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The Case of TWO (2) Allonges To Note, Saxon Cannot Explain | INGRID BERG v. eHome Credit

The Case of TWO (2) Allonges To Note, Saxon Cannot Explain | INGRID BERG v. eHome Credit

via Matt Weidner

INGRID BERG, Plaintiff,
eHOME CREDIT CORP., a New York corporation; SAXON MORTGAGE SERVICES INC., Defendants.

No. 08 C 05530.

United States District Court, N.D. Illinois, Eastern Division.

February 25, 2011.



This matter comes before the Court on plaintiff Ingrid Berg’s Motion to Dismiss defendant Saxon Mortgage Services Inc.’s Counterclaim pursuant to Rule 12(b)(1) for lack of standing [46] [49]. For the reasons that follow, the motion is denied.


Plaintiff and her husband, Stanley Berg, purchased a property in Highland Park, Illinois, in 2001. The Bergs financed the purchase of the property with a mortgage originally held by eHome Credit Corporation (“eHome Mortgage”). In 2005, Stanley Berg filed for bankruptcy. Ingrid Berg did not file for bankruptcy. The bankruptcy court ruled that the trustee of Stanley Berg’s bankruptcy estate could avoid the eHome Mortgage as to Stanley Berg’s half-interest in the property, but it had no jurisdiction over the half-interest owned by Ingrid Berg. The bankruptcy court further ruled that the trustee could sell the property and Ingrid Berg’s share of the proceeds would be subject to valid liens, and that the trustee could deposit the proceeds with a neutral custodian during the adjudication of any liens.

Ingrid Berg filed this lawsuit seeking a declaratory judgment that her interest in the property is not encumbered by the eHome Mortgage. Defendant eHome Credit Corp. has not filed an appearance in this action. Saxon Mortgage Services, Inc. (“Saxon”), who asserts that it is the servicer of the eHome Mortgage for FV-1, Inc. (“FV-1”), was granted leave to intervene as a defendant. FV-1 purports to be the current holder of the eHome Mortgage and note. Saxon filed an answer and counterclaim seeking a declaratory judgment that the eHome Mortgage is the senior lien on the proceeds from the sale of Ingrid Berg’s half-interest in the property.

Legal Standard

The present challenge relates to standing and this Court’s jurisdiction over the matter. The requirements of standing are: (1) an injury in fact; (2) causation; and (3) redressibility. See, e.g., RK Co. v. See, 622 F. 3d 846, 851 (7th Cir. 2010). When deciding a motion to dismiss the Court accepts well-pleaded allegations of the complaint as true, (Tamayo v. Blagojevich, 526 F. 3d 1074, 1081 (7th Cir. 2008)), and draws all reasonable inferences in favor of the nonmoving party. Pisciotta v. Old Nat. Bancorp, 499 F.3d 629, 633 (7th Cir. 2007). On Rule 12(b)(1) motions, the court may consider material outside the pleadings. See United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003).


Plaintiff moves to dismiss defendant Saxon’s counterclaim, asserting that Saxon has no standing to assert the counterclaim because only the entity entitled to enforce the note may bring a complaint to foreclose the mortgage against the mortgagor. See Bayview Loan Servicing v. Nelson, 382 Ill. App. 3d 1184, 1187-88 (2008). Saxon responds that it is an entity entitled to enforce the note because FV-1 is the holder of the note and the mortgage and FV-1 authorized Saxon, as its servicer, to enforce the note on its behalf.

Here, it is undisputed that the eHome mortgage and note were transferred once by an allonge to Option One Mortgage Corporation (“Option One”) on July 16, 2004. Saxon further asserts that Option One then indorsed the note in blank by an allonge, and that FV-1 is in possession of the original mortgage and note with the allonge indorsed in blank.

