence, and intended solely to harass the Bank. See generally, Allstate Ins. Co. v. Boecher, 733 So. 2d 993, 995 (Fla. 1999) (holding that there is an exception to the rule of complete discovery where it may be harassing or embarrassing).

After a hearing, the trial court denied the Bank’s motion as to request 13, except it narrowed the time frame to three years. The trial court concluded that the requested documents “may potentially lead to admissible evidence just based upon the counter plaintiff’s theory of policy written or potentially otherwise as to the lender’s motive to pull out of the project.”

As for the manual, the Bank’s counsel brought the document to the hearing for an in-camera inspection. The trial court did not inspect the materials but accepted counsel’s explanation that the materials contained the Bank’s lending guidelines and practices. The Bank’s counsel argued that the Bank would produce the materials if the trial court entered an adequate confidentiality order. The trial court denied the motion for a protective order, but agreed to grant a “confidentiality agreement between the parties for the protection of [the Bank].”

The trial court asked Mr. Forbes’s counsel to take the Bank’s proposed confidentiality order from the hearing and draft an order satisfactory to both sides. The Bank and Mr. Forbes could not agree. Each submitted a proposed order to the trial court. To center the dispute, we note that Mr. Forbes’s proposed order had no provision requiring consultants, experts, or their employees retained for the litigation to consent to the confidentiality provisions before viewing the manual.

The trial court adopted Mr. Forbes’s proposed order. The order provided that documents marked “Confidential” shall not be disclosed to any persons, except for counsel actively engaged in the litigation along with their employees and staff, parties and employees of the parties, persons with prior knowledge of the documents or the confidential information contained therein, and court officials involved in the litigation. Other relevant portions of the order provide as follows:

3. Plaintiff shall produce the documents requested, however the time period shall be limited to three (3) years prior to the date of this Order.

4. That the documents being produced pursuant to Paragraph 10 of Defendant’s First Request for Production of Documents which are marked “Confidential” by Plaintiff’s counsel shall not be disclosed to any persons, except that such documents may be disclosed or otherwise utilized as follows:

. . . .

(B) Such documents may also be disclosed to persons noticed for depositions during the course of such depositions, including retained outside consultants or experts and their employees retained for the purpose of assisting counsel in the litigation;

. . . .

5. Within 30 days after final conclusion of all aspects of this litigation, stamped confidential documents and all copies of same . . . shall be returned to the party or person which produced such documents or, at the option of the producer, destroyed.

(Emphasis added.)

Certiorari Jurisdiction

We may grant a petition for certiorari “only when the petitioner establishes (1) a departure from the essential requirements of the law, (2) resulting in material injury for the remainder of the trial (3) that cannot be corrected on postjudgment appeal. We examine prongs two and three first to determine our certiorari jurisdiction.” DeLoach v. Aird, 989 So. 2d 652, 654 (Fla. 2d DCA 2007)(citing Parkway Bank v. Ft. Myers Armature Works, Inc., 658 So. 2d 646, 648-49 (Fla. 2d DCA 1995)). If jurisdictional prongs two and three are not fulfilled, then we dismiss the petition rather than deny it. Id.

Analysis

Other Claims Specified in Request 13

The trial court denied, in part, and granted, in part, the Bank’s motion for a protective order as to these materials. The trial court narrowed Mr. Forbes’s request from five years to three years but did not otherwise narrow its breadth.

Discovery allows the parties to find potentially relevant evidence. The conduct of discovery is left to the trial court’s sound discretion. Fla. R. Civ. P. 1.280(b)(1); Friedman v. Heart Inst. of Port St. Lucie, Inc., 863 So. 2d 189, 193 (Fla. 2003). The order on review does not necessarily cause irreparable harm by allowing discovery of what the Bank claims to be irrelevant materials. See Am. Home Assurance Co. v. Vreeland, 973 So. 2d 668, 671 (Fla. 2d DCA 2008) (citingFirst Paradee, Ltd. v. Jones, 828 So. 2d 483, 485 (Fla. 2d DCA 2002)). Thus, certiorari jurisdiction is improper. We dismiss this portion of the Bank’s petition.

Manuals Specified in Request 10

The Bank argues that the trial court departed from the essential requirements of law by requiring the disclosure of trade secrets without providing adequate protective measures. An order requiring disclosure of trade secrets may cause irreparable injury that cannot be corrected on appeal; the disclosure lets the “cat out of the bag.” Id. Here, the trial court did not err. Its order sufficiently protects the Bank. See Allstate Ins. Co. v. Langston, 655 So. 2d 91, 94 (Fla. 1995). The Bank is concerned that experts or consultants retained by Mr. Forbes will misuse the materials. The order does not ignore that concern; only specified individuals may have access to the materials for the stated and limited purposes of assisting counsel in the litigation. No other use is contemplated. Further, the order requires that designated confidential materials, and any copies, be returned or destroyed at the end of the litigation.

Perhaps the order could have been clearer. However, we understand it to limit experts’ and consultants’ access to confidential information. Paragraph 4 of the order provides a blanket protection that documents may not be disclosed to “any person,” with enumerated exceptions. Importantly, the identification of people to whom access is granted is drawn narrowly to include only the parties and their employees, court employees, and outside consultants and experts. As for the consultants and experts, the order allows access only for a limited time and for the limited purposes of assisting counsel in this litigation.^[1] The trial court did not depart from the essential requirements of law by entering the order proposed by Mr. Forbes’s counsel. As to this issue, the petition for certiorari is denied.

Dismissed in part; denied in part.

SILBERMAN and CRENSHAW, JJ., Concur.

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

[1] We do not decide who would be liable should a consultant or expert violate the protective order. See, e.g.,Quinter v. Volkswagen of Am., 676 F.2d 969, 973 (3d Cir. 1982) (holding a nonparty liable for civil contempt where the nonparty had knowledge of the protective order.)