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The Big Lie: MERS Mortgages in Massachusetts by Jamie Ranney, Esq.

The Big Lie: MERS Mortgages in Massachusetts by Jamie Ranney, Esq.


This is a repost from a previous post dated 11/30/2010

by Jamie Ranney, Esq.
Jamie Ranney, PC
4 Thirty Acres Lane
Nantucket, MA 02554
jamie@nantucketlaw.pro
508-228-9224

This memo will focus on MERS-designated mortgages in Massachusetts.

In this author’s opinion two (2) things are evident after a survey of Massachusetts law.

First, MERS cannot be a valid “mortgagee” under Massachusetts law and thus MERS designated mortgages are invalid in the Commonwealth of Massachusetts.

This is because MERS-designated mortgages by definition “split” the security instrument (the mortgage) from the debt (the promissory note) when they are signed. This “split” invalidates the mortgage under Massachusetts law. Where the security interest is invalid upon the signing of the mortgage, MERS cannot occupy the legal position of a “mortgagee” under Massachusetts law no matter what language MERS inserts into their mortgages that purports to give them the legal position of “mortgagee”. Since MERS-designated mortgages are invalid at their inception, it follows logically therefore that MERS mortgages are not legally capable of being recorded in the Commonwealth of Massachusetts by its Registers of Deeds.

Second, even if a MERS-designated mortgage were found to be a valid security instrument in Massachusetts, each and every assignment of the mortgage and note “behind” a MERS-designated mortgage must be recorded on the public land records of the Commonwealth in order to comply with the Massachusetts recording statute at M.G.L. c. 183, s. 4 which requires that “conveyances of an estate” be recorded to be valid. A mortgage is a “conveyance of an estate” under Massachusetts law. Since MERS-designated mortgages exist for the primary purpose of holding “legal” title on the public land records while the “beneficial” interest is transferred and sold multiple times (and a mortgage cannot exist without a note under Massachusetts law), MERS-mortgages unlawfully avoid recording fees due the Commonwealth for the transfer(s) of interests under MERS-designated mortgages.

“If you tell a lie that’s big enough, and you tell it often enough, people will believe you are telling the truth, even when what you are saying is total crap.”1

Continue reading below…

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STEWART TITLE BULLETIN: RE: Recent Oklahoma Supreme Court Decisions Regarding Foreclosures

STEWART TITLE BULLETIN: RE: Recent Oklahoma Supreme Court Decisions Regarding Foreclosures


Dear Associates:

The Oklahoma Supreme Court has recently issued several opinions:

Deutsche Bank National Trust v. Brumbaugh, 2012 OK 3 {Approved for Publication}

Deutsche Bank National Trust v. Byrams, 2012 OK 4

HSBC Bank USA v. Lyon, 2012 OK 10

Deutsche Bank National Trust Company v. Matthews, 2012 OK 14

Deutsche Bank National Trust Company v. Richardson, 2012 OK 15

CPT Asset Backed Certificates; Series 2004-EC1 v. Kham, 2012 OK 22

Bank of America, N.A. v. Kabba, 2012 OK 23

JPMorgan Chase Bank, N.A. v. Eldridge, 2012 OK 24

(It is important to note that only one of the opinions, Deutsche Bank National Trust v. Brumbaugh, 2012 OK 3, has been approved for publication so far.)

These opinions hold that to commence a foreclosure action, the plaintiff must show that it has the right to enforce the promissory note, and in the absence of such showing, the plaintiff lacks standing to bring the lawsuit.  The fact patterns in each of the cases vary slightly (seven are based on appeals from orders granting summary judgment entered by the trial court, and one is based upon a default judgment), but the basic fact pattern is as follows:  Plaintiff files a foreclosure action either without attaching a copy of the promissory note or attaching the note without proper indorsement(s) by the original lender.  Defendant raises the issue that Plaintiff does not have standing to sue, either in response to a Motion for Summary Judgment or by pleadings filed after the Journal Entry of Judgment.  Motions are denied after Plaintiff provides documentation showing indorsement or allonge.  Defendant appeals.

[STEWART VIRTUAL UNDERWRITER]

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Mortgages and the UCC

Mortgages and the UCC


Think this applies to MERS after you read this case from the 1800’s? Carpenter v. Longan, 83 US 271 – Sup. Court | The note and mtg are inseparable…ASMNT of the note carries the mtg with it, while an ASMNT of the latter alone is a nullity.

Baker, Donelson, Bearman, Caldwell & Berkowitz, PC-

Who is entitled to enforce a mortgage note?

How can the owner of a note effectively transfer ownership?

What is the effect of such a transfer?

May an assignee who has not obtained a recordable assignment of a secured interest in the mortgaged property take steps to become the assignee of record?

While you might expect that these questions would have a different answer in each state, the Permanent Editorial Board (PEB) for the Uniform Commercial Code sought to answer these questions for the nation as a whole in a report it issued on November 14, 2011.

While acknowledging that foreclosure law is largely the province of the states, the board declared nevertheless that the UCC is relevant under state law and, further, that “legal determinations made pursuant to the […] Report will, in many cases, be central to the administration of [state foreclosure] law.” Report, pp. 1 & 14.  The board therefore issued the report with the stated intent to further a more consistent, nationwide application of the UCC principles to state real property law in an era when “not all courts and attorneys are familiar with them.” Report, p. 1.

The UCC is a model code sponsored by the American Law Institute and the Uniform Law Commission that governs commercial transactions and has been enacted, in one form or another, in each of the 50 states.  Generally, Articles 3 and 9 of the UCC are relevant to mortgage loans. If the note is considered a negotiable instrument, Article 3 provides rules governing both the obligations of parties to a note as well as enforcement of those obligations. Article 9 governs the transfer of notes, whether the note is a negotiable instrument or not. The UCC constitutes enforceable law in each state only to the extent that it has been adopted by the state legislature.

Who is entitled to enforce a mortgage note?

Continue reading …[Baker, Donelson, Bearman, Caldwell & Berkowitz, PC]

Copy of the Permanent Editorial Board (PEB) for the Uniform Commercial Code is below but please read the link above first:

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Full Deposition of Michele Sjolander, Executive Vice President of Countrywide Home Loans, Inc. “Stamp Endorsement”

Full Deposition of Michele Sjolander, Executive Vice President of Countrywide Home Loans, Inc. “Stamp Endorsement”


Remember Michele Sjolander? Well, you can read about her in MERS, Endorsed Note Get SLAMMED by Kings County NY Supreme Court | BANK of NEW YORK v. ALDERAZI

As well as in ARIZONA BK COURT ORDERS BONY MELLON TO PRODUCE ORIGINAL CUSTODIAN DOCUMENTS

and finally in the FULL DEPOSITION OF BANK OF AMERICA ROBO SIGNER RENEE D. HERTZLER

Fresh off the depo wagon comes her Full Deposition courtesy of 4closurefraud.

Excerpts:

Q It’s employees at Recontrust that stamp the
7 endorsements on the notes in general, including this one;
8 is that right?
9 A Yes.
10 Q And you’ve seen that taking place?
11 A Yes.
12 Q In Simi Valley?
13 A Yes.
14 Q Is there some type of manual or set of
15 instructions?
16 A They have my power of attorney.
17 Q Well, okay. That’s not what I’m asking. But I
18 do want to know about that. But what I’m saying: Is
19 there some sort of manual or instructions or –
20 A If you want to know the desk procedures, you
21 would have to speak with an associate of Recontrust.
22 Q Okay. Okay. Sorry. I’m just reading the notes
23 again. Now, I’m going to try to explain this. I may
24 have to do it a couple of times, but just bear with me.
25 And you’ve been very helpful so far. I appreciate it,
1 there it sat is I guess what I’m asking.
2 A In safekeeping, yes.
3 Q Okay. All right. Now, this is something you
4 touched on a minute ago. I’m going to try to phrase it
5 in a way that makes sense. Who — and let’s just deal
6 with Countrywide in 2007.
7 Who is allowed to be an endorser as you were? I
8 mean, who — let me leave it at that and see if that
9 makes sense to you.
10 A I don’t know what you’re asking.
11 Q What I’m saying is: Are there people other than
12 you at Countrywide in 2007 whose names would appear on a
13 note as an endorsement?
14 A For Countrywide Home Loans, Inc.?
15 Q Yes.
16 A In 2007, I was the endorser for Countrywide Home
17 Loans, Inc.
18 Q Okay. And, I mean, can you explain why you, in
19 particular? I mean, how is that established?
20 A Just lucky.
21 Q I mean, I know this is going to sound silly, but
22 was there some competition for it? Did they come to you
23 and say, “Ms. Sjolander, we choose you?” I mean, how did
24 you come to be designated the person?
25 A It is the position I held within Countrywide.
1 Q Okay. And did you know that going in; you know,
2 if you take this job, you’re going to be the endorser?
3 Was that explained to you at some point?
4 A I knew that my previous boss was the endorser,
5 yes.
6 Q Oh, okay. Now, we covered this, that other
7 people stamped your signature and the other — her name
8 is — oh, it’s Laurie Meder?
9 A Meder.
10 Q Okay. So other people have a stamp with her
11 name and your name on it, and how do those people have
12 the authority to put her name and your name on a note for
13 it to be an effective endorsement?
14 A With my name, they have a power of attorney.
15 Q And what does the power of attorney say?
16 A The power of attorney allows them to place my
17 endorsement stamp on collateral.
18 Q How do they come to have your power of attorney?
19 A I gave that to them.
20 Q But, I mean, in what sort of process? You know,
21 how does someone at Recontrust — I mean, I understand
22 that a power of attorney document exists, I’m assuming;
23 correct?
24 A Yes.
25 Q And how do those people come to operate under
1 it?
2 A It’s common, standard practice.
3 Q I may not be asking it quite right. I guess
4 what I’m asking is: Do they — the people who actually
5 use the stamps — is there more than one, or is there
6 just one stamp? I said “stamps” multiple. Is there only
7 one, or is there –
8 A No, there’s multiple stamps.
9 Q So do these people sign something that says, “I
10 understand I’m under Michele Sjolander’s power of
11 attorney”?
12 A Once again, you would have to look at the desk
13 procedures for Recontrust, and you would have to talk to
14 someone at Recontrust.
15 Q So that’s your understanding that you — did you
16 sign a power of attorney document?
17 A Yes, I did.
18 Q And, I mean, can you explain just in — you
19 know, in general, not word for word what it says, but
20 what does it purport to grant as power of attorney?
21 A It grants Recontrust. They can endorse and
22 assign notes on behalf of myself.
23 Q And do you know if this applies to a select
24 group of people?
25 A I do not have — I would have to read the
1 document.
2 Q Okay. But just to clarify, once again, you
3 don’t actually know the legal mechanism by which these
4 people with the stamps operate under this power of
5 attorney?
6 A As I said, I would have to go back through all
7 of the documentation that surrounds the power of
8 attorney, and Recontrust has desk procedures, and it
9 would be their procedures for them to assign that, to
10 place the stamp on the collateral.
11 Q And this was a procedure in 2007, what we’re
12 talking here is 2007?
13 A Correct.
14 Q And to the present?
15 A No.

<SNIP>

4 Q All of it, okay. Let’s see. Now, you mentioned
5 documents that you had reviewed. The AS-400, that’s a —
6 can you just refresh my memory? What was that again?
7 A A servicing system.
8 Q A servicing system, okay. Now, when you looked
9 over these records and documents before that you
10 mentioned before, where were you when you looked at
11 those?
12 A Simi Valley.
13 Q Simi Valley. And where were the documents that
14 you were looking at?
15 A At that time, they were brought into my office.
16 Q Do you have any idea where they were brought
17 from?
18 A They were printed off the system.
19 Q Printed off the system.
20 A From one of my associates.
21 Q Is that a computer system?
22 A As I said, the collateral tracking is printed
23 off the AS-400, which is our servicing system. The
24 investor number commitment was printed off — it’s a
25 web-based application from secondary marketing. It’s
1 printed off of that. The note was printed off of our
2 imaging system. And I think in this case I asked for a
3 copy of the note showing the endorsements, because in our
4 imaging system it does not — the note is actually imaged
5 prior to my endorsement stamp being in place. So I had
6 my associate contact the bank, which is Recontrust, to
7 get a copy of the original note to show my endorsement
8 stamps, because in imaging it is not shown.
9 Q So if a copy is made of a note that you got from
10 Recontrust, it doesn’t have an endorsement? Is that what
11 you’re saying?
12 A From our bank, it does. In our imaging system,
13 it does not. The note is imaged prior to an
14 endorsement — in ’07, the note is imaged prior to an
15 endorsement being placed on the note. So if you look in
16 our imaging system, you wouldn’t see the chain of title
17 of endorsement.
18 Q And where would you see that?
19 A On the original note.
20 Q Which is — which is where?
21 A In this case, it was in the Fannie Mae vault in
22 Simi Valley, California.
23 Q We’ll come back to the Fannie Mae vault. Okay.
24 So they’re printed off in AS-400 imaging system.
25 A AS-400 and the imaging system are two different
systems.
2 Q Oh, you said AS-400 is a servicing software
3 platform of some type?
4 A Yes.
5 Q And the imaging system, what — can you describe
6 that?
7 A It’s a —
8 Q You know —
9 A It’s when all of the collateral documents and
10 credit file documents are imaged after the closing of a
11 loan, and they are put in our imaging system, and we can
12 go into the system by loan number and pull up the
13 documentation of a loan —
14 Q I guess —
15 A — if you have access to the system.
16 Q But imaging, I mean, I’m imagining a scanner of
17 some sort. Is that what it is?
18 A It is not my area. I cannot tell you.

continue below…

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Did Chase (or Chase’s lawyer) fake foreclosure evidence AFTER doing the deal w/ Fed & State law enforcers? You decide:

Did Chase (or Chase’s lawyer) fake foreclosure evidence AFTER doing the deal w/ Fed & State law enforcers? You decide:


Thanks to Abigail Field for the title post and thank you to Joe over at BP Investigative Agency for this submission.

