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CLASS ACTION AMENDED against MERSCORP to include Shareholders, DJSP

CLASS ACTION AMENDED against MERSCORP to include Shareholders, DJSP

Kenneth Eric Trent, P.A. of Broward County has amended the Class Action complaint Figueroa v. MERSCORP, Inc. et al filed on July 26, 2010 in the Southern District of Florida.

Included in the amended complaint is MERS shareholders HSBC, JPMorgan Chase & Co., Wells Fargo & Company, AIG, Fannie Mae, Freddie Mac, WAMU, Countrywide, GMAC, Guaranty Bank, Merrill Lynch, Mortgage Bankers Association (MBA), Norwest, Bank of America, Everhome, American Land Title, First American Title, Corinthian Mtg, MGIC Investor Svc, Nationwide Advantage, Stewart Title,  CRE Finance Council f/k/a Commercial Mortgage Securities Association, Suntrust Mortgage,  CCO Mortgage Corporation, PMI Mortgage Insurance Company, Wells Fargo and also DJS Processing which is owned by David J. Stern.

MERSCORP shareholders…HERE

[ipaper docId=36456183 access_key=key-26csq0mmgo6l8zsnw0is height=600 width=600 /]

Related article:

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CLASS ACTION FILED| Figueroa v. Law Offices Of David J. Stern, P.A. and MERSCORP, Inc.

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



Posted in bank of america, chain in title, citimortgage, class action, concealment, CONTROL FRAUD, corruption, countrywide, djsp enterprises, fannie mae, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, forgery, Freddie Mac, HSBC, investigation, jpmorgan chase, Law Offices Of David J. Stern P.A., lawsuit, mail fraud, mbs, Merrill Lynch, MERS, MERSCORP, mortgage, Mortgage Bankers Association, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, non disclosure, notary fraud, note, racketeering, Real Estate, RICO, rmbs, securitization, stock, title company, trade secrets, trustee, Trusts, truth in lending act, wamu, washington mutual, wells fargo13 Comments

FORECLOSURE FRAUD Personally CAUGHT by JUDGE SCHACK! Dismissed with PREJUDICE!

FORECLOSURE FRAUD Personally CAUGHT by JUDGE SCHACK! Dismissed with PREJUDICE!

2010 NY Slip Op 51482(U)

ARGENT MORTGAGE COMPANY, LLC, Plaintiff,
v.
DAPHINE MAITLAND, ET. AL., Defendants.

41383/07.

Supreme Court, Kings County.

Decided August 19, 2010.

Melissa A Sposato, Esq., Law Offices of Jordan Katz, PC, Melville NY, Plaintiff.

No Appearances, Defendant.

ARTHUR M. SCHACK, J.

In this mortgage foreclosure action, plaintiff’s motion for an order of reference for the premises located at 732 Hendrix Street, Brooklyn, New York (Block 4305, Lot 22, County of Kings) is denied with prejudice. The complaint is dismissed. The notice of pendency filed against the above-named real property is cancelled. Plaintiff’s successor in interest, AMERICAN HOME MORTGAGE SERVICING, INC. (AHMSI), lacks standing to continue this action because the instant mortgage was satisfied on April 26, 2010. Plaintiff’s counsel never notified the Court that the mortgage had been satisfied and failed to discontinue the instant action with prejudice. I discovered that the mortgage had been satisfied by personally searching the Automated City Register Information System (ACRIS) website of the Office of the City Register, New York City Department of Finance. AHMSI’s President and Chief Executive Officer or its Executive Vice President, Chief Legal Officer and Secretary Jordan D. Dorchuck, Esq., its counsel, Melissa A. Sposato, Esq. and her firm, Jordan S. Katz, P.C., will be given an opportunity to be heard as to why this Court should not sanction them for making a “frivolous motion,” pursuant to 22 NYCRR §130-1.1.

Background

Defendant DAPHINE MAITLAND (MAITLAND) borrowed $392,000.00 from original plaintiff ARGENT MORTGAGE COMPANY, LLC (ARGENT), on August 4, 2006. The loan was secured by a mortgage, recorded by ARGENT, at the Office of the City Register of the City of New York, New York City Department of Finance, on August 23, 2006, at City Register File Number (CRFN) XXXXXXXXXX. Defendant MAITLAND allegedly defaulted in her mortgage loan payments with her June 1, 2007 payment. ARGENT commenced the instant action with the filing of the summons, complaint and notice of pendency with the Kings County Clerk on November 8, 2007. Plaintiff’s counsel, on April 14, 2009, filed the instant motion for an order of reference with the Court’sForeclosure Department. After reviewing the papers, the Foreclosure Department forwarded the instant motion to me on August 16, 2010.

On August 16, 2010, I searched ACRIS and discovered that AHMSI, the successor in interest to plaintiff ARGENT, executed a satisfaction of the instant mortgage almost four months ago, on April 26, 2010. The satisfaction was executed in Idaho Falls, Idaho, by Krystal Hall, Vice President of “AMERICAN HOME MORTGAGE SERVICING, INC., AS SUCCESSOR TO CITI RESIDENTIAL LENDING, INC. AS SUCCESSOR TO ARGENT MORTGAGE COMPANY, LLC,” and the satisfaction was recorded at the Office of the City Register of the City of New York, on May 10, 2010, at CRFN XXXXXXXXXXXXX.

Successor plaintiff AHMSI is one of several companies controlled by billionaire investor Wilbur L. Ross, Jr. through his firm, W. L. Ross & Company. Louise Story, in her April 4, 2008 New York Times article, “Investors Stalk the Wounded of Wall Street,” described Mr. Ross as “a dean of vulture investing.” She wrote:

Almost two centuries ago, as Napoleon marched on Waterloo, a scion of the Rothschilds is said to have declared: The time to buy is when blood is running in the streets.

Now as red ink runs on Wall Street, the figurative heirs of the Rothschilds — bankers, traders, hedge fund gurus and takeover artists — are plotting to profit from today’s financial upheaval. These market opportunists — vulture investors in the Wall Street term — have begun to swoop. They are buying up mortgages of hard-pressed homeowners, the bank loans of cash-short businesses, and companies that seem to be hurtling to bankruptcy. And they are trying to buy them all on the cheap. . . .

“The only time you really know you’ve reached the bottom is when you’re back on the other side and things are going back up,” said Wilbur L. Ross, Jr., a dean of vulture investors, who made a fortune buying steel companies when no one else seemed to want them.

Such caution aside, his firm, W. L. Ross & Company, recently spent $2.6 billion for two mortgage servicers [AHMSI and Option One] and a bond insurance company. He said he planned to buy more as hedge funds and other investor sell at bargain prices.

Moreover, ACRIS revealed that defendant MAITLAND sold the premises to 732 HENDRIX STREET, LLC for $155,000.00, with the deed executed on April 5, 2010 and recorded on April 14, 2010, at the Office of the City Register of the City of New York, at CRFN XXXXXXXXXXXXX.

Plaintiff’s counsel never had the courtesy or professionalism to notify the Court that the instant mortgage was satisfied and file a motion to discontinue the instant action. The Court is gravely concerned that it: expended scarce resources on an action that should have been discontinued; and, would have signed an order that could have possibly damaged the credit rating of defendant MAITLAND and put an unfair cloud on the title to the subject premises now owned by 732 HENDRIX STREET, LLC, causing both defendant MAITLAND and 732 HENDRIX STREET, LLC much time and effort to correct an error caused by the failure of successor plaintiff AHMSI and plaintiff’s counsel to exercise due diligence. If successor plaintiff AHMSI is a responsible lender, not a vulture investor looking to profit “when blood is running in the streets,” it should have notified the Court that the subject mortgage had been satisfied.

Discussion

It is clear that successor plaintiff AHMSI lacked standing to proceed in the instant action since some time prior to April 26, 2010, when the satisfaction for defendant MAITLAND’s mortgage was executed. The exact date is probably April 5, 2010, when defendant MAITLAND likely paid off the subject mortgage loan as part of her closing with 732 HENDRIX STREET, LLC, for the sale of the subject mortgaged premises. “To establish a prima facie case in an action to foreclose a mortgage, the plaintiff must establish the existence of the mortgage and the mortgage note, ownership of the mortgage, and the defendant’s default in payment.” (Campaign v Barba (23 AD3d 327 [2d Dept. 2005]). The instant mortgage was satisfied months before the instant motion for an order of reference was forwarded to me by the Foreclosure Department. The satisfaction, dated April 26, 2010, states that “AMERICAN HOME MORTGAGE INC. AS SUCCESSOR TO CITI RESIDENTIAL LENDING, INC. AS SUCCESSOR TO ARGENT MORTGAGE COMPANY, LLC . . . does hereby certify that a certain indenture of mortgage . . . to secure payment of the principal sum of $392,000.00, and interest, and duly recorded . . . document no. 2006000477619 on the 23rd day of August 2006, is PAID, and does hereby consent that the same be discharged of record.” (See Household Finance Realty Corp. of New York v Wynn, 19 AD3d 545 [2d Dept. 2005]; Sears Mortgage Corp. v Yahhobi, 19 AD3d 402 [2d Dept. 2005]; Ocwen Federal Bank FSB v Miller, 18 AD3d 527 [2d Dept. 2005]; U.S. Bank Trust Nat. Ass’n Trustee v Butti, 16 AD3d 408 [2d Dept 2005]; First Union Mortgage Corp. v Fern, 298 AD2d 490 [2d Dept 2002]; Village Bank v Wild Oaks, Holding, Inc., 196 AD2d 812 [2d Dept 1993]).

The Court of Appeals (Saratoga County Chamber of Commerce, Inc. v Pataki, 100 NY2d 801, 812 [2003], cert denied 540 US 1017 [2003]) declared that “[s]tanding to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress.”

In Caprer v Nussbaum (36 AD3d 176, 181 [2d Dept 2006]) the Court held that “[s]tanding to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request.” If a plaintiff lacks standing to sue, the plaintiff may not proceed in the action. (Stark v Goldberg, 297 AD2d 203 [1st Dept 2002]).

Since AHMSI executed the satisfaction for the instant mortgage, the Court must not only deny the instant motion, but also dismiss the complaint and cancel the notice of pendency filed by ARGENT with the Kings County Clerk on November 8, 2007. CPLR § 6501 provides that the filing of a notice of pendency against a property is to give constructive notice to any purchaser of real property or encumbrancer against real property of an action that “would affect the title to, or the possession, use or enjoyment of real property, except in a summary proceeding brought to recover the possession of real property.” Professor David Siegel, in NY Prac, § 334, at 535 [4th ed] observes about a notice of pendency that:

The plaintiff files it with the county clerk of the real property county, putting the world on notice of the plaintiff’s potential rights in the action and thereby warning all comers that if they then buy the property or lend on the strength of it or otherwise rely on the defendant’s right, they do so subject to whatever the action may establish as the plaintiff’s right.

The Court of Appeals, in 5303 Realty Corp. v O & Y Equity Corp. (64 NY2d 313, 315 [1984]), commented that “[a] notice of pendency, commonly known as a lis pendens,‘ can be a potent shield to litigants claiming an interest in real property.” The Court, at 318-320, outlined the history of the doctrine of lis pendens back to 17th century England. It was formally recognized in New York courts in 1815 and first codified in the Code of Procedure [Field Code] enacted in 1848. At 319, the Court stated that “[t]he purpose of the doctrine was to assure that a court retained its ability to effect justice by preserving its power over the property, regardless of whether a purchaser had any notice of the pending suit,” and, at 320, “the statutory scheme permits a party to effectively retard the alienability of real property without any prior judicial review.”

In Israelson v Bradley (308 NY 511, 516 [1955]) the Court observed that with a notice of pendency a plaintiff who has an interest in real property has received from the State:

an extraordinary privilege which . . . upon the mere filing of the notice of a pendency of action, a summons and a complaint and strict compliance with the requirements of section 120 [of the Civil Practice Act; now codified in CPLR § § 6501, 6511 and 6512] is required. Proper administration of the law by the courts requires promptness on the part of a litigant so favored and that he accept the shield which has been given him upon the terms imposed and that he not be permitted to so use the privilege granted that itbecomes a sword usable against the owner or possessor of realty. If the terms imposed are not met, the privilege is at an end. [Emphasis added]

Article 65 of the CPLR outlines notice of pendency procedures. The Court, in Da Silva v Musso (76 NY2d 436, 442 [1990]), held that “the specific statutorily prescribed mechanisms for implementing this provisional remedy . . . were designed with a view toward balancing the interests of the claimant in the preservation of the status quo against the equally legitimate interests of the property owner in the marketability of his title.” The Court of Appeals, quoted Professor Siegel, in holding that “[t]he ability to file a notice of pendency is a privilege that can be lost if abused’ (Siegel, New York Practice § 336, at 512).” (In Re Sakow, 97 NY2d 436, 441 [2002]).

