Just when you’ve thought you seen, heard and been hurt by this all, Abigail has another jackpot story on her site…besides what’s to stop them since they aren’t protecting the homeowners!

Abigail C. Field-

A shocking aspect of the proposed foreclosure fraud settlement among Bailed-Out Banks, the state attorneys general, and the Feds has rightly gotten a lot of attention, namely the Bailed-Out Banks’ ability to use other people’s money to pay their “penalty.” I confess, when I first heard about it, I figured it was a testament to the federal government’s craven capitulation to the Bailed Out Banks. (Let’s call them the B.O.B.s, rhymes with S.O.Bs.) But now I know it’s much worse than that, thanks to excellent reporting by David Dayen. The federal government really wants the B.O.Bs to use pension fund money to pay their “penalty.”

[REALITY CHECK]

EXECUTIVE SUMMARY

The Office of Corporate Justice has retained Baker & Hostetler LLP to conduct an independent investigation of concerns expressed by Mr. Nye Lavalle, a Fannie Mae shareholder, about several Fannie Mae business practices in connection with single-family mortgages. 1 Mr. Lavalle accuses Fannie Mae of “aiding, abetting and sanctioning … predatory lending and servicing schemes,” as well as committing accounting and securities fraud, and racketeering violations. He views Fannie Mae as responsible for damage inflicted on single-family borrowers by unscrupulous lenders and servicers because Fannie Mae approves lenders and servicers, maintains servicer profiles and ratings, approves mortgage document terms and servicing requirements, and benefits from the income stream created by wrongdoing. He fears Fannie Mae’s alleged failures could result in both civil and criminal liability that would affect shareholder value.

Through a series of communications to members of the Board of Directors and
others starting in December 2003, Mr. Lavalle called for an independent investigation of his
allegations? The Board of Directors decided to conduct an internal review of these concerns.
On September 12,2005, the Office of Corporate Justice retained Baker & Hostetler LLP.

Mr. Lavalle began investigating the mortgage industry after his parents, Anthony
and Matilde L. Pew, had a dispute with mortgage servicer EMC Mortgage Corporation (“EMC”),
a subsidiary of Bear Stearns Companies (“Bear Stearns,,).3 EMC ultimately foreclosed on the
Pews’ property, even though, according to Mr. Lavalle, his family is wealthy and made repeated
efforts to repay the loan.4 The dispute motivated Mr. Lavalle to investigate and publicize his
allegations that EMC engaged in predatory servicing practices, which has resulted in several
lawsuits between Bear Stearns and Mr. Lavalle. 5 Mr. Lavalle then broadened his focus to
include the single-family mortgage industry as a whole.

Mr. Lavalle considers himself a gadfly of the mortgage industry. He claims to
have been investigating, analyzing and exposing mortgage fraud, predatory lending and
servicing, and securitization schemes since 1993.6 He has a website that details his complaints,
and has posted information on several other sites. 7 He claims to have spent more than 20,000
hours and nearly $500,000 investigating predatory lending and servicing. 8 He reports that he is a
consultant to plaintiff lawyers who sue lenders and servicers and to homeowners.
Mr. Lavalle’s view is that since Fannie Mae is such an important force in the
mortgage industry, it has both the responsibility and means to end abusive lending and servicing
practices. Mr. Lavalle’s view is that Fannie Mae directs the conduct of servicers from afar. In
an e-mail ofFebruary21.2006.Mr. Lavalle expresses his frustration, saying:
I hate to keep using the analogies that you don’t like but it really is
like a Mafia operation. The Godfather [Fannie Mae] says we got a
problem, “take care of it” and the lieutenant ["the servicer"]
orders the hit [foreclosure] and hires the hitman [the USFN or
other lawyer to foreclose].

The hit man and lieutenant don’t want the Godfather implicated so
they create layers of deniability [a typical CIA, white house, legal
and political maneuver] to conceal who the real parties in interest
are and who had knowledge of and ordered the hit.