According to a Handwriting Expert… yes, documents were forged and altered.

As if Breaking and Entering weren’t enough, add forgery to the lengths JP Morgan Chase will go to take a home.

When foreclosure proceedings began on William Paatalo’s  Montana property in  January 2010, he, like many homeowners, felt emotionally drained and devastated. “ I couldn’t believe how I got to this place.  I had perfect credit in 2008.  I was making payments on three properties through Washington Mutual, but they began to misapply payments to the wrong accounts and even turned off my ‘auto-pay’ feature in an attempt to sabotage my credit and spin me into default.”

  By the time Paatalo discovered the error, his credit had tanked and things started spiraling downward. “It was brutal. My business lines of credit were shut down, and I couldn’t access any of my lines of credit ; WAMU was slow to acknowledge the problem; the credit agencies ignored me; and then I got the foreclosure notices.  It was a living hell. I spent a lot time being angry. “

In the end, Paatalo did what many home owners  are now doing.  He started pushing back.  “I didn’t want to just roll over.  I figured I still had some rights, so I began the painstaking process of researching my loan in hopes I could modify or delay the action.  The Trustee’s sale wasn’t   scheduled until June, so I figured I had a little bit of time to rectify the situation.”

But unbeknownst to Paatalo, Chase, who had acquired WAMU in 2008, took early action.  In March, they broke into his home, changed all the locks, and stole property, including  personal documents and a handgun.  “I was out of town, and when I found out what they had done I was outraged.” 

Paatalo filed a criminal complaint and took additional action. However, law enforcement sat idle as it was perceived to be a “civil matter.”  Tired of being victimized, he began investigating practices in the mortgage industry and uncovered much of what is now known.  In October of 2010 he filed suit against JP Morgan Chase pro se and has been litigating since then. 

But his case, scheduled for trial in September, took a bizarre turn recently.  “I was reading about the class action suit in California Bakenie v. JPMorgan Chase Bank  and I got to wondering if my note might’ve been forged.  So I got a color copy of the note, and in my office I magnified the signatures 800 fold.”

What he found was astounding.  Even to the layman’s eye, the signatures appeared to have been photo-shopped.  In one instance, even the signature line was colored blue.  “I couldn’t believe what I was seeing.  It looked like something a high school kid did. 

 Paatalo sent the document to Dr. Laurie Hoeltzel  in southern California;  a handwriting / document expert with over 20 years of experience.  Her findings verified what Paatalo suspected, the documents had indeed been forged.  “All along Chase has argued on record they hold the note.  Clearly, they do not.  It’s one thing to claim the note entitles them to foreclose, it’s another to commit a felonious act to illegally take a home they are not entitled to.  It’s absolutely appalling.  This is no longer a civil dispute.”

 Paatalo intends to file a criminal complaint against Chase, along with formal Bar complaints against their attorneys . The expert declaration is now in the hands of Montana’s Federal Magistrate Judge Carolyn  Ostby.   How this new information plays out in court is yet to be determined, but Paatalo is sure of one thing.  “Nothing these banks do surprises me anymore.  I can only hope our judicial system has the backbone to hold these people accountable.”

 Addendum:  Paatalo notified Chase of his discovery last week and was attempting to have the evidence surrendered to the court and sequestered.  After all, attorneys have a duty to uphold justice and refrain from assisting in fraud. He was notified today by Chase’s attorney that the documents had been removed from Butte, Montana and are now in Minneapolis, Minnesota.  Paatalo has objected to the transferring of the documents, and Chase’s attempts to withhold evidence of a crime.


Read the handwriting expert’s affidavit below begin at page 5…

[ipaper docId=86007729 access_key=key-2fuvvomrypzyggrt999p height=600 width=600 /]

 

 

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U.S. Bank N A. v Nyarkoha | NYSC “endorsement on the underlying note, however, is undated, and in blank…does not state the actual date of physical delivery of the note.”

U.S. Bank N A. v Nyarkoha | NYSC “endorsement on the underlying note, however, is undated, and in blank…does not state the actual date of physical delivery of the note.”


Decided on February 29, 2012

Supreme Court, Queens County

 

U.S. Bank National Association, as Trustee, for CSFB ARMT 2006-2, 3476 Stateview Boulevard, Ft. Mill, SC 29715, Plaintiff,

against

Dorcas Nyarkoha, et al., Defendants.

13409/2009

Appearances of Counsel:

For the Plaintiff:Hogan Lovells U.S. LLP, by Allison J. Schoenthal, Danielle Mastriano, & Nicole Schiavo, Esqs., 875 Third Avenue, New York, NY 10022

For Defendant Dorcas Nyarkoha: Sumani Lanka, Esq., The Legal Aid Society – – Civil Practice, 120-46 Queens Boulevard, Kew Gardens, New York 11415-1204

Charles J. Markey, J.

The following papers numbered 1 to 13 read on this motion by defendant Dorcas Nyarkoha, pursuant to CPLR 3012(d), for leave to serve and file a late answer, as proposed.

Papers Numbered

Notice of Motion – Affidavits – Exhibits ……………………………………………………………….1-4

Answering Affidavits – Exhibits …………………………………………………………………………5-10

Reply Affidavits ……………………………………………………………………………………………..11-13

This mortgage foreclosure action raises two controversial issues that will persist in the case law, with incongruent and inconsistent results, until a definitive ruling is eventually made by the New York Court of Appeals. The first issue, especially in the area of mortgage foreclosures, where the statutory framework provides for a conference to all answering defendants in an attempted foreclosure of a residential mortgage (see, CPLR 3408, L 2008, ch 472, § 3), is whether or not a non-answering defendant’s failure to answer timely be excused because he or she relied on ongoing settlement talks, discussions, and negotiations. The second thorny issue is whether or not a plaintiff bank’s alleged lack of standing is a meritorious defense that may be asserted by a defendant seeking permission to file a late answer.

Defendant Nyarkoha, in effect, moves to vacate her default in answering the complaint and for leave to serve a late verified answer as proposed. She claims that her default is excusable, insofar as she believed her engagement in settlement negotiations with plaintiff’s [*2]servicing agent, Wells Fargo Home Mortgage Inc. d/b/a America’s Servicing Company (“ASC”), excused her from taking further action with respect to the suit. Defendant Nyarkoha also claims she has meritorious defenses and counterclaims. The plaintiff opposes the motion.

A defendant who has failed to timely answer the complaint must provide a reasonable excuse for the default and demonstrate a potentially meritorious defense to the action, when moving to compel the acceptance of an untimely answer (see, Palmer Ave. Corp. v. Malick, 91 AD3d 853 [2nd Dept. 2012]; Lipp v Port Auth. of NY & N.J., 34 AD3d 649 [2nd Dept. 2006]; Juseinoski v Board of Educ. of City of NY, 15 AD3d 353, 356 [2nd Dept. 2005]; see also, Rodriguez v Triani, 28 Misc 3d 130(A), 2010 WL 2802747, 2010 NY Slip Op 51256(U) [App T. 2nd Dept. 2010]). The determination of what constitutes a reasonable excuse for a default in answering lies within the sound discretion of the court (see, Adolph H. Schreiber Hebrew Academy of Rockland, Inc. v Needleman, 90 AD3d 791 [2nd Dept. 2011]; Maspeth Fed. Sav. & Loan Assn. v McGown, 77 AD3d 889 [2nd Dept. 2010]; Grutman v Southgate At Bar Harbor Home Owners’ Assn., 207 AD2d 526, 527 [2nd Dept. 1994]).

Defendant Nyarkoha states that she was out of the country at the time of the service of the copy of the summons and complaint, but after her return on June 28, 2009, contacted ASC, seeking to obtain a modification of the subject mortgage. ASC, which participated in the federal Home Affordable Modification Program (“HAMP”), accepted her application for loan modification under HAMP. Defendant Nyarkoha entered into a three-month Trial Period Plan with ASC through HAMP, commencing October 1, 2009, and attended seven conferences held in the Residential Foreclosure Part, wherein she was represented by the Legal Aid Society for the purpose of the conferences.

While the case was assigned to that Part, defendant Nyarkoha twice moved, in effect, to stop the running of interest on the mortgage debt. Both motions were denied. In addition, defendant Nyarkoha filed, on July 1, 2010, a pro se motion for leave to serve an answer to the complaint, which motion was repeatedly adjourned. The case was released from the Residential Foreclosure Part on December 1, 2010.

On December 28, 2010, the Legal Aid Society served and filed a notice of appearance on behalf of defendant Nyarkoha in this action. On January 27, 2011, defendant Nyarkoha served and filed a notice, indicating her withdrawal of the pro se motion for leave to serve a late answer, without prejudice to her right to refile it. The instant motion was filed six months later.

Regarding defendant Nyarkoha’s argument that she relied on ongoing settlement discussions and negotiations, the cases are mixed. A number of cases show a great reluctance, if not loathing, for such a defense as an excuse for not taking concrete action in a litigation, such as filing an answer (see, e.g., Community Preservation Corp. v Bridgewater Condominiums, LLC, 89 AD3d 784 [2nd Dept. 2011] [reliance on settlement discussions does not constitute reasonable excuse]; Mellon v Izmirligil, 88 AD3d 930 [2nd Dept. 2011] [motion to vacate was properly denied]; Maspeth Fed. Sav. & Loan Assn. v McGown, 77 AD3d 889, supra [purported reliance [*3]on settlement discussions was unsubstantiated]; Jamieson v Roman, 36 AD3d 861 [2nd Dept. 2007] [upholding denial of motion to vacate default despite party’s claim of ongoing settlement discussions, since party delayed in appearing after being served with a copy of the judgment]; Flora Co. v Ingilis, 233 AD2d 418 [2nd Dept. 1996] [reliance on settlement discussions was questionable at best]; Bank of New York v Jayaswal, 33 Misc 3d 1214(A), 2011 WL 5061626, 2011 NY Slip Op 51922(U) [Sup Ct Suffolk County 2011] [Whelan, J.] [denying motion to file a late answer, court stated that “the mere engagement in discussions aimed at a potential modification of the subject mortgage loan may not serve as a means to open up an otherwise inexcusable default in answering the summons and complaint by the defendant/mortgagor.”; discussing the competing cases and reasoning that defendant’s conversation with the plaintiff bank’s “operations consultant” could not be reasonably characterized as “legal advice” that “allegedly duped defendant . . . into not answering the complaint in a timely manner.”).

The defense or excuse of a party’s abstaining from taking any action in good faith reliance on ongoing settlement discussions and negotiations has, nevertheless, been sustained if the underlying facts and circumstances are substantiated and reasonable (see, e.g., Performance Constr. Corp. v Huntington Bldg., LLC, 68 AD3d 737, 738 [2nd Dept. 2009] [record revealed that party was actively engaged in settlement negotiations, and adversary unfairly and manipulatively failed to disclose plan to enter default judgment]; Scarlett v McCarthy, 2 AD3d 623 [2nd Dept. 2003]; HSBC Bank USA, N.A. v Cayo, ____ Misc 3d, 934 NYS2d 792, 794 [Sup Ct Kings County 2011] [party presented meritorious defense and substantiated belief that action was stayed pending settlement talks]; Emigrant Mortgage, Inc. v Abbey, 2011 WL 972555, 2011 NY Slip Op 30600(U) [Sup Ct Queens County 2011] [McDonald, J.]).

This Court, in the present action, concludes that defendant Nyarkoha’s reliance upon settlement negotiations with ASC was reasonable and her participation in the conferences is substantiated and thus constituting a sufficient and reasonable excuse for her failure to serve an answer through at least December 1, 2010.

To the extent Defendant Nyarkoha’s pro se motion for leave to serve a late answer was withdrawn prior to its submission, and the instant motion was not made for another six months, such additional delay may be attributable to her counsel and constitutes, at most, law office failure, which is excusable (see, CPLR 2005). Plaintiff has not demonstrated it has been prejudiced by the additional delay (see, Merchants Ins. Group v. Hudson Valley Fire Protection Co., Inc.,72 AD3d 762, 764 [2nd Dept. 2010]).

Plaintiff made no motion seeking any relief during that six-month period, notwithstanding that the order dated December 1, 2010, permitted it to seek an order of reference, and makes no cross motion for such relief. A strong public policy, furthermore, exists favoring the disposition of matters on their merits (see, Berardo v Guillet, 86 AD3d 459, 459 [1st Dept. 2011]; Yu v Vantage Mgt. Servs., LLC, 85 AD3d 564[1st Dept. 2011]; Billingly v Blagrove, 84 AD3d 848, 849 [2nd Dept. 2011]; Khanal v Sheldon, 74 AD3d 894, 896 [2nd Dept. 2010]; Rakowicz v [*4]Fashion Institute of Technology, 65 AD3d 536, 537 [2nd Dept. 2009]; Reed v Grossi, 59 AD3d 509, 511-512 [2nd Dept. 2009]; Bunch v Dollar Budget, Inc., 12 AD3d 391 [2nd Dept. 2004]).