Saxon attached as exhibits to its response, the original note (Exhibit A, Dkt. # 53-1), the allonge to the promissory note indorsing the note to Option One on July 16, 2004 (Exhibit B, Dkt. # 53-2), the allonge to the note indorsed in blank by Option One (Exhibit C, Dkt. # 53-3 ), a declaration under penalty of perjury signed by Roger Perlstadt, attorney for Saxon, averring that Saxon has provided the law firm with the original note and indorsements relating to the loan secured by the mortgage on the property at 2205 Kipling Lane in Highland Park, Illinois (Exhibit D, Dkt. # 53-4), and the “Limited Power of Attorney” authorizing Saxon to enforce any of the mortgages/notes that it services on behalf of FV-1 (Exhibit E, Dkt. # 53-5).

Under Illinois law, when an instrument is indorsed in blank it becomes payable to the bearer. 810 ILCS 5/3-205(b) (West 2010). The person in possession of an instrument payable to the bearer is the “holder” of that instrument, 810 ILCS 5/1-201(b)(21)(A) (West 2010), and the “holder”of an instrument is entitled to enforce it. 810 ILCS 5/3-301 (West 2010). Here, the counterclaim alleges that FV-1 is the current holder of the note secured by the eHome Mortgage, and that Saxon has the authority to enforce the note on FV-1’s behalf. It alleges that FV-1 obtained the note through various transfers or assignments. The documents attached as exhibits support Saxon’s assertions that FV-1 is the holder of the note and that Saxon has the authority to act on FV-1’s behalf to enforce the note. Proof of possession is essential for standing to enforce payment on an instrument. Locks v. North Towne Nat’l Bank, 115 Ill. App. 3d 729, 71 Ill. Dec. 531, 451 N.E.2d 19 (2 Dist. 1983). It is undisputed that the note in Saxon’s possession that it presented to the Court is the original. At issue here is the validity of the allonges purporting to indorse the note from eHome Credit Corp to Option One and from Option One to blank payable to bearer.

Plaintiff argues that the allonge presented by Saxon, purporting to be the allonge transferring the note from eHome Credit Corp to Option One is a different allonge than the one presented by eHome in the bankruptcy proceedings. Indeed, the allonge that plaintiff attached to her motion to dismiss that purports to transfer the note from eHome Credit Corp to Option One (Exhibit F, Dkt. # 46-7) appears to be different from the one presented by Saxon. The Court directed Saxon to produce for the Court the original note and the allonges purporting to transfer the note; first from eHome Credit Corp. to Option One and then from Option One to blank. Saxon could provide no explanation for the two different allonges indorsing the note from eHome Credit Corp to Option One. Despite a difference in appearance, the two allonges purport to make the same indorsement and transfer.

Plaintiff further asserts that this Court should adopt a rule that an allonge is not an effective means of indorsement unless there is no space on the note itself to write the indorsement. Plaintiff relies on Brown [Fountain] v. Bookstaver, 141 Ill. 461 (1892), in which the Illinois Supreme Court stated: “Generally, an assignment of a negotiable instrument must be indorsed on the instrument, viz., written on the back of it, that being the meaning of the word >indorsement.’ If, however, by reason of the number of indorsements, the back of the instrument is so covered as to make it necessary, `an extra piece of paper may be tacked or pasted on the instrument, and all future indorsements may be written on the attached paper.” Id. at 465.

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Florida Ruling Might Further Complicate Loan Crisis

Florida Ruling Might Further Complicate Loan Crisis


Ruling might further complicate loan crisis

Published: Tuesday, November 9, 2010 at 1:00 a.m.
Last Modified: Monday, November 8, 2010 at 10:04 p.m.

Appellate courts in Tallahassee and West Palm Beach have admonished lower courts for allowing foreclosures to proceed without the proper paperwork and kicked the cases back to circuit judges in a move some experts say could further complicate the foreclosure crisis.

At issue is the use of sworn affidavits that convinced circuit judges the borrower’s original promissory note had been lost in the shuffle but that the lender still had a right to foreclose. Experts likened it to a used car dealer selling a vehicle using a photocopy of the title.

Circuit court judges have been using such promises to issue summary judgments, which have sped cases along at a time when the courts have been inundated.

Observers say the rulings from the 1st District Court of Appeal in Tallahassee and the 4th District Court of Appeal in West Palm Beach could become templates for more challenges.

