Mortgage Electronic Registration System

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"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.

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



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

Florida AG investigating LPS subsidiary: Jacksonville Business Journal

Florida AG investigating LPS subsidiary: Jacksonville Business Journal

Monday, May 17, 2010, 1:50pm EDT  |  Modified: Monday, May 17, 2010, 1:51pm

Jacksonville Business Journal – by Christian Conte Staff Writer

The Florida Attorney General’s Office has launched a civil investigation similar to one launched by a Florida U.S. Attorney’s Office against Fidelity National Financial Inc. and Lender Processing Services Inc., along with an LPS subsidiary, relating to possible forged documents in foreclosure cases.

According to the Attorney General’s website, DOCX LLC, based in Alpharetta, Ga., “seems to be creating and manufacturing ‘bogus assignments’ of mortgage in order that foreclosures may go through more quickly and efficiently. These documents appear to be forged, incorrectly and illegally executed, false and misleading. These documents are used in court cases as ‘real’ documents of assignment and presented to the court as so, when it actually appears that they are fabricated in order to meet the documentation to foreclosure according to law.”

The Attorney General’s Economic Crimes Division in Fort Lauderdale is handling the case.

Fidelity National Financial (NYSE: FNF), based in Jacksonville, provides title insurance, specialty insurance, claims management services and information services. Lender Processing Services (NYSE: LPS), also based in Jacksonville, provides mortgage processing services, settlement services, mortgage performance analytics and default solutions.

Fidelity National acquired DOCX, which processes and files lien releases and mortgage assignments for lenders, in 2005.

The U.S. Attorney’s office launched its investigation of DOCX in February.

LPS stated in its 2009 annual report that there was a “business process that caused an error in the notarization” of mortgage documents, some in the foreclosure proceedings in “various jurisdictions around the country,” according to a filing with the U.S. Securities and Exchange Commission.

While the company said it fixed the problem, the annual report stated it spurred an inquiry by the Clerk of Superior Court in Fulton County, Ga., and most recently, LPS was notified by the U.S. Attorney’s Office for the Middle District of Florida, based in Tampa, that it is also investigating the “business processes” of DOCX.

cconte@bizjournals.com | 265-2227
Read more: Florida AG investigating LPS subsidiary – Jacksonville Business Journal:

RELATED STORY: MISSION: VOID LENDER PROCESSING SERVICES “ASSIGNMENTS”

Posted in concealment, conspiracy, corruption, foreclosure fraud, forensic loan audit, Former Fidelity National Information Services, fraud digest, investigation, Law Offices Of David J. Stern P.A., law offices of Marshall C. Watson pa, Lender Processing Services Inc., LPS, Lynn Szymoniak ESQ, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, scam, stop foreclosure fraud0 Comments

Foreclosure Law Update Mills Warning about "The Good, The Bad and The Ugly"

Foreclosure Law Update Mills Warning about "The Good, The Bad and The Ugly"

“”Le Bon, la Brute et le Truand””

[scribd id=31444734 key=key-1ef5g1l94fwlgqb3b85l mode=list]

Posted in foreclosure, foreclosure fraud, foreclosure mills, MERS, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC.0 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

NEW YORK COURT DISMISSES FORECLOSURE WITH PREJUDICE ON ILLEGAL MERS ASSIGNMENT EXECUTED BY COUNSEL FOR THE FORECLOSING PLAINTIFF

NEW YORK COURT DISMISSES FORECLOSURE WITH PREJUDICE ON ILLEGAL MERS ASSIGNMENT EXECUTED BY COUNSEL FOR THE FORECLOSING PLAINTIFF

May 12, 2010

New York Judge Arthur Schack has dismissed another foreclosure case, this time with prejudice, as a result of an illegal MERS assignment which was “executed” by an attorney in the office of counsel for the Plaintiff, finding that the alleged assignment violated the New York Rules of Professional Conduct as doing so was a conflict of interest.

The Plaintiff was US Bank, N.A. as Trustee for the SG Mortgage Securities Asset-Backed Certificates, Series 2006-FRE2. The original lender was Fremont Investment and Loan. The purported Assigment of Mortgage (which did not assign the Note at all) was executed by a New York attorney as “Assistant Secretary and Vice-President” of MERS. As this attorney, signing for the assignor, listed her business address as that of the law office of the Plaintiff’s counsel (Steven J. Baum P.C.), which represented the assignee US Bank as Trustee, the Court found this to be a conflict of interest in violation of 22 NYCRR sec. 1200.0 Rules of Professional Conduct. Judge Schack dismissed US Bank’s foreclosure action with prejudice and cancelled the Lis Pendens.

We know that there are literally hundreds (if not thousands) of these MERS assignments which have been executed by paralegals and others from the law offices of the Plaintiff’s foreclosure counsel as alleged “Vice Presidents” or “Assistant Secretarys” of MERS. This decision indicates that all such purported assignments are most likely illegal, void, and that any foreclosure action based on such an assignment should be dismissed with prejudice.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

RELATED STORY: Lasalle Bank N.A. v Smith 2010: NY Slip Judge Schack does it again! Slams BAUM Law Firm!

[ipaper docId=31290340 access_key=key-1up82qp1gfs9guxgg2a5 height=600 width=600 /]

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



Posted in concealment, conspiracy, corruption, foreclosure fraud, judge arthur schack, MERS, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud0 Comments

What can be done about the backlog of foreclosure cases in Palm Beach County (and other Florida counties)? By Lynn Szymoniak ESQ.

What can be done about the backlog of foreclosure cases in Palm Beach County (and other Florida counties)? By Lynn Szymoniak ESQ.

BACKLOG

1. Dismiss all cases filed after February 11, 2010, that do not include a verification in accordance with the Florida Supreme Court revised  rules of Civil Procedure.   The big foreclosure firms, particularly the Law Offices of David Stern, are choosing to ignore the rule requiring verifications.  All parties should be required to follow the rules.

2. Dismiss all of the cases where the plaintiff is a bank “as Trustee” but the name of the trust is not disclosed.  Failure to identify the actual trust is one of the newest strategies of the foreclosure mills.  The trust, not the trustee, is the real party in interest.

3. Dismiss all of the cases where the complaint is not signed by the attorney whose name appears on the pleading.  The big foreclosure firms in thousands of cases have someone other than the attorney on the pleading sign “for” the attorney who drafted the pleading.  This is done so that both attorneys can deny responsibility.

4. Dismiss all of the cases that include these boilerplate allegations by the bank or trust: “We own the note. We had possession of the note. We lost the note.”  These allegations appear in over 20,000 cases.  By now it is apparent this is a ruse – no one actually lost 20,000 mortgages and notes. Frauds upon the courts should not be tolerated.

5. Dismiss all of the cases that include a Mortgage Assignment that was signed by an employee of the foreclosure mill law firm signing as a MERS officer.  This would include thousands of cases where Cheryl Samons and Beth Cerni, administrative employees for David Stern, signed as a representative of the GRANTOR when the firm was actually working for the GRANTEE.  This would also include cases where Patricia Arango and Caryn Graham, two associates working for The Law Offices of Marshall C. Watson, signed as MERS officers.  This would also include all cases where Christopher Bossman, an administrative employee in the Daniel Consuegra fiirm, signed as a MERS officer.  This would also include all cases where officers of Florida Default Law Group signed as MERS officers. In all of these cases, no disclosure was made to the Court or to the homeowner/defendants that the Assignments were prepared by law firm employees with no knowledge of the truth of the matters asserted therein.

6. Dismiss all of the cases where a Mortgage Assignment was signed by Jeffrey Stephan of GMAC (notarized in Montgomery County, PA).  Stephan has already admitted in sworn testimony that a notary was NOT present when he signed mortgage assignments, even though the Assignments contained a contrary statement.

7. Dismiss all of the cases where the documents were prepared by employees of Lender Processing Services since this company has already admitted in its Annual Statement with the SEC that investigations, internal and otherwise, revealed problems with the documents that were so significant that the company implemented a “remediation” program (and in January, 2010, laid off most of its employees in Alpharetta, GA. Until this company discloses which documents were determined to be defective, and what corrective actions were taken, no documents from LPS submitted to establish ownership and standing (notarized in Fulton County, GA; Duval County, FL and Dakota County, MN) should be relied upon by the Courts.

