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U.S. judge finds Wells Fargo breached 2010 mortgage settlement

U.S. judge finds Wells Fargo breached 2010 mortgage settlement

REUTERS-

Wells Fargo Bank breached a nationwide 2010 legal settlement involving adjustable-payment mortgages, a federal judge ruled, finding that the bank did not properly evaluate homeowners who applied for help to avoid foreclosures.

In an order on Wednesday, U.S. District Court Judge Richard Seeborg in northern California told Wells to meet with plaintiffs and find a way to remedy its violations, including steps to let some homeowners reapply for loan assistance.

Tom Goyda, spokesman for Wells Fargo, the largest U.S. mortgage lender, said the bank is reviewing the decision and will be working to provide additional information requested.

[REUTERS]

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Fraudulent Income Overstatement on Mortgage Applications During the Credit Expansion of 2002 to 2005 | Atif R. Mian & Amir Sufi

Fraudulent Income Overstatement on Mortgage Applications During the Credit Expansion of 2002 to 2005 | Atif R. Mian & Amir Sufi

Fraudulent Income Overstatement on Mortgage Applications During the Credit Expansion of 2002 to 2005


Atif R. Mian

Princeton University – Department of Economics; Princeton University – Woodrow Wilson School of Public and International Affairs; NBER

Amir Sufi

University of Chicago – Booth School of Business; NBER

April 6, 2015

Kreisman Working Papers Series in Housing Law and Policy No. 21


Abstract:     

Academic research, government inquiries, and press accounts show extensive mortgage fraud during the housing boom of the mid-2000s. We explore a particular type of mortgage fraud: the overstatement of income on mortgage applications. We define “income overstatement” in a zip code as the growth in income reported on home-purchase mortgage applications minus the average IRS-reported income growth from 2002 to 2005. Income overstatement is highest in low credit score, low income zip codes that Mian and Sufi (2009) show experience the strongest mortgage credit growth from 2002 to 2005. These same zip codes with high income overstatement are plagued with mortgage fraud according to independent measures. Income overstatement in a zip code is associated with poor performance during the mortgage credit boom, and terrible economic and financial economic outcomes after the boom including high default rates, negative income growth, and increased poverty and unemployment. From 1991 to 2007, the zip code-level correlation between IRS-reported income growth and growth in income reported on mortgage applications is always positive with one exception: the correlation goes to zero in the non-GSE market during the 2002 to 2005 period. Income reported on mortgage applications should not be used as true income in low credit score zip codes from 2002 to 2005.
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TILA : : : Bank of America v. Peterson | “Jesinoski REMAND”; but an additional “OF NOTE” . . . .

TILA : : : Bank of America v. Peterson | “Jesinoski REMAND”; but an additional “OF NOTE” . . . .

CURRENT Opinion

In 2014, the Eighth Circuit held that the Petersons’ claim for rescission under the Truth in Lending Act, 15 U.S.C. 1601, was time-barred by 15 U.S.C. 1635(f) because of their failure to file a lawsuit within three years of their transaction with Bank of America. In 2015, the Supreme Court held that another court had erred in holding that a borrower’s failure to file a suit for rescission within three years of the transaction’s consummation extinguishes the right to rescind and bars relief. Following remand by the Court, the Eighth Circuit vacated its earlier judgment and remanded.
Court Description: Civil case – Truth in Lending Act. On remand from the Supreme court for reconsideration in light of Jesinoski v. Countrywide Home Loans, 135 S. Ct. 790 (2015). For the court’s prior opinion in the case, see Peterson v. Bank of America, N.A., 746 F.3d 357 (8th Cir. 2014). In light of the Jesinoski opinion, the court vacates that portion of the judgment that granted Bank of America summary judgment on the Petersons’ claim for rescission, reinstates that portion of the judgment that vacated the grant of summary judgment to Bank of America on the Peterson’s counterclaim for statutory damages and remands the matter to the district court for further proceedings.

This is a revision of a Previous Opinion originally issued on March 21, 2014.

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—————————————————————————-

Previous Opinion

Bank of America v. Peterson, et al., No. 12-2508 (8th Cir. 2014)

 

OF NOTE: Pg 7 Para: 2

“…. The Petersons, however, have offered evidence that Bank of America failed to deliver the required documents.  They testified that the closing agent took the documents after they had signed them and did not thereafter give them copies.  Taking the evidence in the light most favorable to the Petersons, their testimony rebuts the presumption of delivery and creates a genuine issue of material fact for trial.  See Stutzka v. McCarville, 420 F.3d 757, 762-63 (8th Cir. 2005) (concluding that the presumption of delivery was rebutted based on the borrower’s affidavit that she did not receive the documents); see also Cappuccio v. Prime Capital Funding LLC, 649 F.3d 180, 189-90 (3d Cir. 2011) (“[W]e hold that the testimony of a borrower alone is sufficient to overcome TILA’s presumption of receipt.”) …..”

Defendants appealed the district court’s order granting Bank of America’s motion for summary judgment on their counterclaims for rescission and statutory damages under the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq. The court concluded that the district court did not err in determining that defendants’ right to rescission had expired and that their rescission claim was time-barred under section 1635 because defendants notified Bank of America of their intent to rescind but failed to file a lawsuit within the three-year period. The court concluded, however, that defendants have offered evidence that Bank of America failed to deliver the TILA disclosures and notices. Therefore, there was a genuine issue of material fact regarding the failure to deliver the required documents. Accordingly, the court affirmed the grant of summary judgment to Bank of America on defendants’ counterclaim for rescission; vacated the grant of summary judgment to Bank of America on defendants’ counterclaim for statutory damages; and remanded for further proceedings.
Court Description: Civil case – Truth in Lending Act. Because defendants notified Bank of America of their intent to rescind but failed to file a lawsuit within the three-year limitations period, the district court did not err in finding their right of rescission had expired and that their rescission claim was time barred under 15 U.S.C. Sec. 1635(f); however, the fact that the defendants’ rescission claim failed as a matter of law under Section 1635(f) does not mandate the conclusion that their failure-to-rescind counterclaim for statutory damages necessarily fails or is time-barred, and the district court erred in granting the bank summary judgment on this claim.

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_________________________________

SEPARATE BUT RELATED DISCUSSION:

Rescission Summary As I see It

by Neil Garfield

If you read my blog for the last 3 weeks or so you should get a good idea of where I am coming from on this.  The basic thrust of my argument is that:

  1. BOTH Congress and US Supreme Court agree that there is nothing left for the borrower to do other than dropping notice of rescission in the mail. It is EFFECTIVE BY OPERATION OF LAW at the point of mailing. The whole point is that you don’t need to be or have a lawyer in order to cancel the loan contract, the note and the mortgage (deed of trust) with the same force as if a Judge ordered it. No lawsuit, no proof is required from the borrower. No tender is required as it would be in common law rescission. The money for payoff of the old debt is presumed to come from a new lender that approves a 1st Mortgage loan without fear that they will lose their priority position.
  2. Lender(s) must comply within 20 days — return canceled note, satisfy mortgage, and return money to borrower.
  3. Lenders MUST file a lawsuit challenging the rescission within 20 days or their defenses are waived. Any other interpretation would make the rescission contingent, which is the opposite of what TILA and Scalia say is the case.
  4. Therefore a lawsuit by borrower to enforce the rescission need only prove mailing. (SEE “OF NOTEabove in “Bank of America v. Peterson, et al., No. 12-2508 (8th Cir. 2014)”)
  5. Any attempt to bring up statute of limitations or other defenses are barred by 20 day window.
  6. The clear reason for this unusual statutory scheme is to allow borrower to cancel the old transaction and replace with a new loan. This can only happen if the rescission is ABSOLUTE. It can be declared void or irregular or barred or anything else ONLY within the 20 day window. If the 20 day window was not final (like counting the days for filing notice of appeal appeal, motion for re-hearing, etc.) then no new lender or bank would fund a loan that could be later knocked out of first priority position in the chain of title because the rescission was found to be faulty in some way. This is the opposite of what TILA and Scalia say.
  7. The content of the rescission notice should be short — I hereby cancel/rescind the loan referenced above. You merely reference the loan number, recording information etc. at which point the note and mortgage become VOID by operation of law.
  8. BY OPERATION OF LAW means that the only way it can be avoided is by getting a court order.
  9. If any court were to allow “defense” in a rescission enforcement action AFTER the 20 day window the goal of allowing the borrower to get another loan to pay off the old lender(s) would be impossible.
  10. Hence the ONLY possible logical conclusion is that they MUST file the action within 20 days or lose the opportunity to challenge the rescission. And any possible defenses are waived if not filed during that period of time. That action by the “lender” or “creditor” must be an equitable action to set aside the rescission, which is already “effective” by operation of law.

The worst case scenario would be that rescission is the most effective discovery tool available. If the lender(s) file the 20 day action they would need to establish their positions as creditors WITHOUT the note and mortgage (which are ALREADY VOID). This would require proof of payment and proof of economic interest and proof of ownership and balance. Any failure to plead these things would fail to establish standing. The attempt to use the note and mortgage as proof or the basis of pleading should be dismissed easily. The note and mortgage are void by operation of law by the time the bank or servicer files its action.

In all probability the only parties who actually have an interest in the debt are clueless investors who by contract have waived their right to enforce or participate in the collection process. The problem THEY have is they gave their money to a securities broker. They can neither show nor even allege that they know what happened to their money after they gave it to the broker.

The important thing about TILA Rescission is that it is a virtual certainty that the borrower will be required to file an enforcement action. In that action they should not allow themselves to get sucked into an argument over whether the rescission was correct, fair, barred by limitations or anything else, all of which should have been raised within the 20 day window. AND that recognition is the reason why we have been inundated to prepare pre-litigation packages, analysis and reports to assist lawyers in filing actions to enforce rescissions, whether filed today or ten years ago.

Caveat: I have no doubt that attempts will be made to change the law. The Supreme Court has made changing the law impossible by a ruling from the bench, That means state legislatures and Congress are going to be under intense pressure to change this law or the effect of it. But as it stands now, I don’t think any other analysis covers all the bases like the one expressed here.

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A.G. Schneiderman Announces Settlement With Ernst & Young Over Auditor’s Involvement In Alleged Fraud At Lehman Brothers

A.G. Schneiderman Announces Settlement With Ernst & Young Over Auditor’s Involvement In Alleged Fraud At Lehman Brothers

Agreement Resolves Allegations Firm Enabled Bank To Paint False Picture Of Its Financial Statements By Temporarily Removing Tens Of Billions Of Dollars Of Securities From Its Balance Sheet Without Disclosing Those Transactions On Financial Statements

Schneiderman: Auditors Will Be Held Accountable For Failures To Honestly And Fairly Audit Public Companies

NEW YORK– Attorney General Eric T. Schneiderman today announced a $10 million settlement of a lawsuit filed against the auditing firm Ernst & Young LLP (“Ernst & Young”) over its involvement in a financial statement fraud at the now-defunct investment bank, Lehman Brothers Holdings, Inc. That money will be distributed as restitution to investors in Lehman securities, along with some $99 million being paid by Ernst & Young to settle a private federal class action that relied in part on facts uncovered by the Attorney General’s investigation. No other law enforcement authority has brought an enforcement action in connection with the 2008 collapse of Lehman. Moreover, today’s settlement resolves the first lawsuit brought against an auditor of a public company under New York’s securities laws. The case also resulted in an important decision by the Appellate Division’s First Department, which confirmed the Attorney General’s power to obtain disgorgement of professional fees received by a firm, in this case Ernst and Young’s fees.

“The basic duty and legal obligation of auditors is to ensure that the public companies they audit provide reliable and unbiased information about their operations to the investing public. If auditors issue opinions that are unreliable or provide cover for their clients by helping to hide material information, that harms the investing public, our economy, and our country,” Attorney General Schneiderman said. “Auditors will be held accountable when they violate the law, just as they are supposed to hold the companies they audit accountable.”

Under the terms of the settlement, Ernst & Young will pay $10 million—most of which will go to investors, with the remaining settlement funds to be used to reimburse New York State for investigation and litigation costs.

The Attorney General’s case, People v. Ernst & Young LLP, filed in Manhattan Supreme Court pursuant to the Martin Act and Executive Law § 63(12) in December 2010, concerned Ernst & Young’s role, as Lehman’s auditor, in an alleged fraud involving Lehman’s use of “Repo 105” transactions. Repo 105s were transactions in which Lehman transferred to various overseas counterparties investment grade securities in return for cash, with the binding understanding that Lehman would repurchase the same securities within a very short time, often just a few days. As alleged in the Attorney General’s lawsuit, Lehman, with Ernst & Young’s approval and complicity, treated the Repo 105s as sales, which enabled Lehman to temporarily remove tens of billions of dollars of securities from its balance sheet without requiring Lehman to disclose the Repo 105 transactions as financings on its financial statements. The Repo 105s served no legitimate business purpose. As alleged in the suit, Lehman used the funds derived from the transactions to pay down billions of dollars of liabilities, which had the effect of temporarily and misleadingly reducing Lehman’s leverage ratios, an important metric for analyzing Lehman’s liquidity and financial health.

