STOP FORECLOSURE FRAUD - Part 2

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Foreclosure King Wilbur Ross to Government Employees Affected by Shutdown “LET THEM EAT CAKE”

Foreclosure King Wilbur Ross to Government Employees Affected by Shutdown “LET THEM EAT CAKE”

CNBC-

Commerce Secretary Wilbur Ross said Thursday on CNBC that government employees affected by the shutdown should simply take out personal loans to cover their expenses. That advice is “completely out of touch with reality,” wealth manager and bestselling author David Bachtells CNBC Make It.

Around 800,000 federal employees face the prospect of missing yet another paycheck Friday as the partial government shutdown will enter its 35th day. Each employee has already missed more than $5,000 in wages on average, The New York Times estimates, so many have had to get creative to meet their financial responsibilities. Some have opted to cancel autopay on their bills, skip seeing the doctor, or even sell their car.

Hundreds are also turning to local food pantries and shelters to feed their families. One Chicago-based food pantry told the Chicago Tribuneit had helped 130 federal employees since the shutdown started, while a Utah-based organization estimated it had given out supplies to 280 federal employees.

[CNBC]

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Schiff, Waters plan joint Deutsche Bank investigation

Schiff, Waters plan joint Deutsche Bank investigation

“The interesting thing about Deutsche Bank is they seem to be pretty much the only entity out there willing to lend to The Trump Organization.”

 

Politico-

Two powerful House committee chairs are planning a joint investigation into German lending giant Deutsche Bank, which is under scrutiny from Democrats over its business dealings with President Donald Trump.

House Intelligence Chairman Adam Schiff and Financial Services Chairwoman Maxine Waters coordinating oversight of the bank, which also faces questions about its role in money laundering schemes.

The two California Democrats have been talking about areas of interest for each committee and where there’s common ground, Schiff said in an interview.

“We’re going to work jointly,” he said. “We think we’ll be more effective doing it that way.”

[POLITICO]

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Non-Judicial Foreclosure and the FDCPA: How the Supreme Court’s Looming Decision in Obduskey v. McCarthy & Holthus LLP Could Affect Law Firms and Collections Agencies Alike

Non-Judicial Foreclosure and the FDCPA: How the Supreme Court’s Looming Decision in Obduskey v. McCarthy & Holthus LLP Could Affect Law Firms and Collections Agencies Alike

Lexology-

The United States Supreme Court heard oral argument in the case Obduskey v. McCarthy & Holthus LLP on January 7, 2019. The Court’s ruling in this case could have major implications for all organizations—including law firms—that utilize non-judicial foreclosure regarding defaulted mortgages.

The primary question in Obduskey is whether the Fair Debt Collection Practices Act (the “FDCPA”), 15 U.S.C. § 1692-1692p, applies to non-judicial foreclosures. There is currently a circuit split regarding this question: the Fourth, Fifth, and Sixth Circuits apply the FDCPA to non-judicial foreclosures, while the Ninth and Tenth Circuits have held that the FDCPA does not apply to non-judicial foreclosures. The Obduskey decision should resolve this split.

The FDCPA only applies to “debt collectors,” defined under the statute as any person who “regularly collects or attempts to collect, directly or indirectly, debts owed or due . . . another.” 15 U.S.C. § 1692(a)(6). This definition, however, has certain carve-outs and does not traditionally apply to parties who are seeking only to enforce a security interest without obtaining any payment (e.g. repossessing a car). In the foreclosure context, judicial foreclosure where the creditor is seeking a deficiency judgment has traditionally fallen under the rubric of the FDCPA, as actions taken in such a proceeding are to collect a monetary debt. With non-judicial foreclosure where no deficiency is sought, however, the question becomes murkier. Hence the circuit split.

[LEXOLOGY]

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Some Cities Are Cashing In On Homeowners’ Tax Debts, And Making Foreclosure More Likely

Some Cities Are Cashing In On Homeowners’ Tax Debts, And Making Foreclosure More Likely

WGBH-

Some cities in Massachusetts are cashing in on homeowners who have failed to pay tax bills by running auctions that pull in thousands of dollars more than they’re actually owed in taxes.

At Worcester’s annual auction last May, small tax lien debts of just a few hundred dollars routinely set off bidding wars from private investors who paid the city far more than a homeowner actually owed in unpaid taxes. The process may also make it more likely the homeowner will wind up in foreclosure.

City records show that private investors have paid Worcester more than $2.6 million in premiums in the last three years. Worcester only keeps that extra cash when the homeowner gets foreclosed on, and records from the city show Worcester has a balance of more than $900,000 in premiums paid to the city.

[WGBH]

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TFH 1/20 – Foreclosure Workshop #71: — HawaiiUSA Federal Credit Union v. Monalim: The Validity of Hawaii Deficiency Judgments for the First Time Orally Argued Before the Hawaii Supreme Court (Certiorari Granted 11/14/18)

TFH 1/20 – Foreclosure Workshop #71: — HawaiiUSA Federal Credit Union v. Monalim: The Validity of Hawaii Deficiency Judgments for the First Time Orally Argued Before the Hawaii Supreme Court (Certiorari Granted 11/14/18)

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

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Sunday – January 20, 2019

Foreclosure Workshop #71: — HawaiiUSA Federal Credit Union v. Monalim: The Validity of Hawaii Deficiency Judgments for the First Time Orally Argued Before the Hawaii Supreme Court (Certiorari Granted 11/14/18)

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Listeners to our show know that Hawaii Courts have recently been at the forefront of foreclosure reform.

Unlike in most other States, the Hawaii Supreme Court has been systematically improving almost every aspect of its mostly judge made foreclosure system just in recent years.

For example, when compared to an otherwise thought to be progressive judiciary and legislature in California:

1. Hawaii now allows a wrongful foreclosure claim to be brought simultaneously in defense of foreclosure, whereas California homeowners in foreclosure irrationally must wait until evicted.

2. Hawaii now allows challenges to a foreclosing plaintiff’s standing to foreclose based on its lack of ownership and possession of a Promissory Note now considered a jurisdictional defense, whereas California homeowners in foreclosure irrationally are precluded from challenging standing by misconceived threshold notions of “voidability.”

3. Hawaii now reverses nonjudicial foreclosure sales where evidence of true market value does not accompany a nonjudicial foreclosure auction sale, whereas California homeowners in foreclosure irrationally are permitted to be nonjudicially foreclosed on without any evidence of true market value shown as considered to be irrelevant.

4. Hawaii now rejects application of the stringent federal pleading standard subjecting wrongful foreclosure claims to dismissal, whereas California homeowners in foreclosure generally have their wrongful foreclosure claims dismissed under the irrational federal pleading standard while denied discovery to prove their claims.

5. Hawaii now requires strict adherence to evidentiary requirements for proof of every element supporting a lender’s burden for proving a foreclosure case based upon personal firsthand knowledge testimony, whereas California homeowners in foreclosure are generally irrationally unable to challenge unsworn business records of prior loan servicers.

6. Hawaii now allows homeowners to defend against foreclosure without first tendering the full amount of a claimed accelerated loan default, whereas California homeowners in foreclosure are still required in some California courts irrationally to tender before being allowed to present defenses including those based on lack of standing.

Yet there is one area of foreclosure litigation in which for decades Hawaii has trailed behind California: failure to protect borrowers from unfair, inequitable deficiency judgments (the amount of an unpaid loan balance that exceeds the net proceeds of a foreclosure sale, which then becomes a money judgment against a borrower in foreclosure).

Whereas California has long prohibited deficiency judgments for most residential purchase money home loans and also in cases of nonjudicial foreclosures, Hawaii has yet to change its historic judge-made foreclosure deficiency procedures which have created a gigantic thieves market in Hawaii in which credit-bidding rigged forced auction sales have resulted in a forfeiture of hundreds of millions of dollars of Hawaii homeowner equity and continue to do so.

However, the Hawaii Supreme Court now has before it all of those deficiency judgment issues in HawaiiUSA Federal Credit Union v. Monalim, on certiorari, which was orally argued on January 11, 2019.

The Monalim Application for Writ of Certiorari will be posted on our Website www.foreclosurehour.com when the recording of this Sunday’s show is posted thereafter in the Past Broadcast Section.

The Foreclosure Hour is pleased this Sunday to play for our listeners the oral argument in Monalim.

