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SULLIVAN vs. KONDAUR CAPITAL CORPORATION | MASS. Appeals Court | Though several of the Sullivans’ challenges are without merit, we conclude that the complaint sufficiently stated a claim that Kondaur’s title to the mortgage was defective at the time of the foreclosure, and reverse the judgment.

SULLIVAN vs. KONDAUR CAPITAL CORPORATION | MASS. Appeals Court | Though several of the Sullivans’ challenges are without merit, we conclude that the complaint sufficiently stated a claim that Kondaur’s title to the mortgage was defective at the time of the foreclosure, and reverse the judgment.

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Proof of Flowers’s authority to assign the mortgage on Saxon’s behalf (to the extent she was authorized) accordingly requires additional evidence than appears either on the face of the second assignment or in the record.  Sadly, the second assignment is further illustration of the phenomenon observed in the concurrence to U.S. Bank Natl. Assn. v. Ibanez, supra at 655 (Cordy, J., concurring) (“what is surprising about these cases is . . . the utter carelessness with which the [foreclosing lenders] documented the titles to their assets”).  We accordingly are constrained to reverse the judgment of dismissal, and remand the matter to the Land Court for further proceedings consistent with this opinion.

So ordered.

 

[7] Our conclusion applies solely to a mortgagor’s challenge to an assignment asserting that it is void.  A deficiency in an assignment that makes it merely voidable at the election of one party or the other would not automatically invalidate the title of a foreclosing mortgagee, and accordingly would not render void a foreclosure sale conducted by the assignee or its successors in interest.

_______________________________________

13?P?706                                        Appeals Court

 

JOSEPH L. SULLIVAN & another[1]  vs.  KONDAUR CAPITAL CORPORATION.

No. 13P706.

Suffolk.     February 4, 2014.    April 16, 2014.

Present:  Kafker, Green, & Sullivan, JJ.

 

Mortgage, Assignment, Foreclosure.  Practice, Civil, Motion to dismiss, Standing.  Real Property, Mortgage, Registered land, Certificate of title.  AssignmentAgency, Scope of authority or employment.  Corporation, Officers and agents.  Land Court.

Civil action commenced in the Superior Court Department on March 8, 2010.

After transfer to the Land Court Department, a motion to dismiss was heard by Harry M. Grossman, J.

Rockwell P. Ludden for the plaintiffs.

David M. Rosen for the defendant.

GREEN, J.  In this appeal, the plaintiffs, Joseph L. and Mary R. Sullivan (Sullivans), challenge the title of the defendant, Kondaur Capital Corporation (Kondaur), to the Sullivans’ former residence, based on their contention that Kondaur did not hold a valid interest in the mortgage it foreclosed on the property in October, 2009.  A judge of the Land Court allowed Kondaur’s motion to dismiss the Sullivans’ amended verified complaint, and thereafter denied (on grounds of futility) the Sullivans’ motion to further amend their complaint.  Though several of the Sullivans’ challenges are without merit, we conclude that the complaint sufficiently stated a claim that Kondaur’s title to the mortgage was defective at the time of the foreclosure, and reverse the judgment.

Background.  We draw the following factual background from the allegations in the Sullivans’ verified amended complaint.  On or about August 16, 2004, the Sullivans acquired title to property located at 98 Wild Hunter Road in Dennis (property).  The property is registered land, and upon registration of the deed conveying the property to them, certificate of title no. 174074 issued in their names, evidencing their title.  On January 11, 2006, the Sullivans executed a mortgage (mortgage), conveying the property to Mortgage Electronic Registration Systems, Inc. (MERS), “solely as nominee for [WMC Mortgage Corp. (WMC)] and [WMC's] successors and assigns,” to secure payment of a promissory note the Sullivans executed in favor of WMC.  The mortgage thereafter was duly filed for registration with the Barnstable registry district of the Land Court.  By instrument dated May 21, 2008 (first assignment), MERS purported to assign the mortgage to Saxon Mortgage Services, Inc. (Saxon).  Thereafter, by instrument dated February 12, 2009 (second assignment), Saxon purported to assign the mortgage to Kondaur.  Both assignments were duly filed for registration with the Barnstable registry district of the Land Court.

On October 15, 2009, acting in exercise of the statutory power of sale contained in the mortgage, Kondaur foreclosed on the property and thereafter executed, and filed for registration, a foreclosure deed purporting to convey the property to itself.  Kondaur thereafter commenced a summary process action in the Orleans District Court; that action concluded with the entry of an agreement for judgment between the parties, in which the Sullivans agreed to surrender possession of the property to Kondaur but reserved their rights to challenge Kondaur’s title to the property.

By complaint dated March 9, 2010, after commencement but before conclusion of Kondaur’s summary process action, the Sullivans commenced an action in the Barnstable Superior Court, seeking declaratory and injunctive relief based on their claim that Kondaur did not hold a valid interest in the mortgage at the time of the foreclosure, and that it accordingly was without valid legal authority to exercise the statutory power of sale contained in the mortgage.  A judge of the Superior Court endorsed a memorandum of lis pendens, but thereafter transferred the matter to the Land Court, under G. L. c. 212, § 26A, because the complaint concerned claims of title to registered land over which the Land Court has exclusive jurisdiction.  See G. L.

c. 185, § 1(a1/2); Feinzig v. Ficksman, 42 Mass. App. Ct. 113, 115-117 (1997).  As we observed above, a judge of the Land Court thereafter allowed Kondaur’s motion to dismiss the complaint, and denied the Sullivans’ motion to further amend the complaint.  This appeal followed.

Discussion.  The essence of the Sullivans’ complaint is that Kondaur’s title to the mortgage was defective because each of the two assignments of the mortgage was defective for various reasons, discussed in more detail below.  Before considering the Sullivans’ claims, however, we first address Kondaur’s contention that the Sullivans are without standing to raise a question of defects in assignments to which they are not a party, as well as its contention that the Sullivans are precluded from raising any question concerning Kondaur’s title to the property by virtue of the issuance of certificate of title no. 190346 in Kondaur’s name on December 21, 2009, evidencing its title to the property.