8. Dismiss all cases where a Mortgage Assignment has been made by American Brokers Conduit, American Home Mortgage Acceptance or American Home Mortgage Company, or nominees or mortgage servicing companies working for these American Home companies, after August 6, 2007, the day these companies filed for bankruptcy.  The bankruptcy court did not authorizing these actions.

If Palm Beach County judges looked critically at the documents submitted by the foreclosure mills,  they would reach the same conclusion as judges in other Florida Circuits – that the documents submitted by the foreclosure mills are worthless and the attorneys submitting these documents deserve strict sanctions.

LYNN E. SZYMONIAK ESQ.

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



Posted in concealment, conspiracy, corruption, DOCX, foreclosure fraud, foreclosure mills, fraud digest, Law Offices Of David J. Stern P.A., Lender Processing Services Inc., LPS, Lynn Szymoniak ESQ, marshall watson, MERS, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, note, robo signer, robo signers, stop foreclosure fraud0 Comments

Kline v. Mortgage Electronic Registration Systems, Inc., Dist. Court, SD Ohio, Western Div. 2010

Kline v. Mortgage Electronic Registration Systems, Inc., Dist. Court, SD Ohio, Western Div. 2010

Pointers for FDCPA, TILA, MERS, OCSPA

EUGENE KLINE, et al., Plaintiffs,
v.
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., et al., Defendants.

Case No. 3:08cv408.

United States District Court, S.D. Ohio, Western Division.

March 29, 2010.

DECISION AND ENTRY SUSTAINING IN PART AND OVERRULING IN PART PLAINTIFFS’ OBJECTIONS (DOC. #143) TO REPORT AND RECOMMENDATIONS OF THE UNITED STATES MAGISTRATE JUDGE (DOC. #133); REPORT AND RECOMMENDATIONS ADOPTED IN PART AND REJECTED IN PART; MOTION TO DISMISS FILED BY DEFENDANT MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (DOC. #31), SUSTAINED IN PART AND OVERRULED IN PART

 

WALTER HERBERT RICE, District Judge.

In this putative class action, the Plaintiffs have set forth claims under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692a et seq.; the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601 et seq.; and the Ohio Consumer Sales Practices Act (“OCSPA”), Ohio Revised Code § 1345.01 et seq,; as well as for breach of contract and unjust enrichment under the common law of Ohio. See Doc. #1 at ¶ 2. In their Complaint, the Plaintiffs have named eleven Defendants, including Defendant Mortgage Electronic Registration Systems, Inc. (“MERS”). MERS has filed a motion, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, requesting that this Court dismiss Plaintiff’s Complaint for failure to state a claim upon which relief can be granted. See Doc. #31. This Court referred that motion to United States Magistrate Judge Sharon Ovington for a Report and Recommendations. Judge Ovington has submitted such a judicial filing, recommending that this Court sustain in part and overrule in part MERS’ motion. See Doc. #133. The Plaintiffs have submitted Objections (Doc. #143) thereto, upon which the Court now rules. The Court begins by setting forth the standard by which it reviews Judge Ovington’s Report and Recommendations (Doc. #133), as well as a brief summary of the procedural standards which must be applied whenever a court rules on a motion under Rule 12(b)(6) of the Federal Rules of Civil Procedure, seeking dismissal for failure to state a claim upon which relief can be granted.

Under 28 U.S.C. § 636(b)(1)(A), a District Court may refer to a Magistrate Judge “any pretrial matter pending before the court,” with certain listed exceptions. Motions to dismiss are among the listed exceptions. Section 636(b)(1)(B) authorizes District Courts to refer “any motion excepted from subparagraph (A)” to a Magistrate Judge for “proposed findings of fact and recommendations.” When a District Court refers a matter to a Magistrate Judge under § 636(b)(1)(B), it must conduct a de novo review of that judicial officer’s recommendations. See United States v. Raddatz, 447 U.S. 667, 673-74 (1980); United States v. Curtis, 237 F.3d 598, 603 (6th Cir. 2001).

In Prater v. City of Burnside, Ky., 289 F.3d 417 (6th Cir. 2002), the Sixth Circuit reiterated the fundamental principles which govern the ruling on a motion to dismiss under Rule 12(b)(6):

The district court’s dismissal of a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure is also reviewed de novo. Jackson v. City of Columbus, 194 F.3d 737, 745 (6th Cir. 1999), overruled on other grounds by Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002). When deciding whether to dismiss a claim under Rule 12(b)(6), “[t]he court must construe the complaint in a light most favorable to the plaintiff, and accept all of [the] factual allegations as true.” Id. (citation omitted).

Id. at 424. In Swierkiewicz v. Sorema N.A., 532 U.S. 506 (2002), the Supreme Court noted that Rule 8(a)(2) of the Federal Rules of Civil Procedure merely requires that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Id. at 212. Therein, the Court explained further:

Such a statement must simply “give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957). This simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims. See id., at 47-48; Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S. 163, 168-169 (1993). “The provisions for discovery are so flexible and the provisions for pretrial procedure and summary judgment so effective, that attempted surprise in federal practice is aborted very easily, synthetic issues detected, and the gravamen of the dispute brought frankly into the open for the inspection of the court.” 5 C. Wright & A. Miller, Federal Practice and Procedure § 1202, p. 76 (2d ed. 1990).

Id. at 512-13. In Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), the Supreme Court rejected the standard established in Conley v. Gibson, 355 U.S. 41, 45-46 (1957), that a claim should not be dismissed “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” 550 U.S. at 562-63. The Supreme Court recently expounded upon Twombly in Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937 (2009), writing:

Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” As the Court held in Twombly, 550 U.S. 544, the pleading standard Rule 8 announces does not require “detailed factual allegations,” but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation. Id., at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). A pleading that offers “labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not do.” 550 U.S., at 555. Nor does a complaint suffice if it tenders “naked assertion[s]” devoid of “further factual enhancement.” Id., at 557.

To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Id., at 570. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id., at 556. The plausibility standard is not akin to a “probability requirement,” but it asks for more than a sheer possibility that a defendant has acted unlawfully. Ibid. Where a complaint pleads facts that are “merely consistent with” a defendant’s liability, it “stops short of the line between possibility and plausibility of `entitlement to relief.'” Id., at 557 (brackets omitted).

Two working principles underlie our decision in Twombly. First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Id., at 555 (Although for the purposes of a motion to dismiss we must take all of the factual allegations in the complaint as true, we “are not bound to accept as true a legal conclusion couched as a factual allegation” (internal quotation marks omitted)). Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. Id., at 556. Determining whether a complaint states a plausible claim for relief will, as the Court of Appeals observed, be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. 490 F.3d, at 157-158. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not “show[n]”—”that the pleader is entitled to relief.” Fed. Rule Civ. Proc. 8(a)(2).

Id. at 1949-50.

In their Complaint, four Plaintiffs have set forth claims against MERS, to wit: Eugene Kline (“Kline”), Diana Hughes (“Hughes”) and George and Carol Ross (collectively the “Rosses”). In that pleading, Kline alleges that he entered into a loan transaction with WMC Mortgage (“WMC”) and that the mortgage securing that loan was held by MERS, as nominee for WMC. Doc. #1 at ¶ 64. During the course of the foreclosure proceeding on that property, Kline’s foreclosure counsel communicated to the attorney representing MERS, requesting that the latter give him a figure at which Kline could pay off that loan. MERS’ counsel indicated that Kline’s payoff figure included, inter alia, $350, for attorney’s fees, and $225, for previous service costs. Id. at ¶¶ 65-69. According to Kline, MERS’ actions in that regard violated provisions of the FDCPA, constituted deceptive and misleading practices in violation of the OCSPA, unjustly enriched MERS, and breached a contract between the parties. In addition, Kline alleges that MERS violated the TILA, 15 U.S.C. § 1666d, by demanding these sums. Id. at ¶¶ 133-136.

