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Tag Archive | "arizona"

Bank of America Settlements Impede Fraud Probe, Hushing Borrowers Arizona Says

Bank of America Settlements Impede Fraud Probe, Hushing Borrowers Arizona Says


Bloomberg-

Bank of America Corp. is impeding an investigation of its loan modification practices by negotiating settlements with borrowers who must agree to keep them secret and not criticize the bank in exchange for cash payments and loan relief, Arizona officials say.

The Arizona Attorney General’s office is asking a court to block those aspects of the settlements and require the bank to turn over all the agreements. The bank denies any wrongdoing.

One 2011 accord involving a borrower facing foreclosure who defaulted on a $253,142 mortgage included a $5,000 payment, plus $7,500 for legal fees, and the defaulted payments were waived and the loan was modified to a 40-year term with a 2 percent interest rate, court documents show. The terms of the original loan and the borrower’s complaint about the lender weren’t described in the documents.

[BLOOMBERG]

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Arizona v. Countrywide Financial Corp. CV2010-033580, Arizona Superior Court, Maricopa County

Arizona v. Countrywide Financial Corp. CV2010-033580, Arizona Superior Court, Maricopa County


IN THE SUPERIOR COURT OF THE STATE OF ARIZONA
IN AND FOR THE COUNTY OF MARICOPA

STATE OF ARIZONA, ex rel. THOMAS C.
HORNE, Attorney General,
Plaintiff,

vs.

COUNTRYWIDE FINANCIAL
CORPORATION, et al.,
Defendants.

[ipaper docId=79536678 access_key=key-230tup2numiwbhfeybli height=600 width=600 /]

 

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PMI Group, “MERS” Shareholder Files Bankruptcy After Regulators Take Over Unit

PMI Group, “MERS” Shareholder Files Bankruptcy After Regulators Take Over Unit


Remember, PMI Group is also a Mortgage electronic Registration System, INC. “MERS” shareholder! Hmmm…

Business Week-

PMI Group Inc. filed for bankruptcy protection after the mortgage insurer lost a court bid to undo the takeover of its main unit by Arizona regulators.

The Walnut Creek, California-based company listed assets of $225 million and debt of $736 million as of Aug. 4 in a Chapter 11 petition filed today in U.S. Bankruptcy Court in Wilmington, Delaware.

Arizona Director of Insurance Christina Urias took control of the PMI unit last month on an interim basis and directed claims to be paid at 50 cents on the dollar after losses on mortgage defaults drained capital.“

The ADI Director’s action in seeking receivership of MIC, among other things, has led the debtor to seek bankruptcy protection in order to maximize value for its estate and creditors,” L. Stephen Smith, PMI’s chief executive officer, said in court papers.

[BUSINESS WEEK]

 

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DAN RATHER: Avoiding the Auction Block – RALI Series Exposed, Goldman Sachs, Aurora, UBS, CitiGroup

DAN RATHER: Avoiding the Auction Block – RALI Series Exposed, Goldman Sachs, Aurora, UBS, CitiGroup


HuffPO-

No other state has experienced the dizzying heights of the housing boom or the depths of the subsequent bust quite like California. Today, four metro areas in the Golden State have the highest foreclosure rates in the country, eclipsing — for the first time — even Las Vegas, Nevada. In last night’s look at the housing crisis that continues to cripple this country, we traveled to southern California and met Lise Johnson, a mother of four who’s been in the same home for 12 years and is desperate to stay put.

[HUFFINGTON POST]

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Top Mortgage Insurer PMI Group Unit Seized by Arizona Agency, to Pay 50% on Claims

Top Mortgage Insurer PMI Group Unit Seized by Arizona Agency, to Pay 50% on Claims


Business Week-

PMI Group Inc., the mortgage insurer that was ordered in August to stop writing policies, said a unit that sells such coverage was seized by Arizona authorities and will pay out claims at 50 percent starting tomorrow.

The Arizona insurance regulator has full possession, management and control of the unit, PMI Group said in a statement on its website. Bill Horning, a spokesman for PMI, didn’t respond to a message seeking comment.

[BUSINESS WEEK]

 

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LETTER TO AZ ATTORNEY GENERAL HORNE RE: VASQUEZ CERTIFIED QUESTION

LETTER TO AZ ATTORNEY GENERAL HORNE RE: VASQUEZ CERTIFIED QUESTION


REQUIRED READING.

 

RE:

Brief of Amicus Curiae State of Arizona, Constituting the Opinion of the Arizona Attorney General, to the Arizona Supreme Court in Vasquez Deutsche Bank National Trust Company, as Trustee for Saxon Asset Securities Trust 2005-3; Saxon Mortgage, Inc. (“DBNTC”), No. CV 11-0091-CQ (Ariz. S. Ct. 2011), Certified Question from Bankruptcy Case, In re Vasquez, 4:08-bk-15510-EWH (Bky. D. Ariz Tucson)

[ipaper docId=64760770 access_key=key-uc49xd305k49ofjszev height=600 width=600 /]

 

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AZ AG Horne Files Amicus Brief With Supreme Court Favoring Homeowners – IN RE: VASQUEZ

AZ AG Horne Files Amicus Brief With Supreme Court Favoring Homeowners – IN RE: VASQUEZ


Read this entirely. It’s all about the TITLE today, tomorrow and the future to come.

H/T ForeclosureBlues & LivingLies

CASE IS SCHEDULED FOR ORAL ARGUMENT ON SEPTEMBER 22, 20011 IN TUCSON, AZ. CONTRARY TO RUMOR, DO NOT EXPECT A RULING FROM THE COURT ON THAT DATE. THE SUPREME COURT OF ARIZONA WILL TAKE AS MUCH TIME AS IT NEEDS TO MAKE THE DECISION.

JUDGE HOLLOWELL HAS CERTIFIED TWO QUESTIONS ESSENTIAL TO THE OUT COME OF HUNDRED OF THOUSANDS OF FORECLOSURE CASES. ATTORNEY GENERAL THOMAS C HORNE HAS SUBMITTED AN AMICUS (FRIEND OF THE COURT) BRIEF ADVOCATING A FAVORABLE RESULT FOR THE PROTECTION OF THE TITLE SYSTEM, THE MARKETPLACE AND BORROWERS.

The case is Julia Vasquez v Deutsch Bank National Trust Company, as Trustee for Saxon Asset Securities Trust 2005-3; Saxon Mortgage, Inc., and Saxon Mortgage Services, Inc. Supreme Court Case No CV 11-0091-CQ, U.S. Bankruptcy Court Case No: 4:08-bk-15510-EWH. Assisting in the writing of the Amicus Brief were Carolyn R. Matthews, Esq., Dena R. Epstein, Esq., and Donnelly A. Dybus, Esq..

In a a very well -written and well reasoned brief, the Arizona Attorney general takes and stand and makes a very persuasive case contrary to the tricks and shell games of the pretender lenders. It also addresses head-on the contention that that a negative ruling to the banks will cause financial disaster. Just as we have been saying for years here on these pages, the AG makes short shrift of that argument. And the AG takes the bank to task on their “spin” that stopping the foreclosures will have a chilling effect on the housing market and therefore the economy. The absurdity of both positions is exposed for what they are — naked aggression and greed justifying the means to defraud and corrupt the entire housing market, financial industry and the whole of the consumer buying base in this and other countries.

Of particular note is the detailed discussion in the Amicus Brief regarding the recordation of interests in real property. While the brief does not directly attach perfection of liens that violate the provisions of Arizona Statutes, the implications are clear: If the public record does not contain adequate disclosure as to the identity of the interested parties, the document is neither properly recorded, nor is the party seeking to enforce such a document entitled to use that document as though it had been recorded.