The motion papers, in the case at bar, adequately demonstrate that the defendant Nyarkoha may have a meritorious defense based upon lack of standing (compare Citigroup Global Markets Realty Corp. v. Randolph Bowling, 25 Misc 3d 1244(A), 2009 WL 4893940, 2009 NY Slip Op 52567(U), slip op at 3 [Sup Ct Kings County 2011] [standing issue was not raised as a last minute gesture to avert sale of property and was thus properly raised on a motion to file a late answer] with Deutsche Bank Nat. Trust Co. v. Young, 66 AD3d 819,819 [2nd Dept. 2009] [upholding lower court’s denial of motion to vacate default in mortgage foreclosure action, Second Department stated that “the Supreme Court did not err in determining that they waived the issue of standing by failing to timely appear or answer”] and HSBC Bank, USA v. Dammond, 59 AD3d 679, 680 [2nd Dept. 2009] [where it was “undisputed that the respondent was personally served” and the defendant did not raise the standing defense until “immediately prior to the date scheduled for the sale of the property,” the Second Department stated: “The respondent waived any argument that HSBC lacked standing to commence the foreclosure action. Having failed to interpose an answer or file a timely pre-answer motion which asserted the defense of standing, the respondent waived such defense pursuant to CPLR 3211(e).”]; and Deutsche Bank Nat. Trust Co. v. Pietranico, 33 Misc 3d 528 [Sup Ct Suffolk County 2011] [Whelan, J.] [alleged lack of standing was untimely asserted on motion to vacate a default in a mortgage foreclosure action]; see, U.S. Bank, N.A. v Collymore, 68 AD3d 752 [2nd Dept. 2009] [upholding denial of plaintiff bank’s motion for summary judgment and appointment of a referee, Second Department stated: “Contrary to the Bank’s contentions, it failed to demonstrate its prima facie entitlement to judgment as a matter of law because it did not submit sufficient evidence to demonstrate its standing as the lawful holder or assignee of the subject note on the date it commenced this action.”]).

In the present action, the assignment agreement indicates that the mortgage, “[t]ogether with all moneys . . . owing or that may . . . become due or owing in [r]espect thereof,” were assigned by First United Mortgage Banking Corp. to plaintiff on May 12, 2009. The endorsement on the underlying note, however, is undated, and in blank and without recourse, and the affidavit of Jennifer Robinson, the vice-president of loan documentation for Wells Fargo, indicates that the note was physically delivered to Wells Fargo as custodian for plaintiff “prior to the commencement of this action on May 25, 2009.” The action, however, was commenced on May 21, 2009, and Ms. Robinson does not state the actual date of physical delivery of the note.

The Court holds, under the circumstances of the present action, that the alleged lack of standing of the plaintiff bank may be considered on a motion to vacate a default in a mortgage foreclosure action. Absent express legislation barring a litigant from proving a meritorious defense in an attempt to vacate a default because of an alleged lack of standing, courts should not engraft such a prohibition on the case law of this State.

The Court grants defendant’s motion for leave to serve a late answer is granted, and the [*5]proposed answer annexed to the motion papers shall be deemed served upon service of a copy of this order bearing the date stamp of the County Clerk, with notice of entry. Plaintiff shall serve a reply or move with respect to the answer, within 30 days of the service of a copy of this order with notice of entry. Defendant Nyarkoha shall file a copy of the answer within 20 days of service of a copy of this order with notice of entry.

The foregoing constitutes the decision, opinion, and order of the Court.

______________________________________

J.S.C.

Dated: February 29, 2012

[ipaper docId=84416322 access_key=key-3mkfr2pslowab35tnl9 height=600 width=600 /]

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Naked Capitalism | OCC Servicer Review Firm Also “Scrubs” Loan Files, Fabricates Documents

Naked Capitalism | OCC Servicer Review Firm Also “Scrubs” Loan Files, Fabricates Documents


Yves Smith-

Reader Lisa N. pointed me to a troubling October 2010 press release by SolomonEdwardsGroup, a company that describes itself as a “national financial services consulting and staffing firm” about its remediation services for “significant loan documentation problems.” Alert readers will recognize that this is shortly after the robosiging scandal broke.

Here are the key parts of the press release:

SEG’s teams can also be rapidly deployed across the U.S., to help banks and servicers “scrub” files and determine which foreclosures may have been tainted by incorrect loan documentation and processing issues such as robo-signing….

For instance on a recent engagement, SEG quickly deployed a 25-person team to review a single-family loan portfolio containing 5,000 loans and within six weeks brought the portfolio into compliance with investor guidelines. During another recent engagement, SEG successfully completed the same type of project involving 20,000 single-family loans tainted by fraud allegations.

Needless to say, this sounds consistent to the charges we’ve heard from borrower attorneys and have even seen at trial: that of “tah dah” documents appearing suddenly in court that solved all the problems with the evidence presented. A not that unusual case occurred last week, in Kings County, New York, where in HSBC v. Sene, when the lawyers for the bank tried submitting two notes (borrower IOUs), the second attempting to remedy problems raised by the first one, each presented as the original. The judge not only ruled against the foreclosure but referred the case to the district attorney and the state attorney general.

Why the Failure to Convey Notes and Make Assignments Properly is Such a Big Deal in Mortgage Securitizations…

[NAKED CAPITALISM]

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Yves Smith | Yet Another Mortgage Scam: Homeowners Not Getting Cancelled Notes After Foreclosures, Hit by Later Claims

Yves Smith | Yet Another Mortgage Scam: Homeowners Not Getting Cancelled Notes After Foreclosures, Hit by Later Claims


Naked Capitalism-

As we’ve discussed the “where’s the note?” problem of mortgage securitizations, some readers who are old enough to have sold a home more than once have said that while they’d gotten a cancelled mortgage note back on their first sale, on a more recent one, they hadn’t. They were concerned, and as this post will show, they are right to be.

By way of background, the popular press has done the public a disservice by talking about “mortgages”. A “mortgage” consists of two instruments: a promissory note, which is a IOU, and a lien against the property, which is referred to as a mortgage (in non-judicial foreclosure states, they are typically called a deed of trust and confer somewhat different rights, but we’ll put that aside for purposes of this discussion).

What appears to be happening on all too often in Florida is that when borrowers signed warranty deeds in lieu of foreclosure when they can no longer keep these homes, they often get only a satisfaction of mortgage, not a cancelled note. This is not what is supposed to happen...

[NAKED CAPITALISM]

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US Treasury: New HAMP Mortgage Modification Program Includes GSE Principal Reductions

US Treasury: New HAMP Mortgage Modification Program Includes GSE Principal Reductions


I posted the quoted text below back on Nov ’10… I wonder who exactly signs off for MERS, if this is so?

The standard modification agreement
is between the Borrower and
the Lender. The agreement amends
and supplements (1) the Mortgage,
Deed of Trust or Deed to Secure
Debt (Security Instrument) and (2)
the Note bearing the same date as,
and secured by, the Security
Instrument. Prior to MERS, the
standard agreement worked
because the Lender was the mortgagee
of record and could modify
the mortgage and also had the
authority to modify the Note.

However, if MERS is the mortgagee
of record, the Lender can’t
modify the mortgage without the
“mortgagee’s” consent.

MNINEWS-

The Obama Administration Friday announced it is expanding its flagship mortgage modification program and will now encourage lenders to reduce the principal loan balance for Fannie Mae and Freddie Mac loans.

The announcement comes just three days after President Obama said he would do more to support the struggling housing market and two days after Federal Reserve Chairman Ben Bernanke said housing is holding back the economic recovery.

Assistant Secretary for Financial Stability Timothy Massad in a blog post Friday outlined the changes to HAMP — including extending the end-date by one year and refocusing on principal reductions.

Massad said Treasury notified the Federal Housing Finance Agency, the regulator for Fannie Mae and Freddie Mac, that they will pay principal reduction incentives to the GSEs if they allow servicers to forgive principal — if done in conjunction with a HAMP modification.

Massad also said Treasury will triple the incentives for HAMP principal reduction modifications by paying from 18 to 63 cents on the dollar, depending on how much the loan-to-value ratio is reduced.

[MNINEWS]

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DEUTSCHE BANK NAT. TRUST v. BRUMBAUGH | OK SC “there is a question of fact as to when Appellee became a holder, and thus, a person entitled to enforce the note”

DEUTSCHE BANK NAT. TRUST v. BRUMBAUGH | OK SC “there is a question of fact as to when Appellee became a holder, and thus, a person entitled to enforce the note”


DEUTSCHE BANK NATIONAL TRUST v. BRUMBAUGH
2012 OK 3
Case Number: 109223
Decided: 01/17/2012

THE SUPREME COURT OF THE STATE OF OKLAHOMA


Cite as: 2012 OK 3, __ P.3d __


NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION IN THE PERMANENT LAW REPORTS. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.

 


DEUTSCHE BANK NATIONAL TRUST, AS TRUSTEE FOR LONG BEACH MORTGAGE LOAN 2002-1, Plaintiff/Appellee,
v.
DENNIS BRUMBAUGH, Defendant/Appellant.

ON APPEAL FROM THE DISTRICT COURT OF TULSA COUNTY
HONORABLE LINDA G. MORRISSEY
DISTRICT JUDGE

¶0 The Plaintiff /Appellee, Deutsche Bank National Trust as Trustee for Long Beach Mortgage Loan 2002-1, filed this foreclosure action against the Defendant/Appellant, Dennis Brumbaugh. Plaintiff filed a motion for summary judgment which was granted by the trial court. Defendant contends there is not enough evidence to show Plaintiff has standing. Plaintiff asserts it is the holder of the note and has standing. We find there are material issues of fact that need to be determined and summary judgment is not appropriate.

REVERSED AND REMANDED WITH INSTRUCTIONS

Phillip A. Taylor, TAYLOR & ASSOCIATES, Broken Arrow, Oklahoma, for Defendant/Appellant.
Ray E. Zschiesche, PHILLIPS MURRAH P.C., Oklahoma City, Oklahoma, for Plaintiff/Appellee.

COMBS, J.

FACTS

¶1 This is an appeal from a foreclosure action initiated by Appellee, Deutsche Bank National Trust As Trustee for Long Beach Mortgage Loan 2002-1 (Appellee) against Appellant Dennis Brumbaugh (Appellant) and others. Appellant and his wife, Debra Brumbaugh, (Brumbaughs) executed a note and mortgage with Long Beach Mortgage Company on February 27, 2002. On December 27, 2006, the Brumbaughs entered into a loan modification agreement with U.S. Bank, N.A., successor trustee to Wachovia Bank, N.A. (formerly known as First Union National Bank), as Trustee for Long Beach Mortgage Loan Trust 2002-1, Asset Backed Certificates, Series 2002-1 in trust for the benefit of the Certificateholders. On July 20, 2007, the Brumbaughs divorced, and in 2008, Debra Brumbaugh executed a quitclaim deed to Dennis Brumbaugh.

¶2 Appellant defaulted on the note in January 2009, and Appellee filed its petition for foreclosure on June 2, 2009. Attached to the petition was a copy of the note, mortgage, loan modification agreement, and copies of statements of judgments and liens by other entities. Appellee claims it is the present holder of the note and mortgage having received due assignment through mesne assignments of record or conveyance via mortgage servicing transfer. The Appellant answered, denying Appellee owns any interest in the note and mortgage, and the copies attached to the petition were not the same as those he signed. He claims Appellee lacked capacity to sue and the trial court lacks jurisdiction over the subject matter. He also denied being in default and asserted the Appellee/servicing agent caused the alleged default.

¶3 On April 1, 2010, Appellee filed a motion for summary judgment. Attached to the motion was an affidavit from an employee of JP Morgan Chase Bank (Chase) as the servicing agent for Appellee. The affidavit states the Appellee is the current owner and holder of the original note, mortgage, and the modification agreements. However, there is no mention of when Appellee became the holder.

¶4 Appellant asserts in his response to the motion for summary judgment that Appellee failed to prove the affiant is a competent witness and no documentation was presented that connects Appellant to Appellee. The note attached to the petition and the motion did not show it had been negotiated to any other party including Appellee. Negotiation requires transfer of possession of the instrument and its indorsement by the holder. 12A O.S. 2001, § 3-201(b). He asserts because there is no indorsement whatsoever by Long Beach Mortgage Company attached to the petition and motion for summary judgment, Appellee cannot be the holder of the note. Therefore, Appellant asserts Appellee cannot be the real party in interest. However, in Appellee’s reply to Appellant’s response to the motion for summary judgment and at the hearing, a copy of the note with a blank, undated indorsement signed by Long Beach Mortgage Company was attached and presented.

¶5 Appellee asserts that even if negotiation of the note was at issue, Appellee has possession of the note and that satisfies the “negotiation” requirements of 12A O.S. 2001, § 3-201. Further, the Chase affiant has personal knowledge because he reviewed and examined the account files and Chase is the servicing agent for Appellee. Appellee further asserts, it has the original note and mortgage, and is therefore, the real party in interest.

¶6 The trial court reviewed the note presented at the hearing and agreed with Appellee that Appellee was the holder of the note because it had possession of the note and it was indorsed in blank. The court granted summary judgment in favor of Appellee on January 27, 2011.

