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SHOUP vs. McCurdy & CANDLER, LLC | 11th Cir. Court of Appeals “MERS is NOT a CREDITOR, The complaint states a plausible claim for relief under the FDCPA”

SHOUP vs. McCurdy & CANDLER, LLC | 11th Cir. Court of Appeals “MERS is NOT a CREDITOR, The complaint states a plausible claim for relief under the FDCPA”


IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
_________________________
No. 10-14619
__________________________
D.C. Docket No. 1:09-cv-02598-JEC

JONI LEE SHOUP,
on behalf of herself and all others similarly situated,
Plaintiff – Appellant,

versus

MCCURDY & CANDLER, LLC,
Respondent – Appellee.
__________________________
Appeal from the United States District Court
for the Northern District of Georgia

___________________________
(March 30, 2012)

Before DUBINA, Chief Judge, CARNES, Circuit Judge, and FORRESTER,*
District Judge.

*Honorable J. Owen Forrester, United States District Judge for the Northern District of
Georgia, sitting by designation.

PER CURIAM:

Joni Shoup filed a lawsuit against McCurdy & Candler, LLC alleging a
violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692e. The
district court dismissed her complaint for failure to state a claim under Federal
Rule of Civil Procedure 12(b)(6), and Shoup appeals, contending that her
complaint stated a valid claim for statutory damages under the FDCPA because
McCurdy & Candler’s initial communication letter falsely said that its client,
Mortgage Electronic Registration Systems, Inc. (MERS), was Shoup’s “creditor.”

I.

Shoup bought a home in Georgia in 2003. To finance her new home, she
entered into a mortgage contract with America Wholesale Lender. The contract
stated that America Wholesale Lender was the “Lender,” but it also described
MERS as “the grantee under” the mortgage contract and as “a separate corporation
that is acting solely as a nominee for Lender and Lender’s successors and assigns.”
Shoup defaulted on her mortgage, and MERS’ law firm, McCurdy &
Candler, sent Shoup an initial communication letter. That letter was entitled,
“NOTICE PURSUANT TO FAIR DEBT COLLECTION PRACTICES ACT 15
USC 1692,” and stated that its purpose was “an attempt to collect a debt.” The
letter identified MERS as “the creditor on the above referenced loan.” (Emphasis
added.)

Soon after receiving that letter, Shoup filed a complaint against McCurdy &
Candler under the FDCPA. She alleged that MERS is not a “creditor” as defined
in the FDCPA because it did not offer or extend credit to Shoup and she does not
owe MERS a debt. Instead, according to the complaint, MERS is “a company that
tracks, for its clients, the sale of promissory notes and servicing rights.” Shoup,
therefore, alleged that McCurdy & Candler violated the FDCPA by falsely stating
in the initial communication letter that MERS was Shoup’s “creditor.”1
McCurdy & Candler filed a motion to dismiss under Rule 12(b)(6), which
the district court granted. Finding that MERS was a “creditor” under the FDCPA,
the court concluded that Shoup’s complaint did not state a claim for statutory
damages under the FDCPA. The court also concluded that, even if MERS was not
a “creditor,” calling MERS one was harmless. This is Shoup’s appeal.

II.

We review de novo the grant of a motion to dismiss under Rule 12(b)(6) for
failure to state a claim, “accepting the allegations in the complaint as true and
construing them in the light most favorable to the plaintiff.” Belanger v. Salvation
Army, 556 F.3d 1153, 1155 (11th Cir. 2009). “A complaint must state a plausible
claim for relief, and ‘a claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.’” Sinaltraninal v. Coca-Cola Co.,
578 F.3d 1252, 1261 (11th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662,
129 S.Ct. 1937, 1949 (2009)) (alteration omitted). We also review de novo
matters of statutory interpretation. Belanger, 556 F.3d at 1155.

Under the FDCPA, “[a] debt collector may not use any false, deceptive, or
misleading representation or means in connection with the collection of any debt,”
15 U.S.C. § 1692e, which includes “[t]he use of any false representation or
deceptive means to collect or attempt to collect any debt or to obtain information
concerning a consumer,” id. § 1692e(10). The statute defines “creditor” as “any
person who offers or extends credit creating a debt or to whom a debt is owed, but
such term does not include any person to the extent that he receives an assignment
or transfer of a debt in default solely for the purpose of facilitating collection of
such debt for another.” Id. § 1692a(4). And “[t]he FDCPA provides that ‘any
debt collector who fails to comply with any provision of this subchapter with
respect to any person is liable to such person’ for [actual and statutory] damages
and costs.” Bourff v. Lublin, __ F.3d __, slip op. at 6, No. 10-14618 (11th Cir.
Mar. 15, 2012) (quoting 15 U.S.C. § 1692k(a)).

Our decision in this case is controlled by our recent decision in Bourff. In
that case a law firm sent a letter to the plaintiff in “AN ATTEMPT TO COLLECT
A DEBT.” Id. at __, slip op. at 3 (quotation marks omitted). That letter identified
a loan servicer as “the creditor on the above-referenced loan.” Id. at __, slip op. at
3 (quotation marks omitted). The plaintiff’s complaint alleged that the loan
servicer was not a “creditor” under the FDCPA, id., and that the law firm violated
the FDCPA’s “prohibition on false, deceptive or misleading representations by
falsely stating in its collection notice that [the servicer] was the ‘creditor’ on [the
plaintiff’s] loan,” id. at __, slip op. at 5 (some quotation marks omitted). The
allegation that the loan servicer was not a “creditor” was enough to state a
plausible claim for relief under the FDCPA. Id. at __, slip op. at 6–7.

Here, viewing the allegations in the complaint in the light most favorable to
Shoup, she has alleged that MERS did not offer or extend credit to her and that she
does not owe a debt to MERS. Because the FDCPA defines a “creditor” as “any
person who offers or extends credit creating a debt or to whom a debt is owed,” 15
U.S.C. § 1692a(4), Shoup has alleged that MERS is not a “creditor” under the
FDCPA. Finally, because the complaint alleges that McCurdy & Candler’s initial
communication letter falsely identified MERS as her “creditor,” the complaint
states a plausible claim for relief under the FDCPA. See Bourff, __ F.3d at __,
slip op. at 6–7. And because the FDCPA provides a claim for statutory damages
based on any violation of the statute, see 15 U.S.C. § 1692k(a)(2), McCurdy &
Candler’s alleged violation of the FDCPA is not harmless. See Muha v. Encore
Receivable Mgmt., Inc., 558 F.3d 623, 629 (7th Cir. 2009) (“Were the plaintiffs
seeking actual damages rather than just statutory damages, they would have to
present some evidence that they were misled to their detriment.”); Baker v. G.C.
Servs. Corp., 677 F.2d 775, 780 (9th Cir. 1982) (“The statute clearly specifies the
total damage award as the sum of the separate amounts of actual damages,
statutory damages and attorney fees. There is no indication in the statute that
award of statutory damages must be based on proof of actual damages.”). The
district court erred in dismissing Shoup’s complaint under Rule 12(b)(6).

REVERSED AND REMANDED.

footnote:

1 Shoup also brought her claim on behalf of a putative class and sought class certification.
The district court did not rule on that issue, so it is not before us on appeal.

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BOURFF vs. RUBIN LUBLIN, LLC | GA 11th Cir. Appeals Court “The identity of the “creditor” in these notices is a serious matter, FDCPA”

BOURFF vs. RUBIN LUBLIN, LLC | GA 11th Cir. Appeals Court “The identity of the “creditor” in these notices is a serious matter, FDCPA”


IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT

________________________
No. 10-14618
________________________
D.C. Docket No. 1:09-cv-02437-JEC

MICHAEL BOURFF,
Plaintiff – Appellant,

versus

RUBIN LUBLIN, LLC,
Defendant – Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(March 15, 2012)

Before EDMONDSON and PRYOR, Circuit Judges, and BOWDRE,* District
Judge.
*

PER CURIAM:
This appeal involves a Fair Dept Collection Practices Act claim in which a
“false representation” has been alleged. Michael Bourff appeals the district
court’s dismissal of his civil action under 15 U.S.C. §1692, the Fair Debt
Collection Practices Act (“FDCPA”), for failure to state a claim. The district court
concluded that Bourff’s claim was covered by the FDCPA but that Bourff did not
allege acts that violated the FDCPA. We vacate the dismissal and remand the case
for further proceedings.

Background

This case involves a $195,000 loan by America’s Wholesale Lender
(“AWL”) to Michael Bourff. The loan was evidenced by a note, was used to
purchase property in Fulton County, Georgia, and was secured by a deed to the
property purchased.1

The basics of this case are not in dispute. In April 2009 Bourff failed to
make a payment on the loan and caused default under the terms of the note. AWL
later assigned the loan and the security deed to BAC Home Loan Servicing, LP
f/k/a Countrywide Home Loans Servicing, LP (“BAC”) for the purpose of
collecting on the note. BAC in turn hired defendant law firm, Rubin Lublin, LLC
(“Rubin Lublin”), to assist in collection efforts. In late May 2009 Rubin Lublin
sent a notice to Bourff stating that they had been retained to help collect on the
loan. The notice clearly stated that it was being sent as “NOTICE PURSUANT
TO FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. § 1692[,]” and that
it was “AN ATTEMPT TO COLLECT A DEBT.” The notice also identified BAC
as “the creditor on the above-referenced loan.” (Compl. Ex. A.)