Standing of a mortgagor to challenge validity of a mortgage assignment.  Observing that the Sullivans are neither parties to nor intended beneficiaries of the first assignment or the second assignment, Kondaur contends that they are without standing to challenge the validity of either instrument.  It is of course true that a nonparty who does not benefit from a contract generally is without standing to enforce rights under it.  See, e.g., Cumis Ins. Soc., Inc. v. BJ’s Wholesale Club, Inc., 455 Mass. 458, 464 (2009).  However, that is not the position the Sullivans occupy, since they are not seeking to enforce any rights under either assignment.  Instead, by their complaint they seek to challenge Kondaur’s claim of title to the property the Sullivans formerly owned, which derives from foreclosure of the mortgage Kondaur claims to have acquired by virtue of the first and second assignments.  Kondaur held legal authority to conduct the foreclosure, under the statutory power of sale contained in the mortgage, only if it held a valid title to the mortgage at the time it gave the notice of foreclosure required under G. L. c. 244, § 14, and at the time it exercised the power of sale.  See U.S. Bank Natl. Assn. v. Ibanez, 458 Mass. 637, 647-648 (2011).  If it did not hold a valid title to the mortgage at the relevant times, the foreclosure would be void, as would Kondaur’s claim to have extinguished the Sullivans’ equity of redemption.  IdPut another way, the legally cognizable interest the Sullivans seek to protect by their complaint is their ownership interest in the property, based on their claim that Kondaur’s purported foreclosure was void by reason of its lack of legal authority to conduct it.  We accordingly conclude that the Sullivans have standing to challenge the validity of the assignments by which Kondaur claims to have acquired the mortgage.

Registered land.  There is likewise no merit to Kondaur’s assertion that the Sullivans are precluded from challenging the validity of its title by virtue of the issuance of a transfer certificate of title in its name prior to the commencement of this action.  See G. L. c. 185, § 54.  To be sure, “the underlying purpose of title registration is to protect the transferee of a registered title.”  Wild v. Constantini, 415 Mass. 663, 668 (1993), quoting from Kozdras v. Land/Vest Properties, Inc., 382 Mass. 34, 44 (1980).  However, the conclusiveness of a certificate of title is not entirely without exception.  For example, G. L. c. 185, § 45, allows “any person deprived of land, or of any estate or interest therein,” to challenge a judgment of registration obtained by fraud by complaint filed within one year after entry of the judgment, provided no innocent purchaser for value has acquired an interest during the intervening time.  Similarly, G. L. c. 185, § 62, provides that, following the original judgment of registration, “any subsequent registration procured by the presentation of a forged deed or other instrument shall be null and void.”  In addition, the Supreme Judicial Court has recognized “two exceptions to the rule that holders of a certificate of title take ‘free from all encumbrances except those noted on the certificate,’” applicable in circumstances where facts described on the certificate of title would prompt a reasonable purchaser to investigate further other certificates of title, documents, or plans in the registration system, or if the purchaser has actual knowledge of a prior unregistered interest.  Doyle v. Commonwealth, 444 Mass. 686, 693 (2005).  See also Jackson v. Knott, 418 Mass. 704, 711 (1994).  More broadly, G. L. c. 185, § 114, authorizes any “registered owner or other person in interest” to bring a motion to correct a certificate of title upon various grounds, including “that any error or omission was made in entering a certificate or any memorandum thereon,” provided that “nothing shall be done or ordered by the court which shall impair the title or other interest of a purchaser holding a certificate for value and in good faith.”  In Doyle v. Commonwealth, supra, the Supreme Judicial Court held that the authority established under section 114 extended to cancellation of an erroneously issued certificate of title, where the error was apparent on the face of the certificate; because the error was apparent from documents referenced on the certificate and available in the registration system, the purchaser of the lot did not “enjoy the status of a purchaser holding its certificate in good faith.”  444 Mass. at 695.

In the present case, we are not confronted by an innocent third party who purchased the property for value.  As discussed above, as the foreclosing mortgagee Kondaur was required to establish its title to the mortgage by reference to instruments of assignment transferring the mortgage to it following the Sullivans’ conveyance of the mortgage to MERS in the first instance.  Accordingly, it is fairly charged with knowledge of any deficiencies in the effectiveness of the assignment instruments on which its claim of title is based, and accordingly is subject to a challenge to its certificate of title based on a break in the chain of mortgage assignments.

Validity of the mortgage assignments.  Having concluded that the Sullivans have legal standing to challenge the validity of the assignments, and that their challenges are not barred by Kondaur’s certificate of title, we turn to the grounds on which they contend the assignments are deficient.

a.  Validity of assignment by MERS as nominee.  Observing that MERS held the mortgage solely as nominee for WMC and appears to have held no ownership interest in the debt secured by the mortgage, the Sullivans contend that any assignment by MERS to another entity is invalid unless supported by evidence of authorization of that assignment by the owner of the debt.  The argument is without merit.

We begin by observing that until quite recently, a foreclosing mortgagee was not required to demonstrate ownership of the debt secured by the mortgage, principally because the note typically is not recorded.  See Eaton v. Federal Natl. Mort. Assn., 462 Mass. 569, 587-588 (2012).  The rule announced in Eaton was given only prospective effect, to foreclosure sales for which the mandatory notice of sale was given after the date of that opinion (June 22, 2012).  Accordingly, to the extent the Sullivans’ challenge to Kondaur’s legal status as “mortgagee” (with authority to foreclose the mortgage) rests on Kondaur’s failure to demonstrate unity of legal and equitable interest in the loan by reference to the unrecorded mortgage note or any unrecorded assignments of the equitable interest in the mortgage itself, they are without benefit of the holding in Eaton to do so.  Moreover, their argument would represent a significant expansion of the Eaton rule, insofar as they suggest that a “mortgagee” must hold both legal and equitable interest in the loan not only at the time of foreclosure but at the time of any previous transfers of the recorded mortgage interest.