As alleged by the Attorney General, Ernst & Young approved Lehman’s accounting for the Repo 105 transactions and issued unqualified opinions certifying Lehman’s financial statements, in spite of knowing that Lehman was not disclosing the existence or impact of the Repo 105s in its annual and quarterly consolidated financial statements, all of which Ernst & Young audited or reviewed. Ernst & Young also failed to object when Lehman allegedly misled analysts on its quarterly earnings calls regarding its leverage ratios, and did not inform Lehman’s Audit Committee about a highly-placed whistleblower’s concerns about Lehman’s use of Repo 105 transactions.

The lawsuit charged that Ernst & Young’s assent to Lehman’s failure to include any indication in its financial statements about the Repo 105 transactions was fraudulent and deceptive under the Martin Act and Executive Law § 63(12), as was allowing Lehman to the use the Repo 105s to manipulate its balance sheet and leverage ratios.

The case against Ernst & Young was prosecuted by Senior Trial Counsel David N. Ellenhorn, Assistant Attorneys General Armen Morian and Tanya Trakht, and Bureau Chief Chad Johnson, all of the Investor Protection Bureau, and Executive Deputy Attorney General for Economic Justice Karla G. Sanchez.

Source:http://ag.ny.gov/press-release/ag-schneiderman-announces-settlement-ernst-young-over-auditor’s-involvement-alleged

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It’s Even Hard to Buy a House When Your Father Runs Wells Fargo

It’s Even Hard to Buy a House When Your Father Runs Wells Fargo

WSJ-

Even the daughter of the CEO of the largest U.S. mortgage lender is found it hard to buy a home in one of the country’s hottest housing markets.

On a conference call Tuesday, Wells Fargo WFC +1.14% & Co. Chairman and CEO John Stumpf offered up his daughter as an example of the difficulties first-time buyers face in San Francisco, thanks to the influx of affluent tech industry employees and the lack of housing supply.

Mr. Stumpf was responding to an analyst question about where first-time home buyers have returned to the market. While Wells Fargo executives noted that credit on a national basis has become easier to obtain and houses have become more affordable, that’s less true in expensive urban markets like San Francisco where the bank is based.

“My daughter and son-in-law bought a house recently. You have to write a letter to tell them how nice you are, tell them how many children you have,” Mr. Stumpf said, adding that sending a “nice letter” to the sellers is simply the price of admission to participate in the bidding process.

[WALL STREET JOURNAL]

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HSBC USA v Lugo | NY Appellate Div. – Serious issues exist regarding plaintiff’s ownership of the mortgage and note given  the absence of such documents in the record and the fact that the assignment is undated

HSBC USA v Lugo | NY Appellate Div. – Serious issues exist regarding plaintiff’s ownership of the mortgage and note given the absence of such documents in the record and the fact that the assignment is undated

Decided on April 14, 2015
Tom, J.P., Renwick, DeGrasse, Gische, Clark, JJ.

 

13454 381904/09

[*1] HSBC USA, etc., Plaintiff-Respondent,

v

Betty Lugo, Defendant-Appellant, New Century Mortgage Corp., et al., Defendants.

 

Law Offices of Robert M. Brill, LLC, New York (Robert M. Brill and Anita Jaskot of counsel), for appellant.

Eckert Seamans Cherin & Mellott, LLC, White Plains (Geraldine A. Cheverko of counsel), for respondent.

 

Amended order, Supreme Court, Bronx County (Kenneth L. Thompson, Jr., J.), entered July 17, 2012, which, in this mortgage foreclosure action, denied defendant mortgagor’s motion to dismiss the complaint, or, in the alternative, to compel plaintiff to accept her untimely answer, modified, on the law and the facts, to grant the motion to compel plaintiff to accept defendant’s untimely answer, and otherwise affirmed, without costs.

This action seeks foreclosure on a $271,360 mortgage made on May 9, 2006, between New Century Corporation (New Century), as lender, and defendant Betty Lugo, as borrower, which was secured by real property located in the Bronx and a note. New Century purportedly assigned the mortgage to plaintiff HSBC Bank USA.

The motion court properly denied defendant’s motion to dismiss the complaint. Defendant waived her right to seek dismissal of the complaint as abandoned pursuant to CPLR 3215(c), because she did not object to plaintiff’s treatment of her untimely answer as a notice of appearance and because she thereafter sought documents from plaintiff (see Myers v Slutsky, 139 AD2d 709 [2d Dept 1988]). Nor is defendant entitled to dismissal of the complaint based on plaintiff’s alleged failure to comply with RPAPL 1304, given the lack of probative evidence concerning the applicability of that section.

However, in light of the strong public policy of this state to dispose of cases on their merits (see Berardo v Guillet, 86 AD3d 459, 459 [1st Dept 2011]; Yu v Vantage Mgt. Servs., LLC, 85 AD3d 564, 564 [1st Dept 2011]; Billingly v Blagrove, 84 AD3d 848, 849 [2d Dept 2011]), the motion court improvidently exercised its discretion in denying defendant’s motion to compel acceptance of the untimely answer. The circumstances herein demonstrate that the delay was not willful (see DaimlerChrysler Ins. Co. v Seck, 82 AD3d 581 [1st Dept 2011]). Nor has plaintiff pointed to any evidence that the relatively short delay involved here, which was undisputedly mostly attributable to ongoing settlement negotiations, caused it to change its [*2]position or to suffer any similar prejudice (see Mutual Mar. Off., Inc. v Joy Constr. Corp., 39 AD3d 417, 419 [1st Dept 2007]; Forastieri v Hasset, 167 AD2d 125 [1st Dept 1990]). In fact, plaintiff has acknowledged that from September 2009 to June 22, 2011, it placed the foreclosure file on hold while the parties attempted to negotiate a settlement, including defendant’s attempt to negotiate for a “short sale.” A further hold was placed on the case by FEMA from September 11 through November 22, 2011. The Court accepted plaintiff’s argument that its delay in prosecuting this case between 2009 and 2011 was attributable to ongoing settlement negotiations. These same negotiations likewise justify defendant’s late answer. Moreover, a review of the record indicates that defendant also has an arguably meritorious affirmative defense of plaintiff’s lack of standing to commence this foreclosure action (see id.). Serious issues exist regarding plaintiff’s ownership of the mortgage and note given

the absence of such documents in the record and the fact that the assignment is undated. These issues are best resolved on the merits, as opposed to on default.

All concur except Tom, J.P. and DeGrasse, J. who dissent in part in a memorandum by Tom, J.P. as follows:
TOM, J.P. (dissenting in part)

This Court is in agreement that defendant waived her right to seek dismissal of the complaint as abandoned pursuant to CPLR 3215(c) and that she has not established the applicability of RPAPL 1304 so as to afford a basis for dismissal (RPAPL 1304[5][a][iii]). However, I find that the motion court properly denied defendant’s motion to compel acceptance of the answer, given the absence of any excuse for the almost five-month delay in answering the complaint or the nearly two-year delay in making this motion (CPLR 3012[d]; see Nouveau El. Indus., Inc. v Tracey Towers Hous. Co., 95 AD3d 616, 618 [1st Dept 2012] [no reasonable excuse for default provided]; Mannino Dev., Inc. v Linares, 117 AD3d 995 [2d Dept 2014] [absent a reasonable excuse for delay, extension of time to answer properly denied despite defendants’ participation in required settlement conferences]; HSBC Bank USA, N.A. v Lafazan, 115 AD3d 647 [2d Dept 2014] [same]; compare Sackman Mtge. Corp. v 111 W. 95th St. Realty Corp., 152 AD2d 463, 464 [1st Dept 1989] [prompt answer upon learning that summons and complaint had been mailed to deceased attorney]).

 

It is within the exercise of a motion court’s discretion to assess the sufficiency of a movant’s submissions in support of relief pursuant to CPLR 3012(d) (e.g. Provident Life & Cas. Ins. Co. v Hersko, 246 AD2d 365 [1st Dept 1998]), and on this record the finding that defendant failed to advance any excuse whatsoever for her failure to serve a timely answer can hardly be said to have been an abuse of discretion (see Fidelity & Deposit Co. of Md. v Andersen & Co., 60 NY2d 693, 695 [1983]; Mufalli v Ford Motor Co., 105 AD2d 642, 643 [1st Dept 1984]). Even on appeal, defendant supplies no excuse for the delay in answering.

To compel acceptance of defendant’s answer, as urged by the majority, on the preference that cases be decided on the merits, results in the exception swallowing the rule. If reaching the merits is the paramount goal, a court need never consider the statutory prerequisites for the grant of relief from a default — namely, a reasonable excuse and the demonstration of the merit of the defense. It is a rare appellate case in which the rationale embraced by the majority has been applied in the context of a motion to compel acceptance of an answer (see Harcztark v Drive Variety, Inc., 21 AD3d 876 [2d Dept 2005] [insurer’s three-month delay in answering a [*3]complaint on behalf of its insured]), and no equitable consideration warrants acceptance of the answer in this matter (cf. Smith v Daca Taxi, 222 AD2d 209, 211 [1st Dept 1995] [attempted bribery of a witness]). To the contrary, defendant has benefitted from the delay by remaining in possession of the foreclosed vacant premises, which she does not occupy as a principle residence, to the detriment of plaintiff. Defendant’s delay of almost two years after the rejection of her answer before moving to compel its acceptance in this foreclosure action does not constitute a “short delay” as urged by the majority. There is no dispute that defendant defaulted in the mortgage payments. The record reflects that defendant owed a default balance of $268,817.47 as of August 31, 2009. In view of the loss of interest on the debt and the associated carrying costs, it also cannot be said that plaintiff will not continue to sustain prejudice as a result of further delay in recovering the property. Thus, this matter does not fulfill the criterion that the grant of relief will not result in prejudice to the opposing party (see Stephenson v Hotel Empls. & Rest. Empls. Union Local 100 of AFL-CIO, 293 AD2d 324, 325 [1st Dept 2002]; Elemery Corp. v 773 Assoc., 168 AD2d 246, 247 [1st Dept 1990]). The majority’s statement that defendant’s short delay was “undisputedly mostly attributable to ongoing settlement negotiations” is inaccurate and not supported by the record. Significantly, defendant’s attorney, in his reply affidavit, avers that plaintiff’s allegation of negotiation with defendant from September 2009 to June 22, 2011 is “unsubstantiated in any way by affidavit of person with knowledge or [by] documentary evidence.” Thus, defendant denies there were negotiations between the parties. Even if there were settlement discussions between the parties, such negotiations cannot extend the time to serve an answer to the foreclosure complaint (HSBC Bank USA, N.A., 115 AD3d at 648).

Finally, some of the defenses proffered border on the frivolous. It should not require elaboration that Supreme Court has subject matter jurisdiction of mortgage foreclosure actions, that a plaintiff’s participation in settlement negotiations constitutes good cause for its forbearance in entering judgment on default or that the failure to assert lack of standing in the answer or by way of a pre-answer motion operates as a waiver of such affirmative defense (CPLR 3211[e]). Therefore, a defendant’s failure to assert the standing defense in a timely manner should not be excused merely because its answer, failing to assert the defense, was rejected as untimely (cf. Wells Fargo Bank, N.A. v. Forde-White, 38 Misc 3d 1209[A], 2013 NY Slip Op 50029[U], *3-4 [Sup Ct, Kings County 2013] [the defendant was permitted to assert lack-of-standing defense in motion to dismiss where the defendant never served an answer]). To the contrary, the opportunity to interpose a second answer does not afford occasion to interpose a defense governed by CPLR 3211(e) that was not asserted in the original answer (Addesso v Shemtob, 70 NY2d 689 [1987]). Thus, whether defendant’s asserted lack of standing defense, interposed for [*4]the first time in her post-answer motion to dismiss, might constitute an “arguably meritorious affirmative defense,” as the majority supposes, is immaterial.

Accordingly, the order should be affirmed in all respects.

THIS CONSTITUTES THE DECISION AND ORDER

OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: APRIL 14, 2015

CLERK

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Trouble ahead: Tidal wave of HELOC resets about to hit

Trouble ahead: Tidal wave of HELOC resets about to hit

This never ending nightmare is far from over!


Housing Wire-

Home equity lines of credit taken during big housing bubble just before the crash may hit the millions of homeowners with home equity lines of credit with a dramatic spike in their payments.

This comes at a time when even economic bulls are seeing a systemic weakness in the economy.

