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COMPLAINT | Sand Canyon Corp. v. American Home Mortgage Servicing, Inc

COMPLAINT | Sand Canyon Corp. v. American Home Mortgage Servicing, Inc


SUPREME COURT OF NEW YORK

Sand Canyon Corporation,

Plaintiff

v.

American Home Mortgage Servicing, Inc.

Defendant

[ipaper docId=86295973 access_key=key-25g1cjdadqi8na4avshn height=600 width=600 /]

 

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New MBS twist: Sand Canyon sues servicer for releasing loan info

New MBS twist: Sand Canyon sues servicer for releasing loan info


Alison Frankel-

Just when you think you’ve seen it all in mortgage-backed securities litigation, along comes the likes of Sand Canyon to prove you wrong.

The onetime California mortgage lender, which stopped originating loans in late 2007 and sold its servicing business to American Home Mortgage Servicing in 2008, has filed a complaint in New York State Supreme Court in Manhattan that accuses American Home of making it too easy for MBS trustees and insurers to get hold of underlying loan files. In essence, Sand Canyon’s lawyers at Cahill Gordon & Reindel are arguing that the servicer should be helping it thwart claims that it breached representations and warranties about the mortgages it sold to MBS issuers, not smoothing the way for put-back demands.

Sand Canyon’s 26-page complaint, filed last month, asserts that American Home pledged to act as an ally when it bought the servicing business in 2008. “Sand Canyon bargained for and obtained (American Home’s) cooperation in connection with Sand Canyon’s defense,” the complaint said. Under their agreement, according to the complaint, American Home was supposed to “refrain from disclosing confidential loan information to third parties except as required by law.”

[REUTERS LEGAL]

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Wells Fargo Bank, N.A. v Gallo | NYSC “GAP NOTE”, “GAP MORTGAGE”, “CONSOLIDATED NOTE”

Wells Fargo Bank, N.A. v Gallo | NYSC “GAP NOTE”, “GAP MORTGAGE”, “CONSOLIDATED NOTE”


NEW YORK SUPREME COURT – QUEENS COUNTY

WELLS FARGO BANK, N.A., as Trustee for
the Certificateholders of Soundview
Home Loan Trust 2007-OPT5, etc.

Plaintiff,

-against-

JOHN A. GALLO; ET AL.,

 

EXCERPTS:

A copy of a “GAP NOTE”, which John A. Gallo obtained from Option
One Mortgage Corporation, in the sum $24,654.98, dated August 13,
2007.

A copy of a “GAP MORTGAGE” dated August 13, 2007, on the subject
real property given by John A. Gallo to Option One Mortgage
Corporation, which refers to the note of August 13, 2007 in the sum
of $27,555.49. The gap mortgage was recorded on October 18, 2007.

A copy of an allonge, which refers to the note dated August 13,
2007, made by John A. Gallo, and states that the loan amount of
$335,000.00.

A consolidated note dated August 13, 2007 given by John A. Gallo to
Option One Mortgage Corporation, in the sum of $335,000.00. Said
note recites that it “AMENDS AND RESTATES IN THEIR ENTIRETY, AND IS
GIVEN IN SUBSTITUTION FOR THE NOTES DESCRIBED IN EXHIBIT A OF THE
NEW YORK CONSOLIDATION, EXTENSION, AND MODIFICATION AGREEMENT
[CEMA] DATED THE SAME DATE AS THIS NOTE”.

A copy of the CEMA, dated August 13, 2007, between John A. Gallo,
and the lender One Option Mortgage Corporation, which recites that
the total unpaid principal balance of the notes is $335,000.00, and
that $27,555.49 was advanced to the borrower or on his account,
immediately prior to the consolidation.

An assignment dated November 17, 2007, and recorded on January 31,
2008, by H & R Block Mortgage Corporation to Option One Mortgage
Corporation, of the mortgage pertaining to the subject property
dated and recorded on August 3, 2006 given by John A. Gallo to H &
R Block Mortgage Corporation.

An assignment of the mortgage on the subject property by Sand
Canyon Corporation, formerly known as Option One Mortgage
Corporation to Wells Fargo, dated December 18, 2009, and recorded
on January 11, 2010.

Plaintiff has also submitted an affidavit from Michelle
Halyard, a vice president of American Home Mortgage Servicing Inc.,
who states that this entity is the loan servicing agent and
attorney in fact for Wells Fargo. She states that Mr. Gallo failed
to make all of the monthly payments of due as required by the note
and mortgage, and sets forth the date of default as April 1, 2009
and recites that amounts due for principal, interest, late charges
and advances for taxes, hazard insurance, appraisal and inspections
for a total of $370,428.92. Plaintiff has also submitted a copy of
the May 16, 2008 limited power of attorney appointing Option One
issued in connection with the servicing of certain mortgage loans.

 […]

Therefore, as plaintiff may not rely upon the consolidated
note and as it has not established that it was in possession of
the original note at the time it commenced the within action, it
lacks standing to maintain this foreclosure action.

[ipaper docId=76277397 access_key=key-g2rjreovpt33g9od1y0 height=600 width=600 /]

 

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Wroblewski v. AMERICAN HOME MORTGAGE SERVICING, INC. – FL 5DCA Reverses SJ for failure to comply with the condition precedent contained in the mortgage, requiring notice and opportunity to cure

Wroblewski v. AMERICAN HOME MORTGAGE SERVICING, INC. – FL 5DCA Reverses SJ for failure to comply with the condition precedent contained in the mortgage, requiring notice and opportunity to cure


MICHELLE WROBLEWSKI, Appellant,
v.
AMERICAN HOME MORTGAGE SERVICING, INC., Appellee.

Case No. 5D10-1068.
District Court of Appeal of Florida, Fifth District.

Opinion filed September 9, 2011.
Tanner Andrews of Tanner Andrews, P.A., Deland, for Appellant.

Michael Cavendish and Ana D. Johnson of Gunster, Yoakley & Stewart, P.A., Jacksonville, for Appellee.

PER CURIAM.

We reverse the summary judgment of foreclosure because Appellee failed to overcome Appellant’s assertion in her answer that Appellee had failed to comply with the condition precedent contained in the mortgage, requiring notice and opportunity to cure. Morrison v. U.S. Bank, N.A., 36 Fla. L. Weekly D1646 (Fla. 5th DCA July 29, 2011); Konsulian v. Busey Bank, N.A., 61 So. 3d 1283 (Fla. 2d DCA 2011).

REVERSED and REMANDED.

GRIFFIN, MONACO and TORPY, JJ., concur.

[ipaper docId=65026737 access_key=key-1z5wtn1bnnxpigk27dyu height=600 width=600 /]

 

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Court rulings complicate evictions for lenders in Oregon

Court rulings complicate evictions for lenders in Oregon


“Those issues give credence to Defendan’t argument that this case is better brought as one to quiet title and then for ejectment.”

 

OregonLive-

Another Oregon woman successfully halted a post-foreclosure eviction after a judge in Hood River found the bank could not prove it held title to the home.

Sara Michelotti’s victory over Wells Fargo late last week carries no weight in other Oregon courts, attorneys say. But it illustrates a growing problem for banks  — if the loans’s ownership history isn’t recorded properly, foreclosed homeowners might be able to fight even an eviction.

“There’s this real uncertainty from county to county about what that eviction process is going to look like for the lender,” said Brian Cox, a real estate attorney in Eugene who represented Wells Fargo.

Michelotti’s case revolved around a subprime mortgage lender, Option One Mortgage Corp., that went out of business during the housing crisis. Circuit Court Judge Paul Crowley ruled that it was not clear when or how Option One transferred Michelotti’s mortgage to American Home Mortgage Servicing Inc., which foreclosed on her home and later sold it to Wells Fargo.

[OREGON LIVE]

[ipaper docId=64758413 access_key=key-1wgv40jymxhu95iu3qr6 height=600 width=600 /]

 

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Cape Coral couple sue Wells Fargo, Sold them home it didn’t own

Cape Coral couple sue Wells Fargo, Sold them home it didn’t own


If you recall it, I believe Mr. Barnhart is a Real Estate broker, so even the pros can be duped without even realizing this.

News-Press-

Brian and Holly Barnhart of Cape Coral – who were sold a house by Wells Fargo Bank even though the bank didn’t own the property – have filed a lawsuit alleging fraud and negligence.

The Barnharts, who emptied their life savings to buy the house for $153,000 cash and renovate it for another $80,000, bought the house in November.

But it turned out Wells Fargo had given the house back to its original owner …

[NEWS-PRESS]

[Image] The News-Press

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COMPLAINT + EXHIBITS | American Home Mortgage Servicing Inc. Vs. Lender Processing Services Inc., DOCX

COMPLAINT + EXHIBITS | American Home Mortgage Servicing Inc. Vs. Lender Processing Services Inc., DOCX


American Home Mortgage

Servicing Inc.

v.

