reversed - FORECLOSURE FRAUD

Tag Archive | "reversed"

RIGBY vs WELLS FARGO | FL 4DCA “Bank failed to establish that it had standing to foreclosure upon the note”

RIGBY vs WELLS FARGO | FL 4DCA “Bank failed to establish that it had standing to foreclosure upon the note”


DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

January Term 2012

DAVID RIGBY and KATHLYN RIGBY,
Appellants,

v.

WELLS FARGO BANK, N.A., AS TRUSTEE FOR OPTION ONE MORTGAGE LOAN TRUST 2007-FXD2 ASSET-BACKED CERTIFICATES, SERIES 2007-FXD2,
Appellee.

No. 4D10-3587

[April 4, 2012]

STEVENSON, J.

This appeal stems from a complaint of foreclosure filed b y the
appellee, Wells Fargo Bank, N.A., as trustee (“Bank”), against the
appellants David Rigby and Kathlyn Rigby. The trial court entered final
summary judgment. Because Bank failed to meet its burden on
summary judgment, we reverse.

The Bank file d its complaint on May 21, 2008, and attached a
mortgage that named Option One Mortgage Corporation (“Option One”)
as the lender. Subsequently, the Bank filed an assignment of mortgage,
from Option One to Bank, dated May 22, 2008, as well as the undated
original note containing a special endorsement in favor of Bank. The
parties proceeded to discovery and Bank sought an admission from the
Rigbys acknowledging that they had previously received notice that the
note and mortgage had been transferred to Bank. The Rigbys failed to
respond to this request. Bank then filed a motion for summary
judgment, attaching an affidavit wherein the affiant swore that Bank was
holder and owner of the mortgage. Based on this record, the trial court
entered summary judgment. A trial court’s entry of summary judgment
is reviewed de novo. See Frost v. Regions Bank, 15 So. 3d 905, 906 (Fla.
4th DCA 2009).

The Bank failed to establish that it had standing to foreclosure upon
the note. “A crucial element in any mortgage foreclosure proceeding is
that the party seeking foreclosure must demonstrate that it has standing
to foreclose.” McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d
170, 173 (Fla. 4th DCA 2012). To establish standing, the plaintiff must
submit the note bearing a special endorsement in favor of the plaintiff,
an assignment from payee to the plaintiff or an affidavit of ownership
proving its status as holder of the note. Servedio v. U.S. Bank Nat’l
Ass’n, 46 So. 3d 1105, 1107 (Fla. 4th DCA 2010). “A party must have
standing to file suit at its inception and may not remedy this defect by
subsequently obtaining standing.” Venture Holdings & Acquisitions Grp.,
LLC v. A.I.M. Funding Grp., LLC, 75 So. 3d 773, 776 (Fla. 4th DCA 2011).
The Bank has not shown that it was holder of the note at the time the
complaint was filed. The note containing a special endorsement in favor
of Bank was not dated. The assignment of mortgage, dated May 22,
2008, indicates that Bank did not acquire the mortgage until the day
after the complaint was filed. Finally, neither the affidavit, nor the
technical admissions made by the Rigbys, establishes the date on which
Bank acquired possession of the note and there is no evidence in the
record establishing that an equitable transfer of the mortgage occurred
prior to the date the complaint was filed. See McLean, 79 So. 3d at 174
(reversing final summary judgment of foreclosure because appellee bank
failed to establish standing where mortgage was assigned to bank three
days after lawsuit was filed; note contained undated special endorsement
in favor of bank; and affidavit in support of summary judgment failed to
indicate that bank became equitable owner of note and mortgage prior to
date lawsuit was filed).

Reversed.

WARNER and CONNER, JJ., concur.

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



Posted in STOP FORECLOSURE FRAUDComments (0)

Compucredit Corp. v. Greenwood | US Supreme Court “Federal Arbitration Act, Enforceability of Consumer Arbitration Agreements, Right To Sue”

Compucredit Corp. v. Greenwood | US Supreme Court “Federal Arbitration Act, Enforceability of Consumer Arbitration Agreements, Right To Sue”


“requires courts to enforce agreements to arbitrate according to their terms . . . even when the claims at issue are federal statutory claims, unless the FAA’s mandate has been ‘overridden by contrary congressional command.’”

.