The use of a double nominee method of identifying the straw-man beneficiary (usually MERS) and a straw-man “lender” (usually the mortgage originator  that was acting only as a conduit or broker) leaves the public without any knowledge as to the identities of the real parties in interest. In the case of a mortgage lien, if it is impossible to know the identity of the party who can satisfy the lien, then the lien is not perfected. The same reasoning holds true with any other document required to be recorded, to wit:

PUBLIC POLICY OF ARIZONA AGAINST FORECLOSURES: The AG also meets head on the obvious bias in the courts in which the assumption is made that that it is somehow better for society to speed along the foreclosures. Not so, says the AG:

[ipaper docId=63850498 access_key=key-2fb6uaz9ex9i8hwc71l8 height=600 width=600 /]

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IN RE: VASQUEZ | ORDER CERTIFYING STATE LAW QUESTIONS TO THE ARIZONA 16 V. SUPREME COURT “Who Owns the Note?”

IN RE: VASQUEZ | ORDER CERTIFYING STATE LAW QUESTIONS TO THE ARIZONA 16 V. SUPREME COURT “Who Owns the Note?”


Show some love to Judge Eileen W. Hollowell!

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ARIZONA

JULIA V. VASQUEZ,
Plaintiff

vs.

SAXON MORTGAGE, INC.;
SAXON MORTGAGE SERVICES,
INC.; DEUTSCHE BANK
NATIONAL TRUST COMPANY
AS TRUSTEE FOR SAXON
ASSET SECURITIES TRUST
2005-3
Defendants.


EXCERPT:

The Certifying Court has reviewed the proposals by the parties and certifies the following questions to the Arizona Supreme Court under A.R.S. § 12-1861 and Ariz. S. Ct. Rule 27(a)(3)(A):

(1) Is the recording of an assignment of deed of trust required prior to
the filing of a notice of trustee’s sale under A.R.S. § 33-808 when
the assignee holds a promissory note payable to bearer?

(2) Must the beneficiary of a deed of trust being foreclosed pursuant to
A.R.S. § 33-807 have the right to enforce the secured obligation?


[ipaper docId=63818981 access_key=key-20bq6pq4yyg69o4cbd19 height=600 width=600 /]

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Bank Of America Foreclosure Over a Dollar

Bank Of America Foreclosure Over a Dollar


Bank tells Surprise couple they’re in foreclosure on home they sold in short sale nine months ago.

AZCENTRAL-

A Surprise couple sold their home in a short sale, and then were shocked when the bank told them the house was in foreclosure for an unpaid balance of just one dollar.

Like many other homeowners, Jose and Marcy Romero were upside down on their home. They felt the best decision was to put it up for a short sale. They owed $200,000, but it sold for $84,000. Marcy said, “(We) put it up on the market. Five minutes later it sold.”

Continue reading [AZCENTRAL]

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It’s Marshall Home(s)… B*TCHES!!! Tucson mayoral candidate on odd spree of house claiming

It’s Marshall Home(s)… B*TCHES!!! Tucson mayoral candidate on odd spree of house claiming


Rumor has it, Mr. Home has trademarked both Fannie Mae and Freddie Mac names in AZ ??

AZCENTRAL-

A Tucson mayoral candidate from a fringe political party has seized dozens of foreclosed homes in metro Phoenix, changing the locks, kicking out real-estate agents and posting “Do Not Trespass” signs.

Marshall Home, who claims many foreclosures are illegal, has filed documents in the past two weeks with the Maricopa County Recorder’s Office showing he has supposedly taken ownership of at least 21 homes belonging to government-owned mortgage giant Fannie Mae. But none of the documents shows any money has changed hands, and Fannie Mae says it has not sold the houses.

[…]

“Lenders are gangsters, and they can’t prove they own these homes. So they have no right to foreclose,” said the 80-year-old self-professed billionaire from his real-estate and political office in Tucson on Tuesday. “I plan to continue to take homes from Fannie Mae and Freddie Mac. I would buy them, but those groups can’t produce the notes showing they are the rightful owners to sell or foreclose on them.”

Continue reading [AZCENTRAL]

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FALSE STATEMENTS: Veal v. American Home Mortgage Servicing, BAP No. AZ-10-1055-MkKiJu

FALSE STATEMENTS: Veal v. American Home Mortgage Servicing, BAP No. AZ-10-1055-MkKiJu


By Lynn Szymoniak, ESQ.

False Statements

American Home Mortgage Servicing
DocX, LLC
Lender Processing Services
Sand Canyon Corporation
Wells Fargo Bank, N.A.

Action Date: June 12, 2011
Location: Phoenix, AZ

On June 10, 2011, the U.S. Bankruptcy Appellate Panel of the Ninth Circuit issued an important and lengthy analysis of standing and real-party-in-interest issues in a foreclosure case in Veal v. American Home Mortgage Servicing, BAP No. AZ-10-1055-MkKiJu.

GSF Mortgage Corporation was the original lender in this case. Wells Fargo Bank, as Trustee for Option One Mortgage Loan Trust 2006-3, and its servicer, American Home Mortgage Servicing, Inc., sought to set aside the automatic bankruptcy stay in order to foreclose on the Veals. The note was not endorsed to Wells Fargo or to the trust. As part of their efforts to establish standing, and real-party-in-interest status, Wells Fargo and American Home Mortgage Servicing, the servicer for the Trust, filed a mortgage assignment.

The Assignment was prepared by Docx, LLC in Alpharetta, GA, the document mill made famous by Fraud Digest, then by 60 Minutes, Reuters, The Washington Post, the New York Times, Huffington Post, Firedoglake, Naked Capitalism, Foreclosure Hamlet, 4closure Fraud, Stop Foreclosure Fraud, the Wall Street Journal, and many others. While Docx is now closed, its documents live on in courts and recorders offices across the country.

The Veal Assignment was signed by Tywanna Thomas and Cheryl Thomas who claimed to be officers of Sand Canyon Corporation formerly known as Option One Mortgage. From deposition testimony of Cheryl Thomas, it is known that both Cheryl and Tywanna Thomas were actually employees of Lender Processing Services, the company that owned Docx. There are many different versions of the Tywanna Thomas signature because, as we now know, the employees in Alpharetta forged each other’s names on witnessed and notarized documents.

The Assignment was signed (by someone) on November 10, 2009, but a line on the Assignment right underneath the legal description of the property states:
“Assignment Effective Date 10/13/2009.”

The closing date of the trust was October 27, 2006, almost three years prior to the Assignment effective date. Investors were told the trust would obtain actual Assignments to the Trust of the mortgages pooled in that trust by the closing date.

Dale Sugimoto, the president of Sand Canyon, said in a sworn affidavit on March 18, 2009, filed in the Ron Wilson bankruptcy case in the Eastern District of Louisiana, Case No. 10-51328, Document 52-3, that Sand Canyon does not own any residential mortgages and has no servicing rights.

To summarize:

1. Cheryl Thomas and Tywanna Thomas were not officers of Sand Canyon, as represented on the Assignment. Someone other than Tywanna Thomas and Cheryl Thomas often forged their names.

2. The Veal loan was not transferred to the Option One trust effective October 13, 2009, as represented on the Assignment.

3. Sand Canyon did not own the Veal mortgage and, therefore, had no authority to assign the mortgage to the Option One Trust. The Latin phrase – Nemo dat quod non habit – best covers this situation. Translation: one cannot give what one does not have.

Investors in this Option One trust, the Bankruptcy Judge in the Veal case, bankruptcy trustees with similar documents, homeowners and their lawyers, the SEC, and the Justice Department must all demand answers (and reparations) from the Trustee, the document custodian, the servicer and Lender Processing Servicing.