It is unclear just how many cases could be affected — the chief judge in this region’s circuit says foreclosure paperwork is carefully scrutinized by teams of case managers — but the rulings come as the system already is dealing with disruptions from self-imposed bank moratoriums to deal with questionable paperwork.

“It is the culmination of the worst civil procedure nightmare we’ve ever imagined,” said Anne L. Weintraub, a real estate attorney at Sarasota’s Syprett Meshad law firm, referring to the recent appellate rulings.

What happens next could have widespread implications for the more than 200,000 Floridians who have lost their homes to foreclosure since January 2007, including the more than 12,000 in Manatee, Sarasota and Charlotte counties.


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July Term 2010

a/k/a Joseph Servedio,


US BANK NATIONAL ASSOCIATION, as Indenture Trustee, on behalf of
the holders of Terwin Mortgage Trust 2007-AHL1, Asset-Backed
Securities Series 2007-AHL1,

No. 4D10-1898

[October 27, 2010]


The issue presented in this appeal is whether the trial court erred in
granting a final summary judgment of foreclosure where appellee failed
to file with the court a copy of the original note and mortgage prior to the
entry of judgment. Because the absence of the original note created a
genuine issue of material fact regarding appellee’s standing to foreclose
on the mortgage, summary judgment was not proper. We reverse.

In November 2008, appellee filed a n unverified complaint against
appellant, seeking both foreclosure of the mortgage and reestablishment
of the lost promissory note. Appellant attached to the complaint a copy
of the mortgage it sought to foreclose, but this document identified
Bankers Express Mortgage, Inc. as the lender and mortgagee. An
adjustable rate rider a n d prepayment penalty rider also identified
Bankers Express as the lender and mortgagee.

Appellant answered and denied all of the allegations in appellee’s
complaint. In addition, appellant asserted affirmative defenses that
appellee was not “in privity” with the lender and mortgagee and that
appellee lacked standing to seek foreclosure.

Appellee filed for summary judgment on the foreclosure count alone.
In support of its motion, appellee filed an affidavit from a representative
of the loan servicing company who stated the total amount due on the
mortgage. The affidavit did not indicate that appellee was an owner or
holder of the mortgage and note, and no documentary evidence was
appended to the affidavit. The trial court granted appellee’s motion for
summary judgment. The record on appeal contains no indication that
appellee filed the original note with the trial court.1

Summary judgment is proper if there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter of law.
Volusia County v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130
(Fla. 2000). The court may consider “affidavits, answers to
interrogatories, admissions, depositions, and other materials as would be
admissible in evidence” o n which the parties rely. Fla. R. Civ. P.
1.510(c). The court must draw “every possible inference” in favor of the
non-moving party. Edwards v. Simon, 961 So. 2d 973, 974 (Fla. 4th
DCA 2007). The facts must be “so crystallized that nothing remains but
questions of law.” Moore v. Morris, 475 So. 2d 666, 668 (Fla. 1985.) The
moving party bears the burden of showing the complete absence of
genuine issues of material fact. Frost v. Regions Bank, 15 So. 3d 905,
906 (Fla. 4th DCA 2009). Moreover, the “party moving for summary
judgment must factually refute or disprove the affirmative defenses
raised, or establish that the defenses are insufficient as a matter of law.”
770 PPR, LLC v. TJCV Land Trust, 30 So. 3d 613, 618 (Fla. 4th DCA
2010) (quoting Leal v. Deutsche Bank Nat’l Trust Co., 21 So. 3d 907, 909
(Fla. 3d DCA 2009)). We review de novo an order granting summary
judgment. Frost, 15 So. 3d at 906.