Shortly after receiving the notice, Bourff filed this civil action against Rubin
Lublin pursuant to the FDCPA. Bourff claimed that the notice sent by Rubin
Lublin violated §1692e of the FDCPA by falsely representing that BAC was the
“creditor” on the loan, despite entities in BAC’s position being specifically
excluded from the definition of “creditor” by the language of the FDCPA. Rubin
Lublin filed a motion to dismiss under Rule 12(b)(6), and the district court
dismissed the action for failure to state a claim under the FDCPA. The district
court concluded that BAC was a “creditor” according to the ordinary meaning of
the term and that, even if BAC was no creditor, the error in listing it as such was a
harmless mistake in the use of the term because BAC had the power to foreclose
on the property or otherwise to act as the creditor on the loan. (Order 11.)

Standard of Review

We review the grant of a motion to dismiss de novo; and in so doing, we
accept the allegations in the complaint as true while construing them in the light
most favorable to the Plaintiff. Powell v. Thomas, 643 F.3d 1300, 1302 (11th Cir.
2011). The interpretation of a statute is likewise reviewed de novo as a purely
legal matter. Belanger v. Salvation Army, 556 F.3d 1153, 1155 (11th Cir. 2009).
A “complaint must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S.Ct.
1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1974
(2007)). Stating a plausible claim for relief requires pleading “factual content that
allows the court to draw the reasonable inference that the defendant is liable for
the misconduct alleged”: which means “more than a sheer possibility that a
defendant has acted unlawfully.” Id.

DISCUSSION

The FDCPA limits what is acceptable in attempting debt collection. The
FDCPA applies to the notice here in question because the notice was an attempt at
debt collection. The notice stated that Rubin Lublin had been retained to “collect
the loan,” stated in bold capital letters that it was “an attempt to collect a debt,”
and advised Bourff to contact Rubin Lublin to “find out the total current amount
needed to either bring your loan current or to pay off your loan in full.” (Compl.
Ex. A.)

The FDCPA, among other things, mandates that, as part of noticing a debt, a
“debt collector” must “send the consumer a written notice containing” — along
with other information — “the name of the creditor to whom the debt is owed[.]”
15 U.S.C. §1692g(a)(2). In addition, the Act prohibits a “debt collector” from
using “any false, deceptive, or misleading representation or means in connection
with the collection of any debt.” 15 U.S.C. §1692e. The use of “or” in §1692e
means that, to violate the FDCPA, a representation by a “debt collector” must
merely be false, or deceptive, or misleading. A false representation in connection
with the collection of a debt is sufficient to violate the FDCPA facially, even
where no misleading or deception is claimed.

Plaintiff claims that Rubin Lublin violated the prohibition on “false,
deceptive, or misleading representation[s]” by falsely stating in its collection
notice that BAC was the “creditor” on Bourff’s loan. The identity of the
“creditor” in these notices is a serious matter. For the FDCPA, “creditor” is
defined this way:

“The term ‘creditor’ means any person who offers or extends credit
creating a debt or to whom a debt is owed, but such term does not include
any person to the extent that he receives an assignment or transfer of a debt
in default solely for the purpose of facilitating collection of such debt for
another.” 15 U.S.C. §1692a(4).

Plaintiff’s complaint alleges that Bourff defaulted on the loan in April 2009
by failing to tender the required monthly payment. The complaint further alleges
that BAC “received an assignment of the security deed and debt on June 19, 2009 .
. ., while the Plaintiff’s loan was in default, for the purpose of facilitating
collection of such debt for another, presently unknown, entity.” (Compl. ¶13)
Accepting Plaintiff’s allegations as true and construing them in the light most
favorable to the Plaintiff, the statement on the May 2009 notice that BAC was
Plaintiff’s “creditor” was a false representation and was made by a “debt collector”
as defined in §1692a of the FDCPA.

The FDCPA provides that “any debt collector who fails to comply with any
provision of this subchapter with respect to any person is liable to such person…”
for potential damages and costs. 15 U.S.C. §1692k(a). The complaint on its face,
taken as true and viewed in the light most favorable to Plaintiff, states a claim
upon which relief may be granted under the FDCPA. As such, we vacate the
dismissal and remand this case to the district court for further proceedings.

VACATED and REMANDED.

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Georgia State Senate Unanimously Approves Bill Criminalizing Foreclosure Fraud (HB 237)

Georgia State Senate Unanimously Approves Bill Criminalizing Foreclosure Fraud (HB 237)


 

PRESS ADVISORY

Wednesday, March 21, 2012

Georgia Senate Unanimously Approves Bill Criminalizing Foreclosure Fraud

Today, the Senate unanimously approved HB 237, legislation that will make foreclosure fraud a crime in Georgia. Currently, Georgia law criminalizes fraud during the mortgage process, but specifically does not penalize similar fraud on the back end of the loan – at the foreclosure process.

Attorney General Sam Olens thanked the Senate for their overwhelming bipartisan support of this crucial measure. “Georgia’s current mortgage fraud statute is insufficient and must be revised to criminalize fraud throughout the entire lending process, including foreclosure,” said Olens. “Just last month, 49 state attorneys general reached a $25 billion agreement with the Nation’s five largest mortgage servicers to settle rampant fraud which occurred nationwide during the foreclosure process.”

“I applaud the members of the Senate for recognizing that Georgia urgently needs a law protecting borrowers during every stage of the lending process. I am grateful for the leadership of Senators Bill Hamrick and Jesse Stone for shepherding the bill through the Senate. I look forward to continuing to work with the bill’s sponsor, Representative Rich Golick, on gaining final approval for HB 237 in the House of Representatives, where it already passed last year 168-1.”

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STUBBS v. Bank of America, BAC, Fannie Mae | GA Nothern District Court “BAC …was not the ‘SECURED CREDITOR’ entitled to foreclose”

STUBBS v. Bank of America, BAC, Fannie Mae | GA Nothern District Court “BAC …was not the ‘SECURED CREDITOR’ entitled to foreclose”


h/t NYE LAVALLE

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

GARY STUBBS,
Plaintiff,

v.

BANK OF AMERICA, BAC HOME
LOANS SERVICING, LP, and
FEDERAL NATIONAL MORTGAGE
ASSOCIATION,
Defendants.

EXCERPT:

Plaintiff has alleged facts making it plausible that Fannie Mae was in fact
the secured creditor at the time of the foreclosure and has alleged that no
assignment to Fannie Mae was filed prior to the time of sale as required by
O.C.G.A. § 44-14-162(b). Therefore, based on the allegations in the amended
complaint, BAC evaded the most substantive requirements of Georgia’s
foreclosure statute in that (1) it was not the secured creditor entitled to foreclose
despite providing a notice letter affirmatively representing it was the creditor;
and (2) it failed to file the assignment of the security deed to the secured creditor
in the county deed records prior to the foreclosure. See O.C.G.A. § 162(b);
Weems v. Coker, 70 Ga. 746, 749 (Ga. 1883); Cummings v. Anderson, 173 B.R.
959, 963 (Bankr. N.D. Ga. 1994).3 The Court accordingly DENIES the motion to
dismiss Plaintiff’s claim for wrongful foreclosure based on failure to comply with
Georgia foreclosure law.

For whatever reason scribd download is not permitting this to be downloaded.

Please use this link to download Stubbs_v._Bank_of_America

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Evicted woman, 101, can’t go home as promised

Evicted woman, 101, can’t go home as promised


HUD says foreclosed Detroit home is unsafe; options being explored

MSNBC-

The federal government now says a 101-year-old Detroit woman it promised could move back into her foreclosed home four months ago can’t return because the building’s unsanitary and unsafe.

Texana Hollis was evicted Sept. 12 and her belongings placed outside after her 65-year-old son failed to pay property taxes linked to a reverse mortgage, The Detroit News reported Sunday. Two days later, the U.S. Department of Housing and Urban Development said she could return.

But now, HUD said it won’t let Hollis move back in because of the house’s condition. She had lived there about 60 years.

[MSNBC]

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MERS (DE) vs MERS (GA) – Is there a difference?

MERS (DE) vs MERS (GA) – Is there a difference?


Hmm I think I would throw this in, look at the date this TM patent was signed below, 3-4 years after MERS’ 1999’s date via Fmr. V.P. W. Hultman’s secretary Kathy McKnight [PDF link to depo pages 29-39].

