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HUD’s Proposal to Terminate FHA Insurance Policies  Could Terminate the FHA Program

HUD’s Proposal to Terminate FHA Insurance Policies Could Terminate the FHA Program

K&L Gates-

U.S. Consumer Financial Services Alert
By Krista Cooley, Kathryn Baugher

If there is anything that galls servicers of government-insured loans, it is the forfeiture or curtailment of all accrued interest from mortgage insurance claims resulting from the failure to foreclose fast enough within artificially created state time lines. At first glance, the U.S. Department of Housing and Urban Development (“HUD” or the “Department”) listened to the complaints of servicers who argued that they should not be penalized for pursuing foreclosure avoidance options or experiencing delays in the legal system beyond their control. HUD’s proposed regulation regarding changes to the Federal Housing Administration’s (“FHA”) single-family mortgage insurance claim filing process includes proposals that pro rate the curtailment of interest based on actual delays caused by the servicer, proposing to eliminate the complete forfeiture of accrued interest for only one day of delay. So far, so good, but HUD did not stop there. HUD also proposed the complete extinguishment of an FHA insurance policy if the servicer does not complete foreclosure within a new set of artificial time lines. Read together, HUD’s reform is to provide servicers with more accrued interest if they do not foreclose fast enough, unless, of course, HUD invalidates the whole insurance policy—the loss of both principal and interest—by virtue of HUD’s subjective definition of unreasonable delays. Few servicers think that is progress.

This proposal raises significant questions and concerns for FHA mortgagees that hold and service FHA-insured loans, many of which could have a chilling effect on FHA lending and servicing activities if HUD were to implement the proposed claim filing deadline as proposed and without significant changes to HUD’s claim filing guidelines and procedures.

Below, we briefly summarize the proposed regulatory changes and discuss some of the key concerns and questions raised by the Department’s proposed regulation, with a focus on the issues raised by the proposed claim filing deadline. We note that HUD proposed a very similar regulatory change almost 25 years ago that would have terminated the FHA insurance contract based on conveyance delays related to property damage and/or title issues. Based on strong objections from mortgagees, HUD reconsidered its proposal and determined that insurance termination on such grounds would be “unnecessarily harsh.”1 Instead, the Department determined that it could protect the Mutual Mortgage Insurance Fund (“Insurance Fund”) through less drastic measures, such as curtailment of interest and costs. Hopefully, upon consideration of the concerns raised by this proposal, HUD will again conclude that unilateral termination of an FHA insurance policy based on delays that often are outside of a mortgagee’s control continues to be a draconian penalty that could negatively impact mortgagees’ participation in the FHA program and, ultimately, the access to housing opportunities for those borrowers served by the FHA program.

[K&L GATES]

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Miami mortgage lawsuits vs BofA, Citigroup, Wells Fargo are revived

Miami mortgage lawsuits vs BofA, Citigroup, Wells Fargo are revived

Reuters-

A federal appeals court on Tuesday revived three lawsuits in which the City of Miami accused Wells Fargo & Co, Bank of America Corp and Citigroup Inc of predatory mortgage lending to black and Hispanic borrowers.

By a 3-0 vote, the 11th U.S. Circuit Court of Appeals said a lower court erred in dismissing the city’s claims under the federal Fair Housing Act, over what Miami called a decade of lending discrimination in its residential housing market.

“It is clear that the harm the city claims to have suffered has a sufficiently close connection to the conduct the statute prohibits,” Circuit Judge Stanley Marcus wrote.

U.S. cities including Baltimore, Chicago, Cleveland, Los Angeles and Memphis have with mixed success accused banks of biased mortgage lending that prolonged the nation’s housing crisis.

[REUTERS]

image: pubcit.typepad.com

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CMFG Life Insurance Co. vs RBS SECURITIES, INC. | 7th Cir. – CUNA’s claims against RBS sound in fraud rather than contract they are not time-barred | REVERSED

CMFG Life Insurance Co. vs RBS SECURITIES, INC. | 7th Cir. – CUNA’s claims against RBS sound in fraud rather than contract they are not time-barred | REVERSED

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 14-2904

CMFG LIFE INSURANCE CO.,
CUMIS INSURANCE SOCIETY, INC., and
MEMBERS LIFE INSURANCE CO.,
Plaintiffs-Appellants,

v.

RBS SECURITIES, INC.,
Defendant-Appellee.
____________________

Between 2004 and 2007, CUNA
Mutual, an insurance company, purchased fifteen residential
mortgage-backed securities from RBS Securities, Inc. Then
the housing market crashed, and the securities with it.
CUNA now wants out of the deals. CUNA alleges that RBS
induced it to purchase the securities by materially misrepresenting
that the underlying mortgages complied with underwriting
guidelines. The district court granted summary
judgment on all but one of CUNA’s rescission claims, and
CUNA appealed. We reverse in part and affirm in part.

[..]

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Housing Tax Reform and Foreclosure Rates

Housing Tax Reform and Foreclosure Rates

 

Richard Dusansky

University of Texas at Austin

 

Firas Zebian

Independent

August 20, 2015

Journal of Real Estate Finance and Economics, Vol. 51, No. 3, 2015

Abstract:

Since the housing market collapse of 2008 and the ensuing economic recession were amplified by rising foreclosure rates, we study the potential impact of housing taxation reform on foreclosures. Two ways in which housing receives preferential treatment are the tax deductibility of mortgage interest payments and the non-recognition of imputed rents. We employ a recursive equilibrium model in which heterogeneous agents make housing tenure choices and in which mortgage default occurs in equilibrium. We calibrate the model and use the calibration results to quantify the effects of reforming these parts of the tax regime. We find that elimination of the mortgage interest tax deduction reduces the foreclosure rate by 12.4 percent. Alternatively, taxing imputed rents would reduce it by 32.5 percent.
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A Cost-Benefit Analysis of Judicial Foreclosure Delay and a Preliminary Look at New Mortgage Servicing Rules

A Cost-Benefit Analysis of Judicial Foreclosure Delay and a Preliminary Look at New Mortgage Servicing Rules

 

Lawrence R. Cordell

Federal Reserve Banks – Federal Reserve Bank of Philadelphia

 

Lauren Lambie-Hanson

Federal Reserve Bank of Philadelphia

2015-03-23

FRB of Philadelphia Working Paper No. FEDPWP15-14

Abstract:

Since the start of the financial crisis, we have seen an extraordinary lengthening of foreclosure timelines, particularly in states that require judicial review to complete a foreclosure but also recently in nonjudicial states. Our analysis synthesizes findings from several lines of research, updates results, and presents new analysis to examine the costs and benefits of judicial foreclosure review. Consistent with previous studies, we find that judicial review imposes large costs with few, if any, offsetting benefits. We also provide early analysis of the new mortgage servicing rules enacted by the Consumer Financial Protection Bureau (CFPB) and find that these rules are contributing to even longer timelines, especially in nonjudicial states.

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Proof of Ongoing Foreclosure Fraud and Mortgage Document Fabrication, in Five Emails

Proof of Ongoing Foreclosure Fraud and Mortgage Document Fabrication, in Five Emails

Naked Capitalism-

Five years ago this month, GMAC became the first mortgage servicer to announce that they would suspend foreclosure operations, due to irregularities in their document preparation. Within a few weeks every major mortgage servicer in America followed suit. This is usually called the robo-signing scandal, but to be more precise we gave it the name foreclosure fraud. It ended with the five leading servicers, including GMAC, signing the $25 billion National Mortgage Settlement.

Except it didn’t end, and this past week I was handed inconvertible proof of that fact. The scenario is so fantastical that if I didn’t have a working knowledge of foreclosure fraud I wouldn’t have believed it. But it appears to be very real.

Bill Paatalo is a former cop who worked in the mortgage industry as a loan officer and, from 2002-2008, the President of Wissota Mortgage in the Midwest. Since 2009, after experiencing his own mortgage trouble through a loan with Washington Mutual, he became a licensed private investigator specializing in securitization and chain of title analysis. He testifies as an expert witness, working with foreclosure defense attorneys and pro se litigants.

[NAKED CAPITALISM]

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Federal Deposit Insurance Corporation v. U.S. Bank NA | breaches of two securitization trusts totaling more than $248 million

Federal Deposit Insurance Corporation v. U.S. Bank NA | breaches of two securitization trusts totaling more than $248 million

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

FEDERAL DEPOSIT INSURANCE CORPORATION
AS RECEIVER FOR GUARANTY BANK
Plaintiff,

-against-

U.S. BANK NATIONAL ASSOCIATION,
Defendant

NATURE OF ACTION

1. This is an action for damages against US Bank for its breaches of contractual and
statutory duties under the governing agreements, the New York Streit Act, N.Y. Real Property
Law § 124, et seq. (the “Streit Act”), and under the federal Trust Indenture Act of 1939 (the
“TIA”), 15 U.S.C. § 77aaa, et seq.1 as Trustee for two securitization trusts, Harborview
Mortgage Loan Trust, Pass-Through Certificates, Series 2005-8 (“HVMLT 2005-8”) and
Harborview Mortgage Loan Trust, Pass-Through Certificates, Series 2005-16 (“HVMLT
2005-16”) ( collectively the “Covered Trusts”), which issued residential mortgage-backed
securities (“RMBS”) purchased by investors, including Guaranty Bank (“Guaranty”).