In any event, as Eaton itself recognized, the legal interest in a mortgage permissibly may be separated from the beneficial or equitable interest in the debt it secures; in such instances the party holding the bare legal title to the mortgage holds it in trust for the party owning the debt.  See 462 Mass. at 576-577.  Accordingly, the Sullivans’ challenge is without merit to the extent that it suggests that MERS’s interest in the mortgage was inherently invalid because it was separated from ownership of the underlying debt.  Moreover, even at the time of foreclosure it is not essential that the holder of a bare legal title to the mortgage physically possess the note; all that is required is that it be able to demonstrate either that it holds the underlying note or acts as an authorized agent for the note holder.  Id. at 586.  In short, though a foreclosing mortgagee must demonstrate an unbroken chain of assignments in order to foreclose a mortgage, see U.S. Bank Natl. Assn. v. Ibanez, supra at 651, and now must also demonstrate that it holds the note (or acts as authorized agent for the note holder) at the time it commences foreclosure, see Eaton, supra, nothing in Massachusetts law requires a foreclosing mortgagee to demonstrate that prior holders of the record legal interest in the mortgage also held the note at the time each assigned its interest in the mortgage to the next holder in the chain.  It is accordingly of no moment that WMC may not have held any ownership interest in the note or mortgage at the time MERS assigned the mortgage to Saxon, because MERS at the time of the first assignment still held the record legal interest in the mortgage.,

b.  Authority of the signatory to the second assignment.  The Sullivans fare better (at least for purposes of surviving a motion to dismiss) with their contention that the second assignment is deficient because it does not demonstrate the authority of the individual who executed it on Saxon’s behalf.  The second assignment identifies Saxon as the assignor in its first paragraph, identifies Kondaur as the assignee in its third paragraph, and identifies the mortgage as the assigned interest in its fourth paragraph.  The assignment is signed by an individual named Natalie Flowers, whose signature appears on a line beneath Saxons’ corporate name.  No designation of Flowers’s office or other capacity appears next to her signature.  The paragraph preceding the signature block reads as follows:

“IN WITNESS WHEREOF, Mortgage Electronic Registration Systems, Inc. as nominee for WMC Mortgage Corp. has caused these presents to be signed by its duly authorized officer and its corporate seal to be hereunto affixed, this 12 day of February, 2009.”

 

Following the signature block, the assignment includes an acknowledgment by a Texas notary public, attesting that “on 2-12-2009 before me, Jimmie Hernandez, personally appeared Natalie Flowers personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.”

Ordinarily, under Massachusetts law, an instrument transferring an interest in land held by a business corporation and executed by an individual officer will bind the corporation only if the officer is authorized or directed by the board of directors so to do.  See G. L. c. 156D, § 8.41.  Recordation of such an instrument in turn requires evidence of the authorizing vote and incumbency of the officer, typically in the form of a certificate by the secretary or clerk of the corporation.  See generally Crocker’s Notes on Common Forms, §§ 318-319 (10th ed. 2013).  However, in the case of various instruments affecting a recorded mortgage (including, as pertinent to the present case, an assignment of the mortgage) the formal requirements are markedly more relaxed.  Pursuant to G. L. c. 183, § 54B, such instruments shall bind the entity assigning or discharging the mortgage if “executed before a notary public, justice of the peace or other officer entitled by law to acknowledge instruments, whether executed within or without the commonwealth, by a person purporting to hold the position of president, vice president, treasurer, clerk, secretary, cashier, loan representative, principal, investment, mortgage or other officer, agent, asset manager, or other similar office or position, including assistant to any such office or position, of the entity holding such mortgage,” without need of any vote affirming such authority or further evidence of their status as such an officer.

Even viewed against such relaxed requirements, however, the second assignment falls short.  We reiterate that Saxon was the assignor under the second assignment.  The only reference to the status of the individual signatory to the second assignment, Natalie Flowers, as an officer of any kind of any entity is in the paragraph immediately preceding the signature block, which recites that MERS “has caused these presents to be signed by its duly authorized officer.”  While we agree with the Land Court judge that the presence of MERS in that reference is likely a scrivener’s error which need not itself invalidate the assignment, the absence of any other indication that Flowers is or was an officer of Saxon fails to satisfy even the very broad latitude afforded by § 54B.  Put simply, nowhere on the face of the instrument is there any indication or evidence that Flowers was, or in any manner purported to be, an officer or other authorized agent of Saxon.  Nor can the notarial acknowledgment supply the missing evidence; it merely recited that Flowers acknowledged that she executed the assignment “in [her] duly authorized capacity,” without describing what that capacity might be, or with whom.  Proof of Flowers’s authority to assign the mortgage on Saxon’s behalf (to the extent she was authorized) accordingly requires additional evidence than appears either on the face of the second assignment or in the record.  Sadly, the second assignment is further illustration of the phenomenon observed in the concurrence to U.S. Bank Natl. Assn. v. Ibanez, supra at 655 (Cordy, J., concurring) (“what is surprising about these cases is . . . the utter carelessness with which the [foreclosing lenders] documented the titles to their assets”).  We accordingly are constrained to reverse the judgment of dismissal, and remand the matter to the Land Court for further proceedings consistent with this opinion.

So ordered.

 

 


     [1] Mary R. Sullivan.

     [2] The original complaint is not in the record.  From the docket it appears that the Sullivans amended the original complaint before Kondaur filed a responsive pleading, as authorized by Mass.R.Civ.P. 15(a), 365 Mass. 761 (1974).

     [3] Though executed on May 21, 2008, the assignment stated that it “has an effective date of December 12, 2007.”

     [4] We reserve description of certain other details of the assignments to our discussion of the Sullivans’ challenges to their validity.

     [5] Other than their contentions that Kondaur did not acquire valid title to the mortgage prior to the foreclosure, the Sullivans do not contend in this appeal that Kondaur failed to conduct the foreclosure in accordance with law.

     [6] Kondaur also asserts that the Sullivans’ failure to challenge the validity of the assignments in its previous

Superior Court action, seeking permission to foreclose under the Servicemembers Civil Relief Act, operates as a bar to their ability to raise such a challenge in the present action, under principles of claim preclusion.  It does not.  See HSBC Bank USA, N.A. v. Matt, 464 Mass. 193, 198-199, 204 (2013).

     [7] Our conclusion applies solely to a mortgagor’s challenge to an assignment asserting that it is void.  A deficiency in an assignment that makes it merely voidable at the election of one party or the other would not automatically invalidate the title of a foreclosing mortgagee, and accordingly would not render void a foreclosure sale conducted by the assignee or its successors in interest.