STANDARD OF REVIEW

¶7 An appeal on summary judgment comes to this court as a de novo review. Carmichael v. Beller, 1996 OK 48, ¶2, 914 P.2d 1051, 1053. All inferences and conclusions are to be drawn from the underlying facts contained in the record and are to be considered in the light most favorable to the party opposing the summary judgment. Rose v. Sapulpa Rural Water Co., 1981 OK 85, 621 P.2d 752. Summary judgment is improper if, under the evidentiary materials, reasonable individuals could reach different factual conclusions. Gaines v. Comanche County Medical Hospital, 2006 OK 39, ¶4, 143 P.3d 203, 205.

ANALYSIS

¶8 The Uniform Commercial Code adopted in Oklahoma, 12A O.S. 2001, § 1-101 et seq., defines who is a “person entitled to enforce” the note (instrument).1 A “person entitled to enforce” the note requires possession of the note with a very limited exception.2 It will be either one who is a “holder” of the note or a “nonholder in possession of the note who has the rights of a holder.”3

¶9 Appellee must demonstrate it is a person entitled to enforce the note. It must provide evidence it has possession of the note either by being a holder or a nonholder in possession who has the rights of a holder. Appellee attached to its Reply to Defendant’s Response to Plaintiff’s Motion for Summary Judgment a copy of the note with a blank indorsement from Long Beach Mortgage Company. Appellee states this allonge4 was inadvertently omitted from the copy of the note that was attached to its Motion for Summary Judgment. However, this allonge was not attached to the Petition for Foreclosure of Mortgage. Appellee is trying to establish it is a “holder” of the note. Evidence establishing when Appellee became a person entitled to enforce the note must show Appellee was a person entitled to enforce the note prior to filing its cause of action for foreclosure.

¶10 Appellant argues Appellee does not have standing to bring this foreclosure action. The issue presented to this Court is standing. This Court has previously held:

Standing, as a jurisdictional question, may be correctly raised at any level of the judicial process or by the Court on its own motion. This Court has consistently held that standing to raise issues in a proceeding must be predicated on interest that is “direct, immediate and substantial.” Standing determines whether the person is the proper party to request adjudication of a certain issue and does not decide the issue itself. The key element is whether the party whose standing is challenged has sufficient interest or stake in the outcome.

Matter of the Estate of Doan, 1986 OK 15, ¶7, 727 P.2d 574, 576. In Hendrick v. Walters, 1993 OK 162, ¶ 4, 865 P.2d 1232, 1234, this Court also held:

Respondent challenges Petitioner’s standing to bring the tendered issue. Standing refers to a person’s legal right to seek relief in a judicial forum. It may be raised as an issue at any stage of the judicial process by any party or by the court sua sponte. (emphasis original)

Furthermore, in Fent v. Contingency Review Board, 2007 OK 27, footnote 19, 163 P.3d 512, 519, this Court stated “[s]tanding may be raised at any stage of the judicial process or by the court on its own motion.” Additionally in Fent, this Court stated:

Standing refers to a person’s legal right to seek relief in a judicial forum. The three threshold criteria of standing are (1) a legally protected interest which must have been injured in fact- i.e., suffered an injury which is actual, concrete and not conjectural in nature, (2) a causal nexus between the injury and the complained-of conduct, and (3) a likelihood, as opposed to mere speculation, that the injury is capable of being redressed by a favorable court decision. The doctrine of standing ensures a party has a personal stake in the outcome of a case and the parties are truly adverse.

Fent v. Contingency Review Board, 2007 OK 27, ¶7, 163 P.3d 512, 519-520. In essence, a plaintiff who has not suffered an injury attributable to the defendant lacks standing to bring a suit. And, thus, “standing [must] be determined as of the commencement of suit.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 570, n.5, 112 S.Ct. 2130, 2142, 119 L.Ed. 351 (1992).

¶11 To commence a foreclosure action in Oklahoma, a plaintiff must demonstrate it has a right to enforce the note and, absent a showing of ownership, the plaintiff lacks standing. Gill v. First Nat. Bank & Trust Co. of Oklahoma City, 1945 OK 181, 159 P.2d 717.5 Being a person entitled to enforce the note is an essential requirement to initiate a foreclosure lawsuit. In the present case, there is a question of fact as to when Appellee became a holder, and thus, a person entitled to enforce the note. Therefore, summary judgment is not appropriate. If Deutsche Bank became a person entitled to enforce the note as either a holder or nonholder in possession who has the rights of a holder after the foreclosure action was filed, then the case may be dismissed without prejudice and the action may be re-filed in the name of the proper party. We reverse the granting of summary judgment by the trial court and remand back for further determinations as to when Appellee acquired its interest in the note.

CONCLUSION

¶12 It is a fundamental precept of the law to expect a foreclosing party to actually be in possession of its claimed interest in the note, and have the proper supporting documentation in hand when filing suit, showing the history of the note, so the defendant is duly apprised of the rights of the plaintiff. This is accomplished by establishing that the party is a holder of the instrument or a nonholder in possession of the instrument who has the rights of a holder, or a person not in possession of the instrument who is entitled to enforce the instrument pursuant to 12A O.S. 2001, § 3-309 or 12A O.S. 2001, § 3-418. 12A O.S. 2001, § 3-301. Likewise, for the homeowners, absent adjudication on the underlying indebtedness, the dismissal cannot cancel their obligation arising from an authenticated note, or loan modification, or insulate them from foreclosure proceedings based on proven delinquency. See, U.S. Bank National Association v. Kimball 27 A.3d 1087, 75 UCC Rep.Serv.2d 100, 2011 VT 81 (VT 2011); and Indymac Bank, F.S.B. v. Yano-Horoski, 78 A.D.3d 895, 912 N.Y.S.2d 239 (2010).

REVERSED AND REMANDED WITH INSTRUCTIONS

¶13 CONCUR: TAYLOR (This Court’s decision in no way releases or exonerates the debt owed by the defendants on this home.), C.J., KAUGER (joins Taylor, C.J.), WATT, WINCHESTER (joins Taylor, C.J.), EDMONDSON, REIF, COMBS, GURICH (joins Taylor, C.J.), JJ.

¶14 RECUSED: COLBERT, V.C.J.

FOOTNOTES

112A O.S. 2001, § 3-301.

2 A person who is not reasonably able to obtain possession of the note because it was lost, destroyed, in the wrongful possession of another, or it is paid or accepted by mistake. 12A O.S. 2001, § 3-301.

3 A holder is a person in possession of the note that is payable either to bearer (blank indorsement) or to an identified person (special indorsement) that is the person in possession. 12A O.S. 2001, §§ 1-201(b)(21), 3-204 and 3-205. A “nonholder in possession who has the rights of a holder” is a person in possession of the note but the note was not indorsed by the previous holder; special indorsement or blank indorsement. No negotiation has occurred because the person now in possession did not become a holder by lack of the note being indorsed as mentioned. An example would be when a sale of notes in bulk is made by the holder to a transferee and the holder is transferring the right to enforce the notes even though there has been no negotiation. (See the REPORT OF THE PERMANENT EDITORIAL BOARD FOR THE UNIFORM COMMERCIAL CODE, APPLICATION OF THE UNIFORM COMMERCIAL CODE TO SELECTED ISSUES RELATING TO MORTGAGE NOTES (NOVEMBER 14, 2011)). Negotiation is the voluntary or involuntary transfer of an instrument by a person other than the issuer to a person who thereby becomes its holder. 12A O.S. 2001, § 3-201. Transfer occurs when the instrument is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument. 12A O.S. 2001, § 3-203. Delivery of the note would still have to occur even though there is no negotiation. Delivery is defined as the voluntary transfer of possession. 12A O.S. 2001, § 1-201(b)(15). The transferee would then be vested with any right of the transferor to enforce the note. 12A O.S. 2001, § 3-203(b). Some jurisdictions have held that without holder status and therefore the presumption of a right to enforce, the possessor of the note must demonstrate both the fact of the delivery and the purpose of the delivery of the note to the transferee in order to qualify as the person entitled to enforce. In re Veal, 450 B.R. 897, 912 (B.A.P. 9th Cir. 2011).

4According to Black’s Law Dictionary (9th ed. 2009) an allonge is “[a] slip of paper sometimes attached to a negotiable instrument for the purpose of receiving further indorsements when the original paper is filled with indorsements.” See, 12A O.S. 2001, § 3-204(a).

5 This opinion occurred prior to the enactment of the UCC and as explained in footnote 3 of this opinion, the person entitled to enforce the note in almost all situations is required to be in possession of the note and therefore if the owner of the note is not in possession of the note it is not a person entitled to enforce the note. (See the REPORT OF THE PERMANENT EDITORIAL BOARD FOR THE UNIFORM COMMERCIAL CODE, APPLICATION OF THE UNIFORM COMMERCIAL CODE TO SELECTED ISSUES RELATING TO MORTGAGE NOTES (NOVEMBER 14, 2011)).

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Deutsche Bank Nat.Trust v. Byrams | OK SC “Without an indorsement on the note the Appellee cannot be a holder of the note”

Deutsche Bank Nat.Trust v. Byrams | OK SC “Without an indorsement on the note the Appellee cannot be a holder of the note”


DEUTSCHE BANK NATIONAL TRUST COMPANY v. BYRAMS
2012 OK 4
Case Number: 108545
Decided: 01/17/2012

THE SUPREME COURT OF THE STATE OF OKLAHOMA

NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION IN THE PERMANENT LAW REPORTS. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.

DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE IN TRUST FOR THE BENEFIT OF THE CERTIFICATE HOLDERS FOR ARGENT SECURITIES INC., ASSET-BACKED PASS THROUGH CERTIFICATES, SERIES 2006-W2, Plaintiff/Appellee,

v.

JEVESTER BYRAMS, JR. and NATACHA BYRAMS, ET AL Defendant/Appellant,

ON APPEAL FROM THE DISTRICT COURT OF CREEK COUNTY
HONORABLE LAWRENCE W. PARISH
DISTRICT JUDGE

¶0 Appeal of a summary judgment granted in Deutsche Bank National Trust Company’s favor against the Byramses on May 11, 2010. The Byramses filed a petition and motion to vacate, as well as, requests to stay any proceedings regarding the property. The parties appeared before the trial court on June 15, 2010, and the petition, motion and other requests were denied. The order was filed on July 6, 2010. The Byrams appealed on July 28, 2010, and this Court retained the matter on April 21, 2011.

REVERSED AND REMANDED WITH INSTRUCTIONS

Phillip A. Taylor, TAYLOR & ASSOCIATES, Broken Arrow, Oklahoma, for Defendant/Appellants.
A. Grant Schwabe, KIVELL, RAYMENT AND FRANCIS, P.C., Tulsa, Oklahoma, for Plaintiff/Appellee.

COMBS, J.

FACTUAL AND PROCURAL HISTORY

¶1 In a petition filed on December 8, 2009, Deutsche Bank National Trust company, as Trustee in Trust for the benefit of the Certificate Holders for Argent Securities Inc., Asset-Backed Pass-Through Certificates, Series 2006-W2,claiming to be the present holder of the note (hereinafter Deutsche Bank) filed a foreclosure action against the Byramses. Deutsche Bank claimed at that time to hold the note and mortgage having received due assignment through mesne assignments of record or conveyance via mortgage servicing transfer. A review of the note shows no indorsement. Argent Mortgage Company, LLC, was the original lender. In its brief in support of motion for summary judgment, filed March 9, 2010, Deutsche Bank attached a document entitled “Assignment of Mortgage.” This assignment of mortgage was acknowledged on January 12, 2010, and stamped as being recorded with the County Clerk of Tulsa County on January 26, 2010. This was over one month after the filing of the foreclosure proceeding (December 8, 2009). Additionally, this Assignment of Mortgage, from Argent Mortgage Company, LLC, by Citi Residential Lending, Inc., made to plaintiff, Deutsche Bank as the trustee of Argent Mortgage Company, LLC, was signed by Citi Residential Lending, Inc. Both the assignor and assignee list the same address, “c/oAmerican Home Mtg Servicing, Inc. 1525 S. Beltline Rd, Coppell, TX 75019.” A summary judgment granted in Deutsche Bank’s favor against the Byrams on May 11, 2010, memorialized a final journal entry of judgment order. A petition for new trial to vacate the final journal entry of judgment, and motion to dismiss plaintiff’s petition for lack of standing was filed on May 21, 2010, which was denied by order on June 28, 2010, by the trial court. The Byrams appeal this summary judgment arguing Deutsche Bank National Trust Company failed to demonstrate standing.

STANDARD OF REVIEW

¶2 An appeal on summary judgment comes to this court as a de novo review. Carmichael v. Beller, 1996 OK 48, ¶2, 914 P.2d 1051, 1053. All inferences and conclusions are to be drawn from the underlying facts contained in the record and are to be considered in the light most favorable to the party opposing the summary judgment. Rose v. Sapulpa Rural Water Co., 1981 OK 85, 631 P.2d 752. Summary judgment is improper if, under the evidentiary materials, reasonable individuals could reach different factual conclusions. Gaines v. Comanche County Medical Hospital, 2006 OK 39, ¶4, 143 P.3d 203, 205.

ANALYSIS

¶3 Appellant argues Appellee does not have standing to bring this foreclosure action. Although Appellee has argued it holds the note, there is no evidence in the record supporting it is a holder of the note. The face of the note does not indicate it was indorsed and the purported “assignment of mortgage” was filed after the filing of the foreclosure proceedings.

