JUDITH ALEJANDRE and SERGIO TERRON, Appellants,
v.
DEUTSCHE BANK TRUST COMPANY AMERICAS
f/k/a BANKER’S TRUST COMPANY, as TRUSTEE
and CUSTODIAN FOR NATIXIS 2007-HE2, Appellee.

No. 4D09-2280.

October 13, 2010 –

Joshua Bleil and Jessica Ticktin of The Ticktin Law Group, P.A.,
Deerfield Beach, for appellants.

No brief filed for appellee.

Judith Alejandre and Sergio Terron (Alejandre) appeal the summary judgment of foreclosure in favor of Deutsche Bank Trust Company. Alejandre asserts that the trial court erred in granting the summary judgment and that they had asserted affirmative defenses which were not denied by Deutsche, dealt with during the hearing on the motion for summary judgment or addressed in the final judgment. We agree and reverse.

Deutsche filed an amended complaint with the necessary documentation alleging that it was entitled to foreclose on the property in question. In Alejandre’s answer to the amended complaint, they asserted as affirmative defenses, the Real Estate Settlement Procedures Act (RESPA), the Truth in Lending Act (TILA), and unclean hands. In moving for summary judgment, Deutsche attached an affidavit stating that it had advanced to Alejandre, and is owed by Alejandre, the sum of $337,567.26. In its motion, however, it did not address any of the pending affirmative defenses. Nonetheless, the trial court granted Deutsche’s motion for summary judgment, prompting this appeal.

“The standard of review of the entry of summary judgment is de novo.” Craven v. TRG-Boynton Beach, Ltd.,925 So.2d 476, 479 (Fla. 4th DCA 2006). Further, [t]he law is well settled in Florida that a party moving for summary judgment must show conclusively the absence of any genuine issue of material fact, and the court must draw every possible inference in favor of the party against whom a summary judgment is sought.” Id. at 479-80. “Summary judgment cannot be granted unless the pleadings, depositions, answers to interrogatories, and admissions on file together with affidavits, if any, conclusively show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Frost v. Regions Bank,15 So.3d 905, 906 (Fla. 4th DCA 2009).

When a party raises affirmative defenses, “[a] summary judgment should not be granted where there are issues of fact raised by [the] affirmative defense[s] which have not been effectively factually challenged and refuted.” Cufferi v. Royal Palm Dev. Co.,516 So.2d 983, 984 (Fla. 4th DCA 1987). Thus, “`[i]n order for a plaintiff . . . to obtain a summary judgment when the defendant asserts affirmative defenses, the plaintiff must either disprove those defenses by evidence or establish the legal insufficiency of the defenses.’” Id. (quoting Bunner v. Fla. Coast Bank of Coral Springs, N.A.,390 So.2d 126, 127 (Fla. 4th DCA 1980)). In such instances, “[t]he burden is on the plaintiff, as the moving party, to demonstrate that the defendant could not prevail.” Id.

In Frost, a bank/mortgagee filed a foreclosure claim against a mortgagor. In response to that complaint, the mortgagors filed an answer that contained the affirmative defense of notice and opportunity to cure. The bank filed a motion for summary judgment. In opposition to that motion, the mortgagors did not file any papers or affidavits. At the hearing, the mortgagors contended that summary judgment was improper because the bank failed to address their affirmative defense. The trial court granted the bank’s motion for summary judgment. Frost, 15 So. 3d at 906.

On appeal, this court reversed. We stated that the bank failed to refute the mortgagors’ affirmative defense of lack of notice and opportunity to cure. The bank failed to meet this requirement because “[n]othing in the bank’s complaint, motion for summary judgment, or affidavits indicate that the bank gave the [mortgagors] the notice which the mortgage required. The bank also did not establish that the [mortgagors'] lack of notice and opportunity to cure defense was legally insufficient.” Id. at 906. This Court held that “[b]ecause the bank did not meet its burden to refute the [mortgagors'] lack of notice and opportunity to cure defense, the bank is not entitled to final summary judgment of foreclosure.” Id. at 906-07.

In the instant case, as in Frost, the trial court’s entry of summary judgment was improper. Here, as in Frost, Deutsche moved for summary judgment, but in that motion, it failed to address affirmative defenses raised by the mortgagor, Alejandre. Because Deutsche failed to address Alejandre’s affirmative defenses, it did not carry its burden on summary judgment. Therefore, the trial court’s entry of summary judgment was erroneous. We do not pass upon the merits of the affirmative defenses, as that is a matter to be addressed in further proceedings.