Courthouse News-

ATLANTA (CN) – Mortgage Electronic Registration Systems claims William Davidson deceptively incorporated his Mortgage Electronic Registration Systems in Georgia, causing people to believe they had properly served the real MERS by sending notice to Davidson.
     MERS seeks punitive damages on six counts, including bad faith, theft by deception, trespass/conversion, deceptive trade and trademark violations.
     MERS claims Davidson incorporated his own MERS with a principal place of business at his home address in Lawrenceville, Ga.
     The true MERS is a Delaware corporation developed by Fannie Mae and Freddie Mac which “serves as the mortgagee or beneficiary on more than 70 million mortgages, deeds of trust, and security deeds for properties across the country, more than 2.3 million of which are located in Georgia,” according to the federal complaint.
     MERS says Davidson incorporated his copycat business on March 10, 2011 in Georgia.

[COURTHOUSE NEWS]

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Cops, movers refuse to foreclose on 103-year-old woman

Cops, movers refuse to foreclose on 103-year-old woman


HEROS! Similar Story: Texana Hollis, 101-year-old woman evicted from her home, Gets Home Back!

RAW STORY-

In a heart warming story just in time for the holiday season, a 103-year-old woman in Atlanta avoided foreclosure of her home Tuesday afternoon, thanks entirely to the kindness of strangers.

According to WSBTV Atlanta, movers hired by Deutsche Bank AG and police were ready to go through with the bank’s request to remove Vita Lee and her 83-year old daughter from their home.

However, when they first got sight of Lee, they had a change of heart and declined to go through with it.

[RAW STORY]

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Phillips vs. U.S. Bank | JUDGE DENNIS BLACKMON NAILS US BANK IN GEORGIA ON HAMP, WRONGFUL FORECLOSURE AND EMOTIONAL DISTRESS DAMAGES

Phillips vs. U.S. Bank | JUDGE DENNIS BLACKMON NAILS US BANK IN GEORGIA ON HAMP, WRONGFUL FORECLOSURE AND EMOTIONAL DISTRESS DAMAGES


H/T Living Lies For This Superb Find

“Sometimes, only courts of law stand to protect the taxpayer. Somewhere, someone has to stand up. Well, sometimes is now, and the place is the Great State of Georgia. The Defendant’s Motion is hereby Denied”

“The United States Government paid taxpayer dollars to the largest of our financial institutions, and to European Union Banks, in order to prop up those poorly run organizations. Twenty Billion of those dollars were handed over to the defendant, U.S. Bank.”

“The HAMP guidelines require U.S. Bank to perform modification services for all mortgage loans its services. Otis Philips applied to modify his mortgage with U.S. Bank. U..S. Bank denied the request, without numbers, figures, or explanation, reasoning, comparison to the guidelines, or anything.”

“A cynical Judge might believe that this entire motion to dismiss is a desperate attempt to avoid the discovery period, where U.S. Bank would have to tell Mr. Phillips how his financial situation did not qualify him for a modification. Or, perhaps he was [Judge’s emphasis, not mine] qualified, yet didn’t receive the modification, in violation of U.S. Bank’s Service Participation Agreement (SPA).”

“U.S. Bank’s silence on this issue might heighten the suspicions of such a cynical jurist.”

“Clearly, U.S. Bank cannot take the money, contract with our government to provide a a service to the taxpayer, violate that agreement, and then say no one on earth can sue them for it. That is not the law in Georgia. In fact, since no administrative review is provided in HAMP [which is something you should put in your OCC letter demanding review], the courts are the only recourse.”

  [ipaper docId=72757477 access_key=key-2mhv6qb83jgun7xscoll height=600 width=600 /]

 

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11th Circuit Reversed/Remands “the federal court lacked jurisdiction because although the petition referenced federal laws, none of the claims relied on federal law”

11th Circuit Reversed/Remands “the federal court lacked jurisdiction because although the petition referenced federal laws, none of the claims relied on federal law”


IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT

WEKESA O. MADZIMOYO,
Plaintiff-Appellant,

versus

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., f.k.a. The Bank of New York Trust Company, N.A.,
JP MORGAN CHASE BANK, N.A.,
GMAC MORTGAGE, LLC,
MCCURDY & CANDLER, LLC,
ANTHONY DEMARLO, Attorney,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(September 7, 2011)

Before TJOFLAT, CARNES and KRAVITCH, Circuit Judges.

PER CURIAM:

Wekesa Madzimoyo, proceeding pro se, appeals the district court’s
judgment on the pleadings in favor of the defendants. Because we conclude that
the district court lacked removal jurisdiction, we vacate and remand.

In July 2009, Madzimoyo filed an emergency petition in state court seeking
a temporary restraining order (TRO) to stop foreclosure proceedings on his home
by defendants Bank of New York Mellon Trust Company, JP Morgan Chase Bank,
McCurdy & Candler, and attorney Anthony DeMarlo. According to the petition,
none of the defendants was the original lender and there was no evidence that the
original lender had transferred its rights to any defendant. In support of his
petition, Madzimoyo submitted correspondence sent to the defendants in which he
sought to verify their rights over the mortgage. Some of the correspondence
referenced the Fair Debt Collection Practice Act (FDCPA) and Regulation Z, the
Truth-in-Lending regulations. The state court issued the TRO and scheduled a
hearing on the petition to stop the foreclosure.

The day before the scheduled hearing in state court, the defendants removed
the petition to federal district court in the Northern District of Georgia, asserting
federal-question jurisdiction because Madzimoyo had alleged violations of the
FDCPA and Regulation Z. Madzimoyo moved to remand to state court, disputing
that he raised any basis for federal jurisdiction.

The magistrate judge denied the motion to remand, finding that
Madzimoyo’s petition raised federal questions under the FDCPA and Regulation
Z. The defendants then moved for judgment on the pleadings. In a brief in
support of the motion, the defendants argued that the FDCPA and Regulation Z
claims failed because Madzimoyo had not alleged any violation of these statutes.
The magistrate judge recommended that the motion for judgment on the
pleadings be granted. The district court adopted the recommendation, over
Madzimoyo’s objections, and granted judgment on the pleadings. This appeal
followed.

On appeal, both parties address the merits of the order granting judgment on
the pleadings, and there is no discussion of the district court’s jurisdiction over
Madzimoyo’s action. Nevertheless, we are “obliged to notice any lack of
jurisdiction regardless of whether the question is raised by the parties themselves.”
Edge v. Sumter Cnty. Sch. Dist., 775 F.2d 1509, 1513 (11th Cir. 1985).

We review questions of subject-matter jurisdiction de novo. Romero v.
Drummond Co., 552 F.3d 1303, 1313 (11th Cir. 2008). We consider sua sponte
whether the district court had removal jurisdiction. Cotton v. Mass. Mut. Life Ins.
Co., 402 F.3d 1267, 1280 (11th Cir. 2005).

Under the removal statute:
Any civil action of which the district courts have original jurisdiction
founded on a claim or right arising under the Constitution, treaties or
laws of the United States shall be removable without regard to the
citizenship or residence of the parties. Any other such action shall be
removable only if none of the parties in interest properly joined and
served as defendants is a citizen of the State in which such action is
brought.

28 U.S.C. § 1441(b). In other words, to be removable on federal-question
jurisdiction grounds, the case must arise under federal law. See Merrell Dow
Pharm. Inc. v. Thompson, 478 U.S. 804, 807-08 (1986). The “well-pleaded
complaint” rule instructs that a case does not arise under federal law unless a
federal question is presented on the face of the plaintiff’s complaint. Id. at 808;
Kemp v. Int’l Bus. Mach. Corp., 109 F.3d 708, 712 (11th Cir. 1997) (citing
Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 11 (1983)).

A federal question is presented by the complaint when the suit relies on a
federal cause of action or where “the vindication of a right under state law
necessarily turned on some construction of federal law.” See Merrell Dow, 478
U.S. at 808. Under this latter analysis, federal question jurisdiction should be
narrowly construed. See id. at 810-14. “[T]he mere presence of a federal issue in
a state cause of action does not automatically confer federal-question jurisdiction,”
even where the interpretation of federal law may constitute an element of the state
cause of action. Id. at 813. More recently, the Supreme Court fashioned another
test for deciding whether federal courts should exercise federal question
jurisdiction over removed state court proceedings: “does a state-law claim
necessarily raise a stated federal issue, actually disputed and substantial, which a
federal forum may entertain without disturbing any congressionally approved
balance of federal and state judicial responsibilities.” Grable & Sons Metal
Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 314 (2005). “If the plaintiff
elects to bring only state law causes of action in state court, no federal question
will appear in the complaint that could satisfy the well-pleaded complaint rule, and
the case may not be removed to federal court.” Kemp, 109 F.3d at 712.

Upon review of the record, we conclude that the district court should not
have exercised federal-question jurisdiction upon the removal of this case.
Although Madzimoyo’s petition referenced federal laws in passing, none of his
causes of action relied on even the interpretation of federal law. Rather,
Madzimoyo merely asserted that he requested his loan information from the
mortgage companies in accordance with federal law to show that he had acted
diligently and merited state relief. Accordingly, we vacate the judgment of the
district court and remand with instructions that the district court remand the
proceeding to the state court.

VACATED AND REMANDED.