The instant case, with successor plaintiff AHMSI lacking standing to bring this action and the complaint dismissed, meets the criteria for losing “a privilege that can be lost if abused.” CPLR § 6514 (a) provides for the mandatory cancellation of a notice of pendency by:

[t]he court, upon motion of any person aggrieved and upon such notice as it may require, shall direct any county clerk to cancel a notice of pendency, if service of a summons has not been completed within the time limited by section 6512; or if the action has been settled, discontinued or abated; or if the time to appeal from a final judgment against the plaintiff has expired; or if enforcement of a final judgment against the plaintiff has not been stayed pursuant to section 5519. [Emphasis added]

The plain meaning of the word “abated,” as used in CPLR § 6514 (a) is the ending of an action. Abatement is defined (Black’s Law Dictionary 3 [7th ed 1999]) as “the act of eliminating or nullifying.” “An action which has been abated is dead, and any further enforcement of the cause of action requires the bringing of a new action, provided that a cause of action remains’ (2A Carmody-Wait 2d § 11.1).” (Nastasi v Nastasi, 26 AD3d 32, 40 [2d Dept 2005]). Further, Nastasi at 36, held that “[c]ancellation of a notice of pendency can be granted in the exercise of the inherent power of the court where its filing fails to comply with CPLR 6501 (see 5303 Realty Corp. v O & Y Equity Corp. at 320-321; Rose v Montt Assets, 250 AD2d 451, 451-452 [1st Dept 1998]; Siegel, NY Prac § 336 [4th ed]).” AHMSI, as successor plaintiff, lacks standing to sue. Therefore, dismissal of the instant complaint must result in mandatory cancellation of the November 8, 2007 notice of pendency against the property “in the exercise of the inherent power of the Court.”

The failure of successor plaintiff AHMSI, by its President David M. Friedman or its Executive Vice President, Chief Legal Officer and Secretary Jordan D. Dorchuck, Esq., and its counsel, Melissa A. Sposato, Esq. and her firm, Jordan S. Katz, P.C., to discontinue the instant action since the April 2010 payoff of the MAITLAND mortgage appears to be “frivolous.” 22 NYCRR § 130-1.1 (a) states that “the Court, in its discretion may impose financial sanctions upon any party or attorney in a civil action or proceeding who engages in frivolous conduct as defined in this Part, which shall be payable as provided in section 130-1.3 of this Subpart.” Further, it states in 22 NYCRR § 130-1.1 (b), that “sanctions may be imposed upon any attorney appearing in the action or upon a partnership, firm or corporation with which the attorney is associated.”

22 NYCRR § 130-1.1 (c) states that:

For purposes of this part, conduct is frivolous if:

(1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law;

(2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or

(3) it asserts material factual statements that are false.

It is clear that since at least April 26, 2010 the instant motion for aan order of reference “is completely without merit in law” and “asserts material factual statements that are false.”

Several years before the drafting and implementation of the Part 130 Rules for costs and sanctions, the Court of Appeals (A.G. Ship Maintenance Corp. v Lezak, 69 NY2d 1, 6 [1986]) observed that “frivolous litigation is so serious a problem affecting the proper administration of justice, the courts may proscribe such conduct and impose sanctions in this exercise of their rule-making powers, in the absence of legislation to the contrary (see NY Const, art VI, § 30, Judiciary Law § 211 [1] [b] ).”

Part 130 Rules were subsequently created, effective January 1, 1989, to give the courts an additional remedy to deal with frivolous conduct. These stand beside Appellate Division disciplinary case law against attorneys for abuse of process or malicious prosecution. The Court, in Gordon v Marrone (202 AD2d 104, 110 [2d Dept 1994], lv denied 84 NY2d 813 [1995]), instructed that:

Conduct is frivolous and can be sanctioned under the court rule if “it is completely without merit . . . and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law; or . . .

it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another” (22 NYCRR 130-1.1[c] [1], [2] . . . ).

In Levy v Carol Management Corporation (260 AD2d 27, 33 [1st Dept 1999]) the Court stated that in determining if sanctions are appropriate the Court must look at the broad pattern of conduct by the offending attorneys or parties. Further, “22 NYCRR 130-1.1 allows us to exercise our discretion to impose costs and sanctions on an errant party . . .” Levy at 34, held that “[s]anctions are retributive, in that they punish past conduct. They also are goal oriented, in that they are useful in deterring future frivolous conduct not only by the particular parties, but also by the Bar at large.”

The Court, in Kernisan, M.D. v Taylor (171 AD2d 869 [2d Dept 1991]), noted that the intent of the Part 130 Rules “is to prevent the waste of judicial resources and to deter vexatious litigation and dilatory or malicious litigation tactics (cf. Minister, Elders & Deacons of Refm. Prot. Church of City of New York v 198 Broadway, 76 NY2d 411; see Steiner v Bonhamer, 146 Misc 2d 10) [Emphasis added].” Since at least April 26, 2010, and probably since April 5, 2010, the instant action is “a waste of judicial resources.” This conduct, as noted in Levy, must be deterred. In Weinstock v Weinstock (253 AD2d 873 [2d Dept 1998]) the Court ordered the maximum sanction of $10,000.00 for an attorney who pursued an appeal “completely without merit,” and holding, at 874, that “[w]e therefore award the maximum authorized amount as a sanction for this conduct (see, 22 NYCRR 130-1.1) calling to mind that frivolous litigation causes a substantial waste of judicial resources to the detriment of those litigants who come to the Court with real grievances [Emphasis added].” Citing Weinstock, the Appellate Division, Second Department, in Bernadette Panzella, P.C. v De Santis (36 AD3d 734 [2d Dept 2007]) affirmed a Supreme Court, Richmond County $2,500.00 sanction, at 736, as “appropriate in view of the plaintiff’s waste of judicial resources [Emphasis added].”

In Navin v Mosquera (30 AD3d 883 [3d Dept 2006]) the Court instructed that when considering if specific conduct is sanctionable as frivolous, “courts are required to examine whether or not the conduct was continued when its lack of legal or factual basis was apparent [or] should have been apparent’ (22 NYCRR 130-1.1 [c]).” The Court, in Sakow ex rel. Columbia Bagel, Inc. v Columbia Bagel, Inc. (6 Misc 3d 939, 943 [Sup Ct,

New York County 2004]), held that “[i]n assessing whether to award sanctions, the Court must consider whether the attorney adhered to the standards of a reasonable attorney (Principe v Assay Partners, 154 Misc 2d 702 [Sup Ct, NY County 1992]).” In the instant action, plaintiff’s Chief Legal Officer or its outside counsel is responsible for keeping track of whether the mortgage was satisfied. In Sakow at 943, the Court observed that “[a]n attorney cannot safely delegate all duties to others.”

This Court will examine the conduct of successor plaintiff AHMSI and plaintiff’s counsel, in a hearing, pursuant to 22 NYCRR § 130-1.1, to determine if plaintiff AHMSI, by its President, David M. Friedman, or its Executive Vice President, Chief Legal Officer and Secretary, Jordan D. Dorchuck, Esq., and plaintiff’s counsel Melissa A. Sposato, Esq. and her firm Jordan S. Katz, P.C. engaged in frivolous conduct, and to allow successor plaintiff AHMSI, by its President David M. Friedman or Executive Vice President, Chief Legal Officer and Secretary Jordan D. Dorchuck, Esq., and plaintiff’s counsel Melissa A. Sposato, Esq. and her firm Jordan S. Katz, P.C. a reasonable opportunity to be heard. The Court is aware that AHMSI’s Chief Legal Officer, Mr. Dorchuck, is a member of the New York State Bar. (See Mascia v Maresco, 39 AD3d 504 [2d Dept 2007]; Yan v Klein, 35 AD3d 729 [2d Dept 2006]; Greene v Doral Conference Center Associates, 18 AD3d 429 [2d Dept 2005]; Kucker v Kaminsky & Rich, 7 AD3d 39 [2d Dept 2004]).

Conclusion

Accordingly, it is

ORDERED, that the motion of successor plaintiff, AMERICAN HOME MORTGAGE SERVICING, INC., for an order of reference for the premises located at 732 Hendrix Street, Brooklyn, New York (Block 4305, Lot 22, County of Kings), is denied with prejudice; and it is further

ORDERED, that because successor plaintiff, AMERICAN HOME MORTGAGE SERVICING, INC., lacks standing and no longer is the mortgagee in this foreclosure action, the instant complaint, Index No. 41383/07 is dismissed with prejudice; and it is further

ORDERED, that the Notice of Pendency filed with the Kings County Clerk on November 8, 2007, by original plaintiff, ARGENT MORTGAGE COMPANY, LLC, in an action to foreclose a mortgage for real property located at 732 Hendrix Street, Brooklyn, New York (Block 4305, Lot 22, County of Kings), is cancelled; and it is further

ORDERED, that it appearing that successor plaintiff AMERICAN HOME MORTGAGE SERVICING, INC., Melissa A. Sposato, Esq. and Jordan S. Katz, P.C. engaged in “frivolous conduct,” as defined in the Rules of the Chief Administrator, 22 NYCRR § 130-1 (c), and that pursuant to the Rules of the Chief Administrator, 22 NYCRR § 130.1.1 (d), “[a]n award of costs or the imposition of sanctions may be made. . . upon the court’s own initiative, after a reasonable opportunity to be heard,” this Court will conduct a hearing affording: successor plaintiff AMERICAN HOME MORTGAGE SERVICING, INC., by its President David M. Friedman or Executive Vice President, Chief Legal Officer and Secretary, Jordan D. Dorchuck, Esq.; Melissa A. Sposato, Esq.; and, Jordan S. Katz, P.C.; “a reasonable opportunity to be heard” before me in Part 27, on Monday, September 13, 2010, at 2:30 P.M., in Room 479, 360 Adams Street, Brooklyn, NY 11201; and it is further

ORDERED, that because the headquarters of successor plaintiff AMERICAN HOME MORTGAGE SERVICING, INC. is in Irving, Texas, Mr. Friedman or Mr. Dorchuck may appear either in person or by telephone; and it is further

ORDERED, that Ronald David Bratt, Esq., my Principal Law Clerk, is directed to serve this order by first-class mail, upon: David M. Friedman, President of successor plaintiff AMERICAN HOME MORTGAGE SERVICING, INC., 4600 Regent Boulevard, Suite 200, Irving, Texas 75063; Jordan D. Dorchuck, Esq., Executive Vice President, Chief Legal Officer and Secretary of successor plaintiff AMERICAN HOME MORTGAGE SERVICING, INC., 4600 Regent Boulevard, Suite 200, Irving, Texas 75063; Melissa A. Sposato, Esq., Law Offices of Jordan S. Katz, P.C., 395 North Service Road, Suite 401, Melville, New York XXXXX-XXXX; and Jordan S. Katz, P.C., 395 North Service Road, Suite 401, Melville, New York XXXXX-XXXX.

This constitutes the Decision and Order of the Court.

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



Posted in bogus, chain in title, citi, concealment, conflict of interest, conspiracy, CONTROL FRAUD, corruption, discovery, dismissed, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, inc., investigation, judge arthur schack, lawsuit, mortgage, Mortgage Foreclosure Fraud, non disclosure, note, quiet title, Real Estate, scam, Violations2 Comments

MUST READ |E-Discovery…Electronic Registration Systems WORST NIGHTMARE!

MUST READ |E-Discovery…Electronic Registration Systems WORST NIGHTMARE!

Via: Discovery Tactics aka Anthony Martinez & Assoc.

Latest Electronically Stored Information (ESI) Cases

I’ve been harping on the importance of demanding and acessing ESI from foreclosing parties for quite some time now.  A properly made ESI discovery request will provide numerous “smoking gun” documents that are sure to place the opposing party in a uncomfortable position.  Below I’ve identifed some of the most recent and more important cases that involve ESI.

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Court Grants Defendant’s Motion for Entry of Clawback Provision

Rajala v. McGuire Woods LLP, 2010 WL 2649582 (D. Kan. July 22, 2010) Plaintiff, as Bankruptcy Trustee, brought suit against defendant, alleging several claims. The parties could not agree on the entry of a clawback provision. Accordingly, defendant moved the…

Jury Instruction Allowing Inference that Destroyed Evidence Was Unfavorable and Payment of Attorneys’ Fees and Costs Ordered as Sanction for Failure to Preserve

Medcorp, Inc. v. Pinpoint Tech., Inc., 2010 WL 2500301 (D. Colo. June 15, 2010) Finding “willful” spoliation of 43 hard drives “in the sense that Plaintiff was aware of its responsibilities to preserve relevant evidence and failed to take necessary…

Judge Scheindlin Amends Recent Pension Opinion

On May 28th, Judge Shira Scheindlin entered an order amending her recent opinion in Pension Comm. of Univ. of Montreal Pension Plan v. Bank of Am. Secs., LLC. The order provides important clarification regarding the scope of a party’s obligation…

Court Rules Failure to Copy Files on Flash Drive Prior to Failure of the Drive Violated Duty to Preserve

Wilson v. Thorn Energy, LLC, 2010 WL 1712236 (S.D.N.Y. Mar. 15, 2010) In this case, the court ordered sanctions for defendants’ failure to preserve relevant data where defendants failed to back up a flash drive containing all relevant financial records…

Court Orders Monetary Sanctions for Production Delay Resulting from Counsel’s Failure to Become Familiar with Plaintiff’s Retention Policies and Systems

GFI Acquisition, LLC v. Am. Federated Title Corp. (In re A & M Fla. Props. II, LLC), 2010 WL 1418861 (Bankr. S.D.N.Y. Apr. 7, 2010) Where plaintiff’s counsel “failed in his obligation to locate and produce all relevant documents in…

Court Rules Communications with Attorney Using Work Computer are Protected as Privileged

Stengart v. Loving Care Agency, Inc., 2010 WL 1189458 (N.J. Mar. 30, 2010) In this employment litigation, the Supreme Court of New Jersey addressed whether employees have a reasonable expectation of privacy as to attorney-client privileged emails sent and received…

Despite Malaysian Blocking Statute, Court Compels Third Party’s Production of Foreign Banking Information Pursuant to Subpoena

Gucci Amer., Inc. v. Curveal Fashion, 2010 WL 808639 (S.D.N.Y. Mar. 8, 2010) Plaintiff sought to compel the production of documents and information regarding defendants’ Malaysian bank accounts pursuant to a subpoena served on United Overseas Bank’s New York Agency…

Court Provides Detailed Analysis of Law of Spoliation, Orders Adverse Inference Instruction, Monetary Sanctions for Intentional Spoliation of ESI

Rimkus Consulting Group, Inc. v. Cammarata, 2010 WL 645253 (S.D. Tex. Feb. 19, 2010) For intentional spoliation, the court declined to order terminating sanctions but ordered an adverse inference instruction and for defendants to pay plaintiff’s attorneys fees and costs….