SUPREME COURT OF THE UNITED STATES
Syllabus

COMPUCREDIT CORP. ET AL. v. GREENWOOD ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

No. 10–948. Argued October 11, 2011—Decided January 10, 2012

[ipaper docId=87396392 access_key=key-l9l73t0vwkdubqrki5a height=600 width=600 /]

 

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



Posted in STOP FORECLOSURE FRAUDComments (0)

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.

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.


H/T Dawn M. Rapoport, The Rakusin Law Firm & TitleLaw

83 U.S. 271 (____)
16 Wall. 271

CARPENTER
v.
LONGAN.

Supreme Court of United States.
Messrs. J.M. Carlisle and J.D. McPherson, for the appellant; Messrs. Bartley and Casey contra.

Mr. Justice SWAYNE stated the case, and delivered the opinion of the court.

On the 5th of March, 1867, the appellee, Mahala Longan, and Jesse B. Longan, executed their promissory note to Jacob B. Carpenter, or order, for the sum of $980, payable six months after date, at the Colorado National Bank, in Denver City, with interest at the rate of three and a half per cent. per month until paid. At the same time Mahala Longan executed to Carpenter a mortgage upon certain real estate 272*272 therein described. The mortgage was conditioned for the payment of the note at maturity, according to its effect.

On the 24th of July, 1867, more than two months before the maturity of the note, Jacob B. Carpenter, for a valuable consideration, assigned the note and mortgage to B. Platte Carpenter, the appellant. The note not being paid at maturity, the appellant filed this bill against Mahala Longan, in the District Court of Jefferson County, Colorado Territory, to foreclose the mortgage.

She answered and alleged that when she executed the mortgage to Jacob B. Carpenter, she also delivered to him certain wheat and flour, which he promised to sell, and to apply the proceeds to the payment of the note; that at the maturity of the note she had tendered the amount due upon it, and had demanded the return of the note and mortgage and of the wheat and flour, all which was refused. Subsequently she filed an amended answer, in which she charged that Jacob B. Carpenter had converted the wheat and flour to his own use, and that when the appellant took the assignment of the note and mortgage, he had full knowledge of the facts touching the delivery of the wheat and flour to his assignor. Testimony was taken upon both sides. It was proved that the wheat and flour were in the hands of Miller & Williams, warehousemen, in the city of Denver, that they sold, and received payment for, a part, and that the money thus received and the residue of the wheat and flour were lost by their failure. The only question made in the case was, upon whom this loss should fall, whether upon the appellant or the appellee. The view which we have taken of the case renders it unnecessary to advert more fully to the facts relating to the subject. The District Court decreed in favor of the appellant for the full amount of the note and interest. The Supreme Court of the Territory reversed the decree, holding that the value of the wheat and flour should be deducted. The complainant thereupon removed the case to this court by appeal.

It is proved and not controverted that the note and mortgage were assigned to the appellant for a valuable consideration 273*273 before the maturity of the note. Notice of anything touching the wheat and flour is not brought home to him.

The assignment of a note underdue raises the presumption of the want of notice, and this presumption stands until it is overcome by sufficient proof. The case is a different one from what it would be if the mortgage stood alone, or the note was non-negotiable, or had been assigned after maturity. The question presented for our determination is, whether an assignee, under the circumstances of this case takes the mortgage as he takes the note, free from the objections to which it was liable in the hands of the mortgagee. We hold the affirmative.[*] The contract as regards the note was that the maker should pay it at maturity to any bonâ fide indorsee, without reference to any defences to which it might have been liable in the hands of the payee. The mortgage was conditioned to secure the fulfilment of that contract. To let in such a defence against such a holder would be a clear departure from the agreement of the mortgagor and mortgagee, to which the assignee subsequently, in good faith, became a party. If the mortgagor desired to reserve such an advantage, he should have given a non-negotiable instrument. If one of two innocent persons must suffer by a deceit, it is more consonant to reason that he who “puts trust and confidence in the deceiver should be a loser rather than a stranger.”[†]

Upon a bill of foreclosure filed by the assignee, an account must be taken to ascertain the amount due upon the instrument secured by the mortgage. Here the amount due was the face of the note and interest, and that could have been recovered in an action at law. Equity could not find that 274*274 less was due. It is a case in which equity must follow the law. A decree that the amount due shall be paid within a specified time, or that the mortgaged premises shall be sold, follows necessarily. Powell, cited supra, says: “But if the debt were on a negotiable security, as a bill of exchange collaterally secured by a mortgage, and the mortgagee, after payment of part of it by the mortgagor, actually negotiated the note for the value, the indorsee or assignee would, it seems, in all events, be entitled to have his money from the mortgagor on liquidating the account, although he had paid it before, because the indorsee or assignee has a legal right to the note and a legal remedy at law, which a court of equity ought not to take from him, but to allow him the benefit of on the account.”