2. This action seeks to hold US Bank accountable for abdicating its fundamental
duties as the trustee to certificateholders such as Plaintiff. Under the agreements governing the
Covered Trusts, US Bank accepted virtually all of the powers designed to protect the
certificateholders and was compensated for that role. US Bank was essentially Plaintiff’s sole
source of protection against breaches of the governing agreements by the other parties to those
agreements, including the sponsor that sold the loans to the Covered Trusts and the servicer
tasked with servicing the mortgage loans. US Bank, however, shirked its duty to exercise its
powers to protect Plaintiff and instead attempted to shorn itself of the responsibilities that
trusteeship imports. While US Bank stood idly for years, the sponsor kept defective mortgage
loans in the Covered Trusts, the servicer reaped excessive fees for servicing the defaulted loans
from the Covered Trusts, and Plaintiff was left to suffer enormous losses.

3. The Covered Trusts were created to facilitate RMBS transactions sold to
investors in 2005. Both of the RMBS transactions were sponsored by Greenwich Capital
Financial Products, Inc. (referred to herein as the “Sponsor”), and contained loans originated
by Countrywide Home Loans, Inc. (“Countrywide” or the “Originator”).

4. Prior to its failure, Guaranty purchased the RMBS certificates at issue in this
action with a purchase price of over $248 million (the “Certificates”)

[…]

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Federal Deposit Insurance Corp v. Citibank | lost more than $200 million when selling $420 million of the Guaranty securities (SAMI 2007- AR6)

Federal Deposit Insurance Corp v. Citibank | lost more than $200 million when selling $420 million of the Guaranty securities (SAMI 2007- AR6)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

FEDERAL DEPOSIT INSURANCE CORPORATION
AS RECEIVER FOR GUARANTY BANK
Plaintiff,

-against-

CITIBANK N.A.,
Defendant

NATURE OF ACTION

1. This is an action for damages against Citibank for its breaches of contractual and
statutory duties under the governing agreements, the New York Streit Act, N.Y. Real Property
Law § 124, et seq. (the “Streit Act”), and under the federal Trust Indenture Act of 1939 (the
“TIA”), 15 U.S.C. § 77aaa, et seq.1 as Trustee for Structured Asset Mortgage Investments II
Trust 2007-AR6 Mortgage Pass-Through Certificates (“SAMI 2007-AR6” or the “Covered
Trust”) securitization trust, which issued residential mortgage-back securities (“RMBS”)
purchased by investors, including Guaranty Bank (“Guaranty”).

2. This action seeks to hold Citibank accountable for abdicating its fundamental
duties as the trustee for certificateholders such as Plaintiff. Under the agreements governing the
Covered Trust, Citibank accepted virtually all of the powers designed to protect the
certificateholders and was compensated for that role. Citibank was essentially Plaintiff’s sole
source of protection against breaches of the governing agreements by the other parties to those
agreements, including the sponsor that sold the loans to the Covered Trust and the servicers
tasked with servicing the mortgage loans. Citibank, however, shirked its duty to exercise its
powers to protect Plaintiff and instead attempted to shorn itself of the responsibilities that
trusteeship imports. While Citibank stood idly for years, the sponsor kept defective mortgage
loans in the Covered Trust, servicers reaped excessive fees for servicing the defaulted loans from
the Covered Trust, and Plaintiff was left to suffer enormous losses.

3. The Covered Trust was sponsored by EMC Mortgage Corporation (“EMC” or
the “Sponsor”) and backed by loans originated by American Home Mortgage Corp.
(“AHM” or the “Originator”).

4. Prior to its failure, Guaranty purchased the RMBS certificate SAMI 2007-
AR6 1A2 with an original face value of $420,046,000 (the “Certificate”)
[…]

 

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FDIC vs THE BANK OF NEW YORK MELLON | BNY breached its duties as trustee of 12 RMBS trusts that issued approximately $2 billion in certificates

FDIC vs THE BANK OF NEW YORK MELLON | BNY breached its duties as trustee of 12 RMBS trusts that issued approximately $2 billion in certificates

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

FEDERAL DEPOSIT INSURANCE CORPORATION AS RECEIVER FOR GUARANTY BANK
Plaintiff,

-against-

THE BANK OF NEW YORK MELLON,
Defendant.

NATURE OF ACTION

1. This is an action for damages against BNY Mellon for its breaches of contractual and statutory duties under the governing agreements, the New York Streit Act, N.Y. Real Property Law § 124, et seq. (the “Streit Act”), and under the federal Trust Indenture Act of 1939 (the “TIA”), 15 U.S.C. § 77aaa, et seq.1 as Trustee for 12 securitization trusts (the “Covered Trusts”), identified below, which issued residential mortgage-backed securities (“RMBS”) purchased by investors, including Guaranty Bank (“Guaranty”).

2. This action seeks to hold BNY Mellon accountable for abdicating its fundamental duties as the trustee to certificateholders such as Plaintiff. Under the agreements governing the Covered Trusts, BNY Mellon accepted virtually all of the powers designed to protect the certificateholders and was compensated for that role. BNY Mellon was essentially Plaintiff’s sole source of protection against breaches of the governing agreements by the other parties to those agreements, including the sponsors that sold the loans to the Covered Trusts and the servicers tasked with servicing the mortgage loans. BNY Mellon, however, shirked its duty to exercise its powers to protect Plaintiff and instead attempted to shorn itself of the responsibilities that trusteeship imports. While BNY Mellon stood idly for years, the sponsors kept defective mortgage loans in the Covered Trusts, servicers reaped excessive fees for servicing the defaulted loans from the Covered Trusts, and Plaintiff was left to suffer enormous losses.

3. The Covered Trusts were created to facilitate RMBS transactions sold to investors from 2005 to 2006. Eight of the RMBS transactions were sponsored by Countrywide Home Loans, Inc. (the “Countrywide Trusts”), and four were sponsored by EMC Mortgage Corporation (the “EMC Trusts”) (EMC Mortgage Corporation and Countrywide Home Loans, Inc., are referred to as “Countrywide” and “EMC” respectively, or collectively as the “Sponsors”).

[…]

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Shipmates hope to save terminally-ill sailor’s home from foreclosure

Shipmates hope to save terminally-ill sailor’s home from foreclosure

WAVY TV –

Hundreds of volunteers are rallying around a former Norfolk sailor who has been unable to sell his Chesapeake home.

Petty Officer Nick Salter worked at Naval Station Norfolk for six years before he was reassigned in New Mexico. He was diagnosed with skin cancer eight years ago. In 2014, the cancer spread to his brain, and more recently his health has weakened.

The Salter family put their Lambert Trail home on the market in April. Since then, they’ve had no offers because of the home’s poor condition.

[WAVY-TV]

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Bernie Sanders: “The business model of Wall Street is fraud.”

Bernie Sanders: “The business model of Wall Street is fraud.”

August 30, 2015 – ( CNN ) – Bernie Sanders FULL State of the Union Interview with Jake Tapper

 

 

 

.

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PHOENIX FUNDING, LLC v. AURORA LOAN , MERS | NM: Court of Appeals – QUIET TITLE, Neither the unindorsed note, nor the MERS assignment of mortgage is sufficient to establish Aurora as the holder of the Note

PHOENIX FUNDING, LLC v. AURORA LOAN , MERS | NM: Court of Appeals – QUIET TITLE, Neither the unindorsed note, nor the MERS assignment of mortgage is sufficient to establish Aurora as the holder of the Note

 

Phoenix Funding, LLC, Plaintiff-Appellant,
v.
AURORA LOAN SERVICES, LLC, and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendants-Appellees.

No. 33,211.
Court of Appeals of New Mexico.
Filed August 24, 2015.
William F. Davis & Associates, P.C. William F. Davis, Nephi D. Hardman, Albuquerque, NM, for Appellant.

Cavin & Ingram, P.A. Stephen D. Ingram, Albuquerque, NM, for Appellees.

OPINION

ZAMORA, Judge.

{1} Appellant Phoenix Funding, LLC (Phoenix) appeals from the district court’s order granting summary judgment in favor of Appellees Aurora Loan Services, LLC (Aurora) and Mortgage Electronic Registration Systems, Inc. (MERS) (collectively Aurora). Phoenix filed suit to quiet title, challenging the validity of a default foreclosure judgment entered against its predecessor in interest, Kirsten Hood (Hood). The district court determined that Phoenix’s suit constituted an improper collateral attack on the original judgment and that Phoenix’s claims were barred by res judicata. We hold that a collateral attack on the original judgment by Phoenix was proper, and thus, res judicata does not operate to bar Phoenix’s claims. We reverse and remand for further proceedings.

I. BACKGROUND

{2} In December 2006, Hood signed a promissory note with GreenPoint Mortgage Funding, Inc. (GreenPoint Funding) to purchase her Santa Fe home. To secure the note, Hood signed a mortgage contract with MERS as the nominee for GreenPoint Funding, which pledged her home as collateral for the loan.