[ipaper docId=66347058 access_key=key-v4vyt62h3kei1952mcn height=600 width=600 /]

 

 

 

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MORGAN v. OCWEN, MERS, MERSCORP | GA Dist. Court “Only Secured Creditors Can Foreclosure Non-Judicially in Georgia”

MORGAN v. OCWEN, MERS, MERSCORP | GA Dist. Court “Only Secured Creditors Can Foreclosure Non-Judicially in Georgia”


Via: NYE LAVALLE author of Report On Fraudulent & Forged Assignments Of Mortgages & Deeds In U.S. Foreclosures

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

MICHAEL L. MORGAN,
Plaintiff,

v.

OCWEN LOAN SERVICING,
LLC, MORTGAGE
ELECTRONIC REGISTRATION
SYSTEMS, INC., and
MERSCORP, INC.
Defendants.

ORDER

The action is presently before the Court on Defendants’ motion to dismiss (“motion”) [Doc. 15], filed on November 22, 2010. For the following reasons, the Court GRANTS IN PART and DENIES IN PART the motion.

I. Background1

Plaintiff filed his complaint against Ocwen Loan Servicing, LLC (“Ocwen”), Mortgage Electronic Registration Systems, Inc. (“MERS”), and Merscorp, Inc. (“Merscorp”) on November 1, 2010. In the complaint, Plaintiff raises state law claims against Defendants for declaratory judgment, injunctive relief, cancellation of deed to secure debt, slander of title, quiet title, wrongful foreclosure, intentional infliction of emotional distress, and negligence. (Compl. at 1-20.) He also raises a claim under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. 1961-1968.
(Id. at 20-22.)

Plaintiff’s claims for declaratory judgment, cancellation of security deed, slander of title, and quiet title rest on the fact that he obtained a residential mortgage loan from Guaranteed Rate, Inc., and in connection with the loan he executed a promissory note to Guaranteed Rate and a deed to secure debt in favor of MERS “as nominee” for Guaranteed Rate. (Id. ¶¶ 11-13.) He alleges that because MERS had no pecuniary interest in the transaction, and was acting solely as “nominee” for the lender, the security deed to MERS is void. (Id. ¶¶ 19, 20.) Plaintiff’s claims for injunctive relief, wrongful foreclosure, intentional infliction of emotional distress, and negligence are based on allegations that Ocwen commenced a nonjudicial foreclosure against his property (1) when Ocwen was not the holder of the promissory note, and (2) without sending the statutorily required notice of foreclosure sale to the proper address. (Id. ¶¶ 24-27.) Plaintiff’s RICO claim is based on allegations that Defendants fraudulently used MERS in mortgage transactions, mailed fraudulent notices of foreclosure, and committed other unlawful acts. (Id. ¶¶ 79-80.)

Defendants filed a motion to dismiss the complaint on November 22, 2010, that contended: (1) Plaintiff failed to effect service of process, (2) Plaintiff’s claim for wrongful foreclosure based on Defendant’s failure to properly mail the foreclosure notice was moot, because Defendant canceled the November foreclosure sale, and (3) all counts based on allegations that the security deed is void failed to state a claim. (Defs.’ Mem. Supp. Mot. Dismiss at 6-15.) Plaintiff filed a response in opposition to the motion to dismiss on December 9, 2010,2 and Defendants filed a reply on December 22, 2010.

On December 30, 2011, all Defendants executed the waiver of service of summons, which was filed with the Clerk’s office on January 3, 2011. (Waiver of Service of Summons, Jan. 3, 2011.)

II. Motion to Dismiss Standard

In determining whether a complaint states a claim upon which relief can be granted, courts accept the factual allegations in the complaint as true and construe them in the light most favorable to the plaintiff. Hill v. White, 321 F.3d 1334, 1335 (11th Cir. 2003). To survive a motion to dismiss, a complaint must allege facts that, if true, “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quotations omitted). A claim is plausible where the plaintiff alleges factual content that “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. The plausibility standard requires that a plaintiff allege sufficient facts “to raise a reasonable expectation that discovery will reveal evidence” that supports the plaintiff’s claim. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007).

The Court recognizes that Plaintiff is appearing pro se. Thus, his complaint is to be liberally construed and “held to less stringent standards than formal pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citations and internal quotation marks omitted).

III. Analysis

A. Service of Process

As Defendants executed the waiver of service on December 30, 2010, their arguments for dismissal based on insufficient process, insufficient service of process, and lack of jurisdiction are moot. (See Waiver of Service of Summons, Jan. 3, 2011.) Defendants’ sole basis for alleging a lack of personal jurisdiction was the (previously true, but no longer so) assertion that service had not been effected under Rule 4. (Defs.’ Mem. Supp. Mot. Dismiss at 6-8.)

B. Alleged Failure to Send Notice of Foreclosure

Defendants argue that Plaintiff’s claims arising out of failure to send the foreclosure notice to the proper address are moot because the foreclosure did not go forward on November 2, 2010. However, a court may refuse to dismiss as moot claims in which the former controversy is one “capable of repetition, yet evading review.” United Steelworkers of America v. Bishop, 598 F.2d 408, 412 (5th Cir. 1979) (internal citations omitted).3 Claims will be preserved for review on this basis when they meet the following criteria: (1) “the challenged action was too brief in duration to be fully litigated prior to its cessation or expiration,” and (2) there is a reasonable likelihood that the plaintiff will face the same challenged conduct again. Id. As Plaintiff is still in default on his mortgage, and the Court’s predecessor judge terminated the injunction barring foreclosure on January 3, 2011, it is very likely that Defendants will again attempt a nonjudicial foreclosure. Since the statutorily required notice of foreclosure sale is only required to be sent 30 days prior to the sale date, there would not likely be time to adjudicate this issue should it arise again by virtue of another foreclosure sale notice mailed to the incorrect address. See O.C.G.A. § 44-14- 162.2. Plaintiff contends that Defendant failed to send proper notice, despite his written provision of an updated address. (Compl. ¶ 16.) Under these circumstances, the Court declines to dismiss as moot Plaintiff’s claims for wrongful foreclosure arising out of failure to give the required foreclosure notice.

C. Validity of the Security Deed and Wrongful Foreclosure

The issues presented here regarding ownership of the note and the effectiveness of an assignment executed by MERS have been the subject of much litigation, in this district and throughout the country. Therefore, the Court takes this opportunity to carefully address the complex issues presented.

The following are the facts relevant to these claims that must be presumed true for purposes of the instant motion. Plaintiff obtained a residential mortgage loan from Guaranteed Rate. (Compl. ¶ 9.) Like most residential mortgages in Georgia, this transaction was memorialized by two documents: a promissory note and a deed to secure debt (or “security deed”). The original grantee of the promissory note was Guaranteed Rate. (Id. ¶ 11.) The original grantee of the security deed was MERS “as nominee” for Guaranteed Rate and its successors and assigns. (Id. ¶¶ 12-13.)
Guaranteed Rate later transferred the note to Taylor, Bean & Whitaker. (Id. ¶ 14.)

Subsequently, MERS executed a purported assignment of the security deed to Ocwen. (Id. ¶ 64.) Ocwen is not now and has never been the holder of the note.4 (Id. ¶ 25.)

1. Validity of the Security Deed

A promissory note and a security deed are two separate, but interrelated, instruments. See Frank S. Alexander, GEORGIA REAL ESTATE FINANCE AND FORECLOSURE LAW, § 3:7 (2010-11 ed.). The security deed arises from the indebtedness memorialized in the promissory note, and “the deed’s power of sale depend[s] on default under the note.” Boaz v. Latson, 580 S.E.2d 572, 578 (Ga. Ct. App. 2003), rev’d on other grounds, 598 S.E.2d 485, 487 (Ga. 2004). Historically, the note and security deed have traveled together. If an originating lender decided to sell a mortgage loan, that lender would endorse and physically transfer the note (a negotiable instrument) to a new holder, and assign the security deed to that holder as well. See Bowen v. Tucker Fed. Sav. & Loan Assoc., 438 S.E.2d 121, 122 (Ga. Ct. App. 1993) (“the holder of a note who is also the grantee of a security deed has the right to exercise the power of sale in the security deed upon default”). The parties would then record the assignment in the county deed room, giving record notice to the homeowner and all the world of who held the mortgage. Christopher L. Peterson, Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System, 78 U. CIN. L. REV. 1359, 1362 (2009-10).

With the rise of securitization of mortgage loans, the financial services industry sought to maximize profitability by developing shortcuts to these cumbersome paperwork requirements. Peterson, 78 U. CIN. L. REV. at 1368-69. One such costsaving method was to have the original lender endorse the note in blank, so that it would not have to be specifically endorsed to every holder in the chain of ownership. In the securitization process, ownership of a note might be transferred four or five times, from the original lender to the issuer of the securities, through one or more special purpose entities, and finally to the trustee bank, which holds the legal interest in the note for the benefit of the securities holders. Id. at 1367; Adam Ashcraft and Til Schuermann, Understanding the Securitization of Subprime Mortgage Credit, 318 FEDERAL RESERVE BANK OF NEW YORK STAFF REPORT at 5 (2008).