Court Finds Data “Not Reasonably Accessible,” Denies Motion to Compel

Rodriguez-Torres v. Gov. Dev. Bank of Puerto Rico, 265 F.R.D. 40 (D.P.R. 2010) In this employment discrimination case, the court found the electronically stored information (“ESI”) requested by the plaintiffs “not reasonably accessible because of the undue burden and cost”…

“Zubulake Revisited: Six Years Later”: Judge Shira Scheindlin Issues her Latest e-Discovery Opinion

Pension Comm. of Univ. of Montreal Pension Plan v. Bank of Am. Secs., LLC, 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010) (Amended Order) Issued earlier this month, Judge Shira Scheindlin’s opinion in Pension Comm. of Univer. of Montreal Pension Plan…

Court Compels Discovery from Foreign Corporation Pursuant to Federal Rules of Civil Procedure

In re Global Power Equip. Group, Inc., 418 B.R. 833 (Bankr. D. Del. 2009) Upon a motion to compel production of documents from claimant, a foreign corporation, the court found the documents at issue to be within the control of…

Swiss Government Says It Would Seize UBS Data Sought by U.S.

Bloomberg.com, July 8, 2009 By David Voreacos and Mort Lucoff July 8 (Bloomberg) — Switzerland said it would seize UBS AG data to prevent the U.S. Justice Department from pursuing a U.S. court order seeking the identities of 52,000 American…

Finding Defendants’ Behavior “a Textbook Case of Discovery Abuse,” Court Orders $1,022,700 in Monetary Sanctions

Kipperman v. Onex Corp., 2009 WL 1473708 (N.D. Ga. May 27, 2009) In this constructive transfer and fraud case arising out of the 2003 bankruptcy of Magnatrax Corporation, plaintiff alleged numerous discovery abuses on the part of defendants and sought…

Court Declines to Compel Production of Documents from Foreign Jurisdiction upon Finding a Lack of Personal Jurisdiction and where Certain Documents are Protected from Production by Israeli Law

Linde v. Arab Bank, PLC, 2009 WL 1456573 (E.D.N.Y. May 22, 2009) In this case, defendant Arab Bank moved to compel production of documents, pursuant to subpoena, by non-parties Israel Discount Bank, Ltd. (“IDB”), its indirect, wholly –owned subsidiary, Israel…

Granting Motion to Compel, Court Orders Appointment of Independent Expert “to Retrieve any Deleted Responsive Files from Defendants’ Computers”

Bank of Mongolia v. M & P Global Fin. Servs., Inc., 2009 WL 1117312 (S.D. Fla. Apr. 24, 2009) In this case arising from allegations that defendants conspired to defraud plaintiff of $23 million, defendants failed to properly and timely…

Court Orders Production of Relevant Source Code Citing Defendant’s Suggestion for Mitigating Costs

Metavante Corp. v. Emigrant Savings Bank, 2008 WL 4722336 (E.D. Wis. Oct. 24, 2008) In this breach of contract case, Emigrant filed several motions to compel Metavante’s response to multiple discovery requests. One motion sought the production of source code…

Updated List: Local Rules, Forms and Guidelines of United States District Courts Addressing E-Discovery Issues

At least 41 United States District Courts now require compliance with special local rules, forms or guidelines addressing the discovery of electronically stored information. In some districts where there are no local rules or court-mandated forms, individual judges have created…

Finding “No Reason to Treat Websites Differently than Other Electronic Files,” Court Grants Adverse Inference for Failure to Preserve Website

Arteria Prop. Pty Ltd. v. Universal Funding V.T.O., Inc., 2008 WL 4513696 (D.N.J. Oct. 1, 2008) (Not for Publication) In this case arising from failed negotiations for a long term development loan, the plaintiff filed a motion for spoliation sanctions…

Court Denies Protective Order, Orders Allegedly Proprietary Data Produced Directly to Competitor

In re NVMS, LLC, 2008 WL 4488963 (Bankr. M.D. Tenn. Mar. 21, 2008) In this case, the debtor, a medical services company, moved for expedited discovery of information contained in the database of a former billing partner. In July of…

No Spoliation Found Where Expert Drafted His Report on Computer, Without Saving or Preserving Progressive Iterations

In re Teleglobe Communications Corp., 2008 WL 3198875 (Bankr. D. Del. Aug. 7, 2008) In this lengthy opinion addressing a variety of issues, the bankruptcy judge denied defendants’ motion to exclude testimony of the plaintiff’s expert as a sanction for…

Magistrate Judge “Clearly Erred” by Analyzing Cost-Shifting Dispute for Paper Production under Seven-Factor Zubulake Test

Tierno v. Rite Aid Corp., 2008 WL 3287035 (N.D. Cal. July 31, 2008) In this wage and hour employment case, plaintiff sought documents about class members’ employment and salary history, terminations, performance evaluations, discipline, certain communications, and personnel files. Rite…

Inadequate Preservation Efforts Necessitate Restoration and Production of Email from Backup Tapes, and Forensic Search of CEO’s Laptop

Treppel v. Biovail Corp., 2008 WL 866594 (S.D.N.Y. Apr. 2, 2008) In this case, plaintiff alleged that Biovail Corp., its CEO, general counsel and others engaged in a “smear campaign” that destroyed plaintiff’s career as a securities analyst. He asserted…

Magistrate Judge Sets Protocol for Plaintiff’s Forensic Examination of Former Employee’s Computer and Requests Affidavit from Expert Explaining Certain Issues

Equity Analytics, LLC v. Lundin, 248 F.R.D. 331 (D.D.C. 2008) In this case, plaintiff Equity Analytics claimed that defendant, its former employee, gained illegal access to electronically stored information after he was fired. Defendant explained that another Equity employee had…

Recent Amendments to Federal Rules of Appellate, Bankruptcy, Civil and Criminal Procedure Require Redaction of Personal Identification Information from Documents Filed with the Court

On December 1, 2007, the amendments to the Federal Rules of Appellate, Bankruptcy, Civil, and Criminal Procedure that implement the E-Government Act of 2002 became effective. The amendment to Appellate Rule 25, and new Bankruptcy Rule 9037, Civil Rule 5.2,…

The Biggest Data Disaster Ever

From The Red Tape Chronicles, Posted: Friday, November 30 at 05:15 am CT by Bob Sullivan: “It’s being called the worst data leak of the information age. Earlier this month, U.K. officials had to admit they’d lost hard drives containing…

Email Communications Between Physician and His Attorney Exchanged Over Hospital’s Email System Not Protected by Attorney-Client Privilege or Work Product Doctrine

Scott v. Beth Israel Med. Center Inc., 2007 WL 3053351 (N.Y. Sup. Ct. Oct. 17, 2007) Plaintiff is a physician who sued for breach of contract based upon his termination from defendant hospital (“BI”). Under the contract at issue, BI…

Inadequate Legal Hold Measures, and Resulting Spoliation, Warrant Sanctions

In re NTL, Inc. Sec. Litig., 2007 WL 241344 (S.D.N.Y. Jan. 30, 2007) In this opinion, Magistrate Judge Andrew J. Peck granted plaintiffs’ motion for sanctions in the form of an adverse inference instruction and awarded plaintiffs their costs and…

Court Allows Plaintiffs to Conduct Expedited Discovery Regarding Possible Spoliation

Roberts v. Canadian Pac. R.R. Ltd., 2007 WL 118901 (D. Minn. Jan. 11, 2007) In this decision, Chief District Judge James M. Rosenbaum granted plaintiff’s motion for leave to conduct limited discovery concerning spoliation of evidence on an expedited basis….

Condemning Defendant’s Gamesmanship, Court Orders Production of Database

JPMorgan Chase Bank, N.A. v. Neovi, Inc., 2006 WL 3803152 (S.D. Ohio Nov. 14, 2006) In this case involving UCC claims stemming from defendant’s internet-based check service, defendant disputed that it did sufficient business with Ohio residents to subject it…

Court Grants Plaintiff Access to Defendant’s Database

Bianchi v. The Bureaus, Inc., 2006 WL 3802758 (N.D. Ill. Nov. 1, 2006) In this brief order, the court granted plaintiff’s motion to allow her computer expert access a database maintained by defendant, for the purpose of determining whether the…

Citing Conference of Chief Justices’ Guidelines to State Courts, North Carolina Court Refuses to Compel Nonparty to Produce Deleted Emails from Backup Tapes

Bank of America Corp. v. SR Int’l Bus. Ins. Co., Ltd., 2006 WL 3093174, 2006 NCBC 15 (N.C. Super. Nov. 1, 2006) In its introductory remarks, the court advised: This opinion should be read in conjunction with the opinion in…

North Carolina Court Orders Production of Email from Backup Tapes; Parties to Share Restoration Costs Equally

Analog Devices, Inc. v. Michalski, 2006 WL 3287382 (N.C. Super. Nov. 1, 2006) (Unpublished) In this misappropriation of trade secrets case, defendants moved to compel the production of emails of the originators of the trade secrets at issue relating to…

North Carolina Court Relies on Conference of Chief Justices’ Guidelines in Two Decisions Involving the Production of Email from Backup Tapes

These two opinions, both filed on November 1, 2006, discuss for the first time the extent to which inaccessible electronic data is discoverable and who should pay for its production under the North Carolina Rules of Civil Procedure. Bank of…

$1.888 Million Judgment Entered in Favor of Bankruptcy Trustee Based on Adverse Party’s Spoliation of Financial Records

In re Quintus Corp., 353 B.R. 77 (Bankr. D. Del. 2006) Avaya, Inc. purchased the assets of the debtors in bankruptcy, and agreed to assume certain of the debtors’ liabilities. Thereafter, the trustee filed an adversary complaint against Avaya asserting…

Failure to Conduct Reasonable Investigation for Responsive Documents and Other Discovery Abuses Warrant Adverse Inference Instruction

3M Innovative Props. Co. v. Tomar Elecs., 2006 WL 2670038 (D. Minn. Sept. 18, 2006) In this patent infringement litigation, the district court judge affirmed the magistrate’s report and recommendation that plaintiff’s motion for sanctions against the defendant be granted…

Party Not Entitled to Shift Costs of Restoring Emails that were Converted to Inaccessible Format After Duty to Preserve was Triggered

Quinby v. WestLB AG, 2006 WL 2597900 (S.D.N.Y. Sept. 5, 2006) Like the plaintiff in the Zubulake v. UBS Warburg LLC, the plaintiff in this case was a highly-paid investment banker who accused her employer of gender discrimination and illegal…

Crime-Fraud Exception to Attorney-Client Privilege Invoked to Allow Testimony and Production of Notes by Attorney, Where Executive’s Deletion of Email Sought by Grand Jury Could Constitute Obstruction of Justice

In re Grand Jury Investigation, 445 F.3d 266 (3rd Cir. 2006) This opinion relates to an ongoing grand jury investigation of suspected federal criminal activity; because of the secrecy of the proceeding, the court’s opinion lacks specific details. The grand…

Second Circuit Reverses Frank Quattrone Conviction for Obstruction of Justice and Witness Tampering

In 2000, Credit Suisse First Boston Corporation (“CSFB”) employed Frank Quattrone as head of its Global Technology Group (the “Tech Group”). In that capacity, Quattrone managed approximately 400 technology investment bankers from the firm’s Palo Alto, California office. The Tech…

Florida Court Affirms $75,000 Coercive Civil Contempt Sanction Against Defendants For Prolonged Discovery Abuse

Channel Components, Inc. v. Am. II Electronics, Inc., 915 So. 2d 1278 (Fla. Dist. Ct. App. 2005) In this case alleging tortious interference and related claims against two former employees, the plaintiff sought intervention by the court several times in…

Defendant Sanctioned for Negligent Failure to Institute and Communicate Legal Hold

In re Old Banc One Shareholders Sec. Litig., 2005 WL 3372783 (N.D. Ill. Dec. 8, 2005) In this opinion, the District Court adopted in full the Magistrate’s Report and Recommendation regarding plaintiffs’ motion for sanctions based upon the defendant’s failure…

Bank of America Corporation Ordered to Provide Discovery on Behalf of Non-Party Wholly-Owned Subsidiaries

In re ATM Fee Antitrust Litig., 2005 WL 3299763 (N.D. Cal. Dec. 5, 2005) In this class action, plaintiffs propounded requests for production of documents and a request for admissions to all named defendants, including Bank of America Corporation (“BAC”)….