     [8] We note that our conclusion that the Sullivans have standing to challenge Kondaur’s title to the mortgage (and, consequently, its legal authority to foreclose their equity of redemption) is consistent with that of the First Circuit Court of Appeals in Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282, 291 (1st Cir. 2013).  Compare Wilson v. HSBC Mort. Servs., Inc., 744 F.3d 1, 14 (1st Cir. 2014) (no standing where homeowners’ complaint alleged that officer who executed assignment on behalf of assignor was also an officer of assignee and executed assignment on behalf of the latter).

     [9] It is unclear whether Kondaur’s argument on this point is properly before us.  Though Kondaur made the argument to the Land Court judge in a supplemental brief filed in response to the

Sullivans’ motion to further amend their complaint, it merely asserted in that brief that a new certificate of title had issued in its name; the brief does not include a copy of the certificate itself as an exhibit, the Sullivans did not rely on it in framing their complaint, and the Land Court judge disposed of the case on the basis of Kondaur’s previously filed motion to dismiss (without, in other words, treating the motion as one for summary judgment, based on an expanded record, as contemplated under Mass.R.Civ.P. 12(b), 365 Mass. 754 (1974), and without addressing the argument in either of his memoranda of decision).  Compare Marram v. Kobrick Offshore Fund, Ltd., 442 Mass. 43, 45 n.4 (2004).  Kondaur’s brief on appeal includes a copy of the new certificate, in an addendum, but there is no indication that it was entered in evidence in the Land Court.  We nonetheless address the argument in the exercise of our discretion, because the Sullivans do not dispute Kondaur’s factual assertion that a new certificate of title issued in its name, instead responding (both here and in the Land Court) to the substance of the legal argument.

     [10] In pertinent part, G. L. c. 185, § 54, provides that “[t]he original certificate [of title] . . . shall be conclusive as to all matters contained therein, except as otherwise provided in this chapter.”

     [11] We reject Kondaur’s suggestion that G. L. c. 185, § 70, implicitly requires any such challenge to be brought before issuance of a new certificate of title following foreclosure, by providing that “this chapter shall not prevent the mortgagor or other person in interest, prior to the entry of a new certificate of title, from directly impeaching, by bill in equity or otherwise, any foreclosure proceedings affecting registered land” (emphasis added).  The quoted language appears at the end of a sentence describing the method by which the purchaser at a foreclosure sale may obtain a new certificate of title by registering the foreclosure deed and need not, in our view, be applied to limit a challenge in circumstances such as those in the present case, where the purchaser at the foreclosure sale also conducted the sale under a claim that it held a valid title to the mortgage.

     [12] Certain of the challenges raised by the Sullivans in the Land Court are absent from their brief on appeal.  For example,

they argued before the Land Court that the first assignment (from MERS to Saxon) was invalid because it included a statement that it had an effective date before the date of its execution, in an apparent attempt to effect the assignment on a date preceding the first statutorily required foreclosure notice.  See U.S. Bank Natl. Assn. v. Ibanez, 458 Mass. 637, 654 (2011).  The claim is waived, but is without merit in any event, because Saxon did not proceed with the foreclosure noticed before the date of the first assignment, and Kondaur commenced its foreclosure anew after the date of the second assignment.  Likewise waived but without merit is the Sullivans’ argument to the Land Court that the second amendment is invalid because it is missing a corporate seal.  See G. L. c. 183, § 1A.  Conversely, the Sullivans did not raise before the Land Court their claims that the assignments are unconstitutional (on grounds of substantive due process, procedural due process, and equal protection) and we decline to consider them for the first time on appeal.

     [13] The Sullivans’ argument on this point takes various forms and is difficult to decipher.  They observe that their mortgage loan was included in a pool with other mortgage loans and then securitized, suggesting that WMC assigned its equitable interest in the loan to another lender, who in turn assigned it at least once more, before MERS assigned the mortgage to Saxon.  Accordingly, the argument goes, MERS could not validly have assigned the mortgage, because WMC (the entity as nominee for which MERS acquired its bare legal interest) then held no equitable interest in the loan.  More broadly, they appear to suggest that any separation of the legal and ownership interests in a mortgage is inherently invalid under Massachusetts law.  We address both variants.

     [14] Subsequently, in Galiastro v. Mortgage Elec. Registration Sys., Inc., 467 Mass. 160, 167 (2014), the Supreme Judicial Court extended application of the Eaton rule to “cases that were pending on appeal in the Appeals Court when the rescript in Eaton issued, and in which the litigants asserted and preserved a claim that a foreclosure by power of sale is invalid where the foreclosing mortgagee does not hold the note.”

     [15] Notice of the foreclosure sale in the present case was given on September 16, 2009.  The Sullivans commenced the action in the Superior Court on March 8, 2010, and (following transfer to the Land Court) judgment entered on January 25, 2013.  The case entered on the docket of the Appeals Court on April 29, 2013.

     [16] Though the note itself is not in the record, Kondaur represents in its brief on appeal that it is in possession of the original note, endorsed in blank by WMC.

     [17] We note that our conclusion in this respect is again consistent with that reached by the First Circuit Court of Appeals in Culhane v. Aurora Loan Servs. of Neb., supra at 291-293.

     [18] Because the proposed second amended complaint merely sought to elaborate the same claim, it did not (as the Sullivans contend) address each deficiency cited by the Land Court judge in the amended verified complaint he dismissed.  The judge accordingly did not abuse his discretion in denying (on grounds of futility) the Sullivans’ motion to further amend their complaint.  We likewise discern no error or abuse of discretion by the Land Court judge in his dismissal of those counts of the Sullivans’ complaint which are beyond the Land Court’s limited jurisdiction.

     [19] An exception exists for instruments signed by the president or vice president and the treasurer or assistant treasurer, which require neither authorizing vote nor evidence of incumbency.  See G. L. c. 155, § 8; G. L. c. 156D, § 8.46.  See also Eno & Hovey, Real Estate Law, § 4.39 (4th ed. 2004); Title Standard No. 11 of the Real Estate Bar Association for Massachusetts (2009), as appearing in Eno & Hovey, Real Estate Law c. 58, at 336 (Supp. 2013).