While Mr. Lavalle is partial to extreme analogies that undermine his credibility, he has become
knowledgeable about the mortgage industry. He has identified significant issues but, in our
view, does not always analyze them correctly. In proposing solutions, he generally undervalues
the benefits to homeowners of efficient mortgage markets operated at low costs and overstates
the needs of borrowers to have information about the status of their loans in the secondary
markets for mortgages. Fannie Mae has already identified and is addressing many of the same
issues. This report details several areas where Fannie Mae faces legal and business issues that
remain to be addressed.

Mr. Lavalle also claims that as a result of this work, he and his family have been
harassed. He expresses considerable anger when he attributes these attacks to Fannie Mae. An
investigation of his personal retaliation claim is in progress; to date Mr. Lavalle has identified no
direct conduct by Fannie Mae that he considers harassing.

We have reviewed more than 1,500 pages of documents provided by Mr. Lavalle
to Fannie Mae or us directly and had 17 conversations with him. We have identified six general
areas of his concerns: (1) foreclosure policies and procedures, (2) transparency, (3) protection of
promissory notes, (4) predatory servicing, (5) fraud detection and reporting, and (6) accounting
and securities issues. Within each area, Mr. Lavalle identifies multiple issues that are detailed in
this report. In investigating these concerns, we have collected documents from Mr. Lavalle,
Fannie Mae and public sources, reviewed extensively eFannie.com, and interviewed at least 30
Fannie Mae employees. The company has fully cooperated in our investigation.
In reviewing Mr. Lavalle’s concerns as a shareholder, we have told Mr. Lavalle
that the proper scope of our investigation is to determine whether he has identified wrongdoing
hy Fannie Mae officials or financial risks of sufficient magnitude to affect materially Fannie
Mae’s financial statements. We cannot resolve every case of an alleged mishandled mortgage.
1. Foreclosure Policies and Procedures

Mr. Lavalle asserts that Fannie Mae’s mortgage servicers and the Mortgage
Electronic Registry System, Inc. (“MERS”) routinely make misrepresentations in foreclosure
proceedings. He has identified two categories of alleged misrepresentations: that MERS or the
servicers are the holders and owners of the defaulted promissory notes, and that promissory notes
are lost, stolen or destroyed.9 He also questions whether foreclosures in the name of MERS or
servicers satisfy state laws on standing to sue. Since Fannie Mae authorizes foreclosures, Mr.
Lavalle argues that Fannie Mae could be liable for these misrepresentations, including for
racketeering violations under federal and state laws, and could risk having foreclosure sales
unwound by the courts. 10

We have found evidence that false statements by foreclosure attorneys are being
routinely made in at least two counties in Florida and appear to be occurring elsewhere.
Apparently due to Mr. Lavalle’s ex parte communications, two Florida judges ordered hearings
to examine MERS’s role in foreclosures. During consolidated hearings that resulted in the
judges dismissing 24 foreclosure actions, three judges (including one who took the time to
observe and comment) criticized MERS for routinely filing “sham” pleadings and “false”
affidavits regarding its interest in promissory notes and supposed lost promissory notes. I I One
judge questioned whether large numbers of foreclosures would have to be reversed due to fraud
on the court.

[...]

Scribd

“From my own personal experience and 20 years of research and investigation, nothing — and I mean nothing — that a bank, lender, loan servicer or their lawyer says or puts on paper can be trusted and accepted as true,” Mr. Lavalle said.

NYT-

YEARS before the housing bust — before all those home loans turned sour and millions of Americans faced foreclosure — a wealthy businessman in Florida set out to blow the whistle on the mortgage game.

His name is Nye Lavalle, and he first came to attention not in finance but in sports and advertising. He turned heads in marketing circles by correctly predicting that Nascar and figure skating would draw huge followings in the 1990s.

[FAIR GAME NYT]

The Never Ending Story… of smoke and mirrors.

HuffPO-

In his State of the Union speech, President Obama said and proposed many reasonable-sounding things. One of them was this:

We’ll also establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud… financial firms violate major anti-fraud laws because there’s no real penalty for being a repeat offender… So pass legislation that makes the penalties for fraud count.

And tonight, I’m asking my Attorney General to create a special unit of federal prosecutors and leading state attorney general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis.