According to RealtyTrac, 3,262,036 HELOCs with an estimated total balance of $158 billion that originated during the housing price bubble between 2005 and 2008 are still open and scheduled to reset between 2015 and 2018.

 [HOUSING WIRE]

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Mortgage Insecuritization: Pennsylvania Clerks Take on MERS

Mortgage Insecuritization: Pennsylvania Clerks Take on MERS

The Legal Intellingencer-

Two class action lawsuits are winding their way through the courts in Pennsylvania. Both involve county clerks as plaintiffs, and Mortgage Electronic Registration Systems Inc., or MERS, either as a defendant or a participant in allegedly fraudulent practices. They both point to larger problems within the residential mortgage sector.

Having suffered through the subprime mortgage meltdown of 2008, the robo-signing misadventures that led five major banks to enter into a $25 billion settlement agreement with 49 states’ attorneys general, and after a decade of devaluation in the housing market, you would think the financial market had learned its lesson, that government reforms had been effective and that the mortgage financial market and its investors would have been restored to a secure foundation. But these cases indicate otherwise, bringing to light systemic problems that could exacerbate another market disruption, the tip of a burgeoning iceberg threatening havoc against the nation’s homeowners and investment markets worldwide.

MERS began in the early 1990s when an interagency task force, formed by the Mortgage Bankers Association, Fannie Mae, Freddie Mac and Ginnie Mae, recommended an industry-sponsored central repository to register and track the ownership of mortgage interests. MERS was officially launched in 1997. The concept was straightforward: residential mortgages would be issued a unique mortgage identification number that MERS would record in its database and track. As a mortgage loan moved between trading partners, beginning with the originating lender, the securitizer (Fannie, Freddie), then on to secondary-market investors, since each party typically assigned its own account number to the asset, the use of a centrally assigned identification number facilitated standardized tracking throughout the process.

Read more: http://www.thelegalintelligencer.com/id=1202723185856/Mortgage-Insecuritization-Pennsylvania-Clerks-Take-on-MERS#ixzz3XFYkY3HN

 

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Wells Fargo Bank, N.A. v Mone | NYSC – whether the note was physically delivered to plaintiff or the note and mortgage were assigned to plaintiff, OCWEN Affidavit Fail

Wells Fargo Bank, N.A. v Mone | NYSC – whether the note was physically delivered to plaintiff or the note and mortgage were assigned to plaintiff, OCWEN Affidavit Fail

SUPREME COURT – STATE OF NEW YORK
I.A.S. PART 37 – SUFFOLK COUNTY

WELLS FARGO BANK, N.A. as Trustee for
OPTION ONE MORTGAGE LOAN TRUST
2005-2 Asset Backed Certificates, Series 2005-2,
Plaintiff,

- against -

VINCE J. MONE,
Defendant

ORDERED that this motion (seq. #001) by defendant to compel, this motion (seq. #002)
by plaintiff for summary judgment, and this motion (seq. #003) by defendant to dismiss are
consolidated for the purposes of this determination; and it is further

ORDERED that this motion (seq. #001) by defendant for an Order, pursuant to CPLR
3 l 24 and 3126, compelling plaintiff to comply with defendant’s combined demands is denied;
and it is further
[* 1]

ORDERED that this motion (seq. #002) by plaintiff for an Order, pursuant to CPLR
J 212. granting summary judgment in its favor and for an award of attorney’s fees is denied; and
it is further

ORDERED that this motion (seq. #003) by defendant to dismiss, pursuant to CPLR 3211
(a) ( 1) and (a) (7), is denied.

This is a declaratory judgment action pursuant to RPAPL article 15 for the imposition of
an equitable first priority lien in favor of plaintiff in the loan amount of $600,000.00 from the
date of closing, February 9, 2005, upon defendant’s premises located at 922 Sound Shore Road,
Jamesport. New York. Plaintiff, Wells Fargo, N.A. as Trustee for Option One Mortgage Loan
Trust 2005-2 Asset Backed Certificates, Series 2005-2, commenced this action on March 29,
2012.

Plaintiff alleges by verified complaint that on February 9, 2005, defendant having
accepted the terms of the loan agreement, executed an original mortgage and its attached interestonly
rider in plaintiff’s favor against the subject property as security and in return for the
aforementioned loan. In addition, plaintiff alleges that its settlement agent attempted to record
said documents in the Suffolk County Clerk’s Office but that they were: (i) rejected due to
incomplete or improper signatures; (ii) lost in transit; or (iii) misplaced by plaintifrs settlement
agent or an employee of the Suffolk County Clerk’s Office. Plaintiff insists that defendant must
sign duplicates of said documents inasmuch as he agreed to be bound by the terms and conditions
of the loan agreement and asserts that defendant has refused or failed to re-execute or complete
duplicate original mortgage documents. By its complaint, plaintiff seeks a declaration that it has
an equitable first priority lien in favor of plaintiff in the loan amount of $600,000.00 from the
date of closing. February 9, 2005, upon defendant’s premises; the imposition of a constructive
and/or resulting trust upon said premises for said lien; a declaration that a copy of the final order
entered herein be recorded among the land records of Suffolk County together with true copies of
the original mortgage and its attached original rider and that said order be indexed in the manner
appropriate to the original documents and in the names of the parties referenced therein. Plaintiff
also alleges that defendant breached his agreement under the loan agreement to execute and
provide those documents necessary to grant plaintiff and its assignees a first priority security
interest in the subject property and seeks specific performance of defendant’s agreement under
the loan agreement by executing documents necessary for the recording of the original mortgage
and its rider. Defendant served his answer containing affirmative defenses, including standing,
and counterclaims.

 

Plaintiff seeks summary judgment on its complaint and attorney’s fees. The Court notes that the copies or the original note and mortgage indicate the lender to be “The New York Mortgage Co .. LLC. A New York Corporation” and an assignment dated February 9. 2005 indicates that said note and mortgage \Vere assigned to “Option One Mortgage Corporation a California Corp.” In addition. the note contains an allonge paying it to the order of ”Option One
Mortgage Corporation a California Corp.” by authorized signer Anna Frange. VP of Closing.

Funding and Shipping of “The New York Mortgage Co .. LLC. A New York Corporation.’·
De!Cndant requests dismissal on the grounds that plaintiff failed to demonstrate standing
as assignee of the mortgage or holder of the note and mortgage at the commencement of this
action. and in any event, a trustee plaintiff cannot be the rightful owner of the mortgage and
plaintiff has not provided a power-of-attorney for each assignment in the chain of title of the
mortgage. Defendant’s submissions include a copy of an assignment of mortgage dated July 27.
20 I l. indicating that “The New York Mortgage Co., LLC” assigned the subject mortgage to
··sand Canyon Corporation FKA Option One Mortgage Corporation.”

A defendant waives the defense of lack of standing unless it is raised in either the answer
or in a pre-answer motion to dismiss the complaint (see CPLR 3211 [ e]; Citibank, N.A. v
Swiatkowski. 98 AD3d 555, 949 NYS2d 635 [2d Dept 2012]; Wells Fargo Bank Minn., N.A. v
Mastropaolo. 42 AD3d 239, 837 NYS2d 247 [2d Dept 2007]). Where, as here, standing is put
into issue by the defendant, the plaintiff is required to prove it has standing in order to be entitled
to the relief requested (see Deutsche Bank Natl. Trust Co. v Haller, 100 AD3d 680, 954 NYS2d
551 [2d Dept 2011 ]; US Bank, NA v Collymore, 68 AD3d 752, 890 NYS2d 578 [2d Dept 2009];
Wells Fargo Bank Minn., NA v Mastropaolo, 42 AD3d 239, 837 NYS2d 247 [2d Dept 2007]).
”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, 939 NYS2d 120 [2d Dept 2012]; US Bank, NA v Collymore, 68 AD3d at 753;
Countrywide Home Loans, Inc. v Gress, 68 AD3d 709, 888 NYS2d 914 [2d Dept 2009]).
··Either a written assignment of the underlying note or the physical delivery of the note prior to
the commencement of the … action is sufficient to transfer the obligation” (HSBC Bank USA v
Hernandez. 92 AD3d 843 ). However, “a transfer or assignment of only the mortgage without
the debt is a nullity and no interest is acquired by it,” since a mortgage is merely security for a
debt and cannot exist independently of it (U.S. Bank N.A. v Dellarmo, 94 AD3d 746, 748, 942
N YS2d 122 [2d Dept 2012]; see Deutsche Bank Natl. Trust Co. v Barnett, 88 AD3d 636, 931
NYS2d 630 [2d Dept 2011]; see also Homecomings Fin., LLC v Guidi, 108 AD3d 506, 969
NYS2d 470 [2d Dept 2013]).

Here the issue of standing cannot be determined as a matter of law on this record (see
Deutsche Bank Natl. Trust Co. v Rivas, 95 AD3d 106 L 1062, 945 NYS2d 328 [2d Dept 2012)).
The motion for summary judgment is supported only by copies of the mortgage loan documents
and the 2005 assignment, powers-of-attorney, and the affidavit of Kyle Lucas, a Senior Loan
Analyst by Ocwen Corporation, whose indirect subsidiary is Ocwen Loan Servicing LLC
( .. Ocwen ‘”). Ms. Lucas states that Ocwen services defendant’s loan as authorized attorney-in-fact
fur plaintiff and attaches the limited power-of-attorney. Plaintiff does not explain either in its
complaint or anywhere else in the submitted motion papers its relationship to either the original
lender or the assignees. Specifically, plaintiff did not submit an affidavit from someone with
personal knowledge providing factual details of a physical delivery of the note to plaintiff or
assignment of the note and mortgage to plaintiff prior to the commencement of this action (see
Deutsche Bank Natl. Trust Co. v Haller, 100 AD3d at 682-683). Thus, plaintiff has failed to
demonstrate that it has standing to commence this action. In addition, defendant’s motion to
dismiss must be denied as questions of fact exist as to, among other things, whether the note was
physically delivered to plaintiff or the note and mortgage were assigned to plaintiff prior to the
commencement of the action (see id., l 00 AD3d at 683; Deutsche Bank Natl. Trust Co. v Rivas,
95 AD3d at l 062).

 

Finally, the request by defendant to compel plaintiff to provide a response to those
portions of his combined demands which were objected to by plaintiff in its responses to
combined demands is denied inasmuch as the affirmation of good faith submitted by defendant’s
counsel did not satisfy 22 NYCRR § 202.7, as it did not refer to any “communications between
the parties evincing a diligent effort to resolve the dispute, or indicating good cause why no such
communications occurred” other than a letter dated March 4, 2013 to plaintiff’s counsel
requesting outstanding documents and more information concerning objections within fifteen
days and notifying that thereafter defendant counsel would “pursue [his] option through the
court.” (Matter of Greenfield v Board of Assessment Review for Town of Babylon, 106 AD3d
908, 908. 965 NYS2d 555 [2d Dept 2013]; see also Murphy v County of Suffolk, 115 AD3d
820 .. 982 NYS2d 380 [2d Dept 2014]).
—~

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What Every Homeowner Needs To  Know About Robo Notaries – Part Two on THE FORECLOSURE HOUR 4/12/2015

What Every Homeowner Needs To Know About Robo Notaries – Part Two on THE FORECLOSURE HOUR 4/12/2015

This coming Sunday Debbie Ramirez is back on the show for Part Two of a discussion on robo notaries.

Debbie has done some more interesting research.

“What Every Homeowner Needs To Know About Robo Notaries — Part Two”

Meanwhile, most if not all of the attention given to robo-signers in the past in foreclosure defense has concentrated with little practical effect in courts on those robos signing mortgage assignments. On the other hand, fraudulent notary acknowledgments, often by contrast virtually overlooked, invoke both stronger civil and criminal sanctions in American law, and once exposed can cause the cancellation of recorded mortgage assignments altogether.

And in some cases (land court recordations), robo signature acknowledgments can cause the loss of the entire mortgage interest as well upon sale of the property to a third party — a knockout punch often surprisingly overlooked!

This Sunday after Debbie Ramirez’ second appearance will tentatively feature the long awaited class action expose of Washington Mutual FA as the poster child of the entire securitized trust fraud in the United States.

Facing foreclosure?

If so, you can’t afford to miss a single show!
Our upcoming guests will help you save your home.

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

 LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

 

Host: Gary Dubin -

Co-Host:  John Waihee -

 CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air. 