Reversed and Remanded for Further Proceedings Consistent with this Opinion.

TAYLOR and CIKLIN, JJ., concur.

ALEJANDRE v. DEUTSCHE BANK TRUST COMPANY

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RUSCALLEDA v. HSBC BANK USA

Glazy Ruscalleda and Jose Ruscalleda, Appellants,
v.
HSBC Bank USA, etc., Appellee.

No. 3D09-997.

District Court of Appeal of Florida, Third District.

Opinion filed September 15, 2010.

John H. Ruiz and Karen Barnet-Backer, for appellants.

Shapiro & Fishman and Heidi J. Weinzetl (Boca Raton), for appellee.

Before WELLS, ROTHENBERG, and LAGOA, JJ.

ON MOTION FOR REHEARING OR CLARIFICATION.

ROTHENBERG, J.

Upon consideration of the appellee’s motion for rehearing or clarification, we withdraw our previous opinion filed on June 9, 2010, and substitute the following opinion in its stead.

This is an appeal of a final summary judgment in a mortgage foreclosure action entered in favor of plaintiff, HSBC Bank USA (“HSBC”), and against the defendants, Glazy Ruscalleda and Jose Ruscalleda. Based on the unique circumstances of this case, we reverse and remand for further proceedings.

The unique circumstances surrounding this case involve a rather confusing situation caused by two banks—the appellee, HSBC, and American Home Mortgage Servicing, Inc. (“American Home Mortgage”)—because they were simultaneously attempting to foreclose the same mortgage. On October 8, 2008, American Home Mortgage filed a foreclosure action against the defendants.^{[ 1 ]} A week later, HSBC filed an action to foreclose the same exact mortgage. The complaint filed by HSBC falsely alleged that it was the current owner and holder of the mortgage and note, when, in reality, American Home Mortgage was still the holder of the note and mortgage.^{[ 2 ]} On October 28, 2008, due to the actions of American Home Mortgage and HSBC, the defendants, who were acting pro se at that time, filed an answer and affirmative defenses only in the foreclosure action filed by American Home Mortgage, which was the holder of the mortgage and note, because they mistakenly believed that the complaints involved the same foreclosure action.

After filing their pro se answer and affirmative defenses, the defendants retained counsel. Continuing in their mistaken belief, they did not inform their attorney of the action filed by HSBC. On November 13, 2008, counsel filed an amended answer and affirmative defenses on behalf of the defendants in the American Home Mortgage action, but took no action on the HSBC complaint.

Although the defendants did not file an answer in response to HSBC’s complaint, HSBC never moved for a default judgment.^{[ 3 ]} Instead, on January 22, 2009, HSBC moved for summary judgment, scheduling the hearing for March 24, 2009. When the defendants received the motion for summary judgment in the HSBC action, it sent the motion to their counsel. It was at that point, that the defendants and their counsel realized that two separate banks were attempting to simultaneously foreclose on the same mortgage, but that they only had been defending the initial action filed by American Home Mortgage.

On February 23, 2009, the defendants filed a memorandum of law in opposition to the motion for summary judgment, the affidavit of Glazy Ruscalleda, and a motion to transfer the case to the division where the foreclosure action filed by American Home Mortgage was pending (“Motion to Transfer”). On February 25, 2009, the defendants filed a request for production, request for admissions, and notice of interrogatory. American Home Mortgage waited until the day before the scheduled hearing to file its notice of voluntary dismissal, although it had executed the assignment of mortgage almost three months earlier.

At the scheduled hearing, the trial court heard the arguments raised by HSBC in its motion for summary judgment and by defense counsel in his memorandum of law filed in opposition. Although it is undisputed that the defendants’ discovery was still pending, the trial court entered final summary judgment on the same day as the hearing, March 24, 2009, in favor of HSBC.^{[ 4 ]}

Based on the unique circumstances set forth above, we conclude that the order under review must be reversed, and the cause remanded for further proceedings, with directions to allow the defendants to file an answer and affirmative defenses and to require HSBC to respond to the defendants’ discovery requests. The record clearly demonstrates that the defendants’ failure to file a timely answer and affirmative defenses in the action filed by HSBC was due to the confusion caused by American Home Mortgage and HSBC when they were simultaneously attempting to foreclose on the same exact mortgage in two different divisions of the circuit court.