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IN RE VEAL | AZ 9th Circuit BAP “Reverses Stay, Wells Fargo & AHMSI Lack of Standing, PSA Fail, Assignment Fail, UCC Articles 3 & 9 Applied”

IN RE VEAL | AZ 9th Circuit BAP “Reverses Stay, Wells Fargo & AHMSI Lack of Standing, PSA Fail, Assignment Fail, UCC Articles 3 & 9 Applied”


UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT

In re:
HOWARD RICHARD VEAL, JR., and
SHELLI AYESHA VEAL,
Debtors.

HOWARD RICHARD VEAL, JR.;
SHELLI AYESHA VEAL,
Appellants,

v.

AMERICAN HOME MORTGAGE SERVICING,
INC.; WELLS FARGO BANK, N.A., as
Trustee for Option One Mortgage
Loan Trust 2006-3 Asset-Backed
Certificates, Series 2006-3, and
its successor and/or assignees,
Appellees.

Argued and Submitted on June 18, 2010
at Phoenix, Arizona
Filed – June 10, 2011
Appeal From The United States Bankruptcy Court
for the District of Arizona

Honorable Randolph J. Haines, Bankruptcy Judge, Presiding

Before: MARKELL, KIRSCHER and JURY, Bankruptcy Judges.

EXCERPTS:

The Substantive Law Related to Notes Secured by Real Property

Real party in interest analysis requires a determination of the applicable substantive law, since it is that law which defines and specifies the wrong, those aggrieved, and the redress they may receive. 6A Federal Practice and Procedure § 1543, at 480-81 (“In order to apply Rule 17(a)(1) properly, it is necessary to identify the law that created the substantive right being asserted . . . .”). See also id. § 1544.

1. Applicability of UCC Articles 3 and 9
Here, the parties assume that the Uniform Commercial Code (“UCC”) applies to the Note. If correct, then two articles of the UCC potentially apply. If the Note is a negotiable instrument, Article 3 provides rules governing the payment of the obligation represented by and reified in the Note.

[…]

In particular, because it did not show that it or its agent had actual possession of the Note, Wells Fargo could not establish that it was a holder of the Note, or a “person entitled to enforce” the Note. In addition, even if admissible, the final purported assignment of the Mortgage was insufficient under Article 9 to support a conclusion that Wells Fargo holds any interest, ownership or otherwise, in the Note. Put another way, without any evidence tending to show it was a “person entitled to enforce” the Note, or that it has an interest in the Note, Wells Fargo has shown no right to enforce the Mortgage securing the Note. Without these rights, Wells Fargo cannot make the threshold showing of a colorable claim to the Property that would give it prudential standing to seek stay relief or to qualify as a real party in interest.

Accordingly, the bankruptcy court erred when it granted Wells Fargo’s motion for relief from stay, and we must reverse that ruling.

[…]

AHMSI apparently conceded that Wells Fargo held the economic interest in the Note, as it filed the proof of claim asserting that it was Wells Fargo’s authorized agent. Rule 3001(b) permits such assertions, and such assertions often go unchallenged. But here the Veals did not let it pass; they affirmatively questioned AHMSI’s standing. In spite of this challenge, AHMSI presented no evidence showing any agency or other relationship with Wells Fargo and no evidence showing that either AHMSI or Wells Fargo was a “person entitled to enforce” the Note. That failure should have been fatal to its position.

[…]

IV. CONCLUSION

For all of the foregoing reasons, the bankruptcy court’s order granting Wells Fargo’s relief from stay motion is REVERSED, and the order overruling the Veals’ claim objection is VACATED and REMANDED for further proceedings consistent with this opinion.

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BREAKING: Sarah Palin, Your New AZ Home Robo-Signed… Again, Meet Deborah Brignac

BREAKING: Sarah Palin, Your New AZ Home Robo-Signed… Again, Meet Deborah Brignac


Commonwealth of Massachusetts
Southern Essex District Registry of Deeds
Shetland Park
45 Congress Street
Suite 4100
Salem, Massachusetts 01970

JOHN L. O’BRIEN, JR.
Register of Deeds
Phone: 978-542-1704
Fax: 978-542-1706
website: www.salemdeeds.com

NEWS
FOR IMMEDIATE RELEASE

Salem, MA
June 9th, 2011

Contact:
Kevin Harvey, 1st Assistant Register
978-542-1724
kevin.harvey@sec.state.ma.us

Marie McDonnell, President McDonnell Property Analytics, Inc.
508-694-6866
marie@mcdonnellanalytics.com

Massachusetts Register of Deeds John O’Brien and Forensic Mortgage Fraud Examiner Marie McDonnell find former Vice-Presidential candidate Sarah Palin is victim of potential mortgage fraud; expert says chain of title to new Arizona home clouded by robo-signers.

In what is an ironic twist of fate today Register of Deeds John O’Brien and nationally renowned mortgage fraud examiner Marie McDonnell, President of McDonnell Property Analytics, Inc., announce that former Alaska Governor and Vice-Presidential nominee Sarah Palin is an unwitting victim of mortgage fraud and has purchased a home in Arizona that contains flaws in the chain of title.

Register O’Brien said, “If fundamental property principles still matter in this country, Sarah Palin may have legal issues that could affect the ownership of her home. Through no fault of her own, Sarah Palin has become a victim like thousands of others across the country that have the same problem with their chain of title. I feel bad for Governor Palin and all the homeowners who have been victimized by this scheme, it just goes to show you that no one is immune from this type of fraud and irresponsible behavior that these banks participated in.”

Marie McDonnell added, “Sarah Palin’s chain of title has been swept up into the eye of the ‘perfect storm’ where robo-signer Linda Green’s fraudulent Deed of Release on behalf of Wells Fargo Bank, N.A. is eclipsed by robo-signer Deborah Brignac’s fraudulent foreclosure documents. Brignac, a Vice President of California Reconveyance Company (a subsidiary of JPMorgan Chase Bank), assigned the homeowner’s Deed of Trust to JPMorgan Chase Bank in her capacity as a Vice President of Mortgage Electronic Registration Systems, Inc. (“MERS”); in the same breath, Brignac executed a document appointing California Reconveyance Company (her real employer) as Substitute Trustee in her alleged capacity as a Vice President of JPMorgan Chase.”

Sound confusing? McDonnell explained, “This is a shell game where Brignac purports to be Vice President of three (3) different entities so that she can manufacture the paperwork necessary for JPMorgan Chase Bank to hijack the mortgage and then foreclose on the property. This is an excellent example of how MERS is being used by its Members to perpetrate a fraud. I have laid out a timeline that illustrates the defects in Sara Palin’s chain of title which shows that it is seriously, if not fatally impaired.” McDonnell whose firm performed the extensive forensic analysis. (See McDonnell’s Mortgage Map)

O’Brien, who recently announced that he found 6047 fraudulent Linda Green documents recorded in the Essex Southern District Registry of Deeds which had 22 different variations of a Linda Green signature has been the National Leader in blowing the whistle on banks such as Bank of America, J.P. Morgan Chase, Wells Fargo for their business practices. O’Brien said “These banks have participated in a national epidemic of fraud that has clouded or damaged the chain of title of hundreds of thousands of American homeowners all across the country”. O’Brien further said “Sadly, Sarah Palin’s misfortune will however, hopefully shine the national spotlight on this issue. Given her position in the country, I am sure that she will use her influence to stand up for homeowners and their property rights”.

[Click image below to see McDonnell’s Palin Mortgage Map]


[ipaper docId=57497718 access_key=key-1w7fb7ufnsa0wsp7b4bl height=600 width=600 /]

[Sarah Image: VARIGHT.com]

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IN RE FONTES | Arizona Bankr. Court Appellate Panel Slams Standing “MERS Assignment, HSBC Affidavit”

IN RE FONTES | Arizona Bankr. Court Appellate Panel Slams Standing “MERS Assignment, HSBC Affidavit”


In re: CARLOS RAMON FONTES and EVA MARIE FONTES, Debtors.
CARLOS RAMON FONTES; EVA MARIE FONTES, Appellants,
v.
HSBC BANK, USA, NA; DIANNE CRANDELL KERNS, Chapter 13 Trustee, Appellees.