Along the same lines, the mortgage industry created MERS to facilitate tracking ownership of mortgage loans without the necessity of executing and recording assignments of the security deeds. Peterson, 78 U. CIN. L. REV. at 1369.

The Georgia Supreme Court has described the MERS system as follows:

MERS, which began operating in 1997, is a private company
created by the mortgage banking industry for the purpose of
establishing a centralized, electronic system for registering the
assignments and sales of residential mortgages, with the goal
being the elimination of costly paperwork every time a loan is
sold . . . . Under the MERS system, the borrower and the original
lender name MERS as the grantee5 of any instrument designed
to secure the mortgage loan. The security instrument is then
recorded in the local land records, and the original lender
registers the original loan on MERS’s electronic system.
Thereafter, all sales or assignments of the mortgage loan are
accomplished electronically under the MERS system.

Taylor, Bean & Whitaker v. Brown, 583 S.E.2d 844, 845 n.1 (Ga. 2003) (internal citations omitted).

Whereas the cost-saving benefits to the mortgage banking industry of the MERS system are clear, its harmony with Georgia real estate law is less evident. Indeed, the use of MERS as a record “holder” of the security instrument (and tracking system for actual ownership of same) has created a great deal of confusion for homeowners attempting to communicate with the owner of their loan, as well as for judges and lawyers attempting to parse out ownership of the debt and authority to foreclose. See Landmark Nat’l Bank v. Kesler, 216 P.3d 158, 168 (Kan. 2009).

Several of Plaintiff’s claims rest on the argument that the security deed is void because of the fact that MERS was named as the grantee-as-nominee in the security deed rather than Guarantee Rate, the actual lender and payee on the note. This argument is unsupported by Georgia law. Separation of the note and security deed creates a question of what entity would have the authority to foreclose, but does not render either instrument void. See Boaz, 580 S.E.2d at 578; Alexander at § 3.7. Therefore, the Court dismisses Plaintiff’s claims for declaratory judgment (Count I), cancellation of the security deed (Count III), slander of title (Count IV), and quiet title (Count V), all of which seek either injunctive relief or damages based on the assertion that the security deed is void because of the MERS involvement.

2. Wrongful Foreclosure

Although the separation of the note and the security deed does not render either instrument void, it does create a substantial question of what entity has the right to foreclose when the borrower defaults on the loan. The Georgia Supreme Court has expressly reserved ruling on the question of “whether MERS, as nominee for the original lender and its successors, has the power to foreclose on an existing security deed either with or without the participation of the existing note holder.” Taylor, Bean & Whitaker v. Brown, 583 S.E.2d at 848. Many other courts have questioned MERS’s right to foreclose or effect an assignment of a security instrument, as it admittedly holds no beneficial interest in the note or security instrument. See Landmark v. Kesler, 216 P.3d at 167 (“If MERS is only the mortgagee, without ownership of the mortgage instrument, it does not have an enforceable right.”); Bellistri v. Ocwen Loan Servicing, LLC, 284 S.W.3d 619, 624 (Mo. Ct. App. 2009) (“MERS never held the promissory note, thus its assignment of the deed of trust to Ocwen separate from the note had no force.”); In re Agard, No. 810-77338, 2011 WL 499959, at *16 (E.D.N.Y. Feb. 10, 2011) (“[W]ithout more, this Court finds that MERS’s ‘nominee’ status and the rights bestowed upon MERS within the Mortgage itself, are insufficient to empower MERS to effectuate a valid assignment of mortgage.”).

The question presented by this case is not whether MERS has authority to foreclose under Georgia law, but whether an assignment of a security deed from MERS to Ocwen empowers Ocwen to foreclose when Ocwen does not hold the note.6

Georgia law authorizes the secured creditor, the holder of the obligation, to exercise a power of sale. See O.C.G.A. §§ 44-14-162 et seq.7 The Georgia Supreme Court has clearly indicated that the right to foreclose lies with the party that holds the indebtedness:

Could there be a more conclusive defense to the foreclosure
than that the party prosecuting it was not the holder of the debt
or demand secured by the mortgage, which he failed to produce
when called on, and offered nothing to show that he controlled
it, or to explain why it was not forthcoming at the trial?

Weems v. Coker, 70 Ga. 746, 749 (1883), cited by Truitt v. Moister, 11 B.R. 15 (Bankr. N.D. Ga. 1981); see also Bowen, 438 S.E.2d at 122; Boaz, 580 S.E.2d at 578; Cummings v. Anderson, 173 B.R. 959, 963 (Bankr. N.D. Ga. 1994) (foreclosure was null and void where the entity foreclosing did not have an actual assignment of the note and security deed), aff’d, 112 F.3d 1172 (11th Cir. 1997); Weston v. Towson, No. 5:04- CV-416, 2006 WL 2246206, at *6 (M.D. Ga. Aug. 4, 2006) (“[T]he holder of the note continues to retain remedies under the security deed so long as the debt evidenced by the note has not been satisfied.”).

Plaintiff has alleged that Ocwen is attempting to foreclose when it is not the holder of the note. (Compl. ¶ 25.) Moreover, in publishing the foreclosure notice, Ocwen did not purport to be acting as agent for the actual holder of the note, but rather asserted that it was acting on its own behalf. (Id. ¶ 61.) These allegations clearly support a claim for wrongful foreclosure.8 The Court need not reach the question of whether an agent for the holder of the debt can carry out a power of sale foreclosure under Georgia law, as Ocwen did not advertise the foreclosure as agent for any disclosed principal. Defendants further argue that there can be no cause of action for wrongful foreclosure here because the foreclosure has not taken place. However, courts have recognized a cause of action for wrongful attempted foreclosure when a foreclosure action was commenced, but not completed, where plaintiffs have shown that a defendant “knowingly published an untrue and derogatory statement concerning the plaintiffs’ financial conditions and that damages were sustained as a direct result.” Sale City Peanut & Milling Co. v. Planters & Citizens Bank, 130 S.E.2d 518, 520 (Ga. Ct. App. 1963).9 Furthermore, Plaintiff is clearly seeking injunctive relief barring Ocwen from foreclosing wrongfully because it allegedly is not the holder of the note. (Compl. ¶¶ 40-43, 63.) A court may enjoin a nonjudicial foreclosure sale in a wrongful foreclosure action where the authority to foreclose is in question. See Atlanta Dwellings, Inc. v. Wright, 527 S.E.2d 854, 856 (Ga. 2000); West v. Koufman, 384 S.E.2d 664, 666 (Ga. 1989); Cotton v. First Nat’l Bank of Gwinnett Co., 220 S.E.2d 132 (Ga. 1975).

Thus, Plaintiff’s claims for injunctive relief (Count II), wrongful foreclosure (Count VI), and negligence (Count VIII) are not subject to dismissal at this time.

D. Remaining Claims

Defendants have not made any argument for dismissal of the claims for intentional infliction of emotional distress (Count VII) or RICO (Count IX) other than their general argument that Ocwen had the right to foreclose, which cannot prevail at this stage for the reasons cited above. Therefore, because Defendants have not challenged these claims, Court does not address them in this Order.

IV. Conclusion

For the foregoing reasons, Defendants’ motion to dismiss [15] is GRANTED IN PART and DENIED IN PART. Plaintiff’s claims for declaratory judgment (Count I), cancellation of the security deed (Count III), slander of title (Count IV), and quiet title (Count V) are DISMISSED. Defendants’ motion to dismiss Plaintiff’s claims for injunctive relief (Count II), wrongful foreclosure (Count VI), negligence (Count VIII), intentional infliction of emotional distress (Count VII), and RICO (Count IX) is DENIED.

IT IS SO ORDERED, this 7th day of July, 2011.

__________________________________
AMY TOTENBERG
UNITED STATES DISTRICT JUDGE

Footnotes:

1 The facts described here are taken from Plaintiff’s complaint [Doc. 1] and presumed true for purposes of resolving Defendants’ motion to dismiss. See infra Part II.

2 Plaintiff exceeded the twenty-five-page limit imposed by the local rules in his response brief. See Local Rule 7.1(D). Because Plaintiff is appearing pro se, he is entitled to some lenience from this Court regarding the formalities of litigation. However, Plaintiff is advised in the future to keep any original briefs to no more than twenty-five pages, and reply briefs to no more than fifteen pages.