{3} In March 2009, Aurora filed a complaint in the First Judicial District Court seeking foreclosure on Hood’s home and claiming to be the holder of the note and mortgage with the right of enforcement. In October 2009, default judgment was entered against Hood. In November 2011 for “valuable consideration,” Hood executed a quitclaim deed transferring her interest in the property to Gregory Hutchins (Hutchins), the sole member of Phoenix. Hutchins borrowed the money to purchase the property and mortgaged his interest in the property to Phoenix. Hutchins defaulted and Phoenix filed suit to foreclose Hutchins’ interest in the property and to quiet title as to certain mortgage holders, including Aurora.

 

{4} Phoenix claimed that the Hood note and mortgage were never properly assigned to Aurora, and as a result, Aurora lacked standing to bring the original foreclosure action against Hood, therefore, the district court lacked subject matter jurisdiction over that action and its 2009 foreclosure judgment was void. Aurora moved for summary judgment claiming that Phoenix lacked standing to challenge that original foreclosure judgment, and that Phoenix’s claims constituted an improper collateral attack that were barred by res judicata. Phoenix also moved for summary judgment reiterating its claim that the original judgment against Hood was void based on lack of standing and subject matter jurisdiction. Phoenix also argued, for the first time, that the judgment was void because Aurora had fraudulently assigned the Hood mortgage to itself.

{5} The district court found that it had jurisdiction over the original foreclosure action, that Phoenix, as a party in privity with and/or a successor-in-interest to Hood, was bound by the original foreclosure judgment under the doctrine of res judicata, and as a result Phoenix was precluded from collaterally attacking the original foreclosure judgment. The district court granted summary judgment in favor of Aurora and concluded that Phoenix’s motion for summary judgment was moot.

II. DISCUSSION

{6} On appeal, Phoenix argues that the district court erred in granting summary judgment and in determining that its claims are barred by res judicata. Phoenix renews its argument that because Aurora lacked standing to bring the foreclosure action, that the district court therefore lacked jurisdiction to hear the case, and as a result, the original foreclosure judgment is void. Aurora contends that Phoenix lacks standing to challenge the original foreclosure judgment because it was not a party to the original foreclosure action and took its interest in the subject property after the foreclosure judgment was rendered. Aurora further argues that the grant of summary judgment was proper and that Phoenix’s claims are precluded under the doctrine of res judicata.

A. Summary Judgment Standard of Review

{7} “We review the district court’s decision to grant summary judgment de novo.” Hydro Res. Corp. v. Gray, 2007-NMSC-061, ¶ 14, 143 N.M. 142, 173 P.3d 749. Summary judgment is appropriate where the facts are undisputed, “and the movant is entitled to judgment as a matter of law.” Id. (internal quotation marks and citation omitted). Generally, New Mexico courts view summary judgment with disfavor. Romero v. Philip Morris Inc., 2010-NMSC-035, ¶ 8, 148 N.M. 713, 242 P.3d 280. We review the facts and make all reasonable inferences from the record in favor of the nonmoving party. T.H. McElvain Oil & Gas Ltd. P’ship v. Benson-Montin-Greer Drilling Corp., 2015-NMCA-004, ¶ 19, 340 P.3d 1277, cert. granted, 2014-NMCERT-012, 344 P.3d 988.

B. Under New Mexico Law Judgments Rendered by a Court Lacking Jurisdiction Are Void

{8} The New Mexico Supreme Court has distinguished between judgments rendered in error, judgments that can be set aside, and judgments rendered without authority which are null and void. State v. Patten, 1937-NMSC-034, ¶ 26, 41 N.M. 395, 69 P.2d 931 (“Where a court has jurisdiction, it has a right to decide every question which occurs in the cause . . . [b]ut if it act[s] without authority, its judgments and orders are regarded as nullities; they are not voidable, but simply void.” (internal quotation marks and citation omitted)). Judgments void for lack of jurisdiction have no legal effect. See In re Field’s Estate, 1936-NMSC-060, ¶ 11, 40 N.M. 423, 60 P.2d 945 (“There are three jurisdictional essentials necessary to the validity of every judgment, to wit, jurisdiction of parties, jurisdiction of the subject matter, and power or authority to decide the particular matters presented and the lack of either is fatal to the judgment[.]” (citations omitted)); see also Heckathorn v. Heckathorn, 1967-NMSC-017, ¶ 10, 77 N.M. 369, 423 P.2d 410 (same). Concerning void judgments, our Supreme Court has stated:

A judgment void upon its face and requiring only an inspection of the record to demonstrate its invalidity is a mere nullity, in legal effect no judgment at all, conferring no right and affording no justification. Nothing can be acquired or lost by it; it neither bestows nor extinguishes any right, and may be successfully assailed whenever it is offered as the foundation for the assertion of any claim or title. It neither binds nor bars anyone. All acts performed under it and all claims flowing out of it are void. The parties attempting to enforce it may be responsible as trespassers. The purchaser at a sale by virtue of its authority finds himself without title and without redress. No action upon the part of the plaintiff, no inaction upon the part of the defendant, no resulting equity in the hands of third persons, no power residing in any legislative or other department of the government, can invest it with any of the elements of power or of vitality. It does not terminate or discontinue the action in which it is entered, nor merge the cause of action; and it therefore cannot prevent the plaintiff from proceeding to obtain a valid judgment upon the same cause, either in the action in which the void judgment was entered or in some other action. The fact that the void judgment has been affirmed on review in an appellate court or an order or judgment renewing or reviving it entered adds nothing to its validity. Such a judgment has been characterized as a dead limb upon the judicial tree, which may be chopped off at any time, capable of bearing no fruit to plaintiff but constituting a constant menace to defendant.

Walls v. Erupcion Mining Co., 1931-NMSC-052, ¶ 6, 36 N.M. 15, 6 P.2d 1021 (internal quotation marks and citation omitted).

C. A Judgment’s Validity Can Be Challenged by a Successor in Interest in a Subsequent Action

{9} New Mexico courts characterize attacks on void judgments as either “direct” or “collateral.” Barela v. Lopez, 1966-NMSC-163, ¶¶ 4-5, 76 N.M. 632, 417 P.2d 441.

A direct attack . . . is an attempt to avoid or correct [the judgment] in some manner provided by law and in a proceeding instituted for that very purpose, in the same action and in the same court[. Whereas,] a collateral attack is an attempt to impeach the judgment by matters dehors the record, in an action other than that in which it was rendered; an attempt to avoid, defeat, or evade it, or deny its force and effect, in some incidental proceeding not provided by law for the express purpose of attacking it[.]

Id. ¶ 5 (internal quotation marks and citations omitted). “In other words, if the action or proceeding has an independent purpose and contemplates some other relief or result, although the overturning of the judgment may be important or even necessary to its success, then the attack upon the judgment is collateral.” Id. (internal quotation marks and citation omitted).

 

{10} Because a void judgment has no effect on the parties, or their respective interests, “[t]here is no time limitation on asserting that [a] judgment is void.” See Heckathorn, 1967-NMSC-017, ¶ 15. This is true when a judgment is challenged under Rule 1-060(B) NMRA. See Eaton v. Cooke, 1964-NMSC-137, ¶ 7, 74 N.M. 301, 393 P.2d 329 (“[W]here the judgment was void, [Rule 1-060(B)] does not purport to place any limitation of time.”). It is also true when a judgment is challenged in a subsequent action. See In re Estate of Baca, 1980-NMSC-135, ¶ 10, 95 N.M. 294, 621 P.2d 511 (stating that a void judgment is “subject to direct or collateral attack at any time”); Chavez v. Cnty. of Valencia, 1974-NMSC-035, ¶ 15, 86 N.M. 205, 521 P.2d 1154 (“An attack on subject matter jurisdiction may be made at any time in the proceedings. It may be made for the first time upon appeal. Or it may be made by a collateral attack in the same or other proceedings long after the judgment has been entered.” (citations omitted)).

{11} The general rule is that judgments may be challenged directly or challenged collaterally in a subsequent action, where the challenge is based on an asserted lack of jurisdiction. See Hanratty v. Middle Rio Grande Conservancy Dist., 1970-NMSC-157, ¶¶ 1-4, 82 N.M. 275, 480 P.2d 165 (deciding the merits of a collateral attack on a previously rendered default foreclosure judgment where the challenge was based on an asserted lack of jurisdiction and was presented in the context of a subsequent action to quiet title); Matlock v. Somerford, 1958-NMSC-093, ¶ 6, 64 N.M. 347, 328 P.2d 600 (same).

{12} This rule has been applied regardless of whether the challenge is based on an alleged lack of personal or subject matter jurisdiction. See Hubbard v. Howell, 1980-NMSC-015, ¶¶ 6-10, 94 N.M. 36, 607 P.2d 123 (reaching the merits of two collateral attacks on a previous judgment, where the attacks were based on the asserted lack of subject-matter and personal jurisdiction); Matlock, 1958-NMSC-093, ¶¶ 18-23, (examining the merits of a collateral attack involving an alleged lack of personal jurisdiction). This rule also seems to apply regardless of whether the party making the attack was a party to the original action or a successor in interest. See In re Estate of Baca, 1980-NMSC-135, ¶ 6 (stating that successors in interest challenged prior judgment in a quiet title action); Matlock, 1958-NMSC-093, ¶¶ 18-23 (successor in interest challenged prior default foreclosure judgment in a quiet title action).