Due to time limitations, we are unable to play the brief oral rebuttal argument in Monalim, but listeners will find the entire oral argument in the Past Broadcast Section of our Website www.foreclosurehour.com attached to the posting of this Sunday’s show shortly after aired.

It is important to understand that Monalim is no isolated instance where true market value of foreclosed property is not considered in awarding a deficiency judgment in Hawaii.

For example, on Maui in our Second Circuit Court such unfair inequitable deficiency judgments are the rule rather than the exception in every foreclosure case no matter how inequitable.

Thus, in Romspen v. L & E Ranch, nearly 2,000 acres of prime vacant land, recently appraised at $48.2 Million, was sold and finalized last week in the Second Circuit Court to the foreclosing plaintiff credit bidding at $15 Million, awarded a deficiency judgment of $11 Million, now allowed to foreclosure on a multi-million dollar Canadian residence of an 85-year-old woman, her property given as additional collateral.

Thus, in LCP-Maui v. Tucker, a $1.3 Million deficiency judgment was awarded in the Second Circuit Court, mechanically subtracting the forced auction sale net proceeds from the amount of the outstanding loan balance claimed, with no consideration given to the true market value of eight foreclosed properties, notwithstanding that the confirmed sale price being burdened by the foreclosure blight, whose original purchase prices combined exceeded ten times the forced sale price, the original loan amount being nearly $4 Million.

Thus, in DB Private Wealth Mortgage, Ltd. v. Bouley, in the Second Circuit, a credit bid of $6.3 Million was confirmed on a $7 Million claimed loan balance due, which another subsidiary of Deutsche Bank flipped weeks later selling the property then appraised at nearly $9 Million for more than $2 Million above the confirmed sale price.

We have featured many other unfair deficiency judgments awarded against Hawaii homeowners on our show for years and years, and nothing has been done about it.

This literal theft of Hawaii homeowner equity takes place weekly in every judicial circuit in Hawaii, with most of the stolen monies going outside Hawaii to Mainland securitized trusts or federal government insider assignees.

Even worse, foreclosing plaintiffs pretending to own or otherwise owning most of these securitized loans bought the loans way below face value, or were already paid with partial or full no recourse insurance proceeds or with government guaranties against loss, resulting in being paid many times more than what they loaned or purchased the loans for.

The Monalim case is the first time that the Hawaii Supreme Court has agreed to review Hawaii judicial deficiency procedures.

The foreclosure world is watching. Will it narrow its reversal to laches, or will it broaden the scope of its reversal, agreeing, for instance, with Justice Douglas in Gelfert v. National City Bank of New York, 313 U.S. 221, 233 (1941), that “Mortgagees are constitutionally entitled to no more than payment in full”?

Five Justices of the Hawaii Supreme Court can now finally put an end to such prolonged gross injustice with the stroke of their pens.

Gary Dubin

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The mortgage industry isn’t ready for a foreclosure crisis created by climate change

The mortgage industry isn’t ready for a foreclosure crisis created by climate change

CNBC-

A foreclosure crisis spurred by climate change is becoming a real threat to the mortgage industry as extreme storms and other natural disasters increasingly occur in places where borrowers might not have flood or fire insurance.

The industry is not prepared for the effects of such extreme weather and rising sea levels, according to Ed Delgado, CEO of national mortgage trade association the Five Star institute and a former executive at Freddie Mac.

 “If we look at the basic foundation of what drives the mortgage market, it is the application of credit risk. What’s missing is the understanding of weather risk and where those weather events can take place,” Delgado said.

The current system is reactive and local and doesn’t include plans for the widespread effects of climate change. That could affect several major housing markets at once.

[CNBC]

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Scott v. TROTT LAW, PC, Court of Appeals, 6th Circuit | we find that Trott violated the FDCPA by continuing collection activities after receiving Scott’s Dispute Letter

Scott v. TROTT LAW, PC, Court of Appeals, 6th Circuit | we find that Trott violated the FDCPA by continuing collection activities after receiving Scott’s Dispute Letter

 

KEVIN SCOTT, Plaintiff-Appellant,
v.
TROTT LAW, P.C., Defendant-Appellee.

No. 18-1051.
United States Court of Appeals, Sixth Circuit.
January 11, 2019.
On Appeal from the United States District Court for the Eastern District of Michigan.

BEFORE: BATCHELDER, DONALD, and THAPAR, Circuit Judges.

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION

ALICE M. BATCHELDER, Circuit Judge.

This case is about a debtor, Scott, who claimed a debt collector, Trott, deceptively and fraudulently tried to foreclose on his mortgage. Scott’s Complaint asserted six counts of civil violations under federal and state law. After three months of discovery concluded, the district court granted summary judgment to Trott and dismissed all six counts. Scott appealed one count as a matter of statutory interpretation and appealed the district court’s decision to end discovery and consider summary judgment. We hold that the district court did not abuse its discretion ending discovery and considering summary judgment but that the court erred interpreting the statute. We REVERSE and REMAND.

I.

Although the facts of this case involve a debtor with previous litigation relating to his mortgage and the lender, this case is limited to the interactions between a debt collector and the debtor. In 2004, Kevin Scott (Scott) executed a mortgage with Bank of America, N.A. (BANA) on his home in Farmington Hills, Michigan. Between 2012 and 2016, Scott and BANA litigated over various issues relating to the mortgage; those issues were ultimately resolved by an order of this court in June 2016, dismissing Scott’s appeal of the district court’s order granting summary judgment to the defendants and dismissing the Complaint. Kevin Scott v. Bank of America, N.A. et al, No. 15-2188, (6th Cir. Jun. 7, 2016). In September of 2016, BANA retained Trott Law, P.C. (Trott) as a debt collector to manage foreclosure proceedings on Scott’s mortgage due to nonpayment.

On September 20, 2016, in compliance with the Fair Debt Collection Practices Act[1] (FDCPA), Trott sent a Fair Debt Letter to Scott informing him of Trott’s role as a debt collector acting on behalf of its client, BANA, to foreclose on Scott’s mortgage for the total outstanding indebtedness of the mortgage. The Fair Debt Letter stated:

Unless you notify this office within thirty (30) days after receiving this notice that you dispute the validity of this debt, or any portion thereof, this office will assume this debt is valid. If you notify this office in writing within thirty (30) days after receiving this notice that you dispute the validity of this debt, this office will obtain verification of the debt or a copy of the judgment, if applicable, and mail a copy of such verification or judgment to you. If you request, in writing, within thirty (30) days after receiving this notice, this office will provide you with the name and address of the original creditor, if different from the current creditor.

On October 5, Trott took three actions. First, Trott arranged a sheriff’s sale for a Foreclosure of Mortgage by Advertisement with an auction date of November 8, 2016. Pursuant to Michigan law,[2] Trott prepared a Notice of Mortgage Foreclosure Sale (Notice) to be posted on the premises of Scott’s home and published for four consecutive weeks in a newspaper in the county of Scott’s residence, stating the date of sale and amount of outstanding mortgage debt. Second, Trott contacted the local newspaper to schedule the home posting and the four publications of the Notice for October 7, 14, 21, and 28. The newspaper had the Notice posted on the premises on October 14. Third, Trott mailed a copy of the Notice to Scott. On October 8, Scott sent a certified letter (Dispute Letter) to Trott disputing the validity of the debt, claiming he was current on his mortgage, and that all payments had been made to BANA’s attorneys pursuant to a court order entered in the prior litigation over the delinquency of this mortgage. Trott received the Dispute Letter on October 11.

Trott claimed that after receiving the Dispute Letter it ceased collection of the debt and contacted its client BANA to confirm the debt’s validity. The Notice, however, was posted on the premises on October 14 and published in the newspaper on October 14, 21, and 28. Trott did not send Scott a verification of the debt. Scott claimed he tried to contact Trott but that it would not respond to his communications.

On October 20, 2016, Scott filed the complaint against Trott including a motion for a temporary injunction to enjoin the November 8 sheriff’s foreclosure sale. On November 4, Trott filed a response opposing the injunction, and on November 7, hours prior to the hearing on the motion for the preliminary injunction, Scott filed for Chapter 13 bankruptcy. The scheduled sheriff’s foreclosure sale did not take place, and the motion for an injunction was stayed pending verification of the debt.

Scott’s complaint against Trott alleged violations of the FDCPA (Count 1), violation of the Real Estate Settlement Procedures Act (Count 2), unreasonable collection efforts under Michigan Law § 339.918(e)(2) (Count 3), Fraud and Misrepresentation (Count 4), Intentional Infliction of Emotional Distress (Count 5), and violation of civil rights under 42 U.S.C. § 1981 (Count 6).