3 In Bonner v. Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to October 1, 1981.

4 The facts in the complaint must be presumed true at this stage. Hill v. White, 321 F.3d at 1335. Defendants assert that the Court may consider documents referenced in the complaint, including the promissory note and the purported assignment of the security deed to Ocwen, without converting this motion to a motion for summary judgment. However, Defendants are attempting to use these documents to dispute a central factual allegation of Plaintiff’s complaint, compared to the securities cases wherein courts have considered on a motion to dismiss documents  required to be filed with the SEC of which the contents, and not the truth, were at issue. See Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1278 (11th Cir. 1989) (“When SEC documents are relevant only to determine what statements or disclosures are actually contained therein, there can be little question as to authenticity, nor can the fact that such statements or disclosures were thus publicly filed be reasonably questioned.”); Oxford Asset Mgmt. Ltd. v. Jahar, 297 F.3d 1182, 1188 (11th Cir. 2002) (documents outside the complaint may only be considered at the motion to dismiss stage to show their contents, not for the truth of matters asserted therein). The Court must therefore assume at this motion to dismiss stage of the proceedings that Ocwen is not the holder of the note, based on the allegations of  Plaintiff’s complaint. (Compl. ¶ 25.) Furthermore, the documents attached to the motion to dismiss do not support anyfactual finding to the contrary, as an assignment of the security deed is not indicative of who holds the note, and the promissory note shows no endorsement to Ocwen.

5 MERS is listed on the original security deed as the grantee of the instrument “as nominee” for the lender and lender’s successor and assigns.

6 Defendants cite O.C.G.A. § 44-14-64 and Redwine v. Frizzell, 190 S.E. 789 (Ga. 1937) to support their argument that the purported assignment of the security deed also transferred the promissory note. However, this statute and Redwine were authored at a time when the promissory note and the security deed where not commonly separated. Neither support the proposition that a party who has never held the promissory note (MERS) could transfer it by an assignment of the security deed.

7 “The security instrument or assignment thereof vesting the secured creditor with title to the security instrument shall be filed prior to the time of sale in the office of the clerk of the superior court of the county in which the real property is located.” O.C.G.A. § 44-14-162(b) (emphasis added). “Notice of the initiation of proceedings to exercise a power of sale in a mortgage, security deed, or other lien contract shall be given to the debtor by the secured creditor no later than 30 days before the date of the proposed foreclosure.” O.C.G.A. § 44-14-162.2(a) (emphasis added).

8 Defendants cite Nicholson v. OneWest Bank, No. 1:10-CV-0795, 2010 WL 2732325 (N.D.Ga. Apr. 20, 2010) for the proposition that MERS has the ability to foreclose even if it does not hold the promissory note. However, in Nicholson the court denied a motion for TRO because the plaintiff in that case failed to carry his burden on a TRO motion to show the likelihood of success on the merits when he failed to overcome the defendant OneWest’s showing that it held both the note and security deed. Id. at *4. Nicholson is therefore inapposite to the facts that must be assumed true herein.

Defendants also cite Trent v. Mortgage Electronic Registration Systems, Inc., 288 Fed. Appx. 571 (11th Cir. 2008) (unpublished) and Mortgage Electronic Registration Systems, Inc. v. Revoredo, 955 So.2d 33 (Fla. Dist. Ct. App.2007). These cases interpret Florida law and therefore are not relevant to the instant case.

9 It is not clear whether Plaintiff can prevail on a claim for wrongful attempted foreclosure, which requires a showing of intentional publication of derogatory and untrue financial information about the complainant. See Sale City Peanut, 130 S.E.2d at 520. Plaintiff does not specify in the complaint whether he was actually in default on the mortgage at the time Ocwen commenced foreclosure proceedings against him or whether a default had been cured through a loan modification. However, to the extent Plaintiff fails to establish the required elements for the tort of attempted wrongful foreclosure, his claim for wrongful foreclosure may proceed as a claim for injunctive relief.

[ipaper docId=62298288 access_key=key-j1lgzc9novxn2v7p77 height=600 width=600 /]

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Homeowner Win: Mortgage Servicers Must Obey GA Law

Homeowner Win: Mortgage Servicers Must Obey GA Law


Abigail C. Field-

Foreclosures are often done in the name of mortgage servicers rather than the person who actually owns the defaulted loan. Fannie Mae, for example, generally requires servicers to foreclose in the servicers’ name rather than Fannie Mae. (The link is to Fannie Mae’s current servicing guidelines; see Section 101 at p. 801-2.) Well, based on this recent opinion, the practice should no longer fly in Georgia, at least if servicers are trying to foreclose without going to court. In addition the many Georgia foreclosures servicers have already completed non-judicially are now in question.

Only Secured Creditors Can Foreclosure Non-Judicially in Georgia

[REALITY CHECK]

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Counties Take Action After Notary Investigation

Counties Take Action After Notary Investigation


“She’s clearly breaking the law”

- Debra DeBerry, chief deputy clerk of the DeKalb County Superior Court

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Attorneys Save 90-Year Old Woman From Being Evicted After Watching CBS-ATL News Report

Attorneys Save 90-Year Old Woman From Being Evicted After Watching CBS-ATL News Report


CBSATLANTA-

SOUTH FULTON CO, GA (CBS ATLANTA) -

A 90-year old woman was scheduled to be thrown out of her home tomorrow at 1 p.m.

Fulton County Marshals arrived on Katherine Brealond’s doorstep of this morning. They were there to figure out what possessions they were going to have to throw out on the curb tomorrow.

“She was unaware that her home was being foreclosed on,” Fulton County Marshal Antonio Johnson told CBS Atlanta News.

Continue reading [CBS ATLANTA]

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Georgia Offical Vows To Investigate Notary Misuse Claims

Georgia Offical Vows To Investigate Notary Misuse Claims


WSBTV-

FULTON COUNTY, Ga. — Fulton County’s clerk of court said homeowners from across the country have filed complaints questioning the credentials of notaries who signed their mortgage documents.

Cathelene “Tina” Robinson said she’s already revoked certifications from several of the notaries involved.

“As a notary, your job is to prevent fraud,” said Robinson, who commissions all of Fulton County’s notaries.

continue reading [WSBTV]


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National mortgage fraud scandal spreads to the judiciary

National mortgage fraud scandal spreads to the judiciary


EXAMINER-

While the U. S. Department of Justice is actively prosecuting mortgage and foreclosure fraud, a national organization that helps homeowners avoid foreclosure has evidence that certain state judges appear to be protecting lawbreakers.  Billions of dollars have been received by corporations in the foreclosure industry since the Great Recession began.  Are these vast sums of money finding their way to elected state judges and politicians?

CHOESTOE, GA – June 11, 2011 (Examiner.com) – Amid the splendor of pristine mountains, waterfalls and springtime flowers in one of America’s favorite vacationlands, a passionate lady-with-a-cause, presented evidence yesterday that could shake the judicial system to its foundation.   While helping families facing foreclosure, her non-profit organization has recently stumbled upon very questionable judicial actions in several states. The evidence is overwhelming that the powerful foreclosure industry not only has inappropriate influence over state court systems, but is using threats and economic pressure to stymie investigative efforts and legislative regulation.

Continue reading [EXAMINER]


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Oklahoma Attorney General Scott Pruitt Goes After Own Fraudclosure Settlement

Oklahoma Attorney General Scott Pruitt Goes After Own Fraudclosure Settlement


BLOOMBERG

Oklahoma Plan

Oklahoma Attorney General Scott Pruitt is seeking an alternative settlement with banks that respects “the appropriate role of attorneys general,” his office said in a statement today. The settlement could be a model for other states, Pruitt said.

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Georgia Joins Dissenters Opposing Writedown Plan in State Foreclosure Deal

Georgia Joins Dissenters Opposing Writedown Plan in State Foreclosure Deal


BLOOMBERG-

Georgia Attorney General Sam Olens said he has “significant concerns” about a proposal to reduce loan balances for some homeowners as part of a settlement of a nationwide foreclosure probe, joining at least seven other states that have criticized such a plan.

A deal with the top mortgage servicers in the U.S. that includes writedowns could encourage homeowners who are current on their loans to stop making payments, Olens, a Republican, said today in a telephone interview.

“You’re declaring in advance who the winners and losers are,” Olens said. “I’m a little concerned that this process disengages the normal market forces.”

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GA SUPREME COURT Rejects Bank’s Definition of “Duly Filed, Recorded, and Indexed” U.S. Bank v. GORDON

GA SUPREME COURT Rejects Bank’s Definition of “Duly Filed, Recorded, and Indexed” U.S. Bank v. GORDON


U.S. BANK NATIONAL ASSOCIATION,
v.
GORDON.

S10Q1564.
Supreme Court of Georgia.

Decided: March 25, 2011.

NAHMIAS, Justice.

The United States District Court for the North District of Georgia has certified a question to this Court regarding the 1995 Amendment to OCGA § 441-4-33. See Ga. L. 1995, p. 1076, § 1. The question is whether the 1995 Amendment

means that, in the absence of fraud, a security deed that is actually filed and recorded, and accurately indexed, on the appropriate county land records provides constructive notice to subsequent bona fide purchasers, where the security deed contains the grantor’s signature but lacks both an official and unofficial attestation (i.e., lacks attestation by a notary public and also an unofficial witness).

For the reasons that follow, we answer the certified question in the negative.