     [20] Section 54B was initially enacted by St. 1992, c. 410, § 1, and its scope was expanded by St. 2006, c. 63, § 2.  Legislative history suggests that the purpose of the section, and its subsequent expansion, was to address problems that often arose in recording discharges or assignments executed by non-Massachusetts corporations who were unfamiliar with Massachusetts recording formalities, particularly following the growth of the secondary market and securitization of mortgages.  See, e.g., testimony of E. Christopher Kehoe, presented May 18, 2005, to the Joint Committee on Financial Services concerning Senate Bill 624.

     [21] Kondaur suggests we should infer that Flowers’s act in signing the document on the signature line beneath Saxon’s name constituted an assertion that she held one of the offices listed in § 54B and was authorized to act on its behalf.  Were we to do so, we would render superfluous much of the language contained in the statute.  If the Legislature intended to provide that any individual could bind a corporate mortgagee by signing a mortgage assignment on its behalf, without any indication of her office or authority, it could have done so with far less detail than set forth in the statute it enacted.

     [22] We note that the deficiency in the second assignment may well be one of form rather than of substance, and may therefore be susceptible of cure of the type described in Ibanez, supra at 654 (“Where the earlier assignment is not in recordable form or bears some effect, a written assignment executed after foreclosure that confirms the earlier assignment may be properly recorded”).

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Ginnie Mae To Big Banks: Show Us Your Mortgages. But Can They?

Ginnie Mae To Big Banks: Show Us Your Mortgages. But Can They?

Don’t be fooled by Ginnie Mae, as ALL including the DOJ, FBI etc etc … knew from the day this blog began about all the fraudulent documents being fabricated. They were watching by the sidelines as homeowner after homeowner were being illegally robbed of their homes.


Benzinga-

The Government National Mortgage Association (Ginnie Mae) recently discovered that Bank of America (NYSE: BAC) is missing key documents relating to mortgages the bank services for it, Kate Berry reported for National Mortgage News.

Because Bank of America is missing so many documents, Ginnie Mae put a planned sale of mortgage servicing rights on hold. While Bank of America assesses the problem, Ginnie Mae has decided to take inventory more broadly, Berry reports: “…Ginnie Mae, is trying to assess the magnitude of the problem of missing documents. Ginnie now plans to send letters this month to about 10 of the largest mortgage servicers – including B of A, JPMorgan Chase and Wells Fargo – that take part in a special program to expedite servicing transfers.”

[BENZINGA]

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The Toughest Cop on Wall Street You’ve Never Heard Of | How Benjamin Lawsky’s making big banks pay

The Toughest Cop on Wall Street You’ve Never Heard Of | How Benjamin Lawsky’s making big banks pay

New Republic-

In early April, when The New York Times reported that the Justice Department would grant Credit Suisse a deferred prosecution agreement for actively aiding tax evasion, it seemed yet another bank would pay a paltry penalty for major misconduct. Credit Suisse would owe only a fine for helping rich Americans hide their wealth from taxes in Switzerland. And those wealthy clients would get off scot-free, with their Swiss bank accounts still secret.

But a funny thing happened on Credit Suisse’s way to legal impunity: a new inquiry from the relatively obscure New York Department of Financial Services (DFS). Under the direction of former federal prosecutor Benjamin Lawsky, DFS has reportedly requested documents from Credit Suisse and a Senate subcommittee investigation, seeking to learn whether Credit Suisse executives based in New York lied to state regulators about their role in creating offshore tax havens. In the current climate of financial regulation, where investigations rarely impact the individual employees who design and perpetrate misdeeds, this was a bold step—one that could force the Justice Department to toughen up. Imposing a less stringent penalty than a state regulator would humiliate the feds.

[NEW REPUBLIC]

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Matt Taibbi On ‘The Divide’

Matt Taibbi On ‘The Divide’

Award-winning investigative journalist and best-selling author Matt Taibbi joins us to discuss his new book, “The Divide: American Injustice in the Age of the Wealth Gap,” which explores how the nation’s wealth disparities impact our justice system.

 

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Bank of America in Settlement Talks With Justice Department Over Shoddy Mortgages

Bank of America in Settlement Talks With Justice Department Over Shoddy Mortgages

Window dressing.

 

WSJ-

Bank of America Corp. is engaged in multibillion-dollar settlement talks with the Justice Department to end investigations into shoddy residential mortgage backed securities, according to people familiar with the matter.

The talks have been ongoing for months and it isn’t clear how much longer it could take for a deal to be completed, these people said. If a deal cannot be struck, the Justice Department would have to decide whether to file a lawsuit over the bank’s role in packaging poor-performing mortgages into securities that were sold to investors. The government has already sued the bank over one set of suspect mortgages, though a magistrate judge recently recommended the suit be dismissed, saying the government had overreached its legal authority.

[WALL STREET JOURNAL]

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U.S. Regulators Examining Departures at Mortgage Electronic Registrations Systems Inc. (MERS)

U.S. Regulators Examining Departures at Mortgage Electronic Registrations Systems Inc. (MERS)

MERS is a shell for the bankstas! It has destroyed 100′s of years of land records. Plain and Simple. How do you cure this defect of fraud?

See my MERS 101 page and do a search of all the cases where judges don’t agree with the assignment and the transfer of the note to what exactly is Mers’ role as either a nominee or a beneficiary?

The banks created this system to hide the fraud.

 

Bloomberg-

As the rest of the housing industry recovers, a little-known firm with a key role in U.S. mortgage finance remains stuck in limbo, wrestling with regulators, lawsuits and the departures of senior employees.

The turbulence feeds uncertainty about the fate of Mortgage Electronic Registrations Systems Inc., or MERS, which documents the ownership and resale of about half of U.S. home loans. A breakdown could force clients such as Fannie Mae (FNMA) and Bank of America Corp. to make costly changes to their loan businesses.

Management hasn’t completed fixes promised in a broad 2011 U.S. settlement designed to stop foreclosure abuses, according to two people briefed on MERS’ operations. Regulators rejected one of the firm’s consultants as unqualified and are examining why four employees hired to help with reforms — including the chief legal officer — recently quit, said the people, speaking on condition of anonymity because the matter is private.

