N.A. | FORECLOSURE FRAUD | by DinSFLA

Tag Archive | "N.A."

Banks face crisis in bungled commercial mortgages

Banks face crisis in bungled commercial mortgages


Oh yes, MERS is in this rabbit hole as well: From a 10/10 post EXCLUSIVE | NYSC COMMERCIAL (CMBS), MERS and a $65 MILLION NOTE

If this doesn’t do them in then look for the Next Robo-Signing Scandal: RePOST: CHASE BANK v. GERGIS | NY Civ. Court “ROBO-TESTIMONY, WAMU, CREDIT-CARD DEBT” Dismissed w/ PREJUDICE

Either way the banks are screwed on these as well.

CBS-

The nation’s banks are looking at a robo-signing problem with commercial real estate which may dwarf the one for home mortgages, according to a new study.

Research by Harbinger Analytics Group shows the widespread use of inaccurate, fraudulent documents for land title underwriting of commercial real estate financing. According to the report:

This fraud is accomplished through inaccurate and incomplete filings of statutorily required records (commercial land title surveys detailing physical boundaries, encumbrances, encroachments, etc.) on commercial properties in California, many other western states and possibly throughout most of the United States.

[CBS NEWS]

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COMPLAINT | CURTIS HERTEL, NANCY HUTCHINS, REG. OF DEEDS vs. MORTGAGE ELECTRONIC REGISTRATION  SYSTEMS, INC., MERSCORP, INC.

COMPLAINT | CURTIS HERTEL, NANCY HUTCHINS, REG. OF DEEDS vs. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., MERSCORP, INC.


STATE OF MICHIGAN
30THCIRCUIT COURT FOR THE COUNTY OF INGHAM

CURTIS HERTEL, the Register of Deeds and

Representative of INGHAM COUNTY; and

NANCY HUTCHINS, the Register of Deeds

and Representative of BRANCH COUNTY,

both as Class Representatives of all 83

counties in the State of Michigan.

 Plaintiffs,

V                                                                                     

MORTGAGE ELECTRONIC REGISTRATION

SYSTEMS, INC., MERSCORP,INC., JEANNE

KIVI, ELLEN COON, MARSHALL ISAACS,

BANK OF AMERICA N.A., JP MORGAN CHASE & CO,

CHASE HOME MORTGAGE CORPORATION f/k/a

CHASE HOME FINANCE, WELLS FARGO BANK, N.A.,

CITIMORTGAGE INC., eTITLE AGENCY INC,

1ST CHOICE TITLE SERVICES INC, ATTORNEYS

TITLE AGENCY LLC, f/k/a WARRANTY TITLE

AGENCY LLC, and FEDERAL NATIONAL

MORTGAGE ASSOCIATION, and

JOHN DOE as Any Other authorized signers for MERS

or MERSCORP,INC. and Defendants JOHN DOE

Corporations I – MMM,

 Defendants.

 

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Michigan, Ingham & Branch Counties file class action lawsuit against MERS

Michigan, Ingham & Branch Counties file class action lawsuit against MERS


For immediate release:  November 15th, 2011

CONTACT:  Curtis Hertel Jr., Ingham County Register of Deeds, Ph:  517-281-3574

Ingham & Branch Counties file class action lawsuit against MERS

Ingham County Register of Deeds Curtis Hertel Jr. & Branch County Register of Deeds Nancy Hutchins have filed a new lawsuit in the 30th Circuit Court, against Mortgage Electronic Registration Systems.  The lawsuit alleges that MERS has avoided paying state and county transfer taxes that would have been due on multiple property deeds filed within the last decade.  The transfers usually took place shortly following sheriff’s sales on foreclosed homes.

                “This is another case we’ve found, where the state’s residents have been shortchanged by questionable bank practices”, said Hertel.  “This is money that is intended for public education funds on the state level, and money that the county could have used for local programs like health and police.  The law requires that transfer tax is paid on the value of a property, whenever that property is transferred on a document such as a deed.  The big banks have found multiple ways of dodging those taxes.”

                The lawsuit was filed as a class-action, which means that other counties around Michigan are free to join the suit.  Ingham County and Branch County are the two current plaintiffs.  Hertel is hoping that other Registers from Michigan’s 83 counties will join the action.

                “It’s time for this nonsense to stop”, said the Branch County Register Nancy Hutchins.  “These organizations need to step up to the plate, pay the transfer tax that is due and stop claiming exemptions that by law they are not entitled to.”

                “MERS has transformed the entire mortgage industry into a giant shell game”, said Hertel.  “The current servicer of a mortgage is no longer a matter of public record, and once a property is foreclosed, the real games begin, as deeds and other paperwork are filed in such a way as to avoid transfer taxes at every step.   Property ownership is clouded, and the simple task of collecting transfer tax has been turned into this legal battle, largely because of the involvement of MERS.”

                The lawsuit also lists many of the country’s largest banks, as well as individual officers of MERS, as defendants in the case.  Because MERS has represented and acted in the stead of dozens of different banks in property transactions, Hertel & Hutchins are hoping that the court action will bring clarity to the issue of these delinquent taxes.

                Ingham County residents can ask questions about the lawsuit at a pair of town-hall meetings being held this week.  As part of a series of meetings that Hertel has been convening in various communities across the county this year, there are meetings this week on Tuesday in Okemos, and Thursday in Lansing.  The meeting on Tuesday will take place at Okemos High School, in the 2nd floor library, at 5:30pm, and the meeting on Thursday will take place at the Lansing Church of God in Christ, at 5304 Wise Road, also at 5:30pm.  Citizens can get questions answered about how the foreclosure crisis has affected Ingham County, and also get legal help if they are facing such a problem with their own home.