{13} Our Supreme Court has also considered the merits of a collateral attack on a prior foreclosure judgment, made by a successor in interest in a subsequent action to quiet title, where the successor in interest acquired its interest after the original foreclosure judgment was entered. See Hanratty, 1970-NMSC-157, ¶¶ 1-2, 6; Matlock, 1958-NMSC-093, ¶¶ 18-23. And the Court has permitted default judgments to be challenged even where jurisdiction was not raised in the original action. See In Re Estate of Baca, 1980-NMSC-135, ¶¶ 3, 10; Hubbard, 1980-NMSC-015, ¶¶ 6-10; Matlock, 1958-NMSC-093, ¶¶ 18-23. We conclude that Phoenix, as a successor in interest, has standing to challenge the validity of the prior default foreclosure judgment.

D. Standing to Foreclose Implicates Subject Matter Jurisdiction

{14} Having established that judgments rendered by a court lacking subject matter jurisdiction are void, and that void judgments can be challenged by a successor in interest in a subsequent action to quiet title, we find the determinative question to be whether the default judgment in this case was rendered without subject matter jurisdiction. We first consider whether Aurora established its standing to foreclose, and if it did not, did Aurora’s lack of standing deprive the district court of subject matter jurisdiction.

1. Aurora Lacked Standing to Foreclose

{15} Whether a party has standing to bring a claim is a legal question we review de novo. Disabled Am. Veterans v. Lakeside Veterans Club, Inc., 2011-NMCA-099, ¶ 9, 150 N.M. 569, 263 P.3d 911. In order to establish standing to foreclose, plaintiffs must demonstrate that they had the right to enforce the note and the right to foreclose the mortgage at the time the foreclosure suit was filed. Bank of N.Y. v. Romero, 2014-NMSC-007, ¶ 17, 320 P.3d. 1. The right to enforce the mortgage arises from the right to enforce the note, so the determinative inquiry is whether the plaintiff has established that it had the right to enforce the note at the time it filed suit. Id. ¶ 35.

{16} Under New Mexico’s Uniform Commercial Code (UCC), a promissory note is a negotiable instrument, NMSA 1978, § 55-3-104(a), (b), (e) (1992), which can be enforced by (1) the holder of the instrument; (2) a holder who does not possess the instrument and has the rights of a holder; or (3) a person who does not possess the instrument, but is entitled to enforce it pursuant to certain provisions of the UCC. NMSA 1978, § 55-3-301 (1992); Romero, 2014-NMSC-007, ¶ 20 (same). The holder of the instrument is “the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.” NMSA 1978, § 55-1-201(b)(21)(A) (2005); Romero, 2014-NMSC-007, ¶ 21 (same). “Accordingly, a third party must prove both physical possession and the right to enforcement through either a proper indorsement or a transfer by negotiation.” Romero, 2014-NMSC-007, ¶ 21.

{17} In this case, the Hood note was payable to GreenPoint Funding, not Aurora. As a result, we must determine whether Aurora provided sufficient evidence of how it became a holder of the Hood note, either by indorsement or by a transfer. Id. In the Hood foreclosure, Aurora produced an unindorsed copy of the Hood note and a corporate assignment of mortgage assigning the Hood mortgage from MERS to Aurora. Neither the unindorsed note, nor the assignment of mortgage is sufficient to establish Aurora as the holder of the Hood note. See id. ¶¶ 23, 34-35 (stating that “[p]ossession of an unindorsed note made payable to a third party does not establish the right of enforcement, just as finding a lost check made payable to a particular party does not allow the finder to cash it” and that a plaintiff who has not established the right to enforce the note cannot foreclose the mortgage, even if evidence shows that the mortgage was assigned to the plaintiff, there being no legal authority allowing the assignment of a mortgage to carry with it the transfer of a note).

{18} In the subsequent quiet title action, Aurora introduced another copy of the Hood note that was indorsed in blank and attached to the affidavit of Alan Flanagan (Flanagan), an officer of Nationstar Mortgage, LLC (Nationstar). The affidavit stated that Nationstar was the successor in interest to Aurora, that Nationstar had custody and control of the business records concerning the Hood loan, and that according to those records Aurora maintained custody and possession of the Hood note from January 2009 through June 2012. Although this evidence creates a genuine issue of material fact, the undated indorsement is still insufficient to establish Aurora as the holder of the Hood note at the time its foreclosure against Hood was filed in March 2009.

{19} The affidavit of Flanagan, states that the Hood note was transferred to Nationstar “in or about June 2012,” thirty-nine months after the foreclosure complaint was filed in March 2009. The affidavit does not state that Flanagan had personal knowledge that the Hood note was transferred to Aurora prior to the filing of the foreclosure complaint. See Rule 11-602 NMRA (“A witness [or affiant] may testify to a matter only if evidence is introduced sufficient to support a finding that the witness has personal knowledge of the matter. Evidence to prove personal knowledge may consist of the witness’s own testimony.”). Flanagan’s only purported basis of knowledge regarding the transfer of the Hood note is his review of the “business records as they relate to the [l]oan.” However, no such business record itself was offered or admitted as a business records hearsay exception. See Rule 11-803(6) NMRA (naming this category of hearsay exceptions as “[r]ecords of a regularly conducted activity”); see also Romero, 2014-NMSC-007, ¶¶ 31-32 (holding that a witness’s testimony and a witness’s affidavit were insufficient to establish the transfer of the note because the witnesses lacked personal knowledge of the note’s transfer, and that a witness’s reliance on a review of the business records was also insufficient to establish the note’s transfer without a specific business record having been offered and admitted under the business records exception to the hearsay rule).

{20} The copy of the Hood note attached to the affidavit of Flanagan, differed from the note produced in the original foreclosure; it included an extra page with a blank indorsement. A blank indorsement “does not identify a person to whom the instrument is payable but instead makes it payable to anyone who holds it as bearer paper.” Id. ¶ 24; see NMSA 1978, § 55-3-205(b) (1992) (“If an indorsement is made by the holder of an instrument and it is not a special indorsement, it is a blank indorsement.” (internal quotation marks omitted)). “When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed.” Section 55-3-205(b). In other words, the bearer of a note indorsed in blank is ordinarily the holder of that note. See § 55-3-104(a)(1), (b), (e) (defining “negotiable instrument” as including a “note” made “payable to bearer or to order” (internal quotation marks omitted)); Section 55-3-301 (defining “[p]erson entitled to enforce” a negotiable instrument); see also Romero, 2014-NMSC-007, ¶ 26 (“[The] blank indorsement . . . established the [b]ank as a holder because the [b]ank [was] in possession of bearer paper[.]”). However, where an indorsed note is not produced until after the plaintiff has filed for foreclosure and the indorsement is undated, the indorsement is insufficient to show that the plaintiff was the holder of that note at the time the foreclosure complaint was filed. Deutsche Bank Nat’l Trust Co. v. Beneficial N.M. Inc., 2014-NMCA-090, ¶ 13, 335 P.3d 217, cert. granted sub nom. Deutsche Bank v. Johnston, 2014-NMCERT-008, 334 P.3d 425. We conclude that Aurora did not present the necessary evidence to establish it had standing to enforce the Hood note at the time its complaint was filed in March 2009. To be clear, we are not deciding whether Aurora was the holder of the Hood note when it initiated foreclosure proceedings against Hood. The issue before us is whether Aurora presented evidence sufficient to establish that it was the holder of the note at the time the complaint for foreclosure was filed and we determine that it did not.

2. Lack of Standing to Foreclose Deprived the District Court of Subject-Matter Jurisdiction

{21} Although foreclosure was historically considered an equitable remedy, in Romero, our Supreme Court also recognized it as a statutory cause of action under the provisions of the New Mexico UCC, making a lack of standing to foreclose on a note a jurisdictional defect.

The Bank of New York does not dispute that it was required to demonstrate under New Mexico’s Uniform Commercial Code (UCC) that it had standing to bring a foreclosure action at the time it filed suit. See . . . § 55-3-301 . . . (defining who is entitled to enforce a negotiable interest such as a note); see also . . . § 55-3-104(a), (b), (e) . . . (identifying a promissory note as a negotiable instrument); ACLU of N.M. v. City of Albuquerque, 2008-NMSC-045, ¶ 9 n.1, 144 N.M. 471, 188 P.3d 1222 (recognizing standing as a jurisdictional prerequisite for a statutory cause of action)[.]

Romero, 2014-NMSC-007, ¶ 17. In ACLU, the Court stated “[w]hen a statute creates a cause of action and designates who may sue, the issue of standing becomes interwoven with that of subject matter jurisdiction. Standing then becomes a jurisdictional prerequisite to an action.” 2008-NMSC-045, ¶ 9 n.1 (internal quotation marks and citation omitted). Reading Romero and ACLU together, we conclude that Aurora lacked standing to foreclose, thereby, depriving the district court of subject matter jurisdiction in March 2009.