Now, how could you be against that? In his speech, and indeed as has been true for his entire career, Mr. Obama deserves an A for rhetoric. But what grade does he deserve for action? Alas, he flunks.

[HUFFINGTONPOST]

image: fixturescloseup

It’s ON Like Donkey Kong!! No Settlement Going Down Now!

Will this end up with the one & only Judge Schack since it’s in his district?

“Plaintiffs Designate Kings County as place of TRIAL!!”

THE PEOPLE OF THE STATE OF NEW YORK by ERIC T. SCHNEIDERMAN

vs.

MERSCORP, MERS, JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A

Scribd

Complaint Charges Use Of MERS By Bank Of America, J.P. Morgan Chase, And Wells Fargo Resulted In Fraudulent Foreclosure Filings  

Servicers And MERS Filed Improper Foreclosure Actions Where Authority To Sue Was Questionable

Schneiderman: MERS And Servicers Engaged In Deceptive and Fraudulent Practices That Harmed Homeowners And Undermined Judicial Foreclosure Process

NEW YORK – Attorney General Eric T. Schneiderman today filed a lawsuit against several of the nation’s largest banks charging that the creation and use of a private national mortgage electronic registry system known as MERS has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process. The lawsuit asserts that employees and agents of Bank of America, J.P. Morgan Chase, and Wells Fargo, acting as “MERS certifying officers,” have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have. The lawsuit names JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., as well as Virginia-based MERSCORP, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc.

The lawsuit further asserts that the MERS System has effectively eliminated homeowners’ and the public’s ability to track property transfers through the traditional public records system. Instead, this information is now stored only in a private database – which is plagued with inaccuracies and errors – over which MERS and its financial institution members exercise sole control. Additional defendants include BAC Home Loans Servicing, LP, Chase Home Finance LLC, EMC Mortgage Corporation, and Wells Fargo Home Mortgage, Inc.

“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,” said Attorney General Schneiderman. “Our action demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners.”

The financial industry created MERS in 1995 to allow financial institutions to evade local county recording fees, avoid the hassle and paperwork of publicly recording mortgage transfers, and facilitate the rapid sale and securitization of mortgages. MERS operates as a membership organization, and most large companies that participate in the mortgage industry – by originating loans, buying or investing in loans, or servicing loans – are members, including JPMorgan Chase, Bank of America, Wells Fargo, Fannie Mae, and Freddie Mac. Over 70 million loans nationally have been registered in MERS System, including about 30 million currently active loans.

Through their membership in MERS, these companies avoided publicly recording the purchase and sale of mortgages by designating MERS Inc. – a shell company with no economic interest in any mortgage loan – as the “nominal” mortgagee of the loan in the public records. Instead, MERS members were supposed to log mortgage transfers in the MERS private electronic registry. The basic theory behind MERS is that, because MERS Inc. serves as a “nominee” (or agent) for most major lenders, it remains the “mortgagee” in the public records regardless of how often the loan is sold or transferred among MERS members. Thus, although MERSCORP has only about 70 employees, MERS Inc. serves as the mortgagee of record for tens of millions of loans registered in the MERS System.

MERS has granted over 20,000 “certifying officers” the authority to act on its behalf, including the authority to assign mortgages, to execute paperwork necessary to foreclose, and to submit filings on behalf of MERS in bankruptcy proceedings. These certifying officers are not MERS employees, but instead are employed by MERS members, including JPMorgan Chase, Bank of America, and Wells Fargo.

[...]

The lawsuit specifically charges that the defendants have engaged in the following fraudulent and deceptive practices:

• MERS has filed over 13,000 foreclosure actions against New York homeowners listing itself as the plaintiff, but in many instances, MERS lacked the legal authority to foreclose and did not own or hold the promissory note, despite saying otherwise in court submissions.
• MERS certifying officers, including employees and agents of JPMorgan Chase, Bank of America, and Wells Fargo, have repeatedly executed and submitted in court legal documents purporting to assign the mortgage and/or note to the foreclosing party. These documents contain numerous defects, including affirmative misrepresentations of fact, which render them false, deceptive, and/or invalid. These assignments were often automatically generated and “robosigned” by individuals who did not review the underlying property ownership records, confirm the documents’ accuracy, or even read the documents. These false and defective assignments often masked gaps in the chain of title and the foreclosing party’s inability to establish its authority to foreclose, and as a result have misled homeowners and the courts.
• MERS’ indiscriminate use of non-employee “certifying officers” to execute vital legal documents has confused, misled, and deceived homeowners and the courts and made it difficult to ascertain whether a party actually has the right to foreclose. MERS certifying officers have regularly executed and submitted in court mortgage assignments and other legal documents on behalf of MERS without disclosing that they are not MERS employees, but instead are employed by other entities, such as the mortgage servicer filing the case or its counsel. The signature line just indicates that the individual is an “Assistant Secretary,” “Vice President,” or other officer of MERS. Indeed, these documents often purport to assign the mortgage to the certifying officer’s own employer. Moreover, as a result of the defendants’ failure to track the designation of certifying officers and the scope of their authority to act, individuals have executed legal documents on behalf of MERS, such as mortgage assignments and loan modifications, when they were either not designated as a MERS certifying officer at the time or were not authorized to execute documents on behalf of MERS with respect to the subject loan.
• MERS and its members have deceived and misled borrowers about the importance and ramifications of MERS’ role with respect to their loan by providing inadequate disclosures.
• The MERS System is riddled with inaccuracies which make it difficult to verify the chain of title for a loan or the current note-holder, and creates confusion among stakeholders who rely on the information. In addition, as a result of these inaccuracies, MERS has filed mortgage satisfactions against the wrong property.

[ag.ny.gov]

Current Position Prevents Many Homeowners from Receiving Relief

BOSTON – Concerned that the refusal by Fannie Mae and Freddie Mac to engage in principal forgiveness and loan modifications for struggling homeowners is slowing the nation’s economic recovery, Attorney General Martha Coakley has sent a letter urging Fannie and Freddie to reverse this stance.

Leaders of Fannie Mae and Freddie Mac have expressed an unwillingness to participate in federal loan modification programs, including principal forgiveness. In a letter  to the acting director of the Federal Housing Finance Agency (FHFA), AG Coakley insists that the FHFA should allow for principal forgiveness, guided by a net present-value analysis, which would increase loan modifications and help stabilize the housing market and economy. 

“More than five million people have lost their homes due to foreclosure in the past five years, and millions more on the brink of foreclosure, struggling to stay in their homes,” wrote AG Coakley.  “Fannie Mae and Freddie Mac should be a leader in the arena of loan modification best practices, not an obstruction.  Fannie Mae and Freddie Mac should change course to serve both their own interests and those of the public and the economy.”

[MASS.GOV]

Scribd

Abigail C. Field-

WARNING: Attention homeowners: Do not read this post as legal advice. Although the information in this post is true, securitization fail, even of your loan, will not typically prevent the bank from foreclosing on you, unless you have a good lawyer. Even then, realistic end game is a sustainable modification, not a free house. More after the post.

—

The criminal securities fraud at the heart of the financial crisis has one very under-reported aspect: “securitization fail.” Once you understand the securitization fail concept, you can instantly, with tremendous clarity, see the scale of the fraud the Bailed Out Banks and Wall Street firms committed and commit every day. Get securitization fail, and the bankers’ crimes stand out like a vast herd of bison on the South Dakota prairie, a herd much bigger than this one.

[REALITY CHECK]

As if she didn’t know this…hmm

Miami Herald-

An appeals court has denied Attorney General Pam Bondi‘s request to allow the state Supreme Court to review a ruling she says limits her ability to fight foreclosure fraud. Because of this decision, seven pending cases are now threatened, Bondi said Thursday.

In December, the state’s 4th District Court of Appeals ruled that Bondi does not have the authority to investigate a law firm for alleged fraud under the Florida Deceptive and Unfair Trade Practices Act because attorneys’ work on behalf of lenders did not constitute trade or commerce. She asked the court to certify that its decision in the  Law Offices of David Stern, P.A. v. State of Florida case passes upon a question of great public importance so that she could appeal to the Supreme Court.