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IA APPEALS COURT |”Sheriff’s Sale Null and Void, Returning Legal Title to Owner” BANK OF NEW YORK v SMITH

IA APPEALS COURT |”Sheriff’s Sale Null and Void, Returning Legal Title to Owner” BANK OF NEW YORK v SMITH


IN THE COURT OF APPEALS OF IOWA
No. 0-407 / 09-1816

FFMLT 04-FF10, BANK OF NEW YORK,
as Successor in Interest to JP MORGAN
CHASE BANK, N.A., as Trustee,
Plaintiff-Appellee,

vs.
BARBRA J. SMITH,
Defendant-Appellant.

Excerpt:

Bank of New York also contends any issue concerning the validity of the foreclosure judgment is moot because it already bought the property at the sheriff’s sale. We find this claim without merit because we have the power to declare a judgment null and void, even if the judgment has previously been executed. See Hell, 238 Iowa at 513-14, 28 N.W.2d at 2-3 (holding the two-year statute of limitations had run, rendering the judgment null and void even though a levy had been made on the property and the debtor’s credits had already been garnished). “A void judgment ordinarily cannot be made valid and operative by . . . a sale on execution held under it.” Halverson v. Hageman, 249 Iowa 1381, 1390, 92 N.W.2d 569, 575 (1958) (citation omitted). The fact that an execution sale has occurred does not moot the issue presented.

V. Conclusion.
We conclude the legislature did not intend a demand to delay sale obtained pursuant to Iowa Code section 654.21 to toll the two-year statute of limitations in section 615.1. Therefore, the July 24, 2009 special execution of the July 5, 2007 foreclosure judgment came nineteen days too late, rendering the judgment null and void.

We reverse the decision of the district court and remand for entry of a decree declaring the sheriff’s sale null and void, returning legal title to Smith, and declaring the July 5, 2007 foreclosure judgment null and void for any purpose other than set off or counterclaim. Costs are assessed to the Bank of New York.

REVERSED AND REMANDED WITH DIRECTIONS.

BANK OF NEW YORK v SMITH

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IA APPEALS COURT |”MORTGAGE NULL & VOID” DEUTSCHE BANK NATIONAL TRUST COMPANY v. GAUPPS

IA APPEALS COURT |”MORTGAGE NULL & VOID” DEUTSCHE BANK NATIONAL TRUST COMPANY v. GAUPPS


Back by popular demand…first posted this back on July 1, 2010.

DEUTSCHE BANK NATIONAL TRUST COMPANY, As Trustee of Ameriquest Mortgage Securities, Inc., Asset-Backed Pass Through Certificates, Series 2004-X3, Under the Pooling and Servicing Agreement Dated as of September 1, 2004, Without Recourse, Plaintiff-Appellant,
v.
DAVID J. GAUPP, ALEXANDRA C. GAUPP, NATHAN PARTON and SPOUSE OF NATHAN PARTON, REBEKAH J. BARTON and SPOUSE OF REBEKAH J. BARTON, WELLS FARGO BANK, N.A., and PARTIES IN POSSESSION,, Defendants-Appellees.

No. 0-272/09-0700.

Court of Appeals of Iowa.

Filed June 30, 2010.

Excerpt:

On October 21, 2008, the Partons and Wells Fargo filed a motion for summary judgment asserting that (1) the mortgage held by Deutsche Bank was invalid; and (2) the mortgage held by Deutsche Bank could not be foreclosed because the Partons were bona fide purchasers for value. On February 12, 2009, the district court issued its ruling finding that the Gaupps and Granger conveyed their interest in the property to G & G Properties on July 3, 2002, and when G & G Properties recorded the deed on September 24, 2002, it became the record titleholder. Gaupp did not have any interest in the property when he executed the mortgage in favor of Ameriquest/Deutsche Bank and after the mortgage was executed, Gaupp never obtained title to the property. G & G Properties did not convey the property to anyone prior to May 19, 2006, when the Partons purchased the property. As a result, the mortgage held by Deutsche Bank was “null and void.” The district court granted the Partons and Wells Fargo’s motion for summary judgment and dismissed the petition for foreclosure. Deutsche Bank appeals.

<SNIP>

Deutsche Bank asserts that the district court erred in granting the defendants’ motion for summary judgment. The parties do not dispute that at the time Gaupp executed the promissory note and mortgage, he did not hold title to the property and that G & G Properties was the record titleholder. Deutsche Bank cannot avoid the fundamental principal that a party that has no interest in a particular piece of real property cannot validly mortgage that property. See, e.g., Lee v. Lee, 207 Iowa 882, 885, 223 N.W. 888, 890 (Iowa 1929) (holding a mortgage invalid because the mortgagor had no interest in the property at the time the mortgage was given); 59 C.J.S. Mortgages § 111, at 102-03 (2009) (discussing that “[o]ne who has no ownership interest in property has no right to mortgage it” and if one does so, the mortgage creates no interest in the property). At the time Gaupp obtained the loan from Ameriquest, he did not have any interest in the property and therefore, the mortgage instrument attempting to secure the promissory note was invalid.