Lender Processing Services

Inc., DOCX, L.L.C

[ipaper docId=63851479 access_key=key-19uowkk1cinmvgl4xmqi height=600 width=600 /]

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Beyond Robosigning Forgers – The Truths Exposed in the AHMSI Suit

Beyond Robosigning Forgers – The Truths Exposed in the AHMSI Suit


Abigail C. Field-

The American Home Servicing lawsuit against consummate and prolific robosigner Lender Processing Services is a pretty good read, but if you don’t have the time, I’ve highlighted the best nuggets.

Page 1: American Home Servicing Inc. says that over 30,000 assignments of mortgage in Texas and across America are fraudulent—“improperly executed, notarized and recorded”.

Page 2: American Home renames robosigners “Special Officers” to suggest the robosigners were legitimately signing the assignments of mortgages.


[REALITY CHECK]

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PETITION | American Home Mortgage Servicing Inc. Vs. Lender Processing Services Inc., DOCX “Bombshell Admission of Failed Securitization Process”

PETITION | American Home Mortgage Servicing Inc. Vs. Lender Processing Services Inc., DOCX “Bombshell Admission of Failed Securitization Process”


Via NAKED CAPITALISM-

Wow, Jones Day just created a huge mess for its client and banks generally if anyone is alert enough to act on it.

The lawsuit in question is American Home Mortgage Servicing Inc. v Lender Processing Services. It hasn’t gotten all that much attention (unless you are on the LPS deathwatch beat) because to most, it looks like yet another beauty contest between Cinderella’s two ugly sisters.

[NAKED CAPITALISM]

.

Looks to me like the year was changed from 2009 to 2008 below…VERY SUSPICIOUS!

 

[ipaper docId=113924002 access_key=key-bo4zjmcs0z1kverjrx2 height=600 width=600 /]

 

 

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AHMSI sues LPS and DocX over robo-signing scandal

AHMSI sues LPS and DocX over robo-signing scandal


UPDATE 9/25:

PETITION | American Home Mortgage Servicing Inc. Vs. Lender Processing Services Inc., DOCX “Bombshell Admission of Failed Securitization Process”

`

Rumor has it for a bit now that all things robo-signing would see an end shortly after “Labor Day”, so now what happens to those who were unlawfully foreclosed upon? How do you justify that AHMSI knew of this for over a year to come to an unsuccessful agreement to settle with LPS?

HousingWire-

Lender Processing Services Inc. (LPS: 17.07 -2.29%) and its DocX affiliate caused American Home Mortgage Servicing Inc. to lose millions from the robo-signing of mortgage documents, a lawsuit filed Tuesday contends.

Coppell, Texas-based AHMSI filed suit in a Dallas district court against Jacksonville, Fla.-based LPS alleging more than 30,000 residential mortgages across the country were affected by  “improper execution, notarization and recording of assignments of mortgage.”

[HOUSING WIRE]

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FOUST VS. WELLS FARGO | Nevada Supreme Court Reverses/Remands “Substitution of AHMSI Default as trustee may have been an error, Remand as to whether Wells Fargo was entitled to Enforce the Note”

FOUST VS. WELLS FARGO | Nevada Supreme Court Reverses/Remands “Substitution of AHMSI Default as trustee may have been an error, Remand as to whether Wells Fargo was entitled to Enforce the Note”


IN THE SUPREME COURT OF THE STATE OF NEVADA

GEORGE M. FOUST AND BECKY H.
FOUST, AS HUSBAND AND WIFE,
Appellants,

vs.

WELLS FARGO, N.A., STATE OF
INCORPORATION PRESENTLY
UNKNOWN; MORTGAGE
ELECTRONIC REGISTRATION
SYSTEMS, INC.; AND AMERICAN
HOME SERVICING MORTGAGES,
INC., A DELAWARE CORPORATION,
Respondents.

ORDER OF REVERSAL AND REMAND

This is an appeal from a district court order dismissing a complaint as to respondents, certified as final under NRCP 54(b), in a foreclosure action. Eighth Judicial District Court, Clark County; Timothy C. Williams, Judge.

EXCERPTS:

On January 30, 2009, Wells Fargo signed a document substituting AHMSI Default Services, Inc. (AHMSI Default), as a substitute trustee, but did not have this document acknowledged until February 2, 2009. Also on January 30, 2009, AHMSI Default, acting as a substitute trustee for Wells Fargo, signed and acknowledged a notice of default against the Fousts, and recorded the same on February 2, 2009. However, Wells Fargo’s status as of January 30, 2009, is unclear.

According to the record, American Home Mortgage Servicing, Inc., executed an assignment of the deed of trust to Wells Fargo on February 20, 2009, which was recorded on February 25, 2009. It included a provision stating “Misc. Comments: EFFECTIVE DATE OF ASSIGNMENTS: 01/02/2009.” This effective date is prior to the date on which Wells Fargo substituted AHMSI Default as trustee.

[…]

The issues the Fousts raise on appeal are: (1) whether AHMSI Default wrongfully commenced a foreclosure against them because AHMSI Default was not a proper substitute trustee, as Wells Fargo was not entitled to enforce the note; and (2) whether Wells Fargo was assigned the deed of trust prior to the date on which AHMSI Default entered the notice of default. We conclude that the district court erred in granting the motion to dismiss because the Fousts presented a claim upon which relief could be granted. Thus, we reverse and remand this matter to the district court for further proceedings consistent with this order.

Standard of review

We review the district court’s legal conclusions, including a determination that a plaintiff has failed to state any legitimate causes of action under NRCP 12(b)(5), de novo. See Buzz Stew, LLC v. City of N. Las Vegas, 124 Nev. 224,  228, 181 P.3d 670, 672 (2008). In reviewing motions to dismiss pursuant to NRCP 12(b)(5), we accept all facts in the complaint as true, construe the pleadings liberally, and draw all possible inferences in favor of the nonmoving party: Id.; Blackjack Bonding v. Las Vegas Mun. Ct., 116 Nev. 1213, 1217, 14 P.3d 1275, 1278 (2000). This standard of review is rigorous, and the plaintiffs “complaint should be dismissed only if it appears beyond a doubt that it could prove no set of facts, which, if true, would entitle it to relief.” Buzz Stew, 124 Nev. at 227-28, 181 P.3d at 672.

The Fousts stated a claim upon which relief can be granted

This appeal focuses on the Fousts’ fifth cause of action, in which the Fousts alleged that Wells Fargo may not own the note and mortgage and, therefore, lacked standing to foreclose. Construing this allegation liberally and drawing all possible inferences in favor of the Fousts, the first amended complaint presents a claim upon which relief could be granted.

While deeds of trust and mortgage notes work together in the context of mortgage lending, they are distinct documents with separate functions. Leyva v. National Default Servicing Corp., 127 Nev. „ P.3d , (Adv. Op. No. 40, July 7, 2011). We do not analyze those distinctions here, but possessing only the deed of trust does not create an entitlement to enforce the underlying note. See In re Veal, No. 09-14808, 2011 WL 2304200, at *12 (B.A.P. 9th Cir. June 10, 2011). To enforce a debt secured by a deed of trust and mortgage note, a person must be entitled to enforce the note pursuant to Article 3 of the Uniform Commercial Code. Id. at *7; see also Restatement (Third) of Property: Mortgages § 5.4(c) (1997) (“A mortgage may be enforced only by, or in behalf of, a person who is entitled to enforce the obligation the mortgage secures.”). “Article 3 is codified in NRS 104.3101-.3605.” Levva, 127 Nev. at n.6, P.3d at n.6. If Wells Fargo was not entitled to enforce the note, then the substitution of AHMSI Default as trustee and the subsequent foreclosure notice against the Fousts may have been in error.

Therefore, the central inquiry on remand is whether Wells Fargo was entitled to enforce the note. 5

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LEYVA v. National Default Servicing Corp. | Nevada Supreme Court Remand and Reverse “Defective ASMT, U.C.C Article 3, No Endorsement, In Re Pasillas, Wells Fargo, MortgageIt”

LEYVA v. National Default Servicing Corp. | Nevada Supreme Court Remand and Reverse “Defective ASMT, U.C.C Article 3, No Endorsement, In Re Pasillas, Wells Fargo, MortgageIt”


Cite as: Leyva v. National Default Servicing Corp.

127 Nev. Adv. Op. No. 40

July 7, 2011

IN THE SUPREME COURT OF THE STATE OF NEVADA

No. 55216

MOISES LEYVA,

Appellant,

vs.

NATIONAL DEFAULT SERVICING CORP.; AMERICA’S SERVICING COMPANY; AND WELLS FARGO,

Respondents.

Appeal from a district court order denying a petition for judicial review in a foreclosure mediation action.  Eighth Judicial District Court, Clark County; Donald M. Mosley, Judge.

Reversed and remanded.

Crosby & Associates and David M. Crosby and Troy S. Fox, Las Vegas, for Appellant.

Snell & Wilmer, LLP, and Gregory A. Brower and Cynthia Lynn Alexander, Las Vegas, for Respondents America’s Servicing Company and Wells Fargo.