A different doctrine would involve strange anomalies. The assignee might file his bill and the court dismiss it. He could then sue at law, recover judgment, and sell the mortgaged premises under execution. It is not pretended that equity would interpose against him. So, if the aid of equity were properly invoked to give effect to the lien of the judgment upon the same premises for the full amount, it could not be refused. Surely such an excrescence ought not to be permitted to disfigure any system of enlightened jurisprudence. It is the policy of the law to avoid circuity of action, and parties ought not to be driven from one forum to obtain a remedy which cannot be denied in another.

The mortgaged premises are pledged as security for the debt. In proportion as a remedy is denied the contract is violated, and the rights of the assignee are set at naught. In other words, the mortgage ceases to be security for a part or the whole of the debt, its express provisions to the contrary notwithstanding.

The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.[*]

275*275 It must be admitted that there is considerable discrepancy in the authorities upon the question under consideration.

In Baily v. Smith et al.[*] — a case marked by great ability and fulness of research — the Supreme Court of Ohio came to a conclusion different from that at which we have arrived The judgment was put chiefly upon the ground that notes, negotiable, are made so by statute, while there is no such statutory provision as to mortgages, and that hence the assignee takes the latter as he would any other chose in action, subject to all the equities which subsisted against it while in the hands of the original holder. To this view of the subject there are several answers.

The transfer of the note carries with it the security, without any formal assignment or delivery, or even mention of the latter. If not assignable at law, it is clearly so in equity. When the amount due on the note is ascertained in the foreclosure proceeding, equity recognizes it as conclusive, and decrees accordingly. Whether the title of the assignee is legal or equitable is immaterial. The result follows irrespective of that question. The process is only a mode of enforcing a lien.

All the authorities agree that the debt is the principal thing and the mortgage an accessory. Equity puts the principal and accessory upon a footing of equality, and gives to the assignee of the evidence of the debt the same rights in regard to both. There is no departure from any principle of law or equity in reaching this conclusion. There is no analogy between this case and one where a chose in action standing alone is sought to be enforced. The fallacy which lies in overlooking this distinction has misled many able minds, and is the source of all the confusion that exists. The mortgage can have no separate existence. When the note is paid the mortgage expires. It cannot survive for a moment the debt which the note represents. This dependent and incidental relation is the controlling consideration, and takes the case out of the rule applied to choses in action, 276*276 where no such relation of dependence exists. Accessorium non ducit, sequitur principale.

In Pierce v. Faunce,[*] the court say: “A mortgage is pro tanto a purchase, and a bonâ fide mortgagee is equally entitled to protection as the bonâ fide grantee. So the assignee of a mortgage is on the same footing with the bonâ fide mortgagee. In all cases the reliance of the purchaser is upon the record, and when that discloses an unimpeachable title he receives the protection of the law as against unknown and latent defects.”

Matthews v. Wallwyn[†] is usually much relied upon by those who maintain the infirmity of the assignee’s title. In that case the mortgage was given to secure the payment of a non-negotiable bond. The mortgagee assigned the bond and mortgage fraudulently and thereafter received large sums which should have been credited upon the debt. The assignee sought to enforce the mortgage for the full amount specified in the bond. The Lord Chancellor was at first troubled by the consideration that the mortgage deed purported to convey the legal title, and seemed inclined to think that might take the case out of the rule of liability which would be applied to the bond if standing alone. He finally came to a different conclusion, holding the mortgage to be a mere security. He said, finally: “The debt, therefore, is the principal thing; and it is obvious that if an action was brought on the bond in the name of the mortgagee, as it must be, the mortgagor shall pay no more than what is really due upon the bond; if an action of covenant was brought by the covenantee, Cthe account must be settled in that action. In this court the condition of the assignee cannot be better than it would be at law in any mode he could take to recover what was due upon the assignment.” The principle is distinctly recognized that the measure of liability upon the instrument secured is the measure of the liability chargeable upon the security. The condition of the assignee cannot be better in law than it is in equity. 277*277 So neither can it be worse. Upon this ground we place our judgment.

We think the doctrine we have laid down is sustained by reason, principle, and the greater weight of authority.

DECREE REVERSED, and the case remanded with directions to enter a decree

IN CONFORMITY WITH THIS OPINION.