On December 13, the district court entered a scheduling order that, among other things, gave the parties three months for discovery, and set a jury trial for August 8, 2017. In January, Trott moved for summary judgment or for dismissal of Scott’s complaint for failure to allege sufficient facts to state a claim. In April, the district court held a hearing on the motion at which Scott argued that he did not fairly have the opportunity to make his case.

The district court found that there were no material facts in dispute between the parties and granted summary judgment on the FDCPA claim, holding that as a matter of law, the FDCPA did not require that Trott verify the debt and that Trott had “cease[d] collection of the debt” pursuant to the statute because Trott itself performed no more activity. The court dismissed Counts 2-6, holding that Scott failed to state sufficient facts or make allegations with sufficient particularity to state any claim. The district court held all outstanding discovery motions moot and dismissed the case.

Scott raises two issues on appeal. First, Scott argues that the district court erred in interpreting the language of the FDCPA and finding that Trott ceased collection of the debt. Second, Scott contends that the district court’s ruling on a summary judgment motion before all discovery motions and requests had been completed denied him a meaningful opportunity to gather facts and evidence to make his case. Scott does not appeal the district court’s order dismissing Counts 2-6 of his complaint and he therefore waives argument on those claims.

II.

We review de novo a district court’s grant of summary judgment. Rogers v. O’Donnell, 737 F.3d 1026, 1030 (6th Cir. 2013). Summary judgment is proper when the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The court must consider the evidence in the light most favorable to the non-moving party. Rogers, 737 F.3d at 1030. The record in this case demonstrates that there was no genuine dispute of material fact between the parties regarding Count 1, only a question of law. The district court ruled that, as a matter of law, the statutory language of the FDCPA’s command to “cease collection of the debt” did not require Trott to intervene and stop the actions of Trott’s agents and/or third parties that Trott put into motion prior to receiving Scott’s Dispute Letter. We find the district court erred in that determination.

The issue is a matter of first impression for this circuit. In 2013, we took the consequential step of ruling that mortgage foreclosures were “debt collection” under the FDCPA. Glazer v. Chase Home Finance LLC., 704 F.3d 453 (6th Cir. 2013). Prior to Glazer, the Sixth Circuit was among the majority of circuits that do not classify a mortgage foreclosure as debt collection, but rather an “enforcement of a security interest.” Id. at 460. In Glazer, we joined the Third and Fourth circuits in the minority that do. See Piper v. Portnoff Law Assocs., Ltd., 396 F.3d 227 (3rd Cir. 2005)Wilson v. Draper & Goldberg, P.L.L.C., 443 F.3d 373 (4th Cir. 2006).

This shift five years ago has had heightened implications for the Michigan foreclosure industry. Michigan is among the few states that permit non-judicial mortgage foreclosures. See-Mich. Comp. Laws § 600.3201 (Foreclosure of Mortgage by Advertisement). Because this non-judicial process is faster and less cumbersome for lenders, the majority of Michigan foreclosures are executed in that manner. However, Michigan’s process requires some actions that implicate the FDCPA in perhaps unexpected ways. In the aftermath of Glazer, litigation regarding the FDCPA’s requirements as they pertain to Michigan’s foreclosure industry has increased. We take this opportunity to provide some clarity.

Under Michigan law, a party executing a Foreclosure of Mortgage by Advertisement must publish a detailed Notice for four consecutive weeks in a county newspaper and post the Notice in a conspicuous place on the premises. Id.§ 600.3208. This publication of notice qualifies under the FDCPA as an “initial communication” with the debtor, 15 U.S.C. § 1692a(2). The FDCPA requires that within five days of that initial communication, the debt collector must send to the debtor a Fair Debt Letter containing specific information about the debt, its intention to collect the debt, and the debtor’s rights, unless the published notice contains that information. 15 U.S.C. § 1692g(a). That information includes the amount of the debt, the identity of the creditor, the right of the debtor, within thirty days of receipt of that notice, to dispute the validity or the amount of the debt, and the right of the debtor to notify the debt collector within that thirty-day period of its demand to obtain from the debt collector verification of the debt. Id. Finally, the FDCPA provides:

If the consumer notifies the debt collector in writing within the thirty-day period . . . that the debt, or any portion thereof, is disputed . . . the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment . . . and a copy of such verification or judgment . . . is mailed to the consumer by the debt collector. 15 U.S.C. § 1692g(b).

Scott originally claimed three violations[3] under the FDCPA but here he appeals only one: whether Trott ceased collection of the debt after receiving Scott’s Dispute Letter on October 11 as the FDCPA requires. Scott claims that the events occurring after October 11 constitute collection activity by Trott: (1) the newspaper advertisements on October 14, 21, and 28; (2) the posting of the Notice at Scott’s home on October 14; (3) Trott’s failure to cancel the sheriff’s sale scheduled for November 8; (4) Trott’s refusal to engage in communications with Scott after October 11; (5) Trott’s November 4 response in opposition to Scott’s October 20 motion for temporary injunction.

We consider the newspaper advertisements, the home posting, and sheriff’s sale together. Scott contends that since these activities were necessary to satisfy the requirements of a Foreclosure of Mortgage by Advertisement under Michigan law, they must be construed to be continued collection activity under the FDCPA. Scott has strong grounds for this assertion. “If a purpose of an activity taken in relation to a debt is to `obtain payment’ of the debt, the activity is properly considered debt collection.” Glazer, 704 F.3d at 461. It is uncontested that these three activities are statutorily required under Michigan law. See Mich. Comp. Laws § 600.3201, § 600.3208, § 600.3216.

Trott does not address whether the activity was debt collection taken after the Dispute Letter was received, but rather claims that Trott was not the one performing the activity arguing that, “[t]he publications and posting, that Scott attempts to bootstrap to Trott, were ordered by Trott prior to the receipt of the [Dispute Letter] and were actions by third-parties other than Trott.”. The district court found this compelling, stating, “Scott has not shown, however, that these were collection activities on the part of Trott.” The court also determined that the FDCPA did not require Trott “to take any positive action to stop” third parties.

The issue before us is whether FDCPA’s requirement that a debt collector must “cease collection of the debt” after receiving a Dispute Letter required Trott to stop the subsequent newspaper publications from appearing, stop the home posting from occurring, and stop the sheriff’s sale from taking place. We find that it does. To read the FDCPA as the district court did would render the Dispute Letter a nullity.

Trott admits that it ordered the newspaper advertisements and the home posting, mailed the Notice, and scheduled the sale with the sheriff all contemporaneously on October 5. These activities set into motion all the requirements to satisfy Michigan foreclosure law and the FDCPA. Trott then claims that after receiving the Dispute Letter on October 11, it did nothing more towards debt collection. However, Trott fails to mention that there was nothing else for it to do—parties directed by Trott would continue to do everything else necessary. Ostensibly, Trott is suggesting that even though Scott sent a Dispute Letter, the foreclosure sale could have still occurred because Trott itself had “ceased.” This reading of the statute produces a result contrary to the plain intent of the FDCPA and this circuit’s case law.

Although the FDCPA contains a definitions section, it omits a statutory definition of “cease” or “collection of the debt.” Thus, we begin with a clean slate. The verb “cease” is defined in Black’s Law Dictionary[4] as, “to stop,” “to come to an end,” “to suspend or forfeit.” Within § 1692g(b), the noun subject of the verb “cease” is the “debt collector.” The direct object of the verb “cease” is “collection of the debt.” It follows then that the statute imposes on the “debt collector” an obligation to stopthe “collection of the debt.” This is more obviously true when the debt collector has been the one to initiate the “collection of the debt.” This obligation exists only until the debt collector “obtains verification” of the debt and sends it to the debtor, after which the debt collector is free to resume collection of the debt.

The contours of “collection of the debt” are a more difficult matter to determine. As mentioned above, this circuit is breaking new ground in the application of the FDCPA to mortgage foreclosures. See, Glazer, 704 F.3d at 360. Given the vast differences between judicially managed foreclosures and non-judicial foreclosures, we cabin this holding to the latter. We find that, at a minimum, “collection of the debt” in a statutorily created process such as Michigan’s foreclosure by advertisement must include any activities that attempt to satisfy the essential statutorily required elements of that process.