Hughes alleges that, in or about July, 2005, she entered into a mortgage agreement with Heartland Home Finance (“Heartland”), covering her home at 437 Donnington Drive, Dayton, Ohio. Doc. #1 at ¶ 107. That mortgage was subsequently assigned to MERS, as nominee for Heartland. Id. at ¶ 108. Subsequently, Hughes initiated proceedings under Chapter 13 of the Bankruptcy Code, during which MERS filed a proof of claim, with which it sought to recover, inter alia, $675 for post-petition attorney’s fees. Id. at ¶ 109 and ¶ 111. According to Hughes, the recovery of such fees, even pursuant to a fee-shifting provision in a mortgage, violates Ohio law. Id. at ¶ 113. Hughes alleges that MERS’ actions in that regard violated provisions of the FDCPA, constituted deceptive and misleading practices in violation of the OCSPA, unjustly enriched MERS, and breached a contract between the parties. Hughes has not set forth a claim under the TILA against MERS.

The Rosses allege that, in or about December, 2002, they took out a mortgage loan from Preferred Mortgage Consultants, with MERS acting as the mortgagee. Doc. #1 at ¶ 114. In December, 2006, the Rosses fell behind in their payments, which resulted in their mortgage being accelerated. Id. at ¶¶ 116-117. In April, 2007, the Rosses initiated proceedings under Chapter 13 of the Bankruptcy Code, during which MERS filed a proof of claim seeking to recover, inter alia, $475, for pre-petition bankruptcy fees, and $495.22, for accrued late charges. Id. at ¶¶ 119-120. The Rosses allege that MERS’ actions in that regard violated provisions of the FDCPA, constituted deceptive and misleading practices in violation of the OCSPA, unjustly enriched MERS, and breached a contract between the parties. The Rosses have not set forth a claim under the TILA against MERS.

In her Report and Recommendations (Doc. #133), Judge Ovington has recommended that this Court dismiss the claims of Kline, Hughes and the Rosses against MERS under the FDCPA, because that Defendant was not a “debt collector,” as that term is defined by the federal statute. See Doc. #133 at 9-15. That judicial officer has also recommended that the Court dismiss, with prejudice, those Plaintiffs’ state law claims for breach of contract and unjust enrichment against MERS. Id. at 21-24. As to those Plaintiffs’ claims under the OCSPA, the Magistrate Judge has recommended that the Court dismiss their class action claims with prejudice, and that it decline to continue to exercise supplemental jurisdiction over the individual claims of Hughes and the Rosses, while continuing to exercise such jurisdiction over Kline’s individual claim under the state statute. Id. at 25-26. Finally, Judge Ovington has recommended that the Court decline to dismiss Kline’s claim under the TILA against MERS. Id. at 19-21.

Kline, Hughes and the Rosses do not challenge Judge Ovington’s recommendation that this Court dismiss their claims under the FDCPA against MERS, because the latter is not a debt collector within the meaning of that statute. This Court, having conducted a de novo review of the recommendation, concurs with same. Accordingly, the Court sustains MERS’ Motion to Dismiss (Doc. #31), as it relates the claims of Kline, Hughes and the Rosses under the FDCPA.

MERS supported its Motion to Dismiss (Doc. #31), by appending seven documents to its memorandum in support thereof (Doc. #33). In particular, MERS has provided the mortgages of Kline, Hughes and the Rosses pertaining to it, the proof of claim filed on behalf of MERS in Hughes’ bankruptcy proceedings, the amended and second amended proofs of claim filed on behalf of MERS in the Rosses’ bankruptcy and a decision of Judge Thomas Rose issued in Kline v. Home Eq Servicing Corp., Case No. 3:07cv084 (S.D.Ohio). The Plaintiffs initially object to the Report and Recommendations of the Magistrate Judge, because she did not exclude those documents from consideration, since they are matters outside the pleadings. For reasons which follow, this Court cannot agree.

Rule 12(d) of the Federal Rules of Civil Procedure provides:

(d) Result of Presenting Matters Outside the Pleadings. If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.

In Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007), the Supreme Court cited with approval 5B Wright & Miller, Federal Practice and Procedure § 1357, as setting forth types of such materials which can be considered when ruling on a motion to dismiss. Id. at 322. That section of the treatise provides, in pertinent part:

In determining whether to grant a Federal Rule 12(b)(6) motion, district courts primarily consider the allegations in the complaint. The court is not limited to the four corners of the complaint, however. Numerous cases, as the note below reflects, have allowed consideration of matters incorporated by reference or integral to the claim, items subject to judicial notice, matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint whose authenticity is unquestioned; these items may be considered by the district judge without converting the motion into one for summary judgment.

5B Wright & Miller, Federal Practice and Procedure § 1357 at 375-76 (footnote omitted). The Sixth Circuit has approved of the use of each of those types of materials, when ruling on a motion to dismiss, without converting same to a motion for summary judgment. See e.g., Jackson v. City of Columbus, 194 F.3d 737, 745 (6th Cir. 1999) (District Court may consider documents referred to in plaintiff’s complaint and central to his claim, public records, matters of which a court may take judicial notice and decisions of governmental agencies). See also Wyser-Pratte Management Corp. Inc. v. Telxon Corp., 413 F.3d 553, 560 (6th Cir. 2005); Nieman v. NLO, Inc., 108 F.3d 1546, 1554 (6th Cir. 1997) (quoting Wright & Miller, supra, with approval). Of course, where the submitted materials “capture[] only part of the incident and would provide a distorted view of the events at issue, . . . we do not require a court to consider that evidence on a 12(b)(6) motion.” Jones v. City of Cincinnati, 521 F.3d 555, 562 (6th Cir. 2008) (internal quotation marks omitted).

Herein, Kline, Hughes and the Rosses have referred in their Complaint to the mortgages and the proofs of claim supplied by MERS, documents central to their claims against it. As to Judge Rose’s decision, as well as the proofs of claim, courts are authorized to take judicial notice of other court proceedings, without converting a motion under rule 12(b)(6) into one for summary judgment. Buck v. Thomas Cooley Law School, ___ F.3d ___, 2010 WL 935364 (6th Cir. 2010) at *3 (noting that, “[a]lthough typically courts are limited to the pleadings when faced with a motion under Rule 12(b)(6), a court may take judicial notice of other court proceedings without converting the motion into one for summary judgment” and citing Winget v. JP Morgan Chase Bank, N.A., 537 F.3d 565, 576 (6th Cir. 2008)). Accordingly, the Court overrules the Plaintiffs’ Objections (Doc. #143), as they relate to the question of whether the Magistrate Judge erred by failing to exclude the documents MERS attached to its memorandum.

Hughes and the Rosses argue that Judge Ovington erred in recommending that this Court decline to continue to exercise supplemental jurisdiction, because not all claims over which this Court can exercise original jurisdiction have been dismissed. The supplemental jurisdiction statute provides, in relevant part:

(a) Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties.

* * * (c) The district courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if—* * *

(3) the district court has dismissed all claims over which it has original jurisdiction . . . .

28 U.S.C. § 1367. Whether a court may exercise supplemental jurisdiction over a state law claim, in accordance with § 1367(a), is to be determined under the standards established by the Supreme Court in United Mine Workers of Am. v. Gibbs, 383 U.S. 715 (1966), wherein the Court wrote that to exercise pendent (nka supplemental) jurisdiction, “[t]he state and federal claims must derive from a common nucleus of operative fact.” Id. at 725.[1] When a court dismisses a plaintiff’s only claim over which it has original jurisdiction (i.e., a federal claim), for failure to state a claim upon which relief can be granted, it should decline to continue to exercise supplemental jurisdiction over the plaintiff’s state law claims. See e.g., Musson Theatrical, Inc. v. Federal Express Corp., 89 F.3d 1244, 1255-56 (6th Cir. 1996) (noting that there is a strong presumption that District Court declines to continue to exercise supplemental jurisdiction over state law claims after it has dismissed federal claims pursuant to a 12(b)(6) motion).

Herein, this Court can exercise original jurisdiction over Plaintiffs’ claims under the FDCPA and the TILA. Accordingly, it must exercise supplemental jurisdiction over all other claims set forth by Plaintiffs. Whether it will continue to do so, from this point forward, is the issue. The only federal claims set forth by Hughes are claims under the FDCPA against MERS and the law firm of Lerner, Sampson and Rothfuss (“LS&R”). In this Decision, the Court has dismissed Hughes’ claim under the FDCPA against MERS, and it previously dismissed her claim under that statute against LS&R. See Doc. #116. Accordingly, it is inappropriate for the Court to continue to exercise supplemental jurisdiction over any of Hughes’ state law claims, i.e., her claim under the OCSPA, regardless of whether such claim is for class action relief, and her claims for breach of contract and for unjust enrichment. Those state law claims are ordered dismissed without prejudice to refiling in a state court of competent jurisdiction.[2]

Similarly, the Rosses only federal claims are under the FDCPA against MERS and LS&R. Although this Court has determined herein that the Rosses’ claim under the FDCPA against MERS must be dismissed, it has previously concluded that their claim under that statute survived LS&R’s Motion to Dismiss (Doc. #17). See Doc. #116. Since that claim arises out of the same nucleus of fact as those Plaintiffs’ state law claims against MERS, it is permissible to continue to exercise supplemental jurisdiction over those state law claims.