[BLOOMBERG]

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Selling Guide Announcement SEL-2014-03 – Fannie Mae | Use of MERS Rider (Form 3158) in Specified Geographic Areas

Selling Guide Announcement SEL-2014-03 – Fannie Mae | Use of MERS Rider (Form 3158) in Specified Geographic Areas

For newly originated mortgage loans that the lender elects to be registered with the Mortgage Electronic Registration System, Inc. (MERS), Fannie Mae requires lenders to modify the standard security instruments to name MERS as the nominee for the mortgagee. As a result of recent judicial decisions regarding MERS and its role as the nominee for the mortgagee, Fannie Mae is requiring the use of a Mortgage Electronic Registration Systems, Inc. Rider (MERS Rider) (Form 3158) to modify the standard security instruments in the states of Montana, Oregon and Washington. The MERS Rider must be used in these three states for newly originated mortgage loans that will be registered with MERS. Consequently, post-closing assignments into MERS are prohibited in these states. Lenders must also make changes to the standard security instruments for these three states as detailed in the Instructions to the MERS Rider. The new rider and instructions are available on the Single-Family Riders & Addenda page of Fannie Mae’s website.

 

Updated Selling Guide Topics

 

§ B8-7-01, Mortgage Electronic Registration Systems (MERS) (Naming MERS as the Nominee for the Beneficiary in the Security Instrument, and Use of MERS Rider in Specified Geographic Areas)

 

Effective Date

Lenders may begin using the new MERS Rider immediately in the three specified states and must begin using it for mortgage loans with notes dated on or after October 15, 2014.

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Ginnie Mae Nixes Bank of America Mortgage Servicing Transfer Because the Bank is Missing Documents

Ginnie Mae Nixes Bank of America Mortgage Servicing Transfer Because the Bank is Missing Documents

National Mortgage News-

Ginnie Mae has halted the transfer of mortgage servicing rights from Bank of America (BAC) to a nonbank servicer because the bank is missing documents such as recorded mortgages and title policies on the underlying home loans.

Ted Tozer, the president of Ginnie Mae, says he has held up the transfer of servicing rights by B of A “for an extended period” because the bank is not complying with agency’s guidelines that require all mortgage documents be delivered to custodians in a timely manner.

“Issues are coming up now because documents are missing,” Tozer said Tuesday. “It’s a new phenomenon with the major banks getting out of the servicing business. We don’t want to transfer the risk to a new servicer.”

[NATIONAL MORTGAGE NEWS]

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Missed Mortgage Payments Are Back on the Rise

Missed Mortgage Payments Are Back on the Rise

HELOC’s are due to reset and are going to hit with brute force!

AOL-

For several quarters, lenders have been reporting low and falling delinquency rates for credit card, mortgage and auto loan borrowers, and that positive trend has opened up credit products to consumers with lower credit scores. That may be starting to shift. A greater share of mortgages were 30 to 59 days past due in the fourth quarter of 2013 than at the same time in 2012, and bank risk professionals expect credit card and auto loan delinquencies to follow suit.

Growing Concern: At the end of 2012, 2.05 percent of outstanding mortgages were at least 30 days delinquent, which was down from 2.39 percent in 2011. But at the close of 2013, the delinquency rate rose slightly, to 2.13 percent, according to data from the Experian-Oliver Wyman Market Intelligence Reports. Using Experian’s IntelliView tool to sort the data, the bump in

[AOL]

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JUDGE UPHOLDS $5 MILLION PUNITIVE AGAINST US BANK FOR FRAUD

JUDGE UPHOLDS $5 MILLION PUNITIVE AGAINST US BANK FOR FRAUD

MCCULLEY v US BANK

April 14, 2014

In a 22 page brief detailing the  ’abusive’ behavior of US BANK, Montana Judge John Brown upholds the jury’s punitive award of $5 million to Plaintiff Mary Mcculley. ” Based upon the foregoing. Findings, Mcculley proved the Bank’s actual fraud by clear and convincing evidence.’ “Further, US BANK “blatantly misrepresented a important fact” in one of it’s briefs with this court….and  ”This egregious behavior by the Bank constitutes intentional deceit and supports the conclusion that the Bank’s conduct was  reprehensible.”

The Judge goes on to the skewer US BANK. 

Read the findings of fact and conclusions of law here:

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WELLS FARGO vs EROBOBO | BRIEF OF AMICI CURIAE ROBERT GARRASI AND JAMES HUNTER

WELLS FARGO vs EROBOBO | BRIEF OF AMICI CURIAE ROBERT GARRASI AND JAMES HUNTER

WELLS FARGO BANK, N.A., AS TRUSTEE FOR
ABFC 2006-OPT3 TRUST,
ABFC ASSET-BACKED CERTIFICATES,
SERIES 2006-OPT3,
Plaintiff–Appellant,

– against –

ROTIMI EROBOBO, et al.
Defendants–Respondent.

Appellate Department Case No. 2013-6986

BRIEF OF AMICI CURIAE ROBERT GARRASI
AND JAMES HUNTER IN SUPPORT OF
DEFENDANT–RESPONDENT ROTIMI EROBOBO

Interest of Amici Curiae

Robert Garrasi and James Hunter request permission to appear as amici curiae in this matter.  Amici’s input in this matter will be very valuable to this Court because of amici’s experience as co-litigants and non-debtor co-defendants in similar cases. Your amici’s brief will shed new light upon Appellant’s heretofore undisclosed motivations and business practices, as well as those of its affiliates, co-venturers, undisclosed third parties and other signatories to their Pooling and Servicing Agreement (“PSA”). The information provided herein applies not only to the present Appellant, but also to other plaintiffs  similarly situated that appear before New York courts in securitized mortgage foreclosure actions. As such, our brief is designed to assist the Court in its public policy considerations regarding these matters.

Our brief focuses on four areas that are the subject matter of this appeal: (1) demonstration that mortgagors in Residential Mortgage Backed Securities (“RMBS’) foreclosure actions are indeed third-party beneficiaries of the PSA’s, and thus have standing to object to a trustee’s ultra vires acts; (2) that EPTL §7-2.4 applies to RMBS trusts in New York making ultra vires transfers void, not voidable; (3) a showing that the subject mortgage notes are never transferred to the trusts; and (4) proving that the investor beneficiaries cannot legally ratify a trustee’s ultra vires acts, thus making the acts void, not voidable.  We also explain why the foreclosing deal principals claim that they have transferred the notes and mortgages to the trusts long after the closing date, and why the alleged transfers are not subject to the Internal Revenue Code’s 100% prohibited contributions tax. Our brief suggests that the New York judiciary has been “had” by the RMBS foreclosing deal principals and their lawyers for at least the last six years.