[MIAMI HERALD]

What is wrong with people these days???

They should have known better going up against AG Masto!

Nevada News Bureau-

CARSON CITY – When state Sen. Greg Brower asked the Attorney General’s office earlier this month about the $6 million in outside legal costs incurred so far in defending the state in a freeway construction dispute, he said his motives were purely fiscal in nature.

“We just don’t have money to waste,” said Brower, R-Reno. “At least this particular situation seems to suggest that maybe we are. Maybe there are good answers to all of these questions I raised in my letter but there is only one way to find out and that is to ask them.”

But the use of outside counsel is being questioned in another case where Brower’s law firm, Snell & Wilmer, is representing a company being sued by Attorney General Catherine Cortez Masto, who is also using the services of a private law firm.

[NEVADA NEWS BUREAU]

More proof FL AG Pam Bondi is not doing her job!

MADIGAN FILES SUIT OVER FAULTY MORTGAGE ASSIGNMENTS FILED WITH COUNTY RECORDERS

Attorney General Alleges Faulty Practices in Foreclosing on
Homeowners in Crisis

Chicago — Attorney General Lisa Madigan today filed a lawsuit against Nationwide Title Clearing for filing faulty documents with Illinois county recorders. Nationwide Title Cleaning Inc. (NTC) is a Florida-based company that prepares documents for mortgage servicers to use against borrowers who are in default, foreclosure or bankruptcy.

“The practices that NTC used were a key contributor to the mortgage crisis by undermining the integrity and accuracy of the mortgage servicing and foreclosure process,” Attorney General Madigan said.

NTC provides a range of mortgage loan services to eight of the top 10 lenders and mortgage servicers in the country. NTC specializes in creating, processing and recording mortgage assignments, which are often used for a lender to foreclose on a borrower.

The lawsuit, filed in Cook County Circuit Court, alleges numerous violations of the Illinois Consumer Fraud and Deceptive Practices Act and the Uniform Deceptive Trade Practices Act. Madigan is asking the court to require NTC to review and correct all documents it unlawfully created and recorded in Illinois, and pay back all revenues, profits and gains achieved in whole or in part due to unlawful practices. The suit also asks the court to impose civil penalties against the company.

[illinoisattorneygeneral.gov]

John O’Brien to MA AG Martha Coakley urging her not to sign onto the 50 state settlement with the banks.

Scribd

 United States Court of Appeals, Tenth Circuit.

 No. 11-1232.

 February 1, 2012.

EXCERPT:

3. The BAP Appeal

The Millers appealed the bankruptcy court’s order granting relief from stay to the BAP. The BAP began its decision by noting that “[t]he details surrounding the assignment to Deutsche Bank are not part of the record on appeal.” Aplee. Supp. App. at 6 n.8. In particular, the record submitted to the BAP did not even contain a copy of the Note, much less the original.

In its decision, the BAP spent little time discussing the adequacy of proof that Deutsche Bank was in possession of the original Note, and the legal consequences thereof. Instead, the BAP relied on the Rooker-Feldman doctrine. See Rooker v. Fid. Trust Co., 263 U.S. 413 (1923); D.C. Court of Appeals v. Feldman, 460 U.S. 462 (1983). Though noting that the bankruptcy court had not expressly mentioned this doctrine, it concluded that the court had relied on the state court’s decision on the standing issue. The BAP further concluded that in light of this doctrine, which generally prohibits federal courts from entertaining suits by parties who have lost in state court and who seek review of state court decisions in federal court, “the bankruptcy court properly declined to revisit the state court’s decision that Deutsche Bank was an `interested person’ entitled to a Rule 120 order of sale.” Aplee. Supp. App. at 16. Armed with the state-court decision finding Deutsche Bank had standing to proceed with the foreclosure, the BAP reached a further conclusion that Deutsche Bank had standing to seek relief from stay.

[...]