{22} This is consistent with other New Mexico Supreme Court precedent. The Court addressed standing as a jurisdictional requirement in State ex rel. Overton v. New Mexico State Tax Commission, 1969-NMSC-140, 81 N.M. 28, 462 P.2d 613. In that case, the county assessor filed a declaratory judgment action against the state tax commission and the commissioners, questioning the constitutionality of the soldiers’ real and personal property exemption statute, and two veteran groups intervened. Id. ¶¶ 1, 5. In its answer, the tax commission argued that the assessor and the intervenors had no standing to sue and that their complaints presented no justiciable issue or controversy. Id. ¶ 6. “The [district] court concluded that it had jurisdiction and that an actual controversy existed.” Id. On appeal the parties did not raise the issues of standing or jurisdiction. Id. ¶ 8. Nonetheless, the Supreme Court raised the issue sua sponte, stating, “we cannot ignore jurisdictional questions.” Id.

 

{23} The Court concluded that the county assessor would not be personally injured or jeopardized by the challenged statute, and the intervenors—members of an unincorporated association made up of veteran taxpayers—were not similarly situated so as to allow action by non-legal entity association. Id. ¶¶ 10-14, 19-20. The Court also concluded that the assessor and intervenors did not have standing to bring the action and as a result, the district court lacked subject matter jurisdiction to decide the case. Id. ¶¶ 19-20. The Court explained that subject matter jurisdiction could not be conferred by consent of the parties and could not be waived. Id. ¶ 8. The Court further stated “[the absence of] jurisdiction over the parties or . . . the power or authority to decide the particular matter presented, . . . is . . . fatal to the judgment.” Id. The case was remanded for dismissal of the action. Id. ¶ 20.

{24} In the context of foreclosure, other jurisdictions have held that lack of standing creates a jurisdictional defect with respect to the district court’s authority to hear the particular case, not with respect to general subject matter jurisdiction, and that judgments rendered by a court lacking authority to hear the case are voidable, rather than null and void. See Nationstar Mortg., LLC v. Canale, 10 N.E.3d 229, ¶ 17 (“[A] plaintiff’s standing, though an element of justiciability, is not an element of the district court’s subject-matter jurisdiction. Again, the latter requires only a justiciable matter, which a foreclosure clearly is.” (internal quotation marks and citation omitted)); see also Bank of Am., N.A. v. Kuchta, 21 N.E.3d 1040, ¶ 22 (“Standing is certainly a jurisdictional requirement; a party’s lack of standing vitiates the party’s ability to invoke the jurisdiction of a court—even a court of competent subject-matter jurisdiction—over the party’s attempted action. But an inquiry into a party’s ability to invoke a court’s jurisdiction speaks to jurisdiction over a particular case, not subject-matter jurisdiction.” (emphasis added) (citations omitted)); Southwick v. Planning Bd. of Plymouth, 891 N.E.2d 239, 268 (Mass. Ct. App. 2008) (“[S]tanding is an issue of subject matter jurisdiction only in the sense that it is a criterion that must be met in order for the court to exercise jurisdiction, when the court otherwise is competent to decide the case. [A] subsequent showing that the plaintiff did not, in fact, have standing does not mean that the judgment is void and must be vacated; the judgment is immune from postjudgment attack unless the court’s exercise of jurisdiction constituted a clear usurpation of power.” (internal quotation marks and citations omitted)).

{25} This approach may be untenable under New Mexico law. Concerning the distinction between subject matter jurisdiction and a court’s power or authority to decide a particular case, our Supreme Court has stated:

Despite the well-settled character of the statement just quoted from Heckathorn and Field’s Estate, it is not easy to discern the difference between lack of subject-matter jurisdiction and lack of power or authority to decide the particular matter presented. The difference, if any, is not recognized in our Rules of Civil Procedure for the District Courts, which refer only to jurisdiction over the subject matter of the action and we know of no case in which this difference has been explained. Possibly it relates to Article VI, Section 13, of our Constitution, which confers upon the district court original jurisdiction in all matters and causes not excepted in this constitution, and also grants such jurisdiction of special cases and proceedings as may be conferred by law. Jurisdiction over the subject matter is commonly treated as a unitary topic, and at this stage in the development of the law one may doubt that the distinction serves any useful purpose.

Sundance Mech. & Util. Corp. v. Atlas, 1990-NMSC-031, ¶ 13, 109 N.M. 683, 789 P.2d 1250 (internal quotation marks and citations omitted).

{26} The present case calls into question whether there is a meaningful distinction between subject-matter jurisdiction and power or authority to decide the particular issue. However, the question has not been resolved. See Armstrong v. Csurilla, 1991-NMSC-081, ¶ 12, 112 N.M. 579, 817 P.2d 1221 (“We recently considered the topic of subject-matter jurisdiction in Sundance Mechanical & Utility Corp. . . . There we took note of our previous statement in, inter alia, Heckathorn, . . . that there are three aspects to jurisdiction: jurisdiction of the parties, jurisdiction of the subject matter, and power or authority to decide the particular matter presented. The plurality opinion questioned whether there is now any utility to the distinction between the second aspect, subject-matter jurisdiction, and the third, power or authority to decide the particular issue. But we did not resolve this question then and do not resolve it now.” (internal quotation marks and citations omitted)).

{27} Moreover, our Supreme Court has held that a judgment rendered by a court lacking authority to decide a particular case is void, not voidable. See Heckathorn, 1967-NMSC-017, ¶¶ 10-11. In that case, the Court considered a challenge to the validity of a divorce decree. Id. ¶ 1. The Court recognized the “three jurisdictional essentials necessary to the validity of every judgment: jurisdiction of parties, jurisdiction of subject matter and power or authority to decide the particular matter presented” and identified the issue in that case as one involving the third jurisdictional element; the district court’s “power or authority to grant the divorce.” Id. ¶ 10. Determining that the district court lacked the authority to grant the divorce because the wife had not been a resident of the state for the statutorily mandated period, the Court concluded that the divorce decree was null and void. Id. ¶ 11. Though there may not be a meaningful distinction between subject-matter jurisdiction and the authority to decide a particular case, Heckathorn suggests that the distinction may not be material for the purpose of determining a judgment’s validity; where a court is lacking either, the resulting judgment is null and void.

{28} We conclude that the original foreclosure judgment was subject to collateral attack by Phoenix, as Hood’s successor in interest; that Aurora lacked standing to bring the original foreclosure action against Hood thus, depriving the district court of subject matter jurisdiction; and as a result the judgment is void.

E. Res Judicata Does Not Bar Phoenix’s Claims

{29} Phoenix argues that the district court erred in determining that its claims were barred by res judicata. “Res judicata is designed to relieve parties of the cost and vexation of multiple lawsuits, conserve judicial resources, . . . prevent inconsistent decisions, and encourage reliance on adjudication.” Computer One, Inc. v. Grisham & Lawless P.A., 2008-NMSC-038, ¶ 31, 144 N.M. 424, 188 P.3d 1175 (alterations, internal quotation marks, and citation omitted). The “party asserting res judicata or claim preclusion must establish that (1) there was a final judgment in an earlier action, (2) the earlier judgment was on the merits, (3) the parties in the two suits are the same, and (4) the cause of action is the same in both suits.” Potter v. Pierce, 2015-NMSC-002, ¶ 10, 342 P.3d 54.

{30} In this case, the judgment in the Hood action on which the district court based its res judicata determination is void. A void judgment has no conclusive effect either as res judicata or as an estoppel, because the proceeding that culminated in the void judgment was itself without integrity. See Matsu v. Chavez, 1981-NMSC-113, ¶¶ 8, 9, 96 N.M. 775, 635 P.2d 584 (stating that a void judgment “has no legal effect[,]” and that a void judgment cannot serve as the basis of claim preclusion or collateral estoppel). Accordingly, the district court’s grant of summary judgment on the basis of res judicata cannot stand.

F. Unintended Consequences of Romero

{31} This case presents a unique scenario: Two years after the default foreclosure judgment was entered and the foreclosure sale was held, a third party—Phoenix—obtained an interest in the foreclosed property from Hutchins, its sole member and the defaulting borrower for “valuable consideration,” and sought to invalidate the original foreclosure judgment based on the original plaintiff’s lack of standing. Our decision here turns on standing and jurisdiction with respect to foreclosure actions as clarified by our Supreme Court recently in Romero. See 2014-NMSC-007, ¶¶ 15, 17-38. We are not convinced that the Supreme Court contemplated Romero being applied in circumstances such as those before us here. However, our decision here is based on Romero and other binding precedent. See Trujillo v. City of Albuquerque, 1998-NMSC-031, ¶ 33, 125 N.M. 721, 965 P.2d 305 (“Stare decisis is the judicial obligation to follow precedent, and it lies at the very core of the judicial process of interpreting and announcing law.”). Whether or not this result was contemplated in the deciding of Romero, it must be expressed by the Supreme Court.