Deutsche Bank argues that Gaupp acquired title to the property on December 31, 2003, when the Gaupps and Granger executed the “Corrected Warranty Deed,” which Deutsche Bank further argues resulted in the mortgage becoming valid.[ 3 ] However, this argument fails because Gaupp did not acquire an interest in the property when the “Corrected Warranty Deed” was executed on December 31, 2003. On July 3, 2002, the Gaupps and Granger conveyed the property to G & G Properties. After this conveyance, Gaupp had no interest in the property and could not convey the property to anyone. See Iowa Code § 557.3 (2007) (“Every conveyance of real estate passes all the interest of the grantor therein, unless a contrary intent can be reasonably inferred from the terms used.”). After the July 3, 2002 conveyance, only G & G Properties was able to convey title to the property. Any such attempt by Gaupp to do so would be and was invalid as he was no longer the titleholder. Therefore, the attempts by the Gaupps and Granger to convey the property on December 31, 2003, and February 2, 2005, were not valid conveyances.[ 4 ] Additionally, because the invalid conveyances were outside the chain of title, they were stray deeds when recorded. See William Stoebuck and Dale Whitman, The Law of Property § 11.11 (3rd ed. 2000) (“The term `chain of title’ is a shorthand way of describing the collection of documents which one can find by the use of the ordinary techniques of title search.”); 1 C.J.S. Abstracts of Title § 15, at 320 n.8 (2009) (“Instrument executed by owner [that] is recorded before acquisition or after relinquishment of title by owner is outside chain of title . . . .”).[ 5 ] Title remained with G & G Properties from July 3, 2002 until May 5, 2006, when G & G Properties conveyed its solely held interest in the property to the Partons. Therefore the chain of title went from G & G Properties to the Partons. Gaupp did not have title to the property when he executed the mortgage instrument now held by Deutsche Bank nor did he subsequently obtain title. We affirm the district court’s findings and ruling.

Continue reading below…

deutsche bank v. gaupp

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EXCLUSIVE | NYSC COMMERCIAL (CMBS), MERS and a $65 MILLION NOTE

EXCLUSIVE | NYSC COMMERCIAL (CMBS), MERS and a $65 MILLION NOTE


Recently many blogs have been discussing MERS and CMBS, well here is an example of one case from a NY Supreme Court. You can read it and draw your own conclusions by commenting down below if you wish.

Be sure you catch Judge IRA B. WARSHAWSKY’s valid points!

SUPREME COURT : STATE OF NEW YORK
COUNTY OF NASSAU

MASS OP LLC and MASS ONE LLC

against

PRINCIPAL LIFE INSURANCE COMPANY
PRINCIPAL GLOBAL INVESTORS, LLC,
WELLS FARGO BANK, N.A., CENTERLINE
CAPITAL GROUP, INC., BANK OF AMERICA
NATIONAL ASSOCIATION, Successor by
Merger to LASALLE BANK NATIONAL
ASSOCIATION, as TRUSTEE for the Registered
Holders of Bear Stearns Commercial Mortgage
Securities, Inc. Commercial Mortgage Pass-
Through Certificates Series 2006-PWR14

Excerpts:

The application stated that the lender intended to ” securitize” the loan and the borrower was to “cooperate in connection with any such securitization.” The application recited that each borrower was a “single purpose bankruptcy-remote entity…formed exclusively for the purpose of owning and operating the property.” The application stated that the loan amount would be not less than $65 million provided, among other conditions, that the loan amount would be equal to 80% of the appraised value of the property “pursuant to an appraisal approved by lender. “

However, the court hastens to add that it is not insensitive to plaintiffs ‘ predicament. Traditionally, mortgage assignments were recorded with the County Clerk. By searching the mortgage records, the mortgagor could determine the present mortgage holder and attempt to negotiate a “work out” or forbearance. In 1993, several large participants in the mortgage industry created the Mortgage Electronic Registration System (“MERS”). Pursuant to MERS, assignments of residential mortgages, instead of being publicly recorded, are tracked electronically in a private system (See MERSCORP, Inc. Romaine 8 NY3d 90 (2006)). By visiting MERS’ website or dialing its 800 number , a homeowner may access information regarding his or her loan servicer, but not the holder of the mortgage.

This lack of disclosure may create substantial difficulty when a homeowner wishes to negotiate the terms of his or her mortgage or enforce a legal right against the mortgagee and is unable to learn the mortgagee s identity (See 8 NY3d at 104, Kaye, J. dissenting). This

“information deficit” may function to “insulate a note holder from liability… and hide predatory lending practices”

(Id). The MERS system applies only to residential mortgages. However, as the present case illustrates , securitized financing creates the potential for the same abuses with commercial mortgages because of a similar “information deficit. ” While a breach of contract action against the lender does not lie, this court echoes Judge Kaye in calling the issue to the attention of the Legislature (ld). The court will now proceed to determine the sufficiency of plaintiffs ‘ fraud claims.

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Just recently:

2010 NY Slip Op 51791(U)

MASS OP LLC AND MASS ONE LLC, Plaintiffs,
v.
PRINCIPAL LIFE INSURANCE COMPANY, PRINCIPAL LIFE GLOBAL INVESTORS, LLC, WELLS FARGO BANK, N.A., CENTERLINE SERVICING, INC., BANK OF AMERICA NATIONAL ASSOCIATION, SUCCESSOR BY MERGER TO LA SALLE BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR THE REGISTERED HOLDERS OF BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES, INC. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2006-PWR14, BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC., AND “JOHN DOE” NO. 1 THROUGH “JOHN DOE” #7 INCLUSIVE, THE ACTUAL IDENTITIES OF THE LAST NAMED, defendants BEING UNKNOWN TO Plaintiffs, THE PARTIES INTENDED BEING PERSONS, CORPORATIONS, ASSOCIATIONS AND OTHER ENTITIES HAVING OR CLAIMING AN INTEREST IN THE LOAN DESCRIBED IN THIS COMPLAINT, Defendants.

Supreme Court, Nassau County.

Decided September 30, 2010.

IRA B. WARSHAWSKY, J.