This reading is congruent with our post-Glazer case law regarding the purpose of the Dispute Letter and verification requirement. Haddad v. Alexander, et al, 758 F.3d 777, 784 (6th Cir. 2014). (“The baseline for [the Dispute Letter and verification requirement] is to enable the consumer to `sufficiently dispute the payment obligation’ . . . . [S]uch an approach is consonant with the congressional purpose of the verification provision.”). The district court’s reading of § 1692g(b) would frustrate the FDCPA’s purpose of giving the debtor the opportunity to dispute the debt—the Dispute Letter would become irrelevant for Michigan foreclosures by advertisement. We therefore hold that the Dispute Letter must “stop the clock” on the initiated foreclosure. The debt collector cannot allow the essential statutory elements of a Michigan foreclosure to proceed after receiving a timely Dispute Letter until it obtains sufficient verification of the debt. This approach obviates the need to explore the activities of the debt collector’s agents or independent contractors and instead imposes on the debt collector the duty to “cease” the collection of the debt until the debt collector obtains verification of the debt.

Trott did not cease the collection of the debt after receiving Scott’s Dispute Letter. Not only did Trott not cancel the sheriff’s sale[5] after it received the Dispute Letter on October 11, three of the newspaper advertisements were published and the home posting occurred after that date. Each of these activities was statutorily required to satisfy Michigan’s Foreclosure of Mortgage by Advertisement law. Hence, Trott’s failure to stop them after it received the Dispute Letter violated provisions of § 1692g(b) of the FDCPA.

We now consider Scott’s other claimed collection activities by Trott. Scott also complains that Trott refused to engage him when he sought clarification of the Notice. Scott cites no legal authority for the contention that Trott was required to respond to Scott’s communications. In fact, the FDCPA generally discourages and in some respects outright prohibits extraneous communications between a debt collector and a debtor. See 15 U.S.C. § 1692c. Trott was acting within the general custom of practice and requirements of the FDCPA by not communicating with Scott.

Finally, Scott alleges that Trott’s response in opposition to Scott’s motion for temporary injunction should be considered continued debt collection activity under the FDCPA. Scott does not cite, nor are we aware of, any legal principle that would allow filings made during the course of litigation to be used against the moving litigant to satisfy the elements of the alleged civil violation that precipitated the lawsuit. We decline to adopt this position now. Furthermore, opposition to an injunction to preserve an issue is fairly characterized as zealous advocacy on behalf of clients as required by Michigan’s rules of professional conduct. Mich. Prof’l Conduct R. 1.3. (CMT: “A lawyer should act with commitment and dedication to the interests of the client and zeal in advocacy upon the client’s behalf.”).

III.

We review for abuse of discretion a district court’s decision regarding the sufficiency of discovery and assessment of the relevance of discovery motions to determine whether there remain genuine disputes of material facts. Plott v. General Motors Corp., Packard Elec. Div., 71 F.3d 1190, 1196 (6th Cir. 1995). It is well established that a trial court has broad discretion to control the scope and extent of discovery. Chrysler Corp. v. Fedders Corp. 643 F.2d 1229, 1240 (6th Cir. 1981).

Scott argues that the district court erred in granting summary judgment because several discovery motions remained unresolved. However, most of Scott’s outstanding motions were presented after the expiration of the three-month discovery period set out in the scheduling order. He complains that Trott refused to comply with discovery, however, the district court determined that many of Scott’s requests were covered by privilege. After three months, Scott had still not produced evidence bolstering the allegations of his complaint with respect to Counts 2-6. It was well within the district court’s discretion to determine either that additional discovery would not lead to adducing material facts or that Scott already had sufficient discovery opportunity. The district court therefore did not abuse its discretion.

IV.

For the foregoing reasons we find that Trott violated the FDCPA by continuing collection activities after receiving Scott’s Dispute Letter. We REVERSE the district court’s summary judgment with respect to the FDCPA claim and REMAND for further proceedings consistent with this decision. We AFFIRM the remaining portions of the judgment.

[1] 15 U.S.C. § 1692.

[2] Mich. Comp. Laws § 600.3208.

[3] Scott’s Complaint asserted that the FDCPA required debt collectors to verify the debt upon receipt of the Dispute Letter and that the FDCPA required debt collectors to independently investigate the amount of debt. The district court appropriately dismissed these claims as incorrect as a matter of law. Scott did not appeal these determinations.

[4] Black’s Law Dictionary (Editorial Staff, 5th ed. 1979).

[5] We pause to note that Trott does not even allege that it made an effort, much less a good faith one, to cancel the sheriff’s sale, and had Scott’s property in fact been sold as originally scheduled, the buyer would have received voidable title. See Jackson Inv. Corp. v. Pittsfield Products, Inc., 162 Mich App. 750, 755-56 (Mich. Ct. App. 1987) (holding that a buyer receives a voidable title where there is a defect in the notice of a foreclosure sale under Mich. Comp. Laws § 600.3208). It seems obvious to us that an unnecessary and onerous legal dispute between a rightful title holder and a bonafide purchaser is precisely among the injustices Congress sought to avoid in including the Dispute Letter requirement in the FDCPA.

 

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Bank error costs St. Petersburg man thousands in foreclosure auction gone wrong

Bank error costs St. Petersburg man thousands in foreclosure auction gone wrong

WFLA-

With a few clicks of the mouse, Ron McClemore bought a gorgeous, waterfront townhouse on Coquina Key.

He paid $204,000 through a foreclosure auction on the Pinellas County Clerk of Court’s website. Then came the bad news.

He had actually purchased a different property, and he overpaid.

It turns out, the bank listed the address in error on the county website.

Bank of America agreed to refund McClemore his purchase price, but refused to reimburse him for the $3,009 in fees he paid to the clerk to process the wrong deal.

[WFLA]

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SCOTUS Provides Analysis on Nonjudicial Foreclosure Proceedings and FDCPA Case Arguments

SCOTUS Provides Analysis on Nonjudicial Foreclosure Proceedings and FDCPA Case Arguments

Obduskey v. McCarthy Holthus LLP focuses on debate about definitions of debt collector in the federal law.

ACA International-

Arguments in Obduskey v. McCarthy & Holthus LLP held Jan. 7 show the complexity of the Fair Debt Collection Practices Act when it comes to nonjudicial foreclosures and debt collectors, according to an analysis by Danielle D’Onfro, a lecturer on law at Washington University in St. Louis, on the U.S. Supreme Court’s blog .

In June 2018, the Supreme Court granted certiorari in the case, Obduskey v. McCarthy & Holthus LLP, to determine whether nonjudicial foreclosure proceedings and those who are involved in them are subject to the FDCPA, ACA International previously reported. (Members may read more background on this case on the Industry Advancement Program website.)

In November 2018, the Consumer Financial Protection Bureau filed an amicus brief  with the U.S. Supreme Court supporting that a law firm hired by a mortgage company after a consumer defaulted on a loan is not defined as a debt collector as outlined in the FDCPA, ACA International previously reported.

“This case turns on whether the FDCPA covers parties that handle nonjudicial foreclosures,” D’Onfro writes.

[ACA INTERNATIONAL]

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TFH 1/13/19 | Listeners’ Forum #1: Mortgage Abuse Is Not Limited To Individual States

TFH 1/13/19 | Listeners’ Forum #1: Mortgage Abuse Is Not Limited To Individual States

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

.

Sunday – January 13, 2019

Listeners’ Forum #1: Mortgage Abuse Is Not Limited To Individual States

.

 ———————

 

Being a homeowner in foreclosure is for most a very lonely ordeal, confronted by often incomprehensible substantive laws and procedural rules, unfriendly judges, uncooperative loan servicers, distant pretender lenders, dishonest process servers, mountains of confusing if not fake paperwork, contradictory Internet bloggers, ballooning costs, and difficulties finding competent foreclosure defense attorneys, except for those few who are usually either untrained or generally incompetent or just plain crooks.

But you are not alone.

The Foreclosure Hour receives thousands of emails and voice mail messages annually from homeowners from virtually every State in the Nation complaining about similar if not identical mortgage abuses.

If foreclosure laws are ever to be reformed, it is absolutely necessary for homeowners, judges, and legislators alike to understand that mortgage fraud is not only a local problem, but pervasively national in scope.

In the past, The Foreclosure Hour has highlighted on individual shows the plight of a few individual homeowners.

Today, in order to demonstrate how widespread the problems actually are, John and I have selected a few representative emails we have received from listeners in recent years to read and discuss on today’s show, and anticipate dedicating some future shows as similarly a “Listeners’ Forum.”