G. Phoenix’s Fraud Claims

{32} Phoenix claims that the original foreclosure judgment is void as a result of fraud relating to the assignment of mortgage. Although Phoenix did not challenge the original judgment under Rule 1-060(B)(6), it now characterizes its fraud claims as part of an “independent action” under Rule 1-060, contending that the district court was entitled, in its discretion, to allow Phoenix to argue fraud “under the umbrella of [its] pending independent action for relief.”

{33} These arguments raise important questions about the bases and procedures for obtaining relief from judgments. A collateral attack, as defined by our Supreme Court, “is an attempt to impeach the judgment by matters dehors the record, in an action other than that in which it was rendered; an attempt to avoid, defeat, or evade it, or deny its force and effect, in some incidental proceeding not provided by law for the express purpose of attacking it[.]” Barela, 1966-NMSC-163, ¶ 5 (emphasis added) (internal quotation marks and citation omitted). “In other words, if the action or proceeding has an independent purpose and contemplates some other relief or result, although the overturning of the judgment may be important or even necessary to its success, then the attack upon the judgment is collateral.” Id. (internal quotation marks and citation omitted).

{34} In Barela, the Court held that a motion to vacate a judgment was a direct attack rather than a collateral attack, in part because the motion was authorized by Rule 1-060. This holding suggests that the remedies provided for by Rule 1-060 are considered as being “provided by law” for the purpose of distinguishing between direct and collateral attacks. Barela, 1966-NMSC-163, ¶¶ 5-6. In Apodaca v. Town of Tome Land Grant, plaintiffs sought equitable relief from a judgment as part of a subsequent action. 1971-NMSC-084, ¶ 2, 83 N.M. 55, 488 P.2d 105. With regard to characterizing direct and collateral attacks, the Court noted that “[t]he case law on this point as announced by this court does not appear to be entirely consistent in all respects[,]” but concluded that its recent cases, including Barela, suggested that “the present suit would fall within the definition of a collateral attack.” Apodaca, 1971-NMSC-084, ¶ 5.

{35} Then, in Chavez, the Court stated that “[a]n attack on subject matter jurisdiction may be made . . . by a collateral attack in the same or other proceedings long after the judgment has been entered[,]” and cited Rule 1-060, inter alia, implying that collateral attacks were among the remedies authorized by Rule 1-060, not a distinct remedy. Chavez, 1974-NMSC-035, ¶ 15. Relying on Chavez, this Court characterized a challenge brought as an independent action under Rule 1-060 as a collateral attack, and stated that, a “[c]ollateral attack might be effectuated under Rule [1-060(B)(4)].” Hort v. Gen. Elec. Co., 1978-NMCA-125, ¶ 5, 92 N.M. 359, 588 P.2d 560.

{36} With respect to granting relief from judgments, the Restatement offers some guidance. New Mexico decisions have not adopted every principle set forth in the most recent version of the Restatement, however, our precedent is consistent with the Restatement in many aspects and we continue to look to the Restatement for guidance regarding relief from judgments. See Alvarez v. Cnty. of Bernalillo, 1993-NMCA-034, ¶ 6, 115 N.M. 328, 850 P.2d 1031 (stating that “[a]lthough the Restatement[,] in the interest of clarity[,] avoids the terms void and voidable, it is persuasive authority in determining when a judgment is void under Rule [1-060(B)(4)]” (internal quotation marks and citation omitted)).

{37} The Restatement of Judgments recognizes that the traditional distinction between direct and collateral attacks on a judgment, which was used in the older remedial doctrine concerning relief from judgments, is no longer clear or useful in light of the evolution of merged procedure and the Rule 1-060(B) type of motion. Restatement (Second) of Judgments ch. 5, intro. note, at 138-39 (1982).

{38} The distinction between direct and collateral attacks can be based on whether the attack is made by motion or made in a subsequent action. Id. The distinction can also be based on whether nullification of the judgment is the primary or secondary object of the action, or is merely incidental. The Restatement also notes that the distinction between direct and collateral attacks is used in various contexts and for various purposes. Id. In some cases, the distinction is used to identify the persons who may challenge the judgment, in other cases it is used to identify the proper form for a challenge, and the distinction can even be used to determine whether evidence beyond the record can be received in support of the challenge. According to the Restatement, “[d]istinctions between direct and collateral attacks made in one context for one of these purposes are often carried over into another context in which the problem at hand is a different one.” Id. at 142 This “compound[s] the ambiguities inherent in the basic distinction and can result in further confusion of the issue[.]” Id.

{39} The Restatement notes that the traditional classification of judgments as void or voidable also creates confusion because the terms are used with different connotations. Id. at 144. For example, a void judgment is often considered to be a judgment rendered by a court lacking either personal or subject-matter jurisdiction, but can also refer to a judgment procured by fraud of some kind. Id. A voidable judgment is often considered to be a judgment based on mistake, but the judgment is also based on fraud. Id. And, even though judgments rendered in the absence of jurisdiction are typically considered void and without legal effect, some courts have given such judgments legal effect nonetheless, further muddying the distinction. Id.

{40} For these reasons, the current edition of the Restatement suggests that the distinctions between void and voidable judgments, and direct or collateral attacks are untenable under modern decisional law. Id. at 142-43, 144. Instead, the Restatement identifies three distinct types of procedures for setting aside judgments. Id. at 140. The first is a motion for relief from a judgment under Rule 60(b) of the Federal Rules of Civil Procedure, or the comparable provisions in state procedural systems. Restatement (Second) of Judgments ch. 5, intro. note b, at 140. The motion “is part or a continuation of the original action, [and] it ordinarily must be made in the court in which the judgment was rendered.” Id. The second procedure is an independent action and is also provided for by Rule 60(b). Restatement (Second) of Judgments ch. 5, intro. note b, at 140. The independent action is a challenge to the judgment through an action against the other party to the original action and is similar to the old suit in equity. Id.

{41} The third mode of relief is described as “relief in the course of another action, because the question of the judgment’s effect arises as an incident to a subsequent action.” Id. at 140-41. This mode of relief is defensive and does not stem from Rule 60, but from common law defenses to actions brought upon money judgments. Restatement (Second) of Judgments § 80 cmt. a, at 248. In modern procedural systems this mode of relief is usually employed when the party in whose favor the judgment was entered, relies on the judgment for some sort of additional relief. Restatement (Second) of Judgments ch. 5, intro. note b, at 140-41. For example, where a party defends a quiet title action by relying on a prior judgment in its favor, the opposing party may seek to invalidate the earlier judgment. Restatement (Second) of Judgments § 80 cmt. d, at 246-47.

{42} The Restatement further suggests that in determining whether relief should be granted from any judgment, an analysis of three essential questions is appropriate:

First, does the person seeking relief have standing to obtain relief from the judgment in question on the ground upon which he relies? Second, is the forum in which relief is sought the appropriate one for considering the particular attack? Third, may evidence be offered in support of the attack when it contradicts the face of the record?

Restatement (Second) of Judgments ch. 5 intro. note b, at 142-43 (internal quotation marks omitted).

{43} With regard to standing, the Restatement provides that “[r]elief from a judgment may be sought by or on behalf of a person only if the judgment is or purports to be binding on him under the rules of res judicata, or if he has an interest affected by the judgment[.]” Restatement (Second) of Judgments § 64, at 145. Where a person has standing to attack a judgment, “the question is whether he may pursue relief in the course of the subsequent action rather than being obliged to seek relief by means of other remedies, including [a motion in the original action or an independent action].” Restatement (Second) of Judgments § 80 cmt. a, at 244-45. The question of whether relief was sought in the proper forum requires consideration of the “adequacy of relief obtainable by other remedies and the relation between the ground upon which relief is sought and the forum in which it should be pursued.” Id. at 245. Where “the question concerns the subject[-]matter jurisdiction of the rendering court,” relief may be sought in a subsequent action or a different court. Id. cmt. d, at 246-47.

{44} Our holding in the present case that the original foreclosure judgment is void for lack of jurisdiction is determinative, and accordingly, we do not address Phoenix’s fraud claims, nor do we decide whether a collateral attack on a judgment as defined by our Supreme Court encompasses the remedy of a Rule 1-060 independent action. We leave to our Supreme Court the task of resolving the tension, if any, between Barela, Chavez, and Hort. See State ex rel. Martinez v. City of Las Vegas, 2004-NMSC-009, ¶ 22, 135 N.M. 375, 89 P.3d 47 (“[W]hile the Court of Appeals is bound by Supreme Court precedent, the Court is invited to explain any reservations it might harbor over its application of our precedent so that we will be in a more informed position to decide whether to reassess prior case law[.]”).

CONCLUSION

{45} For the foregoing reasons, we reverse and remand to the district court for further proceedings consistent with this Opinion.

{46} IT IS SO ORDERED.

RODERICK T. KENNEDY, Judge and TIMOTHY L. GARCIA, Judge, concurs.