BAP No. AZ-10-1345-JUMKPa, Bk. No. 08-13133.

United States Bankruptcy Appellate Panel, Ninth Circuit.

.

Argued and Submitted on February 17, 2011 at Phoenix, Arizona. April 22, 2011.

Ronald Ryan, Esq. argued for Appellants Carlos and Eva Fontes Steven D. Jerome, Esq. of Snell & Wilmer LLP argued for Appellee HSBC Bank USA, NA Craig Morris, Esq. argued for Appellee Dianne Crandell Kerns.

Before: JURY, MARKELL, and PAPPAS, Bankruptcy Judges.

EXCERPT:

A. HSBC’s Theories

HSBC argues that we should affirm the court’s decision on the ground that debtors’ statements in their schedules and confirmed plan regarding ASC were judicial admissions[9] that HSBC had standing to bring the motion for relief from stay because ASC was HSBC’s loan servicer. HSBC further argues that the doctrine of judicial estoppel[10] should bar debtors from challenging HSBC’s standing because debtors acknowledged their debt to ASC, HSBC’s loan servicer, in their schedules and plan. Thus, HSBC maintains that debtors should not be able to take an inconsistent position in the context of the relief from stay proceeding. Finally, HSBC contends that despite these grounds for affirming the bankruptcy court’s ruling, it independently met its burden of proof that it had a colorable claim to debtors’ property.[11]

Although we may affirm the bankruptcy court’s decision on any ground fairly supported by the record, Wirum v. Warren (In re Warren), 568 F.3d 1113, 1116 (9th Cir. 2009), we disagree with HSBC that it should prevail under any of these theories.

We first address HSBC’s argument that it proved it had a colorable claim to debtors’ property. The record shows that the bankruptcy court did not directly address this question because it relied on debtors’ confirmed plan for its decision. Regardless, we review standing issues de novo and there is no evidence in the record that supports HSBC’s contention.

The assignment of the deed of trust from MERS, as nominee for Infinity, to HSBC also purported to assign the note. However, HSBC, as MER’S assignee, would take subject to the rights and remedies of its assignor. HSBC overlooks the fact that there is no evidence in the record that shows MERS had any interest in the note to assign. Although the deed of trust gave MERS, as nominee, the power to assign the deed of trust, it did not mention the note, nor did the note itself name MERS as nominee, so MERS could not take this right from the documents themselves. Further, there is no independent evidence that Infinity conveyed the note to MERS. Finally, debtors were not obligated under the note to make payments to MERS. In short, the language in the deed of trust which names MERS as a beneficiary, solely as nominee of Infinity, was insufficient to confer any economic benefit on MERS. In re Weisband, 427 B.R. 13, 20 (Bankr. D. Ariz. 2010).

In Weisband, the bankruptcy court considered whether a MERS assignment of a deed of trust provided the loan servicer with standing for purposes of obtaining relief from stay. The court concluded that MERS had no interest in the note and would suffer no injury if the note was not paid and the deed of trust not foreclosed. As a result, the court concluded that MERS did not have constitutional standing and, if MERS did not have constitutional standing, its assignee could not satisfy the requirements for constitutional standing either. Id.; see also Wilhelm, 407 B.R. at 404[12] (discussing validity of MERS’s assignments related to the note). We do not perceive a different result is warranted under these circumstances.

Moreover, HSBC gives the Williams’ declaration more credence than the rules of evidence allow. Williams’ declaration was conclusory, simply stating that she was familiar with the business records of HSBC and that HSBC was the “holder or servicer” of the note. Williams also stated that HSBC had a contractual right to collect payments and maintain legal actions for the beneficial note holder, either as the current note holder or pursuant to either a Master Servicing Agreement or Power of Attorney. However, neither of those documents were attached to her declaration and there is no other foundation for her to have made these equivocal statements. Finally, the declaration creates an ambiguity because Williams stated that HSBC was “the holder or servicer” of the Note. Which is it? If HSBC was a servicer of the note, it does not necessarily follow that HSBC was the holder of the note under Ariz. Rev. Stat. § 47-1201(B)(21)(a).[13]Weisband, 427 B.R. at 21 (noting that “[E]ven if a servicer has constitutional standing, it may still not be the `real party in interest’ under Fed. R. Civ. P. 17 and may not, therefore be able to satisfy the requirements for prudential standing.”). In short, Williams’ declaration did not establish that HSBC had constitutional or prudential standing or that HSBC had authority to act for any entity that did have standing. See

HSBC’s judicial admission and estoppel theories as grounds for affirmance are also unpersuasive. HSBC seeks to have these doctrines applied to itself vis-a-vis ASC. The only manner in which HSBC links itself to ASC in the record is through its repeated assertion without reference to any evidence that ASC was its “servicer.”[14] No further details are given. Does HSBC mean that ASC was its agent at the time of debtors’ filing? Or, does HSBC mean it somehow became the successor in interest to ASC? The record does not support either theory.

Generally, a loan servicer acts only as the agent of the owner of the instrument. We do not find any evidence in the record that establishes an agency relationship between HSBC and ASC that existed when debtors filed their petition and proposed their plan. The record contains no servicing agreement between ASC and HSBC indicating that ASC was HSBC’s agent, and ASC’s proof of claim did not state that it was acting as the authorized agent for HSBC. Further, MERS’s assignment to HSBC of the trust deed and note is dated September 11, 2009 — a date well past the petition and plan confirmation dates. Thus, the only inference to be drawn from the record is that ASC was acting as servicer for some party other than HSBC when debtors filed their petition.

We also cannot conclude on this record that HSBC established that it was ASC’s successor in interest. A successor in interest is “one who follows another in ownership or control of property. A successor in interest retains the same rights as the original owner, with no change in substance.” Black’s Law Dictionary, (9th ed. 2009). Nothing in the record shows ASC was in the line of assignments of the note or trust deed. In reality, ASC and HSBC appear to be separate unrelated entities at the time of debtors’ filing. Without a direct link to ASC, HSBC cannot take advantage of the judicial admission or estoppel doctrines to bar debtors’ challenge to its standing.

In sum, the record is devoid of evidence that would support any of HSBC’s theories.

[…]

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Posted in STOP FORECLOSURE FRAUDComments (1)

Sarah Palin, Meet Linda Green (And MERS): Was Palin’s New Home Purchase Preceded By A “Robosigned” (And Fraudulent) Title Release

Sarah Palin, Meet Linda Green (And MERS): Was Palin’s New Home Purchase Preceded By A “Robosigned” (And Fraudulent) Title Release


No..It’s not Tina Fey!

Zero Hedge-

Steven Soraya, who had a loan amounting to $980,500.00 with Wells Fargo, which was released on July 3, 2007 and which just so happens was signed by Robosigner extraordinaire, the one, the only, the infamous Linda Green. Ergo our question: did miss Palin just procure a property to which there is no legitimate title, and which, therefore, may not have been legitimately sold to her? Oh yes, MERS is of course involved too.

Continue to ZH to witness the docx…

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Posted in STOP FORECLOSURE FRAUDComments (0)

[VIDEO] AZ Rep. Seel Questioned About Personal $100K Home Principal Reduction

[VIDEO] AZ Rep. Seel Questioned About Personal $100K Home Principal Reduction


Read this post below for further explanation to this craziness…

AZ Rep. Seel Drops Amendment Requiring Pre-Foreclosure Chain of Title, 2 Days After Servicer Grants Principal Reduction


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Posted in STOP FORECLOSURE FRAUDComments (2)

AZ Rep. Seel Drops Amendment Requiring Pre-Foreclosure Chain of Title, 2 Days After Servicer Grants Principal Reduction

AZ Rep. Seel Drops Amendment Requiring Pre-Foreclosure Chain of Title, 2 Days After Servicer Grants Principal Reduction


Another Exclusive from Mandelman

Remember Arizona’s Senate Bill 1259 that would have required servicers to produce a declaration that they had the proper chain of title prior to foreclosing on someone’s home?  You know… the one that passed the Arizona Senate 28-2 that I wrote about back on February 23rd of this year?