Despite Evidence of Intentional and Negligent Concealment, Bankruptcy Court Dismisses Trustee’s Spoliation of Evidence Counterclaims Because No Injury Was Shown

In re Tri-State Armored Services, Inc., 332 B.R. 690 (Bankr. D.N.J. 2005) Insurance company brought adversary proceeding against Chapter 7 trustee, seeking either equitable rescission of employee dishonesty, crime, and disappearance insurance policies issued to debtor armored car company, or…

Court Orders Production of Home Office Backup Tape Created in Connection with CFTC Receivership

Commodity Futures Trading Commission v. Equity Financial Group, LLC, et al., 2005 WL 2205789 (D.N.J. Sept. 9, 2005) In April 2004, the U.S. Commodity Futures Trading Commission (“CFTC”) filed an enforcement action against Equity Financial Group, LLC (“Equity”) and others…

UBS Securities to Pay $2.1 Million in Penalties and Fines for Failure to Preserve Email

On July 13, 2005 the Securities and Exchange Commission (“Commission”) issued an Order in connection with the alleged failure of UBS Securities LLC (“UBS”) to preserve email. The Commission accepted an Offer of Settlement and UBS consented to entry of…

Spoliation Instruction Appropriate where Defendants Failed to Preserve Email

Arndt v. First Union Nat’l Bank, 613 S.E.2d 274 (N.C. Ct.App. 2005) Donald Arndt (“Arndt”) was hired by First Union National Bank (“First Union”) in June 1996 with an initial salary of $90,000 per year and a guaranteed minimum incentive…

Seventh Circuit Reverses Sanction Requiring Production of Documents Listed on Privilege Log

American National Bank and Trust Co. of Chicago v. Equitable Life Assurance Society of the United States, 406 F.3d 867 (7th Cir. 2005) American National Bank and Trust Co. of Chicago, as Trustee f/b/o Emerald Investments LP, and Emerald Investments…

Privilege Not Necessarily Waived Where Email Between Employee and Personal Attorney Maintained on Corporate Email System

In re Asia Global Crossing, Ltd., 322 B.R. 247 (S.D.N.Y. 2005) Asia Global Crossing, Ltd. and Asia Global Crossing Development Co. (collectively “Asia Global”) were pan-Asian telecommunication carriers which filed for bankruptcy under Chapter 11 on November 17, 2002. Asia…

Magistrate Recommends Adverse Inference Instruction and Monetary Sanctions for Failure to Preserve Hard Drives, Audio Recordings and Email

E*Trade Securities LLC v. Deutsche Bank AG, et al., Civil No. 02-3711 RHK/AJB and Civil No. 02-3682 RHK/AJB (D. Minn. Feb. 17, 2005) United States Magistrate Judge Arthur J. Boylan filed a Report and Recommendation regarding several electronic discovery disputes…

Court Denies Motion to Compel Review of CD-ROMs for Responsive Documents

Zakre v. Norddeutsche Landesbank Girozentrale, 2004 WL 764895 (S.D.N.Y. Apr. 9, 2004) Plaintiff requested an order compelling defendant to review for responsive documents two compact discs containing some 204,000 emails. Defendant had conducted a review of the emails for privileged…

Court Precludes Offering of Evidence as Sanction for Discovery Evasion

In re LTV Steel Co., Inc., 307 B.R. 37 (N.D. Ohio 2004) In bankruptcy proceeding, a creditor (“C&K”) submitted a claim for $1.9 million against the estate, a portion of which the debtor agreed was due. When the debtor sought…

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Posted in breach of contract, chain in title, concealment, conflict of interest, conspiracy, CONTROL FRAUD, corruption, discovery, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, forgery, investigation, lawsuit, mail fraud, MERS, MERSCORP, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., non disclosure, notary fraud, note, originator, RICO, robo signers, securitization, servicers, trade secrets, Trusts, Violations0 Comments

Homeowner fights foreclosure in lawsuit claiming documents are fraudulent

Homeowner fights foreclosure in lawsuit claiming documents are fraudulent

Marcia Heroux Pounds, Sun Sentinel
August 20, 2010
After months of wrangling with CitiMortgage, Dennis and Joyce Brown got fed up and hired an attorney to fight CitiMortgage’s foreclosure on their Lauderdale Lakes home. The Browns claim they are victims of fabricated documents used to foreclose after CitiMortgage failed to credit them for mortgage payments.

“They ran my blood pressure up so bad,” said Dennis Brown, who hired Fort Lauderdale lawyer Kenneth Eric Trent to fight the foreclosure.

CitiMortgage and its lawyers, David Stern Law Offices, voluntarily withdrew the case against the Browns in Broward County Circuit Court on June 16. But the Browns can’t rest easy. Recently, they’ve received new foreclosure letters from another lawyer representing CitiMortgage.

The Browns’ story is just one example of foreclosures resulting from allegedly fraudulent mortgage assignments and other tactics that “eliminate due process for the homeowner,” Trent said.

He also is suing Stern and his Plantation law firm in federal court in a separate foreclosure case with similar allegations.

In that lawsuit, on behalf of Oakland Park homeowner Ignacio Damian Figueroa, Trent contends that Stern and a mortgage registration firm generated fraudulent mortgage documents that are intentionally ambiguous to cloud the real ownership of the Figueroa’s mortgage note.

The foreclosure practices of Stern and two other law firms are under investigation by the Florida Attorney General’s Office. The attorney general recently requested records going back to Jan. 1, 2008, from Stern as well as The Law Offices of Marshall C. Watson, P.A., and Shapiro & Fishman, LLP.

Thousands of Florida homeowners may have lost their homes as a result of improper actions by the firms under investigation. In announcing the probe, Attorney General Bill McCollum, a Republican who is a running for governor, said the law firms may have presented fabricated documents in court to speed the foreclosure process and obtain judgments against homeowners.

Jeffrey Tew, a Miami attorney who represents Stern’s firm, said while the attorney general may have received complaints, there “will not be evidence of fraud.” Due to the large volume of foreclosures, there may have been clerical mistakes, he said. “In past two to three years, the Stern law firm has processed probably 100,000 foreclosures.”

But he disputes that Stern’s law firm fabricated any documents. “I haven’t seen any example where a bank didn’t have a mortgage in default,” Tew said.

Stern represents well known mortgage lenders including Bank of America, Chase, CitiMortgage, Inc., Fannie Mae, Freddie Mac, HSBC, SunTrust, and Wells Fargo. These lenders also are the shareholders of Mortgage Electronic Registration Systems (MERS).

MERS is at the heart of the matter for Trent and other lawyers trying to stop what they view as illegal foreclosures in the nation.

The mortgage registry was created by lenders in the early 1990s to track home loans, including those repackaged as securities and sold to investors. When such loans were in foreclosure, MERS – not the original lender — was often the entity foreclosing. Some lawyers have successfully fought foreclosures by contending that MERS doesn’t own the note, or the borrower’s obligation to repay.

University of Utah law professor Christopher Peterson said MERS mortgage processing system goes against long-standing principles of property law in assigning rights to a note or mortgage. He said the “owner” of a mortgage can’t be the same as the “agent” representing the homeowner, for example.

Yet MERS records “false documents” with names of people who are not executives of the registry system, but often paralegals and clerks of law firms, he said. “It’s an extremely controversial and arguably fraudlent practice,” Peterson said.

Merscorp spokeswoman Karmela Lejarde declined to comment on the criticism of MERS or Trent’s lawsuit, citing company policy not to comment on pending lititgation.

Tew, who represents Stern’s Law Offices, called Trent’s lawsuit “fiction.” He points to Florida’s 5th District Court of Appeal that ruled in July against a homeowner who tried to fight foreclosure on the basis that MERS didn’t own the note or mortgage.

For the Browns’, foreclosure troubles began with not getting credit for their payments from CitiMortgage, their mortgage servicer.

The couple says they couldn’t clear it up with the lender. “They were claiming I was behind in payment, but I was paying every month,” said Brown, a carpenter who works for the Broward County School System and whose three children and four grandchildren also live in his Lauderdale Lakes home.

They stopped paying on their mortgage in late 2007 and sought legal help.

Another issue in Browns’ case is the signature on the assignment of Brown’s mortgage, giving rights to CitiMortgage, Trent said. The signature is by Cheryl Samons, who is identified as “assistant secretary of Merscorp.” In reality, Samons is an employee of Stern’s law office.

Tew confirmed Samons’ employment by Stern, but said “it’s very common for companies to appoint a registered agent. That process is absolutely legal and normal.”

But Trent contends that mortgage assignments need to be made on personal knowledge, not hearsay, to be admissible in court.

The Browns could be facing another foreclosure action, but Trent said he is confident he can fight it again. “They don’t have the basis to foreclose,” he said.

CitiMortgage spokesman Mark Rodgers said privacy restrictions prevent the financial institution from discussing a customer’s foreclosure action. But Rodgers said procedures may resume in cases “where, despite our best efforts, we have been unable to arrive at a satisfactory resolution acceptable to all the parties involved.”

Tew said foreclosure defense lawyers are portraying homeowners who have defaulted on their mortgages as helpless victims. “Everyone is sympathetic, including us, for the homeowner who can’t pay his mortgage. But it’s not fair to paint the banks and law firms that represent them as wearing the black hats.”

Marcia Heroux Pounds can be reached at mpounds@sunsentinel.com or 561-243-6650.

Browns’ Assignment of Mortgage & Vol. Dismissal below:

DEPOSITION OF NOTARY SHANNON SMITH OF THIS CASE

[ipaper docId=34340050 access_key=key-1eb2fh5kgjs1rbxhfwhq height=600 width=600 /]

MORE ON THIS CASE & FIRM BELOW

_________________

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

_________________

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

_________________

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

_________________

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

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

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Posted in Christopher Peterson, citimortgage, class action, concealment, conspiracy, CONTROL FRAUD, corruption, fannie mae, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, Freddie Mac, Law Offices Of David J. Stern P.A., law offices of Marshall C. Watson pa, MERS, MERSCORP, mortgage, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, non disclosure, Notary, notary fraud, note, RICO, shapiro & fishman pa, STOP FORECLOSURE FRAUD1 Comment

Could WAMU/ JPMorgan Chase Foreclosures be invalid?

Could WAMU/ JPMorgan Chase Foreclosures be invalid?

This is going to raise questions on how this has been able to proceed without the finalizing of the sale.

You cannot have an omelet if the chicken hasn’t laid the egg yet!

  • Were the shareholders made aware that JPMC never finalized the deal?
  • How does this effect those who filed for Bankruptcy?
  • Why hasn’t the FDIC stepped up when they knew that this was on going and never finalized the sale?
  • What happens to those who have an assignment of mortgage from WAMU to JPMC?
  • Is JPMC currently servicing any of WAMU’ loans?
  • All the chain in title that are in question?
  • Bailout? What Bailout?

Thanks to Foreclosure Hamlet and 4closurefraud for this alert!

Via: 4ClosureFraud

This is very intriguing… Check out the the excerpts from the report below…

Game Changer?

WaMu sale hasn’t closed, document suggests

Next month will mark two years since federal regulators seized Washington Mutual and sold it to JPMorgan Chase for $1.9 billion. Now a document that appears to be from the Federal Deposit Insurance Corporation suggests the deal still hasn’t closed.

“Everyone is saying the sale is finalized,” said the shareholder, Farokh Lam, of Woburn, Mass. “It is not.

Lam noticed that on pages 7 and 9, the original WaMu purchase and sale agreement allows the FDIC to extend the settlement date. He says he asked about it, and the FDIC confirmed in phone calls and emails that the settlement date was set for Aug. 30, 2010, and could be extended further.

“Settlement Date” means the first Business Day immediately prior to the day which is one hundred eighty (180) days after Ban Closing, or such other date prior thereto as may be agreed upon by the Receiver and the Assuming Bank. The Receiver, in its discretion, may extend the Settlement Date.

It says: “The purpose of this amendment is to extend the time period for Final Settlement to August. 30, 2010.

WaMu’s final days were chronicled in depth by Puget Sound Business Journal Staff Writer Kirsten Grind in an award-winning series.

Does this mean that all the WAMU foreclosures being pushed through the courts by JPMorgan Chase using the FDIC Purchase and Sale Agreement are invalid?

Does it mean if they haven’t closed the deal THEY DO NOT OWN THE LOANS OR THEIR SERVICING RIGHTS?

Where are the windfall profits going after the foreclosure sale?

What if the agreement changes before it is finalized?

So many questions…

Pipe up in the comments and let me know what you think.

The way I see it is, if they haven’t finalized the deal, how can they foreclose on the homes?

[ipaper docId=36027673 access_key=key-5z7g1dy0c99oralt1p0 height=600 width=600 /]

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Posted in discovery, fdic, foreclosure, foreclosure fraud, foreclosures, investigation, jpmorgan chase, non disclosure, psa, securitization, servicers, STOP FORECLOSURE FRAUD, wamu, washington mutual4 Comments

Banking Execs Say Gov’t Needs To Back Mortgages

Banking Execs Say Gov’t Needs To Back Mortgages

Banking Executives Tell Obama Officials Government Needs To Play Large Role In Mortgage Market

(AP) WASHINGTON (AP) – The Obama administration invited banking executives Tuesday to offer advice on changing the government’s role in the mortgage market. Their response: stay big.

While the executives disagreed on the exact level of support needed, the group overwhelmingly advocated the government should maintain a large role propping up the nearly $11 trillion market.

Bill Gross, managing director of bond giant Pimco, said the economic recovery required more government stimulus, particularly in the housing market. He suggested the administration push for the automatic refinancing of millions homes backed by mortgage giants Fannie Mae and Fannie Mac.

Refinancing those homes at the lowest mortgage rates in decades would give Americans more money each month. That would boost consumer spending by $50 billion to $60 billion and lift housing prices by as much as 10 percent, he said.

Without such stimulus in the next six months, Gross said, the economy will move at a “snails pace.”

Treasury officials have said they have no plans to enact such a plan, which has been the subject of intense rumors on Wall Street in recent weeks.

Tuesday’s conference at the Treasury Department is the administration’s first of many steps toward restructuring the troubled industry. So far, rescuing Fannie and Freddie has cost the government more than $148 billion. That number is expected to grow.