Wilde & Associates and Gregory L. Wilde, Las Vegas, for Respondent National Default Servicing Corp.

BEFORE THE COURT EN BANC.

OPINION

By the Court, HARDESTY, J.:

In this appeal, we consider issues arising out of Nevada’s Foreclosure Mediation Program.  First, we must determine whether a homeowner who is not the original mortgagor is a proper party to participate in the program.  We conclude that the Foreclosure Mediation statute, NRS 107.086, and the Foreclosure Mediation Rules (FMRs) dictate that a homeowner, even if he or she is not the named mortgagor, is a proper party entitled to request mediation following a notice of default.

Second, we must determine if a party is considered to have complied with the applicable statute and FMRs governing document production in a mediation proceeding by producing what the district court referred to as “essential documents.”  In this, we address whether substantial compliance satisfies the mandates of the statute and FMRs.  Because we conclude that strict compliance is compelled by NRS 107.086(4) and (5), that the assignment offered was defective, and that no endorsement of the mortgage note was provided according to Article 3 of the Uniform Commercial Code, we conclude that Wells Fargo failed to produce the documents required under NRS 107.086(4).  Additionally, we recently concluded in Pasillas v. HSBC Bank USA, 127 Nev. ___, ___ P.3d ___ (Adv. Op. No. 39, July 7, 2011), that a party’s failure to produce the enumerated documents required by NRS 107.086 and the FMRs prohibits the district court from directing the program administrator to certify the mediation so that the foreclosure process can proceed.  Here, we again conclude that, due to the statute’s and the FMRs’ mandatory language regarding document production, a party is considered to have fully complied with the statute and rules only upon production of all documents required.  Failure to do so is a sanctionable offense, and the district court is prohibited from allowing the foreclosure process to proceed.  Therefore, we must reverse and remand this case to the district court for it to determine appropriate sanctions against respondents.[1]

FACTS AND PROCEDURAL HISTORY

Appellant Moises Leyva received and recorded a quitclaim deed in 2007 in exchange for taking over monthly mortgage payments on a residence in Las Vegas.  Leyva did not expressly assume the mortgage note, however, and it remained in the original mortgagor’s name, Michael Curtis Ramos.  Nonetheless, Leyva made the mortgage payments in Leyva’s name to respondent Wells Fargo’s servicing company for 25 months.  Thereafter, Leyva defaulted on the mortgage and, upon receiving a notice of election to sell, decided to pursue mediation through the Foreclosure Mediation Program.  Both he and Ramos signed the form electing to mediate.  The mediation occurred on September 23, 2009,[2] and Leyva, Ramos, and Wells Fargo were represented by counsel at the mediation.  Leyva was present at the mediation, while Ramos was available by telephone.  At the mediation, Wells Fargo produced a certified copy of the original deed of trust and mortgage note, on both of which MortgageIT, Inc., not Wells Fargo, was named as the lender, as well as a notarized statement from a Wells Fargo employee asserting that Wells Fargo was in possession of the deed of trust and mortgage note, as well as any assignments thereto.  Wells Fargo did not submit copies of any assignments.  The parties failed to resolve the foreclosure at the mediation, and the mediator’s statement indicated that Wells Fargo failed to bring the statutorily required documents to the mediation.  The mediator did not, however, indicate that Wells Fargo participated in the mediation in bad faith.

Leyva then filed a petition for judicial review in district court, claiming that Wells Fargo mediated in bad faith and that it should be sanctioned.  After conducting hearings on the petition, the district court found that

there is a lack of showing of bad faith on the part of [Wells Fargo] in that all essential documents were provided, contrary to the indication of the mediator, and that [Wells Fargo] otherwise negotiated in good faith notwithstanding the fact that an agreement was not reached.

Absent timely appeal, a Letter of Certification shall enter.

(Emphasis added.)  This appeal followed.[3]

DISCUSSION

In resolving this appeal, as a preliminary matter, we must determine whether Leyva could properly elect to mediate and participate in the mediation even though he was not a named party on the mortgage note and did not assume the note in his purchase of the residence.  Determining that he could participate as the title holder of record, we next consider whether the district court erred in finding that Wells Fargo brought “all essential documents” to the mediation.  In doing so, we address Wells Fargo’s argument that possessing the original mortgage note and deed of trust is sufficient to demonstrate ownership of the same.  We conclude that Wells Fargo failed to produce the documents required under the applicable statute and FMRs and to otherwise show that it had an enforceable interest in the property subject of the mediation.  Accordingly, the district court abused its discretion, and sanctions are warranted pursuant to our holding in Pasillas, 127 Nev. at ___, ___ P.3d at ___.

Leyva was a proper party to the mediation

Wells Fargo first argues that because Leyva was neither the grantor on the deed of trust nor the obligor on the note, he was not a proper party to the mediation.  We disagree.

NRS 107.086(3) allows “[t]he grantor or the person who holds the title of record” to elect to mediate.  (Emphasis added.)  Similarly, FMR 5(1) states that “any grantor or person who holds the title of record and is the owner-occupant of a residence” is eligible to participate in the Foreclosure Mediation Program.  (Emphasis added.)  Leyva recorded his ownership of the subject property in March 2007 and is therefore clearly the title holder of record eligible to participate in the Foreclosure Mediation Program.

Even though the mortgage note remained in Ramos’s name, this bifurcation of title ownership and liability on the note served only to potentially limit the foreclosure solutions available to Leyva at the mediation, not to exclude all possible remedies.  And while Wells Fargo argues that modification was not an option because Leyva lacked authority over the loan, the record reflects that Ramos, the person with such authority, signed the election-of-mediation form, was represented by counsel at the mediation, and was available by telephone during the mediation.  Therefore, Wells Fargo’s argument lacks merit.  Regardless, because both NRS 107.086(3) and FMR 5(1) permit the person holding the title of record to mediate, and Wells Fargo does not dispute that Leyva possessed a valid, recorded quitclaim deed, we conclude that Leyva could properly elect to mediate and was eligible to participate in the Foreclosure Mediation Program.

Wells Fargo failed to meet the mediation program’s documentation requirements, compelling consideration of sanctions

In Pasillas, we held that if a party fails to (1) provide the required documents, or (2) either attend the mediation in person or, if the beneficiary attends through a representative, that person fails to have authority to modify the loan or access to such a person, the district court is required to impose appropriate sanctions.  127 Nev. at ___, ___ P.3d at ___. Here, despite Wells Fargo’s failure to bring the assignments for the mortgage note and deed of trust, the district court refused to impose sanctions.[4]  “[W]e . . . review a district court’s decision regarding the imposition of sanctions for a party’s participation in the Foreclosure Mediation Program under an abuse of discretion standard.”  Id.

Wells Fargo concedes that it did not provide written assignments of the deed of trust and mortgage note as required by NRS 107.086(4) and FMR 5(6).  Nevertheless, it argues that it fulfilled the purpose of the statute and rule, and thus, its failure to bring actual copies of any assignments was harmless.  In essence, Wells Fargo asserts that its failure to strictly comply with the statute’s and FMRs’ requirements should not subject it to sanctions, because it substantially complied with those requirements.

“Substantial compliance may be sufficient ‘to avoid harsh, unfair or absurd consequences.’  Under certain procedural statutes and rules, however, failure to strictly comply . . . can be fatal to a case.”  Leven v. Frey, 123 Nev. 399, 407, 168 P.3d 712, 717 (2007) (quoting 3 Norman J. Singer, Statutes and Statutory Construction § 57:19, at 58 (6th ed. 2001)).  To determine whether a statute and rule require strict compliance or substantial compliance, this court looks at the language used and policy and equity considerations.  Id. at 406-07, 168 P.3d at 717.  In so doing, we examine whether the purpose of the statute or rule can be adequately served in a manner other than by technical compliance with the statutory or rule language.  See id. at 407 n.27, 168 P.3d at 717 n.27 (citing White v. Prince George’s County, 877 A.2d 1129, 1137 (Md. Ct. Spec. App. 2005) (“Where the purpose of the notice requirements is fulfilled, but not necessarily in a manner technically compliant with all of the terms of the statute, this Court has found such substantial compliance to satisfy the statute.” (internal quotation omitted))).

Here, both the statutory language and that of the FMRs provide that the beneficiary “shall” bring the enumerated documents, and we have previously recognized that “‘shall’ is mandatory unless the statute demands a different construction to carry out the clear intent of the legislature.”  S.N.E.A. v. Daines, 108 Nev. 15, 19, 824 P.2d 276, 278 (1992); see also Pasillas, 127 Nev. at ___, ___ P.3d at ___.  The legislative intent behind requiring a party to produce the assignments of the deed of trust and mortgage note is to ensure that whoever is foreclosing “actually owns the note” and has authority to modify the loan.  See Hearing on A.B. 149 Before the Joint Comm. on Commerce and Labor, 75th Leg. (Nev., February 11, 2009) (testimony of Assemblywoman Barbara Buckley).  Thus, we determine that NRS 107.086 and the FMRs necessitate strict compliance.