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

 

 

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NMS Monitor: Ocwen Investigation Continues | SunTrust and Ocwen report consumer relief for the fourth quarter 2014

NMS Monitor: Ocwen Investigation Continues | SunTrust and Ocwen report consumer relief for the fourth quarter 2014

For immediate release:
April 7, 2015
Contact:
Hannah Harrill
919-508-7821

SunTrust and Ocwen report consumer relief for the fourth quarter 2014

Joseph A. Smith, Jr. releases SunTrust and Ocwen’s self-reported consumer relief

RALEIGH, N.C. – SunTrust and Ocwen, parties to the National Mortgage Settlement (NMS), reported their consumer relief activities through the fourth quarter 2014 under the NMS to Monitor Joseph A. Smith, Jr.
SunTrust and Ocwen sent these reports to each state that is party to the Settlement with copies to the Monitor and the Monitoring Committee. The state-level data can be downloaded here for SunTrust and here for Ocwen. This data is self-reported. The Monitor has not confirmed the numbers SunTrust or Ocwen reported, but will report on his review and the servicers’ progress toward their required consumer relief total in future reports.

SunTrust
According to this data, 6,139 SunTrust borrowers have benefited from some type of consumer relief. Forty-nine borrowers received first lien modification forgiveness totaling approximately $6 million, which, on average, represents about $123,602 per borrower. More than 3,000 borrowers received new loans; these borrowers are either first-time homebuyers, live in hardest-hit areas or previously lost a home to foreclosure or short sale.
“This is SunTrust’s first report on its progress toward fulfilling its $500 million obligation under the National Mortgage Settlement,” said Smith. “This data is gross and self-reported, and my team and I are in the process of crediting SunTrust’s consumer relief progress.”

Ocwen
At Ocwen, 21,257 borrowers completed first lien modifications and benefited from consumer relief totaling $1.9 billion, which, on average, represents about $91,093 per borrower. In addition, another 284,089 borrowers either started a trial plan or were offered or approved for a trial plan as of Dec. 31, 2014. This is Ocwen’s second report on its consumer relief to date, and the Monitor has not yet credited these numbers.

The Monitor is also overseeing Ocwen’s compliance with the servicing standards set forth by the NMS. He and an independent professional firm are conducting an investigation into issues found with Ocwen’s internal review group and letter-dating. More information on these findings can be found here.

“I am encouraged by Ocwen’s consumer relief progress, but I continue to investigate issues of potential non-compliance with the NMS servicing standards. My team and I take this matter seriously, and this investigation is ongoing. I will report my findings later this spring,” stated Smith.

About the Office of Mortgage Settlement Oversight More information about the National Mortgage Settlement is available at www.nationalmortgagesettlement.com. Further information about Joseph Smith and the Office of Mortgage Settlement Oversight is available at www.mortgageoversight.com.

###

source: https://www.jasmithmonitoring.com

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Posted in STOP FORECLOSURE FRAUD0 Comments

Dale Kaymark et al. v. Bank of America and Udren Law Offices PC | 3rd Circ. Rules FDCPA Covers Foreclosure Complaints

Dale Kaymark et al. v. Bank of America and Udren Law Offices PC | 3rd Circ. Rules FDCPA Covers Foreclosure Complaints

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______
No. 14-1816
____________
DALE KAYMARK, individually and on behalf of other similarly situated current and former homeowners in Pennsylvania, Appellant

v.

BANK OF AMERICA, N.A.; UDREN LAW OFFICES, P.C.
____________
On Appeal from the United States District Court
for the Western District of Pennsylvania
(W.D. Pa. No. 2-13-cv-00419)
District Judge: Honorable Cathy Bissoon
______
Argued December 10, 2014
Before: FUENTES, FISHER and KRAUSE, Circuit Judges.
(Opinion Filed: April 7, 2015)

 

FISHER, Circuit Judge.
Dale Kaymark defaulted on a mortgage held by Bank of America, N.A. (“BOA”). On behalf of BOA, Udren Law Offices, P.C. (“Udren”) initiated foreclosure proceedings against Kaymark in state court. The body of the Foreclosure Complaint listed certain not-yet-incurred fees as due and owing, which Kaymark alleges violated several state and federal fair debt collection laws and breached the mortgage contract. Because we conclude that Kaymark has sufficiently pled that the disputed fees constituted actionable misrepresentation under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., we will reverse the District Court’s order dismissing certain FDCPA claims against Udren but affirm its dismissal of all other claims.

[…]

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Cancer survivor loses her home due to banking confusion

Cancer survivor loses her home due to banking confusion

ABC11-

A Houston, Texas woman is at the end of the line when it comes to trying to save her home. She says, through no fault of her own, the mortgage went into foreclosure and now she has just days to find a new place to live. The trouble started 10 years ago when her mortgage was sold from one company to another. That small change led to huge problems.

Mallory Hartman is just days away from being homeless. At 67, the one-time cancer survivor says the experience is more than she can bear.

“I’m 67, I waited, I wish I had died of cancer, it would have been easier,” said Hartman.

Hartman’s mortgage problems started in 2005 when her mortgage company sold the note to another bank.

[ABC 11]

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Victims of Financial Wrongdoing Need a More Muscular S.E.C.

Victims of Financial Wrongdoing Need a More Muscular S.E.C.

NYT-

Given the many billions of dollars financial companies have paid in regulatory and legal settlements related to the mortgage crisis, how much money has actually found its way into the pockets of investors harmed by their actions?

Less than you may think. To start with, little of the cash generated in most of the Justice Department settlements went to investors. Much of this money went into Treasury coffers or to various states while troubled borrowers were promised loan modifications and other relief as part of the deals.

Wronged investors are entitled to receive money, however, from lawsuits filed by the Securities and Exchange Commission. While the S.E.C. cannot, by law, seek compensatory damages for losses incurred by investors, the agency does collect penalties and disgorgement of ill-gotten gains from both institutions and individuals.

 [NEW YORK TIMES]

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Posted in STOP FORECLOSURE FRAUD2 Comments

Court of Appeals of Minnesota **Precedential** | BONY v. Keiran || TILA Bites BONY in the A$$ ||| … United States Supreme Court granted certiorari review of the Eighth Circuit’s opinion ….vacated judgment, and remanded to “the Eighth Circuit for further consideration in light of Jesinoski v. Countrywide

Court of Appeals of Minnesota **Precedential** | BONY v. Keiran || TILA Bites BONY in the A$$ ||| … United States Supreme Court granted certiorari review of the Eighth Circuit’s opinion ….vacated judgment, and remanded to “the Eighth Circuit for further consideration in light of Jesinoski v. Countrywide

H/T Court Listener

STATE OF MINNESOTA IN COURT OF APPEALS
A14-0304 A14-0620

The Bank of New York Mellon, f/k/a The Bank of New York, as Trustee for The Certificateholders of CWABS Inc., Asset-backed Certificates, Series 2007-6, Respondent,

vs.

Alan G. Keiran, et al., Appellants, Provincial Bank, et al., Defendants.

Filed April 6, 2015 Reversed and remanded Schellhas, Judge Dakota County District Court File No. 19HA-CV-11-6412

SYLLABUS A district court may not grant summary judgment based on a party’s failure to satisfy the conditions of a court-ordered bond required to stay foreclosure proceedings unless the court first determines that no genuine issue of material fact exists.
OPINION SCHELLHAS, Judge In this mortgage foreclosure case, appellants argue that summary judgment cannot withstand de novo review. We reverse and remand for further proceedings consistent with this opinion.

 . . .

Meanwhile, Keirans ceased making payments on the mortgage loan and, on October 8, 2009, sent Home Capital and BAC letters, purporting to rescind the mortgage loan on the bases that they were not provided “[s]ufficient correct copies of a Truth in Lending Disclosure Statement . . . in a manner [they] could retain” and that “[they] did not receive the correct Truth in Lending Disclosure Statements.” Keirans alleged that “failure to provide effective notice of these mandatory disclosures effectively extend[ed their] rescission rights.” On January 7, 2010, BAC sent Keirans a letter, enclosing copies

2 of various documents and informing Keirans that their “request to rescind the mortgage loan transaction [wa]s denied.
 . . .

In October 2010, Keirans sued Home Capital, BAC, and BNY Mellon in federal district court, alleging violations of the Truth in Lending Act and seeking a declaration that their rescission is valid, termination of any security interest in the property, an injunction against non-judicial foreclosure proceedings, and monetary damages. The defendants moved for summary judgment, and on November 30, 2011, the federal district court granted the defendants’ motion on the basis that Keirans failed to commence their lawsuit prior to the end of the three-year period of repose under 15 U.S.C. § 1635(f). Keirans appealed the summary judgment to the United States Court of Appeals for the Eighth Circuit.
. . .

On July 12, 2013, the Eighth Circuit affirmed the federal district court’s grant of summary judgment; subsequently, BNY Mellon again moved for summary judgment in state district court. At a hearing on October 14, Keirans requested a continuance, advising the court that they intended to petition for certiorari review by the United States Supreme Court and had obtained an extension to file their petition.
. . .

……

On January 20, 2015, the United States Supreme Court granted certiorari review of the Eighth Circuit’s opinion 
affirming summary judgment, vacated judgment, and remanded to “the Eighth Circuit for further consideration in 
light of Jesinoski v. Countrywide Home Loans, 574 U.S. ___,
, 190 L.E.2d 650 (2015).” Keiran v. Home Capital, Inc.,

135 S. Ct. 1152135 S. Ct. 790

, 1152 (Jan. 20, 2015). In Jesinoski, the Supreme Court determined “that rescission is effected when the borrower 
notifies the creditor of his intention to rescind. It follows that, so long as the borrower notifies within three 
years after the transaction is consummated, his rescission is timely. The statute does not also require him to sue 
within three years.
, 792. . . .

We conclude that the district court erred by granting summary judgment upon Keirans’

failure to satisfy the conditions of the bond without first determining that no genuine

issue of material fact exists.
. . .

 

DECISION

The district court properly exercised jurisdiction in this case but erred by granting

summary judgment in favor of BNY Mellon without first determining that no genuine

issue of material fact exists. We therefore reverse and remand for further proceedings

consistent with this opinion.

Reversed and remanded.

View Original

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Grant v. The Bank of New York Mellon Trust Co. | How often the banks stick Pro Se with the res judicata ploy. This time the Banksters get the SHAFT || The trial court is directed on remand to vacate the grant of summary judgment and dismiss the Bank’s complaint

Grant v. The Bank of New York Mellon Trust Co. | How often the banks stick Pro Se with the res judicata ploy. This time the Banksters get the SHAFT || The trial court is directed on remand to vacate the grant of summary judgment and dismiss the Bank’s complaint

H/T Court Listener

IN THE
COURT OF APPEALS OF INDIANA

Demetrius L. Grant, and April 6, 2015
Vickie O. Grant Court of Appeals Case No.
49A05-1404-MF-139
Appellant-Defendant,
Appeal from the Madison Superior
v. Court
Honorable Michael D. Keele, Special
Judge
The Bank of New York Mellon Case No. 49D07-1006-MF-028352
Trust Co.,
Appellee-Plaintiff

Friedlander, Judge.

[1] Demetrius and Vickie Grant appeal the trial court’s denial of their motion to

dismiss and grant of summary judgment in favor of The Bank of New York

Mellon Trust Company (the Bank). The Grants present the following

dispositive issue for review: Was dismissal of the Bank’s second foreclosure

action against the Grants required where the first action was dismissed under

Indiana Trial Rule 41(E)?
Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015 Page 1 of 9
[2] We reverse and remand.

[3] The Grants have lived in their Indianapolis home for over thirty years. On

January 28, 2004, they executed a note in the principal amount of $127,500

with Paragon Home Lending, LLC. To secure payment of the note, the Grants

executed a mortgage. At some point, the mortgage and note were assigned to

the Bank.

[4] The Grants filed bankruptcy in 2007, and the bankruptcy court granted them

discharge from the mortgage debt that same year. Thereafter, the Grants did

not make their August 2007 mortgage payment or any subsequent payments.

[5] On November 26, 2007, the Bank filed an In Rem Complaint on Note and to

Foreclose Mortgage and Reformation of Mortgage and Deed (the First

Foreclosure Action). The Bank took no action on the complaint for over a year

and a half, so Judge S.K. Reid of the Superior Court of Marion County set the

cause for call of the docket on July 29, 2009. Demetrius Grant appeared for the

hearing, but the Bank did not. Accordingly, Judge Reid dismissed the cause

pursuant to T.R. 41(E) for failure to prosecute.

[6] Eight months later, on March 29, 2010, the Bank filed a motion to reinstate the

First Foreclosure Action, which the court initially granted. Upon the Grants’

motion, Judge Reid returned the case to disposed status on April 23, 2010,

citing Natare Corp. v. Cardinal Accounts, Inc.,

874 N.E.2d 1055

(Ind. Ct. App.

2007) (reversing reinstatement where plaintiff filed an unverified motion with

Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015 Page 2 of 9
no supporting affidavits and presented no admissible evidence at the hearing on

the reinstatement motion). The Bank did not appeal this ruling.