¶4 The issue presented to this Court is standing. This Court has previously held:

Standing, as a jurisdictional question, may be correctly raised at any level of the judicial process or by the Court on its own motion. This Court has consistently held that standing to raise issues in a proceeding must be predicated on interest that is “direct, immediate and substantial.” Standing determines whether the person is the proper party to request adjudication of a certain issue and does not decide the issue itself. The key element is whether the party whose standing is challenged has sufficient interest or stake in the outcome.

Matter of the Estate of Doan, 1986 OK 15, ¶7, 727 P.2d 574, 576. In Hendrick v. Walters, 1993 OK 162, ¶ 4, 865 P.2d 1232, 1234, this Court also held:

Respondent challenges Petitioner’s standing to bring the tendered issue. Standing refers to a person’s legal right to seek relief in a judicial forum. It may be raised as an issue at any stage of the judicial process by any party or by the court sua sponte. (emphasis original)

Furthermore, in Fent v. Contingency Review Board, 2007 OK 27, footnote 19, 163 P.3d 512, 519, this Court stated “[s]tanding may be raised at any stage of the judicial process or by the court on its own motion.” Additionally in Fent, this Court stated:

Standing refers to a person’s legal right to seek relief in a judicial forum. The three threshold criteria of standing are (1) a legally protected interest which must have been injured in fact- i.e., suffered an injury which is actual, concrete and not conjectural in nature, (2) a causal nexus between the injury and the complained-of conduct, and (3) a likelihood, as opposed to mere speculation, that the injury is capable of being redressed by a favorable court decision. The doctrine of standing ensures a party has a personal stake in the outcome of a case and the parties are truly adverse.

Fent v. Contingency Review Board, 2007 OK 27, ¶7, 163 P.3d 512, 519-520. In essence, a plaintiff who has not suffered an injury attributable to the defendant lacks standing to bring a suit. And, thus, “standing [must] be determined as of the commencement of suit; . . .” Lujan v. Defenders of Wildlife, 504 U.S. 555, 570, n.5, 112 S.Ct. 2130, 2142, 119 L.Ed. 351 (1992).

¶5 To commence a foreclosure action in Oklahoma, a plaintiff must demonstrate it has a right to enforce the note and, absent a showing of ownership, the plaintiff lacks standing. Gill v. First Nat. Bank & Trust Co. of Oklahoma City, 1945 OK 181, 159 P.2d 717.1 An assignment of the mortgage, however, is of no consequence because under Oklahoma law, “[p]roof of ownership of the note carried with it ownership of the mortgage security.” Engle v. Federal Nat. Mortg. Ass’n, 1956 OK 176, ¶7, 300 P.2d 997, 999. Therefore, in Oklahoma it is not possible to bifurcate the security interest from the note.” BAC Home Loans Servicing, L.P. v. White, 2011 OK CIV APP 35, ¶ 10, 256 P.3d 1014, 1017. Because the note is a negotiable instrument, it is subject to the requirements of the UCC. Thus, a foreclosing entity has the burden of proving it is a “person entitled to enforce an instrument” by showing it was “(i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to Section 12A-3-309 or subsection (d) of Section 12A-3-418 of this title.” 12A O.S. 2001 §3-301.

¶6 To show you are the “holder” of the note you must prove you are in possession of the note and the note is either “payable to bearer” (blank indorsement) or to an identified person that is the person in possession (special indorsement).2 Therefore, both possession of the note and an indorsement on the note or attached allonge3 are required in order for one to be a “holder” of the note.

¶7 To be a “nonholder in possession who has the rights of a holder” you must be in possession of a note that has not been indorsed either by special indorsement or blank indorsement. The record in this case reflects the note has not been indorsed. No negotiation has occurred because the person now in possession did not become a holder by lack of the note being indorsed as mentioned. Negotiation is the voluntary or involuntary transfer of an instrument by a person other than the issuer to a person who thereby becomes its holder. 12A O.S. 2001, § 3-201. Transfer occurs when the instrument is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument. 12A O.S. 2001, § 3-203. Delivery of the note would still have to occur even though there is no negotiation. Delivery is defined as the voluntary transfer of possession. 12A O.S. 2001, § 1-201(b)(15). The transferee would then be vested with any right of the transferor to enforce the note. 12A O.S. 2001, 3-203(b). Some jurisdictions have held that without holder status and therefore the presumption of a right to enforce, the possessor of the note must demonstrate both the fact of the delivery and the purpose of the delivery of the note to the transferee in order to qualify as the person entitled to enforce. In re Veal, 450 B.R. 897, 912 (B.A.P. 9th Cir. 2011). See also, 12A O.S. 2001, § 3-203.

¶8 In the present case, Appellee has only presented evidence of an unindorsed note and an “Assignment of Mortgage.” Without an indorsement on the note the Appellee cannot be a holder of the note. Therefore, from the record presented to this Court, the Appellee must assert it is a nonholder in possession who has the rights of a holder.

¶9 The assignment of a mortgage is not the same as an assignment of the note. If a person is trying to establish it is a nonholder in possession who has the rights of a holder it must bear the burden of establishing its status as a nonholder in possession with the rights of a holder. Appellee must establish delivery of the note as well as the purpose of that delivery. In the present case, it appears Appellee is trying to use the assignment of mortgage in order to establish the purpose of delivery. The assignment of mortgage purports to transfer “the following described mortgage, securing the payment of a certain promissory note(s) for the sum listed below, together with all rights therein and thereto, all liens created or secured thereby, all obligations therein described, the money due and to become due thereon with interest, and all rights accrued or to accrue under such mortgage.” This language has been determined by other jurisdictions to not effect an assignment of a note but to be useful only in identifying the mortgage. Therefore, this language is neither proof of transfer of the note nor proof of the purpose of any alleged transfer. See, In re Veal, 450 B.R. 897, 905 (B.A.P. 9th Cir. 2011).

¶10 Appellee must show it became a “person entitled to enforce” prior to the filing of the foreclosure proceeding. In the present case, there is a question of fact as to when and if this occurred and summary judgment is not appropriate. Therefore, we reverse the granting of summary judgment by the trial court and remand back for further determinations. If Deutsche Bank became a person entitled to enforce the note as either a holder or nonholder in possession who has the rights of a holder after the foreclosure action was filed, then the case may be dismissed without prejudice and the action may be re-filed in the name of the proper party.

CONCLUSION

¶11 It is a fundamental precept of the law to expect a foreclosing party to actually be in possession of its claimed interest in the note, and have the proper supporting documentation in hand when filing suit, showing the history of the note, so that the defendant is duly apprised of the rights of the plaintiff. This is accomplished by showing the party is a holder of the instrument or a nonholder in possession of the instrument who has the rights of a holder, or a person not in possession of the instrument who is entitled to enforce the instrument pursuant to 12A O.S. 2001, § 3-309 or 12A O.S. 2001, § 3-418. Likewise, for the homeowners, absent adjudication on the underlying indebtedness, the dismissal cannot cancel their obligation arising from an authenticated note, or insulate them from foreclosure proceedings based on proven delinquency. See, U.S. Bank National Association v. Kimball 27 A.3d 1087, 75 UCC Rep.Serv.2d 100, 2011 VT 81 (VT 2011); and Indymac Bank, F.S.B. v. Yano-Horoski, 78 A.D.3d 895, 912 N.Y.S.2d 239 (2010).

REVERSED AND REMANDED WITH INSTRUCTIONS

¶12 CONCUR: TAYLOR (This Court’s decision in no way releases or exonerates the debt owed by the defendants on this home.), C.J., KAUGER (joins Taylor, C.J.), WATT, WINCHESTER (joins Taylor, C.J.), EDMONDSON, REIF, COMBS, GURICH (joins Taylor, C.J.), JJ.

¶13 RECUSED: COLBERT, V.C.J.

FOOTNOTES

1 This opinion occurred prior to the enactment of the UCC. It is, however, possible for the owner of the note not to be the person entitled to enforce the note if the owner is not in possession of the note. (See the REPORT OF THE PERMANENT EDITORIAL BOARD FOR THE UNIFORM COMMERCIAL CODE, APPLICATION OF THE UNIFORM COMMERCIAL CODE TO SELECTED ISSUES RELATING TO MORTGAGE NOTES (NOVEMBER 14, 2011)).

2 12A O.S. 2001, §§ 1-201(b)(21), 3-204 and 3-205.

3 According to Black’s Law Dictionary (9th ed. 2009) an allonge is “[a] slip of paper sometimes attached to a negotiable instrument for the purpose of receiving further indorsements when the original paper is filled with indorsements.” See, 12A O.S. 2001, § 3-204(a).

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Citigroup Global Mkts. v. Smith | NYSC “Assignment of the mortgage from MERS to Citigroup Global Markets Realty was a nullity, and no interest was acquired by it”

Citigroup Global Mkts. v. Smith | NYSC “Assignment of the mortgage from MERS to Citigroup Global Markets Realty was a nullity, and no interest was acquired by it”


Decided on December 13, 2011

Supreme Court, Kings County

Citigroup Global Markets Realty Corp., Plaintiff,

against

Howard Smith, ET AL, Defendants.

3921/2008

Plaintiff’s attorney in this case is Peter T. Roach and Associates, 125 Michael Drive, Suite 105, Syosset, NY 11791

Anthony J. Cutrona, J.

Recitation, as required by CPLR §2219(a), of the papers considered in the review of this motion:

PapersNumbered

Order to Show Cause/Notice of Motion and

Affidavits/Affirmations Annexed………………………………1

Answering Affidavits/Affirmations……………………………

Reply Affidavits/Affirmations…………………………………..

Memoranda of Law………………………………………………….

Other……………………………………………………………………….

Plaintiff’s brings this application for an Order of Reference, in this mortgage foreclosure action. The mortgagor, Howard Smith has not served an answer and is in default.

Plaintiff was assigned the subject mortgage for 424 Hart Street, Brooklyn, on January 11, 2008 by the assignor Mortgage Electronic Registration Systems (MERS).[FN1] The mortgage was executed on December 8, 2006, between the lender, American Brokers Conduit and the borrower, Howard Smith. In the mortgage, it is stated that MERS “is a separate corporation that is acting solely as a nominee for Lender and [*2]Lender’s successors and assigns.”

MERS, was not a party to the underlying note, for $568,000, also dated January 11, 2008, between American Brokers Conduit and Howard Smith. Accordingly, when MERS assigned the mortgage to Plaintiff, Citigroup Global Markets Realty Corp. there was no assignment of the subject note and “a transfer of [a] mortgage without the debt is a nullity, and no interest is acquired by it.” (citations omitted) Bank of New York v Silverberg, 86 AD3d at 280, (2nd Dep’t, 2011). Apparently., there was an attempt made to transfer the note to Plaintiff, as the note contains an undated endorsement to Citimortgage, Inc., which is obviously a different corporate entity than the Plaintiff, Citigroup Global Markets Realty Corp. There is no evidence submitted as to the relationship between these two corporations. There is also no evidence that Plaintiff owns this note.

The Appellate Division, Second Department’s decision in Silverberg, holds that a plaintiff does not have standing to bring a foreclosure action if, as here, it does not own the note. Here, any objection to Plaintiff’s standing has been waived, as the debtor has not served an answer or moved to dismiss. See, Wells Fargo Bank Minn., N.A. v Mastropaolo, 42 AD3d 239, 242 (2nd Dept, 2007).Notwithstanding this waiver on standing, it would be inappropriate to grant Plaintiff an order of reference, where it is clear that it cannot make out its prima- facie case of entitlement to Judgment. In Horizon Bancorp v Pompee, 82 AD3d 935 (2d Dept 2011) ), the Court held that “[t]o establish a prima facie case in an action to foreclose a mortgage, the plaintiff must establish existence of a promissory note and a related mortgage referable to the subject property, its ownership of the mortgage, and the default of the defendant.” ( See Campaign v Barba, 23 AD3d 327 (2nd Dep’t, 2005), Ocwen Federal Bank FSB v. Miller, 18 AD3d 527 (2d Dept 2005).

In the present case, since the assignment of the mortgage from MERS to Citigroup Global Markets Realty was a nullity, and no interest was acquired by it (See, Silverberg, supra), the Plaintiff cannot show that it owns the mortgage and consequently does not meet its burden of making out a prima facie case. “Where a valid cause of action is not stated, the party moving for judgment is not entitled to the requested relief, even on default.” Green v Dolphy Constr. Co. 187 AD2d 635 (2nd Dep’t, 1992)

Accordingly, Plaintiff, Citigroup Global Markets Realty Corp’s application for an Order of Reference is denied.

This shall constitute the decision and order of the Court.

ENTER:

_________________________

ANTHONY J. CUTRONA

Justice, Supreme Court [*3]

Footnotes

Footnote 1: “In 1993, the MERS system was created by several large participants in the real estate mortgage industry to track ownership interests in residential mortgages.” Matter of Merscorp, Inc. v. Romaine, 8 NY3d 90, 96 (2006). For a detailed overview of the MERS system see, Matter of Merscorp, supra and Bank of New York v. Silverberg, 86 AD3d 274 (2nd Dep’t, 2011)

[ipaper docId=75866312 access_key=key-1du1eeyeysqufodmtt5y height=600 width=600 /]

 

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Max Gardner’s Top Tips for Fake Mortgage Documents

Max Gardner’s Top Tips for Fake Mortgage Documents


This is super!

Continue to the Link below for Max Gardner’s 65 Tips For Mortgage Documents.