Because we conclude that strict compliance is necessary, we must discuss what constitutes a valid assignment of deeds of trust and mortgage notes.  Transfers of deeds of trust and mortgage notes are distinctly separate, thus we discuss each one in turn.

The deed of trust, with any assignments, identifies the person who is foreclosing

In this case, Wells Fargo was not the original named beneficiary on the deed of trust, but it contends on appeal that it has the right to foreclose as the assignee of the original beneficiary, MortgageIT.  Although Wells Fargo conceded during oral argument that it did not provide the written assignment, it claims that because it provided a certified copy of the deed of trust and a notarized statement from its employee claiming that it was the rightful owner of the deed of trust, no written assignment was necessary.  We disagree.

A deed of trust is an instrument that “secure[s] the performance of an obligation or the payment of any debt.”  NRS 107.020.  This court has previously held that a deed of trust “constitutes a conveyance of land as defined by NRS 111.010.”[5]  Ray v. Hawkins, 76 Nev. 164, 166, 350 P.2d 998, 999 (1960).  The statute of frauds governs when a conveyance creates or assigns an interest in land:

No estate or interest in lands, . . . nor any trust or power over or concerning lands, or in any manner relating thereto, shall be created, granted, assigned, surrendered or declared . . . , unless . . . by deed or conveyance, in writing, subscribed by the party creating, granting, assigning, surrendering or declaring the same, or by the party’s lawful agent thereunto authorized in writing.

NRS 111.205(1) (emphases added).  Thus, to prove that MortgageIT properly assigned its interest in land via the deed of trust to Wells Fargo, Wells Fargo needed to provide a signed writing from MortgageIT demonstrating that transfer of interest.  No such assignment was provided at the mediation or to the district court, and the statement from Wells Fargo itself is insufficient proof of assignment.  Absent a proper assignment of a deed of trust, Wells Fargo lacks standing to pursue foreclosure proceedings against Leyva.

Mortgage note

The proper method of transferring the right to payment under a mortgage note is governed by Article 3 of the Uniform Commercial Code- Negotiable Instruments, because a mortgage note is a negotiable instrument.[6]  Birkland v. Silver State Financial Services, Inc., No. 2:10-CV-00035-KJD-LRL, 2010 WL 3419372, at *4 (D. Nev. Aug. 25, 2010).  The obligor on the note has the right to know the identity of the entity that is “entitled to enforce” the mortgage note under Article 3, see NRS 104.3301, “[o]therwise, the [homeowner] may pay funds to a stranger in the case.”  In re Veal, No. 09-14808, 2011 WL 2304200, at *16 (B.A.P. 9th Cir. June 10, 2011) (holding, in a bankruptcy case, that AHMSI did not prove that it was the party entitled to enforce, and receive payments from, a mortgage note because it “presented no evidence as to who possessed the original Note.  It also presented no evidence showing [e]ndorsement of the note either in its favor or in favor of Wells Fargo, for whom AHMSI allegedly was servicing the [bankrupt party’s] Loan.”).  If the homeowner pays funds to a “stranger in the case,” then his or her obligation on the note would not be reduced by the payments made. See id. at *7 (“if a[n obligor on a mortgage note] makes a payment to a ‘person entitled to enforce,’ the obligation is satisfied on a dollar for dollar basis, and the [obligor] never has to pay that amount again”).

Wells Fargo argues that, under Nevada law, possession of the original note allowed it to enforce the note.  We disagree and take this opportunity to clarify the applicability of Article 3 to mortgage notes, as we anticipate increasing participation in the Foreclosure Mediation Program, as well as a corresponding increase in the number of foreclosure appeals in this state.  As discussed below, we conclude that Article 3 clearly requires Wells Fargo to demonstrate more than mere possession of the original note to be able to enforce a negotiable instrument under the facts of this case.

Pursuant to NRS 104.3102(1), Article 3 applies to negotiable instruments.  Negotiable instruments are defined as

an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

(a) Is payable to bearer or to order at the time it is issued or first comes into possession of a holder;

(b) Is payable on demand or at a definite time; and

(c) Does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money.

NRS 104.3104(1).  Thus, a mortgage note is a negotiable instrument, and any negotiation of a mortgage note must be done in accordance with Article 3.

A note can be made payable to bearer or payable to order.  NRS 104.3109.  If the note is payable to bearer, that “indicates that the person in possession of the promise or order is entitled to payment.”  NRS 104.3109(1)(a).  However, “[a] promise or order that is not payable to bearer is payable to order if it is payable to the order of an identified person . . . . A promise or order that is payable to order is payable to the identified person.”  NRS 104.3109(2).

For a note in order form to be enforceable by a party other than to whom the note is originally payable, the note must be either negotiated or transferred.[7]  A “‘[n]egotiation’ means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.”  NRS 104.3201(1).  “[I]f an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its endorsement by the holder.”[8]  NRS 104.3201(2) (emphasis added).  An “endorsement” is a signature that is “made on an instrument for the purpose of negotiating the instrument.”  NRS 104.3204(1).  Thus, if the note is payable to the order of an identifiable party, but is then sold or otherwise assigned to a new party, it must be endorsed by the party to whom it was originally payable for the note to be considered properly negotiated to the new party.  Once a proper negotiation occurs, the new party, or “note holder,” with possession is entitled to enforce the note.  NRS 104.1201(2)(u)(1) (“Holder means . . . [t]he person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.”).

If a party cannot attain “holder” status by showing a valid negotiation, the party may establish its right to enforce the note by showing that the note has been validly transferred.  NRS 104.3203(2).  The only distinction between a negotiation and a transfer is that, in the case of a transfer, the note need not be endorsed by the party who is relinquishing enforcement rights.  Because a transferred note is not endorsed, however, the party seeking to establish its right to enforce the note “must account for possession of the unendorsed instrument by proving the transaction through which the transferee acquired it.”  U.C.C. § 3-203 cmt. 2 (explaining the effect of § 3-203(b), codified in Nevada as NRS 104.3203(2)).  In other words, because the party seeking to enforce the note cannot “prove” its right to enforce through the use of a valid endorsement, the party must “prove” by some other means that it was given possession of the note for the purpose of enforcing it.[9]

In this case, the adjustable rate mortgage note provides:  “In return for a loan that I have received, I promise to pay U.S. $192,000.00 . . . plus interest, to the order of Lender.  Lender is [MortgageIT, Inc.]” (emphasis added).  Because the mortgage note is payable to the order of a specific party, MortgageIT, to negotiate the note to a new party, in this case Wells Fargo, Wells Fargo must have possession of the note and the note must be properly endorsed by MortgageIT.  See NRS 104.3201(2).  No such endorsement was included in the documents produced at mediation or in the documents filed with the district court, nor was a valid assignment produced as proof of the note’s transfer, and mere possession does not entitle Wells Fargo to enforce the note.  Therefore, because the mortgage note is payable to MortgageIT, unless Wells Fargo can prove that the note was properly endorsed or validly transferred, thereby making it the party entitled to enforce the note, it has not demonstrated authority to mediate the note.

As we concluded in Pasillas, a foreclosing party’s failure to bring the required documents to the mediation is a sanctionable offense under NRS 107.086 and the FMRs.  Therefore, we conclude that the district court abused its discretion when it denied Leyva’s petition for judicial review.  Accordingly, we reverse the district court’s order and remand this matter to the district court with instructions to determine the appropriate sanctions for Wells Fargo’s violation of the statutory and rule-based requirement.  In doing so, the district court should consider the factors discussed in Pasillas.[10]

DOUGLAS, C.J., and CHERRY, SAITTA, GIBBONS, PICKERING, and PARRAGUIRRE, JJ., concur.

**********FOOTNOTES**********

[1]        Because we reverse on other grounds, we do not reach Leyva’s contention that respondent Wells Fargo also participated in the mediation in bad faith because it refused to offer anything other than a cash-for-keys option to avoiding foreclosure.

[2]        Therefore, this mediation was governed by the Foreclosure Mediation Rules in effect from July 31, 2009, until September 28, 2009, at which time the rules were amended.  See In the Matter of the Adoption of Rules for Foreclosure Mediation, ADKT 435 (Order Adopting Foreclosure Mediation Rules, June 30, 2009, and Order Amending Foreclosure Mediation Rules and Adopting Forms, September 28, 2009).  Although the changes required some renumbering of the rules, the language of the rules important to this case, namely, those specifying who can participate in the mediation and the documents that must be provided, remain essentially the same.

[3]        This court has jurisdiction over the appeal from the district court’s final order in the judicial review proceeding.  Nev. Const. art. 6, § 4; NRAP 3A(b)(1).

[4]        At the time the district court entered its order, the Pasillas opinion had not been published.

[5]        “‘Conveyance’ shall be construed to embrace every instrument in writing, except a last will and testament, whatever may be its form, and by whatever name it may be known in law, by which any estate or interest in lands is created, aliened, assigned or surrendered.”  NRS 111.010(1).

[6]        Article 3 is codified in NRS 104.3101-.3605.