Remember maybe a month ago when I tried to follow up to see how the bill was proceeding in the Arizona House of Representatives… only to find out that on the way to the House… it disappeared… the text replaced by some bill about firefighting with the same number?  And no one was saying a word about it?  If you missed it, I wrote about it here.

Okay, well… it appears that the story is not over yet.



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Posted in STOP FORECLOSURE FRAUDComments (1)

Nancy McLain on SB 1259 “Well, there were people that came and talked to me about it”

Nancy McLain on SB 1259 “Well, there were people that came and talked to me about it”


via KPHO.com

“I’ve got to ask, did lobbyists have anything to do with your decision?” Erwin asked McLain.

“Well, there were people that came and talked to me about it,” she responded.

“Representative, of course the bankers aren’t going to like this bill, it doesn’t help them. But have you talked to the constituents, the folks in foreclosure who could have been assisted by this?” Erwin questioned.

Were these the people who went to speak with her?

SB 1259 – foreclosures; proof of ownership – DO PASS

Zack Porter, Banking and Insurance Committee Intern, explained the bill and answered questions
posed by the Committee.

Senator Reagan, bill sponsor, further explained the bill and answered questions posed by the
Committee.

Wendy Briggs, Lobbyist, Arizona Bankers Association, testified in opposition to the bill and
answered questions posed by the Committee.

William Hultman, Senior Vice President, MERSCORP, Inc., testified in opposition to the bill and
answered questions posed by the Committee.

Lee Miller, Lobbyist, Arizona Trustee Association, testified in opposition to the bill and answered
questions posed by the Committee.

Darrell Blomberg, representing self, testified in support of the bill and answered questions posed
by the Committee.

Beverly Hall, representing self, testified in opposition to the bill and answered questions posed by
the Committee.

Senator Reagan moved SB 1259 be returned with a DO PASS recommendation.
The motion CARRIED with a roll call vote of 4-0-2 (Attachment 2).

Senator Driggs explained his vote.

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[VIDEO] Arizona SB 1259 “Proof of Showing Ownership of Note” Disappear Right Before Your Eyes!

[VIDEO] Arizona SB 1259 “Proof of Showing Ownership of Note” Disappear Right Before Your Eyes!


Thank you Karl “Ticker Guy” Denninger

by on Apr 24, 2011

Arizona abuse of process in the House Banking Committee – raw, in-your-face usurpation of the Democratic process on display by Rep. McClain (R-3)

Text associated with this video is displayed here:
http://market-ticker.org/akcs-www?post=184886

You’re a worthless viper Ms. McClain.

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Posted in STOP FORECLOSURE FRAUDComments (1)

BLOOMBERG | Arizona Bill Would Void Foreclosures Without Full Title History

BLOOMBERG | Arizona Bill Would Void Foreclosures Without Full Title History


Arizona may become the first state to require lenders to prove they have the right to foreclose by providing a complete list of any previous owners of the mortgage, under a bill passed yesterday by its Senate.

The legislation, which is headed to the House after being approved 28-2 in the Republican-dominated Senate, would allow foreclosure sales to be voided if lenders that didn’t originate the loan can’t produce the full chain of title. Arizona permits nonjudicial foreclosures, meaning property can be seized from the homeowner without a court order.

Lawmakers in states including New York, Oregon and Virginia also have proposed legislation to address concerns among consumer advocates that lenders or mortgage servicers are using incomplete or false paperwork to repossess properties in default. The attorneys general of all 50 states are jointly investigating how the mortgage-servicing industry operates.

“If you foreclose on somebody you should have to tell them who owns the property,” Michele Reagan, who sponsored Senate Bill 1259, said in a telephone interview. “People have the right in this country to face their accusers.” The Republican lawmaker is in litigation with her mortgage servicer, which she said won’t identify the owner of the loan.

Continue reading HERE

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Arizona Bankruptcy Court Denies BAC “No Docs To Show Ownership Of Loan Or Standing” In re: ZITTA

Arizona Bankruptcy Court Denies BAC “No Docs To Show Ownership Of Loan Or Standing” In re: ZITTA


In re MIKE ZITTA AND IRENA ZITTA, Debtors.
BAC HOME LOANS SERVICING, LP FKA COUNTRYWIDE HOME LOANS
SERVICING LP, its assignees and/or successors in interest, Movant,
v.
MIKE ZITTA AND IRENA ZITTA, Respondents.

No. 09-bk-19154-SSC

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ARIZONA

DATED: January 21, 2011.

Not for Publication-Electronic Docketing ONLY

AMENDED1 MEMORANDUM DECISION

I. PRELIMINARY STATEMENT
This Court recently received a Notice of Appeal filed by BAC Home Loans Servicing, L.P., f/k/a Countrywide Home Loans Servicing, L.P.(“BAC”) on December 23, 2010. The Notice of Appeal concerns the Court’s denial of a Motion for Reconsideration filed by BAC relating to its Motion for Relief from Stay in the Chapter 11 bankruptcy case of Mike and Irena Zitta (“Debtors”). Because BAC may have prematurely filed its Notice of Appeal, and because this Court had anticipated an opportunity to execute some sort of Order, with an appended memorandum decision on the issues presented, this Court will amplify its reasoning in denying the Motion for Reconsideration and clarify the record so that the Motion for Reconsideration may be heard on appeal.

BAC filed its Motion for Relief from Stay on August 30, 2010.2 Copies of the interest-only promissory note (“Note”), along with an allonge (“Allonge”), the recorded deed of trust (“Deed of Trust”), and the Broker’s price opinion were attached to the Motion.3 BAC also filed a declaration in support of the Motion.4 However, no assignment of the Deed of Trust from any entity to BAC was included. The Debtors filed a response/objection to the relief requested.5 The Court denied BAC’s Motion by Minute Entry Order issued on October 20, 2010 (the “Minute Entry Order”), because BAC had failed to provide a copy of an assignment of the Deed of Trust with its Motion.6 The October 20 Minute Entry Order was not executed by this Court.

On October 29, 2010, BAC filed a Motion for Reconsideration of the Minute Entry Order, asserting that under Arizona law, an assignment of the Deed of Trust was not necessary to establish standing to move for relief from the automatic stay.7 The Court heard the Motion for Reconsideration on December 15, 2010, and denied the requested relief. BAC never submitted a form of order denying the Motion for Reconsideration, and although a minute entry order was generated that same day outlining briefly the Court’s denial of the Motion, the minute entry order was never executed by this Court.8 Rather than wait for an appropriate form of order to be entered, BAC chose to file a Notice of Appeal on December 23, 2010.

In this Memorandum Decision, the Court has set forth its findings of fact and conclusions of law pursuant to Rule 7052 of the Rules of Bankruptcy Procedure. The issues addressed herein constitute a core proceeding over which this Court has jurisdiction. 28 U.S.C. §§ 1334(b) and 157(b) (West 2010).