Reversed and remanded with directions.

Not final until disposition of timely filed motion for rehearing.

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On June 23, 2009, MERS substituted MTC Financial Inc., d.b.a. Trustee Corps, as trustee. (See Id., Ex. B.) Trustee Corps recorded a notice of trustee’s sale (“NOS”) on or about September 15, 2009, indicating that it would sell the Property on October 5, 2009, (see Id., Ex. C), but Plaintiff claims to have never received notice of the NOS, (see id. ¶ 63).

The most obvious potential defect in this foreclosure stems from the fact that Trustee Corps was substituted as trustee after it recorded the NOD, but before it recorded the NOS. In Nevada, the power of sale cannot be exercised until one of two particular entities–the beneficiary or the trustee–or an agent thereof, records the NOD. Nev. Rev. Stat. § 107.080(2)(c). Trustee Corps was not such an entity when it recorded the NOD. Thus, unless Trustee Corps can provide evidence indicating that the beneficiary–Taylor–or the trustee–Equity Title–caused Trustee Corps to file the NOD, it may be liable for wrongful foreclosure.
Further complicating matters, some other unusual events occurred prior to the filing

Scribd

Washington Post Staff Writer
Monday, August 16, 2010; 7:32 PM

A federal judge on Monday refused to accept a $75 million settlement between the Securities and Exchange Commission and Citigroup, the second time in a year that the agency’s attempt to sanction a major bank was foiled by a judge with questions about the appropriateness of the agreement.

Judge Ellen S. Huvelle of the U.S. District Court of the District of Columbia raised questions during a hearing Monday about why the SEC chose to penalize Citigroup financially when it’s the company’s shareholders who will ultimately bear the price of the sanction, according to lawyers who were present. She also asked why the agency decided to charge only two executives with wrongdoing when other more senior executives were involved with Citigroup’s actions, the lawyers said.

Huvelle demanded more information from SEC and Citigroup and scheduled another hearing for Sept. 24.

Continue Reading…Washington Post

MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. v. SAUNDERS

2010 ME 79

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

Docket: Cum-09-640.

Supreme Judicial Court of Maine.

Argued: June 15, 2010.

Decided: August 12, 2010.

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

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

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

GORMAN, J.

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

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

I. BACKGROUND

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

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

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

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

II. DISCUSSION

A. MERS’s Standing

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

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

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

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

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

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

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

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

. . . .

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

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

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

. . . .

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

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

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

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

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

(1) The holder of the instrument;

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

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

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

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

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

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

B. Substitution of the Bank for MERS

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

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

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

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

C. Summary Judgment

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

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

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

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

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

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

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

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

III. CONCLUSION

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

The entry is:

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

This copy provided by Leagle, Inc.

VIA: ForeclosureHamlet & 4closureFraud

Dismissed With PREJUDICE!

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

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

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Via: Livinglies

Now that these venerable institutions have turned into ankle biter’s, their claims to compel production and other forms of discovery are being heard by the same judges that turn down similar claims from borrowers. In this case AMBAC is suing one of the mortgage aggregators alleging that the aggregator  caused loans to be originated without regard to the ability of of the borrower to repay the loan. They allege that despite the claim that the mortgage “pools” were sampled, many of the loans consisted of transactions in which the borrower was known not to have the capability of even making the first payment. In other cases, as we know, the loans were “qualified” simply on the ability of the borrower to make the first payment, which was substantially reduced by allowing the borrower to pay less than the accrued interest and not of the principal. AMBAC is therefore making the same claims as borrowers and investors.

It is clear from this case and other recent decisions at the trial court level that the defensive stonewalling tactics which were used successfully against borrowers are not working when the litigants are both institutions. This particular case was submitted to me by Max Gardner, who recognizes the significance of this development. It may seem like technical procedure to most people but the fact remains that these “pretender lenders” simply do not have a factual defense. The only thing they have our lawyers who are skilled in using civil procedure to avoid any possibility that the case will be  heard on the merits. This tactic, while successful against borrowers, is obviously going down the tubes in connection with litigation between institutions.

This will have an obvious and palpable effect on litigation with borrowers. Borrowers or their attorneys that represent them will merely cite  rulings in the same or nearby jurisdiction wherein discovery was allowed to proceed. Our experience in monitoring thousands of cases indicates that in the relatively few cases where judges allow discovery to proceed the matter was quickly settled or the party seeking foreclosure simply vanished, allowing the borrower to either get a judgment for quiet title by default or to sit in limbo with no party seeking payments or foreclosure.