“The party seeking foreclosure must present evidence that it owns and
holds the note and mortgage in question in order to proceed with a
foreclosure action.” Lizio v. McCullom, 36 So. 3d 927, 929 (Fla. 4th DCA
2010). A plaintiff must tender the original promissory note to the trial
court or seek to reestablish the lost note under section 673.3091, Florida
Statutes. State St. Bank & Trust Co. v. Lord, 851 So. 2d 790, 791 (Fla.
4th DCA 2003). Moreover, if the note does not name the plaintiff as the
payee, the note must bear a special indorsement in favor of the plaintiff
or a blank indorsement. Riggs v. Aurora Loan Servs., LLC, 36 So. 3d 932,
933 (Fla. 4th DCA 2010). Alternatively, the plaintiff may submit evidence
of a n assignment from th e payee to the plaintiff or a n affidavit of
1 Appellee has twice moved this court to supplement the record on appeal to
include a copy of the original note and mortgage it claims to have filed at the
summary judgment hearing. This court denied the motions with leave for
appellee to seek relinquishment of jurisdiction to the trial court to recreate the
record. Appellee has not sought leave to recreate the record in the court below.

Likewise, appellee has not designated any transcripts to support its position.
ownership to prove its status as a holder of the note. Verizzo v. Bank of
N.Y., 28 So. 3d 976 (Fla. 2d DCA 2010); Stanley v. Wells Fargo Bank, 937
So. 2d 708 (Fla. 5th DCA 2006).

The record on appeal does not contain the original note, evidence of
an assignment of the mortgage and note to appellee, or an affidavit of
ownership by appellee. Appellee filed no other admissible “pleadings,
depositions, answers to interrogatories, admissions, affidavits, and other
materials” to support its contention that it owns and holds the note and
mortgage. Fla. R. Civ. P. 1.510(c). “[I]t is apodictic that summary
judgments may not be granted . . . absent the existence” of admissible
evidence in the record. TRG-Brickell Point NE, Ltd v. Wajsblat, 34 So. 3d
53, 55 (Fla. 3d DCA 2010). Without evidence demonstrating appellee’s
status as holder and owner of the note and mortgage, genuine issues of
material fact remain, and summary judgment was improper.

Appellee argues on appeal that it presented to the trial court a copy of
the original note and an affidavit of ownership at the summary judgment
hearing. Appellee concedes, however, that the documents were not filed
with the clerk of the court until several days after the entry of summary
judgment. The documents were not part of the record at the time the
motion for summary judgment was granted, so we cannot determine
whether the trial court considered those documents in rendering its
decision. See Poteat v. Guardianship of Poteat, 771 So. 2d 569 (Fla. 4th
DCA 2000) (noting that a n appellate court may review only items
considered by the trial court). Because appellant does not stipulate that
the documents were considered at the hearing, and because appellee has
not sought relief in the trial court to recreate the record, we must reverse
the order granting summary judgment. We cannot rely o n the
representations of counsel alone. Wright v. Emory, 41 So. 3d 290, 292
(Fla. 4th DCA 2010) (“[An] attorney’s unsworn, unverified statements do
not establish competent evidence.”).

Even if the trial court considered the note and mortgage at the
hearing, the documents were not authenticated, filed, and served more
than twenty days before the hearing as required by Rules 1.510(c) and
1.510(e). Appellee’s failure to abide by these rules also necessitates
reversing the order granting summary judgment. Verizzo, 28 So. 3d at
977-78; Mack v. Commercial Indus. Park, Inc., 541 So. 2d 800 (Fla. 4th
DCA 1989).

Accordingly, we reverse the entry of final summary judgment in favor
of appellee a n d remand for further proceedings. We note that a
summary judgment motion may b e filed “at any time” under Rule
1.510(a), and “this opinion does not preclude a re-filing of such motion if
and when the necessary legal documents are before the court.” Mack,
541 So. 2d at 800.

Reversed and remanded.

WARNER, POLEN and LEVINE, JJ., concur.
* * *
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Thomas H. Barkdull, III, Judge; L.T. Case No.

Peter J. Snyder of Peter J. Snyder, P.A., Boca Raton, for appellant.
Heidi J. Weinzetl of Shapiro & Fishman, LLP., Boca Raton, for

Not final until disposition of timely filed motion for rehearing.