[7] Two months after unsuccessfully attempting to reinstate the First Foreclosure

Action, the Bank filed a new lawsuit against the Grants asserting the same

allegations and seeking the same relief (the Second Foreclosure Action). The

Grants subsequently filed a motion to dismiss, invoking as its basis Indiana

Trial Rule 12(B)(6). In their pro-se motion, the Grants argued that the First

Foreclosure Action had been dismissed for failure to prosecute and could not be

reinstated in this separate action. In opposition, the Bank argued in part that

despite the T.R. 41(E) dismissal, it was allowed to refile a separate action in the

future. The Grants replied that the motion to dismiss was proper under T.R. 41

and that “the bank [sic] attempt to refile this lawsuit is barred by the doctrine of

res judicata”. Appellants’ Appendix at 68. Following a hearing, the trial court

denied the Grants’ motion to dismiss. The Grants appealed the denial, but this

court dismissed the appeal because it was not from a final appealable order and

the Grants had not sought certification of the interlocutory order. Grant v. Bank

of New York, Cause No. 49A02-1104-MF-485 (March 22, 2012).

[8] After dismissal of the appeal, nothing happened in the case for several months

and the trial court issued a call of the docket notice to the parties in November

 

2012. The Bank sought leave to amend its complaint in February 2013, which

the trial court granted after a T.R. 41(E) hearing. The amendment, filed March

7, 2013, added the State as a party defendant and changed one date. The

Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015 Page 3 of 9
Grants then sought a change of judge, which was granted, and Special Judge

Michael Keele was appointed.

[9] On July 10, 2013, the Bank filed a motion for summary judgment. In their

memorandum in opposition to summary judgment, the Grants noted the T.R.

41(E) dismissal of the First Foreclosure Action and that the case was not

reinstated pursuant to T.R. 41(F). The Grants further developed their T.R. 41

argument in a supplemental response, which they urged should be treated as a

belated motion to dismiss under T.R. 12(B)(8).

[10] The trial court held a summary judgment hearing on January 23, 2014. At the

conclusion of the hearing, the court directed the Bank to file a response to the

Grants’ T.R. 12(B)(8) motion. In its written response, the Bank’s sole argument

was that T.R. 41(F) does not require a party to petition the original court to

reinstate a case following dismissal for failure to prosecute. The Bank asserted,

without citing any authority, “[a] Plaintiff is well-within its rights to instead re-

file the Complaint at any time of its choosing.” Appellants’ Appendix at 330.

[11] On March 26, 2014, the trial court summarily denied the Grants’ motion to

dismiss. The court also entered a separate order for In Rem Entry of Summary

Judgment and Decree of Foreclosure in favor of the Bank. The Grants now

appeal.

[12] In support of their argument, the Grants direct us to Zavodnik v. Richards,

984 N.E.2d 699

(Ind. Ct. App. 2013), aff’d on reh’g,

988 N.E.2d 806

(Ind. Ct. App.

2013), a case with procedural facts almost identical to those at hand. In

Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015 Page 4 of 9
Zavodnik, the plaintiff’s complaint was dismissed under T.R. 41(E) for failure to

prosecute and the plaintiff unsuccessfully attempted to reinstate the original

lawsuit pursuant to T.R. 41(F). The plaintiff then filed a new lawsuit with

allegations nearly identical to those of the originally-dismissed complaint. The

new court granted the defendant’s motion to dismiss.1

[13] The defendant argued that the filing of an entirely new complaint in a different

court contravened T.R. 41(E) and (F) and that the plaintiff should not be

allowed to avoid the rule’s reinstatement requirement simply by filing a new

complaint before a different judge.

[14] Subsections (E) and (F) of T.R. 41 provide:

(E) Failure to prosecute civil actions or comply with rules.
Whenever there has been a failure to comply with these rules or when
no action has been taken in a civil case for a period of sixty [60] days,
the court, on motion of a party or on its own motion shall order a
hearing for the purpose of dismissing such case. The court shall enter
an order of dismissal at plaintiff’s costs if the plaintiff shall not show
sufficient cause at or before such hearing. Dismissal may be withheld
or reinstatement of dismissal may be made subject to the condition
that the plaintiff comply with these rules and diligently prosecute the
action and upon such terms that the court in its discretion determines
to be necessary to assure such diligent prosecution.
(F) Reinstatement following dismissal. For good cause shown and
within a reasonable time the court may set aside a dismissal without
prejudice. A dismissal with prejudice may be set aside by the court for
the grounds and in accordance with the provisions of Rule 60(B).

 

1
The trial court in Zavodnik also sua sponte dismissed, on the same grounds, another complaint involving
two other defendants.

Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015 Page 5 of 9
Thus, “when a trial court has involuntarily dismissed a case without prejudice

pursuant to Trial Rule 41(E), subsection (F) of that rule ascribes to the

dismissing trial court the discretion to consider whether a complaint should be

reinstated.” Zavodnik v. Richards, 984 N.E.2d at 703.

[15] In holding that the plaintiff’s only remedy was to obtain reinstatement of his

first complaint under its original cause number, we explained:

We [] presume that the Indiana Supreme Court, in drafting Trial Rule
41, did not intend to place a nullity in the rule by adding subsection
(F)’s explicit procedure for how to go about reinstatement of a
complaint dismissed without prejudice. Zavodnik’s position, that such
complaints can be re-filed in a different court without following the
reinstatement procedure, would render that provision meaningless. By
re-filing complaints before Judge Dreyer that were substantially
similar, if not identical, to complaints that Judge Oakes had already
dismissed, Zavodnik was improperly attempting to circumvent Judge
Oakes’s authority and discretion to decide whether Zavodnik had good
cause to reinstate his original complaint(s). Judge Dreyer apparently
recognized this and acted properly in dismissing the re-filed
complaints, which dismissal served the interests of fairness to litigants,
judicial comity, and judicial efficiency.
Id. On rehearing, we reiterated, “if Zavodnik is unsuccessful in having his

original complaints reinstated, he may not circumvent that ruling by filing

entirely new complaints raising identical legal and factual issues as the original

complaints.” Zavodnik v. Richards, 988 N.E.2d at 807-08.

[16] In this appeal, the Bank makes no attempt to distinguish Zavodnik and, in fact,

does not even cite the case. The Bank, rather, relies on two arguments in an

attempt to avoid the clear mandate of Zavodnik: (1) the First Foreclosure Action

Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015 Page 6 of 9
and the Second Foreclosure Action are not the same because they seek different

relief and (2) the Grants waived their T.R. 41 argument.

[17] Before addressing these arguments, we observe one key difference between this

case and Zavodnik. The latter was dismissed without prejudice, while the

present was dismissed with prejudice.2 In Zavodnik, we reached the T.R. 41(F)

analysis only after observing that the T.R. 41(E) dismissal without prejudice had

no res judicata effect. The same cannot be said for a dismissal with prejudice,

such as in the case at hand. See Afolabi v. Atl. Mortgage & Inv. Corp.,

849 N.E.2d 1170

, 1173 (Ind. Ct. App. 2006) (“a dismissal with prejudice is conclusive of the

rights of the parties and is res judicata as to any questions that might have been

litigated”).

[18] In any case, however, we must address the Bank’s assertion that the two actions

are not the same. Citing Afolabi, the Bank argues that the Grants’ obligations

under the note and mortgage were ongoing and any subsequent default created

a new and independent right to initiate foreclosure. The Bank continues, “[t]he

Second Action seeks relief for defaults that could not have been contemplated

by the First Action because the Second Action sought to recover amounts based

2
T.R. 41(B) provides in relevant part as follows: “Unless the court in its order for dismissal otherwise
specifies, a dismissal under this subdivision or subdivision (E) of this rule…operates as an adjudication upon
the merits.” In this case, because Judge Reid did not otherwise specify, the dismissal of the First Foreclosure
Action was with prejudice.

Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015 Page 7 of 9
on defaults that had accrued only after the dismissal of the First Action.”

Appellant’s Brief at 13.

[19] The Bank’s argument ignores the undisputed fact that the Grants’ personal

liability under the note and mortgage had been discharged in bankruptcy.

Accordingly, the relief sought in both foreclosure actions was precisely the same

and the First Foreclosure Action fully contemplated nonpayment due to the

bankruptcy. A review of the respective complaints, in fact, reveals that they

were based on the same alleged default. Cf. Afolabi v. Atl. Mortgage & Inv. Corp.,

849 N.E.2d at 1175 (“the facts necessary to establish a default in the first

foreclosure action are different from the facts necessary to establish a default in

the second foreclosure action”); Deutsche Bank Nat’l Trust Co. v. Harris,

985 N.E.2d 804

, 816 (Ind. Ct. App. 2013) (“subsequent and separate alleged

defaults under the note create a new and independent right in the mortgagee to

accelerate payment on the note in a subsequent foreclosure action”).

Unsatisfied with Judge Reid’s refusal to reinstate the First Foreclosure Action

and apparently unwilling to appeal that ruling, the Bank chose to re-institute the

exact same claim in a new lawsuit. This was improper.

[20] Finally, we turn to the Bank’s claim that the Grants have waived their T.R. 41

argument. From the beginning of this cause, the Grants have insisted (on

various grounds) that the Bank could not refile a new lawsuit to avoid dismissal

of the First Foreclosure Action. This issue was litigated on res judicata grounds

as a result of the Grants’ T.R. 12(b)(6) motion to dismiss filed in 2010. The

Grants raised the issue again in 2013 in response to the Bank’s summary

Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015 Page 8 of 9
judgment motion, invoking T.R. 12(b)(8) and T.R. 41(F). At the summary

judgment hearing, the issue was once again litigated and the trial court

expressly requested that the Bank file a written response to the Grants’

arguments. In its written opposition to the motion to dismiss, the Bank

addressed the merits of the T.R. 41 issue and did not argue waiver. On the

record before us, we find the Bank’s belated waiver argument disingenuous and

without merit.3

[21] The Bank improperly attempted to circumvent Judge Reid’s T.R. 41 ruling by

filing an entirely new complaint raising identical legal and factual issues. This

violated both T.R. 41 and principles of res judicata. Accordingly, the trial court

erred when it granted summary judgment in favor of the Bank. The trial court

is directed on remand to vacate the grant of summary judgment and dismiss the

Bank’s complaint.

[22] Judgment reversed and cause remanded with instructions.

Kirsch, J., and Crone, J. concur.

3
In support of its waiver argument, the Bank relies on a number of cases applying Indiana Appellate Rule
46(C), which provides that no new issues shall be raised in a reply brief. This rule applies to appellate briefs
and, of course, has no applicability to trial court filings. We are perplexed by the Bank’s reliance on these
cases with respect the Grants’ summary judgment filings.

Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015 Page 9 of 9

View original: From the court   |   Our backup

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Mbazira v. Ocwen (In re Mbazira) the United States Bankruptcy Court for the District of Massachusetts | The homeowner got a house stripped of MERS-originated loans because of the defects in the way it was RECORDED!

Mbazira v. Ocwen (In re Mbazira) the United States Bankruptcy Court for the District of Massachusetts | The homeowner got a house stripped of MERS-originated loans because of the defects in the way it was RECORDED!

This goes to the core of what Dave Krieger teaches at his workshops!

IN RE MBAZIRA
Bankruptcy No. 13-16586-WCH. Adversary No. 14-1055.

518 B.R. 11 (2014)

In re Safina N. MBAZIRA, Debtor. Safina N. Mbazira, Plaintiff, v. Ocwen Loan Servicing, LLC, U.S. Bank N.A., as Trustee of the J.P. Morgan Mortgage Acquisition Corp. 2005-FRE1 Asset Backed Pass-Through Certificates, Series 2005-FRE1, and JPMorgan Chase & Co., Defendants.

United States Bankruptcy Court, D. Massachusetts, Eastern Division.

Signed September 11, 2014.

Kate P. Foley, Christine E. Devine, Mirick, O’Connell, DeMallie & Lougee, LLP, Westborough, MA, for the U.S. National Bank.

David G. Baker, Law Office of David G. Baker, Boston, MA, for the Debtor.

MEMORANDUM OF DECISION

WILLIAM C. HILLMAN, Bankruptcy Judge.

I. INTRODUCTION

The matter before the Court is the “Motion of the Defendant, U.S. National Bank Association[1], to Dismiss Count I of Debtor’s Complaint” (the “Motion to Dismiss”) filed by U.S. National Bank Association (“U.S. Bank”), the “Objection to Motion of U.S. Bank to Dismiss” (the “Objection”) filed by Safina Mbazira (the “Debtor”), and the “Motion by Defendant [U.S. Bank] for Certification of State Law Question to Massachusetts Supreme Judicial Court” (the “Motion to Certify Question”) filed by U.S. Bank. The question presented, as described by the Motion to Certify Question, is
[518 B.R. 14]

Whether a mortgage encumbering registered land, whose certificate of acknowledgement mistakenly omits the mortgagor’s name, but which mortgage was accepted by the Land Court for registration and is noted on the certificate of title of such registered land, provides constructive notice.2

Put another way, the parties seek a determination whether In re Giroux3 and In re Bower,4 which both held that such a defect rendered a mortgage recorded in the registry of deeds incapable of providing constructive notice, applies to an equally defective instrument registered in the Massachusetts Land Court and noted on the certificate of title. For the reasons set forth below, I will deny the Motion to Dismiss and the Motion to Certify Question.