PRELIMINARY STATEMENT

Defendants Bear Stearns and Principal Life Insurance move to dismiss the amended complaint. Bear Stearns, which first appears as a defendant in the amended complaint, assert that by entering into a settlement agreement with certain defendants, and have thereby reaffirmed the valuation of the shopping center and have recovered damages, bars them from further claims under the “one recovery” doctrine. They also claim that the breach of fiduciary duty claim against Bear Stearns is barred by the 3-year statute of limitations, which commenced with the refinancing on November 8, 2006, with service upon Bear Stearns on December 24, 2009. Bear Stearns also contends that the plaintiff has failed to allege a “relationship of higher trust”, essential to a claimed breach of a fiduciary duty; that the claim which plaintiff asserts against Bear Stearns is barred by the Martin Act; and, to the extent a claim of “joint venture” with Bear Stearns is asserted, recovery is also barred under the “one recovery” doctrine.

In similar fashion, Principal Life contends that plaintiffs’ settlement with the servicer defendants renders the amended complaint moot; there was no fiduciary relationship between plaintiffs and Principal Life; the Pooling and Servicing Agreement did not establish a joint venture; and plaintiffs have failed to state a claim for breach of a fiduciary duty.

BACKGROUND

This action arises from the refinancing of the Phillips at Sunrise Mall in Massapequa. Plaintiff, the owner of the mall, sought to borrow $65,000,000 from Principal Life to refinance the existing $40,000,000 mortgage on the mall. Plaintiff contends that prior to the November 8, 2006 refinancing transaction, Principal Life represented that the $65,000,000 represented no more than 80% of the value of the real estate. They claim that this was erroneous, based upon a defective appraisal performed by Cushman & Wakefield, allegedly based upon faulty data. Plaintiff claims to have expressed concern about repaying the loan, but were advised that Principal Life’s servicing entity, Principal Global Investors, LLC would be responsive to the needs of plaintiff.

After the closing, Principal Life assigned the loan to Principal Commercial Funding, LLC, which then sold the loan to Bear Stearns as the “depositor” for a commercial mortgage-backed securities trust (“CMBT”). Plaintiff contended in part that the failure of Principal Life Insurance to divulge its fee arrangement with Bear Stearns, which encouraged them to inflate the amount of the mortgage, breached a duty to plaintiff. The mortgage was deposited along with many other mortgages in the securitization process. Through underwriters, commercial mortgage certificates were sold in the open market.

By December 2008, in the midst of a global economic crisis, plaintiffs had lost two major tenants, and were experiencing difficulty in making payments under the mortgage. Their efforts to modify the mortgage with Principal Global were not successful, and they were advised to contact Wells Fargo Bank, N.A., the “master servicer”. Plaintiffs contend that they were unable to make headway in such discussions with any servicer.

Plaintiffs commenced the original action on March 11, 2009, suing the maker and seller of the loan, the servicers and trustee for their roles in originating and servicing the loan. They did not sue Bear Stearns or any underwriters or other entities involved in bringing the commercial mortgage certificates to market. The complaint was dismissed by Order dated July 1, 2009, but the dismissal was without prejudice to plaintiffs’ seeking to replead to allege a breach of fiduciary duty.

Plaintiffs did so move on September 16, 2009, seeking to add Bear Stearns as a defendant. Defendant Bear Stearns notes that the moving papers included a copy of the proposed amended complaint, but not a summons, and that this is a significant factor in the claimed expiration of the statute of limitations. By Order of December 14, 2009, the Court granted plaintiffs’ motion in part and denied it in part. Plaintiff was permitted to allege a first cause of action in the Amended Complaint claiming a breach of fiduciary duty claim against Principal Life and Bear Stearns, and also permitted the assertion of a similar claim against Wells Fargo and Centerline Servicing, Inc. and Bank of America N.A. under a joint venture theory in the second cause of action. Plaintiff was also permitted to replead a cause of action against Principal Life.

On December 24, 2009 plaintiff made service of the Amended Complaint and Supplemental Summons upon Bear Stearns by service on the New York Secretary of State. By letter dated April 29, 2010 from June Diamant, Esq., Bear Stearns learned that plaintiff reached a settlement with defendants Centerline, Bank of America, Wells Fargo and Principal Global. While Bear Stearns has not seen the settlement agreement, a reading of the letter indicates that there has been no reduction in the principal amount of the loan, but interest is being deferred for some period of time.

Principal Life’s motion asserts that the only claim surviving against them after the Decision and Order of the Court and the settlement with Wells Fargo Bank, N.A. as “master servicer”, Centerline Servicing, Inc. as “special servicer”, Bank of America, N.A., and Principal Global Investors, LLC, are an alleged breach of fiduciary duty based upon its failure to reveal its compensation arrangement with Bear Stearns, and a second cause of action on the theory of a joint venture and breach of a fiduciary duty thereunder.

The Amended Complaint

The complaint alleges Five Causes of Action as follows:

First: Principal assigned an appraised value which would be relied upon by plaintiff to determine the amount of debt which they could safely assume. Principal and Bear Stearns, possessing superior knowledge and expertise than plaintiff in originating loans and issuing debt, placed the loan in a securitized pool. The undisclosed compensation agreements between Principal and Bear Stearns incentivized Principal to originate the loan and Bear Stearns to deposit it into the CMBS trust. The failure of Principal and Bear Stearns to advise plaintiff of the fee arrangement constituted a breach of fiduciary duty.

Second: Wells Fargo, Bank America and Centerline, as trustees and servicers of the loan, acted as joint venturers with Principal and Bear Stearns. In this capacity they owed a fiduciary duty to plaintiffs, which they breached.