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

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Follow the Trail —Don’t get lost in the documents

Follow the Trail —Don’t get lost in the documents

Posted on March 25, 2010 by Neil Garfield


See for Deutsch bank references Prospectus offered all over the world: Anyone who had a Deed of Trust with: Indymac, Wells Fargo, Countrywide, GMAC, Ocwen, American Home, Residential Funding Company, Washington Mutual Bank, BofA, and many others you might want to check this link out.

Editor’s Note: The only thing I would add is that the obligation arose when the borrower executed a note, but the creditor got a securitized bond with different terms, deriving its value from your note and thousands of others. Once you realize that the obligation is NOT the same as the Note, which is only EVIDENCE of the obligation, and that the MORTGAGE is NOT the obligation, it is only incident to the note, THEN you will understand that following the money means following the obligation, not the note or the mortgage. And figuring out what effect there was on the obligation at each step that the note was transferred, bought or paid, is the key to understanding whether the note became a negotiable instrument, and if it did, if it retained that status as a negotiable instrument.

FROM Jan van Eck

to foreclosurefight:

What you are missing in your attempt to analyze this is that you are trying to follow the “mortgage,” not the Note. the reason you are doing this is that only the “mortgage,” as the Security Instrument, is being recorded on the land records – so it is all you get to see.

the reason your adversaries, whoever they really are, “withdrew” from the relief from Stay Motion in the BK Court is that they do not have the Note. Somebody else does. And you have no clue as to who that is.

You have to start by determining what has happened to the Note, and how the Indorsements on the Note flow. And you have not seen the Note, not in years, so the raw truth is that you have no clue.

the “mortgage” never went into any “Trust.” Mortgages do not go into trusts. Only the Note (“maybe”) went into a trust – and only if it had proper Indorsement. Since Deutsche is involved, you can safely bet that it did not. Deutsche is NOTORIOUS for perpetrating fraud on the Courts and by fabricating documents. You may assume that EVERYTHING that Deutsche shows up with is a fraud, and has been fraudulently fabricated, typically in their offices on Liberty Street in Downtown Manhattan NY.

What is missing in your convoluted chain of title is that there was a ton of other parties involved in setting up that “Trust”, including some Delaware sham entity known as the “Depositor,” and then another sham known as the “Seller,” and more. When you burrow through that Prospectus you will find those entities listed. Now you have to dig out the Note, and find if those entities are individually and sequentially listed on the Note by consecutive Indorsements. Since Deutsche had their sticky fingers in the pie, you already know that they did not.

What State are you in? Yes, you need new counsel. You should never have gotten into this with old counsel.

You can still defeat them, but you probably will have to go file in District (Federal ) Court. You will have to sue Deutsche. Think in terms of suing them in the USDC for the Sou.Distr. NY, in White Plains, NY. Now you are not tangled up in the State-Fed politics of your local judges.

You cannot ask for Quiet title as you are asking for that in the State Court. You have to go in with entirely new grounds or they will not hear your case. So you sue them for fraud in interstate commerce. Try the “Commerce Clause” in the US Constitution (Amendment 16? I forget), to try to get “jurisdiction.” You get “venue” easily as Deutsche Bank is in NY. You do not need to show up; you just file and do your papers by mail. If yo ask for enough money, e.g. 40 million, then DB has something to start worrying about.

Right now, DB has no downside. If they lose, all they lose is some paper on some worthless piece of property in some state that is flooded with empty foreclosed houses that nobody can sell. So what do they care? DB probably does not even know or care that your lawsuit is going on; you are just dealing with lawyers that are running up their tab with DB, and DB has so many tabs that they do not try to keep track of it all. So you have to expose them to some serious hurt. A gigantic lawsuit is a good place to start.

You may assume that everything DB and those attys produce is utterly fraudulent. I have seen documents produced where the entire Trust Agreement was fabricated, and notarized by a notary who did not even get his first commission until two years after he swore that the parties were standing in front of him. Welcome to Wall Street banks – the international predator banks.

Besides Deutsche, Credit Suisse is also notorious for this type of flagrant fraud upon our Courts.

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