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Don’t we love New York!

This is another case for you all to learn from…Now again, shouldn’t their be a conflict of any documents where MERS is the nominee for any of these banks?

I think we are going to see lenders, servicers et al slowly begin to turn on MERS!

2010 NY Slip Op 51127(U)

IndyMAC BANK F.S.B., Plaintiff(s),
v.
LUDDY BRITO GARCIA, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., ACTING SOLELY AS A NOMINEE FOR STERLING NATIONAL MORTGAGE COMPANY, INC., SUBSIDIARY OF FEDERALLY CHARTERED BANK, ITS SUCCESSORS AND ASSIGNS, AND “JOHN DOE # 1″ THROUGH “JOHN DOE # 10″, THE LAST TEN NAMES BEING FICTITIOUS AND UNKNOWN TO plaintiff, THE PERSONS OR PARTIES INTENDED BEING THE PERSONS OR PARTIES, IF ANY, HAVING OR CLAIMING AN INTEREST IN OR LIEN UPON THE MORTGAGED PREMISES DESCRIBED IN THE COMPLAINT, Defendant(s).

7282-2008

Supreme Court, Suffolk County.

Eschen, Frenkel & Weisman, LLP, 20 West Main Street, Bay Shore, New York 11706, Attorneys for Plaintiff.

Luddy Brito Garcia, 124 East 13th Street, Huntington Station, New York 11746, Defendant Pro Se.

PETER H. MAYER, J.

Upon the reading and filing of the following papers in this matter: (1) Notice of Motion by the plaintiff, dated June 2, 2009, and supporting papers; and now

UPON DUE DELIBERATION AND CONSIDERATION BY THE COURT of the foregoing papers, the motion is decided as follows: it is

ORDERED that plaintiff’s application (seq. # 002) for an order of reference in this foreclosure action is considered under 2009 NY Laws, Ch. 507, enacted December 15, 2009, and 2008 NY Laws, Ch. 472, enacted August 5, 2008, as well as the related statutes and case law, and is hereby denied without prejudice and with leave to resubmit upon proper papers, for failure to submit proper evidentiary proof, including an affidavit from one with personal knowledge, of a valid indorsement of the note or assignment of the mortgage, sufficient to establish the plaintiff’s ownership of the note and mortgage at the time the action was commenced; and it is further

ORDERED that the plaintiff shall promptly serve a copy of this Order upon the defendant-homeowner(s) at all known addresses and upon all other answering defendants, via first class mail, and shall promptly file the affidavit(s) of such service with the County Clerk and annex a copy of this Order and the affidavit(s) of service as exhibits to any motion resubmitted pursuant to this Order; and it is further

ORDERED that with regard to any scheduled court conferences or future applications by the plaintiff, if the Court determines that such conferences have been attended, or such applications have been submitted, without proper regard for the applicable statutory and case law, or without regard for the required proofs delineated herein, the Court may, in its discretion, dismiss this case or deny such applications with prejudice and/or impose sanctions pursuant to 22 NYCRR §130-1, and may deny those costs and attorneys fees attendant with the filing of such future applications.

By Order dated November 24, 2009, this Court scheduled a foreclosure settlement conference for December 23, 2009, which was adjourned to February 24, 2010. The defendant-homeowner, Luddy Brito Garcia, failed to appear at both. The plaintiff now seeks a default order of reference and requests amendment of the caption to substitute a tenant in the place and stead of the “Doe” defendants. For the reasons set forth herein, the plaintiff’s application is denied.

In this foreclosure action, the plaintiff filed a summons and complaint on January 3, 2008, which essentially alleges that Ms. Garcia defaulted in her payments of a mortgage, dated August 15, 2006, in the principal amount of $411,500.00, for the premises located at 124 East 13th Street, Huntington, New York. The original lender, Sterling National Mortgage Company, Inc., purportedly indorsed the promissory note to the plaintiff prior to the commencement of this action. According to the plaintiff, this indorsement made the plaintiff the lawful holder of the note and mortgage with standing to commence the action. Although the plaintiff’s affidavit in support indicates that the “original note with a proper indorsement is [now] in the plaintiff’s possession,” the plaintiff does not prove — or even assert — that the plaintiff actually possessed the note and mortgage at the time the action was filed.