1. In October 2005, Bertha Hagler refinanced her residence through the predecessor-in-interest to U.S. Bank National Association (U.S. Bank) and granted the predecessor a first and a second security deed to her residence. The security deeds were recorded with the Clerk of the Fulton County Superior Court in November 2005, but the first security deed was not attested or acknowledged by an official or unofficial witness. According to the district court’s certification order:

Gordon, the Chapter 7 Trustee in Hagler’s bankruptcy case, sought to avoid or set aside the valid, but unattested, first security deed to the residence through the “strong-arm” power of Section 544 (a) (3) of the Bankruptcy Code. See 11 U.S.C. § 544 (a) (3). Gordon argued that under the proper interpretation of § 44-14-33 of the Georgia Code, a security deed that is not attested by an official and unofficial witness cannot provide constructive notice to a subsequent purchaser even if it is recorded. U.S. Bank argued, in opposition, that a 1995 amendment to § 44-14-33 changed the law to enable an unattested security deed to provide constructive notice. Gordon argued in response that the 1995 amendment served only to recognize constructive notice from a security deed with a “latently” defective attestation, meaning an irregular attestation that appears regular on its face; a deed with a “patently” defective attestation, meaning an attestation that is obviously defective on its face, would not provide constructive notice.

The bankruptcy court ruled in Gordon’s favor, concluding that, under the 1995 Amendment, a security deed with a facially defective attestation would not provide constructive notice, while a security deed with a facially proper but latently defective attestation would provide constructive notice. See Gordon v. U.S. Bank Natl. Assn. (In re Hagler), 429 BR 42, 47-53 (Bankr. N.D. Ga. 2009). Concluding that the issue involved an unclear question of Georgia law and that no Georgia court had addressed the issue after the 1995 Amendment, the district court certified the question to this Court. We conclude that the bankruptcy court properly resolved the issue.

2. OCGA § 44-14-61 provides that “[i]n order to admit deeds to secure debt . . . to record, they shall be attested or proved in the manner prescribed by law for mortgages.” OCGA § 44-14-33 provides the law for attesting mortgages:

In order to admit a mortgage to record, it must be attested by or acknowledged before an officer as prescribed for the attestation or acknowledgment of deeds of bargain and sale; and, in the case of real property, a mortgage must also be attested or acknowledged by one additional witness. In the absence of fraud, if a mortgage is duly filed, recorded, and indexed on the appropriate county land records, such recordation shall be deemed constructive notice to subsequent bona fide purchasers.

The second sentence of this Code section was added by the 1995 Amendment.

3. We first address Gordon’s contention that the 1995 Amendment does not apply at all to security deeds. He contends that only the first sentence of § 44-14-33, which expressly deals with attestation, is applicable to security deeds through § 44-14-61 and that, because the 1995 Amendment addresses constructive notice, it does not apply to security deeds. We disagree. The General Assembly chose to enact the 1995 Amendment not as a freestanding Code provision but as an addition to a Code provision clearly referenced by § 44-14-61. Moreover, “[t]he objects of a mortgage and security deed . . . under the provisions of the Code are identical — security for a debt. While recognizing the technical difference between a mortgage and security deed hereinbefore pointed out, this court has treated deeds to secure debts . . . as equitable mortgages.” Merchants & Mechanics’ Bank v. Beard, 162 Ga. 446, 449 (134 SE 107)Fair v. State, 288 Ga. 244, 252 (702 SE2d 420) (2010), so the placement of the amendment makes complete sense. Indeed, no reason has been suggested why the General Assembly would want the same type of recording to provide constructive notice for mortgages but not for security deeds. Accordingly, we conclude that the 1995 Amendment is applicable to security deeds. (1926). The General Assembly is presumed to have been aware of the existing state of the law when it enacted the 1995 Amendment, see

4. Turning back to the certified question, we note that the “recordation” that is deemed to provide constructive notice to subsequent purchasers clearly refers back to “duly filed, recorded, and indexed” deeds. U.S. Bank argues that a “dulyin fact filed, recorded, and indexed, even if unattested by an officer or a witness. We disagree. filed, recorded, and indexed” deed is simply one that is

Particular words of statutes are not interpreted in isolation; instead, courts must construe a statute to give “`”sensible and intelligent effect” to all of its provisions,'” Footstar, Inc. v. Liberty Mut. Ins. Co., 281 Ga. 448, 450 (637 SE2d 692)State v. Bowen, 274 Ga. 1, 3 (547 SE2d 286) (2001). In particular, “statutes `in pari materia,’ i.e., statutes relating to the same subject matter, must be construed together.” Willis v. City of Atlanta, 285 Ga. 775, 776 (684 SE2d 271) (2009). (2006) (citation omitted), and “must consider the statute in relation to other statutes of which it is part.”

Construing the 1995 Amendment in harmony with other recording statutes and longstanding case law, we must reject U.S. Bank’s definition of “duly filed, recorded, and indexed.” Its definition ignores the first sentence of § 44-14-33, which provides that to admit a security deed to record, the deed must be attested by or acknowledged before an officer, such as a notary public, and, in the case of real property, by a second witness. See OCGA § 44-2-15 (listing the “officers” who are authorized to attest a mortgage or deed). Other statutes governing deeds and mortgages similarly preclude recording and constructive notice if certain requirements are not satisfied. See OCGA § 44-2-14 (“Before any deed to realty or personalty or any mortgage, bond for title, or other recordable instrument executed in this state may be recorded, it must be attested or acknowledged as provided by law.”); OCGA § 44-14-61 (“In order to admit deeds to secure debt or bills of sale to record, they shall be attested or proved in the manner prescribed by law for mortgages”). Indeed, U.S. Banks’ construction of the 1995 Amendment contradicts OCGA § 44-14-39, which provides that “[a] mortgage which is recorded . . . without due attestation . . . shall not be held to be notice to subsequent bona fide purchasers.”

Thus, the first sentence of § 44-14-33 and the statutory recording scheme indicate that the word “duly” in the second sentence of § 44-14-33 should be understood to mean that a security deed is “duly filed, recorded, and indexed” only if the clerk responsible for recording determines, from the face of the document, that it is in the proper form for recording, meaning that it is attested or acknowledged by a proper officer and (in the case of real property) an additional witness. This construction of the 1995 Amendment is also consistent with this Court’s longstanding case law, which holds that a security deed which appears on its face to be properly attested should be admitted to record, see Thomas v. Hudson, 190 Ga. 622, 626 (10 SE2d 396) (1940); Glover v. Cox, 137 Ga. 684, 691-694 (73 SE 1068) (1912), but that a deed that shows on its face that it was “not properly attested or acknowledged, as required by statute, is ineligible for recording.” Higdon v. Gates, 238 Ga. 105, 107 (231 SE2d 345) (1976).

We note that at the time the 1995 Amendment was considered and enacted, the appellate courts of this State had “never squarely considered” whether a security deed with a facially valid attestation could provide constructive notice where the attestation contained a latent defect, like the officer or witness not observing the grantor signing the deed. Leeds Bldg. Prods. v. Sears Mortg. Corp., 267 Ga. 300, 301 (477 SE2d 565) (1996). The timing of the amendment suggests that the General Assembly was attempting to fill this gap in our law as the Leeds litigation worked its way through the trial court and the Court of Appeals before our decision in 1996. See Gordon, 429 BR at 50. We ultimately decided in Leeds that, “in the absence of fraud, a deed which, on its face, complies with all statutory requirements is entitled to be recorded, and once accepted and filed with the clerk of court for record, provides constructive notice to the world of its existence.” 267 Ga. at 302. We noted that Higdon remained good law, because in that case the deed was facially invalid, did “not entitle [the deed] to record,” and “did not constitute constructive notice to subsequent purchasers.” Leeds, 267 Ga. at 302. Because we reached the same result as under the 1995 Amendment, we did not have to consider whether the amendment should be applied retroactively to that case. See id. at 300 n.1.

Our interpretation of the 1995 Amendment also is supported by commentators that have considered the issue. See Frank S. Alexander, Georgia Real Estate Finance and Foreclosure Law, § 8-10, p. 138 (4th ed. 2004) (stating that “[a] security deed that is defective as to attestation, but without facial defects, provides constructive notice to subsequent bona fide purchasers”); Daniel F. Hinkel, 2 Pindar’s Georgia Real Estate Law and Procedure, § 20-18 (6th ed. 2011) (without mentioning deeds with facial defects, explaining that the 1995 Amendment to § 44-14-33 and Leeds “provide that in the absence of fraud a deed or mortgage, which on its face does not reveal any defect in the acknowledgment of the instrument and complies with all statutory requirements, is entitled to be recorded, and once accepted and filed with the clerk of the superior court for record, provides constructive notice to subsequent bona fide purchasers”); T. Daniel Brannan & William J. Sheppard, Real Estate, 49 Mercer L. Rev. 257, 263 (Fall 1997) (without mentioning deeds with facial defects, stating that the 1995 Amendment to § 44-14-33 resolves “the issue that was before the court in [Leeds]”). As noted by the bankruptcy court, if Hinkel and the law review authors thought that the 1995 Amendment altered longstanding law with regard to deeds containing facial defects as to attestation, they surely would have said so. See Gordon, 429 BR at 52-53.