Third: Principal failed to disclose the methodology by which it valued the property at an inflated price so as to benefit from undisclosed compensation agreements with Bear Stearns. Had plaintiffs been aware of the profit motive which caused Principal to misrepresent the value of the property, they would not have committed to the mortgage. Plaintiff seeks a reformation of the Loan by reducing the principal to 80% of the fair market value and a prohibition against defendants or other owner of the loan from declaring plaintiffs in default.

Fourth: In order to induce plaintiff to agree to the loan Principal made fraudulent misrepresentations of a material fact, that is, that the servicers would be responsive to plaintiff at a time when Principal knew that the loan would be transferred to others who would refuse to communicate with plaintiff, and whose preference was to have the loan go into default rather than resolve issues so as to maintain it as a performing loan.

Fifth: Despite the provision in the mortgage that communications to the lender were to be directed to Principal, neither Principal nor any other defendant notified plaintiff that the contact had been changed, resulting in a lack of communication from Principal in response to contacts from plaintiff. Principal’s servicing arm, Global, advised that communications must be directed to the Master Servicer, yet neither the Master Servicer nor any of the other defendants were willing to respond or carry out the obligations of the lender/mortgagee, although holding the powers of the mortgagee. Defendants thereby breached their obligations under the Mortgage Agreement and Loan Documents by failing to exercise the discretion granted in the Mortgage Agreement in a reasonable manner.

Plaintiffs demand damages of $28,000,000 on the First, Second, Fourth and Fifth Causes of Action, and reformation of the Mortgage in the Third Cause of Action.Plaintiffs oppose the motions of Bear Stearns and Principal, in part asserting that by virtue of the prior Order of the Court, after review of the proposed amended complaint, the Court directed an answer as opposed to a further motion to dismiss. They also contend that the prior settlement with servicer-defendants does not render the matter moot, that the claims against Bear Stearns are not time-barred, that the breach of fiduciary duty claim is sufficiently pleaded, the information that the moving defendants failed to disclose is material, that the action is not barred by the Martin Act, and that the breach of fiduciary claim is adequately pleaded against Bear Stearns on the theory of joint venture liability. Plaintiff asserts the same claims with respect to defendant Principal.

DISCUSSION

Defendants Principal and Bear Stearns move for dismiss pursuant to Civil Practice Law and Rules §§ 3211 (a)(1) and 3211 (a)(7).

CPLR § 3211 (a)(1) provides as follows:

(a) Motion to dismiss cause of action. A party may move for judgment dismissing one or more causes of action asserted against him on the ground that: 1. a defense is founded upon documentary evidence;

In order to succeed in a claim based upon documentary evidence, “. . . the defendant must establish that the documentary evidence which forms the basis of the defense be such that it resolves all factual issues as a matter of law and conclusively disposes of the plaintiff’s claim”. (Symbol Technologies, Inc. v. Deloitte & Touche, LLP, 69 AD3d 191, 194 [2d Dept. 2009]); (DiGiacomo v. Levine, 2010 WL 3583424 (N.Y.AD2d Dept.]).

When determining a motion to dismiss for failure to state cause of action pursuant to Civil Practice Law and Rules § 3211 (a)(7), the pleadings must be afforded a liberal construction, facts as alleged in the complaint are accepted as true, and the plaintiff is accorded the benefit of every favorable inference, and the court must determine only whether the facts as alleged fit within any cognizable legal theory. (Uzzle v. Nunzie Court Homeowners Ass’,. Inc. 55 AD3d 723[2d Dept. 2008]). A pleading will not be dismissed for insufficiency merely because it is inartistically drawn; rather, such pleading is deemed to allege whatever can be implied from its statements by fair and reasonable intendment; the question is whether the requisite allegations of any valid cause of action cognizable by the state courts can be fairly gathered from all the averments. (Brinkley v. Casablancas, 80 AD2d 815 [1st Dept. 1981]).

Defendants contention with respect to § 3211 (a)(1) is, in part, that the settlement agreement with servicing defendants belies the claims that the appraised value was inflated, or the interest rate too high. Aside from the fact that the Court has not seen the settlement agreement, defendants argument presumes that plaintiffs had the opportunity to reduce the principal balance or interest rate in conjunction with their settlement negotiations, and that their failure to do so is an acknowledgment on their part that the loan was not based upon an inflated appraisal and that the interest rate was appropriate. Instead, the settlement merely provided for a deferral of interest payments for some period of time in an effort to allow plaintiff to recover from the loss of two anchor tenants.

The Mortgage Consolidation, Extension and Modification Agreement between Mass Op, LLC and Mass One, LLC, as borrower, and Principal Life Insurance as lender, provides at ¶ 6.1 as follows:

The relationship between Borrower and Lender is solely that of debtor and creditor, and Lender has no fiduciary or other special relationship with Borrower and no term or condition of any of the Note, this Security Instrument and the other Loan Documents shall be construed so as to deem the relationship between Borrower and Lender to be other than that of debtor and creditor. Borrower is not relying on Lender’s expertise, business acumen or advice in connection with the Property”.

This is documentary evidence which clearly refutes any claim that plaintiff relied upon the expertise of Principal and was thereby in a relationship which required a higher level of trust than that between debtor and creditor. New York Courts have been reluctant to find a fiduciary relationship between lenders and borrowers, and the language of the security agreement simply amplifies this position. (Dobroshi v. Bank of America, N.A., 65 AD3d 882, 884 [1st Dept.2009]). There have been relatively rare circumstances in which a fiduciary relationship between a lender and a borrower has been found, but these inevitably involved certain unique circumstances, as when the Court concluded that the underlying motivation for a lender was to drive the borrower out of business. (In re Monahan Ford Corp. of Flushing, 340 B.R. 1 [Bankr. E.D.NY 2006]).