Instead, citing Mortgage Electronic Registration Systems, Inc. v Coakley, 41 AD3d 674, 838 NYS2d 622 (2d Dept 2007), the plaintiff summarily argues that because the promissory note was indorsed to the plaintiff, the mortgage passed as an incident to the note. Under the circumstances presented herein, however, the plaintiff’s reliance on Coakley is misguided. In Coakley, the record showed that the promissory note had been indorsed by the original lender to another bank, who then indorsed it in blank and ultimately transferred and tendered it to the foreclosing plaintiff. On that particular record, the court found that at the time the action was commenced, the plaintiff was the lawful holder of the promissory note and of the mortgage, which had passed as an incident to the promissory note. In this case, however, the alleged “indorsement” appears to be on a separate page from the promissory note and, in any event, is clearly undated.

New York UCC §3-202 (1) states, in pertinent part, that “[i]f the instrument is payable to order it is negotiated by delivery with any necessary indorsement” (emphasis added). In addition, UCC §3-202(2) requires that “[a]n indorsement must be written by or on behalf of the holder and on the instrument or on a paper so firmly affixed thereto as to become a part thereof (emphasis added). Here, the purported indorsement is payable to order, but there is no evidence of delivery of the note prior to the action’s commencement. Furthermore, the alleged indorsement appears to be on a separate page, makes no specific reference to the subject note, and is, in any event, undated. As such, the so-called “indorsement” is, at best, unreliable and fails to support plaintiff’s claim that the “note and mortgage were assigned by a properly indorsed note prior to the commencement of this action” (see, Slutsky v Blooming Grove Inn, Inc., 147 AD2d 208, 542 NYS2d 721 [2d Dept 1989]). This is particularly true where, as here, the plaintiff’s affidavit in support of the motion fails to affirmatively state that the plaintiff did, in fact, possess the note and mortgage at the time the action was commenced. Without either proof of a proper written assignment of the underlying note or proper proof of the physical delivery of the note prior to the commencement of the foreclosure action, the plaintiff has failed to sufficiently show either the proper transfer of the obligation, or that the mortgage passed as an inseparable incident to the debt (see, U.S. Bank, N.A. v Collymore, 68 AD3d 752, 890 NYS2d 578 [2d Dept 2009]).

A plaintiff has no foundation in law or fact to foreclose upon a mortgage, unless the plaintiff has shown it has legal or equitable interest in such mortgage (Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204, 887 NYS2d 615 [2d Dept 2009]; Katz v East-Ville Realty Co., 249 AD2d 243, 672 NYS2d 308 [1st Dept 1998]). A written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action would be sufficient to transfer the obligation, and have the mortgage pass as an inseparable incident to the debt (U.S. Bank, N.A. v Collymore, 68 AD3d 752, 890 NYS2d 578 [2d Dept 2009]). With regard to a written assignment, the execution date is generally controlling and a written assignment claiming an earlier effective date is deficient, unless it is accompanied by proof that the physical delivery of the note and mortgage was, in fact, previously effectuated (see, Bankers Trust Co. v Hoovis, 263 AD2d 937, 938, 694 NYS2d 245 [1999]). A retroactive assignment cannot be used to confer standing upon the assignee in a foreclosure action commenced prior to the execution of the assignment (Countrywide Home Loans, Inc. v Gress, 68 AD3d 709, 888 NYS2d 914 [2d Dept 2009]; Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204, 887 NYS2d 615 [2d Dept 2009]).

Applying this analysis to the case before this Court, a statement by the plaintiff merely indicating that the original note is in plaintiff’s possession as of the making of a motion for an order of reference is insufficient to show that the plaintiff had standing to bring the action in the first instance (Countrywide Home Loans, Inc. v Gress, 68 AD3d 709, 888 NYS2d 914 [2d Dept 2009]; Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204, 887 NYS2d 615 [2d Dept 2009]). Plaintiff’s failure to submit proper proof of a valid indorsement or assignment, and failure to otherwise prove that the plaintiff was the holder of the note and mortgage at the time the action was commenced, requires denial of the plaintiff’s motion for an order of reference.

This constitutes the Decision and Order of the Court.

Liening on NY homeowners

Chase and law firm draw scrutiny over tactics in foreclosure cases

By RICHARD WILNER

Last Updated: 12:01 PM, February 28, 2010
Posted: 12:54 AM, February 28, 2010

Shhh…Anyone who has any of these named should pay close attention.