We conclude that neither the Rooker-Feldman doctrine nor issue preclusion applies to prevent a federal court from determining whether Deutsche Bank is a “party in interest” entitled to seek relief from stay. Because the BAP incorrectly relied on Rooker-Feldman and because neither the bankruptcy court nor the BAP conducted a proper statutory standing analysis under § 362(d), we could simply stop our analysis here and remand for a further consideration of the standing issue. The parties, however, have presented arguments on the merits concerning standing, and the sufficiency of Deutsche Bank’s showing concerning standing in this case is a legal issue that can be resolved on appeal. We will therefore now proceed to discuss why Deutsche Bank has failed to demonstrate its standing as a “party in interest.”

4. Deutsche Bank’s Status as “Party in Interest”

We return to the key question: is Deutsche Bank a “creditor” of the Millers with standing to seek relief from stay? To answer this question, we turn to the Bankruptcy Code. According to the Bankruptcy Code, a “creditor” includes an “entity that has a claim against the debtor.” 11 U.S.C. § 101(10)(a). A “claim” is a “right to payment.” Id. § 101(5)(A).

Does Deutsche Bank have a “right to payment” from the Millers? In examining this question, we begin with the principle that “[w]ithin the context of a bankruptcy proceeding, state law governs the determination of property rights.” In re Mims, 438 B.R. 52, 56 (Bankr. S.D.N.Y. 2010). We must therefore turn to Colorado law, in particular that state’s version of the Uniform Commercial Code (U.C.C. or Code).

We ask first how Colorado law would classify the Note signed by the Millers. Under Colorado law, a promise or order such as the Note is payable “to order” “if it is payable (i) to the order of an identified person or (ii) to an identified person or order.” Colo. Rev. Stat. § 4-3-109(b). The Note at issue here is payable “to the order of Lender. Lender is IndyMac Bank, F.S.B., a federally chartered savings bank[.]” Aplt. App., Vol. I at 14. Thus, the Note is payable to the “order” of IndyMac Bank under § 4-3-109(b).

But “[a]n instrument payable to an identified person [such as IndyMac Bank] may become payable to bearer if it is indorsed in blank pursuant to section 4-3-205(b).” Colo. Rev. Stat. § 4-3-109(c).⁷ Section 4-3-205(b) provides that “[i]f an indorsement is made by the holder of an instrument and it is not a special indorsement, it is a `blank indorsement.’ When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specifically indorsed.” (emphasis added).

Deutsche Bank presented evidence that IndyMac had indorsed the Note in blank. Is proof of this indorsement sufficient under the U.C.C. requirements to establish Deutsche Bank as the successor holder of the note? As we shall see, it is not, because Deutsche Bank must also prove it has possession of the Note.

The U.C.C. identifies the requirements for “negotiation” of a note, that is, for “transfer of possession . . . to a person who thereby becomes its holder.” Id. § 4-3-201(a). This statute provides that “if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder.” Id. § 4-3-201(b) (emphasis added). The Official Commentary to section 4-3-201 explains that negotiation “always requires a change in possession of the instrument because nobody can be a holder without possessing the instrument, either directly or through an agent.” (emphasis added). See also Colo. Rev. Stat. § 4-1-201(b)(20)(A) (defining “holder” of negotiable instrument as “person in possession” of it).

“Possession is an element designed to prevent two or more claimants from qualifying as holders who could take free of the other party’s claim of ownership.” Georg v. Metro Fixtures Contractors, Inc., 178 P.3d 1209, 1213 (Colo. 2008) (citation omitted).⁸ “With rare exceptions, those claiming to be holders have physical ownership of the instrument in question.” Id. (citation omitted).⁹ In the case of bearer paper such as the Note, physical possession is essential because it constitutes proof of ownership and a consequent right to payment.¹⁰

While Deutsche Bank has offered proof that IndyMac assigned the Note in blank, it elicited no proof that Deutsche Bank in fact obtained physical possession of the original Note from IndyMac, either voluntarily or otherwise.¹¹ Under the U.C.C. requirements, Deutsche Bank has therefore failed to show that it is the current holder of the Note.