Accordingly, the Court sustains the Plaintiffs’ Objections (Doc. #143), to the extent that they are based on the assertion that the Magistrate Judge erred in recommending that the Court decline to continue to exercise supplemental jurisdiction over the Rosses’ individual claims under the OCSPA. The Court overrules those Objections, to the extent that they are based on the assertion that the Magistrate Judge erred in recommending that the Court decline to continue to exercise supplemental jurisdiction over Hughes’ individual claim under the OCSPA.[3]

In addition, Kline, Hughes and the Rosses object to the recommendation of Judge Ovington that the Court dismiss their claims for breach of contract, unjust enrichment and for a class action under the OCSPA. As an initial matter, this Court has declined to continue to exercise supplemental jurisdiction over Hughes’ state law claims; therefore, it need not address these objections as they relate to that Plaintiff. Rather, the Court orders that all of Hughes’ state law claims be dismissed, without prejudice to refiling in a state court of competent jurisdiction.

The Court now turns to Kline’s and the Rosses’ claims for breach of contract, for unjust enrichment and for a class action under the OCSPA. Judge Ovington recommended that the Court dismiss, with prejudice, the breach of contract claims of Kline and the Rosses, because those Plaintiffs had failed to allege any of elements of a breach of contract claim against MERS. See Doc. #133 at 21-23. This Court agrees with Judge Ovington that Kline and the Rosses have failed to state claims for breach of contract against MERS in their Complaint. However, since those Plaintiffs have identified potentially plausible claims for breach of contract in their Objections (see Doc. #143 at 6-9), this Court will order that those claims be dismissed, without prejudice to being re-plead in an amended complaint, which sets forth the theories of Kline and the Rosses as to how charging the fees, of which those Plaintiffs complain, breached their contracts with MERS, i.e., the mortgages to which they were parties with MERS.

Similarly, Judge Ovington recommended that this Court dismiss the claims of Kline and the Rosses against MERS, because they failed to allege that they had conferred a benefit upon MERS. See Doc. #133 at 23-24. Those Plaintiffs have objected to that particular recommendation. See Doc. #143 at 10-12. Once again, although this Court agrees with Judge Ovington that Kline and the Rosses have failed to identify the benefit which they conferred on MERS,[4] it will, however, afford those Plaintiffs the opportunity of amending their Complaint to allege how they conferred such a benefit.

Judge Ovington recommended that this Court dismiss, with prejudice, the class action aspect of the claims of Kline and the Rosses under the OCSPA. That recommendation is based upon § 1345.09(B) of the Ohio Revised Code. Under that statutory provision, a consumer may not maintain a class action for a violation of the OCSPA, unless “the violation was an act or practice declared to be deceptive or unconscionable by rule adopted under division (B)(2) of section 1345.05 of the Revised Code before the consumer transaction on which the action is based, or an act or practice determined by a court of this state to violate section 1345.02, 1345.03, or 1345.031 of the Revised Code and committed after the decision containing the determination has been made available for public inspection under division (A)(3) of section 1345.05 of the Revised Code.” (Emphasis added). Herein, since Kline and the Rosses have not alleged that any of the asserted violations of the Ohio statute by MERS also violated such a rule or court decision, Judge Ovington recommended that the Court dismiss that aspect of Kline’s and the Rosses’ claims under the OCSPA, with prejudice. Although this Court agrees with Judge Ovington that the Plaintiffs’ Complaint is devoid of such allegations, it will afford them the opportunity of amending to cure that pleading deficiency.[5]

Based upon the foregoing, the Court sustains in part and overrules in part the Plaintiffs’ Objections (Doc. #143) to Judge Ovington’s Report and Recommendations (Doc. #133). The Court overrules those Objections as they relate to the utilization of the documents supplied by MERS and the recommendation that the Court dismiss certain of the state law claims of Kline, Hughes and the Rosses, while rejecting the recommendation that said dismissal be with prejudice. The Court also sustains those Objections (Doc. #143), as they relate to the recommendation that the Court decline to continue to exercise supplemental jurisdiction over the Rosses’ individual claims under the OCSPA. Accordingly, the Court adopts in part and rejects in part the Magistrate Judge’s Report and Recommendations (Doc. #133). In addition, the Court sustains MERS’ Motion to Dismiss (Doc. #31), as it relates to the claims of Kline, Hughes and the Rosses under the FDCPA and overrules that motion as it relates to Kline’s claim under the TILA. Kline and the Rosses are given leave to file an amended complaint, properly pleading their state law claims of breach of contract, unjust enrichment and for class action status under the OCSPA, subject to the strictures of Fed. R. Civ. P. 11, within 14 days from date. Hughes’ state law claims are ordered dismissed, without prejudice to refiling in a state court of competent jurisdiction, as the Court declines to continue to exercise supplemental jurisdiction over same.

[1] See e.g., De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 308 (3d Cir.2003) (noting that “a district court may exercise supplemental jurisdiction where state-law claims share a `common nucleus of operative fact’ with the claims that supported the district court’s original jurisdiction”) (quoting Gibbs, 383 U.S. at 725).

[2] To the extent that Hughes’ position is that as long as any federal claim remains pending in this litigation, it is permissible to exercise supplemental jurisdiction over all state law claims set forth by every Plaintiff herein, this Court cannot agree. This Court can exercise supplemental jurisdiction over only those state law claims that arise out of the same nucleus of fact as a federal law claim. Therefore, the pendency of Kline’s claim under the TILA does not authorize this Court to exercise supplemental jurisdiction over Hughes’ state law claims, given that those claims do not arise out of the same nucleus of operative facts.

Moreover, this Court rejects Hughes’ assertion that it can exercise subject matter jurisdiction over Hughes’ state law claims in accordance with the Class Action Fairness Act, 28 U.S.C. § 1332(d). This Court’s original jurisdiction over claims under that statute is predicated upon the amount in controversy for a class action exceeding $5,000,000. See 28 U.S.C. § 1332(d)(2). Herein, the Plaintiffs have failed to allege that the amount in controversy in a class action based upon Hughes’ state law claims would exceed that sum.

[3] Given that Judge Ovington did not recommend that this Court decline to continue to exercise supplemental jurisdiction over any of Kline’s state law claims, Kline did not object to the aspect of Judge Ovington’s Report and Recommendations, addressing the continuing exercise of supplemental jurisdiction.

[4] The Court rejects the Plaintiffs’ assertion that one can infer that they conferred a benefit on MERS, merely because they allege that it demanded the payment of certain fees during foreclosure or bankruptcy proceedings.

[5] The portion of § 1345.09(B), which this Court has emphasized above refers to “a court of this state.” Kline and the Rosses have cited decisions by federal courts sitting in Ohio to support their assertion that their class claims under the OCSPA should not be dismissed. Whether a federal court sitting in Ohio is “a court of this state” is an issue which this Court does not address herein.

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



Posted in case, fdcpa, foreclosure fraud, MERS, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., tila0 Comments

QUI TAM: Tennessee vs. MERS, Mortgage Electronic Registration Systems April 20. 2010, RECORDING FRAUD

QUI TAM: Tennessee vs. MERS, Mortgage Electronic Registration Systems April 20. 2010, RECORDING FRAUD

From: b.daviesmd6605

COMPLAINT:

COMES the State of Tennessee ex rel. Barrett Bates, on behalf of real parties in interest, the counties of the State of Tennessee, above-named and hereby complains of Defendants as follows:

STATEMENT OF THE CASE
Plaintiff Barrett Bates seeks recovery pursuant to Tenn. Code Ann. § 4-18-103, the False Claims Act, because Defendants made false representations in order to avoid payment in full of all recording fees reflecting the establishment and/or transfer of secured interests in real property in the State. After having recorded false, fraudulent, misleading and untruthful documents with the land records of the counties of this State, Defendants intentionally failed to cure/correct said false, misleading and untruthful documents and further failed to record subsequent assignments, deeds and other documents evidencing accurate changes in ownership interests in real property and, thereby, avoided, decreased and/or diminished their obligation to pay fees or monies to the counties of the State of Tennessee, the above-named real parties in interest.