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The Foreclosure Hour 8/30/15 | Pt. 3 Homeowners Bill of Rights and Wrongs: Homeowners Declaration of Remedies

The Foreclosure Hour 8/30/15 | Pt. 3 Homeowners Bill of Rights and Wrongs: Homeowners Declaration of Remedies

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This Sunday be completing the “Homeowners Bill of Rights and Wrongs” trilogy by presenting “Part Three” (the “Homeowners Declaration of Remedies”) CLICK THIS LINK TO LISTEN TO REPLAY

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Maryland Attorney General settles with Safeguard Properties for wrongfully locking residents out of their homes or damaging their property and belongings taken

Maryland Attorney General settles with Safeguard Properties for wrongfully locking residents out of their homes or damaging their property and belongings taken

Press release masthead graphic

AG Frosh Secures Settlement with Company That Allegedly Locked Residents From Homes And Damaged Property
Nation’s Largest Mortgage Services Company Agrees to Improve Practices

Baltimore, MD (August 28, 2015) -- Attorney General Brian E. Frosh today announced a settlement with Ohio-based Safeguard Properties, resolving claims that the company’s inadequate policies and procedures resulted in Marylanders being wrongfully locked out of their homes or having their property damaged and belongings taken. Safeguard is the nation’s largest mortgage field services company, and contracts with lenders and mortgage servicers to provide services related to inspecting, maintaining and repairing homes in default or in foreclosure.

Under the settlement reached by the Office of the Attorney General Consumer Protection Division, Safeguard will reform its practices to protect homeowners from future abuses and will return money to impacted Marylanders.

The Division alleged that Safeguard failed to properly screen, train and supervise its network of vendors who perform inspection and preservation work in Maryland. Consumers have made hundreds of complaints to Safeguard about improper conduct at their homes by Safeguard agents.
“Even when a home is in default or foreclosure, lenders and their agents must still comply with state law and respect the rights of homeowners and occupants,” said Attorney General Frosh. “This settlement is significant not only because of the restitution that will be distributed to consumers, but also because of the strengthened protocols and procedures that aim to protect homeowners from future abuses.”

Under the settlement, Safeguard has agreed to enact specific reforms to protect Marylanders, including:

  • Implementing stringent background check requirements for employees and vendor agents, including evaluating prior misdemeanor convictions and prohibiting work by those with relevant felony convictions
  • Ensuring that notices posted at homes and actions taken to secure vacant properties comply with Maryland laws to protect homeowners and tenants, including specific notice language and waiting periods
  • Assuring its vendors that they will not be penalized if they report in good faith that they don’t know whether a property is occupied
  • Requiring clearly posted notice to occupants when Safeguard’s agents enter a property
  • Prohibiting the removal of non-hazardous personal property prior to foreclosure, except pursuant to court order
  • Employing appropriate personnel to supervise and audit its Maryland vendors to ensure compliance with the settlement
  • Maintaining records of all Maryland consumer complaints and, after notice, recording all calls from Maryland consumers to Safeguard’s toll free consumer hotline.

Safeguard will pay $167,000 in restitution to Marylanders harmed by the alleged actions. The Division will contact consumers who are eligible and payments will be distributed through a claims process. For more information about the settlement, Marylanders can contact the Consumer Protection Division at 410-576-6569.

source: http://www.oag.state.md.us

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Citimortgage, Inc. v West | an averment appears to conflict with the import of the written assignments of the note and mortgage executed subsequent to that date that are attached to the moving papers

Citimortgage, Inc. v West | an averment appears to conflict with the import of the written assignments of the note and mortgage executed subsequent to that date that are attached to the moving papers

SUPREME COURT- STATE OF NEW YORK
I.A.S. PART 33 – SUFFOLK COUNTY

Hon. THOMAS F. WHELAN
Justice of the Supreme Court

—————————————————————X

CITIMORTGAGE, INC.,
Plaintiff

-against-

BLAIR WEST, ANN M. WEST, a/k/a ANN
WEST, JP MORGAN CHASE BANK, N.A
AMERICAN EXPRESS TRAVEL RELATED
SERVICES, INC., and and “JOHN DOE #1″
to “JOHN DOE #10″, the last 10 names being
fictitious and unknown to plaintiff, intended
to be persons, entities or corporations, having or
claiming to have an interest in or lien upon
the mortgaged premises,
Defendants.
—————————————————————X

excerpt:
Upon its review of the moving papers submitted by the plaintiff, the court finds that they
failed to establish, prima facie, the plaintiffs standing by due proof in admissible form sufficient to
eliminate all questions of fact on that issue. Although the affidavit of merit attached to the moving
papers contains an averment that the plaintiff or its duly designated custodian has been in possession
of the loan documents in their present condition since October 25, 2005, including the February 8,
2005 consolidated note that contains three indorsements, one of which is in favor of the plaintiff,
such an averment appears to conflict with the import of the written assignments of the note and
mortgage executed subsequent to that date that are attached to the moving papers. In addition,
questions of fact exist regarding whether a proper foundation was established for the admissibility
of the records upon which the affiant relied to establish the plaintiffs standing and the date of the
defendants’ default in payment (see Citibank, N.A. v Cabrera, _ AD3d _ , 2015 WL 4460686
[2d Dept 2015]; US Bank Nat. Ass’n v. Madero, 125 AD3d 757, 5 NYS3d 105 [2d Dept2015); cf,
CPLR 4518[a]; State v 158th Street & Riverside Drive Housing Co., Inc., 100 AD3d 1293, 956
NYS2d 196 (3d Dept20121; Landmark Capital Investments, Inc. v. Li-Shan Wang, 94 AD.3d418,
941NYS2d144 [1st Dept 2012]; Charter One Bank, F.S.B. v Leone, 45 AD3d 958, 845 NYS2d
513 [3d Dept 2007)). Due to the existence of these limited issues of fact concerning the plaintiffs
ownership and/or possession of the consolidated note of February 8, 2005 on date of the
commencement of th.is action and those concerning the date of the defendants’ default in payment,
the plaintiffs demands for summary judgment on its complaint against the answering defendants are
denied.

[…]

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Woman pays her back taxes, but county wants her home

Woman pays her back taxes, but county wants her home

WSMV Channel 4-

Jennifer Dupuis fell behind on her property taxes. The county tried to foreclose on her home, and she came up with the cash.

But county officials are telling her to keep her money, they want the house.

“I just didn’t understand it, they got their money back,” Dupuis said. “I was four years behind, it was my fault. They penalized me got me with fines and I paid all that.”

Read more: http://www.wsmv.com/story/29889078/woman-pays-her-back-taxes-but-county-wants-her-home#ixzz3k25rFkkn

 

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Tips for pet owners facing foreclosure

Tips for pet owners facing foreclosure

For most people, pets are part of the family too. Facing foreclosure is a daunting experience for everyone, including pets. Following a few simple guidelines will help ensure pets and their owners will have a positive future.

If you are facing foreclosure and have pets The American Humane Association suggests some Dos and Don’ts [pdf] to help alleviate some of the stress:

Do

  • Pets are very dependent on their owners. Take them with you if you have to vacate your home. Having their comfort and companionship may ease the strain of having to move.
  • If you can’t take them with you here are some tips to help find them a good home:
    • ask family, friends, co-workers to foster your pets while you relocate.
    • ask your veterinarian if low-cost boarding is available or if you can work out a payment plan to board your pet while you relocate.
    • If you are unable to find temporary placement visit www.petfinder.com to search for available shelter and rescue organizations to surrender ownership and avoid the euthanizing of your pet. Doing so will provide peace of mind. Also, some shelters may offer free or reduced boarding for certain lengths of time.
    • You can also surrender your pet to the local open-admission animal shelter. Keep in mind though, open-admission shelters accept all animals including strays, there is no guaranteeing your pet will be adopted and if the shelter experiences overcrowding they may euthanize.

Don’t:

  • Don’tleave your pet or set your pet loose if you have to vacate your home. It is illegal and inhumane to do so.
    • State criminal animal-cruelty laws may apply if you leave you pet indoors or release them outdoors. This behavior can be considered abandonment and/or neglect.
    • If you leave your pet and have someone checking on them periodically, you could still be considered in violation of the law. When the mortgage company takes possession of the home the pet will be taken by local animal control. Having this happen leaves your pet at risk of possible euthanasia.

By following a few guidelines, you can help your pet have a better future. Remember to provide for your pets to ensure they are safe. After all, they are part of the family too.

Michigan State University Extension has released a new toolkit for homeowners who are experiencing or have previously experienced foreclosure. This toolkit will equip these individuals and families with tools to help them recover their financial stability, in the case that a recovery of their home is not possible. The toolkit is available to download free at MIMoneyHealth.org.

Michigan State University Extension offers financial management and home ownership education classes. For more information of classes in your area, go to either http://msue.anr.msu.edu/events or www.mimoneyhealth.org.

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Represented by Eric Holder’s firm, Wells Fargo fails to overturn class status in overdraft lawsuit

Represented by Eric Holder’s firm, Wells Fargo fails to overturn class status in overdraft lawsuit

Reuters-

A federal judge in Florida has rejected a bid by Wells Fargo to overturn class certification of a lawsuit accusing it of collecting millions of dollars in excessive overdraft fees from struggling checking account customers.

The decision clears the way for one of the last class actions pending in Florida federal court involving overdraft practices that generated billions of dollars in fees for banks nationwide. Wells Fargo was represented by lawyers at Covington & Burling and Hunton & Williams.