Treasury Secretary Timothy Geithner pledged “fundamental change” to the structure of Fannie and Freddie. The mortgage giants profited tremendously during good times but burdened taxpayers with losses when the housing market went bust. He said the two companies weren’t the only cause of the financial crisis, but made it worse.

Fannie and Freddie buy mortgages and package them into securities with a guarantee against default. They have ensured that millions of Americans can get home loans – even after the housing market collapsed.

The two companies, the Federal Housing Administration and the Veterans Administration together backed about 90 percent of loans made in the first half of the year, according to trade publication Inside Mortgage Finance.

Geithner did not offer a specific exit strategy for Fannie and Freddie. He agreed that the government could remain involved in the mortgage system by guaranteeing investors in mortgage-backed securities get paid, even when borrowers default.

There is a “strong case to be made” for such an arrangement, Geithner said.’

But Geithner suggested that Fannie and Freddie’s replacements could pay the government to insure the loans. That money could be tapped if the housing market collapses and would ensure taxpayers do not get hit with losses in the future.

“It is our responsibility to make sure that we create a system that is not vulnerable to these same failures happening again,” Geithner said.

Republicans are expected to pick up seats in Congress in November and the Obama administration will need support from both parties to enact changes next year.

The Obama administration’s management of Fannie and Freddie has been under fire for months from Republicans on Capitol Hill. In December, the Treasury Department eliminated a $400 billion cap on how much money it would give the mortgage giants to keep them from failing.

Rep. Spencer Bachus, the top Republican on the House Financial Services Committee, accused the Obama administration of excluding critics of the government’s role in the mortgage system from Tuesday’s conference.

In a letter to Geithner, Bachus said Treasury appears to be “laying the groundwork for a predetermined policy outcome that looks uncomfortably similar to the failed status quo.”

But the industry executives and experts at the conference seemed to agree that the government should maintain a role in the mortgage market, even if Fannie and Freddie disappear someday. Where they disagreed was on the level of government involvement and whether it should be reduced gradually.

Gross advocated the biggest government role. He said Fannie and Freddie’s function should be consolidated into one government agency that would issue mortgage-backed securities. Without such a solid guarantee, mortgage rates would soar, he warned.

Gross said he is skeptical of having those securities issued by the private sector, saying that doing so would favor “Wall Street as opposed to Main Street.”

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Posted in CONTROL FRAUD, corruption, fannie mae, foreclosure, foreclosure fraud, foreclosures, Freddie Mac, geithner, mbs, mortgage, non disclosure, Real Estate, rmbs, scam, sub-prime, trade secrets1 Comment

Don’t mess with Judge Spinner…he will read you like a book! Emigrant Mtge. Co., Inc. v Fitzpatrick

Don’t mess with Judge Spinner…he will read you like a book! Emigrant Mtge. Co., Inc. v Fitzpatrick

EMIGRANT MORTGAGE COMPANY INC v. FITZPATRICK 10

2010 NY Slip Op 20317

EMIGRANT MORTGAGE COMPANY, INC., Plaintiff,

v.

Linda FITZPATRICK a/k/a Linda J. Fitzpatrick, “John Doe 1-10”, said names being fictitious and unknown to plaintiff, the persons or parties intended being the tenants, occupants, persons or corporations, if any, having or claiming an interest in or lien upon the premises described in the complaint, Defendants.

No. 09-10577.

— August 11, 2010

Deutsch & Schneider, LLP Glendale, for Plaintiff.Nassau/Suffolk Law Services Islandia, for Defendant Fitzpatrick.

It is ORDERED that this motion by the plaintiff for an order pursuant to CPLR 3212 granting summary judgment in its favor and striking the answer of the defendant Linda Fitzpatrick a/k/a Linda J. Fitzpatrick (Fitzpatrick); appointing a referee to ascertain and compute the amount due; amending the caption of this action by substituting Haley Lanzafame for John Doe # 1 and striking out John Doe # 2-# 10; and striking the notice for discovery and inspection of the defendant Fitzpatrick pursuant to CPLR 3124(b) is denied.

This is an action to foreclose a mortgage on property known as 1 Forest Drive, East Northport, New York. The defendant Fitzpatrick obtained a loan in the amount of $210,000.00 at a yearly fixed rate of interest of 11.125 percent from the plaintiff and executed a note and said mortgage, both dated April 9, 2008, in favor of the plaintiff. The note indicated monthly mortgage payments to be $2019 .74. The defendant Fitzpatrick defaulted on the monthly loan payment due on September 1, 2008 and those due thereafter. Subsequently, the plaintiff declared the entire amount due.

The plaintiff commenced the instant mortgage foreclosure action on March 25, 2009 alleging that upon information and belief the subject loan is a “sub-prime/high cost” loan and that the plaintiff is the holder and owner of the subject mortgage and note and has complied with Banking Law §§ 595-a and 6-l or 6-m, if applicable, and RPAPL § 1304.

The defendant Fitzpatrick answered asserting a first affirmative defense that the loan was substantively unconscionable because the monthly mortgage payments of principal, interest and taxes of $2,753 .88 were in excess of the defendant’s fixed monthly income of $2,671.00; the plaintiff knew or should have known at the time that the loan agreement was made that the defendant Fitzpatrick’s income was insufficient to cover the monthly payments due under the note; and the plaintiff failed to verify or to even inquire into the defendant Fitzpatrick’s income, which is fixed and easily verifiable, and disregarded income in determining the loan terms to extend to her. In addition, the first affirmative defense alleged that the loan was procedurally unconscionable due to the unequal bargaining power and imbalance of the knowledge and understanding of the parties.

As a second affirmative defense, the defendant Fitzpatrick asserted that the plaintiff engaged in unfair and deceptive practices in the extension of said loan in violation of General Business Law § 349. The second affirmative defense alleged in effect that the conduct of the plaintiff of extending the subject loan to the defendant Fitzpatrick without determining her ability to repay when a reasonable person would expect such an established bank as the plaintiff to offer a loan that he or she could afford was materially misleading. In addition, the defense alleged that said conduct had the potential to affect similarly-situated financially vulnerable consumers and alleged damages in the form of the loss of the defendant Fitzpatrick’s home of 22 years to foreclosure. The defendant Fitzpatrick pointed out in her answer that the mortgage payments she made for June, July and August 2008 prior to her default were paid out of the loan proceeds.

The plaintiff now moves for summary judgment on the complaint on the grounds that the defendant Fitzpatrick defaulted on her loan payments, the plaintiff served the defendant Fitzpatrick with the required notices of default, and the defendant Fitzpatrick failed to cure her default resulting in the acceleration of her loan. In support of the motion, the plaintiff submits a copy of the note and mortgage; the affidavit of facts of the plaintiff’s assistant treasurer; the 90-day notice pursuant to RPAPL § 1304 dated October 29, 2008 and addressed to the defendant Fitzpatrick; the default notice pursuant to paragraph 22 of the mortgage; the “Help for Homeowners in Foreclosure” notice pursuant to RPAPL § 1303; the Fair Debt Collections Practices Act notice; the summons with the “You Are In Danger of Losing Your Home” notice of RPAPL § 1320; the complaint; the answer of the defendant Fitzpatrick; and the affidavits of service. The plaintiff also submits an affirmation regarding “sub-prime” status stating that upon information and belief this is an action to foreclose a residential mortgage loan which is a “subprime home loan” as defined in RPAPL § 1304 or a “high cost” home loan as defined in Banking Law § 6-l (see, CPLR 3408).

In opposition to the motion, the defendant Fitzpatrick contends that the plaintiff’s act of extending said loan was unconscionable as evidenced by the parties’ unequal appreciation of the undertaking and the clearly ascertainable inability of the defendant Fitzpatrick to repay the loan according to its terms such that the plaintiff knew or should have known prior to closing that it would be impossible for the defendant Fitzpatrick to make loan payments. The defendant Fitzpatrick’s attorney states in her affirmation that upon information and belief, the subject loan is the first mortgage that the defendant Fitzpatrick has ever had and that compared to the plaintiff, a large lending institution with extensive knowledge of loans, mortgages and extension of credit, the defendant Fitzpatrick is a homeowner with very limited knowledge of loan terms and the lending process. The defendant Fitzpatrick’s attorney contends in effect that a review of her client’s easily verifiable income would have immediately alerted the plaintiff that the defendant Fitzpatrick could not afford the loan that was extended to her. She further contends that the extension of the subject loan implies an intent by the plaintiff to seize the defendant Fitzpatrick’s home upon her almost inevitable default.

It is well settled that the proponent of a summary judgment motion bears the initial burden of making a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient proof to demonstrate the absence of any material issues of fact (Norwest Bank Minnesota, N.A. v. Sabloff, 297 A.D.2d 722, 747 N.Y.S.2d 559 [2d Dept 2002] ). Failure to make such a prima facie showing requires a denial of the motion regardless of the sufficiency of the opposition papers (De Santis v. Romeo, 177 A.D.2d 616, 576 N.Y.S.2d 323 [2d Dept 1991] ).

In order to establish prima facie entitlement to summary judgment in a foreclosure action, a plaintiff must submit the mortgage and unpaid note, along with evidence of default (see, Capstone Business Credit, LLC v. Imperia Family Realty, LLC, 70 AD3d 882, 883, 895 N.Y.S.2d 199, 201 [2d Dept 2010]; U.S. Bank Natl. Assn. TR U/S 6/01/98 [Home Equity Loan Trust 1998-2] v. Alvarez, 49 AD3d 711, 711, 854 N.Y.S.2d 171 [2d Dept 2008]; Hoffman v. Kraus, 260 A.D.2d 435, 436, 688 N.Y.S.2d 575 [2d Dept 1999] ). The plaintiff’s motion for summary judgment should prove the allegations of the complaint (2-21 Bergman, New York Mortgage Foreclosures § 21.05). Chapter 472 of the Laws of 2008 (known as the Subprime Residential Loan and Foreclosure Law) provides additional protections, including protections against predatory lending practices, to homeowners facing foreclosure whose home loans meet certain standards. The plaintiff seeking to foreclose a home loan that meets said standards must also submit evidence of compliance with the statutes pertaining to that specific type of home loan in order to demonstrate entitlement to summary judgment. If the loan is a high-cost home loan as defined in Banking Law § 6-l or a subprime home loan as defined in Banking Law § 6-m, the plaintiff seeking to meet its initial burden on a summary judgment motion must establish that it is the owner and holder of the subject mortgage and note or has been delegated the authority to commence a mortgage foreclosure action by the owner and holder and has complied with all of the provisions of Banking Law § 595-a and any rules and regulations promulgated thereunder as well as Banking Law § 6-l or § 6-m and RPAPL § 1304 (see, RPAPL § 1302).

The burden then shifts to the defendant to demonstrate “the existence of a triable issue of fact as to a bona fide defense to the action, such as waiver, estoppel, bad faith, fraud, or oppressive or unconscionable conduct on the part of the plaintiff” (Capstone Bus. Credit, LLC v. Imperia Family Realty, LLC, 70 AD3d at 883 quoting Mahopac Natl. Bank v. Baisley, 244 A.D.2d 466, 467, 664 N.Y.S.2d 345 [2d Dept 1997]; see, Nassau Trust Co. v. Montrose Concrete Prods. Corp., 56 N.Y.2d 175, 183, 451 N.Y.S.2d 663 [1982] ). If the loan is a high-cost home loan as defined in Banking Law § 6-l or a subprime home loan as defined in Banking Law § 6-m, it is a defense in a mortgage foreclosure action that the terms of the home loan or the actions of the lender violate any provision of Banking Law § 6-l or § 6-m or RPAPL § 1304 (see, RPAPL § 1302).

Here, the plaintiff has failed to demonstrate through the submission of proof from someone with personal knowledge that the subject loan is either a high-cost home loan as defined in Banking Law § 6-l or a subprime home loan as defined in Banking Law § 6-m and RPAPL § 1304(5)(c) and that the plaintiff has complied with all of the provisions of Banking Law § 595-a, and any rules and regulations promulgated thereunder, as well as Banking Law § 6-l or § 6-m and RPAPL § 1304, as alleged in the complaint. Nowhere in the attorney’s affirmation of regularity or the affidavit of the plaintiff’s assistant treasurer is there any mention or specification or explanation of the subject loan’s exact loan type as either a high cost home loan or a subprime home loan. The Court notes that the plaintiff has submitted a 90-day default notice which is required for a high-cost home loan as defined in Banking Law § 6-l or a subprime home loan as defined in Banking Law § 6-m (see, RPAPL § 1304). If the subject loan is a high cost home loan, then the plaintiff has failed to submit proof that it complied with Banking Law § 6-l (2-a)(a) inasmuch as the subject mortgage lacks a legend on top in twelve-point type stating that the mortgage is a high-cost home loan subject to Banking Law § 6-l (see, Banking Law § 6-l [2-a][a] ). Therefore, the plaintiff’s motion for summary judgment on the complaint is denied inasmuch as the plaintiff failed to meet its initial burden of establishing its prima facie entitlement to judgment as a matter of law (see, Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923 [1986]; Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316 [1985]; Tyson v. Tower Ins. Co. of New York, 68 AD3d 977, 891 N.Y.S.2d 143[2d Dept 2009] ).