II. BACKGROUND

For the purposes of a motion to dismiss, I must assume the truth of all well-pleaded facts set forth in the complaint.5 In any event, the facts are not in dispute and the parties agree that the Motion to Dismiss presents a pure question of law.

The Debtor is the sole owner of real property located at 977 Trapelo Road in Waltham, Massachusetts (the “Property”).6 The purchase of the Property was financed through Fremont Investment & Loan (“Fremont”) on July 25, 2005.7 As part of that transaction, the Debtor executed two promissory notes in favor of Fremont in the original principal amounts of $528,000.00 (the “First Note”) and $132,000.00 (the “Second Note”) and granted a first and second mortgage to Mortgage Electronic Registration Systems, Inc. (“MERS”), as nominee for Fremont, to secure the respective obligations under the notes (the “First Mortgage” and the “Second Mortgage,” respectively).8 On July 26, 2005, the deed transferring the Property to the Debtor was registered in the Middlesex South Registry District of the Land Court (the “Land Court”) and noted on certificate of title No. 234510 (the “Certificate of Title”), as were both the First Mortgage and Second Mortgage.9 On July 23, 2008, an assignment of the First Mortgage dated June 20, 2008, purporting to assign the First Mortgage from MERS to U.S. Bank as trustee, was registered in the Land Court and noted on the Certificate of Title (the “Assignment”).10

The Debtor filed her Chapter 11 petition on November 12, 2013. On “Schedule A — Real Property” (“Schedule A”), the Debtor listed a fee simple interest in the Property which she valued at $576,400.00, subject to secured claims in the amount of $770,182.60. On “Schedule C — Property Claimed As Exempt” (“Schedule C”), the Debtor claimed an exemption in the Property in the amount of $500,000.00 pursuant to Mass. Gen. Laws ch. 188, § 3.

[518 B.R. 15]

On February 25, 2014, the Debtor commenced the present adversary proceeding, seeking, inter alia, a determination that the First Mortgage is invalid pursuant to 11 U.S.C. § 506(d) and thus preserved for the benefit of the estate pursuant to 11 U.S.C. § 551. As grounds therefor, the Debtor alleged that the certificate of acknowledgement (the “Acknowledgement”) affixed to the First Mortgage was materially defective because it failed to identify the Debtor as the person who executed the First Mortgage. The Acknowledgement, which was attached to the Motion to Dismiss, reads as follows:
Commonwealth of Massachusetts, County ss: On this 25th day of July, before me, the undersigned notary public, personally appeared proved to me through satisfactory identification, which was/were [illegible], to be the person(s) whose name(s) is/are signed on the preceding document, and acknowledged to me that he/she/they signed it voluntarily for its stated purpose /s/ Patricia J. Stokes-Ramos Patricia J. Stokes-Ramos Notary Public Commonwealth of Massachusetts My Commission Expires June 20, 200811
The blank space between “personally appeared” and “proved to me” is where the notary should have inserted the Debtor’s name. I further note that the Acknowledgement does not indicate the year in which it was executed.

After several extensions to file an answer, U.S. Bank instead filed the Motion to Certify Question on May 23, 2014, asserting that “the notice provided by a mortgage containing a purportedly defective acknowledgement noted on the certificate of title of registered land appears to be an issue of first impression,” making certification to the Supreme Judicial Court of Massachusetts appropriate.12 Reasoning that consideration of the Motion to Certify Question was premature in the absence of an answer, I continued it generally and ordered U.S. Bank to file a responsive pleading. On June 3, 2014, U.S. Bank filed the Motion to Dismiss accompanied by a supporting memorandum. The Debtor filed the Objection on July 5, 2014. I heard the Motion to Dismiss on July 9, 2014, and, at the conclusion of oral arguments, took the matter under advisement. I have since consolidated my consideration of the Motion to Dismiss with the Motion to Certify Question.

III. POSITIONS OF THE PARTIES

A. U.S. Bank

U.S Bank asserts that the Debtor cannot prevail on her complaint because she cannot establish that the First Mortgage fails to give constructive notice. While U.S. Bank concedes that the nature of the defect in the Acknowledgement is the same as it was in In re Giroux and In re Bower, it nonetheless contends that the registered land system is governed by a
[518 B.R. 16]

distinct set of statutory provisions and principles that mandate a different result. Indeed, U.S. Bank notes that the analyses of both of those decisions was informed by reference to Mass. Gen. Laws ch. 183, §§ 4, 29, and 30, which do not apply to the registered land system.

U.S. Bank begins from the premise that the Massachusetts registered land system is designed to promote certainty of title and, unlike recorded land, has gone through an adjudication process to quiet title. This alone, it posits, suggests a very different result. Moreover, U.S. Bank asserts that pursuant to Mass. Gen. Laws ch. 185, §§ 46, 57, and 58, the act of registration of an instrument affecting registered land itself operates as constructive notice to third parties. Also, it states that pursuant to Mass. Gen. Laws ch. 185, § 67, a mortgage takes effect upon registration. Furthermore, relying on Doyle v. Commonwealth,13 U.S. Bank argues that certificates of title are “`conclusive as to all matters contained therein.'”14 U.S. Bank thus urges that a bona fide purchaser need only look at the certificate of title and would therefore be charged with constructive notice of the First Mortgage.

B. The Debtor

The Debtor asserts that the First Mortgage is unperfected in light of the material defect contained within the Acknowledgement, allowing her to avoid it pursuant to 11 U.S.C. §§ 544(a)(3) and 1107 as a bona fide purchaser regardless of actual knowledge. She argues that the distinction between registered land and recorded land makes no difference in this context and In re Giroux and In re Bower should control. The Debtor relies on Mass. Gen. Laws ch. 185, § 58 for the proposition that the provisions of law relative to recorded land also apply to registered land. As such, she contends registration is simply a procedure and cannot essentially repair a material defect. Although the Debtor concedes there is no Massachusetts case law on the subject, she cites In re Goheen15 as a case having a substantially similar fact pattern where the Chapter 13 trustee was able to avoid an unperfected mortgage noted on the certificate of title in Ohio.

IV. DISCUSSION

A. The Rule 12(b)(6) Standard

Pursuant to Fed.R.Civ.P. 12(b)(6), made applicable in adversary proceedings by Bankruptcy Rule 7012(b), a court must dismiss a complaint if it fails to state a claim upon which relief can be granted.16 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'”17 “In deciding a motion to dismiss, however, a court is not always limited to the facts alleged in the plaintiff’s complaint.”18 To the contrary,

[518 B.R. 17]

[i]n cases where “a complaint’s factual allegations are expressly linked to — and admittedly dependent upon — a document (the authenticity of which is not challenged), that document effectively merges into the pleadings and the trial court can review it in deciding a motion to dismiss under Rule 12(b)(6).”19

The Debtor does not contest the authenticity of the Acknowledgement attached to the Motion to Dismiss and agrees that it may be considered at this stage.

B. In re Giroux and In re Bower

To inform the present dispute, a brief discussion of In re Giroux and In re Bower is warranted. In In re Giroux, Judge Feeney of this district considered whether the failure to list the mortgagor’s name in a mortgage acknowledgement was a material defect that should have prevented the mortgage from having been accepted for recordation under Mass. Gen. Laws ch. 183, § 29.20 That section provides in relevant part:

No deed shall be recorded unless a certificate of its acknowledgment or of the proof of its due execution, made as hereinafter provided, is endorsed upon or annexed to it, and such certificate shall be recorded at length with the deed to which it relates …21

Recognizing there were no Massachusetts decisions directly on point, Judge Feeney relied on McOuatt v. McOuatt,22 a case in which the Supreme Judicial Court explained:

[O]rdinarily an acknowledgment is not an essential part of a deed; but if it is desired to record the deed in order to charge the world with notice of the conveyance, then it is necessary that the deed be acknowledged and that a certificate reciting this fact be attached to the deed. Doubtless, that is the principal function of a certificate of acknowledgment.23

She found that the Supreme Judicial Court signaled its adherence to the requirement of expressly stating that the execution of an instrument is the grantor’s free act or deed by holding:

[T]here is no finding that McOuatt, after he signed the deed, ever said a word to the one who made out the certificate of acknowledgment. On the other hand, there is an express finding that he did not say anything indicating that he acknowledged the instrument as his free act and deed. The master has set forth all the subsidiary findings relative to this matter of acknowledgment. We are unable to discover anything in his report that would justify a conclusion that McOuatt acknowledged the instrument of conveyance to be his free act and deed. The only conclusion that can be reached from the report is that the deed was not duly acknowledged as required by the statute.24

In light of this authority, Judge Feeney reasoned that Massachusetts requires strict formality in the execution of mortgage acknowledgements, rendering the omission of the debtor’s name from the acknowledgement a patent and material
[518 B.R. 18]

defect.25

In the absence of such strict formality, Judge Feeney looked to Graves v. Graves26 to determine the consequences of the mortgage’s improvident recordation.27 In that case, the Supreme Judicial Court held that an

instrument of defeasance, not being acknowledged, was improvidently admitted to registration, and the record does not operate as constructive notice of the execution of the assignment of the equity of redemption, as against an attaching creditor of the equity; and therefore the title of the attaching creditor, though subsequent in time, takes precedence of the assignment.28

She also quoted Dole v. Thurlow29 where the Supreme Judicial Court similarly held:

[I]t appears to us, that the revised statutes do not alter the law in this respect. By the former St. of 1783, c. 37, and the decisions under it, the law was, that by the execution and delivery of a deed, the estate passed, as between grantor and grantee, and the grantee became seized. But to give it full effect, as against purchasers and creditors of the grantor, recording was necessary; and as a prerequisite to recording, acknowledgment, or proof by one or more subscribing witnesses, was necessary. Actual recording, without one of there prerequisites, would not give effect to the deed.30

With these cases in mind, Judge Feeney predicted that the Supreme Judicial Court would conclude that a mortgage containing a materially defective acknowledgement, though recorded, would not give constructive notice to a bona fide purchaser.31 Accordingly, she held that the Chapter 7 trustee, having the rights and powers of a bona fide purchaser under 11 U.S.C. § 544(a)(3) without regard to his actual knowledge, could avoid the mortgage.32

On appeal, the United States District Court for the District of Massachusetts affirmed, agreeing that because Massachusetts is a strict formality state, the Supreme Judicial Court would likely hold that the omission of the mortgagor’s name from the acknowledgement was not a purposeless formality.33 Approximately one year later, I was faced with the same question in In re Bower and reached the same conclusion as Judge Feeney in In re Giroux.34

C. Registered Land

In Massachusetts, real property may be either registered or unregistered, which is also referred to as recorded.35 Most real property in Massachusetts is unregistered land and is conveyed by the delivery of a deed.36 Even without recording
[518 B.R. 19]

the deed in the appropriate registry, the transfer of unregistered land is valid as between the parties, their heirs, devisees, and other persons with actual notice of the deed.37 If, however, the deed “is recorded in the registry of deeds for the county or district in which the land to which it relates lies,” third parties are then said to have constructive notice of the deed’s existence.38

In contrast, “[r]egistered land is not recorded in the same manner as other real estate, but is governed by Massachusetts statutes codifying a version of what is commonly referred to as a `Torrens System’ for the registration of land titles.”39 The land registration system was enacted in 1898,40 “to provide a means by which the title to land may be readily and reliably ascertained.”41 “The intent of the statute was to simplify land transfer and to provide bona fide purchasers with conclusiveness of title.”42 To this end, “[r]egistered land has gone through an adjudication process in order to quiet title, and `the Commonwealth guarantees and insures the title to land that is registered.'”43

Upon entry of the judgment of registration, a certified copy of the judgment is sent to the register of deeds so the judgment, including all encumbrances, can be transcribed in a registration book, creating an original certificate of title.44 Once a certificate of title is issued, “every subsequent purchaser of registered land taking a certificate of title for value and in good faith, shall hold the same free from all encumbrances except those noted on the certificate” with the exception of certain encumbrances specified by statute such as taxes, federal tax liens, betterment assessments, and leases for a term not exceeding seven years.45 As such, it is generally said that “a person examining a certificate of title in the land registry is entitled to the conclusion that the property is not encumbered by anything that does not show on the certificate.”46