PARTIES
1. Barrett Bates, relator, is a resident of the State of Nevada and an original source of information and authorized to bring this action pursuant to Tenn. Code Ann. § 4-18-101, et seq., and as the qui tam Plaintiff because Bates has worked in the secondary mortgage market business and, during the course of his work in June 2009, became aware Defendants were concealing and avoiding the payment of recording fees or other monies to the above-named counties in this and other states and brings this action under Tenn. Code Ann. G 4-18-103 against Defendants for violations of these sections.

[ipaper docId=31137181 access_key=key-19q0ufo3vs69pn8pqxlf height=600 width=600 /]

RELATED:

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MERS 101

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Posted in foreclosure fraud, MERS, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, QUI TAM0 Comments

Complaint for Wrongful Foreclosure, Fraud, Negligence, Quiet Title and Unfair Business Practices

Complaint for Wrongful Foreclosure, Fraud, Negligence, Quiet Title and Unfair Business Practices

Contributor: Cameron Totten Law Offices of Cameron H. Totten

SUMMARY: Sample Complaint against loan servicer, trustee of mortgaged-backed securities fund, MERS and foreclosure trustee for wrongful foreclosure, quiet title, cancellation of trustee’s deed upon sale, unfair business practices, fraud and negligence.

[ipaper docId=31117667 access_key=key-2javn3wfjvd1xzwkrzlc height=600 width=600 /]

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Posted in foreclosure fraud, MERS, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud0 Comments

Open Letter Jennifer Van Dyne DEUTSCHE BANK NATIONAL TRUST COMPANY Trustee Administrator RAST 2007-A5

Open Letter Jennifer Van Dyne DEUTSCHE BANK NATIONAL TRUST COMPANY Trustee Administrator RAST 2007-A5

Where are the NOTES?

THE TRUSTEE OF A TRUST HOLDS THE ACTUAL RECORDS. THE HIDDEN TRANSFERS IS WHAT ALLOWS THESE PEOPLE TO DO ILLEGAL ACTS AND TRANSFERS.

[scribd id=31053678 key=key-2ecqhcxcs40ajpqq9xw9 mode=list]

Posted in case, foreclosure fraud, forensic mortgage investigation audit, MERS, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud0 Comments

Produce the Note and Deficiency Judgments

Produce the Note and Deficiency Judgments

Some Magically Produce Some Not!

Via: Foreclosure Industry

May 6, 2010 by christine

In speaking with Michael Hirschtick yesterday, he raised a very interesting point that I don’t think a lot of people realize: that enforcement of the Note and foreclosing on the Mortgage are two separate things.

I’ll say that again.

There are two parts to a home loan: the Mortgage and the Note. They are two separate and distinct things. A Mortgage (or Deed of Trust) is basically the instructions on what to do if a borrower defaults on a loan; the Note gives them the right to collect money.

Continue reading… FORECLOSURE INDUSTRY

Related Story: new-mers-standing-case-splits-note-and-mortgage-bellistri-v-ocwen-loan-servicing-mo-app-20100309

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Posted in case, foreclosure fraud, livinglies, MERS, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, neil garfield1 Comment

WEISBAND Case No. 4:09-bk-05175-EWH. BKR Tucson Judge HOLLOWELL Denies MLS for Lack of Standing

WEISBAND Case No. 4:09-bk-05175-EWH. BKR Tucson Judge HOLLOWELL Denies MLS for Lack of Standing

Via: Livinglies

GMAC has failed to demonstrate that it is the holder of the Note because, while it was in possession of the Note at the evidentiary hearing, it failed to demonstrate that the Note is properly payable to GMAC

Once the securities have been sold, the SPV is not actively involved.

IN RE WEISBAND

In re: BARRY WEISBAND, Chapter 13, Debtor.

Case No. 4:09-bk-05175-EWH.

United States Bankruptcy Court, D. Arizona.

March 29, 2010.

Barry Weisband, Tucson, AZ, Ronald Ryan, Ronald Ryan, P.C., Tucson, AZ, Attorney for Debtor.

MEMORANDUM DECISION

EILEEN W. HOLLOWELL, Bankruptcy Judge

I. INTRODUCTION

The debtor, Barry Weisband (“Debtor”), has challenged the standing of creditor, GMAC Mortgage, LLC (“GMAC”), to seek stay relief on his residence. After reviewing the documents provided by GMAC and conducting an evidentiary hearing, the court concludes that GMAC, the alleged servicer of the Debtor’s home loan, lacks standing to seek stay relief. The reasons for this conclusion are explained in the balance of this decision.

II. FACTUAL AND PROCEDURAL HISTORY

A. Creation of Debtor’s Note And Asserted Subsequent Transfers

On or about October 6, 2006, the Debtor executed and delivered to GreenPoint Mortgage Funding, Inc. (“GreenPoint”) an adjustable rate promissory note in the principal sum of $540,000 (“Note”) secured by a Deed of Trust (“DOT”) on real property located at 5424 East Placita Apan, Tucson, Arizona 85718 (“Property”).

On a separate piece of paper, GreenPoint endorsed the Note to GMAC (“Endorsement”). The Endorsement is undated. The DOT was signed by the Debtor on October 9, 2006, and recorded on October 13, 2006. The DOT lists GreenPoint as the lender, and Mortgage Electronic Registration Systems, Inc. (“MERS”) as the beneficiary of the DOT “solely as nominee for [GreenPoint], its successors and assigns.”

Approximately five months before the creation of the Note and DOT, on April 10, 2006, GreenPoint entered into a Flow Interim Servicing Agreement (“FISA”) (Exhibit D)[ 1 ] with Lehman Capital, a division of Lehman Brothers Holdings, Inc. (collectively “Lehman”), pursuant to which Lehman agreed to purchase conventional, residential, fixed and adjustable rate first and second lien mortgage loans from GreenPoint. Under the FISA, GreenPoint agreed to service the mortgage loans it sold to Lehman. According to GMAC, GreenPoint transferred the Note and DOT to Lehman under the FISA.

On November 1, 2006, Lehman entered into a Mortgage Loan Sale and Assignment Agreement (“MLSAA”) with Structured Asset Securities Corporation (“SASC”) (Exhibit E). Under that agreement, Lehman transferred a number of the mortgage loans it acquired under the FISA to SASC. GMAC claims that the Note was one of the mortgage loans transferred to SASC. SASC created a trust to hold the transferred mortgages — GreenPoint Mortgage Funding Trust (“Trust”). The MLSAA also transferred the right to receive principal and interest payments under the transferred mortgage loans from Lehman to the Trust.

Also, on November 1, 2006, SASC entered into a Trust Agreement (Exhibit F) with Aurora Loan Services (“Aurora”) as the master servicer, and U.S. Bank National Association (“U.S. Bank”) as the trustee. A Reconstituted Servicing Agreement (Exhibit G) was executed the same day, which provided that GreenPoint would continue to service the mortgages transferred to the Trust under the MLSAA, but that the Trust could change servicers at any time. Also, according to GMAC, on November 1, 2006, GMAC, Lehman, and Aurora entered into a Securitization Servicing Agreement (“SSA”) (Exhibit H), pursuant to which GMAC would service the loans transferred to the Trust. GMAC claims that under the SSA it is the current servicer of the Note and DOT.

Thus, according to GMAC, as of November 1, 2006, the Note and DOT had been transferred to the Trust, with SASC as the Trustor, U.S. Bank as the Trustee, Aurora as the master servicer, and GMAC as the sub-servicer. GreenPoint went out of business in 2007. According to GMAC, it remains the sub-servicer of the Note, and that is its only financial interest in the Note and DOT. (Transcript Nov. 10, 2009, pp. 44, 47, 75.)