 

1.     The Mortgage or Deed of Trust is assigned from the Originator directly to the Trustee for the Securitized Trust.

 

2.     The Mortgage or Deed of Trust is assigned months and sometimes years after the date of the origination of the underlying mortgage note.

 

3.     The Mortgage or Deed of Trust is assigned from the initial aggregator directly to the Securitized Trust with no assignments to the Depositor or the Sponsor for the Trust.

 

4.     The Mortgage or Deed of Trust is executed, dated or assigned in a manner inconsistent with the mandatory governing rules of Section 2.01 of the Pooling and Servicing Agreement.

 

5.     The assignment of the Mortgage or Deed of Trust is executed by a legal entity that was no longer in existence on the date the document was executed.

 

[AVVO]

 image: MaxGardner.com

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In RE: BASS | North Carolina Appeals Court Affirms U.S. Bank c/o Wells Fargo ‘Judy Faber’s Invalid Stamp Indorsement, Not the legal holder of a promissory note’

In RE: BASS | North Carolina Appeals Court Affirms U.S. Bank c/o Wells Fargo ‘Judy Faber’s Invalid Stamp Indorsement, Not the legal holder of a promissory note’


NORTH CAROLINA COURT OF APPEALS

In the Matter of the foreclosure
of a Deed of Trust executed by
Tonya R. Bass in the original
amount of $139,988.00 dated
October 12, 2005, recorded in Book
4982, Page 86, Durham County
Registry,

Substitute Trustee Services, Inc.,
as Substitute Trustee,

Appeal by Petitioner from order entered 14 September 2010
by Judge Abraham Penn Jones in Durham County Superior Court.
Heard in the Court of Appeals 27 October 2011.

K&L Gates, LLP, by A. Lee Hogewood, III and Brian C. Fork,
for Petitioner-appellant.

Legal Aid of North Carolina, Inc., by E. Maccene Brown,
Gregory E. Pawlowski, John Christopher Lloyd, and Andre C.
Brown, for Respondent-appellee.

HUNTER, JR., Robert N., Judge.

U.S. Bank, National Association, as Trustee, c/o Wells
Fargo Bank, N.A. (“Petitioner”) appeals the trial court’s order
dismissing foreclosure proceedings against Respondent Tonya R.
Bass. Petitioner assigns error to the trial court’s
determination that Petitioner is not the legal holder of a
promissory note executed by Respondent and therefore lacks
authorization to foreclose on Respondent’s property securing the
note under a deed of trust. After careful review, we affirm.

Excerpt:

Furthermore, Comment 1 to North Carolina General Statutes
§ 25-3-308 defines “presumed” to mean “that until some evidence
is introduced which would support a finding that the signature
is forged or unauthorized, the plaintiff is not required to
prove that it is valid.” Id. In contrast to the stamp at
issue, a handwritten signature accompanies each of the other
stamps on the Note introduced by Petitioner before the trial
court. The stamp purporting to transfer the Note from
Residential to Petitioner, for example, bears the apparent
handwritten signature of Judy Faber, identified as Residential’s
vice president. This signature provides at least some evidence
that this stamp was executed with the requisite intent and
authority. Whether a stamp bearing an apparent handwritten
signature is sufficient competent evidence of the purported
indorsement, however, is not before this Court as Respondent
challenges the only stamp without a handwritten signature. The
omission of a handwritten signature with respect to the
challenged stamp is competent evidence from which the trial
court could conclude that this particular stamp was not executed
by an authorized individual and is therefore facially invalid
indorsement. Thus, even if Respondent had failed to object to
the stamp, which it did not, the burden properly remained upon
Petitioner to prove its validity.

[ipaper docId=75081797 access_key=key-1zz3byrbex3zpcm5knnv height=600 width=600 /]

MUST READ:

FULL_DEPOSITION_OF_GMAC_JUDY_FABER

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Future of foreclosures in N.J. hinges on state Supreme Court decision | US Bank N.A. v. Guillaume

Future of foreclosures in N.J. hinges on state Supreme Court decision | US Bank N.A. v. Guillaume


I disagree with the judge’s motion words below and see video below as to why even attorney’s have a difficult time.

“I have a lot of problems with saying that all that’s going, with all this evidence of [c]ourt process for over a year, to just rely on trying to negotiate something with the bank was like sticking your head in the sand.

This wasn’t going to go away and they
didn’t get any assurance from the bank that
they were succeeding in their negotiation
efforts or that an answer to the complaint
was not required. I mean they just focused
on one path. And they ignored the
negotiation path and they ignored the
litigation side of things. You can’t do
that.

And I have to say that . . . Mrs.
Guillaume was being so aggressive and so
persistent in trying to negotiate and going
to all these different places to get help,
but the one place she wasn’t going was a
member of the bar, a lawyer which is usually
what you do when you get [c]ourt papers.

Or if you absolutely can’t afford a
lawyer and that’s the case of many
foreclosures, a very heavy self-represented
area of the law to at least contact the
[c]ourt yourself and you send in some
rudimentary answer. And it doesn’t have to
be fancy. I mean you write a letter to the
foreclosure unit, they’ll stamp contested on
it.

Because I’ve seen so many of them long
hand. But nothing was done. And I don’t
regard that as excusable neglect. So that
prong is lacking.”  

(emphasis added).

Simply wrong, one does NOT understand how frustrating it is to even try to get anyone from the “bank” on the phone, attempting a modification as we have read time and time again were nothing but DISASTROUS and GOING ABSOLUTELY NO PLACE!

[Please watch Michigan Atty Vanessa Fluker and you’ll understand why].

Lets not forget, this reversal that goes to the heart of this from out of New Jersey: BANK OF NEW YORK vs. LAKS | NJ Appeals Court Reversal “A notice of intention is deficient…if it does not provide the name and address of the lender”

NJ.COM-

In the nearly five months since the state Supreme Court effectively allowed six of the country’s biggest banks to begin filing foreclosures again, attorneys and court officials have been expecting a flood of new filings to hit the courts.

Except it hasn’t happened. Foreclosure filings are down 83 percent as of October this year, compared with the same time period last year, according to court figures, and there are at least 100,000 cases either pending in the system or waiting to be submitted.

Attorneys involved in the work in New Jersey point to at least one reason for the significant delay: a court case that has reached the state Supreme Court, with oral arguments on Wednesday.

The case, US Bank National Association v. Guillaume, is important because the court …

[NJ.COM]

[ipaper docId=74692087 access_key=key-1xrvd0kemha1r7mycu2h height=600 width=600 /]

 

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Adam Levitin | The Heirs of Karl Lleywellyn: the PEB Report, Green Cheese, and the Hijacking of American Law

Adam Levitin | The Heirs of Karl Lleywellyn: the PEB Report, Green Cheese, and the Hijacking of American Law


Prof. Adam Levitin –

This last week the Permanent Editorial Board of the Uniform Commercial Code came out with a report bering the none-too-thrilling title of “Report on Application of the Uniform Commercial Code to Selected Issues Related to Mortgage Notes“. There’s an awful lot to say about this awful document, and I’m not going to attempt to cover it all in a single blog post. This post is going to cover what the report is, what authority it has, and why it is completely irrelevant (namely that it deals with negotiable notes, when virtually all mortgage notes are non-negotiable). Subsequent posts will deal with the substantive flaws in the report and with the motivation behind the report and with the way the uniform law making process has become completely hijacked by monied interests.

[PART 1]

.

[PART 2]

.

[PART 3]

.

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APPLICATION OF THE UNIFORM COMMERCIAL CODE TO SELECTED ISSUES RELATING TO MORTGAGE NOTES

APPLICATION OF THE UNIFORM COMMERCIAL CODE TO SELECTED ISSUES RELATING TO MORTGAGE NOTES


Via: Max Gardner’s Boot Camp

The report specifically indicates that “It should not be assumed that all mortgage notes are negotiable instruments” and  affirms that the requirements of  section 3-104 must be met in order for a particular mortgage note to be considered a negotiable instrument.

(If you’re not registered for the UCC seminar yet, there is space available:  get more information or register now!)

Introduction

Recent economic developments have brought to the forefront complex legal issues about the enforcement and collection of mortgage debt. Many of these issues are governed by local real property law and local rules of foreclosure procedure, but others are addressed in a uniform way throughout the United States by provisions of the Uniform Commercial Code (UCC).1 Although the UCC provisions are settled law, it has become apparent that not all courts and attorneys are familiar with them. In addition, the complexity of some of the rules has proved daunting.

The Permanent Editorial Board for the Uniform Commercial Code2 has prepared this Report in order to further the understanding of this statutory background by identifying and explaining several key rules in the UCC that govern the transfer and enforcement of notes secured by a mortgage3 on real property. The UCC, of course, does not resolve all issues in this field. Most particularly, as to both substance and procedure, the enforcement of real estate mortgages by foreclosure is primarily the province of a state’s real property law (although determinations made pursuant to the UCC are typically relevant under that law). Accordingly, this Report should be understood as providing guidance only as to the issues the Report addresses.4

Please click image for paper

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ROCKWELL P. LUDDEN, THE MERS MORTGAGE IN MASSACHUSETTS: GENIUS, SHELL GAME, OR INVITATION TO FRAUD?

ROCKWELL P. LUDDEN, THE MERS MORTGAGE IN MASSACHUSETTS: GENIUS, SHELL GAME, OR INVITATION TO FRAUD?


BY: ROCKWELL. P. LUDDEN

But Mousie, thou art no thy lane,
In proving foresight may be vain:
The best-laid schemes o’ mice an’ men
……………Gang aft agley,
An’ lea’e us nought but grief an’ pain,
……………For promis’d joy!

To a Mouse, Robert Burns

MERS, the Mortgage Electronic Registration Systems, was the creation of a mortgage industry
beset by a tremendous spike in the rate at which mortgage assets were being passed around on the
secondary market in an effort to reap the benefits of securitization. More transfers meant more
paperwork, more trips to an increasingly backlogged county land office, more assignments and
other mortgage-related documents to record, and of course more filing fees. Finally the industry
came up with a plan, ingenious on its face, and yet shrouded in just enough mystery to conceal a
number of assertions that are, upon closer scrutiny, decidedly untenable within the framework of
existing law. Further gaps in the system have allowed unscrupulous individuals to play fast and
loose with the foreclosure process, and although MERS has taken steps to prevent such mischief
in the future the damage already done is of potentially staggering proportion.

The mortgage industry had a number of objectives, a salient of which was the creation of
a privately run, electronic database that would be far more efficient and cost-effective in tracking
the beneficial interests in mortgage loans, servicing rights, and warehouse loans than the traditional
system of county recording offices. With today’s information technology this proved to be
a challenging but nonetheless straightforward undertaking. But there was another objective as
well, one that was far more ambitions—and problematic: to design a system that would allow
successive owners of a mortgage loan to avoid the time-consuming and costly process of having
to run to the local land office to file the necessary paperwork every time a transfer of the mortgage
took place. It is in the methodology by which this latter objective would be accomplished
that the intrigue begins.

The idea was for MERS to be set up as a member organization the members of which
would all individually agree to name MERS as the mortgagee of record in the local land office.
MERS would then track the mortgage loan electronically through its database and, because of the
agreement with its members, would remain the mortgagee of record at the local land office. Thus
the only time an assignment would be recorded would be if the mortgage loan were transferred
out of the MERS system or the actual owner of the mortgage were planning to foreclose in its
own name. This would not only save time and money but add liquidity to the secondary market
as well, thereby making mortgage assets more attractive to investors. Simply put, the goal was to
enable MERS’s designation as mortgagee in the public records to survive and persist in spite of
multiple transfers of the underlying economic obligation on the secondary market.

It was a brilliant idea—or so it seemed.

[ipaper docId=72486193 access_key=key-6gw5dyo43w041j0zt3h height=600 width=600 /]

 

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Legal issues slow foreclosures in New Jersey

Legal issues slow foreclosures in New Jersey


I think this is the case in every state and all will agree


North Jersey-

In a small Bergen County courtroom one recent Friday, a sheriff’s officer auctioned off two foreclosed properties in a matter of minutes, as a handful of investors kept their eyes open for bargains.

It was a far cry from the typical sheriff’s auction of mid-2010, when 15 or more properties were auctioned weekly and up to 100 investors crowded the courthouse’s large jury room.

[…]

The reason: an August appellate court decision, Bank of New York v. Laks, according to Kevin Wolfe, head of the state’s Office of Foreclosure. In that case, the court dismissed a foreclosure, finding the lender violated the state Fair Foreclosure Act because it didn’t properly identify itself in a notice sent to the troubled homeowners.

[NORTH JERSEY]

[ipaper docId=61908065 access_key=key-1zd2neascm8dxsn37rbr height=600 width=600 /]

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NY Appellate Div. 2nd Judicial Dept. “U.S. Bank did not submit a written assignment of the note…Submitted no evidence to establish physical delivery of the note.”

NY Appellate Div. 2nd Judicial Dept. “U.S. Bank did not submit a written assignment of the note…Submitted no evidence to establish physical delivery of the note.”


Decided on November 1, 2011

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE DIVISION : SECOND JUDICIAL DEPARTMENT

MARK C. DILLON, J.P.
THOMAS A. DICKERSON
CHERYL E. CHAMBERS
ROBERT J. MILLER, JJ.
2010-09895
(Index No. 14370/08)

[*1]U.S. Bank, National Association, etc., respondent,

v

Mohamed Y. Sharif, appellant, et al., defendants.