[*] Powell on Mortgages, 908; 1 Hilliard on Mortgages, 572; Coot on Mortgages, 304; Reeves v. Scully, Walker’s Chancery, 248; Fisher v. Otis, 3 Chandler, 83; Martineau v. McCollum, 4 Id. 153; Bloomer v. Henderson, 8 Michigan, 395; Potts v. Blackwell, 4 Jones, 58; Cicotte v. Gagnier, 2 Michigan, 381; Pierce v. Faunce, 47 Maine, 507; Palmer v. Yates, 3 Sandford, 137; Taylor v. Page, 6 Allen, 86; Croft v. Bunster, 9 Wisconsin, 503 Cornell v. Hilchens, 11 Id. 353.

[†] Hern v. Nichols, 1 Salkeld, 289.

[*] Jackson v. Blodget, 5 Cowan, 205; Jackson v. Willard, 4 Johnson, 43.

[*] 14 Ohio State, 396.

[*] 47 Maine, 513.

[†] 4 Vesey, 126.

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



Posted in STOP FORECLOSURE FRAUDComments (2)

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 /]

 

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



Posted in STOP FORECLOSURE FRAUDComments (3)

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 /]

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



Posted in STOP FORECLOSURE FRAUDComments (0)

Foreclosure Ruling Irks Banks

Foreclosure Ruling Irks Banks


Since they can’t find someone with real knowledge, they probably are stuck because the majority of the originating companies are long gone and so are the employees…just as planned.

Palm Beach Post-

WEST PALM BEACH — An appeals court ruling in favor of Wellington homeowners in foreclosure is causing “calamitous confusion,” according to bank attorneys who say it could snarl hundreds of thousands of pending foreclosure cases.

The bank is asking for a rehearing and clarification of the Sept. 7 decision by the 4th District Court of Appeal, which said a foreclosure affidavit submitted by a bank employee was hearsay because the person relied on computerized information and did not have personal knowledge of the case.

The lack of personal knowledge of foreclosure documents is the foundation of the robo-signing controversy that continues to delay foreclosure proceedings.

The bank is not challenging the court’s decision in Gary and Anita Glarum vs. LaSalle Bank, but it said the ruling has been misinterpreted to mean that the person relying on computerized records must be the one who actually entered them into the computer or the direct custodian of the record.

[PALM BEACH POST]

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



Posted in STOP FORECLOSURE FRAUDComments (0)

GLARUM v. LASALLE BANK | FL 4DCA Reverses SJ “Home Loan Services Inc.’s Ralph Orsini Affidavit Fail”

GLARUM v. LASALLE BANK | FL 4DCA Reverses SJ “Home Loan Services Inc.’s Ralph Orsini Affidavit Fail”


DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

July Term 2011

GARY GLARUM and ANITA GLARUM,
Appellants,

v.

LASALLE BANK NATIONAL ASSOCIATION, as Trustee for
Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-FFI, FIRST WELLINGTON, INC., a dissolved
corporation, WELLINGTON SHORES HOMEOWNERS ASSOCIATION,
GREENVIEW SHORES NO.2 AT WELLINGTON HOMEOWNERS
ASSOCIATION, GREENVIEW SHORES HOMEOWNERS ASSOCIATION,
FIRST FRANKLIN FINANCIAL CORPORATION, and any unknown
heirs, devisees, grantees, creditors, and other unknown persons or
unknown spouses claiming by, through and under any of the abovenamed
parties,
Appellees.

No. 4D10-1372

[September 7, 2011]

PER CURIAM.

This appeal presents two issues. First, we consider whether the trial
court improperly granted a summary judgment of foreclosure in favor of
LaSalle Bank. We also consider whether the trial court erred in
sanctioning appellants’ counsel for filing frivolous pleadings pursuant to
section 57.105, Florida Statutes. We reverse the trial court’s entry of
summary judgment in favor of LaSalle in part, as LaSalle’s summary
judgment evidence was insufficient to establish the amount due to
LaSalle under the note and mortgage. We likewise reverse the entry of
sanctions against appellants’ counsel as improper. However, we find no
merit in appellants’ contention that LaSalle lacked standing to seek
foreclosure.