[REUTERS]

 

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Fiorito v. JPMorgan Chase Bank | the officer’s testimony fell short of establishing that Chase acquired all of WAMU’s assets, including Appellant’s note and mortgage, by virtue of the merger

Fiorito v. JPMorgan Chase Bank | the officer’s testimony fell short of establishing that Chase acquired all of WAMU’s assets, including Appellant’s note and mortgage, by virtue of the merger

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

TAMRA FIORITO,
Appellant,

v.

JP MORGAN CHASE BANK, NATIONAL ASSOCIATION, as purchaser of the WASHINGTON MUTUAL BANK, f/k/a WASHINGTON MUTUAL BANK, P.A.,
Appellee.

No. 4D13-2813
[August 26, 2015]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Janis Brustares Keyser, Judge; L.T. Case No. 502008CA033429.

Jonathan H. Kline, Weston, for appellant.
Susan Capote and Joseph D. Wargo of Wargo & French, LLP, Miami, for appellee.
DAMOORGIAN, J.

Appellant, Tamra Fiorito, appeals the trial court’s entry of a final judgment of foreclosure in favor of JP Morgan Chase Bank, N.A. (“Chase”) following a bench trial. We find merit in Appellant’s argument that Chase failed to establish it had standing to foreclose when it filed its foreclosure complaint. Therefore, we reverse the final judgment and remand for entry of an order of involuntary dismissal. Because of our decision on the standing issue, Appellant’s remaining issues are rendered moot.

On October 28, 2008, Chase filed a two count complaint against Appellant, alleging one count for mortgage foreclosure and one count for reestablishment of a lost note. Chase alleged that it was the current owner and holder of the promissory note and mortgage executed by Appellant in June of 2006. A copy of the note and mortgage were attached to the complaint, identifying Washington Mutual Bank, FA (“WAMU”) as the original lender. The copy of the note attached to the complaint contained no endorsements or allonges. Chase later voluntarily dismissed its
reestablishment of a lost note count and filed what it identified as the original note and mortgage with the court. Unlike the note attached to the complaint, the original note contained an undated, blank endorsement from WAMU.

 

At the bench trial, Chase presented a home loan research officer as its only witness. The officer identified the original note, including the undated, blank endorsement by WAMU. The officer, however, was unable to testify as to when the endorsement was placed on the note, and further acknowledged it was possible that the endorsement was placed on the note after the filing of the complaint. At no point in time did the officer testify that Chase was the owner and holder of the note prior to the filing of the complaint. Both the note and mortgage were admitted into evidence without objection.

On appeal, Appellant argues that Chase’s filing of the original note containing the undated, blank endorsement with the court, coupled with the officer’s general testimony that Chase merged with WAMU in September of 2008, was insufficient to establish that Chase was the owner and holder of the note prior to the filing of the complaint. Chase counters that there is competent, substantial evidence of its authority to enforce the note based on the officer’s testimony that Chase acquired WAMU in September of 2008, approximately one month prior to the filing of the complaint.

 

In McLean v. JP Morgan Chase Bank National Ass’n, we emphasized that “[a] crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose” at the time it filed suit. 79 So. 3d 170, 173 (Fla. 4th DCA 2012); see also Saver v. JP Morgan Chase Bank, 114 So. 3d 352, 353 (Fla. 4th DCA 2013). As we outlined in Saver:

A foreclosure plaintiff has standing so long as it was the holder of the mortgage at the time it filed suit. If the plaintiff’s name is not on the mortgage, it can establish standing by proving that the mortgage was either assigned or equitably transferred prior to the date it filed the complaint. The following evidence is sufficient to establish standing in such a scenario: 1) a special endorsement on the note in favor of the plaintiff or a blank endorsement, 2) evidence of an assignment from the payee to the plaintiff, or 3) an affidavit of ownership.
114 So. 3d at 353 (citations omitted).

When a mortgage foreclosure case proceeds to a bench trial, the plaintiff bank need only present competent, substantial evidence that it has standing to foreclose. See Stone v. BankUnited, 115 So. 3d 411, 413 (Fla. 2d DCA 2013). A bank employee’s trial testimony that the plaintiff bank owned the note before the inception of the lawsuit is sufficient to resolve the issue of standing. See id. (plaintiff bank provided competent, substantial evidence that it owned and held the note prior to the filing of the complaint based on its employee’s testimony that the bank acquired ownership of the note and mortgage pursuant to a purchase assumption agreement); see also Am. Home Mortg. Servicing, Inc. v. Bednarek, 132 So. 3d 1222, 1223 (Fla. 2d DCA 2014).

 

As in the present case, “[w]here the plaintiff contends that its standing to foreclose derives from an endorsement of the note, the plaintiff must show that the endorsement occurred prior to the inception of the lawsuit.” McLean, 79 So. 3d at 174. Chase failed to establish that the endorsement was placed on the note prior to the filing of the complaint. While Chase also could have established standing through its merger with WAMU, the officer’s testimony fell short of establishing that Chase acquired all of WAMU’s assets, including Appellant’s note and mortgage, by virtue of the merger. The officer only testified that Chase merged with, and “took over,” WAMU on September 25, 2008. The officer never testified that Chase acquired all or any of WAMU’s assets, nor did he testify as to when Chase became the owner of the note. Cf. Stone, 115 So. 3d at 413 (bank employee specifically testified that the plaintiff bank acquired all of the prior bank’s assets pursuant to a purchase assumption agreement). Thus, because Chase failed to establish when it became the owner of the note, the trial court erred in finding that Chase had standing to initiate the foreclosure action.

Accordingly, we reverse the final judgment and remand for entry of an order of involuntary dismissal of the foreclosure action.

Reversed and remanded.
GROSS, J. and HERSCH, RICHARD L., Associate Judge, concur.

* * *

Not final until disposition of timely filed motion for rehearing.

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Bankruptcy Judge Sides With Owner on Home Surrender

Bankruptcy Judge Sides With Owner on Home Surrender

DBR-

A Miami bankruptcy judge threw another wrench into the already convoluted and controversial “surrender” issue linking bankruptcy and foreclosure cases.

In a ruling that contradicted others by Chief Judge Paul Hyman Jr. in the Southern District of Florida and Judge Michael Williamson in the Middle District, U.S. Bankruptcy Judge A. Jay Cristol said it “would be unconstitutional, inequitable and unjust” to force homeowners to stop fighting foreclosure after they surrender property in bankruptcy court.

Some judges, like Hyman and Williamson, have been clamping down, threatening penalties and other sanctions against homeowners who surrender their property to get bankruptcy protection but keep fighting in state court to save the same homes from foreclosure. Their rulings created legal precedents that divided bankruptcy judges by finding that “surrender” means relinquishing property to “make it available to the secured creditor by refraining from taking any overt act that impedes” foreclosure.

Read more: http://www.dailybusinessreview.com/id=1202735530891/Bankruptcy-Judge-Sides-With-Owner-on-Home-Surrender#ixzz3jwu1Lf4L

 

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Progressives Demand Answers From Clinton on Golden Parachutes for Wall Streeters-Turned-Government Officials

Progressives Demand Answers From Clinton on Golden Parachutes for Wall Streeters-Turned-Government Officials

The Intercept_-

A coalition of eight progressive organizations, using material previously published at The Intercept, have challenged Hillary Clinton to disavow the use of “golden parachute” bonuses for former Wall Street executives who enter government service.

In a letter to the Clinton campaign delivered today, the organizations, including Rootstrikers, Democracy for America, CREDO and MoveOn.org Political Action, refer to two top aides to Clinton when she served as secretary of state, Thomas Nides and Robert Hormats. As The Intercept reported in July, Nides and Hormats received millions of dollars in golden parachute payments from their respective ex-employers, investment banks Morgan Stanley and Goldman Sachs, after becoming Clinton’s deputies.

Goldman Sachs paid out Hormats’ unvested restricted stock units, valued between $250,000 and $500,000. Morgan Stanley’s accelerated payout for Nides of restricted stock units was worth between $5 million and $25 million. Deferred compensation awards like these would have been forfeited, had the executives left their jobs for somewhere other than the government.

[THE INTERCEPT_]

Image: Reuters Stephen Lam

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Homeowners’ fight against foreclosure ends with $264K bill

Homeowners’ fight against foreclosure ends with $264K bill

NY POST-

The New York family that in 2009 became the national face of beating back “repugnant” and “repulsive” bank foreclosure practices after a judge ripped up the mortgage on their $525,000 ranch home, not only lost an appeal of the judge’s order — and eventually their home — but were also slapped with a $264,500 bill from the bank.

The bill was to cover the difference between what was owed on the mortgage and what the bank got when it sold their 3,400 square-foot home, court records show.

“That’s adding insult to injury,” Suffolk Judge Jeffrey Spinner said of the quarter-million-dollar-plus deficiency judgment.

Spinner, the judge who tossed Diana Yano-Horoski and Gregory Horoski’s $292,500 mortgage, with an interest rate of 12.375 percent, told The Post that in more than 17 years on the bench and thousands of cases, he has had only three requests for deficiency judgments.

 [NEW YORK POST]

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