Steven Alexander Biolsi, Forest Hills, N.Y., for appellant.
Shapiro, DiCarlo & Barak, LLC, Rochester, N.Y. (Ellis M.
Oster of counsel), for respondent.

DECISION & ORDER

In an action to foreclose a mortgage, the defendant Mohamed Y. Sharif appeals, as limited by his brief, from so much of an order of the Supreme Court, Nassau County (Adams, J.), entered August 20, 2010, as granted those branches of the plaintiff’s motion which were for summary judgment on the complaint insofar as asserted against him and for an order of reference, and denied those branches of his cross motion, made jointly with the defendant Nazimah Sharif, which were for leave to serve and file an amended answer to assert a defense based on lack of standing and, thereupon, to dismiss the complaint insofar as asserted against him based on lack of standing.

ORDERED that the order is reversed insofar as appealed from, on the law, on the facts, and in the exercise of discretion, with costs, those branches of the plaintiff’s motion which were for summary judgment on the complaint insofar as asserted against the defendant Mohamed Y. Sharif and for an order of reference are denied, and those branches of the cross motion of the defendant Mohamed Y. Sharif, made jointly with the defendant Nazimah Sharif, which were for leave to serve and file an amended answer, and thereupon, to dismiss the complaint insofar as asserted against the defendant Mohamed Y. Sharif based on lack of standing are granted.

” Entitlement to a judgment of foreclosure may be established, as a matter of law, where a mortgagee produces both the mortgage and unpaid note, together with evidence of the mortgagor’s default, thereby shifting the burden to the mortgagor to demonstrate, through both competent and admissible evidence, any defense which could raise a question of fact'” (Zanfini v Chandler, 79 AD3d 1031, 1031-1032, quoting HSBC Bank USA v Merrill, 37 AD3d 899, 900; see Household Fin. Realty Corp. of N.Y. v Winn, 19 AD3d 545, 546; Sears Mtge. Corp. v Yaghobi, 19 AD3d 402, 403; Ocwen Fed. Bank FSB v Miller, 18 AD3d 527, 527). However, “foreclosure of a mortgage may not be brought by one who has no title to it” (Kluge v Fugazy, 145 AD2d 537, 538). Where standing is raised as a defense by the defendant, the plaintiff is required to prove its standing before it may be determined whether the plaintiff is entitled to relief (see U.S. Bank, N.A. v Collymore, 68 AD3d 752, 753; Wells Fargo Bank Minn., N.A. v Mastropaolo, 42 AD3d 239, 242). [*2]

Here, the defendant Mohamed Y. Sharif (hereinafter Sharif) initially did not raise a defense based on lack of standing in his answer or in a pre-answer motion to dismiss. “[A]n argument that a plaintiff lacks standing, if not asserted in the defendant’s answer or in a pre-answer motion to dismiss the complaint, is waived pursuant to CPLR 3211(e)” (Wells Fargo Bank Minn., N.A. v Mastropaolo, 42 AD3d at 242; see JP Morgan Chase Bank, N.A. v Strands Hair Studio, LLC, 84 AD3d 1173, 1173). However, defenses waived under CPLR 3211(e) can nevertheless be interposed in an answer amended by leave of court pursuant to CPLR 3025(b) so long as the amendment does not cause the other party prejudice or surprise resulting directly from the delay (Complete Mgt., Inc. v Rubenstein, 74 AD3d 722, 723; see Nunez v Mousouras, 21 AD3d 355, 356; Aurora Loan Servs., LLC v Thomas, 70 AD3d 986, 987).

After the plaintiff moved for summary judgment, Sharif, with the defendant Nazimah Sharif, cross-moved, inter alia, for leave to serve and file an amended answer to assert a defense based on the plaintiff’s lack of standing, and, upon the assertion of that defense, to dismiss the complaint insofar as asserted against them. “Motions for leave to amend pleadings should be freely granted, absent prejudice or surprise directly resulting from the delay in seeking leave, unless the proposed amendment is palpably insufficient or patently devoid of merit” (Aurora Loan Servs., LLC v Thomas, 70 AD3d at 987; see CPLR 3025[b]; Lucido v Mancuso, 49 AD3d 220, 222). ” Mere lateness is not a barrier to the amendment. It must be lateness coupled with significant prejudice to the other side, the very elements of the laches doctrine'” (Public Adm’r of Kings County v Hossain Constr. Corp., 27 AD3d 714, 716, quoting Edenwald Contr. Co. v City of New York, 60 NY2d 957, 959; see Abrahamian v Tak Chan, 33 AD3d 947, 949).

The Supreme Court improvidently exercised its discretion in denying that branch of Sharif’s cross motion which was for leave to serve and file an amended answer to assert a defense based on lack of standing. In opposition to that branch of the cross motion, the plaintiff failed to demonstrate the existence of any prejudice or surprise that would result from the amendment, or that the proposed amended answer was palpably insufficient or patently devoid of merit (see Aurora Loan Servs., LLC v Thomas, 70 AD3d at 987).

Upon Sharif’s assertion of the defense of lack of standing, the plaintiff was required to demonstrate its standing to prosecute this action (see U.S. Bank, N.A. v Collymore, 68 AD3d at 753). In opposition to that branch of Sharif’s cross motion which, upon the amendment of the answer, was to dismiss the complaint insofar as asserted against him, the plaintiff failed to make any showing that it had standing to maintain this action. The plaintiff did submit an assignment of the mortgage. However, “[w]here a mortgage is represented by a bond or other instrument, an assignment of the mortgage without assignment of the underlying note or bond is a nullity” (U.S. Bank, N.A. v Collymore, 68 AD3d at 754; see Merritt v Bartholick, 36 NY 44, 45; Kluge v Fugazy, 145 AD2d at 538). “Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident” (U.S. Bank, N.A. v Collymore, 68 AD3d at 754). In opposing the cross motion, the plaintiff did not submit a written assignment of the note. Moreover, the plaintiff submitted no evidence to establish physical delivery of the note. Accordingly, in the absence of any evidence to demonstrate the existence of a written assignment of the note or physical delivery of the note, the Supreme Court should have granted that branch of Sharif’s cross motion which, upon the amendment of the answer, was to dismiss the complaint insofar as asserted against him for lack of standing (see CPLR 3211[a][3]; Bank of N.Y. v Silverberg, 86 AD3d 274; Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 109; U.S. Bank, N.A. v Collymore, 68 AD3d at 753-754).

DILLON, J.P., DICKERSON, CHAMBERS and MILLER, JJ., concur.

ENTER: [*3]

Matthew G. Kiernan

Clerk of the Court
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FELTUS v. US Bank N.A. | FL 2DCA “Affidavit of Indebtedness Fail, Genuine Issue of Material Fact of Who Owned or Held the Note”

FELTUS v. US Bank N.A. | FL 2DCA “Affidavit of Indebtedness Fail, Genuine Issue of Material Fact of Who Owned or Held the Note”


JULIA FELTUS, Appellant,
v.
U.S. BANK NATIONAL ASSOCIATION, as TRUSTEE of MASTR ADJUSTABLE RATE MORTGAGES TRUST 2007-3, Appellee.

 

Case No. 2D10-3727.
District Court of Appeal of Florida, Second District. 

Opinion filed October 19, 2011.
Jacqulyn Mack of The Mack Law Firm, Englewood, for Appellant.Roy A. Diaz and Diana B. Matson of Smith, Hiatt & Diaz, P.A., Ft. Lauderdale for Appellee.

WHATLEY, Judge.

Julia Feltus appeals a final summary judgment of foreclosure in favor of U.S. Bank National Association, as Trustee of Mastr Adjustable Rate Mortgages Trust 2007-3 (U.S. Bank or the Bank). We reverse because material issues of fact as to which entity holding the promissory note executed by Feltus existed at the time the trial court entered summary judgment.

On August 24, 2009, U.S. Bank filed an unverified complaint seeking to reestablish a lost promissory note and to foreclose the mortgage on Feltus’s home. U.S. Bank attached to the complaint a copy of the note and the mortgage, but both documents showed the lender to be Countrywide Bank, N.A. In the count to reestablish the note pursuant to section 673.3091, Florida Statutes (2009), U.S. Bank alleged that the note was executed by Feltus on February 16, 2007; U.S. Bank is the owner and holder of the note; the original note has been lost and is not in U.S. Bank’s custody or control; the note was continuously in the possession and control of the Bank’s assignor and predecessor from the date of execution until the loss, at which time the assignor and predecessor was entitled to enforce the note; and the note has not been paid or otherwise satisfied, assigned, or transferred, or lawfully seized. Notably, these allegations did not include an allegation that Countrywide had assigned the note to U.S. Bank.

After Feltus filed a motion to dismiss alleging that U.S. Bank had failed to establish that it owned or held the subject note, on November 16, 2009, U.S. Bank filed an affidavit of indebtedness executed by Kathy Repka, an assistant secretary of BAC Home Loan Servicing, L.P., f/k/a Countrywide Home Loan Servicing, L.P. Repka asserted that her affidavit was based on the loan payment records of the servicing agent and her familiarity with those records. After she explained that the purpose of the records was “to monitor and maintain the account relating to a note and mortgage that are the subject matter of the pending case,” Repka asserted that U.S. Bank owns and holds the note described in its complaint. Then on November 18, 2009, U.S. Bank filed another copy of the note as a supplemental exhibit to its complaint. In contrast to the copy attached to the complaint that contained no endorsements, this copy contained two endorsements that were side by side on the last page—the first stated “PAY TO THE ORDER OF: COUNTRYWIDE HOME LOANS, INC. WITHOUT RECOURSE COUNTRYWIDE BANK, N.A.” and the second stated “PAY TO THE ORDER OF: __________ WITHOUT RECOURSE COUNTRYWIDE HOME LOANS, INC.” Notwithstanding this filing, eight days after Feltus filed her answer and affirmative defenses, on May 26, 2010, U.S. Bank filed a motion for summary final judgment alleging that it “owns and holds a promissory note and mortgage” and that the original note had been lost and is not in U.S. Bank’s control. But on June 4, 2010, the Bank filed a reply to Feltus’s affirmative defenses in which it asserted that it is now in possession of the original note, which it attached and which is the same note it filed on November 18, 2009. The Bank further asserted that because the note is endorsed in blank and it is in possession of the note, it is the bearer and entitled to foreclose the mortgage. See Riggs v. Aurora Loan Servs., LLC, 36 So. 3d 932, 933 (Fla. 4th DCA 2010) (noting that pursuant to Uniform Commercial Code, negotiation of note by transfer of possession with blank endorsement makes transferee the holder of the note entitled to enforce it).

We view U.S. Bank’s filing of a copy of the note that it later asserted was the original note as a supplemental exhibit to its complaint to reestablish a lost note as an attempt to amend its complaint in violation of Florida Rule of Civil Procedure 1.190(a). U.S. Bank did not seek leave of court or the consent of Feltus to amend its complaint. A pleading filed in violation of rule 1.190(a) is a nullity, and the controversy should be determined based on the properly filed pleadings. Warner-Lambert Co. v. Patrick, 428 So. 2d 718 (Fla. 4th DCA 1983).

Before a court may grant summary judgment, the pleadings, depositions, answers to interrogatories, admissions, and any affidavits must “`conclusively show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'” Allenby & Assocs., Inc. v. Crown St. Vincent Ltd., 8 So. 3d 1211, 1213 (Fla. 4th DCA 2009) (quoting Fini v. Glascoe, 936 So. 2d 52, 54 (Fla. 4th DCA 2006)). The party moving for summary judgment bears the burden to show conclusively that there is a complete absence of any genuine issue of material fact. Id.

The properly filed pleadings before the court when it heard the Bank’s motion for summary judgment were a complaint seeking to reestablish a lost note, Feltus’s answer and affirmative defenses alleging that the note attached to the complaint contradicts the allegation of the complaint that U.S. Bank is the owner of the note, a motion for summary judgment alleging a lost note of which U.S. Bank is the owner, an affidavit of indebtedness alleging that U.S. Bank was the owner and holder of the note described in the complaint, and U.S. Bank’s reply to Feltus’s affirmative defenses asserting that it was now in possession of the original note, which it attached to the reply. But the note attached to the complaint showed the lender to be Countrywide Bank, N.A. And the complaint failed to allege that “[t]he person seeking to enforce the instrument was entitled to enforce the instrument when loss of possession occurred, or has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred.” § 673.3091(a). In addition, the affidavit of indebtedness revealed no basis for the affiant’s assertion that U.S. Bank owns and holds the note. The affiant is an assistant secretary for the alleged servicing agent of the Bank, and she asserted that she had personal knowledge of the loan based on the loan payment records. She did not assert any personal knowledge of how U.S. Bank would have come to own or hold the note. See Shafran v. Parrish, 787 So. 2d 177, 179 (Fla. 2d DCA 2001) (“When affidavits are filed to establish the factual basis of the motion [for summary judgment], they must be made on personal knowledge, demonstrate the affiant’s competency to testify, and be otherwise admissible in evidence.”).

The trial court erred in entering final summary judgment of foreclosure because the documents before it created a genuine issue of material fact of who owned or held the note. Accordingly, we reverse and remand for further proceedings.

CRENSHAW, J., Concurs.

CASANUEVA, J., Concurs with opinion.

CASANUEVA, Judge, Concurring.

I fully concur with the majority opinion and write only to point out further failings in the affidavit of indebtedness.