In any event, when a plaintiff moves for summary judgment, it is proper for the court to look beyond the defendant’s answer and deny summary judgment if facts are alleged in opposition to the motion which, if true, constitute a meritorious defense (see, Nassau Trust Co. v. Montrose Concrete Prods. Corp., 56 N.Y.2d at 182). Here, the defendant Fitzpatrick’s opposition to the motion also raises allegations of a violation of Banking Law § 6-l (2)(k) if the subject loan is actually a high cost home loan in that it was made without “due regard to repayment ability ? as verified by detailed documentation of all sources of income and corroborated by independent verification” and a violation of Banking Law § 6-m (4) if the subject loan is actually a subprime home loan (see, Banking Law §§ 6-l [2][k], 6-m [4] ). Consistent with the rule referred to above, the Court considers not only the defenses pleaded but also alleged violations of Banking Law § 6-l (2)(k) and § 6-m (4) (see, id. at 183).

The plaintiff also moves for dismissal of the affirmative defenses of the defendant Fitzpatrick on the grounds that the loan documents that were signed and presumably read and assented to by the defendant Fitzpatrick fully disclosed the amount of monthly loan payments and income required to meet the obligations of the subject asset based loan, that the plaintiff expressly relied on her sworn representations of her ability to repay the loan, and that there was no predatory lending involved inasmuch as it was the defendant Fitzpatrick who approached the plaintiff for a loan so as to avoid tax foreclosure.

When moving to dismiss an affirmative defense, the plaintiff bears the burden of demonstrating that the affirmative defense is “without merit as a matter of law” (see, CPLR 3211[b]; Vita v. New York Waste Services, LLC, 34 AD3d 559, 559, 824 N.Y.S.2d 177 [2d Dept 2006] ). In reviewing a motion to dismiss an affirmative defense, this court must liberally construe the pleadings in favor of the party asserting the defense and give that party the benefit of every reasonable inference (see, Fireman’s Fund Ins. Co. v. Farrell, 57 AD3d 721, 723, 869 N.Y.S.2d 597 [2d Dept 2008] ). Moreover, if there is any doubt as to the availability of a defense, it should not be dismissed (see, id.).

A party is under an obligation to read a document before he or she signs it, and a party cannot generally avoid the effect of a document on the ground that he or she did not read it or know its contents (Cash v. Titan Fin. Services, Inc., 58 AD3d 785, 788, 873 N.Y.S.2d 642 [2d Dept 2009][internal quotations and citations omitted] ). There are situations where an instrument will be deemed void because the signer was unaware of the nature of the instrument he or she was signing, such as where the signer is illiterate, or blind, or ignorant of the alien language of the writing, and the contents thereof are misread or misrepresented to him by the other party, or even by a stranger (Id. at 788 [internal quotations and citations omitted] ).

Whether a contract or clause is unconscionable is to be decided by the court against the background of the contract’s commercial setting, purpose and effect (see, Wilson Trading Corp. v. David Ferguson, Ltd., 23 N.Y.2d 398, 403, 297 N.Y.S.2d 108 [1968] ). An unconscionable contract is one which is so grossly unreasonable or unconscionable in the light of the mores and business practices of the time and place as to be unenforceable according to its literal terms (Gillman v. Chase Manhattan Bank, 73 N.Y.2d 1, 10, 537 N.Y.S.2d 787 [1988][internal quotations and citations omitted] ). A determination of unconscionability generally requires a showing that the contract was both procedurally and substantively unconscionable when made, for example, some showing of an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party (Id. [internal quotations and citations omitted] ). The procedural element of unconscionability requires an examination of the contract formation process and the alleged lack of meaningful choice with a focus on such matters as the size and commercial setting of the transaction, whether deceptive or high-pressured tactics were employed, the use of fine print in the contract, the experience and education of the party claiming unconscionability, and whether there was disparity in bargaining power (Id. at 10-11). The substantive element of unconscionability entails an analysis of the substance of the bargain to determine whether the terms were unreasonably favorable to the party against whom unconscionability is urged (Id.).

With respect to the first affirmative defense that the loan was unconscionable, the plaintiff’s attorney points out in his affirmation that the defendant Fitzpatrick signed a “Resource Letter” on April 9, 2008, which is submitted with the motion papers, indicating that she understood and confirmed her ability to make the initial monthly mortgage payments of approximately $2,754.00 on a timely basis; that she had regular and dependable income from which to make her scheduled monthly payments; that under the standard loan program her annual regular and dependable income would need to be $100,163.00 and that if it was projected to be lower than said sum, she must have additional resources available to fund her monthly payments. In addition, the plaintiff’s attorney points out that the defendant Fitzpatrick received a similar copy of this letter at the time that her loan was approved prior to closing and that she acknowledged that the loan was being made in reliance on said confirmation of her ability to repay. The plaintiff’s attorney also indicates that since the loan was an asset based loan, in which the plaintiff considered the value of the home, and not an income/net worth based loan, the plaintiff was not required to verify the defendant Fitzpatrick’s statements as to income. He further indicates that the defendant Fitzpatrick was therefore required to sign a High Equity Loan Certificate, also submitted with the motion papers, acknowledging that the plaintiff may not have made any independent determination of her ability to repay the loan other than as represented by the defendant Fitzpatrick in the loan application and that the plaintiff may be relying on her said representations.

Here, the plaintiff has failed to demonstrate that the first affirmative defense lacks merit. The High Equity Loan Certificate explains that the subject loan is a High Equity Plus Loan which is a “no income-documentation mortgage loan” and the Resource Letter indicates that it is a loan program that does not enable the bank to independently verify the borrower’s ability to make their scheduled loan payments to repay the loan. Said submissions raise an issue of fact as to whether the mere extension of an asset based secured loan, a type of loan used almost exclusively in commercial business lending to provide working capital, to the defendant Fitzpatrick as a residential home loan was grossly unreasonable or unconscionable (see e.g., Gartenberg v. Wells Fargo Bus. Credit, 1985 U.S. Dist LEXIS 20133 [SDNY 1985]; see also, 2-11 N.Y. Practice Guide: Business and Commercial § 11.03). In addition, the defendant Fitzpatrick’s allegation that the loan agreement was unreasonably favorable to the plaintiff because the plaintiff knew or should have known that she could not afford the terms of the agreement sufficiently states a claim for substantive unconscionability (see, Williams v. Aries Fin., LLC, 2009 WL 3851675 [EDNY 2009] ). Moreover, if the subject loan is actually a high cost home loan, the plaintiff has clearly failed through its submissions to demonstrate compliance with Banking Law § 6-l (2)(k), that the loan was made with “due regard to repayment ability, based upon consideration of the resident borrower or borrowers’ current and expected income, current obligations, employment status, and other financial resources (other than the borrower’s equity in the dwelling which secures repayment of the loan), as verified by detailed documentation of all sources of income and corroborated by independent verification” (see, Banking Law § 6-l [2][k] ). Likewise, if said loan is actually a subprime home loan, the plaintiff has failed to establish compliance with Banking Law § 6-m (4) (see, Banking Law § 6-m [4] ). Therefore, the request for dismissal of the first affirmative defense is denied.

Regarding the defense of unfair and deceptive practices in violation of General Business Law § 349, the plaintiff asserts that the subject loan transaction did not involve any deceptive practice of fraudulent inducement inasmuch as the defendant Fitzpatrick had significant tax arrears when she approached the plaintiff and sought a mortgage to prevent a tax foreclosure. The plaintiff points to the U.S. Department of Housing and Urban Development (HUD) settlement statement in support of the assertion that the defendant Fitzpatrick obtained in excess of $123,000.00 cash at the closing of which approximately $44,058.12 was used to pay the defendant’s real estate tax arrears.

An affirmative defense or a cause of action under General Business Law § 349(a) must allege that (1) the challenged conduct was consumer-oriented, (2) the conduct or statement was materially misleading, and (3) damages (see, Stutman v. Chemical Bank, 95 N.Y.2d 24, 29, 709 N.Y.S.2d 892 [2000]; Lum v. New Century Mtge. Corp., 19 AD3d 558, 559, 800 N.Y.S.2d 408 [2d Dept 2005], lv denied 6 NY3d 706, 812 N.Y.S.2d 35 [2006] ).

Here, the plaintiff has also failed to demonstrate that the second affirmative defense lacks merit. The plaintiff’s proffered proof raises an issue of fact as to whether the act of offering an asset based loan under the plaintiff’s High Equity Plus Program to the defendant Fitzpatrick and other homeowners in similarly financially vulnerable or desperate situations who approached the plaintiff for a loan was materially misleading in violation of General Business Law § 349 (see generally, Aurora Loan Services, LLC v. Thomas, 53 AD3d 561, 862 N.Y.S.2d 89 [2d Dept 2008]; Popular Fin. Services, LLC v. Williams, 50 AD3d 660, 855 N.Y.S.2d 581 [2d Dept 2008] ). Therefore, the request for dismissal of the second affirmative defense is denied.

The plaintiff’s remaining requests for relief are denied.

Dated:___August 11, 2010__________/s/ JEFFREY ARLEN SPINNER____

J.S.C.

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Posted in conspiracy, foreclosure, foreclosures, mortgage, non disclosure, note, sub-prime2 Comments

FL Rule of Civil Procedure 1.540 RELIEF FROM JUDGMENT, DECREES, OR ORDERS

FL Rule of Civil Procedure 1.540 RELIEF FROM JUDGMENT, DECREES, OR ORDERS

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

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

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

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

Cases:

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

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

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

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

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Posted in breach of contract, chain in title, concealment, conflict of interest, conspiracy, corruption, discovery, ex parte, foreclosure fraud, forensic loan audit, injunction, investigation, mail fraud, mistake, non disclosure, notary fraud, securitization, STOP FORECLOSURE FRAUD, TRO, trustee sale1 Comment

1st Comes Fannie, then comes Freddie, then comes tax payer with…

1st Comes Fannie, then comes Freddie, then comes tax payer with…

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

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

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

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

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

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

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

We are no fools.

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Posted in bogus, chain in title, concealment, conspiracy, CONTROL FRAUD, corruption, fannie mae, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, Freddie Mac, Law Offices Of David J. Stern P.A., mbs, MERS, MERSCORP, Mortgage Bankers Association, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., non disclosure, notary fraud, note, originator, QUI TAM, racketeering, sub-prime, trade secrets, Violations, Wall Street0 Comments

What does DJSP, Enterprises Newly Appointed Counsel have in common with PBC Judge Meenu Sasser?

What does DJSP, Enterprises Newly Appointed Counsel have in common with PBC Judge Meenu Sasser?

DJSP, Enterprises announced today that they have added a General Counsel to their Senior Management Team.

Howard S. Burnston has accepted the position of Vice President, General Counsel and Corporate Secretary effective August 5th 2010. Prior to joining the company, Mr. Burnston was a shareholder with Gunster, Yoakley, & Stewart, P.A., a Florida law firm, where he practiced for 12 years, most recently as chairman of the firm’s Securities and Corporate Governance Practice Group.

“We are very pleased to add such a seasoned professional to our executive team,” said David J. Stern, Chairman and CEO of DJSP Enterprises. “Howard’s business experience and legal expertise in the areas of securities and corporate governance will add tremendous value to DJSP and our shareholders.”

Mr. Burnston stated, “The company is operating in a dynamic and challenging business environment. I believe the company has a promising future and I am excited to join the impressive management team assembled at DJSP.”

Palm Beach County Judge Meenu Sasser was also a shareholder of Gunster, Yoakley, & Stewart from 2002-09, Associate 1995-02.

Again, when is this all going to be disclosed to both investors and defendants? Where does one put a stop to conflict of interest? Where are the disclosures?

I am 100% certain that both The State of Florida and DJSP Investors want to know did Mr. Burnston and Mrs. Sasser have a working relationship and to what extent?

Inquiring minds do wish to know!

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



Posted in conflict of interest, djsp enterprises, investigation, Law Offices Of David J. Stern P.A., non disclosure, STOP FORECLOSURE FRAUD1 Comment

FLORIDA| Watch out for Conciliation| Mediation Scam

FLORIDA| Watch out for Conciliation| Mediation Scam

DinSFLA here: MEDIATION without the true lenders disclosed may be an issue later…these mills have no right to play middlemen to no one! You must make sure who the real parties are before, during and after foreclosure!

Florida Default Group is emailing foreclosure defense attorneys with emails stating “Per your request, conciliation will be scheduled for your client…” that is how the are scamming even REPRESENTED defendants out of their right to a third party mediation (not that they are going to work anyway).

As I myself have witnessed on many occasions, some mill attorneys, or LOCAL COUNSEL, like Peter Porcaro local counsel for Stern’s office, bring pro se defendants out of the courtroom, smooth talk them into an agreement where there is an “extended sale date 120 days into the future, and an agreement for “conciliation” (which differs from mediation because mediation for primary residences cost the plaintiff $750 each and also there is a mediator) and a waiver of mediation. Conciliation is at no cost to the plaintiff and is between the two parties without a mediator. There is no explanation of mediation vs conciliation and no telling that the FL Supreme Court mandates mediation unless it is waived. There is no acknowledgment of months if not years of frustrated attempts at “conciliation” in terms of loan mods or short sales or deeds in lieu and how the defendants have a right to mediation. If any issues regarding the veracity and/or authenticity of the documents in the court file are raised, the answer given in these hallway dirty dealings, is “I’m not involved with that. I don’t work for their office.”

The same thing happens with all the mills. Attached is what the defendant in a Marshall Watson case walked away with…..just read it to see …………

See for yourselves. Stand outside of courtroom 10H or the other “foreclosure mill courtrooms” and watch this play out.

Sincerely,
Lisa Epstein
ForeclosureHamlet.org

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Posted in coercion, conspiracy, investigation, Law Offices Of David J. Stern P.A., law offices of Marshall C. Watson pa, non disclosure, settlement, STOP FORECLOSURE FRAUD1 Comment

ANOTHER INVESTIGATION into DJSP ENTERPRISES UNLEASHED!!