Finally, it should be recognized that U.S. Bank’s interpretation of the 1995 Amendment to § 44-14-33 “would relieve lenders of any obligation to present properly attested security deeds” and “would tell clerks that the directive to admit only attested deeds is merely a suggestion, not a duty,” and this would risk an increase in fraud because deeds no longer would require an attestation by a public officer who is sworn to verify certain information on the deeds before they are recorded and deemed to put all subsequent purchasers on notice. Gordon, 429 BR at 51-52. Moreover, while “it costs nothing and requires no special expertise or effort for a closing attorney, or a lender, or a title insurance company to examine the signature page of a deed for missing signatures before it is filed,” U.S. Bank’s construction would “shift to the subsequent bona fide purchaser and everyone else the burden of determining [possibly decades after the fact] the genuineness of the grantor’s signature and therefore the cost of investigating and perhaps litigating whether or not an unattested deed was in fact signed by the grantor.” Id. at 52.

For these reasons, we answer the certified question in the negative.

Certified question answered. All the Justices concur.

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GA Supreme Court Affirms | Quiet Title, Forged Deeds Cannot Vest Title AURORA LOAN SERVICES, LLC v. Veatch

GA Supreme Court Affirms | Quiet Title, Forged Deeds Cannot Vest Title AURORA LOAN SERVICES, LLC v. Veatch


“[A] forged deed is a nullity and vests no title in a grantee. [Cit.] As such, even a bona fide purchaser for value without notice of a forgery cannot acquire good title from a grantee in a forged deed, or those holding under such a grantee, because the grantee has no title to convey.” Brock v. Yale Mortgage Co

AURORA LOAN SERVICES, LLC
v.
JOHN MACELRAY VEATCH, ADMR., et al.

S10A1725.

Supreme Court of Georgia.

Decided: March 18, 2011.

HINES, Justice.

In this quiet title action, the trial court entered a final order ruling that fee simple title to the subject property was vested in John Macrelay Veatch (“Veatch”), as personal representative of the estate of Raymond Wesley Veatch, Jr., unencumbered by the security deed held by Aurora Loan Services, LLC (“Aurora”), and striking various deeds from the deed records of Fulton County. Aurora appeals, and for the reasons that follow, we affirm.

Elsie Veatch owned the subject property until her death in 1974; her sole heir was Raymond Wesley Veatch, Jr., Veatch’s father, who died on March 20, 2006. After his death, two forged deeds were recorded in the Fulton County deed records, purporting to convey title to the property to Antonio Simpson. One forged deed was styled “Quitclaim Deed,” purportedly executed on May 19, 2006 by Elsie Veatch, who had then been dead for 32 years; this purported deed was recorded on October 17, 2006. The other purported deed was styled “Executors Deed,” and was purportedly executed by Raymond Wesley Veatch, Jr., on March 15, 2006, a date on which he lay in a coma; it was recorded on November 6, 2006. After these forged deeds were executed and recorded, a warranty deed purportedly from Antonio Simpson to Darryl Matthews was recorded on November 8, 2006. Matthews then executed a security deed in favor of First Magnus Financial Corporation in connection with a loan for $187,500. The security deed was eventually assigned to Aurora.

On September 5, 2007, after Veatch discovered activity on the property and applied for, and was granted, letters of administration of the estate of Raymond Wesley Veatch, Jr., he filed in the Fulton County land records an affidavit stating that the Executor’s and Quitclaim deeds were false. He then filed in the superior court the present petition to quiet title. OCGA § 23-3-40 et seq. The trial court appointed a Special Master who concluded that Aurora was a bona fide purchaser for value. See Roop Grocery Co. v. Gentry, 195 Ga. 736, 745 (1) (25 SE2d 705) (1943). However, the trial court disagreed, finding that there was record notice that the forged deeds were fraudulent, and that in any event, a forged deed is a nullity and cannot convey title.

The trial court is correct. Aurora’s interest in the property is dependent upon the forged deeds made to Antonio Simpson. As the trial court noted, such a deed cannot convey title. “[A] forged deed is a nullity and vests no title in a grantee. [Cit.] As such, even a bona fide purchaser for value without notice of a forgery cannot acquire good title from a grantee in a forged deed, or those holding under such a grantee, because the grantee has no title to convey.” Brock v. Yale Mortgage Co., 287 Ga. 849, 852 (2) (700 SE2d 583) (2010). In that opinion, this Court specifically overruled prior precedent of this Court that extended “the bona fide purchaser for value doctrine to those acquiring title under a grantee in a forged deed.” Id. at 853 (2). Accordingly, it is of no moment whether the deed records provided notice of the forgeries at the time Matthews executed the security deed on which Aurora bases its claim; there was simply no title held by Simpson, Matthews, First Magnus Financial Corporation, or any subsequent assignee. Id. Accord, Second Refuge Church &c. v. Lollar, 282 Ga. 721, 726-727 (3) (550 SE2d 128) (2007). The trial court did not err in declaring title to be vested in Veatch, as personal representative of the estate of Raymond Wesley Veatch, Jr., unencumbered by the security deed held by Aurora.

Judgment affirmed. All the Justices concur.

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GA Attorney General Olens Is Taking Foreclosure Fraud Bill By The Horns

GA Attorney General Olens Is Taking Foreclosure Fraud Bill By The Horns


Georgia’s newly elected Attorney General Sam Olens is clearly not part of any 50 state settlement. According to AJC, on Tuesday House Bill 237 is moving closer to passing.

This bill if passed, will criminalize falsifying foreclosure documents, not simply errors or typos. The bill would go into effect on July 1, and will give both the attorney general and district attorneys the power to subpoena. Florida you listening?

Georgians make sure this goes smoothly and do all you can.

Perhaps Mr. Olens should take over Mr. Millers position of leading the pack?

[image: Doug Thompson]

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GA Foreclosure Fraud Bill Passes Out of House Committee

GA Foreclosure Fraud Bill Passes Out of House Committee


HB 237, introduced by Representative Rich Golick, would prohibit misstatements with the intent to defraud during the foreclosure process. The bill would also give law enforcement, including the Attorney General, sufficient authority to investigate and prosecute violations.

Georgia Seal

PRESS ADVISORY

Monday, February 28, 2011

Foreclosure Fraud Bill Passes Out of House Committee; Attorney General Unveils Mortgage and Foreclosure Webpage

Attorney General Sam Olens applauded today’s action by the House Judiciary (Non-Civil) Committee to recommend “Do Pass” on HB 237. HB 237, introduced by Representative Rich Golick, would prohibit misstatements with the intent to defraud during the foreclosure process. The bill would also give law enforcement, including the Attorney General, sufficient authority to investigate and prosecute violations. Attorney General Olens, who testified before the Committee last Friday in support of the bill, is dedicated to protecting consumers from fraud during the foreclosure process and is asking the General Assembly to expand the State of Georgia’s current mortgage fraud law to cover fraud during the entire lending process, including foreclosures.

“Georgia’s real estate market has been hit hard during the financial crisis due in part to unscrupulous individuals involved in the process,” said Attorney General Sam Olens. “As the state’s attorney, it is appropriate that my office investigate foreclosure fraud and prosecute individuals who scam the system. I thank Representative Rich Golick and the other sponsors for their leadership on this important issue and encourage the General Assembly to protect Georgia citizens by expeditiously passing HB 237 into law.”

Attorney General Sam Olens also unveiled today the new “Mortgage and Foreclosure Information” page on the Department of Law’s website to assist consumers seeking information about the mortgage and foreclosure processes. The webpage includes frequently asked questions and provides links and contact information to other helpful resources.

“The Department of Law receives numerous calls each day from consumers inquiring about mortgages and foreclosures,” said Attorney General Sam Olens. “We saw a need for an easily accessible consumer resource, and developed the webpage by researching the issues most commonly raised in citizen calls and letters. I remain committed to assisting consumers by making more information available on our website.”

The webpage can be found on the Department of Law website under “Key Issues” or by clicking here.

source: Georgia.gov

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NY TIMES | In A Mortgage Case, a 7-Year Wait for 2 Answers

NY TIMES | In A Mortgage Case, a 7-Year Wait for 2 Answers


2 things pop right out. 1. As you read this article, think of the NJ case Kemp v. Countrywide involving Linda DiMartini “Notes were never delivered”, 2. Were they waiting on something to possibly happen dragging this out long enough? Just makes you wonder…thats all.

Waiting Seven Years for Two Answers

By GRETCHEN MORGENSON
Published: February 26, 2011

WHEN Zella Mae Green of Georgia filed for bankruptcy to save her home from foreclosure in 2004, she and her lawyer wanted to know two things: Did she actually owe any back payments on her mortgage? And, if so, to whom?

It didn’t seem like a lot to ask. But until last week, those questions had been unanswered for seven years.

Mortgages are complicated to begin with, of course. But when homeowners fall behind on their payments, the situation becomes far more complicated. Recurring fees and charges muddle the accounting. That banks routinely transfer the notes underlying a property can make things cloudier still.

Continue reading… NYTIMES

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