[7]        Since the documents provided at the mediation did not establish transfer of either the mortgage or the note, we express no opinion on the issue addressed in the Restatement (Third) of Property section 5.4 concerning the effect on the mortgage of the note having been transferred or the reverse.

[8]        Under NRS 104.3301(1)(a), a person entitled to enforce an instrument is “[t]he holder of the instrument.”

[9]        To “prove” a transaction under NRS 104.3203(2), a party must present evidence sufficient to establish that it is more likely than not that the transaction took place.  NRS 104.3103(1)(i) (defining “prove”); NRS 104.1201(h) (defining “burden of establishing”).

[10]      In Pasillas, we concluded that the following nonexhaustive list of factors would aid district courts in determining what sanctions are appropriate: “whether the violations were intentional, the amount of prejudice to the nonviolating party, and the violating party’s willingness to mitigate any harm by continuing meaningful negotiation.”  Pasillas v. HSBC Bank USA, 127 Nev. ___, ___, ___ P.3d ___, ___ (Adv. Op. No. 39, July 7, 2011).


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PASILLAS v. HSBC Bank USA | Nevada Supreme Court Reverse “Sanctionable offenses under the Foreclosure Mediation Program, IBANEZ, AHMSI, Alleged Assignment”

PASILLAS v. HSBC Bank USA | Nevada Supreme Court Reverse “Sanctionable offenses under the Foreclosure Mediation Program, IBANEZ, AHMSI, Alleged Assignment”


Cite as: Pasillas v. HSBC Bank USA

127 Nev. Adv. Op. 39

EMILIANO PASILLAS AND YVETTE PASILLAS, Appellants,
v.
HSBC BANK USA, AS TRUSTEE FOR LUMINENT MORTGAGE TRUST; POWER DEFAULT SERVICES, TRUSTEE; AND AMERICAN HOME MORTGAGE SERVICING, INC., Respondents.

No. 56393.

Supreme Court of Nevada.

July 7, 2011.

Terry J. Thomas, Reno, for Appellants.

Pite Duncan, LLP, and Gregg A. Hubley, Laurel I. Handley, and Cuong M. Nguyen, Las Vegas, for Respondents.

BEFORE THE COURT EN BANC.

OPINION

By the Court, HARDESTY, J.:

In this appeal, we consider issues arising out of Nevada’s Foreclosure Mediation Program and address whether a lender commits sanctionable offenses when it does not produce documents and does not have someone present at the mediation with the authority to modify the loan, as set forth in the applicable statute, NRS 107.086, and the Foreclosure Mediation Rules (FMRs).

Because NRS 107.086 and the FMRs expressly require that certain documents be produced during foreclosure mediation and that someone with authority to modify the loan must be present or accessible during the mediation, we conclude that a party’s failure to comply with these requirements is an offense subject to sanctions by the district court. In such an event, the district court shall not direct the program administrator to certify the mediation to allow the foreclosure process to proceed until the parties have fully complied with the statute and rules governing foreclosure mediation.

Here, because respondents HSBC Bank USA, Power Default Services, and American Home Mortgage Servicing, Inc. (AHMSI), did not bring the required documents to the mediation and did not have access to someone authorized to modify the loan during the mediation, we conclude that the district court erred in denying appellants Emiliano and Yvette Pasillas’s petition for judicial review. Therefore, we reverse the district court’s order and remand this matter to the district court so that the court may determine sanctions.

FACTS AND PROCEDURAL HISTORY

The Pasillases purchased a home in Reno in 2006 with a loan from American Brokers Conduit. The note and deed of trust were allegedly assigned to HSBC.[1] Near the end of 2009, Power Default Services became a substitute trustee, removing HSBC from that role. Allegedly, the servicer for the Pasillases’ loan is AHMSI.[2]

When the Pasillases defaulted on their mortgage and received a notice of election to sell, they elected to mediate pursuant to the Foreclosure Mediation Program provided for in NRS 107.086. Two separate mediations occurred, one on February 18, 2010, and one on March 8, 2010,[3] but neither mediation resulted in a resolution.

While a representative of AHMSI was available by phone at both mediations, it is unclear whether HSBC was present or represented by counsel. There is some disagreement between the parties regarding who the respondents’ attorneys represented at the mediations and at the hearing on the petition for judicial review. In the addendum to the mediator’s statement, the mediator stated that “HSBC . . . was identified as Beneficiary . . . and represented by Cuong Nguyen, Esq. of Pite Duncan, LLP.” In the second mediation, the mediator indicated that “HSBC . . . was again identified as Beneficiary . . . and represented by Heather Hudson, Esq. of Pite Duncan, LLP.” However, in responding to the Pasillases’ petition for judicial review, the Pite Duncan law firm indicated that it was not counsel for HSBC. Specifically, the response opened with the following statement: “Respondents AMERICAN HOME MORTGAGE SERVICING, INC. (`AHMSI’), erroneously named herein as HSBC BANK USA AS TRUSTEE FOR LUMINENT MORTGAGE TRUST.” Respondents also claimed that the Pasillases were “incorrect that Pite Duncan, LLP attended [the mediations] on behalf of HSBC.” At oral argument before this court, respondents’ counsel stated that they represented all of the respondents named in this case at the mediations, but they did not dispute the mediator’s finding that respondents needed additional authority from investors to agree to a loan modification.

After both mediations were completed, the mediator filed a statement indicating that (1) “[t]he parties participated but were unable to agree to a loan modification or make other arrangements,” (2) “[t]he beneficiary or his representative failed to participate in good faith,” and (3) “[t]he beneficiary failed to bring to the mediation each document required.” The mediator also filed an addendum to his statement, wherein he stated that two pages of the mortgage note were missing, that the assignment purportedly assigning the mortgage note and deed of trust to HSBC was incomplete, that instead of an appraisal HSBC provided a broker’s price opinion,[4] and that respondents stated they would need additional investor approval before agreeing to a loan modification. The mediator concluded that he would not recommend that the administrator issue a certificate authorizing further foreclosure proceedings because HSBC “failed to participate in [the] mediation in good faith as evidenced by its failure to produce required documents and information initially, or subsequently to cure its failures.” The Pasillases subsequently filed a petition for judicial review in the district court. In the petition, the Pasillases requested sanctions in the form of a modification of their mortgage and attorney fees.

The district court conducted a short hearing, during which the only issue addressed was the parties’ failure to come to an agreement. The district court did not address whether respondents failed to provide the required documents at the mediation or whether respondents lacked the requisite authority at the mediation to modify the loan. After the hearing, the district court entered an order finding that “Respondents] [have] met the burden to show cause why sanctions should not lie,” and directed the Foreclosure Mediation Program administrator to issue a certification authorizing the foreclosure to proceed. The Pasillases appealed.

DISCUSSION

In resolving this appeal, we must determine whether the district court abused its discretion when it refused to enter sanctions against respondents for failing to satisfy express statutory requirements and allowed respondents to continue with the foreclosure process. We begin our discussion with a brief background of the Foreclosure Mediation Program.

The Foreclosure Mediation Program

The Nevada Legislature enacted the Foreclosure Mediation Program in 2009 in response to the increasing number of foreclosures in this state. Hearing on A.B. 149 Before the Joint Comm. on Commerce and Labor, 75th Leg. (Nev., February 11, 2009) (testimony of Assemblywoman Barbara Buckley). The program requires that a trustee seeking to foreclose on an owner-occupied residence provide an election-of-mediation form along with the notice of default and election to sell. NRS 107.086(2)(a)(3). If the homeowner elects to mediate, both the homeowner and the deed of trust beneficiary must attend, must mediate in good faith, provide certain enumerated documents,[5] and, if the beneficiary attends through a representative, that person must have authority to modify the loan or have “access at all times during the mediation to a person with such authority.” NRS 107.086(4), (5); FMR 5(7)(a). After the conclusion of the mediation, the mediator must file a mediator’s statement with the program administrator, indicating whether all parties complied with the statute and rules governing the program. FMR 12(2). If the beneficiary does not (1) attend the mediation; (2) mediate in good faith; (3) provide the required documents; or (4) if attending through a representative, have a person present with authority to modify the loan or access to such a person, the mediator is required to “submit … a petition and recommendation concerning the imposition of sanctions.”[6] NRS 107.086(5). The homeowner may then file a petition for judicial review with the district court,[7] and the court “may issue an order imposing such sanctions against the beneficiary of the deed of trust or the representative as the court determines appropriate.” See FMR 5(7)(f).[8] But if the district court finds that the parties met the four program requirements, it will direct the program administrator to certify the mediation, allowing the foreclosure process to proceed. See NRS 107.086(2)(c)(2), (3), (6), (7).

Respondents failed to meet the mediation program’s statutory requirements

The Pasillases argue that respondents failed to meet the program’s requirements—the document requirement because respondents failed to bring a complete mortgage note and failed to provide assignments of the note and deed of trust, and the loan modification authority requirement because they failed to have someone present at the mediation with the authority to modify the loan. We agree.