The affidavit of indebtedness was the sole affidavit offered in support of U.S. Bank’s motion for summary judgment. The affiant was an assistant secretary employed by the Bank’s loan servicing agent. She set forth, under oath, that her direct personal knowledge was restricted to that learned in maintaining the loan payment records of the servicing agent. And, as the majority opinion points out, she did not assert any personal knowledge of how U.S. Bank had come to own or hold the note. Beyond this deficiency noted in the majority opinion, the affiant also stated that U.S. Bank had accelerated the entire principal balance due and had “retained Smith, Hiatt & Diaz, P.A. to represent it in this matter.” Because the affiant’s competency was based only on her review of the loan payment records, she was not competent to aver as to actions of the Bank in accelerating the loan or hiring counsel, and her averments are hearsay and inadmissible at trial. The Bank could have easily established the facts of acceleration of the note and hiring of counsel with affidavits from the Bank’s official in charge of foreclosing this loan and/or the Bank’s counsel to establish the fact of hiring and of the fee arrangement. Such bank official or counsel would have direct personal knowledge, would be competent, and would have presented evidence admissible at trial.

The affidavit the Bank submitted fell woefully short of these requirements and could not aid the Bank in any way to support its motion for summary judgment of foreclosure.

NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED.

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WISCONSIN 4DCA Reverses, Remands Summary Judgment “Materials were insufficient to establish that BAC was the holder of the note”

WISCONSIN 4DCA Reverses, Remands Summary Judgment “Materials were insufficient to establish that BAC was the holder of the note”


BAC Home Loan Servicing, L.P. f/k/a Countrywide Home Loans Servicing L.P., Plaintiff-Respondent,
v.
Michael J. Williams and Nicole J. Williams, Defendants-Appellants.

No. 2010AP2334.
Court of Appeals of Wisconsin, District IV.

Opinion Filed: September 29, 2011.
Before Lundsten, P.J., Sherman and Blanchard, JJ.

¶ 1 PER CURIAM.

Michael and Nicole Williams (collectively, Williams) appeal a summary judgment order that granted BAC Home Loan Servicing (BAC) a judgment of foreclosure against them. Williams raises multiple arguments challenging the judgment of foreclosure, and further contends the circuit court erred in denying the counterclaims by an earlier order. We conclude that the circuit court properly dismissed the counterclaims, but that the summary judgment materials were insufficient to establish that BAC was the holder of the note upon which the foreclosure was based. Accordingly, we reverse the judgment of foreclosure and remand for further proceedings.

BACKGROUND

¶ 2 On January 25, 2008, Williams executed a promissory note in favor of One Choice Mortgage, LLC, secured by a mortgage on certain residential property in Sauk County. On August 7, 2009, BAC filed this action, seeking to foreclose on the property without deficiency, pursuant to Wis. Stat. § 846.101 (2009-10).[1]

¶ 3 BAC alleged in its complaint that it was the current holder of the note and mortgage, and that Williams had failed to make contractually required payments. Williams filed an answer, subsequently amended, admitting that Williams had failed to make payments, but raising a series of affirmative defenses. Williams also set forth a series of counterclaims seeking damages for the alleged failure of BAC (and/or its predecessors in interest) to comply with several federal administrative code provisions and for negligence, product liability, lender liability, and strict liability. BAC moved to dismiss the counterclaims and further sought summary judgment on the foreclosure.

¶ 4 The summary judgment materials included certified copies of the original note and mortgage, which were both issued to One Choice Mortgage through its nominee Mortgage Electronic Registration Systems, Inc., and an uncertified photocopy of an “Assignment of Mortgage” form. This form stated that Mortgage Electronic Registration Systems, Inc. “assigns to BAC … the mortgage executed by [Williams] to Mortgage Electronic Registration Systems Inc., as mortgagee on the 25th of January, 2008, together with the previously transferred note secured thereby ….” The assignment form was accompanied by an affidavit from a BAC employee. The employee averred that she was a custodian of BAC’s business records, having

possession, control and responsibility for the accounting and other mortgage loan records relating to the defendants’ mortgage loan which are created and kept and maintained in the ordinary course of business as a regular business practice and are prepared at or near the time of the transaction or event by a person with knowledge.

The affidavit further stated that the employee had personally inspected the records relating to Williams, and had personal knowledge of how such records generally were created and kept and maintained.

¶ 5 The circuit court dismissed the counterclaims and granted summary judgment on the foreclosure, and Williams appeals.

STANDARD OF REVIEW

¶ 6 This court reviews summary judgment decisions de novo, applying the same methodology and legal standard employed by the circuit court. Brownelli v. McCaughtry, 182 Wis. 2d 367, 372, 514 N.W.2d 48 (Ct. App. 1994).

We first examine the complaint to determine whether it states a claim, and then we review the answer to determine whether it joins a material issue of fact or law…. [Next,] we examine the moving party’s affidavits to determine whether they establish a prima facie case for summary judgment. If they do, we look to the opposing party’s affidavits to determine whether there are any material facts in dispute that entitle the opposing party to a trial.

Frost v. Whitbeck, 2001 WI App 289, ¶6, 249 Wis. 2d 206, 638 N.W.2d 325 (citations omitted), aff’d, 2002 WI 129, 257 Wis. 2d 80, 654 N.W.2d 225.

DISCUSSION

Summary Judgment on the Foreclosure

¶ 7 Although Williams raises multiple arguments, we conclude that one issue is dispositive as to whether summary judgment was properly granted on BAC’s foreclosure action. Specifically, we agree with Williams that BAC failed to make a prima facie case that it was in fact the current holder of the promissory note.

¶ 8 We first question whether the form assigning the mortgage to BAC, and making reference to a “previously transferred note” was actually the effective instrument transferring the promissory note to BAC. If the note had in fact been previously transferred, it would seem that the prior document would be necessary to establish that transfer, and should have been included in the summary judgment materials. In any event, as discussed below, even assuming that the document assigning the mortgage to BAC also assigned the promissory note or could properly be used to document the assignment by reference, we conclude that the assignment document was insufficiently authenticated to satisfy the summary judgment standard.

¶ 9 Affidavits in support or in opposition to a motion for summary judgment “shall be made on personal knowledge and shall set forth such evidentiary facts as would be admissible in evidence.” Wis. Stat. § 802.08(3). In order to be admissible in evidence, a document must be authenticated by “evidence sufficient to support a finding that the matter in question is what its proponent claims.” Wis. Stat. § 909.01. Certain documents may be self-authenticating, including certified copies of public records such as recorded instruments, and certified domestic records of regularly conducted activity. Wis. Stat. § 909.02(4) and (12). The rule on self-authentication for records of regularly conducted activity parallels the hearsay exception for such records, allowing admission of

a memorandum, report, record, or data compilation, in any form, of acts events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, all in the course of a regularly conducted activity, as shown by the testimony of the custodian or other qualified witness.

Cf. Wis. Stat. §§ 908.03(6) and 909.02(12).

¶ 10 A records custodian seeking to authenticate a record must be qualified to testify both that the record at issue was made by a person with knowledge or from information transmitted by a person with knowledge, and that this was done in the course of a regularly conducted activity. Palisades Collection LLC v. Kalal, 2010 WI App 38, ¶20, 324 Wis. 2d 180, 781 N.W.2d 503. Being qualified means that the custodian possesses sufficient personal knowledge to testify about such things as who recorded or transmitted the information and the contemporaneousness of the record in relation to the events it purports to document. See id., ¶16.

¶ 11 We first note that the copy of the mortgage assignment form included in the summary judgment materials here was not certified, and therefore would not be admissible as a self-authenticated public record, even if it were recorded. Next, we question whether a form assigning a mortgage or promissory note from one party to another based upon consideration, constitutes “a memorandum, report, record, or data compilation” so as to qualify as a record of regularly conducted activity, subject to the self-authentication rule.

¶ 12 Even assuming for the sake of argument only that such a signed, notarized, and recorded instrument could be considered a “record” of regularly conducted activity, we are not persuaded that the BAC employee’s affidavit established that she was qualified to authenticate the assignment form here. The employee’s affidavit makes conclusory assertions parroting the statutory language that she has personal knowledge that the records in her custody are prepared in the ordinary course of business at or near the time of the transaction or event by a person with knowledge of the underlying transactions. However, it does not include any specific assertions to explain where the copy of the assignment form attached to her affidavit came from—for instance, whether it was made from the original, and if so, by whom. The fact that the employee may have been in a position to know how BAC prepared its account statements, which we would agree qualify as ordinary business records, does not mean that she was in a position to authenticate an uncertified copy of an instrument that she did not see executed.

¶ 13 Because the copy of the document purportedly assigning to BAC Williams’ mortgage—and by reference, the promissory note—was not properly authenticated, it did not meet the standard of admissible evidence required for summary judgment materials under Wis. Stat. § 802.08(3). Therefore, BAC failed to make a prima facie case that it had standing to foreclose based upon Williams’ failure to pay according to the terms of the promissory note. In light of BAC’s failure, we do not need to address whether any of the affirmative defenses asserted in Williams’ answer would also have created material disputes for the circuit court. Accordingly, we reverse the circuit court’s summary judgment decision and remand with directions that the matter proceed with discovery[2] and trial on BAC’s foreclosure claim.

Williams’ Counterclaims

¶ 14 Williams filed counterclaims alleging violations of 12 U.S.C. §§ 2605(b), 2605(c), 2605(e), 2605(e)(3), negligence, product liability, lender liability, and strict liability for alleged violations of the Truth in Lending Act.

¶ 15 Williams first argues that the circuit court violated due process by dismissing all counterclaims without providing an adequate opportunity to submit additional evidence. Williams correctly points out that when matters outside the pleadings are presented on a motion to dismiss, the motion shall be treated as one for summary judgment. Wis. Stat. § 802.06(2)(b). However, as we explained above, the first step in summary judgment methodology is to examine the sufficiency of the pleadings. If the pleadings do not state a claim upon which relief can be granted, there is no need for further analysis. Therefore, any error the circuit court may have committed in refusing to allow Williams to submit additional materials in response to BAC’s motion to dismiss was rendered harmless once the court determined that Williams’ pleadings in fact failed to state a claim, and the circuit court did not violate Williams’ due process rights by dismissing the counterclaims based on the pleadings alone.

¶ 16 Williams next contends that the circuit court applied the wrong standard in considering whether to dismiss the counterclaims because it did not mention the oft-cited language that a claim should be dismissed only if it is “quite clear” that under no circumstances could the plaintiff prevail. Instead, the circuit court cited Doe v. Archdiocese of Milwaukee, 2007 WI 95, ¶12, 303 Wis. 2d 34, 734 N.W.2d 827, for the proposition that “[d]ismissal of a claim is improper if there are any conditions under which the [pleading party] could recover.” The minor difference in language is a distinction without a difference. In short, we are satisfied the circuit court properly understood that it was to liberally construe the pleadings when testing their sufficiency.

¶ 17 Turning to the merits, Williams challenges the circuit court’s conclusion that the counterclaims of negligence, product liability, and strict liability were barred by the economic loss doctrine. Williams complains that the circuit court did not adequately explain why the economic loss doctrine applied to these claims, and why Williams did not qualify for an exception. The economic loss doctrine “preclud[es] contracting parties from pursuing tort recovery for purely economic or commercial losses associated with the contract relationship.” Kaloti Enterprises, Inc. v. Kellogg Sales Co., 2005 WI 111, ¶27, 283 Wis. 2d 555, 699 N.W.2d 205 (citations omitted). Contrary to Williams’ assertions, neither the status of being a consumer nor a lack of knowledge about the economic loss doctrine relieves a party from its constraints. Williams correctly points out that there is a limited exception to the economic loss doctrine when a contract was induced by fraud. See Digicorp, Inc. v. Ameritech Corp., 2003 WI 54, ¶¶51-52, 262 Wis. 2d 32, 662 N.W.2d 652. That exception does not apply here, however, because the instances of fraud Williams alleges in the complaint—namely, an erroneous real estate appraisal and a misrepresentation about whether a damages clause should apply to the APR rate—were allegedly committed by persons who were not employees of BAC or otherwise parties to the action.[3] In sum, Williams’ claims of negligence, product liability, and strict liability clearly lie in tort, and were plainly associated with contractual relationships arising out of a series of mortgages. The court did not need to say more to dispose of counterclaims six, seven and nine.

¶ 18 Williams presents no argument that the circuit court erred in the dismissal of the other counterclaims.

¶ 19 Finally, Williams contends the circuit court should have imposed sanctions on BAC based upon what Williams views as inaccurate statements in BAC’s filings to the court. However, the challenged statements appear simply to be legal propositions or characterizations that Williams disagrees with. The circuit court was well within its discretion to determine that there had been no ethical violation warranting sanctions.

By the Court.—Judgment reversed and cause remanded.

This opinion will not be published. See Wis. Stat. Rule 809.23(1)(b)5.

[1] All references to the Wisconsin Statutes are to the 2009-10 version unless otherwise noted.

[2] Williams complains that the circuit court ignored discovery requests, but does not specify what specific materials were sought. We therefore do not address any particular discovery matter in this appeal.

[3] Williams also contends that the circuit court should have granted Williams’ motion to add the appraiser and real estate broker to the action. As BAC points out, however, that motion was not filed until after the counterclaims had already been dismissed, and the alleged misconduct related to prior, satisfied mortgages that were not the subject of the current foreclosure action.

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