Assignment blew up in their face!

Scribd

If we can only turn back time!

2005 NY Slip Op 09728

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

2004-04735.

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

Decided December 19, 2005.

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

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

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

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

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

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

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

DECISION & ORDER

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

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

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

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

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

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

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

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

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

Title says it all. Like in the recent post about LISTENING TO CASSANDRA: ‘MERS’ By Carol A. Needham.

MERS has no authority to assign anything!

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

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FRAZILE v. EMC MORTGAGE CORPORATION

LUCE FRAZILE, Plaintiff-Appellant,
v.

EMC MORTGAGE CORPORATION, a Foreign corporation, FREMONT REORGANIZING CORPORATION, a foreign corporation, Defendants-Appellees.

No. 09-15560. Non-Argument Calendar.

United States Court of Appeals, Eleventh Circuit.

June 11, 2010.

Before BIRCH, MARTIN and ANDERSON, Circuit Judges.

DO NOT PUBLISH

PER CURIAM:

Luce Frazile brought this action against EMC Mortgage Corporation (“EMC”) and Fremont Reorganizing Corporation (“Fremont”). She alleges that in executing and servicing her mortgage loan the defendants misrepresented the true nature of her obligations and violated various federal loan processing requirements. The district court granted the defendants’ motions to dismiss. This appeal followed. For reasons we will discuss, we affirm in part, reverse in part, and remand to the district court.

I.

Accepting the factual allegations of the complaint as true and construing them in the light most favorable to Frazile, the relevant facts are as follows. In 2006, a Fremont agent approached Frazile and encouraged her to refinance the home mortgage on her primary residence, which she alone owned. After she refinanced, it quickly became apparent that Frazile could not afford the payments on her newly refinanced mortgage and she turned to Fremont to rework the agreement’s terms. On November 16, 2006, Frazile again refinanced her mortgage loan. However, Frazile claims that at closing Fremont never provided her with certain documents, namely a consumer handbook on adjustable rate mortgages, two copies of a notice of right to cancel the mortgage, or a closing package. She further alleges that at some point after closing, EMC was assigned either the mortgage and note, loan servicing responsibility, or some combination of these.

Approximately two years after closing, in November 2008, Frazile attempted to rescind her mortgage loan transaction, a right to which she claimed entitlement under the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601-1667f. In December 2008, Frazile finally received a “less-than-complete copy of the closing package” from EMC. In these documents, her monthly income was misstated as $4,000, well above her actual $1,200 monthly earnings. Under the terms of the mortgage, the required monthly payments actually exceeded her monthly income. According to her complaint, “[t]he cumulative effect of increased monthly mortgage payments, property taxes and insurance premiums was to create an onerous financial burden on Frazile that would seriously jeopardize her ownership of the homestead of sixteen (16) years.”

On June 15, 2009, Frazile filed this lawsuit. In addition to three state law claims, she sought relief under the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601-2617, TILA, and relevant federal regulations. The defendants filed Rule 12(b)(6) motions to dismiss for failure to state a claim. The district court granted the defendants’ motions, dismissing with prejudice Frazile’s federal claims, declining to exercise supplemental jurisdiction as to her remaining state law claims, and closing the case. Frazile now appeals, challenging only the district court’s ruling as to her two federal claims.

II.

“We review de novo the district court’s grant of a motion to dismiss under Rule 12(b)(6).” Redland Co. v. Bank of Am. Corp., 568 F.3d 1232, 1234 (11th Cir. 2009). While we accept all allegations of the complaint as true, the “[f]actual allegations must be enough to raise a right to relief above the speculative level.’” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 1965 (2007). In other words, the plaintiff must “allege[] enough facts to suggest, raise a reasonable expectation of, and render plausible” the claims. Watts v. Fla. Int’l Univ., 495 F.3d 1289, 1296 (11th Cir. 2007). “[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. ___, 129 S. Ct. 1937, 1949 (2009). Furthermore, although the pleading party is not required to “allege a specific fact to cover every element or allege with precision each element of a claim, it is still necessary that a complaint contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory.” Roe v. Aware Woman Ctr. for Choice, Inc., 253 F.3d 678, 683 (11th Cir. 2001) (citation and internal quotation marks omitted).

A.