The Supreme Judicial Court has recognized two exceptions to the general rule that subsequent purchasers take free from all encumbrances except those noted on the certificate. The first exception is straightforward — a purchaser takes subject to an unregistered interest, such as an easement or restriction, if the purchaser
[518 B.R. 20]

had actual knowledge of the unregistered interest.47 The second exception, which is more nuanced, applies when “there were facts described on [the] certificate of title which would prompt a reasonable purchaser to investigate further other certificates of title, documents, or plans in the registration system.”48 This exception has been applied in cases where a registration decree and certificate of title contained a general reference to rights granted by a recorded subdivision plan or deed, reasoning that even without specificity, a purchaser has notice of the unregistered interest and would investigate further.49

Once land is registered, an owner “may convey, mortgage, lease, charge or otherwise deal with it as fully as if it had not been registered,” and “may use forms of deeds, mortgages, leases or other voluntary instruments, like those now in use, sufficient in law for the purpose intended.”50 Notably, however, these instruments, with few exceptions not relevant here, will not “take effect as a conveyance or bind the land, but shall operate only as a contract between the parties, and as evidence of authority to the recorder or assistant recorder to make registration.”51 Indeed, “[t]he act of registration only shall be the operative act to convey or affect the land.”52 If an owner desires to convey registered land, the owner must execute a deed of conveyance which either the grantor or grantee must present to the assistant recorder, who will then make out a new certificate of title to the grantee and stamp the grantor’s surrendered certificate of title “canceled.”53

Similarly, Mass. Gen. Laws ch. 185, § 67, which applies to registering mortgages, provides:

The owner of registered land may mortgage it by executing a mortgage deed. Such deed may be assigned, extended, discharged, released in whole or in part, or otherwise dealt with by the mortgagee by any form of deed or instrument sufficient in law for the purpose. But such mortgage deed, and all instruments which assign, extend, discharge and otherwise deal with the mortgage, shall be registered, and shall take effect upon the title only from the time of registration.54

Registration of a mortgage or other encumbrance, however, does not trigger a
[518 B.R. 21]

new adjudication of the status of title. Instead, “the assistant recorder shall enter upon the certificate of title a memorandum of the purport of the mortgage deed, the time of filing and the file number of the deed, and shall sign the memorandum.”55 Only when there is a question or dispute as to the proper memorandum to be made in pursuance of an instrument does the assistant recorder refer the matter to the Land Court for a full hearing.56

Unlike the recorded land system, there is no express requirement in the statutory provisions governing registered land that a deed must be acknowledged as a prerequisite to registration.57 Indeed, Chapter 185 only expressly mandates three documents be acknowledged: (1) a power of attorney for any person procuring land for another; (2) a revocation of such a power of attorney; and (3) a written instrument withdrawing land from the registration system.58 Nevertheless, Mass. Gen. Laws ch. 185, § 58, which is titled “Notice of registering, filing or entering,” provides:

Every conveyance, lien, attachment, order, decree, instrument or entry affecting registered land, which would under other provisions of law, if recorded, filed or entered in the registry of deeds, affect the land to which it relates, shall, if registered, filed or entered in the office of the assistant recorder of the district where the land to which such instrument relates lies, be notice to all persons from the time of such registering, filing or entering.59

Although this section is somewhat awkwardly phrased, it essentially states that an instrument that would legally affect land if recorded in the registry of deeds will provide notice to all persons if registered.60 Thus, Mass. Gen. Laws ch. 185, § 58 incorporates the filing standards for recorded land, including Mass. Gen. Laws ch. 183, §§ 29 and 30, into the land registration system as the condition for the act of registration to be notice to third parties.61

[518 B.R. 22]

D. Avoidance of Unperfected Interest Pursuant to 11 U.S.C. § 544(a)(3)

Pursuant to 11 U.S.C. § 544(a)(3), a trustee is vested with the rights of a hypothetical bona fide purchaser of real property “without regard to the knowledge of the trustee or of any creditor.”62 These rights are defined by reference to state law.63 Section 1107(a) of the Bankruptcy Code grants these same rights to a Chapter 11 debtor in possession.64 Accordingly, whether the Debtor may avoid the First Mortgage depends solely on whether the Debtor had constructive notice.

In the present case, the Acknowledgement omits the Debtor’s name, as well as the year from the date. In In re Bower, I agreed with Judge Feeney’s conclusion in In re Giroux that the Supreme Judicial Court would hold that an acknowledgement that does not state the name of the mortgagor is materially defective.65 Therefore, I find that the Acknowledgement is materially defective.

I do not understand U.S. Bank to dispute the material defectiveness of the Acknowledgement — they do not address need to or requirements for acknowledgement at all — but instead urge that the land registration system is so different from the recorded land system that a different result is warranted. Essentially, U.S. Bank posits that under a plain reading of Mass. Gen. Laws ch. 185, §§ 46, 57, and 58, all parties are charged with constructive notice of any encumbrances noted on the certificate of title of registered land. Therefore, U.S. Bank reasons, the Debtor has constructive notice of the First Mortgage because it appears on the Certificate of Title. Ultimately, this argument is flawed for several reasons.

As I noted above, U.S. Bank reads Mass. Gen. Laws ch. 185, § 58 wholly out of context.66 It does not provide that every registered instrument provides notice to all persons, but only those “which would under other provisions of law, if recorded, filed or entered in the registry of deeds, affect the land to which it relates.”67 Because a mortgage with a defective acknowledgement should not be accepted for recordation under Mass. Gen. Laws ch. 183, § 29, and, under the common law, does not give constructive notice if it is improvidently recorded, the registration of the First Mortgage does not, as a matter of law, provide notice to third parties under Mass. Gen. Laws ch. 185, § 58. In this way, unacknowledged instruments are treated the same in both the registered and unregistered (recorded) land systems.

[518 B.R. 23]

The fact that the First Mortgage appears on the Certificate of Title does not change this result. While Mass. Gen. Laws ch. 185, § 46 provides that a “purchaser of registered land taking a certificate of title for value and in good faith, shall hold the same free from all encumbrances except those noted on the certificate,”68 that must be read in conjunction with Mass. Gen. Laws ch. 185, § 58 which governs when a registered instrument is notice to third parties.69 The Supreme Judicial Court has recognized that “applicable rules of statutory construction require courts to `construe statutes that relate to the same subject matter as a harmonious whole and avoid absurd results.'”70 It would be absurd if, on one hand, the statute precluded the First Mortgage from giving notice of itself on account of its defective acknowledgement, but, on the other, treated its notation on the Certificate as notice to all parties. I concede, however, that this issue ultimately may be so abstract and esoteric that it could only exist as a practical matter in an avoidance action under 11 U.S.C. § 544(a)(3) where a Trustee or debtor in possession may cast off the burden of actual notice and adopt the persona of a bona fide purchaser who, by definition, lacks actual notice.

This result is also consonant with the purpose of the registered land system and time honored principles of Massachusetts law. While it is often said that “[t]he purpose of land registration is to provide a means by which the title to land may be readily and reliably ascertained,”71 the Supreme Judicial Court has also stated that “[i]t is clear from the history of the Torrens system that the underlying purpose of title registration is to protect the transferee of a registered title.”72 Indeed, registration protects bona fide purchasers from unregistered interests, unless they have actual notice or the certificate of title contains facts that would prompt a further investigation of the registration system.73 Moreover, a contrary ruling would effectively mean that registered mortgages do not require an acknowledgement, the very proof that the mortgagor validly executed the encumbrance appearing on the certificate. Such a practice would hardly make “the title to land … readily and reliably ascertained.”74

In sum, because the First Mortgage cannot give constructive notice of itself, the Debtor has stated a plausible claim for relief and dismissal is unwarranted.75
[518 B.R. 24]

Moreover, as resolution of the issue was apparent from the statutory text, certification to the Supreme Judicial Court is unnecessary.

V. CONCLUSION

In light of the foregoing, I will enter an order denying the Motion to Dismiss and the Motion to Certify Question.