II. FACTUAL DISCUSSION
In the Motion for Relief from Stay filed on August 30, 2010, BAC asserted that it was the “holder in due course” and that it was the “payee and a holder in due course under that certain Promissory Note dated March 20, 2007.”9 The Note attached to the Motion for Relief from Stay stated that GreenPoint Mortgage Funding, Inc., had provided the financing to the Debtors so that the Debtors could acquire the real property located at 5100 East Blue Jay Lane, Flagstaff, Arizona (“Property”).10 The Note further stated that anyone taking the Note “by transfer and who [was] entitled to receive payments under [the] Note [was] called the “Note Holder.”11 The Allonge, dated March 20, 2007, stated as follows: “Pay to the Order of BAC Home Loans Servicing, LP f/k/a Countrywide Home Loan Servicing, LP without recourse.”12 GreenPoint Mortgage Funding, Inc. had executed the Allonge, although the signature is difficult to discern.13 The Deed of Trust attached to the Motion for Relief from Stay stated that GreenPoint Mortgage Funding, Inc. was the lender and that MERS was the nominee for the lender. Specifically, the Deed of Trust stated:

(E) “MERS” is Mortgage Electronic Registration Systems, Inc. MERS is a separate corporation that is acting solely as a nominee for Lender and Lender’s successors and assigns. MERS is the beneficiary under this Security Instrument.14

The Deed of Trust stated that the Debtors acknowledged or executed the document on March 21, 2007, although the Allonge and the Note had an execution date of March 20, 2007. Finally, the Declaration submitted in support of the Motion for Relief from Stay stated that “[it] is in the regular course and scope and business for BAC Home Loans Servicing, LP f/k/a Countrywide Home Loans Servicing LP to prepare and maintain books and records relating to the status of the servicing of Movant’s Deed of Trust.”15 The Declaration also stated that “Movant is the payee under that certain Promissory Note dated March 20, 2007…. Further, Movant is the present holder and owner of that certain First Deed of Trust of same date…. securing said Note against Debtors’ property….”16 Thus, BAC’s Declaration creates an ambiguity as to whether BAC is the servicer of the loan or whether it is the Note Holder who is entitled to payments under the Debtors’ Note obligation. The documentation presented by BAC also includes a security agreement, granting BAC a security interest in the Note.17

A review of the Motion for Relief from Stay reflects the myriad problems that this and other Courts are facing in attempting to handle the tremendous volume of such motions that are filed in the numerous bankruptcy cases that are pending across the country. First, the Motion that was filed in this case appears to be a form that may have been imperfectly tailored to the facts of this case. For instance, the Motion for Relief from Stay alleges that GreenPoint Mortgage Funding, Inc. “was the original lender on the subject Note and Deed of Trust. Thereafter, GreenPoint Mortgage Funding, Inc. assigned all of its rights, title and interest in and to said [N]ote and Deed of Trust to BAC Home Loans Servicing, L.P., f/k/a Countrywide Home Loans Servicing, L.P. by way of an Allonge….”18 However, as noted previously, the Declaration seems to indicate that BAC was acting as a servicer. If BAC was simply the servicer, then for whom was BAC receiving payments under the Note? If BAC was holding the Note as the servicer, for whom was it acting? If BAC was the Note Holder, as defined in the Note, then why does the Declaration state that BAC operates as a servicer? Another way to state the problem is that the Motion for Relief from the Stay and the Declaration seem to reflect imperfectly the transfer of the various interests in the Note and Deed of Trust. Given the posture of the record presented to the Court, and the lack of clarity, the Court denied the Motion for Relief from Stay by Minute Entry Order on October 20, 2010. Rather than clarify the record by filing the appropriate assignment, a further declaration or affidavit, or some other documentation, BAC filed its Motion for Reconsideration. BAC chose to provide no further information to the Court from a factual standpoint.

III. LEGAL DISCUSSION
The Motion for Reconsideration

As outlined above, part of the problem with the issues to be decided is the context in which the matters have been presented to the Court. When a motion for relief from stay is filed, the Bankruptcy Code, the Rules of Bankruptcy Procedure, and the Local Rules of this Court are immediately applicable or implicated.

11 U.S.C. §362 (d) states that the bankruptcy court may, for instance, terminate, modify, or condition the automatic stay (1) “for cause, including the lack of adequate protection of an interest in property of such party in interest,” or (2) “with respect to a stay of an act against
property under subsection (a) of this section if-(A) the debtor does not have an equity interest in such property; and (B) such property is not necessary to an effective reorganization.”19 Section 362(g) states that the party requesting relief from the automatic stay has the burden of proof of whether the debtor has any equity in the property at issue.20 The Local Rules of the Arizona Bankruptcy Court further require that a party filing a motion for relief from the automatic stay be able to provide some support for the relief requested. For instance, if the party is stating that it is a secured creditor requesting relief from the automatic stay to pursue a trustee’s sale under Arizona law, the secured creditor should be able to provide support in the motion that it has a perfected security interest in property of the estate in which the debtor or debtor in possession also has an interest.21

In reviewing the sufficiency of any motion for relief from the automatic stay, the court must also consider under what provision of the Bankruptcy Code the debtor has filed. For instance, if the individual debtor has filed a chapter 7 petition, a trustee in bankruptcy is appointed that must collect and liquidate property of the estate, that has not been claimed exempt by the debtor, for distribution to the debtor’s creditors, according to the priorities set forth in the Bankruptcy Code.22 The trustee in bankruptcy may increase the amount of property of the estate available for distribution to creditors by exercising certain avoidance powers enumerated, inter alia, in Bankruptcy Code Sections 544, 547, and 548.23 An individual debtor may acquire the same duties and responsibilities of a trustee in bankruptcy by filing a chapter 11 petition, seeking to reorganize or to file a plan of liquidation.24 Because the debtor in possession is vested with the same powers of the trustee, the debtor in possession may pursue avoidance actions as well.25 In this case, the individual Debtors filed a chapter 11 petition seeking to reorganize, and no bankruptcy trustee has yet been appointed in this case. As a result, the Debtors exercise the rights of a bankruptcy trustee concerning the ability to avoid certain transfers or transactions.

Because of the avoidance powers of the bankruptcy trustee or the debtor in possession, this Court requires that if a party seeking relief from the automatic stay asserts a perfected security interest in any property of the estate, that moving party must be able to present at least a prima faciecase that it has such a perfected security interest under applicable law.26 The fact that the transaction is not avoidable between the parties to the underlying loan transaction is not dispositive of whether the transaction may be avoided by third parties that are, for instance, bona fidepurchasers.27

Turning to the standards of a motion for reconsideration, the moving party must show a manifest error of fact, a manifest error of law, or newly discovered evidence. School Dist. No. 1J Multnomah County, OR v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993); In re Gurr, 194 B.R. 474 (Bankr. D. Ariz. 1996). A motion for reconsideration is not specifically contemplated by the Federal Rules. To the extent it is considered by the Court, it is under Fed. R. Civ. P. 59(e) to alter or amend an order or judgment. In re Curry and Sorensen, Inc., 57 B.R. 824, 827 (Bankr. 9th Cir. 1986). Because BAC presented no new evidence to this Court and has not outlined any manifest error of fact, the sole basis for the BAC Motion for Reconsideration must be a manifest error of law by this Court. BAC has outlined several bases for what it believes is this Court’s manifest error of law.


(A) Is the Movant the Real Party in Interest?


A colleague in the Arizona Bankruptcy Court has stated that a party that brings a motion for relief from the automatic stay must first establish a “colorable claim.” “In order to establish [such a claim], a movant…. bears the burden of proof that it has standing to bring the motion.” In re Weisband, 427 B.R. 13, 18 (Bankr. D. Ariz. 2010) (citing In re Wilhelm, 407 B.R. 392, 400 (Bankr. D. Idaho 2009)). In the Weisband decision, the Court states that the moving party may establish standing by showing that it is a “real party in interest.”28 The Weisband Court next states that a holder of a note is a “real party in interest” under FRCP 17 because, under the Arizona Revised Statute (“ARS”) § 47-3301, the note holder has the right to enforce it. Weisband at 18. Relying on a decision from a bankruptcy court in Vermont, the Weisband Court next opines that “[b]ecause there is no federal commercial law which defines who is a note holder, the court must look to Arizona law to determine whether [movant] is [such] a holder.” Id. (citing In re Montagne, 421 B.R. 65, 73 (Bankr. D. Vt. 2009)). Finally, the Weisband Court states that under Arizona law, a holder of a note is defined as, inter alia, “the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.” Id. (citing ARS § 47-1201(B)(21)(a)).