We have been receiving emails and voice mail messages from virtually every State, especially New Mexico, Massachusetts, Hawaii, Oregon, New York, Arizona, California, Maryland, New Jersey, Washington State, Virginia, Georgia, Florida, Illinois, New Hampshire, Connecticut, Ohio, South Carolina, Indianapolis, Minnesota, Iowa, Michigan, and Colorado.

It is of course not possible for John and me to specifically respond to all of the many thousands of comments we receive.

We will today play only a representative few of your emails as time permits, removing last names for privacy reasons, so our listeners can fully appreciate that, facing foreclosure and mortgage abuse, they are not alone.

John and I hope that that too will give our judges and legislators listening a better understanding of the broad scope of mortgage abuse in America, and a better understanding that homeowners in foreclosure are not deadbeats, but deserve better respect and treatment than the present court decapitation by procedural dynamics which too often takes place and the irrational forfeiture of homeowners’ life savings equity in their homes.

Gary Dubin

.
Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383

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

EVERY SUNDAY
3:00 PM HAWAII 
6:00 PM PACIFIC
9:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
iHEART RADIO

The Foreclosure Hour 12

 

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Supreme Court Split in Unexpected Ways During Oral Arguments for Obduskey v. McCarthy & Holthus LLP

Supreme Court Split in Unexpected Ways During Oral Arguments for Obduskey v. McCarthy & Holthus LLP

Inside Arm-

On Monday, the United States Supreme Court heard oral arguments in Obduskey v. McCarthy & Holthus LLP. As a brief recap, the case questions whether a law firm engaging in non-judicial foreclosure is considered a debt collector under the Fair Debt Collection Practices Act (FDCPA). The Consumer Financial Protection Bureau filed an amicus brief in this case back in November, siding with McCarthy & Holthus (McCarthy) on the issue.

The crux of the oral arguments seemed to rest on whether the FDCPA intended the exclusion of those enforcing a security interest to mean only those who do not engage with consumers. The justices asked counsel for both parties to discuss the difference between a law firm engaging in non-judicial foreclosure versus a repossessor. McCarthy’s counsel argued that there is no distinction, both are enforcing a security interest, whereas Obduskey’s attorney argued that sending a pre-foreclosure notice constitutes debt collection. Some of the justices seemed to side with Obduskey’s attorney. differentiating that repossessor only engages with the collateral “in the dark of night,” whereas a foreclosure attorney engages with the consumer by, for example, sending a pre-foreclosure notice.

In a rather unexpected turn, two of the right-leaning, pro-business justices — Chief Justice John Roberts and Justice Brett Kavanaugh — both seemed to side with Obduskey’s counsel on this question.  Since such a notice encourages payment, Chief Justice Roberts referred to it as “indirect collection.” Justice Kavanaugh, the newest addition to the Supreme Court’s bench, likewise indicated that the purpose of a foreclosure notice is to tell someone that they need to pay or they will lose their home.

[INSIDE ARM]

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Supreme Court debates the meaning of the term ‘debt collector’ in a foreclosure protections case dating back to the financial crisis

Supreme Court debates the meaning of the term ‘debt collector’ in a foreclosure protections case dating back to the financial crisis

CNBC-

Markets are racked by turmoil, and there are signs the booming U.S. economy could slow down later this year. Yet the Supreme Court is reckoning with the lingering fallout from the financial crisis that rocked the global economy a decade ago.

The top court on Monday attempted to resolve a legal question that could have broad ramifications on hundreds of thousands of Americans who are foreclosed on without a judicial process each year. A key issue in the matter is who or what can be considered a “debt collector.”

The justices were divided, but not into clear ideological zones. Chief Justice John Roberts and Justice Brett Kavanaugh, Republican-appointed conservatives who are typically business friendly, were among the most skeptical questioners of the respondent in the case, a law firm working on behalf of Wells Fargo.

[CNBC]

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Bill would protect federal workers from foreclosure, eviction during shutdown

Bill would protect federal workers from foreclosure, eviction during shutdown

Hawaii News Now-

More than 20 Democratic lawmakers on Wednesday introduced legislation that would protect federal employees from foreclosures or evictions during the shutdown of the federal government.

The bill, sponsored by Sen. Brian Schatz of Hawaii and Rep. Derek Kilmer of Washington, is designed to provide some level of emotional stability during a period of financial insecurity for the thousands of federal employees who have been furloughed or working without pay since Dec. 22.

“Thousands of federal workers and their families are struggling to pay rent and make ends meet,” Sen. Schatz said in a statement. “It’s absolutely unacceptable. Our bill will protect federal workers and make sure they aren’t harmed because of a political stunt.”

The measure, known as the Federal Employee Civil Relief Act, would also prevent federal government employees who have been impacted by the shutdown from having cars or other property repossessed, being penalized for falling behind in student loan programs, or from losing insurance because of missed payments on premiums.

[HAWAII NEWS NOW]

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Branching Out – Western District of Virginia Defines “Branch Office” for Purposes of HUD’s Face-to-Face Meeting Requirement

Branching Out – Western District of Virginia Defines “Branch Office” for Purposes of HUD’s Face-to-Face Meeting Requirement

Lexology-

In the home mortgage industry, loans insured by the Fair Housing Authority (“FHA”) come with statutory prerequisites that are embedded in the loan contracts and that must be followed prior to foreclosure. One such obligation put forth by the Department of Housing and Urban Development (“HUD”) is the “face-to-face meeting” requirement. This meeting, however, is not required in several scenarios, including when the mortgaged property is not within 200 miles of the mortgagee, its servicer, or a branch office of either.

The bounds and application of those two words – branch office – bring us to a recent opinion handed down on December 18 by the U.S. District Court for the Western District of Virginia. There, on a motion to dismiss for failure to state a claim, the Court defined a “branch office” as “one where some business related to mortgage is conducted” and dismissed the complaint with prejudice.

The borrower had brought suit claiming improper foreclosure on her home because the lender failed to offer, attempt, or conduct a face-to-face meeting prior to foreclosing on the subject property. The borrower alleged that the exemption did not apply because there was an office of the lender within 200 miles of the property. It was undisputed that this office was not open to the public and did not provide services related to mortgage origination or servicing.

[LEXOLOGY]

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Glass v. Nationstar | FL Supreme Court Quash 4th DCA Decision, Approves decision in BONY v Williams the question of whether a voluntary dismissal provides a basis for being considered the prevailing party for the purpose of appellate attorney fees.

Glass v. Nationstar | FL Supreme Court Quash 4th DCA Decision, Approves decision in BONY v Williams the question of whether a voluntary dismissal provides a basis for being considered the prevailing party for the purpose of appellate attorney fees.

sc17-1387 by on Scribd

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TFH 1/6/19 | Previewing the 2019 Foreclosure Defense Agenda of the Hawaii Supreme Court

TFH 1/6/19 | Previewing the 2019 Foreclosure Defense Agenda of the Hawaii Supreme Court

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

.

Sunday – January 6, 2019

Previewing the 2019 Foreclosure Defense Agenda of the Hawaii Supreme Court

.

 ———————

 

In recent years the Hawaii Supreme Court has gained national recognition for its leadership in attempting to bring fairness to and modernizing the Hawaii judge-made foreclosure defense system.

In doing so, the Hawaii Supreme Court has openly even rejected in its decisions the contrary holdings by our local Hawaii federal district court impinging on the rights of Hawaii mortgage borrowers.

The result has been a number of far reaching decisions that have arguably afforded more protection to mortgage borrowers today than in any State in the Nation.