Appellants admitted in their answer that they had not made payments
according to the terms of the note, and as such, they were in default.
Appellants, however, denied LaSalle’s allegations regarding the amount
of the default. To establish the amount of appellants’ indebtedness for
summary judgment, LaSalle filed the affidavit of Ralph Orsini, a “specialist”
at the loan servicer, Home Loan Services, Inc. Orsini claimed
in the affidavit that appellants were in default of their payment
obligations and owed in excess of $340,000 on the note. In opposition to
the motion for summary judgment, appellants filed Orsini’s deposition,
wherein Orsini explained that he derived the $340,000 figure from his
company’s computer system. However, Orsini did not know who entered
the data into the computer, and he could not verify that the entries were
correct at the time they were made. To calculate appellants’ payment
history, Orsini relied in part on data retrieved from Litton Loan Servicing,
a prior servicer of appellants’ loan.

Florida Rule of Civil Procedure 1.510(c) requires a party moving for
summary judgment to “identify any affidavits, answers to interrogatories,
admissions, depositions, and other materials as would be admissible in
evidence.” If this evidence, taken in the light most favorable to the nonmoving
party, shows no genuine issue of material fact, the moving party
is entitled to judgment as a matter of law. Volusia Cnty. v. Aberdeen at
Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000).

We find that Orsini’s affidavit constituted inadmissible hearsay and,
as such, could not support LaSalle’s motion for summary judgment.
Pursuant to section 90.803(6)(a), Florida Statutes, documentary evidence
may be admitted into evidence as business records if the proponent of
the evidence demonstrates the following through a record’s custodian:
(1) the record was made at or near the time of the event; (2)
was made by or from information transmitted by a person
with knowledge; (3) was kept in the ordinary course of a
regularly conducted business activity; and (4) that it was a
regular practice of that business to make such a record.
Yisrael v. State, 993 So. 2d 952, 956 (Fla. 2008).

Orsini did not know who, how, or when the data entries were made
into Home Loan Services’s computer system. He could not state if the
records were made in the regular course of business. He relied on data
supplied by Litton Loan Servicing, with whose procedures he was even
less familiar. Orsini could state that the data in the affidavit was
accurate only insofar as it replicated the numbers derived from the
company’s computer system. Despite Orsini’s intimate knowledge of how
his company’s computer system works, he had no knowledge of how that
data was produced, and he was not competent to authenticate that data.
Accordingly, Orsini’s statements could not be admitted under section
90.803(6)(a), and the affidavit of indebtedness constituted inadmissible
hearsay. Because LaSalle presented no competent evidence to show
$422,677.85 in damages, the amount of the judgment to which LaSalle is
entitled remains at issue. Therefore, we reverse the entry of judgment in
favor of LaSalle and remand for further proceedings.

The trial court also entered sanctions against appellants’ counsel for
filing a “form affidavit” from an expert, Rita Lord, who opined on the
ability of lay persons to distinguish between original and high-quality
copies of promissory notes. Lord did not represent in the affidavit that
she reviewed the papers at issue in this case. Nevertheless, the trial
court was distressed by appellants’ counsel’s habit of filing “the same
affidavit in ten different cases, when [Lord] hasn’t seen the documents in
this case.” The court awarded LaSalle its reasonable attorney’s fees for
having to file a motion to strike Lord’s affidavit.

We note that LaSalle moved for sanctions under section 57.105,
Florida Statutes. That statute permits a trial court to award a
“reasonable attorney’s fee” to the “prevailing party” where the plaintiff’s
claim was frivolous or to a party to compensate for the opposing party’s
dilatory conduct. § 57.105(1)-(2), Fla. Stat. The trial court did not find
that appellants’ claims were frivolous, a n d th e trial court did not
conclude that Lord’s affidavit was filed to cause unreasonable delay.
Thus, section 57.105 could not serve as a basis for the award of
attorney’s fees to LaSalle.

To the extent that the trial court may have been exercising its
inherent authority to sanction parties or their attorneys, we also find
error. “[A] trial court possesses the inherent authority to impose
attorneys’ fees against an attorney for bad faith conduct.” Moakley v.
Smallwood, 826 So. 2d 221, 226 (Fla. 2002). To impose attorney’s fees
as a sanction under its inherent authority, the trial court must make an
“express finding of bad faith conduct” that is “supported by detailed
factual findings describing the specific acts of bad faith conduct that
resulted in the unnecessary incurrence of attorneys’ fees.” Id. at 227.
The trial court did not make any specific findings of bad faith on the
record, and the sanctions order must be reversed without prejudice. See
Finol v. Finol, 912 So. 2d 627, 629 (Fla. 4th DCA 2005). “Upon remand,
should the court be asked to reconsider the issue, any future hearing
and order must comply with the requirements of Moakley.” Id.