Count I of the complaint alleged violation of RESPA. In her complaint, Frazile specifically identified only one provision of that statute as the basis for her claims. She asserted that the defendants’ statutorily required “good faith estimate” failed to “timely provide [her] with full disclosure regarding the nature and the cost of the loan” including the “amount or range of settlement charges.” For this reason, she alleged that the defendants violated 12 U.S.C. § 2604(c).

We have held in the past that “there is no private civil action for a violation of 12 U.S.C. § 2604(c), or any regulations relating to it.” Collins v. FMHA-USDA, 105 F.3d 1366, 1368 (11th Cir. 1997). For this reason, we affirm the district court’s conclusion that all claims brought under this provision must fail.

However, the district court went on to liberally construe Frazile’s complaint. The court examined Frazile’s argument, made in response to the defendants’ motions to dismiss, that she had pleaded sufficient facts to give rise to a claim under 12 U.S.C. § 2605. Section 2605 does afford a private cause of action, and requires that “[e]ach transferee servicer to whom the servicing of any federally related mortgage loan is assigned, sold, or transferred shall notify the borrower of any such assignment, sale, or transfer.” 12 U.S.C. § 2605(c)(1). The district court dismissed any claim arguably brought under § 2605 on the grounds that Frazile failed to allege either (1) actual damage from the nondisclosure of the assignment of the servicing of the loan—as compared to nondisclosure of the terms of the mortgage—or (2) a pattern or practice of nondisclosure by the defendants that would warrant statutory damages. Such an allegation is a necessary element of any claim under § 2605. Id. § 2605(f). After careful review of the complaint, we agree with the conclusion of the district court that Frazile failed to allege facts relevant to the necessary element of damages caused by assignment. She did not, therefore, state a claim under § 2605.

On appeal, Frazile first acknowledges that her “complaint, as drafted, alleges that the [RESPA] violations were of § 2604(c), only.” Despite this fact, and without citation to any statutory provision, relevant regulation, or binding authority, Frazile sets out a series of other RESPA claims that she argues can be inferred from the facts alleged in her complaint. Her attempts to salvage a RESPA claim, however, are without merit. Frazile seems to suggest that she can assert a cause of action under 12 U.S.C. § 2607 (prohibiting kickbacks, markups, and fee splitting for services not performed) or 12 U.S.C. § 2605(e) (setting out the proper form and timing of responses to qualified written requests).

Frazile never raised arguments regarding § 2607 at the district court, even though she had the opportunity to do so. When, for instance, the defendants pointed out in their respective motions to dismiss that § 2604(c) could not support a private cause of action, Frazile did not argue that her complaint alleged facts sufficient to give rise to claims of unlawful markups, kickbacks, or fee splitting. Instead, as it related to RESPA, Frazile’s responsive filing focused entirely on § 2605. She argued that although she had cited only § 2604(c), “[t]he motion to dismiss should be denied because Ms. Frazile is afforded a private or individual cause of action under § 2605.” “[W]e have repeatedly held that `an issue not raised in the district court and raised for the first time in an appeal will not be considered by this court.’” Walker v. Jones, 10 F.3d 1569, 1572 (11th Cir. 1994) (quoting Depree v. Thomas, 946 F.2d 784, 793 (11th Cir. 1991)). If we were to try and address these new arguments on appeal, “we [would] have nothing to go on other than scattered (and unsupported) factual references in the appellant[`s] brief before this Court.” Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1332 (11th Cir. 2004). Under this standard, Frazile failed to preserve a § 2607 claim.

In addition, after careful review of Frazile’s complaint, we cannot conclude that Frazile “alleged enough facts to suggest, raise a reasonable expectation of, and render plausible” claims brought under either § 2607 or § 2605(e). See Watts, 495 F.3d at 1296. Relying solely on the allegations of the complaint, we conclude that Frazile’s pleading did not afford the defendants fair notice either that she brought a claim for payment of unlawful kickbacks, markups, or fee splitting, or that she brought a claim based on the inadequacy of their response to her qualified written request. In other words, her complaint did not include factual allegations sufficient “to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555, 127 S. Ct. at 1965.

For the foregoing reasons, the district court did not err when it held that Frazile’s complaint failed to state a RESPA claim.

B.

Frazile also sought relief under TILA, alleging that the defendants violated 15 U.S.C. §§ 1635, 1640, and 1641 as well as Regulation Z, 12 C.F.R. § 226. She asked that the district court remedy her losses by rescinding her mortgage transaction and awarding damages, costs, and attorney’s fees. The district court rejected Frazile’s TILA claims on the grounds that rescission was not available for residential mortgage transactions of the type at issue in Frazile’s suit and that any claim for damages was time-barred.