In the absence of such special circumstances, plaintiff did not have a fiduciary relationship with Principal. Principal’s motion to dismiss the First Cause of Action for Breach of Fiduciary Duty is granted.

The motion by Bear Stearns to dismiss is also granted as to the First Cause of Action. Plaintiff has no contractual relationship with Bear Stearns, and certainly no fiduciary responsibility on the part of Bear Stearns to advise plaintiff of its financial arrangement with Principal.

The Second Cause of Action is directed as the servicing defendants, claiming that they were joint venturers with Principal and Bear Stearns in that they divided responsibilities and compensation with respect to the loan, all without the knowledge of plaintiff. As such joint venturers, they all owed a fiduciary responsibility to plaintiff. As noted, however, neither Principal or Bear Stearns were in a fiduciary relationship with plaintiff, and, even if the subsequent servicing defendants were part of a joint venture, they did not assume a fiduciary responsibility from their assignors, who had none.

The Second Cause of Action is dismissed for failure to state a cause of action.

The Third Cause of Action seeks a reformation of the loan agreement based upon Principal’s failure to reveal to plaintiff the methodology by which the value of $82,000,000 was arrived at or its financial arrangement with Bear Stearns. In the absence of a fiduciary relationship, Principal had no obligation to reveal the methodology by which it estimated the value of the property; nor was it obligated to reveal its financial arrangement with Bear Stearns.

In fact, plaintiffs seem to have been fully apprised of the Cushman Wakefield appraisal, which is what formed the basis for Principal’s determination that the loan did not exceed 80% of the value of the property. The proposed terms of loan, described as an “application”, made it clear that the loan amount represented 80% of the appraised value pursuant to an appraisal approved by the Lender. Principal’s motion to dismiss the Third Cause of Action is granted.

The Fourth Cause of Action alleges fraud and fraudulent misrepresentation against Principal. In order to sustain a cause of action for actual fraud, plaintiff must prove:

• defendant made a representation, as to a material fact;

• the representation was false;

• the representation was known to be false by defendant;

• it was made to induce the other party to rely upon it;

• the other party rightfully relied upon the representation;

• the party relying upon the representation was ignorant of its falsity;

• the party suffered injury or damage based on its reliance. (Otto Roth & Co. Inc., v. Gourmet Pasta, Inc. 277 AD2d 293 [2d Dept. 2000]).

The Fourth Cause of Action in the Amended Complaint adds nothing to the claim of fraud which was previously dismissed. This is the law of the case, and the motion by Principal to dismiss the Fourth Cause of Action is granted.

In its earlier decision the Court determined that representations with respect to the servicer being “extraordinarily accessible in servicing the loan”, made to sophisticated investors, was a matter of puffery, not a representation of a material fact upon which plaintiffs were entitled to rely.

The Fifth Cause of Action alleges a breach of contract in that Principal is identified as the party to be contacted by mortgagor with respect to the mortgage; but after the securitization, neither Principal nor any other defendant advised Principal of the identity of the party with whom to make contact with respect to the mortgage. If there is any obligation on the part of Principal to advise the mortgagor of the identity of a special or master servicer, it would have to be contained in the only agreements between them, the Consolidation, Modification and Extension Agreement of November 8, 2006, and the Note and Mortgage executed in conformity with the Agreement.

The Consolidation Agreement is silent on the subject. The note in the amount of $65,000,000 calls for the payment to the order of Principal Life Insurance Company, at 711 High Street, Des Moines, Iowa 50392 (“Lender”) or at such other place as the holder hereof may from time to time designate, in writing, . . .”. This gives the lender the right to direct payment to the order of another, or to a different location, but places no obligation upon it to do so. To the contrary, ¶ 12 of the Promissory Note, Exh. “G” to the Affirmation of Joshua A. Zielinski, provides as follows:

(a) Upon the transfer of this Note, Borrower hereby waiving notice of any such transfer, Lender may deliver all the collateral mortgaged, granted, pledged or assigned pursuant to the Security Instrument and the other Loan Documents, or any part thereof, to the transferee who shall thereupon become vested with all the rights herein or under applicable law given to Lender with respect thereto, and Lender shall thereafter forever be relieved and fully discharged from any liability or responsibility in the matter accruing after said transfer; but Lender shall retain all rights hereby given to it with respect to any liabilities and the collateral not so transferred.

Lender, Principal Life, transferred the Note, notice of which Borrower (plaintiffs) waived, and upon such transfer of the Note and collateral, Lender was absolved from all further liability in the matter. (Exh. “K” to Affirmation of Joshua A. Zielinski).

The Fifth Cause of Action, as set forth in the Amended Complaint, is dismissed.

In light of the foregoing determinations as to each of the causes of action, the Court finds it unnecessary to address the claims of Bear Stearns that the failure of the plaintiff to annex a Supplemental Summons to their motion to amend the complaint caused service to be beyond the three year statute of limitations, that the claim is barred by the Martin Act, and that recovery is barred by the “one recovery” doctrine.

This constitutes the Decision and Order of the Court.

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Posted in STOP FORECLOSURE FRAUDComments (1)

No Summary Judgment in This Foreclosure Action

No Summary Judgment in This Foreclosure Action


THE BANK OF NEW YORK TRUST
COMPANY, N.A., AS TRUSTEE FOR
CHASEFLEX TRUST SERIES 2007-3,

-vs-

DAVID J. MOSQUERA; ELIZABETH
MOSQUERA;

ICE LEGAL does it again…

Thank you to Lynn Szymoniak for her Expert Witness Affidavit used in this foreclosure case!