B. Bankruptcy Events

As of March 1, 2009, the Debtor was in default of his obligations under the Note. Debtor filed his petition for relief under Chapter 13 of the Bankruptcy Code on March 19, 2009. On May 16, 2009, GMAC filed a proof of claim (“POC”), which attached the Note and DOT. The Endorsement from GreenPoint to GMAC was not attached to GMAC’s proof of claim. On May 12, 2009, MERS, as nominee for GreenPoint, assigned its interest in the DOT to GMAC (“MERS Assignment”). The MERS Assignment was recorded on July 16, 2009.

GMAC filed a Motion for Relief from Stay (“Motion”) on May 29, 2009, on the grounds that the Debtor had no equity in the Property and the Property was not necessary for an effective reorganization. The Motion also requested adequate protection payments to protect GMAC’s alleged interest in the Property. GMAC attached the Note with the Endorsement and DOT as exhibits to the Motion.

The Debtor filed a response challenging GMAC’s standing to seek relief from stay. After various discovery disputes, GMAC sent a letter dated September 17, 2009, to the Debtor which purported to explain the various transfers of the Note and the DOT. (Docket #90). The letter explained that GreenPoint transferred the “subject loan” to Lehman under the FISA, that Lehman sold the “subject loan” to SASC under the MLSAA, that SASC, Aurora Loan Services, and U.S. National Bank entered into a trust agreement, which created the Trust and made Aurora the master servicer for the “subject loan,” and, that GMAC was the servicer of the “subject loan” under the SSA. According to GMAC, its status as servicer, along with the Endorsement of the Note to GMAC and the assignment of the DOT from MERS to GMAC, demonstrated that it had standing to bring the Motion.

On November 10, 2009, the Court conducted an evidentiary hearing on the Motion. GMAC offered the original Note at the hearing and admitted into evidence a copy of the Note, DOT, copies of the FISA, MLSAA, Trust Agreement, the Reconstituted Servicing Agreement and the SSA. However, GMAC did not offer any documents demonstrating how the Note and DOT were conveyed by GreenPoint to the FISA. No document was offered demonstrating how the Note and DOT were conveyed from the FISA to the MLSAA or from the MLSAA into the Trust. Schedule A-1 of the MLSAA, where the transferred mortgages presumably would have been listed, only has the words “Intentionally Omitted” on it, and Schedule A-2 has the word “None.” (Exhibit F, pp. 19-20). Similarly, there is no evidence that the Note and DOT are subject to the SSA. Exhibit A to the SSA, titled “Mortgage Loan Schedule,” is blank. At the conclusion of the hearing, this Court ordered the Debtor to begin making adequate protection payments commencing on December 1, 2009 to the Chapter 13 Trustee. The Court further ordered GMAC and the Debtor to negotiate the amount of the adequate protection payments. When the parties were unable to reach agreement, the Court set the amount of the monthly payments at $1,000.

III. ISSUE

Does GMAC have standing to bring the Motion?

IV. JURISDICTIONAL STATEMENT

Jurisdiction is proper under 28 U.S.C. §§ 1334(a) and 157(b)(2)(G).

V. DISCUSSION

A. Introduction

Section 362(a) of the Bankruptcy Code provides that the filing of a bankruptcy petition operates as a stay of collection and enforcement actions. 11 U.S.C. § 362(a). The purpose of the automatic stay is to provide debtors with “protection against hungry creditors” and to assure creditors that the debtor’s other creditors are not “racing to various courthouses to pursue independent remedies to drain the debtor’s assets.” In re Tippett,Dean v. Trans World Airlines, Inc., 72 F.3d 754, 755-56 (9th Cir. 1995)); see also In re Johnston, 321 B.R. 262, 2737-4 (D. Ariz. 2005). Despite the broad protection the stay affords, it is not without limits. 542 F.3d 684, 689-90 (9th Cir. 2008) (citing Section 362(d) allows the court, upon request of a “party in interest,” to grant relief from the stay, “such as terminating, annulling, modifying, or conditioning such stay.” 11 U.S.C. § 362(d)(1). The court may grant relief “for cause, including the lack of adequate protection.” Id. The court may also grant relief from the stay with respect to specific property of the estate if the debtor lacks equity in the property and the property is not necessary to an effective reorganization. 11 U.S.C. § 362(d)(2).

Any party affected by the stay should be entitled to seek relief. 3 COLLIER’S ON BANKRUPTCY ¶ 362.07[2] (Henry Somers & Alan Resnick, eds. 15th ed., rev. 2009); Matter of Brown Transp. Truckload, Inc., 118 B.R. 889, 893 (Bankr. N.D. Ga. 1990); In re Vieland, 41 B.R. 134, 138 (Bankr. N.D. Ohio 1984)). Relief from stay hearings are limited in scope — the validity of underlying claims is not litigated. In re Johnson, 756 F.2d 738, 740 (9th Cir. 1985). As one court has noted, “[s]tay relief hearings do not involve a full adjudication on the merits of claims, defenses or counterclaims, but simply a determination as to whether a creditor has a colorable claim.” In re Emrich, 2009 WL 3816174, at *1 (Bankr. N.D. Cal. 2009).

Nevertheless, in order to establish a colorable claim, a movant for relief from stay bears the burden of proof that it has standing to bring the motion. In re Wilhelm, 407 B.R. 392, 400 (Bankr. D. Idaho 2009). The issue of standing involves both “constitutional limitations on federal court jurisdiction and prudential limitations on its exercise.” Warth v. Seldin, 422 U.S. 490, 498 (1975). Constitutional standing concerns whether the plaintiff’s personal stake in the lawsuit is sufficient to have a “case or controversy” to which the federal judicial power may extend under Article III. Id.; see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-60 (1992); Pershing Park Villas Homeowners Ass’n v. United Pac. Ins. Co., 219 F.3d 895, 899 (9th Cir. 2000).

Additionally, the “prudential doctrine of standing has come to encompass several judicially self-imposed limits on the exercise of federal jurisdiction.'” Pershing Park Villas, 219 F.3d at 899. Such limits are the prohibition on third-party standing and the requirement that suits be maintained by the real party in interest. See Warth v. Seldin, 422 U.S. at 498-99; Gilmartin v. City of Tucson, 2006 WL 5917165, at *4 (D. Ariz. 2006). Thus, prudential standing requires the plaintiff to assert its own claims rather than the claims of another. The requirements of Fed. R. Civ. P. 17, made applicable in stay relief motions by Rule 9014, “generally falls within the prudential standing doctrine.” In re Wilhelm, 407 B.R. at 398.

B. GMAC’s Standing

GMAC advances three different arguments in support of its claim to be a “party in interest” with standing to seek relief from stay. First, GMAC asserts it has standing because the Note was endorsed to GMAC and GMAC has physical possession of the Note. Second, GMAC asserts that by virtue of the MERS Assignment, it is a beneficiary of the DOT and entitled to enforce and foreclose the DOT under Arizona law. Third, GMAC asserts it has standing because it is the servicer of the Note. The court addresses each of GMAC’s claims in turn.

1. GMAC Has Not Demonstrated That It Is A Holder Of The Note

If GMAC is the holder of the Note, GMAC would be a party injured by the Debtor’s failure to pay it, thereby satisfying the constitutional standing requirement. GMAC would also be the real party in interest under Fed. R. Civ. P. 17 because under ARIZ. REV. STAT. (“A.R.S.’) § 47-3301, the holder of a note has the right to enforce it.[ 2 ] However, as discussed below, GMAC did not prove it is the holder of the Note.

Under Arizona law, a holder is defined as “the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.” A.R.S. § 47-1201(B)(21)(a).[ 3 ] GMAC has failed to demonstrate that it is the holder of the Note because, while it was in possession of the Note at the evidentiary hearing, it failed to demonstrate that the Note is properly payable to GMAC. A special endorsement to GMAC was admitted into evidence with the Note. However, for the Endorsement to constitute part of the Note, it must be on “a paper affixed to the instrument.” A.R.S. § 47-3204; see also In re Nash, 49 B.R. 254, 261 (Bankr. D. Ariz. 1985). Here, the evidence did not demonstrate that the Endorsement was affixed to the Note. The Endorsement is on a separate sheet of paper; there was no evidence that it was stapled or otherwise attached to the rest of the Note. Furthermore, when GMAC filed its proof of claim, the Endorsement was not included, which is a further indication that the allonge containing the Endorsement was not affixed to the Note.[ 4 ]

In Adams v. Madison Realty & Dev., Inc., 853 F.2d 163 (3d Cir. 1988), the plaintiffs executed promissory notes which, after a series of transfers, came into the defendant’s possession. At issue was whether the defendant was the rightful owner of the notes. The court held that the defendant was not entitled to holder in due course status because the endorsements failed to meet the UCC’s fixation requirement. Id. at 168-69. The court relied on UCC section 3-202(2) [A.R.S. § 47-3204]: “An indorsement must be written by or on behalf of the holder and on the instrument or on a paper so firmly affixed thereto as to become a part thereof.” Id. at 165. Since the endorsement page, indicating that the defendant was the holder of the note, was not attached to the note, the court found that the note had not been properly negotiated. Id. at 166-67. Thus, ownership of the note never transferred to the defendant. Applying that principle to the facts here, GMAC did not become a holder of the Note due to the improperly affixed special endorsement.