BAC’s citation to Weisband fails to address this Court’s concerns. In the Motion for Relief, BAC contends that it is the “payee and a holder in due course.” However, the Declaration that it filed appears to reflect that BAC is the servicer for some other party. Obviously there is a difference. A servicer acts pursuant to a separate agreement with the Note Holder and is paid a separate fee to determine what payments have been made, or not made, by a given borrower. However, the servicer would not normally list the loan on its balance sheet as one of its assets. The Note Holder, according to the definition in the Note, is the party that is entitled to receive the payments under the Note, because it has arguably paid some consideration for the transfer of the obligation to it, and has listed the obligation as an asset in its books and records.29 BAC has not provided any additional facts to clarify whether it is the servicer pursuant to an agreement with the Note Holder, or contrary to its Declaration, it actually acquired the loan and has placed the loan on its balance sheet as one of its assets.

From the documentation provided by BAC, it appears that GreenPoint provided the original funding for the loan to the Debtors so that they could acquire the Property. Yet, at the time of the closing, GreenPoint immediately assigned its interest in the Note to BAC. The Declaration submitted by BAC, however, seems to indicate that BAC is only in the business of servicing loans-perhaps for some other entity associated or related to BAC. If BAC Home Loans Servicing, LP, is acting as the servicer of a Bank of America entity, for which entity is it acting? Conversely, if GreenPoint transferred the Debtors’ loan from its books and records to some other entity, was it BAC? If BAC alleges in its Motion for Relief from the Stay that it is the Note Holder, is it, in fact, the one legally entitled, because of the purchase of the Debtors’ obligation, to receive the Debtors’ payments?

As a part of its prima faciecase, BAC should have provided the Court with more factual information in support of its position. As a result, this Court may deny the Motion for Reconsideration, and the underlying Motion for Relief from the Stay, on the basis that BAC has failed to provide sufficient documentation to this Court so that the Court may ensure that BAC is the proper Note Holder, or servicer if appropriate, to pursue such a Motion for Relief from the Stay.

Thus, the focus of the BAC’s Motion for Reconsideration does not consider all of the factual and legal issues that it should. It does not address whether BAC, in this matter, has presented an appropriate factual and legal basis to proceed on this loan concerning the Debtors and their Property. BAC could have easily supplemented the record to provide the appropriate documentation to proceed, but chose not to do so.

(B) Has BAC Set Forth a Prima Facie Case That It Has
A Perfected Security Interest in the Property Given the Status
Of the Debtors As Debtors In Possession?

In its Motion for Reconsideration, BAC relies on ARS § 33-817, which states, “The transfer of any contract or contracts secured by a trust deed shall operate as a transfer of the security for such contract or contracts.” ARS § 33-817. BAC further points out that the Supreme Court of Arizona has held that a mortgage is a “mere incident to the debt,” and its “transfer or assignment does not transfer or assign the debt or the note,” but “the mortgage automatically goes along with the assignment or transfer” of the note. Hill v. Favour, 84 P.2d 575, 578 (Ariz. 1938) (emphasis added). However, at the hearing on December 15, 2010, the Court expressly stated its concern about the ability of BAC to proceed given that it had not provided any information as to a recorded assignment of the Deed of Trust. The Court asked counsel how her analysis was appropriate given (1) the status of the Debtors as Debtors in Possession who had objected to the relief requested, and (2) ARS § 33-818 which provides, in pertinent part, as follows:

[A]ssignment of a beneficial interest under a trust deed,… shall from the time of being recorded impart notice of the content to all persons, including subsequent purchasers and encumbrancers for value.
As outlined above, the Debtors, as Debtors in Possession, acquire the status of a bona fide purchaser and are able to set aside any real estate transaction, concerning their Property, for which the creditor has not taken appropriate steps under Arizona law. See 11 U.S.C. § 544(a)(3) (West 2010). Arizona law requires that if a secured creditor with a lien on the Debtors’ Property wishes to ensure that said interest is not subject to the claims of a bona fide purchaser, that said secured creditor record an assignment of its interest with the Recorder in the County where the Debtors’ Property is located. If notice of the assignment has not been provided, through recordation, the secured creditor may have its interest avoided by a bona fide purchaser. See Rodney v. Arizona Bank, 836 P.2d 434, 172 Ariz. 221 (Ariz. App. Div. 2 1992) (Unless and until the transferee of the beneficial interest in the deed of trust records an assignment of the deed of trust, the security interest in the real property remains unperfected.)

At the time of the hearing on the Motion for Reconsideration, BAC’s counsel agreed that although vis-a-vis the original parties to the transaction, no assignment of the Deed of Trust need be produced or recorded, because of the Debtors’ filing of a bankruptcy petition, ARS § 33-818 required that an assignment be prepared and properly recorded given the new status of the Debtors as Debtors in Possession.30 It is unclear why BAC has not simply supplemented the record to provide the assignment of the Deed of Trust.

The request that an assignment be recorded is not a burdensome requirement. MERS, through its registration system, keeps track of the transfers of the beneficial interests, under a deed of trust, from member to member in the system. When there is some type of default under the loan transaction, MERS generally prepares an assignment of the beneficial interest in the deed of trust for signature and then records the assignment with the appropriate state authority, which in Arizona would be the Recorder in the County where the real property that is subject to the secured creditor’s lien is located. This recordation of the assignment provides the requisite notice to third parties, as required under Arizona law.

Although BAC relies on the decision of Rodney v. Arizona Bank, 836 P.2d 434, 172 Ariz. 221 (Ariz. App. Div. 2 1992), the decision actually supports this Court’s understanding of the importance of the recordation of the assignment of the deed of trust. In Rodney, the borrowers were the Vasquezes, who received purchase money financing from the initial lender, Hal Clonts (“Clonts”), to purchase real property (“Property”) located in Mohave County. The Vasquezes executed a promissory note and deed of trust in favor of Clonts to provide him with a lien on their Property to secure repayment of the note. It is important to keep in mind that the Vasquezes remained the borrowers throughout a series of subsequent transactions that only affected the lender or the party that had a security interest in the promissory note and deed of trust.

Clonts transferred his interest to the Fidlers through an assignment of the beneficial interest in the promissory note and deed of trust. Id. at 435. However, on April 11, 1985, the Fidlers entered into a separate loan transaction in which they borrowed money from a third party, State Bank, later called Security Pacific Bank Arizona (“Security Pacific”). The Fidlers provided security to Security Pacific for their loan transaction by pledging “all monies” received by the Fidlers in “Escrow # 85-02-9290.” Id. Security Pacific immediately notified the title company, for the subject escrow, as to Security Pacific’s interest in the escrow funds. In September 1986, the Fidlers again transferred their beneficial interest in the promissory note and deed of trust to Theron Rodney (“Rodney”). The Fidlers received $20,000 from Rodney for the transfer of their interest. The Fidlers executed an assignment of the beneficial interest under the deed of trust. Rodney recorded his interest in the deed of trust with the Mohave County Recorder’s Officer where the Property was located. Not surprisingly, Security Pacific and Rodney disagreed as to the priority of their respective security interests in the loan proceeds. Security Pacific argued that the interest in the loan proceeds could only be perfected pursuant to the Uniform Commercial Code. Conversely, Rodney argued that the real property provisions of Arizona law were applicable. Id. at 436.

The sole issue to be addressed by the Appellate Court was whether Article Nine of the Uniform Commercial Code (as adopted in Arizona) applied to the creation and perfection of a security interest in a promissory note when the note itself was secured by a deed of trust in real property. Id. Before considering the analysis by the Court, let’s diagram the various loan transactions.