[ipaper docId=34155185 access_key=key-npkyn8uzzco86kisdz2 height=600 width=600 /]


© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bank of new york, dismissed, foreclosure, foreclosure fraud, foreclosures, ice law, Lynn Szymoniak ESQ, STOP FORECLOSURE FRAUDComments (1)

DEUTSCHE BANK Gets the BOOT (Broken Chain of Title): DEUTSCHE BANK NATIONAL TRUST COMPANY v. GAUPP

DEUTSCHE BANK Gets the BOOT (Broken Chain of Title): DEUTSCHE BANK NATIONAL TRUST COMPANY v. GAUPP


Most of us can make the assumption that instead of Mr. Gaupp place we might as well enter MERS in his place right?

The real issue with the case as stated is that DBNT magically appears!  Where is the assignment from Ameriquest to *them*??  (I’d like to see the signatures on the note!)

DEUTSCHE BANK NATIONAL TRUST COMPANY, As Trustee of Ameriquest Mortgage Securities, Inc., Asset-Backed Pass Through Certificates, Series 2004-X3, Under the Pooling and Servicing Agreement Dated as of September 1, 2004, Without Recourse, Plaintiff-Appellant,
v.
DAVID J. GAUPP, ALEXANDRA C. GAUPP, NATHAN PARTON and SPOUSE OF NATHAN PARTON, REBEKAH J. BARTON and SPOUSE OF REBEKAH J. BARTON, WELLS FARGO BANK, N.A., and PARTIES IN POSSESSION,, Defendants-Appellees.

No. 0-272/09-0700.

Court of Appeals of Iowa.

Filed June 30, 2010.

Matthew E. Laughlin and Sarah K. Franklin of Davis Brown Law Firm, Des Moines, for appellant.

Charles R. Hannan, IV, Council Bluffs, for appellees David J. Gaupp and Alexandra C. Gaupp.

Aaron W. Rodenburg, Council Bluffs, for appellees G&G Properties and Troy Granger.

Brian D. Nolan of Nolan, Olson & Stryker, P.C., L.L.O., Omaha, Nebraska, for appellees Wells Fargo Bank, N.A., Nathan Parton, Spouse of Nathan Parton, Rebekah J. Barton, and Spouse of Rebekah J. Barton.

Alexandra Gaupp, Council Bluffs, appellee pro se.

David Gaupp, Council Avenue, appellee pro se.

Heard by Vogel, P.J., and Potterfield and Danilson, JJ.

VOGEL, P.J.

I. Background Facts and Proceedings.

In 2002, David Gaupp and Troy Granger formed a partnership, G & G Properties. On March 23, 2002, Gaupp and Granger purchased a duplex to use as a rental home for their partnership. Charles and Betty Bowes conveyed the property to “David J. Gaupp and Troy Granger” by warranty deed, which was recorded on April 9, 2002. On July 3, 2002, Gaupp, his wife, Alexandra Gaupp, and Granger conveyed the property to “G & G Properties” by warranty deed, which was recorded on September 24, 2002.

On December 8, 2003, Gaupp borrowed $162,000 from Ameriquest Mortgage Company (Ameriquest), which was evidenced by a promissory note and signed by Gaupp individually. In spite of the fact that Gaupp was not the titleholder of the property, the note purported to be secured by a mortgage on the property showing the borrower/mortgagor as “David J. Gaupp, married,” and bearing the signatures of “David J. Gaupp” and “Alexandra C. Gaupp,”[ 1 ] but the acknowledgment is only as to “David J. Gaupp” and was notarized by a Nebraska notary public. The mortgage instrument was recorded on January 8, 2004. Ameriquest subsequently sold and assigned the mortgage to Deutsche Bank National Trust Company (Deutsche Bank).

Although G & G Properties was the record titleholder of the property, the Gaupps and Granger subsequently executed two deeds regarding the property. On December 31, 2003, a “Corrected Warranty Deed” attempted to convey the property from “David J. Gaupp and Alexandra C. Gaupp” and “Troy S. Granger” to “David J. Gaupp and Alexandra C. Gaupp,” which was then recorded on January 8, 2004. On February 2, 2005, the Gaupps attempted to convey the real estate from “David J. Gaupp and Alexandra C. Gaupp” to “G & G Properties” by a quitclaim deed, which was recorded on July 28, 2005. In David Gaupp’s deposition testimony, he explained that these conveyances were done so that Granger’s name would not appear in the title, in an effort to keep Granger’s child support obligations from being a lien against the real estate.

In April 2006, G & G Properties agreed to sell the real estate. On May 5, 2006, “G & G Properties” conveyed the property to “Nathan D. Parton, a single person and Rebekah J. Barton, a single person” by warranty deed, which was recorded on May 19, 2006.[ 2 ] In order to purchase the property, the Partons obtained a loan from Wells Fargo Bank, N.A. (Wells Fargo) that was secured by a mortgage on the real estate, which was recorded on May 19, 2006. G & G Properties received proceeds in the amount of $188,273.02 from the sale of the real estate.

At some point, Gaupp defaulted on the note held by Deutsche Bank. On January 30, 2007, Deutsche Bank filed a petition to foreclose its mortgage, seeking judgment in rem against the real estate in the amount of $154,147.19, plus attorney’s fees, costs, and interest, naming the Gaupps as defendants, parties in possession. On March 16, 2007, Deutsche Bank amended its petition to add the Partons and Wells Fargo as additional defendants. On November 1, 2007, the Partons filed a third-party complaint against G & G properties and Granger.