The district court turned to 15 U.S.C. § 1635(e)(1) to dispense with Frazile’s rescission claim. However, its reliance on this provision was misplaced. TILA exempts from the right of rescission residential mortgage transactions “to finance the acquisition or initial construction of such dwelling.” See 15 U.S.C. §§ 1635(e)(1), 1602(w); 12 C.F.R. §§ 226.23(f)(1), 226.2(a)(24). However, the facts alleged in Frazile’s complaint clearly demonstrate that the mortgage at issue was obtained as part of a refinancing transaction. Thus, § 1635(e)(1)’s exemption is not applicable.^{[ 1 ]}

Frazile also sought damages, attorney’s fees, and costs under § 1640(a) both for the defendants’ failure to comply with the statute’s disclosure requirements and for their failure to properly respond to her November 2008 rescission request. The district court addressed only the former issue, deeming any claim for damages time-barred under § 1640(e), which requires that plaintiffs bring suit “within one year from the date of the occurrence of the violation.” 15 U.S.C. § 1640(e).

This Court has observed that a TILA nondisclosure “violation `occurs’ when the transaction is consummated,” in other words, at the time of closing of a residential mortgage transaction. Smith v. Am. Fin. Sys., Inc. (In re Smith), 737 F.2d 1549, 1552 (11th Cir. 1984). Insofar as nondisclosure is concerned, we have held that the violation “is not a continuing violation for purposes of the statute of limitations.” Id. We have also recognized that the doctrine of equitable tolling might salvage a stale TILA claim where the debtor “ha[s] been prevented from [bringing suit] due to inequitable circumstances.” Ellis v. Gen. Motors Acceptance Corp., 160 F.3d 703, 706-08 (11th Cir. 1998).

The alleged nondisclosure occurred at closing on November 16, 2006, more than a year prior to the commencement of this suit. As the district court correctly observed, the complaint’s relevant assertions of misconduct all relate to conduct that took place on or before closing. Because Frazile filed this suit on June 15, 2009, more than one year later, her damages action for noncompliance with TILA’s disclosure requirements is time-barred.^{[ 2 ]}

However, the district court did not evaluate whether the defendants’ failure to timely rescind the mortgage transaction amounted to a separate violation of § 1635(b), which is actionable under § 1640(a). See In re Smith, 737 F.2d at 1552. When a borrower exercises a valid right to rescission, the creditor must take action within twenty days after receipt of the notice of rescission, returning the borrower’s money and terminating its security interest. See 15 U.S.C. § 1635(b). Failure to do so constitutes a separate violation of TILA, actionable under § 1640. Therefore, the one-year limitations period for violation of § 1635(b) claims runs from twenty days after a plaintiff gives notice of rescission. See Belini v. Wash. Mut. Bank, FA, 412 F.3d 17, 26 (1st Cir. 2005) (holding that though the plaintiffs had conceded that their disclosure-based TILA claims were time-barred, the statute of limitations had not yet run on claims arising out of noncompliance with § 1635(b)’s twenty-day requirement). Frazile alleged that in November 2008 she exercised her statutory right to rescind and that the defendants failed to timely respond. Frazile then filed this action on June 15, 2009. Thus, Frazile’s cause of action for inadequate response to her notice of rescission is not time-barred.^{[ 3 ]}

We recognize that the defendants set out a series of alternative grounds on which we might affirm the district court’s dismissal of Frazile’s TILA claims. Despite our authority to affirm on other grounds, we think the better course is to leave these issues for appropriate factual and legal development by the district court. See Jones v. Dillard’s, Inc., 331 F.3d 1259, 1268 n.4 (11th Cir. 2003). On remand, the district court should therefore evaluate the defendants’ other grounds for dismissal and determine whether Frazile has, in fact, stated a TILA claim. If she has, the district court must then determine whether the alleged nondisclosures preserved Frazile’s right to rescind for three years, see 15 U.S.C. § 1635(f), and whether Frazile has alleged that the defendants violated TILA’s rescission procedures by failing to adequately respond to her rescission notice, see id. § 1635(b).

III.

For the foregoing reasons, the district court’s dismissal of Frazile’s RESPA claims is AFFIRMED. However, we REVERSE as to Frazile’s TILA claims and REMAND for proceedings consistent with this opinion.

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

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