ANOTHER INVESTIGATION into DJSP ENTERPRISES UNLEASHED!!

press release

July 28, 2010, 6:55 p.m. EDT ·

The Briscoe Law Firm, PLLC and Cash Powers Taylor, LLP Announce the Investigation of Possible Breaches of Fiduciary Duties Against the Officers and Directors of DJSP Enterprises, Inc.

DALLAS, Jul 28, 2010 (BUSINESS WIRE) — The Briscoe Law Firm, PLLC, founded by a former state prosecutor and enforcement attorney for the United States Securities and Exchange Commission, and the law firm of Cash Powers Taylor, LLP are investigating potential legal claims available to purchasers of DJSP Enterprises, Inc. (“DJSP” or “Company”) (DJSP 3.95, +0.07, +1.85%) during the period of March 16, 2010 and May 27, 2010.

DJSP and certain of its officers and directors allegedly violated the Securities Exchange Act of 1934 by issuing materially false and misleading statements and failing to disclose certain facts known to them regarding the Company’s business and financial results. Specifically, on March 11, 2010, the Company issued statements assuring investors that it would continue to profit and earn revenue as usual, despite the Obama Administration’s efforts to curb real estate foreclosures. Additionally, the Company stated that DJSP would continue to be profitable in subsequent years and that its business would not be affected by the government’s involvement in the mortgage markets. However, in April 2010, when the Company’s largest clients began real estate foreclosure conversion systems, DJSP revenue from mortgage foreclosure began to substantially decline. As a result of defendants’ false statements, DJSP’s stock traded at artificially inflated prices during the Class Period.

If you currently own or purchased DJSP shares and would like additional information regarding this investigation or if you have information regarding the allegations against the company, please contact Patrick Powers at Cash Powers Taylor, LLP, toll free (877) 728-9607, via e-mail at patrick@cptlawfirm.com, or The Briscoe Law Firm, PLLC toll free (877) 397-5991, or via email at WBriscoe@TheBriscoeLawFirm.com. There is no cost or fee to you.

The Briscoe Law Firm is a full service business litigation, commercial transaction, and public advocacy firm with more than 20 years of experience in complex litigation and transactional matters.

Cash Powers Taylor, LLP is a boutique litigation law firm that handles a variety of complex business litigation matters, including claims of investor and stockholder fraud, shareholder oppression, shareholder derivative suits, and security class actions.

SOURCE: Cash Powers Taylor, LLP

The Briscoe Law Firm, PLLC
Willie C. Briscoe, 214-706-9314
214-706-9315 Facsimile
WBriscoe@TheBriscoeLawFirm.com
or
Cash Powers Taylor, LLP
Patrick W. Powers, 214-239-8900
214-265-9514 Facsimile
Patrick@cptlawfirm.com

Copyright Business Wire 2010

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



Posted in concealment, djsp enterprises, foreclosure, foreclosure mills, foreclosures, investigation, Law Offices Of David J. Stern P.A., non disclosure, Violations1 Comment

Fannie Mae Requirements for Document Custodians

Fannie Mae Requirements for Document Custodians

[ipaper docId=34929249 access_key=key-1r2lqf9dy84f0m2bbsq height=600 width=600 /]

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



Posted in chain in title, fannie mae, foreclosure, foreclosures, mortgage, non disclosure, servicers, trustee, Trusts, truth in lending act1 Comment

Are Lenders digging into noncredit proprietary databases such as those maintained by Papa John’s or Victoria’s Secret legally?

Are Lenders digging into noncredit proprietary databases such as those maintained by Papa John’s or Victoria’s Secret legally?

Lenders’ data mining goes deep

Mortgage makers are going beyond tax returns and bank statements to determine whether you’re a good risk. They’re checking such things as where you have pizza delivered and where you shop online.

By Lew Sichelman
July 18, 2010

Reporting from Washington —
That pizza you had delivered the other night could mean the difference between whether you are approved for a mortgage or rejected.

There’s a big stretch between making a house payment and paying for a pizza. But it’s not what you pay for carryout that matters, at least not in the eyes of lenders. It’s where the food was delivered.

Ordering takeout proves that you live where you say you do, and that helps lenders uncover the crook who claims to live in the property he is trying to refinance when he really lives hundreds of miles away. Or expose the 35-year-old who says he has a $1,200-a-month apartment when he really lives rent-free with Mom and Dad.

When you order food online, you become part of a vast database that lenders might tap to help them determine whether you are a good risk. Moreover, all sorts of these data reservoirs exist, and none of them is off-limits to lenders who are coming off the worst financial debacle since the Great Depression.

“If the data is available and it can be obtained legally, I’m going to test it,” says Alex Santos, president of Digital Risk, an Orlando, Fla., analytics firm that works with lenders and investors to build better underwriting mousetraps. “If it is inexpensive and makes my credit model better, I’m going to use it.”

Digital Risk is just one of numerous risk-management companies that are continuously probing for ways to help clients quantify their risk, prevent fraud and otherwise ensure the quality of their loans. And they’re going to extraordinary lengths to do so.

For example, they might peek into your online-buying habits. After all, the reasoning goes, someone who buys his shirts from a Brooks Brothers catalog may have more disposable income than someone who shops at JCPenney.

“At least that’s a theory we can test,” Santos says. “We’re looking for any type of data source that you can plug into a computer. It takes only a month of trial and error to determine whether the information can help [determine credit risk] or not. We have a hypothesis, push a button, and the computer tells us whether the data is predictive or not.”

This sort of data mining goes way beyond your credit score, that financial snapshot that measures your ability and willingness to repay your debt. And, Santos says, “there’s a tremendous amount of this kind of analytics going on right now.”

Lenders are still checking credit histories, not just when you apply for a mortgage but also a second time a day or two before the loan closes. But your credit score — known as a FICO score for the name of the company that created the scoring formula — is now considered “too broad.” Consequently, it has moved down in the hierarchy of tests that lenders are using to make certain that someone isn’t hoodwinking them.

First and foremost, lenders are pulling copies of your tax returns directly from Uncle Sam.

Don’t be alarmed. You give the lender permission to do that when you sign Form 4506-T. The idea here is to make sure that you haven’t altered the copy of your last two years’ tax returns that you provided when you signed your loan application. Lenders want to know if you might have exaggerated how much you earned.

Continue reading….LA Times
© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in credit score, fair isaac corporation, fico, non disclosure0 Comments

Fannie wants to penalize. My “ARSE”…I have the solution!

Fannie wants to penalize. My “ARSE”…I have the solution!

By DinSFLA 6/30/2010

When Fannie Mae announced that she was going to start to penalize people who walk away from underwater mortgages it created a fire storm of angry individuals.

She said it would step up efforts to pursue deficiency judgment—seeking to recoup the difference between the loan balance and the net proceeds of the foreclosure sale—against so-called “strategic” defaulters in states where such suits are allowed. Fannie also will lengthen to seven years, from five, the amount of time borrowers who go through a foreclosure must wait before getting a new loan.

So here is my solution, grab a pen and write this down:

  • Homes have lost not a little but an enormous amount of it’s value up to 70% in some areas.
  • In my opinion it is going to take more than 7 years to see any hope in Real Estate stabilization.
  • Who wants to buy today when we read about possibly 8 million shadow foreclosures that will ultimately bring down the market further to dust?
  • We the tax payers are the owners so who the hell asked us if this is appropriate? Were any of us invited to this meeting and discuss this? Did we have a say in this like we never do? DISCLOSURES?
  • What about the possible millions that were denied a modification from no fault of their own? Oh but the Obama Administration admitted this too…too…too…late 🙁 Who will be responsible for those who were improperly foreclosed on?
  • With the taxes and insurance sky rocketing, it only makes sense to rent for a while.
  • Deficiency Judgment? Do you realize what this little pot you stir will cause?? Hmmm think about it.
  • Credit who wants credit? We don’t even know where our own money is being used.
  • Who do we have to contact to foreclose on Your “arse” Fannie??? After all you are owned by us… Do not bite the hand that feeds you!

You see the threat really has no impact.

Trust is earned my friends and we have absolutely none at the moment.

The evil thing here is that instead of going after the true Run A Ways “the banks” who stole the cash you go after the ones who feed you and behind our back you feed them???

Image source: The Simpsons “Angry Mob”

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



Posted in deficiency judgement, deficiency judgment, fannie mae, foreclosure, foreclosure fraud, foreclosures, mortgage modification, non disclosure, shadow foreclosures, walk away1 Comment

In the Matter of Merscorp, Inc., et al., Respondents, v Edward P. Romaine, & c., et al., Appellants, et al., Defendant.

In the Matter of Merscorp, Inc., et al., Respondents, v Edward P. Romaine, & c., et al., Appellants, et al., Defendant.

NEW YORK COURT OF APPEALS

2006 NY Int. 167


This opinion is uncorrected and subject to revision before publication in the Official Reports.


2006 NY Slip Op 09500

Decided on December 19, 2006

No. 179

In the Matter of Merscorp, Inc., et al., Respondents,

v

Edward P. Romaine, & c., et al., Appellants, et al., Defendant.

Richard C. Cahn, for appellants.

Charles C. Martorana, for respondents.

Mortgage Bankers Association; American Land Title

Association; Federal National Mortgage Association et al.;

South Brooklyn Legal Services et al.; County Clerks of the

Counties of Albany, & c., amici curiae.

PIGOTT, J.

We are asked to decide on this appeal whether the Suffolk County Clerk 1 is compelled to record and index mortgages, assignments of mortgage and discharges of mortgage, which name Mortgage Electronic Registration Systems, Inc. the lender’s nominee or mortgagee of record.

Petitioners, Merscorp, Inc. and Mortgage Electronic Registration Systems, Inc.(collectively “MERS”), commenced this hybrid proceeding in the nature of mandamus to compel the Clerk to record and index the instruments, and to declare them acceptable for recording and indexing.

Supreme Court denied in part petitioners’ motion for summary judgment and granted in part the cross-motion of respondents, the Suffolk County Clerk and the County of Suffolk (collectively “the County”), holding that although the Clerk must record and index the MERS mortgage when presented, the Clerk may refuse to record a MERS assignment and discharge, because those instruments violate the “factual mandates” of section 321 (3) of the Real Property Law.

The Appellate Division reversed so much of Supreme Court’s ruling as relates to the assignments and discharges, finding “no valid distinction between MERS mortgages and MERS assignments and discharges for purposes of recording and indexing” (24 AD3d 673 [2nd Dept 2005]). This Court granted leave and we now affirm.

In 1993, the MERS system was created by several large participants in the real estate mortgage industry 2 to track ownership interests in residential mortgages. Mortgage lenders and other entities,3 known as MERS members, subscribe to the MERS system and pay annual fees for the electronic processing and tracking of ownership and transfers of mortgages. Members contractually agree to appoint MERS to act as their common agent on all mortgages they register in the MERS system.

The initial MERS mortgage is recorded in the County Clerk’s office with “Mortgage Electronic Registration Systems, Inc.” named as the lender’s nominee or mortgagee of record on the instrument. During the lifetime of the mortgage, the beneficial ownership interest or servicing rights may be transferred among MERS members (“MERS assignments”), but these assignments are not publicly recorded; instead they are tracked electronically in MERS’s private system 4. In the MERS system, the mortgagor is notified of transfers of servicing rights pursuant to the Truth in Lending Act, but not necessarily of assignments of the beneficial interest in the mortgage.

In April 2001, in response to an informal opinion of the Attorney General, which concluded that recording a MERS instrument violates Real Property Law § 316 and frustrates the legislative intent of the recording provisions (2001 Ops Atty Gen No. 2001-2), the Suffolk County Clerk ceased recording the MERS instruments. This proceeding ensued.

The County contends that the MERS mortgage is improper because that mortgage names MERS, an entity that has no interest in the property or loan, as the “nominee” for the lender. Thus, the County contends MERS is not a proper “mortgagee” and the document created cannot be considered a proper “conveyance” for purposes of the recording statute. We disagree.

Section 291 of the Real Property Law provides, in pertinent part, that:

“a conveyance of real property, within the state, on being duly acknowledged by the person executing the same, or proved as required by [the Real Property Law], and such acknowledgment or proof duly certified when required by [such law], may be recorded in the office of the clerk of the county where such real property is situated, and such county clerk shall, upon the request of any party, on tender of the lawful fees therefor, record the same in his said office”

[emphasis added].

Real Property Law § 316-a, which pertains exclusively to Suffolk County, provides that “[e]very instrument affecting real estate or chattels real, situated in the county of Suffolk, which shall be, or which shall have been recorded in the office of the clerk of said county on and after the first day of January, nineteen hundred fifty-one, shall be recorded and indexed pursuant to the provisions of this act”(emphasis added).

Thus, sections 291 and 316-a of the Real Property Law impose upon the Suffolk County Clerk the ministerial duty of recording and indexing instruments affecting real property (see Real Property Law §§ 290[3], 291, 316-a[1, 2], 321 [1]; County Law § 525[1]). The Clerk lacks the statutory authority to look beyond an instrument that otherwise satisfies the limited requirements of the recording statute (see Putnam v Stewart, 97 NY 411 [1884]). Therefore, the County Clerk must accept the MERS mortgage when presented for recording.

With respect to the MERS assignments and discharges of mortgage, the County argues that by requiring the Clerk to record the instrument, the Clerk is recording a document that ignores the mandates prescribed by Real Property Law § 321.