Colorado law does not limit enforcement of an obligation to a holder who received the instrument through negotiation. A note may also be enforced by a transferee. See Colo. Rev. Stat. § 4-3-203. “Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument.” Id. § 4-3-203(b). But transfer requires delivery: “An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.” Id. § 4-3-203(a) (emphasis added). “Delivery” with respect to an instrument “means voluntary transfer of possession” of the instrument. Id. § 4-1-201(14). Because Deutsche Bank has failed to prove transfer of possession of the original Note it has failed to establish its status as a transferee.

Deutsche Bank also argues that it has standing because under Colorado law it can initiate a public trustee foreclosure without producing the original Note. It cites Colo. Rev. Stat. § 38-38-101(1), which provides that the “holder of an evidence of debt” may initiate a foreclosure. An “evidence of debt” includes a promissory note such as the Note at issue here. Colo. Rev. Stat. § 38-38-100.3(8). Under certain circumstances, the “holder of an evidence of debt” can file a public trustee foreclosure without supplying the original note. See id. § 38-38-101(b)(I)-(III).

But this argument depends, first, on Deutsche Bank’s ability to show that it is a “holder of an evidence of debt.” Article 38 defines a “holder of an evidence of debt” as a person “in actual possession of” or “entitled to enforce an evidence of debt.” Colo. Rev. Stat. § 38-38-100.3(10) (emphasis added). Section 38-38-100.3(10) lists a number of presumptive holders of a debt presumed to be the “holder of an evidence of debt.” Each of these requires possession of the evidence of debt, which Deutsche Bank has thus far failed to demonstrate. See id. § 38-38-100.3(10)(a)-(d).

Deutsche Bank appears to argue that notwithstanding its failure to prove it has actual possession of the Note, it qualifies as a “person entitled to enforce an evidence of debt” under § 38-38-100.3(10) and thus is a “holder of an evidence of debt” because (1) it holds a copy of the Note indorsed in blank and (2) it can initiate a foreclosure without presenting the original Note to the public trustee. Deutsche Bank contends that it is a “qualified holder,” see id. § 38-38-100.3(21), that would be permitted under Colorado law to foreclose without presenting the original note, see id. § 38-38-101(B)(II). But foreclosure under this provision requires either the bank or its attorney to execute a statement “citing the paragraph of section 38-38-100.3(20) under which the holder claims to be a qualified holder and certifying or stating that the copy of the evidence of debt is true and correct” and that the bank agrees to “indemnify and defend any person liable for repayment of any portion of the original evidence of debt in the event that the original evidence of debt is presented for payment to the extent of any amount, other than the amount of a deficiency remaining under the evidence of debt after deducting the amount bid at sale, and any person who sustains a loss due to any title defect that results from reliance upon a sale at which the original evidence of debt was not presented.” Id. §§ 38-38-101(b)(II), 38-38-101(2)(a). There is no evidence that Deutsche Bank or its attorneys have executed such a certification or intend to do so. We therefore reject Deutsche Bank’s claim to standing founded on these statutes.

5. Conclusion

For the foregoing reasons, the evidence is insufficient as it currently stands to establish that Deutsche Bank is a “party in interest” entitled to seek relief from stay. The bankruptcy court therefore abused its discretion by granting Deutsche Bank relief from stay.

The Millers raise a number of other objections to the proceedings and orders in the bankruptcy court and the BAP but we need not reach any of them in light of the remand we now order. The judgment of the BAP is REVERSED and the case is REMANDED to the BAP with instructions to remand to the bankruptcy court for further proceedings in accordance with this opinion. The Millers’ motion for leave to file a supplemental appendix is DENIED.

Scribd

Delaware Attorney General Beau Biden has said he won’t sign on to the settlement and Nevada AG Masto wants her 38 questions answered and CA AG Kamala D. Harris said thanks but she isn’t signing either!

Bloomberg-

The deadline for states to decide whether to join a proposed nationwide foreclosure settlement with banks was postponed to Feb. 6 from Feb. 3, according to the Iowa Attorney General’s Office.

States were given more time to evaluate the proposal, which may total $25 billion, after at least one asked for a delay, Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller, said today in a phone interview. Miller is helping to lead negotiations.

State and federal officials have been negotiating an agreement with mortgage servicers that would provide mortgage relief to homeowners and set requirements for how banks conduct foreclosures.

[BLOOMBERG]