The scope and meaning of a statute is a question of law, which we review de novo. Arguello v. Sunset Station, Inc., 127 Nev. ___, ___ P.3d ___. (Adv. Op. No. 29, June 2, 2011). Court rules are also subject to de novo review. Moon v. McDonald Carano Wilson LLP, 126 Nev. ___, ___, 245 P.3d 1138, 1139 (2010). “When the language in a provision is clear and unambiguous, this court gives `effect to that meaning and will not consider outside sources beyond that statute.'” City of Reno v. Citizens for Cold Springs, 126 Nev. ___, ___, 236 P.3d 10, 16 (2010) (quoting NAIW v. Nevada Self-Insurers Association, 126 Nev. ___, ___, 225 P.3d 1265, 1271 (2010)).

Both NRS 107.086 and the FMRs use the word “shall” or “must” when listing the actions required of parties to a foreclosure mediation. Use of the word “shall” in both the statutory language and the FMRs indicates a duty on the part of the beneficiary, and this court has stated that “`shall’ is mandatory unless the statute demands a different construction to carry out the clear intent of the legislature.” S.N.E.A. v. Daines, 108 Nev. 15, 19, 824 P.2d 276, 278 (1992). Additionally, Black’s Law Dictionary defines “shall” as meaning “imperative or mandatory. . . . inconsistent with a concept of discretion.” 1375 (6th ed. 1990). And as it is used here, “must” is a synonym of “shall.” We conclude that NRS 107.086(4) and (5) and FMR 5(7)(a) clearly and unambiguously mandate that the beneficiary of the deed of trust or its representative (1) attend the mediation, (2) mediate in good faith, (3) provide the required documents, and (4) have a person present with authority to modify the loan or access to such a person.

Here, the mediator’s statement and his addendum to that statement, which were provided to the district court in the Pasillases’ petition for judicial review, clearly set out respondents’ failure to bring the required documents to the mediation and to have someone present with authority to modify the loan. Additionally, respondents do not dispute that they failed to bring all the required documents to the mediation.[9] Although respondents argue on appeal that their counsel at the mediation “had the requisite authority and/or access to a person with the authority to modify the loan,” they do not controvert the mediator’s statement that their counsel claimed at the mediation that additional investor approval was needed in order to modify the loan. The record before the district court demonstrates that respondents failed to meet the statutory requirements. Nonetheless, respondents argue that the district court’s conclusion that sanctions were unwarranted did not constitute an abuse of discretion because, despite the failures noted above, they mediated to resolve the foreclosure in good faith. We disagree.

Standard of review

At the outset, we establish that we will review a district court’s decision regarding the imposition of sanctions for a party’s participation in the Foreclosure Mediation Program under an abuse of discretion standard. See Arnold v. Kip, 123 Nev. 410, 414, 168 P.3d 1050, 1052 (2007) (abuse of discretion standard used to review district court’s imposition of sanctions on a party for discovery abuses); Banks v. Sunrise Hospital, 120 Nev. 822, 830, 102 P.3d 52, 58 (2004) (reviewing sanctions imposed for spoliation of evidence under an abuse of discretion standard). When determining whether the district court has abused its discretion in such cases, we do not focus on whether the court committed manifest error, but rather we focus on whether the district court made any errors of law.

Failure to satisfy statutory mandates is a sanctionable offense

As discussed above, under NRS 107.086(5), there are four distinct violations a party to a foreclosure mediation can make: (1) “fail[ure] to attend the mediation,” (2) “fail[ure] to participate in the mediation in good faith,” (3) failure to “bring to the mediation each document required,” and (4) failure to demonstrate “the authority or access to a person with the authority [to modify the loan].” If any one of these violations occurs, the mediator must recommend sanctions. Id. If the homeowner petitions for judicial review, “[t]he court may issue an order imposing such sanctions against the beneficiary of the deed of trust or the representative as the court determines appropriate.” Id. We interpret NRS 107.086(5) to mean that the commission of any one of these four statutory violations prohibits the program administrator from certifying the foreclosure process to proceed and may also be sanctionable. See Tarango v. SIIS, 117 Nev. 444, 451 n.20, 25 P.3d 175, 180 n.20 (2001) (explaining that “may” can be interpreted as “shall” in order to carry out the Legislature’s intent, which in the instant case was to make mandatory the requirements set forth in NRS 107.086(5)).

In this case, despite the mediator’s opinion that respondents did not participate in the mediation in good faith based on their failure to comply with the FMRs, the district court did not impose sanctions and instead entered a Letter of Certification that allowed respondents to proceed with the foreclosure process on the Pasillases’ property. The district court essentially ignored the fact that respondents failed to bring “to the mediation each document required” and did “not have the authority or access to a person with the authority” to modify the loan, failures which we determine constitute sanctionable offenses. Thus, the district court’s order directing the program administrator to enter a letter of certification and its failure to consider sanctions was an abuse of discretion because respondents clearly violated NRS 107.086 and the FMRs.[10] This abuse requires us to remand the case for the district court to consider appropriate sanctions.

The nature of the sanctions imposed on the beneficiary or its representative is within the discretion of the district court. We have previously listed factors to aid district courts when considering sanctions as punishment for litigation abuses. See Young v. Johnny Ribeiro Building, 106 Nev. 88, 93, 787 P.2d 777, 780 (1990); see also Bahena v. Goodyear Tire & Rubber Co., 126 Nev. ___, ___, 235 P.3d 592, 598-99 (2010); Arnold, 123 Nev. at 415-16, 168 P.3d at 1053. However, we conclude that other factors, more specific to the foreclosure mediation context, apply when a district court is considering sanctions in such a case. When determining the sanctions to be imposed in a case brought pursuant to NRS 107.086 and the FMRs, district courts should consider the following nonexhaustive list of factors: whether the violations were intentional, the amount of prejudice to the nonviolating party, and the violating party’s willingness to mitigate any harm by continuing meaningful negotiation.

Because, in this case, the foreclosing party’s failure to bring the required documents to the mediation and to have someone present at the mediation with the authority to modify the loan were sanctionable offenses under the Foreclosure Mediation Program, the district court abused its discretion when it denied the Pasillases’ petition for judicial review and ordered the program administrator to enter a letter of certification authorizing the foreclosure process to proceed. Therefore, we reverse the district court’s order and remand this matter to the district court with instructions to determine the appropriate sanctions for respondents’ violations of the statutory and rule-based requirements.

DOUGLAS, C.J., CHERRY, SAITTA, GIBBONS, PICKERING and PARRAGUIRRE, JJ., concur.

[1] The Pasillases claim that HSBC failed to provide a valid assignment; the one it provided during the mediation was signed by American Brokers Conduit but did not state who the assignee was.

[2] The parties do not argue and we do not reach the question of whether AHMSI is a valid agent for HSBC or the real party in interest, or the “person entitled to enforce” the promissory note in this case. See In re Veal, No. 09-14808, 2011 WL 2304200, at *12-14 (B.A.P. 9th Cir. June 10, 2011).

[3] These mediations were governed by the Foreclosure Mediation Rules (FMRs) as amended on November 4, 2009.

[4] We note that while FMR 11(7)(b) currently allows for a broker’s price opinion in lieu of an appraisal, the rules applicable to this matter called for an appraisal without mention of a broker’s price opinion. In the Matter of the Adoption of Rules for Foreclosure Mediation, ADKT 435 (Order Adopting Foreclosure Mediation Rules, June 30, 2009, and Order Amending Foreclosure Mediation Rules and Adopting Forms, November 4, 2009).

[5] With regard to the documents required, NRS 107.086(4) provides that “[t]he beneficiary of the deed of trust shall bring to the mediation the original or a certified copy of the deed of trust, the mortgage note[,] and each assignment of the deed of trust or mortgage note.” The FMRs echo this documentation requirement nearly word for word. FMR 5(7)(a). FMR 7(2) also provides that “[t]he beneficiary of the deed of trust or its representatives shall produce an appraisal. . . and shall prepare an estimate of the `short sale’ value of the residence.”

[6] If the homeowner fails to attend the mediation, the administrator will certify that no mediation is required. NRS 107.086(6).

[7] Generally, if the parties fail to reach an agreement and neither party files a petition for judicial review, the program administrator will certify the mediation, which allows the foreclosure process to proceed. NRS 107.086(3), (6), (7).

[8] The current version of the FMRs requires the district court to review a case de novo when a party files a petition for judicial review. FMR 21(5) (rules including amendments through March 1, 2011). De novo review may include an evidentiary hearing concerning what transpired at the mediation. See Black’s Law Dictionary 924 (9th ed. 2009) (defining “de novo judicial review” as “[a] court’s nondeferential review of an administrative decision, usu[ally] through a review of the administrative record plus any additional evidence the parties present”).

[9] At oral argument, respondents’ counsel argued that an assignment for the mortgage note was provided, but the name of the assignee was missing. We determine that an assignment provided without the name of the assignee is defective for the purposes of the Foreclosure Mediation Program because it does not identify the relevant parties.