Section 321(1)(a) provides that where it does not appear from the record that any interest in a mortgage has been assigned, a certificate of satisfaction must be signed by the mortgagee or the mortgagee’s personal representative in order for the recording officer to mark the record of the mortgage as “discharged.” Where it appears from the record that a mortgage has been assigned, the recording officer cannot mark the record of that mortgage with the word “discharged” unless a certificate is signed by “the person who appears from the record to be the last assignee” of the mortgage, or his or her personal representative (Real Property Law § 321[1][b]). As the nominee for the mortgagee of record or for the last assignee, MERS acknowledges the instrument and therefore, the County Clerk is required to file and record the instruments.

Other provisions are not to the contrary. Under section 321 [2], the Clerk is required to record “every other instrument relating to a mortgage,” if that instrument is properly acknowledged or proved in a manner entitling a conveyance to be recorded. Such instruments include “certificates purporting to discharge a mortgage” that are signed by persons other than those specified in Real Property Law § 321(1).

Further, section 321 (3) of the Real Property Law provides:

“Every certificate presented to the recording officer shall be executed and acknowledged or proved in like manner as to entitle a conveyance to be recorded. If the mortgage has been assigned, in whole or in part, the certificate shall set forth the date of each assignment in the chain of title of the person or persons signing the certificate, the names of the assignor and assignee, the interest assigned, and, if the assignment has been recorded, the book and page where it has been recorded or the serial number of such record; or if the assignment is being recorded simultaneously with the certificate of discharge, the certificate of discharge shall so state. If the mortgage has not been assigned of record, the certificate shall so state”

[emphasis added].

Notably, section 321 (3) does not call for the unrecorded MERS assignments to be listed on the MERS discharge. Rather, under the statute, the discharge is required either to list the assignment by the name of the assignor and assignee, the interest assigned, and the book and page number, where recorded, or, if the assignment has not been recorded, to “so state.”

The legislative history of the statute supports this interpretation. In 1951, Real Property Law section 321 (3) was amended to, among other things, insert the term “of record” (L 1951, c 159, § 1). The relevant memoranda submitted to the Legislature in connection with the amendment indicate that the term was inserted to “correct a difficulty” in complying with the statute (see e.g. Memorandum by the Executive Secretary and Director of Research of the Law Revision Committee in support of Bill in Senate). Prior to the amendment, the statute required that a discharge certificate presented to the County Clerk either list all of the assignments in the chain of title or state that the mortgage was unassigned 5. However, problems developed when an assignment, known to the person executing the discharge, was not in the chain of title. In those situations, the person executing the discharge would make the untrue statement that the mortgage was unassigned. Thus, the Legislature amended the statute allowing the discharge certificate to either list the assignments in the chain of title or to state that the assignment has not been made “of record”. The MERS discharge complies with the statute by stating that the “[m]ortgage has not been further assigned of record” and, therefore, the County Clerk is required to accept the MERS assignments and discharges of mortgage for recording.

Accordingly, the order of the Appellate Division should be affirmed with costs.

CIPARICK, J.(concurring):

I am constrained to agree with the result reached by the majority opinion. However, I write independently to highlight the narrow breadth of this holding and to point out that this issue may be ripe for legislative consideration.

I concur with the majority that the Clerk’s role is merely ministerial in nature and that since the documents sought to be recorded appear, for the most part, to comply with the recording statutes, MERS is entitled to an order directing the clerk to accept and record the subject documents. I wish to note, however, that to the extent that the County and various amici argue that MERS has violated the clear prohibition against separating a lien from its debt and that MERS does not have standing to bring foreclosure actions, those issues remain for another day (see e.g. Merritt v Bartholick, 36 NY 44, 45 [1867][“a transfer of the mortgage without the debt is a nullity, and no interest is acquired by it”]).

In addition to these substantive issues, a plethora of policy arguments have surfaced during the pendency of this proceeding. For instance, if MERS succeeds in its goal of monopolizing the mortgage nominee market, it will have effectively usurped the role of the County Clerk that inevitably would result in a county’s recording fee revenue being substantially diverted to a private entity. Additionally, MERS’s success will arguably detract from the amount of public data available concerning mortgage ownership that otherwise offers a wealth of statistics that are used to analyze trends in lending practices. Another concern raised is that, once an assignment of the mortgage is made, it can be difficult, if not impossible, for a homeowner to find out the true identity of the loan holder. Amici who submitted briefs in favor of the County argue that this can effectively insulate a note holder from liability and further that it encourages predatory lending practices.

Unquestionably there is considerable public value in allowing seamless assignments of mortgages in a secondary market. However, whether this benefit will outweigh the negative consequences cannot be ascertained by this Court. Thus, as the recording act, which as relevant here has not been substantially amended in the last 50 years, could not have envisioned such a system nor its ancillary impacts, I feel that such a decision is best left in the hands of the Legislature.

M/O Merscorp. v Romaine

No. 179

KAYE, Chief Judge (dissenting in part):

In 1993, members of the real estate mortgage industry created MERS, an electronic registration system for mortgages. Its purpose is to streamline the mortgage process by eliminating the need to prepare and record paper assignments of mortgage, as had been done for hundreds of years. To accomplish this goal, MERS acts as nominee and as mortgagee of record for its members nationwide and appoints itself nominee, as mortgagee, for its members’ successors and assigns, thereby remaining nominal mortgagee of record no matter how many times loan servicing, or the mortgage itself, may be transferred. MERS hopes to register every residential and commercial home loan nationwide on its electronic system.

But the MERS system, developed as a tool for banks and title companies, does not entirely fit within the purpose of the Recording Act, which was enacted to “protect the rights of innocent purchasers . . . without knowledge of prior encumbrances” and to “establish a public record which would furnish potential purchasers with notice, or at least ‘constructive notice’, of previous conveyances” (Andy Assocs. v Bankers Trust Co., 49 NY2d 13, 20 [1979]; see Witter v Taggert, 78 NY2d 234, 238 [1991]). 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.

The Suffolk County Clerk, pursuant to the Recording Act, has a duty to record conveyances that are “entitled to be recorded” (Real Property Law § 316-a [5]), and to discharge mortgages when presented with a validly executed and acknowledged certificate of discharge (Real Property Law § 321). Thus, as part of this ministerial duty, the Clerk is called upon to examine an instrument to see that it is, facially, a “conveyance” of real property or to see that the certificate of discharge complies with the statutory mandates. “The performance of his uniform clerical duty requires him to compare the instruments which come to his possession for record . . . and certify as to the identity of their physical contents. Such a certificate does not involve the expression of an opinion, but calls for the statement of a fact capable of absolute demonstration” (Putnam v Stewart, 97 NY 411, 418 [1884]).

When presented with a MERS mortgage to record, the Clerk is able to discern from the face of the instrument that MERS has been appointed, as nominee, “mortgagee of record.” As the instrument appears to reflect a valid conveyance (Real Property Law § 290 [3]), the Clerk is required to record the instrument in MERS’ name “as nominee for lender” (Real Property Law § 291). Given that the identity of the actual lender is ascertainable from the mortgage document itself — indeed, the use of a nominee as the equivalent of an agent for the lender is apparent, and not unusual — I concur with the majority that the Clerk is obligated to record MERS mortgages.1

When presented with a certificate of discharge, however, the Clerk has the duty to examine the mortgage’s prior assignments. The Clerk collects fees precisely for this purpose (Real Property Law § 321 [3] [“the fee or fees which the recording officer is entitled to receive for filing and entering a certificate of discharge of a mortgage and examining assignments of such mortgage shall be payable with respect to each mortgage”]). Section 321 (3) of the Real Property Law further provides:

“Every certificate presented to the recording officer shall be executed and acknowledged or proved in like manner as to entitle a conveyance to be recorded. If the mortgage has been assigned, in whole or in part, the certificate shall set forth the date of each assignment in the chain of title of the person or persons signing the certificate, the names of the assignor or assignee, the interest assigned, and, if the assignment has been recorded, the book and page where it has been recorded or the serial number of such record; or if the mortgage is being recorded simultaneously with the certificate of discharge, the certificate of discharge shall so state. If the mortgage has not been assigned of record, the certificate shall so state”

(emphasis added).

“[W]here the statutory language is clear and unambiguous, the court should construe it so as to give effect to the plain meaning of the words used” (Raritan Dev. Corp. v Silva, 91 NY2d 98, 107 [1997][emphasis and citations omitted]). Plainly, the statute requires all assignments of the mortgage to be listed on the certificate of discharge, whether recorded or not. The statute first sets out this general requirement, then it addresses each possible scenario in turn: if the assignment was recorded, the Clerk must enter the book and page; if the assignment of mortgage is being recorded simultaneously, the certificate shall so state; if the assignment was not recorded, the certificate similarly shall so state. To read the statute as providing that the certificate “either” list the recorded mortgage “or” simply state that the assignment has not been recorded renders the language of the preceding sentences superfluous and the clause regarding the listing of recording details “if recorded” nonsensical.

“[T]he clearest indicator of legislative intent is the statutory text” (Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577, 583 [1998]). The Court need not look to legislative history when the plain meaning of the statute is clear, and

surely should not look to legislative history to override the plain meaning of the statute, as the majority now does.

Here, moreover, the legislative history of § 321 is inapposite. Real Property Law § 321 was amended in 1951 to ameliorate the situation “where assignments are known by the signing party to have existed but are not in his chain of title because the mortgage has been reassigned to the assignor,” such as when “a mortgage has been pledged to secure a loan and on repayment . . . has been reassigned to the mortgagee without the assignment ever having been recorded” (Recommendation of the Law Revision Comm, Bill Jacket, L 1951, ch 159, at 20; see also Mem of Law Revision Comm, Bill Jacket, L 1951, at 11). Thus, the situation the amendment addressed was when a mortgagee’s assigned, unrecorded mortgage was reassigned back to the mortgagee, and the mortgage was then transferred by the mortgagee to a subsequent holder or discharged by the original mortgagee himself. In such a case, “there appears to be no reason for requiring a statement that the mortgage has not been assigned [as] the certificate is executed by the original mortgagee” (Recommendation of the Law Revision Comm, Bill Jacket, L 1951, ch 159, at 20 [emphasis added]), or transferred by the original assignor after it had been assigned back to him (see Report of Comm on Real Property Law, Bill Jacket, L 1951, at 9).

Under the MERS system, by contrast, assignments are made from one lender, to another lender, to another lender, and so on down the line. The 1951 amendment, which assumed that the mortgagee would be discharging the reassigned mortgage, or that a subsequent holder would discharge it unaware that the previous owner had assigned away and been reassigned the mortgage, is thus inapplicable to the issue under review.

The MERS system raises additional concerns that should not go unnoticed.

The benefits of the system to MERS members are not insubstantial. Through use of MERS as nominee, lenders are relieved of the costs of recording each mortgage assignment with the County Clerk, instead paying minimal yearly membership fees to MERS. Transfers of mortgage instruments are faster, allowing for efficient trading in the secondary mortgage market; a mortgage changes hands at least five times on average.

Although creating efficiencies for its members, there is little evidence that the MERS system provides equivalent benefits to home buyers and borrowers — and, in fact, some evidence that it may create substantial disadvantages. While MERS necessarily opted for a system that tracks both the beneficial owner of the loan and the servicer of the loan, its 800 number and Website allow a borrower to access information regarding only his or her loan servicer, not the underlying lender. The lack of disclosure may create substantial difficulty when a homeowner wishes to negotiate the terms of his or her mortgage or enforce a legal right against the mortgagee and is unable to learn the mortgagee’s identity. Public records will no longer contain this information as, if it achieves the success it envisions, the MERS system will render the public record useless by masking beneficial ownership of mortgages and eliminating records of assignments altogether. Not only will this information deficit detract from the amount of public data accessible for research and monitoring of industry trends, but it may also function, perhaps unintentionally, to insulate a note holder from liability, mask lender error and hide predatory lending practices. The County Clerks, of course, are concerned about the depletion of their revenues — allegedly over one million dollars a year in Suffolk County alone.

Admittedly we do not know, at this juncture, the extent to which these concerns will be realized. But it would seem prudent to call to the attention of the Legislature what is at least a disparity between the relevant statute — now 55 years old — and the burgeoning modern-day electronic mortgage industry.

* * * * * * * * * * * * * * * * *

Order affirmed, with costs. Opinion by Judge Pigott. Judges Rosenblatt, Graffeo, Read and Smith concur. Judge Ciparick concurs in result in an opinion. Chief Judge Kaye dissents in part in an opinion.

Decided December 19, 2006


Notes

1 Edward P. Romaine resigned as County Clerk December 31, 2005. Judith A. Pascale is currently the Acting County Clerk.

2 Among the entities creating MERS were the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, and the Mortgage Bankers Association of America.

3 Members of the MERS system also include entities such as insurance companies, title companies and banks.

4 If a MERS member transfers servicing interests in a mortgage loan to a non-MERS member, an assignment from the MERS member to the non-MERS member is recorded in the County Clerk’s Office and the loan is deactivated within the MERS system.

5 The purpose of such requirement was to facilitate the work of the recording officer in marking the record of the mortgage.

1 I also agree that the issues concerning the underlying validity of the MERS mortgage instrument — in particular, whether its failure to transfer beneficial interest renders it a nullity under real property law, whether it violates the prohibition against separating the note from the mortgage, and whether MERS has standing to foreclose on a mortgage — are best left for another day. Although MERSCORP initially requested a declaratory judgment that the MERS instruments were “lawful in all respects” (which Supreme Court denied) the instruments’ validity has not yet been addressed.

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



Posted in concealment, conflict of interest, conspiracy, foreclosure, foreclosures, MERS, MERSCORP, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., non disclosure0 Comments


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