While the bankruptcy court in In re Nash, 49 B.R. 254 (Bankr. D. Ariz. 1985) found that holder in due course status existed even though an allonge was not properly affixed to an instrument, the court based its determination on the clear intention that the note assignment be physically attached because: (1) the assignment was signed and notarized the same day as the trust deed; (2) the assignment specifically referenced the escrow number; (3) the assignment identified the original note holder; and (4) the assignment recited that the note was to be attached to the assignment. Id. at 261.

In this case, however, there is no proof that the allonge containing the special endorsement from GreenPoint to GMAC was executed at or near the time the Note was executed. Furthermore, the Endorsement does not have any identifying numbers on it, such as an account number or an escrow number, nor does it reference the Note in any way. There is simply no indication that the allonge was appropriately affixed to the Note, in contradiction with the mandates of A.R.S. § 47-3204. Thus, there is no basis in this case to depart from the general rule that an endorsement on an allonge must be affixed to the instrument to be valid.

GMAC cannot overcome the problems with the unaffixed Endorsement by its physical possession of the Note because the Note was not endorsed in blank and, even if it was, the problem of the unaffixed endorsement would remain.[ 5 ] As a result, because GMAC failed to meet its burden of demonstrating that the Endorsement was proper, it has failed to demonstrate that it is the holder of the Note.

2. The MERS Assignment Of The DOT Did Not Provide GMAC With Standing

GMAC argues that it has standing to bring the Motion as the assignee of MERS.[ 6 ] In this case, MERS is named in the DOT as a beneficiary, solely as the “nominee” of GreenPoint, holding only “legal title” to the interests granted to GreenPoint under the DOT. A number of cases have held that such language confers no economic benefit on MERS. See, e.g., In re Sheridan, 2009 WL 631355, *4 (Bankr. D. Idaho 2009); In re Mitchell, 2009 WL 1044368, *3-4 (Bankr. D. Nev. 2009); In re Jacobson, 402 B.R. 359, 367 (Bankr. W.D. Wash. 2009). As noted by the Sheridan court, MERS “collect[s] no money from [d]ebtors under the [n]ote, nor will it realize the value of the [p]roperty through foreclosure of the [d]eed of [t]rust in the event the [n]ote is not paid.” 2009 WL 631355 at *4.

Because MERS has no financial interest in the Note, it will suffer no injury if the Note is not paid and will realize no benefit if the DOT is foreclosed. Accordingly, MERS cannot satisfy the requirements of constitutional standing. GMAC, as MERS’ assignee of the DOT, “stands in the shoes” of the assignor, taking only those rights and remedies the assignor would have had. Hunnicutt Constr., Inc. v. Stewart Title & Trust of Tucson, Trust No. 3496, 187 Ariz. 301, 304 (Ct. App. 1996) citing Van Waters & Rogers v. Interchange Res., Inc., 14 Ariz. App. 414, 417 (1971); In re Boyajian, 367 B.R. 138, 145 (9th Cir. BAP 2007). Because GMAC is MERS’ assignee, it cannot satisfy the requirements of constitutional standing either.[ 7 ]

3. GMAC Does Not Have Standing As The Servicer Of The Note

(a) Servicer’s Right To Collect Fees For Securitized Mortgages

Securitization of residential mortgages is “the process of aggregating a large number of notes secured by deeds of trust in what is called a mortgage pool, and then selling security interests in that pool of mortgages.” Kurt Eggert, Held Up In Due Course: Predatory Lending, Securitization, and the Holder in Due Course Doctrine, 35 CREIGHTON L. REV. 503, 536 (2002). The process begins with a borrower negotiating with a mortgage broker for the terms of the loan. Then, the mortgage broker either originates the loan in its own name or in the name of another entity, which presumably provides the money for the loan. Almost immediately, the broker transfers the loan to the funding entity. “This lender quickly sells the loan to a different financial entity, which pools the loan together with a host of other loans in a mortgage pool.” Id. at 538.

The assignee then transfers the mortgages in the pool to another entity, which in turn transfers the loans to a special purpose vehicle (“SPV”,) whose sole role is to hold the pool of mortgages. Id. at 539. “The transfer to the special purpose trust must constitute a true sale, so that the party transferring the assets reduces its potential liability on the loans and exchanges the fairly illiquid loans for much more liquid cash.” Id. at 542. Next, the SPV issues securities which the assignee sells to investors. Id. at 539.

Once the securities have been sold, the SPV is not actively involved. It “does not directly collect payments from the homeowners whose notes and deeds of trust are held by the SPV.” Id. at 544. Rather, servicers collect the principal and interest payments on behalf of the SPV. Id. Fees are associated with the servicing of loans in the pool. Therefore, GMAC would have constitutional standing if it is the servicer for the Note and DOT because it would suffer concrete injury by not being able to collect its servicing fees.[ 8 ]In re O’Kelley, 420 B.R. 18, 23 (D. Haw. 2009) . In this case, however, the evidence does not demonstrate that the Note and DOT were transferred to the Trust, and, without that evidence, there is no demonstration that GMAC is the servicer of the Note.

(b) There Is Insufficient Evidence That The Note Was Sold To Lehman And Became Part Of The Trust

When the Debtor executed the Note and DOT, GreenPoint was the original holder of the Note and the economic beneficiary of the DOT. GreenPoint, allegedly, transferred the Note to Lehman pursuant to the FISA. However, the term “mortgage loans” is not defined in the FISA and GMAC’s documents regarding the securitization of the Note and DOT provide no evidence of actual transfers of the Note and DOT to either the FISA or the Trust. Because such transfers must be “true sales,” they must be properly documented to be effective. Thus, to use an overused term, GMAC has failed “to connect the dots” to demonstrate that the Note and DOT were securitized. Accordingly, it is immaterial that GMAC is the servicer for the Trust.

C. Debtor’s Other Arguments

1. Securities Investors Are Not The Only Individuals Who Can Satisfy Standing Requirements When Dealing With A 362 Motion on a “Securitized” Mortgage

The Debtor argues that, in an asset securitization scheme, only the securities investors have standing to seek stay relief because they are the only parties with a financial interest in the securitized notes. However, because the Debtor executed the Note and received consideration (which he used to purchase the house), the contract is enforceable regardless of who provided the funding. In other words, the fact that the funds for a borrower’s loan are supplied by someone other than the loan originator, does not invalidate the loan or restrict enforcement of the loan contract to the parties who funded the loan. A number of cases and treatises recognize that consideration for a contract, including a promissory note, can be provided by a third party. See, e.g., DCM Ltd. P’ship v. Wang, 555 F. Supp. 2d 808, 817 (E.D. Mich. 2008); Buffalo County v. Richards, 212 Neb. 826, 828-29 (Neb. 1982); 3 WILLISTON ON CONTRACTS § 7:20 (Richard A. Lord, 4th ed. 2009); RESTATEMENT (SECOND) OF CONTRACTS § 71(4) (2009).

Notes are regularly assigned and the assignment does not change the nature of the contract. The assignee merely steps into the shoes of the assignor. In re Boyajian, 367 B.R. 138, 145 (9th Cir. BAP 2007); In re Trejos, 374 B.R. 210, 215 (9th Cir. BAP 2007). No additional consideration is required, as opposed to a novation which creates a new obligation. Id. at 216-17 citing RESTATEMENT (SECOND) OF CONTRACTS § 280, cmt. e. Therefore, the Debtor’s argument that the Note is unenforceable because the funder of the Note was not the payee fails. The Note is still valid and can be enforced by the party who has the right to enforce it under applicable Arizona law.