The Supreme Judicial Court of Massachusetts recently reached the same conclusion regarding the production of assignments to mortgage notes and deeds of trust, albeit in a slightly different context. In U.S. Bank National Ass’n v. Ibanez, 941 N.E.2d 40 (Mass. 2011), two separate banks foreclosed on the mortgages of two homeowners whose properties the banks then bought at the foreclosure sales. Id. at 44. The banks later filed complaints in the lower court seeking a declaration that they had clear title to the properties. Id. Because the banks failed to show an interest in the mortgages at the time of the foreclosure sales, the sales were invalid, and the lower court entered judgment against the banks. Id. at 45. On appeal, the court determined that, similar to this case, the banks were not the original mortgagees and, therefore, they had to show that the mortgages were properly assigned to them in writings signed by the grantors before they could notice the sales and foreclosures of the properties. Id. at 51. In an attempt to prove that they had the authority to foreclose on the properties, the banks provided contracts purporting to assign to them bundles of mortgages; however, the attachments that identified what mortgages were being assigned were not included in the documents provided. Id. at 52. The court concluded that the banks demonstrated no authority to foreclose on the properties because they did not have the assignments. Id. at 53 (“We have long held that a conveyance of real property, such as a mortgage, that does not name the assignee conveys nothing and is void; we do not regard an assignment of land in blank as giving legal title in land to the bearer of the assignment.”). The court additionally stated that “[a] plaintiff that cannot make this modest showing cannot justly proclaim that it was unfairly denied a declaration of clear title.” Id. at 52. We agree with the rationale that valid assignments are needed when a beneficiary of a deed of trust seeks to foreclose on a property.

[10] Respondents argue that this court should decline to address the Pasillases’ argument that respondents failed to provide someone at the mediation with the authority to modify the loan because it was not raised in the petition for judicial review. First, we note that our decision here would require the district court to impose sanctions even if respondents’ only omission was the failure to provide the required documents. However, we determine that the Pasillases adequately raised this issue in their petition for judicial review by alleging that respondents’ counsel at the mediations did not accurately state who they were representing. Therefore, our decision of the issue is appropriate.

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NY Judge Spinner Denies 86 Applications for JUDGMENT OF FORECLOSURE AND SALE Due to No Affirmation by Plaintiff Counsel

NY Judge Spinner Denies 86 Applications for JUDGMENT OF FORECLOSURE AND SALE Due to No Affirmation by Plaintiff Counsel


Excerpt:

Plaintiff has applied to this Court for the granting of a Judgment of Foreclosure & Sale pursuant to RPAPL § 1351. The express provisions of the Administrative Order of the Chief Administrative Judge of the Courts, no. A0548/10 require the filing of an Affirmation by Plaintiff’s counsel. No such Affirmation has been filed in this proceeding, in derogation of the aforesaid mandate. Accordingly, this application must be denied.

It is, therefore,

ORDERED that the within application by the Plaintiff shall be and the same is hereby denied without prejudice.

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LASALLE v. FULK | Ohio Appeals Court Reversal “Tonya Hopkins Affidavit, AHMSI, Option One, Sand Canyon, Copy of Uncertified Assignment”

LASALLE v. FULK | Ohio Appeals Court Reversal “Tonya Hopkins Affidavit, AHMSI, Option One, Sand Canyon, Copy of Uncertified Assignment”


COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT


LASALLE BANK, N.A.

-vs-

DOUGLAS MARK FULK, ET AL. AND
DAWNETTA G. ANTONACCI


EXCERPT:

{¶8} The Notice of Filing the Assignment of Mortgage states: “Attached hereto as Exhibit A is a recorded assignment of mortgage and reference to the captioned case.” The attachment is a copy of a notarized assignment of mortgage which states Sand Canyon Corporation, FKA Option One Mortgage Corporation grants, bargains, sells, assigns, transfers, conveys, sets over, and delivers to appellee as trustee for Structured Asset Investment Loan Trust, 2004-11, the mortgage securing the payment of a promissory note signed by appellant. The assignment of mortgage is not a certified copy, nor is it accompanied by an affidavit testifying it is a true copy of the original.

[…]

{¶9} In appellee’s affidavit regarding account and military status, Tonya Hopkins alleges she is a duly appointed officer of American Home Mortgage Servicing, Inc., successor in interest to Option One Mortgage Corporation, and competent to testify in the matter. The affidavit states American Home Mortgage Servicing, Inc. provides mortgage and foreclosure related servicing to appellee. The affidavit states that attached to it are Exhibits A and B, true and accurate copies of the original note and mortgage.

[…]

{¶31} Appellee asserts the assignment of mortgage does not need to be authenticated because it is a notarized document. We disagree. It is not a notarized document, but rather a copy of a notarized document. The copy does not state the volume and page wherein it is recorded, and it is not certified by the records custodian. We find it does not constitute proper evidentiary material upon which the court can rely in determining appellee has standing to foreclose on the note and mortgage.

{¶32} Appellee denies the appellant properly endorsed the forbearance agreement, but on remand it should explain the significance of the loan modification agreement signed by appellant and attached to appellee’s complaint. It appears there is an issue of whether appellee retained and credited appellant’s account with payments she submitted pursuant to the agreement.

[…]

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Posted in STOP FORECLOSURE FRAUDComments (0)

HIGHLIGHTS: FROM AN AHMSI LETTER TO 60 MINUTES

HIGHLIGHTS: FROM AN AHMSI LETTER TO 60 MINUTES


LOL– These are not the ORIGINAL Assignments, They’re locked up in a vault … (sure they are)

From the Letter:

“In addition to transferring the mortgage through an unrecorded assignment at the time the assignee securitization trust obtains the loan, it has been industry practice for the loan servicer to have an assignment of mortgage executed and recorded in the name of the trustee for the securitization trust typically shortly before a foreclosure action is commenced. This latter assignment would be recorded to put record title into the name of the owner or holder of the loan, to eliminate any confusion about the assignee being the appropriate plaintiff to commence the foreclosure action. However, this assignment would not act to transfer ownership or holder status to that assignee, which occurred earlier, as explained above.

Although there exists a signed and notarized unrecorded assignment of mortgage in favor of the securitization trustee in a loan file maintained under contract by a custodian retained by the trust, in most cases it is very burdensome and costly to obtain that old, original assignment and more troublesome to record it, which is a document in favor of blank (that is, the name of the assignee is not filled in) and is dated, signed, and notarized years ago; it is generally less burdensome, more efficient, and less expensive to have foreclosure counsel review the current state of title and counsel or a document preparer prepare, sign, notarize, and record a currently prepared assignment, pursuant to appropriate corporate authority.”

ENTIRE LETTER:

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Posted in STOP FORECLOSURE FRAUDComments (3)

EXTRA! EXTRA! FLORIDA APPEALS COURT REVERSES IT’S OWN OPINION: RUSCALLEDA v. HSBC BANK USA No. 3D09-997

EXTRA! EXTRA! FLORIDA APPEALS COURT REVERSES IT’S OWN OPINION: RUSCALLEDA v. HSBC BANK USA No. 3D09-997


RUSCALLEDA v. HSBC BANK USA

Glazy Ruscalleda and Jose Ruscalleda, Appellants,
v.
HSBC Bank USA, etc., Appellee.

No. 3D09-997.

District Court of Appeal of Florida, Third District.

Opinion filed September 15, 2010.

John H. Ruiz and Karen Barnet-Backer, for appellants.

Shapiro & Fishman and Heidi J. Weinzetl (Boca Raton), for appellee.

Before WELLS, ROTHENBERG, and LAGOA, JJ.

ON MOTION FOR REHEARING OR CLARIFICATION.

ROTHENBERG, J.

Upon consideration of the appellee’s motion for rehearing or clarification, we withdraw our previous opinion filed on June 9, 2010, and substitute the following opinion in its stead.

This is an appeal of a final summary judgment in a mortgage foreclosure action entered in favor of plaintiff, HSBC Bank USA (“HSBC”), and against the defendants, Glazy Ruscalleda and Jose Ruscalleda. Based on the unique circumstances of this case, we reverse and remand for further proceedings.

The unique circumstances surrounding this case involve a rather confusing situation caused by two banks—the appellee, HSBC, and American Home Mortgage Servicing, Inc. (“American Home Mortgage”)—because they were simultaneously attempting to foreclose the same mortgage. On October 8, 2008, American Home Mortgage filed a foreclosure action against the defendants.[ 1 ] A week later, HSBC filed an action to foreclose the same exact mortgage. The complaint filed by HSBC falsely alleged that it was the current owner and holder of the mortgage and note, when, in reality, American Home Mortgage was still the holder of the note and mortgage.[ 2 ] On October 28, 2008, due to the actions of American Home Mortgage and HSBC, the defendants, who were acting pro se at that time, filed an answer and affirmative defenses only in the foreclosure action filed by American Home Mortgage, which was the holder of the mortgage and note, because they mistakenly believed that the complaints involved the same foreclosure action.