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ATTORNEY LENORE ALBERT, WHO GOT A GOOD RULING FOR HOMEOWNER HELEN GALOPE IN THE NINTH CIRCUIT COURT OF APPEAL AT THE END OF MARCH, DEMANDS A RETRACTION OF LEXIS NEXIS PUBLICATION ABOUT THE CASE!!

ATTORNEY LENORE ALBERT, WHO GOT A GOOD RULING FOR HOMEOWNER HELEN GALOPE IN THE NINTH CIRCUIT COURT OF APPEAL AT THE END OF MARCH, DEMANDS A RETRACTION OF LEXIS NEXIS PUBLICATION ABOUT THE CASE!!

H/T ABBY in CA

letter excerpt…

To the President/CEO of Reed Elsevier,

 

I have sent two emails to Lexis Nexis without response.  Your publications on Lexis Nexis of consumer cases concerning wrongful foreclosure are misleading and downright deceitful.  You have failed to properly train and supervise your employees to ensure as the “Official” reporter for California, that you are giving an unbiased case summary, correct key/head notes, and core terms. However, you have instituted a pattern and practice of yellow flagging all opinions that came out in favor of the consumer. To my HORROR and SHOCK, you have even went so far to proclaim the BANK a winner in a Ninth Circuit win for the homeowner. 

 


This is not only damaging my reputation in the legal community, but also is frustrating my ability to litigate my other cases or use the consumer friendly opinions the way they were intended.

Your corruption has gone too far. Those case summaries and core terms need to change as well as the flags. For example Galope v Deutsche Bank should have a green flag, should include the core term of LIBOR, and at the very least phrase the case summary that the homeowner won. Are you kidding me? I am so furious you are lucky you are in New York or else I would be on your doorstep right now.

FULL LETTER BELOW

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Bank of N.Y. Mellon v Gales | NY Appeals Court – did not demonstrate that the note was physically delivered to it prior to the commencement of the action, and the plaintiff similarly failed to submit a written assignment of the note

Bank of N.Y. Mellon v Gales | NY Appeals Court – did not demonstrate that the note was physically delivered to it prior to the commencement of the action, and the plaintiff similarly failed to submit a written assignment of the note

Decided on April 9, 2014

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE DIVISION : SECOND JUDICIAL DEPARTMENT
MARK C. DILLON, J.P.
CHERYL E. CHAMBERS
LEONARD B. AUSTIN
COLLEEN D. DUFFY, JJ.
2012-06443
(Index No. 3727/11)

Bank of New York Mellon, etc., respondent,

v

Traci Gales, et al., appellants, et al, defendants.

John M. Schwarz, Jr., Chestnut Ridge, N.Y., for appellants.
Houser & Allison, APC, New York, N.Y. (Kathleen M.
Massimo of counsel), for respondent.

DECISION & ORDER

In an action to foreclose a mortgage, the defendants Traci Gales and Germaine Gales appeal from an order of the Supreme Court, Rockland County (Kelly, J.), entered May 4, 2012, which granted the plaintiff’s motion for summary judgment on the complaint insofar as asserted against them and denied their cross motion to dismiss the complaint for failure to state a cause of action and lack of standing.

ORDERED that the order is modified, on the law, by deleting the provision thereof granting the plaintiff’s motion for summary judgment on the complaint insofar as asserted against the defendants Traci Gales and Germaine Gales, and substituting therefor a provision denying the plaintiff’s motion; as so modified, the order is affirmed, without costs or disbursements.

Contrary to the Supreme Court’s determination, the plaintiff failed to demonstrate its prima facie entitlement to judgment as a matter of law, as it did not submit sufficient evidence to demonstrate that it had standing to commence this action. Where, as here, standing is put into issue by the defendant, the plaintiff must prove its standing in order to be entitled to relief (see U.S. Bank, N.A. v Collymore, 68 AD3d 752, 753; Wells Fargo Bank Minn., N.A. v. Mastropaolo, 42 AD3d 239, 242). In a mortgage foreclosure action, “[a] plaintiff has standing where it is the holder or assignee of both the subject mortgage and of the underlying note at the time the action is commenced” (HSBC Bank USA v Hernandez, 92 AD3d 843, 843; see U.S. Bank, N.A. v Collymore, 68 AD3d at 753; Countrywide Home Loans, Inc. v Gress, 68 AD3d 709, 709). ” Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation’” (HSBC Bank USA v Hernandez, 92 AD3d at 844, quoting U.S. Bank, N.A. v Collymore, 68 AD3d at 754; see Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 108). “Where a mortgage is represented by a bond or other instrument, an assignment of the mortgage without assignment of the underlying note or bond is a nullity” (U.S. Bank, N.A. v Collymore, 68 AD3d at 754; see Merritt v Bartholick, 36 NY 44, 45; Kluge v Fugazy, 145 AD2d 537, 538).

Here, the evidence submitted by the plaintiff in support of its motion did not [*2]demonstrate that the note was physically delivered to it prior to the commencement of the action, and the plaintiff similarly failed to submit a written assignment of the note. Accordingly, the plaintiff failed to establish its entitlement to judgment as a matter of law, and the Supreme Court should have denied its motion for summary judgment.

Contrary to the appellants’ contentions, the Supreme Court properly denied their cross motion to dismiss the complaint, as they did not have standing to assert noncompliance with the subject lender’s pooling service agreement (see Rajamin v Deutsche Bank National Trust Co., 2013 WL 1285160, 2013 US Dist LEXIS 45031 [SD NY, No. 10-Civ-7531 (LTS)]).

The appellants’ remaining contention is without merit.
DILLON, J.P., CHAMBERS, AUSTIN and DUFFY, JJ., concur.

ENTER:

Aprilanne Agostino

Clerk of the Court

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Fannie Mae stops working with two Colorado law firms

Fannie Mae stops working with two Colorado law firms

Negative headlines included claims of foreclosure fee-padding–  EMAILS | Foreclosure Law Firms indicate collusion to control foreclosure billing


HW-

Fannie Mae is not going to send its foreclosure business to two specific law firms in Colorado, effective immediately, the government-sponsored enterprise can confirm.