Among such significant decisions, discussed on our prior shows available for listening in the Past Broadcast Section of our Website at www.foreclosurehour.com, have been:

1. Santiago v. Tanaka, 137 Haw. 137, 366 P.3d 612 (2015), restoring, inter alia, as a precondition to the right to foreclose the service of notice of a mortgage borrower’s right to cure whether or not contractually provided for;

2. Kondaur Capital Corp. v. Matsuyoshi, 136 Haw. 227, 361 P.3d 454 (2015), restoring, inter alia, good faith in nonjudicial auction sales requiring evidence of fair market value at time of sale;

3. Bank of America v. Reyes-Toledo 1, 139 Haw. 361, 390 P.3d 1248 (2017), restoring, inter alia, jurisdictional validity in judicial foreclosures requiring proof of a foreclosing plaintiff’s ownership of the underlying note and mortgage at the time the foreclosure action was first brought;

4. U.S. Bank v. Mattos, 140 Haw. 26, 398 P.3d 615 (2017), restoring, inter alia, a foreclosing plaintiff’s evidentiary burden of proof in judicial foreclosures requiring personal knowledge supporting the elements necessary to foreclose, including default, notice of default, and standing to foreclose;

5. Wells Fargo v. Behrendt, 142 Haw. 37, 414 P.3d 89 (2018), restoring, inter alia, standing in judicial foreclosures as a jurisdictional requirement not based on contract alone, enabling any interested third-party non-borrower to challenge the standing of a plaintiff to foreclose; and

6. Bank of America v. Reyes-Toledo 2, 2018 Haw. LEXIS 214, 2018 WL 4870719, restoring, inter alia, common law notice pleading standards contrary to federal newly stringent dismissal standards which impose unfair pleading burdens on mortgage borrowers, and also permitting mortgage borrowers for the first time to sue or counterclaim for wrongful foreclosure without waiting until a judicial foreclosure lawsuit is concluded.

The 2019 foreclosure defense agenda of the Hawaii Supreme Court moreover is off to a good start at the very beginning of the New Year and promises equally significant bellwether decisions, so far consisting of potentially three Hawaii Intermediate Court of Appeals decisions granted certiorari review and three more in various pending stages.

The three now accepted for review and before the Hawaii Supreme Court include:

1. Bank of Hawaii v. Bruser (In the Matter of the Trust Agreement Dated June 6, 1974, as Amended), SCWC 15-0000623 (no oral argument deemed necessary by the Hawaii Supreme Court), questioning, inter alia, whether a Probate Court has jurisdiction to interpret and revise a lease contract between a Trustee and a third party, raising fees leading to foreclosure;

2. Hawaii USA Federal Credit Union v. Monalim, SCWC-16-0000807 (oral argument January 11, 2019), questioning, inter alia, for the first time various aspects of the judge-made foreclosure deficiency judgment system in the context of a judicial foreclosure case where the foreclosing plaintiff waited four years to eventually seek a deficiency judgment and without the lower court conducting an evidentiary hearing to determine the true value of the foreclosed property at time of sale, notwithstanding the forced sale auction price; and

3. Nationstar Mortgage LLC v. Kanahele, SCWC-16-0000319 (oral argument scheduled for January 17, 2019), questioning, inter alia, whether summary judgment is appropriate where a foreclosing plaintiff summits contradictory supporting declarations, whether a foreclosing plaintiff who is not a holder in due course is subject to a defendant’s affirmative defenses, and whether the lower court abused its discretion by denying a defendant’s motion to compel discovery when a foreclosing party refuses to answer interrogatories and refuses to respond to requests for admissions.

The other three foreclosure appeals requesting or about to request certiorari review by the Hawaii Supreme Court at the start of 2019 include:

1. Kiowa v. Christiana Trust, CAAP-16-0000728, decided by the Hawaii Intermediate Court of Appeals on September 28, 2018, holding that although a promissory note may be unenforceable due to the expiration of the six-year contract statute of limitations in Hawaii, the underlying property may still be foreclosed on as the statute of limitations governing the enforceability of a mortgage as a real property interest is supposedly 20 years (a certiorari petition requesting Hawaii Supreme Court certiorari review will shortly be filed);

2. HSBC Bank USA v. Marcantonio, CAAP-17-0000807, decided by the Hawaii Intermediate Court of Appeals on December 28, 2018, holding, inter alia, that a mortgage borrower against whom summary judgment has been granted and who did not appeal the granting of summary judgment cannot defeat confirmation of sale even though having proof that the foreclosing plaintiff had no right to foreclose, not even owning the mortgage loan, and even if the foreclosing plaintiff had committed fraud on the court, and even though the lower court had no subject matter jurisdiction to hear the foreclosure case at the outset, because of the doctrine of res judicata based supposedly on an earlier decision of the Hawaii Supreme Court in Mortgage Electronic Registration Systems, Inc. v. Wise, 130 Haw. 11, 304 P.3d 1192 (2013) (a certiorari petition requesting Hawaii Supreme Court certiorari review will shortly be filed); and

3. Sakal v. AOAO Hawaiian Monarch, CAAP-15-0000573, decided by the Hawaii Intermediate Court of Appeals on July 26, 2018, reversing in the mortgage borrower’s favor, Sakal, confirming that a power of sale is contractual and not created by statute, which against the ICA decision the AOAO recently requested Hawaii Supreme Court review on behalf of reportedly thousands of Hawaii condo Associations; yet certiorari review was denied by the Hawaii Supreme Court last month in SCWC-15-0000529, leaving remaining Sakal’s own petition for writ of certiorari on another discussed nondispositive issue in the case where the Hawaii Intermediate Court of Appeals mentioned that the entry of a new ownership certificate called a TCT in Land Court records cuts off all mortgage borrowers’ defenses to foreclosure, however a TCT not filed in this case until after the foreclosure, now challenged by Sakai as being unconstitutional state action needing correction (certiorari petition pending on that separate issue before the Hawaii Supreme Court).

The above cases not only should have enormous potential interest locally, but nationally as well, and which outcome might well make a huge difference in many of our listeners’ foreclosure cases.

At the conclusion of today’s show, time permitting, we will also have an important announcement regarding foreclosure defense in California.

Please join John and me for another informative Foreclosure Hour as a weekly public service of the Dubin Law Offices.

Gary Dubin

.
Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383

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

EVERY SUNDAY
3:00 PM HAWAII 
6:00 PM PACIFIC
9:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
iHEART RADIO

The Foreclosure Hour 12

 

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Federal lawsuit accuses Wells Fargo of unlawful foreclosure of Starkville man’s home

Federal lawsuit accuses Wells Fargo of unlawful foreclosure of Starkville man’s home

Clarion Ledger-

A Starkville daughter and father have filed a federal lawsuit against Wells Fargo Home Mortgage alleging the national bank unlawfully foreclosed on the father’s home while still negotiating with them.

Patty Parrish filed the lawsuit last month in federal court in Aberdeen on behalf of her father, Norman Frossard, who the lawsuit says suffers from dementia.

The lawsuit said Wells Fargo and agent Dean Morris, a foreclosure law firm, engaged in unlawful and deceptive dual tracking with Parrish and Frossard prior to the November 2017 foreclosure auction and continued to negotiate with them after the foreclosure auction had already occurred.

[THE CLARION LEDGER]

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Wells Fargo to pay $575 million in settlement with U.S. states

Wells Fargo to pay $575 million in settlement with U.S. states

Reuters-

Wells Fargo & Co (WFC.N) will pay $575 million to settle claims made by U.S. states, the latest settlement as the bank works to resolve lingering investigations and legal battles stemming from its sales-practices scandal and to remove a punitive asset cap.

Two years ago, Wells Fargo agreed to pay $190 million to settle federal government claims that the bank created phony customer accounts. Since then, the bank has racked up over $2 billion in penalties as other issues were discovered across most of its business lines.

Friday’s settlement resolves claims by all 50 states and the District of Columbia related to the accounts, as well as claims that the bank improperly referred and charged customers for a number of financial products like auto and life insurance. “Instead of safeguarding its customers Wells Fargo exploited them,” California Attorney General Xavier Becerra said in a statement. “This is an incredible breach of trust that threatens not only the customer who depended on Wells Fargo, but confidence in our banking system.”

[REUTERS]

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Harris v. BANK OF NEW YORK MELLON | FL 2DCA- Because the record before us contains evidence that establishes the Trust as a party to the mortgage contract, we reverse and remand for an order granting Harris’ motion for attorney’s fees

Harris v. BANK OF NEW YORK MELLON | FL 2DCA- Because the record before us contains evidence that establishes the Trust as a party to the mortgage contract, we reverse and remand for an order granting Harris’ motion for attorney’s fees

 

ALLEN HARRIS A/K/A ALLEN T. HARRIS, Appellant,
v.
THE BANK OF NEW YORK MELLON, FKA The Bank of New York, as trustee for the certificateholders of the CWABS, Inc., Asset-Backed Certificates, Series 2007-9; and ARLANA HARRIS A/K/A ARLANA D. BARR-HARRIS A/K/A ARLANA BARR-HARRIS, Appellees.

Case No. 2D17-2555.
District Court of Appeal of Florida, Second District.
Opinion filed December 28, 2018.
Appeal from the Circuit Court for Hillsborough County; Emmett Lamar Battles, Judge.