After filing their pro se answer and affirmative defenses, the defendants retained counsel. Continuing in their mistaken belief, they did not inform their attorney of the action filed by HSBC. On November 13, 2008, counsel filed an amended answer and affirmative defenses on behalf of the defendants in the American Home Mortgage action, but took no action on the HSBC complaint.

Although the defendants did not file an answer in response to HSBC’s complaint, HSBC never moved for a default judgment.[ 3 ] Instead, on January 22, 2009, HSBC moved for summary judgment, scheduling the hearing for March 24, 2009. When the defendants received the motion for summary judgment in the HSBC action, it sent the motion to their counsel. It was at that point, that the defendants and their counsel realized that two separate banks were attempting to simultaneously foreclose on the same mortgage, but that they only had been defending the initial action filed by American Home Mortgage.

On February 23, 2009, the defendants filed a memorandum of law in opposition to the motion for summary judgment, the affidavit of Glazy Ruscalleda, and a motion to transfer the case to the division where the foreclosure action filed by American Home Mortgage was pending (“Motion to Transfer”). On February 25, 2009, the defendants filed a request for production, request for admissions, and notice of interrogatory. American Home Mortgage waited until the day before the scheduled hearing to file its notice of voluntary dismissal, although it had executed the assignment of mortgage almost three months earlier.

At the scheduled hearing, the trial court heard the arguments raised by HSBC in its motion for summary judgment and by defense counsel in his memorandum of law filed in opposition. Although it is undisputed that the defendants’ discovery was still pending, the trial court entered final summary judgment on the same day as the hearing, March 24, 2009, in favor of HSBC.[ 4 ]

Based on the unique circumstances set forth above, we conclude that the order under review must be reversed, and the cause remanded for further proceedings, with directions to allow the defendants to file an answer and affirmative defenses and to require HSBC to respond to the defendants’ discovery requests. The record clearly demonstrates that the defendants’ failure to file a timely answer and affirmative defenses in the action filed by HSBC was due to the confusion caused by American Home Mortgage and HSBC when they were simultaneously attempting to foreclose on the same exact mortgage in two different divisions of the circuit court.

Reversed and remanded with directions.

Not final until disposition of timely filed motion for rehearing.

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Posted in chain in title, concealment, conflict of interest, conspiracy, CONTROL FRAUD, corruption, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, HSBC, MERS, MERSCORP, mortgage, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Mortgage Foreclosure Fraud, note, reversed court decision, stopforeclosurefraud.com, trustee, TrustsComments (2)

FORECLOSURE MILLS: SHAPIRO & FISHMAN V. LAW OFFICES OF DAVID J. STERN

FORECLOSURE MILLS: SHAPIRO & FISHMAN V. LAW OFFICES OF DAVID J. STERN


For those who may not know both David J. Stern and Cheryl Samons both were former employees of Shapiro & Fishman prior to Mr. Stern and Mrs. Samons departing from Shapiro & Fishman…“thats all“. <grin>————————–>

180 PAGES!

PROTECTIVE ORDER? Lender Processing Services? Specialized Loan Servicing? American Home Mortgage Servicing? DEPOS? SUBPOENAS?

DISMISSAL WITH PREJUDICE!

Florida Rules of Civil Procedure
1.420 Dismissal of Actions

(a) Voluntary Dismissal.

(1) By Parties. Except in actions in which property has been seized or is in the custody of the court, an action may be dismissed by plaintiff without order of court

(B) by filing a stipulation of dismissal signed by all parties who have appeared in the action. Unless otherwise stated in the notice or stipulation, the dismissal is without prejudice, except that a notice of dismissal operates as an adjudication on the merits when served by a plaintiff who has once dismissed in any court an action based on or including the same claim.

Many thanks to Foreclosure Hamlet for the documents.

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Posted in Barry S. Fishman, conspiracy, dismissed, foreclosure, foreclosure mills, foreclosures, investigation, Law Offices Of David J. Stern P.A., lawsuit, mortgage, note, shapiro & fishman pa, STOP FORECLOSURE FRAUD, tew cardenasComments (3)

TEXAS v. AMERICAN HOME MORTGAGE SERVICING , Inc.

TEXAS v. AMERICAN HOME MORTGAGE SERVICING , Inc.


Monday, August 30, 2010

Attorney General Abbott Charges Home Loan Servicer With Violating State Debt Collection Laws

American Home Mortgage Servicing Inc. failed to properly process requests

AUSTIN – Texas Attorney General Greg Abbott today charged Coppell-based American Home Mortgage Servicing Inc. (AHMS) with using illegal debt collection tactics and improperly misleading struggling homeowners.

According to state investigators, AHMS collections agents used aggressive and unlawful tactics to collect payments from Texas homeowners who had difficulty meeting their payment obligations. The defendant also failed to credit homeowners who properly submitted their payments on time.

LAWSUIT COMPLAINT

TEXAS v. AMERICAN HOME MORTGAGE SERVICING, INC

In other cases, AHMS agents falsely claimed that homeowners did not make payments so the agents could justify profitable late fees or escrow accounts. The defendant also failed to properly credit homeowners after AHMS agents withdrew funds from the homeowners’ checking accounts. Because of the defendant’s unlawful conduct, homeowners defaulted on their loans, leading to foreclosure proceedings.

Additionally, the defendant claimed to have a “Home Retention Team” to assist distressed homeowners. Many customers found that AHMS could not qualify homeowners and that they were of no help to halt the foreclosure process. Some homeowners who actually obtained loan modifications found that their monthly payments increased rather than decreased, which worsened their problem with foreclosure.

Today’s enforcement action charges AHMS with multiple violations of the Texas Debt Collection Act and the Texas Deceptive Trade Practices Act (DTPA). The State is also seeking civil penalties of up to $20,000 per violation of the DTPA.

_________________________

DinSFLA here: A little more on AHMSI

Recently, Judge Arthur Schack said this in ARGENT MTGE. CO., LLC v. Maitland, 2010 NY Slip Op 51482 – NY: Supreme Court, Kings 2010

Successor plaintiff AHMSI is one of several companies controlled by billionaire investor Wilbur L. Ross, Jr. through his firm, W. L. Ross & Company. Louise Story, in her April 4, 2008 New York Times article, Investors Stalk the Wounded of Wall Street, described Mr. Ross as “a dean of vulture investing.” She wrote:

Almost two centuries ago, as Napoleon marched on Waterloo, a scion of the Rothschilds is said to have declared: The time to buy is when blood is running in the streets.

Now as red ink runs on Wall Street, the figurative heirs of the Rothschilds — bankers, traders, hedge fund gurus and takeover artists — are plotting to profit from today’s financial upheaval. These market opportunists — vulture investors in the Wall Street term — have begun to swoop. They are buying up mortgages of hard-pressed homeowners, the bank loans of cash-short businesses, and companies that seem to be hurtling to bankruptcy. And they are trying to buy them all on the cheap. . . .

“The only time you really know you’ve reached the bottom is when you’re back on the other side and things are going back up,” said Wilbur L. Ross, Jr., a dean of vulture investors, who made a fortune buying steel companies when no one else seemed to want them.

Such caution aside, his firm, W. L. Ross & Company, recently spent $2.6 billion for two mortgage servicers [AHMSI and Option One] and a bond insurance company. He said he planned to buy more as hedge funds and other investor sell at bargain prices.


© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in conspiracy, CONTROL FRAUD, corruption, foreclosure, foreclosure fraud, foreclosures, investigation, judge arthur schack, mortgage, note, servicers, stopforeclosurefraud.com, Violations, Wall StreetComments (0)

DEUTSCHE GETS AN ARIZONA BEAT DOWN! In RE: Tarantola

DEUTSCHE GETS AN ARIZONA BEAT DOWN! In RE: Tarantola


U.S. Bankruptcy Judge EILEEN W. HOLLOWELL knew exactly where this was going and put an immediate stop to it.

Deutsche not only created the Allonge after it filed its MRS and falsely represented that it was affixed to the Original, but it also relied on the LPA authorizing the transfer of the Note when substantially identical powers of attorney have been held to be ineffective in reported decisions involving Deutsche.

Deutsche, AHMSI and counsel should, however, treat this decision as a warning. If, in the future, the court is confronted with filings as deficient and incorrect as filed in this case, the court will issue an order to show cause and consider imposing sanctions including, but not limited to, an award of fees to debtors’ counsel for having to oppose motions filed without proper evidence or worse with improper evidence.


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Posted in chain in title, citi, conflict of interest, conspiracy, CONTROL FRAUD, corruption, deutsche bank, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, note, originator, securitization, servicers, trusteeComments (1)

“FLORIDA REVERSAL” Ruscalleda vs Hsbc Bank

“FLORIDA REVERSAL” Ruscalleda vs Hsbc Bank


Here we have what appears HSBC foreclosing on a mortgage where another bank has it’s hands on it at another action!

We are seeing a pattern where multiple banks are trying to claim one single mortgage.

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© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in case, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, HSBC, shapiro & fishman paComments (0)


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