FootNotes

1. As Trustee relating to J.P. Morgan Mortgage Acquisition Corp. 2005-FRE1 Asset Backed Pass-Through Certificates, Series 2005-FRE1.
2. Motion to Certify Question, Docket No. 22 at 2.
3. Agin v. Mortg. Elec. Registration Sys. (In re Giroux), No. 08-14708, 2009 WL 1458173 (Bankr.D.Mass. May 21, 2009) aff’d Mortg. Elec. Registration Sys. v. Agin, No. 09-CV-10988, 2009 WL 3834002 (D.Mass. Nov. 17, 2009).
4. Agin v. Mortg. Elec. Registration Sys. (In re Bower), 10-10993-WCH, 2010 WL 4023396 (Bankr.D.Mass. Oct. 13, 2010)
5. See Banco Santander de Puerto Rico v. Lopez-Stubbe (In re Colonial Mortg. Bankers Corp.), 324 F.3d 12, 15 (1st Cir.2003).
6. Complaint, Docket No. 1 at ¶ 12.
7. Id. at ¶ 13.
8. Id. at ¶¶ 18-19, 28.
9. Id. at ¶¶ 12, 17, 28.
10. Id. at ¶ 20.
11. Exhibit B, Docket No. 31.
12. Motion to Certify Question, Docket No. 22 at ¶ 3 (emphasis in original).
13. Doyle v. Commonwealth, 444 Mass. 686, 830 N.E.2d 1074 (2005).
14. Id. at 690-691, 830 N.E.2d 1074 (quoting Mass. Gen. Laws ch. 185, § 54).
15. Burks v. Deutche Bank Nat’l Trust Co. (In re Goheen), 490 B.R. 730, 741 (Bankr. S.D.Ohio 2012) aff’d, 10-16427, 2012 WL 2709802 (S.D.Ohio Jul. 6, 2012).
16. See Hunnicutt v. Green (In re Green), BAP MB 13-061, 2014 WL 3953470, at *5 (1st Cir. BAP Aug. 6, 2014).
17. Ashcroft v. Iqbal, 556 U.S. 662, 678-79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Alantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).
18. Rederford v. U.S. Airways, Inc., 586 F.Supp.2d 47, 50 (D.R.I.2008).
19. Machado v. Sanjurjo, 559 F.Supp.2d 167, 171-172 (D.P.R.2008) (quoting Beddall v. State St. Bank and Trust Co., 137 F.3d 12, 17 (1st Cir.1998)).
20. In re Giroux, 2009 WL 1458173, at *8.
21. Mass. Gen. Laws ch. 183, § 29.
22. McOuatt v. McOuatt, 320 Mass. 410, 414, 69 N.E.2d 806 (1946).
23. McOuatt v. McOuatt, 320 Mass. at 413-14, 69 N.E.2d 806,
24. Id. at 414, 69 N.E.2d 806.
25. In re Giroux, 2009 WL 1458173, at *8.
26. Graves v. Graves, 72 Mass. 391 (1856).
27. In re Giroux, 2009 WL 1458173, at *10.
28. Graves v. Graves, 72 Mass. at 392-393.
29. Dole v. Thurlow, 53 Mass. 157, 1846 WL 4099 (1846).
30. In re Giroux, 2009 WL 1458173, at *10 (quoting Dole v. Thurlow, 53 Mass. 157, 1846 WL 4099 at *4 (citations omitted)) (emphasis in original).
31. Id.
32. Id.
33. Mortg. Elec. Registration Sys., Inc. v. Agin, 2009 WL 3834002, at *2.
34. In re Bower, 2010 WL 4023396, at *5-6.
35. Bailey v. Wells Fargo Bank (In re Bailey), 468 B.R. 464, 477 n. 19 (Bankr.D.Mass.2012)
36. Id.
37. See Mass. Gen. Laws ch. 183, § 4.
38. Id.
39. In re Bailey, 468 B.R. at 477 n. 19 (citing The Torrens System, 25 Law. & Banker. Cent. L.J. 226 (1932)). See Kozdras v. Land/ Vest Properties, Inc., 382 Mass. 34, 43, 413 N.E.2d 1105 (1980); McQuesten v. Commonwealth, 198 Mass. 172, 177, 83 N.E. 1037 (1908).
40. Mass. Gen. Laws ch. 185, as inserted by St. 1898, c. 562, § 2. See Killam v. March, 316 Mass. 646, 648, 55 N.E.2d 945 (1944).
41. State St. Bank & Trust Co. v. Beale, 353 Mass. 103, 107, 227 N.E.2d 924 (1967).
42. Kozdras v. Land/Vest Properties, Inc., 382 Mass. at 43, 413 N.E.2d 1105. See Feinzig v. Ficksman, 42 Mass.App.Ct. 113, 116, 674 N.E.2d 1329 (1997) (“The purpose of the statute (G.L. c. 185) that establishes the Land Court and the land title registration system is to provide a method for making titles to land certain, indefeasible, and readily ascertainable.”).
43. In re Bailey, 468 B.R. at 478 n. 19 (quoting 28 Mass. Prac., Real Estate Law § 22.1). See Mass. Gen. Laws ch. 185, §§ 26-45 (provisions relative to the original registration of land), 101 (grounds for recovery from assurance fund).
44. Mass. Gen. Laws ch. 185, §§ 48, 49.
45. Mass. Gen. Laws ch. 185, § 46.
46. Feinzig v. Ficksman, 42 Mass.App.Ct. at 116, 674 N.E.2d 1329.
47. See, e.g., Jackson v. Knott, 418 Mass. 704, 711, 640 N.E.2d 109 (1994); Killam v. March, 316 Mass. at 651, 55 N.E.2d 945.
48. Jackson v. Knott, 418 Mass. at 711, 640 N.E.2d 109.
49. See Myers v. Salin, 13 Mass.App.Ct. 127, 136-37, 431 N.E.2d 233 (1982) (finding that where the servient certificate of title contained a general reference to the existence of easements and an explicit reference to deeds containing beach rights and a right of way, the requirements of Mass. Gen. Laws ch. 185, §§ 46 and 47 were satisfied); Clark v. Plauche, 09 MISC 406438 KFS, 2013 WL 5969042 (Mass.Land Ct. Nov. 7, 2013) (finding that a precise reference to a recorded deed and plan on a certificate of title put certificate holder on notice of rights granted under the deed); but see Jackson v. Knott, 418 Mass. at 712, 640 N.E.2d 109 (while certificate holders were required to review the subdivision plan referred to in their certificates of title, as well as the certificates of other lot holders in the subdivision, none of those documents would have put them on notice as to what parties were granted use of a right of way).
50. Mass. Gen. Laws ch. 185, § 57.
51. Id.
52. Id. See Malaguti v. Rosen, 262 Mass. 555, 567, 160 N.E. 532 (1928) (“Registration is the act which passes title and is the act of the court.”).
53. Mass. Gen. Laws ch. 185, § 64.
54. Mass. Gen. Laws ch. 185, § 67.
55. Mass. Gen. Laws ch. 185, § 68.
56. Mass. Gen. Laws ch. 185, § 60.
57. See Mass. Gen. Laws ch. 183, § 29.
58. See Mass. Gen. Laws ch. 185, §§ 52, 110.
59. Mass. Gen. Laws ch. 185, § 58 (emphasis added).
60. In U.S. Bank’s memorandum of law in support of the Motion to Dismiss, U.S. Bank purportedly quotes Mass. Gen. Laws ch. 185, § 58 as follows:
Every conveyance, lien, attachment, order, decree, instrument or entry affecting registered land … shall, if registered, filed or entered in the office of the assistant recorder of the district where the land to which such instrument relates lies, be notice to all persons from the time of such registering, filing or entering.
Memorandum in Support of [Motion to Dismiss], Docket No. 31 at 6-7. As is apparent, U.S. Bank omits all references to the recordation of the instrument in the registry of deeds, thus suggesting that all registered instruments give notice to all persons. While I concede the language is somewhat difficult to parse, U.S. Bank’s interpretation is wholly unsupportable as it simply strikes all language that interferes with its preferred reading. Worse, presenting it as a quotation is palpably misleading. U.S. Bank’s counsel would be well advised to exercise more care while quoting in the future.
61. This is consistent with the Land Court’s application of the acknowledgement requirement of Mass. Gen. Laws ch. 183, § 29 to the land registration system notwithstanding its clear statutory reference to instruments being “recorded.” See Petrozzi v. Peninsula Council, Inc., 07 MISC. 349279 GHP, 2011 WL 1459694, at *16 (Mass.Land Ct. Apr. 14, 2011) (holding that “[i]t is true that if the [instrument purporting to impose restrictions on various parcels] was to have been accepted for registration, and to be noted on the Certificate, it required some manner of acknowledgment edgment compliant with G.L. c. 183, § 30.”); Zona v. Zona, 22902-S-2005-06-001, 2008 WL 97425, at *3-6 (Mass.Land Ct. Jan. 9, 2008) (holding that a deed that was registered but not acknowledged by the grantor pursuant to Mass. Gen. Laws ch. 183, §§ 29 and 30 was defective); see also Commonwealth of Massachusetts Land Court Guidelines on Registered Land, 1 (Rev. Feb. 27, 2009), http:// www.mass.gov/courts/docs/courts-and-judges/ courts/land-court/guidelines-registered-land. pdf (requiring that deeds, including mortgage deeds, must be acknowledged in accordance with Mass. Gen. Laws ch. 183, § 29).
62. 11 U.S.C. § 544(a)(3).
63. See In re Giroux, 2009 WL 1458173, at *10 (citing Gray v. Burke (In re Coletta Bros. of North Quincy, Inc.), 172 B.R. 159, 162 (Bankr.D.Mass. 1994). See also Butner v. United States, 440 U.S. 48, 99 S.Ct. 914, 59 L.Ed.2d 136 (1979)); Stern v. Continental Assurance Co. (In re Ryan), 851 F.2d 502 (1st Cir.1988).
64. 11 U.S.C. § 1107(a).
65. In re Bower, 2010 WL 4023396, at *4.
66. See n. 60, supra.
67. Mass. Gen. Laws ch. 185, § 58.
68. Mass. Gen. Laws ch. 185, § 46.
69. U.S. Bank’s reliance on the Certificate as being “conclusive to all matters contained therein,” is actually a reference to Mass. Gen. Laws ch. 185, § 54, which states the evidentiary effect of the original and certified copies of a certificate of title. It is, in any event, expressly subject to the proviso: “except as otherwise provided in this chapter.” Mass. Gen. Laws ch. 185, § 54.
70. Connors v. Annino, 460 Mass. 790, 796, 955 N.E.2d 905 (2011) (quoting Canton v. Commissioner of the Mass. Highway Dep’t, 455 Mass. 783, 791-792, 919 N.E.2d 1278 (2010)).
71. State St. Bank & Trust Co. v. Beale, 353 Mass. at 107, 227 N.E.2d 924.
72. Kozdras v. Land/Vest Properties, Inc., 382 Mass. at 44, 413 N.E.2d 1105.
73. Jackson v. Knott, 418 Mass. at 711, 640 N.E.2d 109.
74. State St. Bank & Trust Co. v. Beale, 353 Mass. at 107, 227 N.E.2d 924 (emphasis added).
75. In fact, because the salient facts are not in dispute, the Debtor has done more than demonstrate a plausible claim — she has proven it. The Court cannot, however, enter judgment on the pleadings sua sponte. See Fed.R.Civ.P. 12(c), made applicable to adversary proceedings by Fed.R.Bank. P. 7012(b)

 

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The Foreclosure Hour 4/5/2015: The most important question now before the entire foreclosure defense and securitized trust banking communities in the past fifteen years

The Foreclosure Hour 4/5/2015: The most important question now before the entire foreclosure defense and securitized trust banking communities in the past fifteen years

This Sunday on the  The Foreclosure Hour, Gary Dubin will address the most important question now before the entire foreclosure defense and securitized trust banking communities in the past fifteen years:

Will The California Supreme Court Restore The Evidentiary Due Process Rights Of American Homeowners, Finally Opening Up For Judicial Inspection The Underground Securitized Trust Banking System in the United States, When It Decides The Glaski, Yvanova, Keshtgar And Mendoza Appeals Pending Before It?

Wall Street sneaked up on the American legal system more than a decade ago.

We were simply not prepared for the conversion of the traditional mortgage into a securitized mortgage and eventually into a digitized mortgage, and for all of the fraudulent low visibility abuses that ensued.

In recent years, American homeowners have had to battle against robo-signers, forged loan documents, the myth of their merely wanting a free house, false attorney affirmations, whistle blowers self-servingly winning big damage awards but only for themselves, and taxpayer indirectly-funded multi-billion dollar government settlements yielding virtually nothing for them the victims of that fraud, while being dishonestly offered entry into a loan modification hell of further dishonest procedures designed to pacify and wear them out, without even one major bank executive being criminally prosecuted in the United States.

With one enlightened opinion, the California Supreme Court could now instantly effectively change all of this, but will it and in what alternative ways?

That will be the subject of this Sunday’s live radio broadcast.

While many individual judges scattered throughout the United States have created pockets of sanity in the American judiciary, protecting some homeowners against securitized trust abuses, none have gone as far as the California Supreme Court can in the four appeals now before it.

The forthcoming decision of the California Supreme Court could well signal the resurrection of the American Homeowner throughout this Nation’s Courts and eventually virtually every mortgage loan in the United States.

Tune in Live below:

EVERY SUNDAY

3:00 PM HAWAII 

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ON KHVH-AM

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http://www.foreclosurehour.com/april-5–2015.html

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Bank of America at center stage in U.S. top court bankruptcy case

Bank of America at center stage in U.S. top court bankruptcy case

Yahoo-

As the U.S. Supreme Court on Wednesday considered the case of a Massachusetts homeowner battling his mortgage lender over a bankruptcy plan, several justices focused their attention on his unlikely ally: Bank of America Corp.

Bank of America, one of the largest U.S. banks, filed a friend-of-the-court brief in support of Louis Bullard, who owes community bank Blue Hills Bancorp Inc $387,000 for the mortgage on a property in the town of Randolph.

During a one-hour oral argument on the technical issue of whether Bullard can appeal a bankruptcy judge’s rejection of his proposed bankruptcy plan, some justices wondered why Bank of America, as a major creditor, would support a debtor.

[YAHOO]

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William Black: HSBC Violates its Sweetheart Deal and Lynch Praises It

William Black: HSBC Violates its Sweetheart Deal and Lynch Praises It

New Economic Perspective-

HSBC got a sweetheart deal from the Obama administration. It laundered vast amounts of money for Mexico’s murderous Sinaloa cartel, helped bust sanctions for terrorists and mass murderers, and did not cooperate with the investigation. The U.S. Attorney in charge of the case, Loretta Lynch, refused to prosecute any of the HSBC bankers or even sue them individually. Instead, there was a pathetic non-prosecution agreement limited to HSBC. Lynch is accused of not contacting either of the primary whistleblowers in the case. The failure to contact one of the whistleblowers has already blown up in Lynch’s face as it became public a few months ago that the governments of the U.S. and Europe were provided many years ago with data on HSBC’s Swiss affiliate that show it was helping terrorists, genocidal leaders, the most violent drug gangs, and tens of thousands of wealthy people evade taxes. Lynch failed to bring that case or use any of the invaluable data provided by the whistleblower who copied the files from the Swiss bank.

Now comes word that, like Standard Chartered, HSBC is failing to abide even by the pathetic sweetheart deal Lynch gifted HSBC’s criminal managers with. In the case of Standard Chartered, NY authorities came down on Standard Chartered with at least one foot on the neck. Lynch is made of considerably less stern stuff. She failed even to do the most obvious move of extending the agreement with HSBC. The New York Times tells the tale in DealBook’s trademark incoherent fashion.

[NEW ECONOMIC PERSPECTIVE]

With all this regulatory capture, I can only think of Rhianna’s latest song. “Bitch better have my money”…”pay me what you owe me”!

Note: E*plicit lyrics.

 

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Family Makes Their Mortgage Payments But Gets Foreclosed On Anyway

Family Makes Their Mortgage Payments But Gets Foreclosed On Anyway

According to court documents, the loan servicer says this is not the first time they’ve had to deal with similar situations. It’s a problem that happens time-and-time again from many loan servicers. Seterus certainly isn’t the only loan servicer that has to fix mistakes that have harmed good customers.

 

HuffPO-

How ridiculous would it be if you made all your mortgage payments in full and on time for years and your mortgage lender foreclosed on you anyway? Surely that could never happen. Unfortunately, that’s exactly what happened to Henry and Elizabeth Manfrediz, a lovely married couple with four kids and a cute dog, who live in Florida.

Henry and Elizabeth took out their mortgage in 2008 with JP Morgan Chase, who later transferred the loan to Fannie Mae, as often happens with many lenders who originate mortgages to sell them on.

In this case, the loan servicers for Chase and Fannie Mae appear to have so totally botched the handling of the mortgage that this family has incurred legal fees and other charges, like having to pay for a lender initiated homeowner’s insurance policy they never needed. The only thing they did wrong was make their mortgage payments on-time, every single month, and continue to do so even today.

[HUFFINGTONPOST]

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Wall Street + Washington revolving door is more dangerous than ever: Nomi Prins

Wall Street + Washington revolving door is more dangerous than ever: Nomi Prins

Yahoo-

What are the consequences of regulators leaving government work to join the financial services industry, and vice versa?  Nomi Prins, a Senior Fellow at D?mos, chronicles the problems of the revolving door between Washington and Wall Street in her latest book “All the Presidents’ Bankers.”

“The difference is that now people know each other less in their personal lives before they make those transitions,” she says. “Now it’s a little more like ‘I know you from the industry of Wall Street and Washington’ as opposed to ‘We hung out and our dads smoked cigars together.’”

[YAHOO]

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