Mark P. Stopa of Stopa Law Firm, LLC, Tampa (withdrew after briefing); and Latasha Scott of Lord Scott, PLLC, Tampa, for Appellants.

J. Kirby McDonough and Lauren G. Raines of Quarles & Brady, LLP, Tampa, for Appellee The Bank of New York Mellon, fka The Bank of New York, as trustee for the certificateholders of the CWABS, Inc., Asset-Backed Certificates, Series 2007-9.

No appearance for Appellee Arlana Harris a/k/a Arlana D. Barr-Harris a/k/a Alana Barr-Harris.

SLEET, Judge.

Allen Harris challenges the trial court’s final order denying his motion for attorney’s fees in the foreclosure action brought against him by Bank of New York Mellon f/k/a Bank of New York, as Trustee for Certificateholders of the CWABS, Inc., Asset-Backed Certificates, Series 2007-9 (the Trust).[1] Harris successfully moved to have the foreclosure action involuntarily dismissed because the Trust failed to prove its standing as the holder of the note at the inception of the action as it had alleged in its complaint. After a hearing on attorney’s fees, the trial court denied Harris’ motion to recover fees under the mortgage contract and section 57.105(7), Florida Statutes (2014). Because record evidence established that there was a contractual relationship between the parties and because Harris was the prevailing party below, we reverse.

In 2007, Harris and his wife Arana executed a note and mortgage with the original lender, Countrywide Home Loans, Inc. On June 4, 2014, the Trust filed a lawsuit to foreclose the mortgage and enforce the terms of the note. In the complaint, the Trust alleged that it was the holder of the note, and it attached a copy of the note bearing a blank indorsement. A copy of the mortgage also was attached to the complaint. Paragraph 22 of the mortgage entitled the Trust to recover all attorney’s fees incurred in connection with this case.

Harris filed an answer and defenses, admitting that he had executed the note and mortgage but challenging the Trust’s standing to foreclose. The case proceeded to nonjury trial. The evidence adduced at trial is undisputed. The Trust called one witness, an employee of the loan servicer Specialized Loan Servicing (SLS), who testified that SLS, not the Trust, possessed the note at the time the foreclosure complaint was filed. The original blank-indorsed note and mortgage and an assignment dated April 12, 2012, which assigned the note and mortgage to the Trust, were admitted into evidence. At the close of the Trust’s case, Harris moved for involuntary dismissal and argued that the Trust did not prove that it was the holder of the note at the inception of the case because SLS possessed the note and there was no evidence of an agency relationship between the Trust and SLS. The trial court agreed and concluded that the Trust had failed to prove its standing at the inception of the case; the court therefore dismissed the lawsuit.

Having prevailed at trial, Harris filed a timely motion for attorney’s fees pursuant to the fee provision in the mortgage and section 57.105(7). The Trust filed a response, arguing that Harris could not recoup prevailing party attorney’s fees because the order of dismissal based upon lack of standing proved there was no contract between the parties and therefore Harris could not avail himself of the contractual fee provision or section 57.105(7). The trial court agreed and denied the motion for fees.

It is well settled that attorney’s fees may only be awarded when authorized by statute or contract. E.g., Snell v. Motts Contracting Servs., Inc., 141 So. 3d 605, 608 (Fla. 2d DCA 2014). Here, Harris relies on section 57.105(7) to statutorily transform the mortgage contract’s unilateral attorney fee provision into a reciprocal obligation. See Fla. Cmty. Bank, N.A. v. Red Road Residential, LLC, 197 So. 3d 1112, 1115 (Fla. 3d DCA 2016) (“[N]otwithstanding that the contractual fee provision is one-sided, entitling only one of the contract’s parties to prevailing party fees, by operation of law section 57.105(7) bestows on the other party to the contract the same entitlement to prevailing party fees.”). “Because it concerns a question of law, we review de novo a trial court’s final judgment determining entitlement to attorney’s fees based on a fee provision in the mortgage and the application of section 57.105(7).” Bank of N.Y. Mellon Tr. Co., N.A. v. Fitzgerald, 215 So. 3d 116, 118 (Fla. 3d DCA 2017).

Section 57.105(7) provides as follows:

If a contract contains a provision allowing attorney’s fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney’s fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to this contract. This subsection applies to any contract entered into on or after October 1, 1998.

Because section 57.105(7) shifts the responsibility for attorney’s fees, “the statute is in derogation of common law and must be strictly construed.” Fla. Cmty. Bank, 197 So. 3d at 1115.

In order to obtain prevailing party fees pursuant to section 57.105(7), the moving party must prove (1) that the contract provides for prevailing party fees, (2) that both the movant and opponent are parties to that contract, and (3) that the movant prevailed. See Nationstar Mortg. LLC v. Glass, 219 So. 3d 896, 898 (Fla. 4th DCA 2017) (en banc). Here, it is undisputed that the mortgage contract contains a provision that provides for prevailing party fees and that Harris prevailed at trial; therefore the only question before us is whether both Harris and the Trust were parties to the contract. We conclude that they were.

We find the Fifth District’s opinion in Madl v. Wells Fargo Bank, N.A., 244 So. 3d 1134 (Fla. 5th DCA 2017), to be instructive. In that case, at the time of inception of the lawsuit, Wells Fargo attached to its complaint a copy of the note, which was payable to the original lender and which contained no indorsements or allonges. The Madls then raised Wells Fargo’s lack of standing in their answer. At trial, Wells Fargo introduced the purported original note with an undated blank indorsement allegedly signed by the original lender. However, Wells Fargo’s witness could not testify as to when the indorsement was made. The Fifth District reversed the final judgment of foreclosure for lack of standing at the inception of the case, noting that “[w]here the plaintiff relies on an undated indorsement to establish its standing, it must prove that the indorsement was made prior to the filing of the complaint and that the indorsed note was in the plaintiff’s possession at the time the suit was filed.” Id. at 1136. The Fifth District nevertheless granted the Madls’ motion for appellate attorney’s fees. Id. at 1137. The Fifth District subsequently denied the bank’s motion for rehearing, which specifically challenged the attorney fee award:

Under current Florida law, the plaintiff in a mortgage foreclosure suit must prove that it has standing both at the time the suit is filed and at the time of trial; failure to have standing at either time requires dismissal of the suit. . . . [W]e found that [Wells Fargo] lacked standing when it filed suit. However, it did appear to have standing by the time of trial as a result of [the] delivery of the alleged original note.

[The Madls’] mortgage had been assigned to [Wells Fargo]. Like many others, the subject mortgage provides that only the lender is entitled to recover its litigation and appellate attorney’s fees incurred in successful collection or foreclosure actions. . . .

In order to obtain prevailing party fees pursuant to section 57.105(7), the moving party must prove three requirements: (1) the contract provides for prevailing party fees, (2) both the movant and opponent are parties to that contract, and (3) the movant prevailed. First . . . the [Madls’] mortgage contains the prevailing party fee provisions. Second, by virtue of the assignment and the indorsement, [Wells Fargo] joined [the Madls], the original mortgagors, as parties to the contract. Third, [the Madls] prevailed on appeal, resulting in dismissal of the underlying suit. Having satisfied all three requirements, [the Madls] are entitled to recover their attorney’s fees and expenses from [Wells Fargo].

Id. at 138-39 (citations omitted).

The instant case is on point with Madl. Here, the Trust failed to prove that it had standing at the time it filed the lawsuit. Nevertheless, the record demonstrates that the note and mortgage were assigned to the Trust in 2012. As such, the Trust became a party to the mortgage contract and was subject to the fee provision therein. And the requirements of section 57.105(7) are satisfied where it can be established that the prevailing party and its opponent are both parties to a contract that contains a prevailing party fee provision. Accordingly, Harris is entitled to an award of attorney’s fees from the Trust pursuant to the mortgage contract and section 57.105(7).