+——————————————————————————————————–+———————————————+
| The Vasquezes |                                                                                                                                                  Clonts |
| —- | |
+——————————————————————————————————–+———————————————+
| initial borrowers purchase money financing |                                                                                     initial lender |
+——————————————————————————————————–+——————————————————————+
| Vasquezes continue to pay on the original note and deed of trust to the title company, as escrow agent | (1) transfer of the interest in the note and deed of trust for consideration to the Fidlers |
|                                                                                                                                                                                                                   | (2) separate loan to the Fidlers–security interest in the note and deed of trust given to Security Pacific-consideration given to Fidlers |
|                                                                                                                                                                                                                   | (3) Fidlers again seek financing–security interest in the note and deed of trust given to Rodney |
|                                                                                                                                                                                                                   | for $20,000. |
+——————————————————————————————————–+——————————————————————–+
| | |
+——————————————————————————————————–+——————————————————————–+

Thus, it is only the parties on one side of the initial loan transaction that are in disagreement as to the priority of their security interests. Noting that Security Pacific only wanted to obtain a perfected security interest in the promissory note proceeds, the Court stated “we find that Security Pacific received a corollary security interest in the real property evidenced by the deed of trust, along with its interest in the note, although the corollary interest remained unperfected.” Id. The Court then stated that Security Pacific need not have a perfected security interest in the real property, because Security Pacific’s interest was only in the note which was a security interest in personal property under ARS § 47-1201(37). Id. at 436-37. The Court concluded that “Arizona case law holds that a mortgage note and the debt evidenced thereby are personal property (citing to Hill v. Favour, 52 Ariz. at 571, 84 P.2d at 579). Article Nine of the UCC applies to security interests in personal property….” Id. at 437. However, Article Nine of the Uniform Commercial Code does not apply to obtaining a lien on real property. In considering the somewhat murky area of “realty paper,” the Court relied on Commentators J White and R. Summers, who described “realty paper” as follows:

B mortgages his real estate to L. L gives B’s note and the real estate mortgage to Bank as security for a loan. Article Nine does not apply to the transaction between L and B, but does apply to that between L and Bank.

Id.31 Turning to the facts of this case, BAC is arguing that its security interest in the Note and Deed of Trust is perfected as to all others, rather than to just other mortgagees. It has forgotten the other side of the transaction, which is the “mortgagor” in the White and Summers analysis, or someone that may acquire an interest from the mortgagor, such as a bona fide purchaser. To perfect its interest as to the “mortgagor,” which would be the Zittas, or someone who may acquire an interest in the Property from the Zittas, BAC needed to record its assignment in the Deed of Trust, as required under real property law, such as ARS § 33-818 (West 2010). BAC has not shown this Court that any such assignment exists, so its Motion for Reconsideration must be denied as a matter of law.

BAC also relies on In re Smith, 366 B.R. 149 (Bank. D. Colo. 2007), which is inapposite. The debtor had been in a chapter 13 proceeding, but had converted his case to one under chapter 7. Id. at 150. Bank of New York, N.A. (“Bank of New York”) subsequently requested relief from the automatic stay as to the real property owned by the debtor. The debtor did not oppose the motion, and a foreclosure sale, pursuant to Colorado law, subsequently occurred. Bank of New York then recorded a deed upon sale as to the debtor’s real property. Without seeking any stay of the foreclosure proceedings, the debtor filed an adversary proceeding with the bankruptcy court. The debtor asserted that the Bank of New York was not the real party in interest, and therefore, it was unable to proceed with a foreclosure of his real property. The bankruptcy court reviewed the evidence presented and determined that Bank of New York was the holder of the promissory note at the time it commenced its foreclosure sale. The court stated that Countrywide Home Loans, Inc., which had originally provided the financing to the debtor, had endorsed the promissory note in blank. Under Colorado law, such a blank endorsement allowed the promissory note to become “payable to bearer.” However, Bank of New York did submit a Certification of Owner and Holder of the Evidence Debt, which allowed the Colorado court to conclude that Bank of New York was the “holder of the original evidence of debt.” The court then reviewed the deed of trust, determining that it was recorded at approximately the same time as the loan closing between the debtor and Countrywide Home Loan, Inc. The bankruptcy court then concluded that the promissory note was assigned to the Bank of New York. As such, once the promissory note was assigned to the Bank of New York, MERS then functioned as the nominee for the Bank of New York. Id. at 151. Presumably, as a result of MERS nominee status, the bankruptcy court concluded, sub silentio, that no additional action needed to be taken by Bank of New York vis-a-vis the debtor.

This Court questions the analysis by the Smith court.32 Although the Smith court relies on a 2002 decision from the Colorado Supreme Court, the court does not analyze the concept of “realty paper” or discuss White and Summers. As noted by this Court supra, the lender in the original loan transaction or a party that may subsequently obtain a security interest in the promissory note, as a result of a separate loan transaction, may be protected, but this Court is viewing the transaction from a different viewpoint: that of the Debtors in Possession that acquire the status of bona fide purchasers. There is no discussion, in Smith, as to how Colorado law would treat such third parties. Moreover, it is unclear whether Colorado has a similar provision as Arizona’s ARS § 33-818 that focuses on the separate requirements of a creditor that may have a beneficial interest under a deed of trust assigned to it.

In considering the ability of the debtor to pursue a claim under 11 U.S.C. § 544, the Colorado court concludes that the debtor does not have the standing of the bankruptcy trustee. Smith at 152. Such an analysis is correct, since the debtor pursued his claim against the Bank of New York only after he had converted his case to one under chapter 7. The chapter 7 trustee also failed to join with the debtor in the adversary proceeding or to pursue the claim separately.33 However, as to the facts before this Court, the Debtors, as Debtor in Possession, in this chapter 11 proceeding do have the standing to pursue claims under Section 544.34 Thus, this Court must reject the analysis in the Smith case.

This Court concludes that given the summary nature of motions for relief from the automatic stay, 35 the general requirements in the case law and the Local Rules of this Court36 that a creditor alleging a security interest in certain property of the debtor and/or the bankruptcy estate at least set forth a prima facie case as to its perfected security interest, 37 BAC should have provided an assignment of the Deed of Trust. It failed to do so; however, the Motion for Relief from the Automatic Stay was denied without prejudice. BAC still has the opportunity to refile the Motion with the appropriate documents as exhibits thereto.

IV. CONCLUSION
For the foregoing reasons, the Court denies BAC Home Loans Servicing, LP’s Motion for Reconsideration of this Court’s Denial of the Motion for Relief from the Automatic Stay. The Court

SARAH SHARER CURLEY, Bankruptcy Judge

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COMPLAINT: ARIZONA AG TERRY GODDARD SUES BANK OF AMERICA, COUNTRYWIDE

COMPLAINT: ARIZONA AG TERRY GODDARD SUES BANK OF AMERICA, COUNTRYWIDE


Office of Attorney General Terry Goddard

AZ State Seal

Terry Goddard Charges Bank of America with Mortgage Fraud

(Phoenix, Ariz – Dec. 17, 2010) Attorney General Terry Goddard announced that his Office today filed a lawsuit against Bank of America Corporation and its affiliated companies (“Bank of America”) alleging violations of the Arizona Consumer Fraud Act and violations of the consent judgment entered in March 2009 between Arizona and the Countrywide companies owned by Bank of America.

The lawsuit, filed in Maricopa County Superior Court, was triggered by hundreds of consumer complaints and follows a year-long investigation into Bank of America’s residential mortgage servicing practices, particularly its loan modification and foreclosure practices.

Read full complaint below…

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Posted in STOP FORECLOSURE FRAUDComments (2)

GARY DUBIN LAW OFFICES FORECLOSURE DEFENSE HAWAII and CALIFORNIA
Chip Parker, www.jaxlawcenter.com
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