2. Proof Of A Note’s Entire Chain Of Ownership Is Not Necessary For Stay Relief

A movant for stay relief need only present evidence sufficient to present a colorable claim — not every piece of evidence that would be required to prove the right to foreclose under a state law judicial foreclosure proceeding is necessary. In re Emrich, 2009 WL 3816174, at *1 (Bankr. N.D. Cal. 2009). Accordingly, not every movant for relief from stay has to provide a complete chain of a note’s assignment to obtain relief.

Arizona’s deed of trust statute does not require a beneficiary of a deed of trust to produce the underlying note (or its chain of assignment) in order to conduct a Trustee’s Sale. Blau v. Am.’s Serv. Co., 2009 WL 3174823, at *6 (D. Ariz. 2009); Mansour v. Cal-W. Reconveyance Corp., 618 F. Supp. 2d 1178, 1181 (D. Ariz. 2009); Diessner v. Mortg. Elec. Registration Sys., 618 F. Supp. 2d 1184, 1187 (D. Ariz. 2009). It would make no sense to require a creditor to demonstrate more to obtain stay relief than it needs to demonstrate under state law to conduct a judicial or non-judicial foreclosure. Moreover, if a note is endorsed in blank, it is enforceable as a bearer instrument. See In re Hill, 2009 WL 1956174, at *2 (Bankr. D. Ariz. 2009). Therefore, this Court declines to impose a blanket requirement that all movants must offer proof of a note’s entire chain of assignments to have standing to seek relief although there may be circumstances where, in order to establish standing, the movant will have to do so.

3. The Movant Has Not Violated Rule 9011

The Debtor argues that GMAC “violated Rule 7011” by presenting insufficient and misleading evidence. Given that there is no Rule 7011, the Court assumes that the Debtor was actually referring to Bankruptcy Rule 9011. Rule 9011 allows a court to impose sanctions for filing a frivolous suit. FED. R. BANKR. P. 9011(c); see also FED. R. CIV. P. 11(c). As noted at the evidentiary hearing, the Court did not find that GMAC filed its motion for relief stay in bad faith, nor does this Court believe GMAC filed its motion thinking it did not have proper evidentiary support. There are numerous, often conflicting, decisions on the issues of “real party in interest” and constitutional standing, and what evidence must be presented by a servicer seeking stay relief. The record in this case does not support imposition of 9011 sanctions.

VI. CONCLUSION

GMAC has not demonstrated that it has constitutional or prudential standing or is the real party in interest entitled to prosecute a motion for relief from stay.

Accordingly, its motion is DENIED without prejudice.

Posted in case, foreclosure fraud, livinglies, MERS, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, neil garfield0 Comments

IN RE MATTER OF THE FORECLOSURE OF TAX LIENS, 2010 NY Slip Op 30628 – NY: Supreme Court, Wayne 2010 MERS

IN RE MATTER OF THE FORECLOSURE OF TAX LIENS, 2010 NY Slip Op 30628 – NY: Supreme Court, Wayne 2010 MERS

In the Matter of the Foreclosure of Tax Liens by Proceeding In Rem Pursuant to Article 11 of the Real Property Tax Law by the County of Wayne Regarding 2007 Town/County Tax.

MERS claims that the proceedings and ensuing conveyances of 4664 Smith Road were defective, because MERS was not separately noticed. There are at least two difficulties with this claim. First, the argument assumes that the County has a duty to read the Mortgage to determine whether anyone else other than the Mortgagee had a cognizable property interest warranting statutory notice under RPTL §1125. This Court does not believe this is or should be the case. The County should not have to go behind a title search to determine whether any property interests are conveyed to third parties not a party to an instrument on file. To accept MERS’ argument would require the County to read every mortgage from A to Z to make sure there are no “Nominees” of the Lender entitled to notice of tax foreclosure in lieu of or in addition to the Lender. Indeed, RPTL §1126(A) provides a vehicle for someone like MERS to receive notice without requiring the County to read every mortgage to determine whether notice should be given.

Second, the Mortgage from which MERS derives its claim of right to statutory notice under RPTL §1125 is by no means crystal clear as to what MERS’ involvement as `’Nominee” requires after the recording of the mortgage. Indeed. MERS does not explain what role the “Nominee” plays in the recording of a mortgage, or thereafter, except perhaps as something akin to a power-ofattorney or agent, albeit with independent standing. If the later is the case, it is incumbent upon the “”Nominee” to state its status as one due notice in the separate declaration of interest form required under section RPTL § 1126, which the County does have a categorical duty to read.

According, the application of MERS shall be, and the same hereby is, denied.

[ipaper docId=30954086 access_key=key-yg3kysmha9xoyredi1g height=600 width=600 /]

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



Posted in case, foreclosure fraud, MERS, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC.2 Comments

Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System

Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System

Via: b.daviesmd6605

Included here is a short excerpt that discusses the way MERS allows nearly any member have MERS authority to sign documents. The article says that some states require the signor to be a VP of the actual member. Eventually some states allow them to be an authorized signatory despite not being an employee. If any late assignments apply to you this is then a must read.

[ipaper docId=30807513 access_key=key-2jtfrih99eg7hyj51oi0 height=600 width=600 /]

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



Posted in Christopher Peterson, foreclosure fraud, MERS, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., robo signer, robo signers0 Comments

(MERS) MORTGAGE ELECTRONIC REGISTRATION SYSTEMS Inc.: Into The Mortgage Netherworld 101

(MERS) MORTGAGE ELECTRONIC REGISTRATION SYSTEMS Inc.: Into The Mortgage Netherworld 101

Posted in concealment, conspiracy, corruption, foreclosure, foreclosure fraud, foreclosure mills, forensic mortgage investigation audit, MERS, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud0 Comments

NO STANDING: MORTGAGE ELECTRONIC REGISTRATION SYSTEM, INC., APPELLANT, VS. SOUTHWEST HOMES OF ARKANSAS, APPELLEE

NO STANDING: MORTGAGE ELECTRONIC REGISTRATION SYSTEM, INC., APPELLANT, VS. SOUTHWEST HOMES OF ARKANSAS, APPELLEE

The Kansas appellate court noted that MERS received no funds and that the mortgage required the borrower to pay his monthly payments to the lender. just as in the case at hand, that the notice provisions of the mortgage “did not list MERS as an entity to contact upon default or foreclosure.” declaring that MERS did not have a “sort of substantial rights and interests” that had been found in a prior decision and noting that “a party with no beneficial interest is outside the realm of necessary parties,” the Kansas court concluded that “the failure to name and serve MERS as a defendant in a foreclosure action in which the lender of record has been served” was not such a fatal defect that the foreclosure judgment should be set aside. at 331, 192 P.3d at 181-82.

It is my opinion that the same holds true in the instant case. Here, Pulaski Mortgage, the lender for whom MERS served as nominee, was served in the foreclosure action. But, further, neither MERS’s holding of legal title, nor its status as nominee, demonstrates any interest that would have rendered it a necessary party pursuant to Ark. R. Civ. P. 19(a).

For these reasons, I concur that the circuit court’s order should be affirmed.

IMBER and WILLS, JJ., join.

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Posted in case, foreclosure, foreclosure fraud, MERS, mortgage electronic registration system0 Comments

BOGUS ASSIGNMENTS 3…Forgery, Counterfeit, Fraud …Oh MY!

BOGUS ASSIGNMENTS 3…Forgery, Counterfeit, Fraud …Oh MY!

For $29.95 YOU TOO CAN STEAL…OOOPS I MEAN BUY ANY HOME or ASSIGN ANY MORTGAGE!!
Now we have Topako Love, Christina Allen & Laura Hescott MASTER PIECES!!! These belong up there with the works of Salvador Dali, Pablo Picasso, Vincent Van Gogh, Claude Monet, Erica Johnson-Seck, Roger Stotts & Dennis Kirkpatrick!
I can’t wait for DMV to allow anyone FOR A FEE to assign auto Titles too!! Or has this occurred all ready…I am too tired to check!

Bank Mortgage Foreclosure FRAUD….BOGUS ASSIGNMENTS 3…Forgery, Counterfeit, Fraud …Oh MY!


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Posted in Lender Processing Services Inc., LPS, MERS, MERSCORP, mortgage bankers association, mortgage electronic registration system, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, Uncategorized0 Comments


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