In so holding, we recognize that the Third, Fourth, and Fifth Districts each have held that when a party prevails by establishing that the plaintiff completely failed to prove standing, there is no longer a contract between the parties and no basis upon which to enforce a fee provision. See Glass, 219 So. 3d at 899 (denying a motion for appellate attorney’s fees and holding that “[a] party that prevails on its argument that dismissal is required because the plaintiff lacked standing to sue upon the contract cannot recover fees based upon a provision in that same contract”); Fitzgerald, 215 So. 3d at 121 (“Because Fitzgerald successfully obtained a judgment below that the Bank lacked standing to enforce the mortgage and note against her, we find that no contract existed between [the parties] that would allow Fitzgerald to invoke the mutuality provisions of section 57.105(7).”); HFC Collection Ctr., Inc. v Alexander, 190 So. 3d 1114 (Fla 5th DCA 2016)(reversing fee award where HFC could not establish that Alexander’s credit card debt had been assigned to it by American Express and holding that because no contract existed between the parties “`there [wa]s no basis to invoke the compelled mutuality provisions of’ section 57.105(7)” (quoting Fla. Med. Ctr., Inc. v. McCoy, 657 So. 2d 1248, 1252 (Fla. 4th DCA 1995))). However, we would initially note that these cases are factually distinguishable from the instant case.

In all of these cases, the evidence demonstrated that no contractual relationship existed between the parties. In Fitzgerald, the Third District reversed a fee award against the bank in a mortgage foreclosure because “[t]here was no Assignment of Mortgage, or any other document evidencing a transfer to the [Bank]” and accordingly “no contract existed between the parties.” 215 So. 3d at 117.[2] In Alexander, the appellant, who was the borrower in a credit card agreement, affirmatively proved that there was no assignment of that agreement to the appellee bank, who was the plaintiff below. Due to that lack of assignment, there was no evidence to establish that the bank was a party to the agreement.[3]Additionally, because Alexander involved credit card debt and not mortgage foreclosure, the bank’s lack of standing in that case was based on the fact that it was never made a party to the credit card agreement. Here, the Trust’s failure to prove standing turned on the very specific proof requirements involved in foreclosure law and did not establish that the Trust was not a party to the mortgage contract. Finally, the Glass opinion does not include enough facts to ascertain whether there was or was not a contractual relationship between Nationstar and Glass, whether there was an assignment of the note and mortgage, or whether Nationstar had standing at the time of trial.

In the instant case, however, the 2012 assignment that transferred the note and mortgage to the Trust was direct evidence that the Trust was a party to the mortgage contract regardless of the fact that the Trust failed to establish its standing to bring the foreclosure action. Whether a lender can establish standing as a holder of the note is predicated on its proving that it has possession—directly or through an agency relationship—of the instrument that is either executed in its favor or has a blank or special indorsement. That is an entirely different question than whether the lender and borrower are parties to a mortgage contract containing a fee provision. We therefore conclude that proof of standing is not required to establish a contractual relationship between the parties.

Although this factual distinction exists between the instant case and the cases relied on by the Trust, the broad language in those cases requires that we certify conflict with Fitzgerald and Glass to the extent that these opinions hold that a party’s failure to establish standing in a mortgage foreclosure case necessarily means that no contract existed between the parties.[4]

Finally, we address the inequity of denying a prevailing party attorney’s fees required by contract simply because the opposing party could not prove its standing to prosecute the claim. The purpose of section 57.105(7) is to level the playing field and “to ensure that each party gets what it gives[, i.e.,] the ability to recover fees in litigation arising under these contractual provisions.” Fla. Hurricane Protection & Awning Inc. v. Pastina, 43 So. 3d 893, 895 (Fla. 4th DCA 2010). Here, the Trust sued Harris alleging that it had a contractual relationship with him and that it had standing to foreclose on the mortgage and enforce the note. Harris was served with the complaint, hailed into court, and forced to retain an attorney. He admitted the contractual relationship but challenged the Trust’s evidence of standing. Ultimately, the trial court granted an involuntary dismissal based upon lack of proof of standing, which is fundamentally different than a dismissal based upon a party affirmatively proving that the plaintiff is not a party to the contract.

There are many other scenarios in which Harris could have prevailed and recovered his attorney’s fees. If the Trust had voluntarily dismissed the lawsuit, Harris would have been entitled to fees. If the Trust had failed to prove a default or the amount of indebtedness and the court granted an involuntary dismissal, Harris would have been entitled to fees. As such, it seems inequitable to deny him his fees in the instant case simply because the action was involuntarily dismissed due to the Trust’s failure to establish its standing as the holder of the note.

Because the record before us contains evidence that establishes the Trust as a party to the mortgage contract, we reverse and remand for an order granting Harris’ motion for attorney’s fees.

Reversed and remanded; conflict certified.

NORTHCUTT and CRENSHAW, JJ., Concur.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED.

[1] Arlana Harris was a named defendant below but makes no appearance in this appeal. She is included as an appellee pursuant to Florida Rule of Appellate Procedure 9.020(g)(2).

[2] Also, in support of its holding, Fitzgerald cites cases wherein there was no contractual basis for attorney’s fees because the mortgage was procured by fraud and/or the borrower’s signature was determined to be a forgery. See Fla. Cmty. Bank, N.A. v. Red Road Residential, LLC, 197 So. 3d 1112 (Fla. 3d DCA 2016)Bank of N.Y. Mellon v. Mestre, 159 So. 3d 953 (Fla. 5th DCA 2015).

[3] In all of the cases cited within Alexander, the underlying contract either did not exist or the party moving for fees was not a party thereto. See Mestre, 159 So. 3d 953Surgical Partners, LLC, v. Choi, 100 So. 3d 1267 (Fla. 4th DCA 2012)Novastar Mortg., Inc. v. Strassburger, 855 So. 2d 130 (Fla. 4th DCA 2003).

[4] We need not certify conflict with Alexander, 190 So. 3d 1114, which was not a mortgage foreclosure case and therefore is not in direct conflict with our holding here.

 

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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TFH 12/30 | Exclusive Tell-All Eye-Witness Interview With a Retiring Mainland Big Law Supervising Foreclosure Attorney (First Broadcast on January 21, 2018)

TFH 12/30 | Exclusive Tell-All Eye-Witness Interview With a Retiring Mainland Big Law Supervising Foreclosure Attorney (First Broadcast on January 21, 2018)

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

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Sunday – December 30, 2018

Exclusive Tell-All Eye-Witness Interview With a Retiring Mainland Big Law Supervising Foreclosure Attorney (First Broadcast on January 21, 2018)

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 ———————

 

For several years, perhaps naively, The Foreclosure Hour had been trying to secure an interview with an experienced national or local foreclosure attorney willing to reveal the inside story concerning how mortgage fraud is planned and implemented directly from the highest levels of American Government, through large Mainland law firms, down to the smallest local foreclosure mills.

Finally, we found one such individual a year ago who said he is a regular listener to our show, who vacationing in Hawaii and looking for a home to purchase, planning to retire here, expressed his willingness to talk with us and even to take questions, if respectful, from our listeners so we invited him on our show at the start of this year.

As we prepare for 2019, it seems important to air that show with “Chuck” once again, for among his many frank if sometimes guarded revelations was how our courts are being intentionally deceived by the federal government through Fannie Mae and Freddie Mac, using the legal services of Chuck and his prestigious Big Law colleagues on the Mainland to mislead American Courts.

For obvious reasons our guest preferred to keep his identity hidden, who we agreed only to refer to as “Chuck,” who promised to reveal the underworld secrets that most of us have heretofore only been guessing about.

Please join us this Sunday as we again broadcast Chuck’s description of what many believe is the biggest fraud ever in American history, especially on our courts which as we proceed into 2019 are in most jurisdictions still unwittingly being used as collection agencies for securitized trust crooks.

Gary Dubin

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Host: Gary Dubin Co-Host: John Waihee

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CALL IN AT (808) 521-8383

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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The Foreclosure Hour 12

 

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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The Bank of New York Mellon FKA The Bank of New York v. West | HAWAII ICA – The record lacks the admissible evidence that establishes BONYM’s entitlement to enforce the Note and Allonge when this action was commenced… Judgments Vacated!

The Bank of New York Mellon FKA The Bank of New York v. West | HAWAII ICA – The record lacks the admissible evidence that establishes BONYM’s entitlement to enforce the Note and Allonge when this action was commenced… Judgments Vacated!

Fresh from the Court another from Dubin Law Offices!

6630964491 by on Scribd

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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RAMIREZ v AURORA LOAN SERVICES | HAWAII ICA – This one is huge, regarding retroactivity and sufficiency of a Declaration pertaining here to having made trial payments

RAMIREZ v AURORA LOAN SERVICES | HAWAII ICA – This one is huge, regarding retroactivity and sufficiency of a Declaration pertaining here to having made trial payments

Great News out of DUBIN LAW OFFICES!

2414813352 by on Scribd

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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