“Fannie Mae has instructed servicers to cease referrals of new foreclosure cases to Aronowitz & Mecklenburg and the Castle Law Group and to transfer existing cases at those law firms to other firms,” said Fannie Mae spokesperson Keosha Burns.

The GSE would not comment on why it so suddenly terminated its relationship with both firms.

[HOUSING WIRE]

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Felix Salmon: Yes, the SEC was colluding with banks on CDO prosecutions

Felix Salmon: Yes, the SEC was colluding with banks on CDO prosecutions

Not just the SEC!!!


Reuters-

Back in 2011, I asked whether the SEC was colluding with banks on CDO prosecutions. And now, thanks to an American Lawyer Freedom of Information Request, we have the answer: yes, they were.

This comes as little surprise: it beggared belief, after all, that every bank would end up being prosecuted for one and only one CDO. But now we have chapter and verse: the key precedent, it seems, was the first one, Goldman Sachs.

 

The SEC filed its case against Goldman and Tourre on April 16, 2010. Three days later Goldman reached out with a $500 million settlement offer, according to an email that Reisner sent Khuzami. Although that proposal was close to the final payment, it took another three months to announce a settlement. As Khuzami described to Kotz, Goldman wanted a global settlement that resolved not just the Abacus investigation but the SEC’s probes into roughly a dozen other Goldman CDOs.

Khuzami didn’t want to give Goldman that public victory. When the SEC and Goldman announced on July 16, 2010, that the investment bank would settle the Abac­us case for $550 million, the SEC said in a press release that the settlement “does not settle any other past, current or future SEC investigations against the firm.”

Khuzami was determined that Goldman’s payment only be linked to ABACUS. “This was not a $550 million settlement for 11 cases,” Khuzami told Kotz. “We may tell Goldman that we are concluding our investigations in these other matters without recommending charges, but that doesn’t mean we’re settling them. And that was an important point for us, because we didn’t want them out there saying, you know, they settled 12 CDO investigations for an average of $30 million each, and, you know, didn’t [Goldman] get a great deal.”

Yet in its statement on the Abacus settlement at the time, Goldman said that the SEC had concluded a review of other CDOs and did not anticipate recommending claims for now.

[REUTERS]

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CFPB ordering Bank of America to pay $727 million to consumers for illegal credit card practices.

CFPB ordering Bank of America to pay $727 million to consumers for illegal credit card practices.

BofA allegedly rips off consumers by $727m. Per @CFPB, doesn’t admit/deny wrongdoing (?!?). To pay $45m in fines, or abt 6% of alleged harm


Today we’re fining Bank of America, N.A. and FIA Card Services, N.A. for unfairly billing consumers for services relating to identity theft protection “add-on” products and for using deceptive marketing and sales practices for credit protection “add-on” products.

We are also ordering Bank of America to refund fees and provide other redress to consumers. Approximately 2.9 million consumers will be receiving or already have received up to $727 million in refunds for fees they paid for these products and services as well as additional redress.

If you’re impacted by the announcement, you don’t have to take any action to receive a credit or check. If you are one of the consumers affected by the order, Bank of America should have already notified you or will notify you directly. If you have questions about whether you are entitled to a refund, you can contact Bank of America.

Who is eligible for compensation?

Nearly 1.4 million consumers have already received or will receive refunds of at least $250 million in fees for the “credit protection” products (Credit Protection Plus and Credit Protection Deluxe). You will receive refunds if you are a Bank of America customer who enrolled in these products at any time over the phone, were charged a fee between October 1, 2010 and March 31, 2013, and either did not activate benefits or who had  a request for benefits denied.

Approximately 1.5 million consumers purchased the “identity theft protection” products (Privacy Guard, PrivacySource, and Privacy Assist) and were improperly billed for services that were not performed. As a result, consumers paid at least $459 million in fees, interest, and over-limit charges for these products without receiving full services. Today’s announcement recognizes the refunds Bank of America has already provided to consumers harmed as a result of the illegal billing practices relating to these identity theft protection products.

Eligible consumers who were enrolled in the “identity theft protection” products received refunds if they enrolled in these products between October 2000 and September 2011 but did not receive full credit monitoring services, received only partial credit monitoring and/or credit report retrieval without notice, and/or didn’t receive credit report retrieval benefits.

What do eligible consumers get?

That depends on the product consumers were enrolled in and some other factors.

Eligible consumers who were enrolled in a “credit protection” product for less than a year, who made a request for benefits that was denied or closed, or who, complained to the CFPB or to Bank of America stating that they did not authorize enrollment in the product, will receive a refund of all fees charged from October 1, 2010 through March 31, 2013. Eligible consumers who were enrolled in a “credit protection” product for a year or more and who do not fall within any of the groups described above will receive a refund of 300 days of fees charged from October 1, 2010 through March 31, 2013.

Some consumers who were enrolled in “credit protection” product will also receive:

  1. A reduction in charged-off balances due to product fees charged from October 1, 2010 through March 31, 2013.
  2. “Credit protection” services for six months at no-cost for consumers enrolled in the product as of March 1, 2013.

Bank of America has already completed reimbursement for the “identity theft protection” eligible consumers, so eligible consumers should have already received refunds. If you have questions about receiving a refund for this product, you can contact Bank of America.

Bank of America is responsible for providing refunds

Watch out for scammers claiming they will get you a refund. When large numbers of consumers get refunds, scammers sometimes pop up. The scammer may charge you a fee or try to steal your personal information. If someone tries to charge you, tries to get you to disclose your personal information, or asks you to cash a check and send a portion to a third party in order to “claim your refund,” it’s a scam. Please call us at (855) 411-CFPB to report the scam.

source: http://www.consumerfinance.gov/blog/explainer-compensating-consumers-for-bank-of-americas-illegal-tactics-for-credit-card-add-on-products/

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GARY DUBIN LAW OFFICES FORECLOSURE DEFENSE HAWAII and CALIFORNIA
Chip Parker, www.jaxlawcenter.com
Jamie Ranney, www.NantucketLaw.pro
Kenneth Eric Trent, www.ForeclosureDestroyer.com
Damian Figueroa, South Florida Realtor, Real Estate Agent
Susan Chana Lask, www.appellate-brief.com

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