On October 21, 2008, the Partons and Wells Fargo filed a motion for summary judgment asserting that (1) the mortgage held by Deutsche Bank was invalid; and (2) the mortgage held by Deutsche Bank could not be foreclosed because the Partons were bona fide purchasers for value. On February 12, 2009, the district court issued its ruling finding that the Gaupps and Granger conveyed their interest in the property to G & G Properties on July 3, 2002, and when G & G Properties recorded the deed on September 24, 2002, it became the record titleholder. Gaupp did not have any interest in the property when he executed the mortgage in favor of Ameriquest/Deutsche Bank and after the mortgage was executed, Gaupp never obtained title to the property. G & G Properties did not convey the property to anyone prior to May 19, 2006, when the Partons purchased the property. As a result, the mortgage held by Deutsche Bank was “null and void.” The district court granted the Partons’ and Wells Fargo’s motion for summary judgment and dismissed the petition for foreclosure. Deutsche Bank appeals.

II. Standard of Review.

We review a district court’s ruling on a motion for summary judgment for correction of errors at law. Iowa R. App. P. 6.907; City of Johnston v. Christenson, 718 N.W.2d 290, 296 (Iowa 2006). Summary judgment should be granted when the entire record demonstrates there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Iowa R. Civ. P. 1.981(3).

Thus, on review, we examine the record before the district court to decide whether any material fact is in dispute, and if not, whether the district court correctly applied the law. In considering the record, we view the facts in the light most favorable to the party opposing the motion for summary judgment.

Shriver v. City of Okoboji, 567 N.W.2d 397, 400 (Iowa 1997) (internal citations and quotation omitted).

III. Analysis.

Deutsche Bank asserts that the district court erred in granting the defendants’ motion for summary judgment. The parties do not dispute that at the time Gaupp executed the promissory note and mortgage, he did not hold title to the property and that G & G Properties was the record titleholder. Deutsche Bank cannot avoid the fundamental principal that a party that has no interest in a particular piece of real property cannot validly mortgage that property. See, e.g., Lee v. Lee, 207 Iowa 882, 885, 223 N.W. 888, 890 (Iowa 1929) (holding a mortgage invalid because the mortgagor had no interest in the property at the time the mortgage was given); 59 C.J.S. Mortgages § 111, at 102-03 (2009) (discussing that “[o]ne who has no ownership interest in property has no right to mortgage it” and if one does so, the mortgage creates no interest in the property). At the time Gaupp obtained the loan from Ameriquest, he did not have any interest in the property and therefore, the mortgage instrument attempting to secure the promissory note was invalid.

Deutsche Bank argues that Gaupp acquired title to the property on December 31, 2003, when the Gaupps and Granger executed the “Corrected Warranty Deed,” which Deutsche Bank further argues resulted in the mortgage becoming valid.[ 3 ] However, this argument fails because Gaupp did not acquire an interest in the property when the “Corrected Warranty Deed” was executed on December 31, 2003. On July 3, 2002, the Gaupps and Granger conveyed the property to G & G Properties. After this conveyance, Gaupp had no interest in the property and could not convey the property to anyone. See Iowa Code § 557.3 (2007) (“Every conveyance of real estate passes all the interest of the grantor therein, unless a contrary intent can be reasonably inferred from the terms used.”). After the July 3, 2002 conveyance, only G & G Properties was able to convey title to the property. Any such attempt by Gaupp to do so would be and was invalid as he was no longer the titleholder. Therefore, the attempts by the Gaupps and Granger to convey the property on December 31, 2003, and February 2, 2005, were not valid conveyances.[ 4 ] Additionally, because the invalid conveyances were outside the chain of title, they were stray deeds when recorded. See William Stoebuck and Dale Whitman, The Law of Property § 11.11 (3rd ed. 2000) (“The term `chain of title’ is a shorthand way of describing the collection of documents which one can find by the use of the ordinary techniques of title search.”); 1 C.J.S. Abstracts of Title § 15, at 320 n.8 (2009) (“Instrument executed by owner [that] is recorded before acquisition or after relinquishment of title by owner is outside chain of title . . . .”).[ 5 ] Title remained with G & G Properties from July 3, 2002 until May 5, 2006, when G & G Properties conveyed its solely held interest in the property to the Partons. Therefore the chain of title went from G & G Properties to the Partons. Gaupp did not have title to the property when he executed the mortgage instrument now held by Deutsche Bank nor did he subsequently obtain title. We affirm the district court’s findings and ruling.

AFFIRMED.

1. Alexandra denies she signed the mortgage.
2. Nathan and Rebekah subsequently married and are referred to herein as “the Partons.”
3. Deutsche Bank cites to Iowa Code section 577.4 (codifying the common-law doctrine of estoppel by deed); Sorenson v. Wright, 268 N.W.2d 203, 205 (Iowa 1978) (discussing the doctrine of estoppel by deed); Bisby v. Walker, 185 Iowa 743, 169 N.W. 467 (1918) (same). However, this authority is not on point. The doctrine of estoppel by deed relies upon a factual scenario where one purports to give a mortgage on property although not in title, but subsequently obtains an interest in the property. As we discuss above, Gaupp did not have an interest in the property when he attempted to mortgage the property and subsequently never obtained an interest in the property. As the district court noted, Deutsche Bank does not cite any authority that someone without any interest in property may utilize a “Corrected Warranty Deed” to convey property that the grantor has no interest in and is titled in another person or entity.
4. These transfers were made by the Gaupps and Granger individually and not on behalf of the partnership. See Iowa Code § 486A.302 (stating that “partnership property held in the name of the partnership may be transferred by an instrument of transfer executed by a partner in the partnership name”).
5. See also Iowa State Bar Ass’n, Comm. on Title Standards, Iowa Land Title Standards ch. 4, standard 4.5 at 18-19 (8 ed. 2010) (discussing the showing necessary regarding stray deeds between persons who have no apparent interest in record title).

This copy provided by Leagle, Inc.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in chain in title, deutsche bank, lawsuit, wells fargoComments (0)


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