In summary, we reverse the judgment of foreclosure and the entry of
sanctions against appellants’ counsel a n d remand for further
proceedings consistent with this opinion.

Reversed and remanded.

CIKLIN, LEVINE, JJ., and THORNTON, JOHN W., JR., Associate Judge, concur.

* * *

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Meenu Sasser, Judge; L.T. Case No. CA08-028930 AW.

Thomas Ice of Ice legal, P.A., Royal Palm Beach, for appellant.

Thomasina F. Moore and Dennis W. Moore of Butler & Hosch, P.A.,
Orlando, for appellee LaSalle Bank National Association.

Not final until disposition of timely filed motion for rehearing

[ipaper docId=64200208 access_key=key-2gbo7ur1dwfuhkdraayd height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (1)

BOSCHMA v. Home Loan Center | CA 4DCA Div. 3 Reverses JGMT “Plaintiffs adequately alleged fraud and section 17200 causes of action, OPTION ARM “Teaser”

BOSCHMA v. Home Loan Center | CA 4DCA Div. 3 Reverses JGMT “Plaintiffs adequately alleged fraud and section 17200 causes of action, OPTION ARM “Teaser”


CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE

CLARENCE E. BOSCHMA et al.,
Plaintiffs and Appellants,

v.

HOME LOAN CENTER, INC.,
Defendant and Respondent.


The defining feature of an option adjustable rate mortgage loan (?Option ARM?) with a discounted initial interest rate (i.e., a ?teaser? rate) is, for a limited number of years, the borrower may (by paying the minimum amount required to avoid default on the loan) make a monthly payment that is insufficient to pay off the interest accruing on the loan principal. Rather than amortizing the loan with each minimum monthly payment (as occurs with a standard mortgage loan), ?negative amortization? occurs — a borrower who elects to make only the scheduled payment during the initial years of the Option ARM owes more to the lender than he or she did on the date the loan was made. After an initial period of several years in which negative amortization can occur, a borrower‘s payment schedule then recasts to require a minimum monthly payment that amortizes the loan.

In this case, plaintiffs1 sued defendant Home Loan Center, Inc., for: (1) fraudulent omissions; and (2) violations of Business and Professions Code section 17200 et seq. (section 17200). Plaintiffs, individual borrowers who entered into Option ARMs with defendant, allege defendant‘s loan documents failed to adequately and accurately disclose the essential terms of the loans, namely that plaintiffs would suffer negative amortization if they made monthly payments according to the only payment schedule provided to them prior to the closing of the loan. The court sustained defendant‘s demurrer to the second amended complaint without leave to amend, reasoning that the loan documentation adequately described the nature of Option ARMs. We reverse the ensuing judgment. Plaintiffs adequately alleged fraud and section 17200 causes of action.

[…]

[ipaper docId=62139793 access_key=key-k3ihuyhha0hnvdj2wac height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (0)

BAKRI v MERS, BONY, TROTT & TROTT PC | Michigan Appeals Court REVERSED “MERS did not have the authority to foreclose by advertisement, No interest in Note”

BAKRI v MERS, BONY, TROTT & TROTT PC | Michigan Appeals Court REVERSED “MERS did not have the authority to foreclose by advertisement, No interest in Note”


S T A T E  O F  M I C H I G A N
C O U R T  O F  A P P E A L S

ALLEN BAKRI,
Plaintiff-Appellant,

v.

MORTGAGE ELECTRONIC REGISTRATION
SYSTEM, MERSCORP INC, BANK OF NEW
YORK MELLON, f/k/a BANK OF NEW YORK,
and TROTT & TROTT PC
,
Defendants-Appellees.

EXCERPT:

Although we find that the trial court properly concluded that defendant MERS had the
right to assign the mortgage to defendant Bank of New York Mellon and that defendant Bank of
New York Mellon had the power to foreclose on and sell the property, our inquiry does not end
there. There is another layer to the analysis, which involves an issue not raised by the parties,
but decided in our recent decision in Residential Funding Co, LLC v Saurman, ___ Mich App
___; ___ NW2d ___ (Docket Nos. 290248 & 291443; April 21, 2011) (Shapiro, J.). In Saurman,
the issue was whether a mortgagee who was not the note holder could foreclose by advertisement
under MCL 600.3204(1)(d). Saurman, slip op pp 7-8. We held that under MCL 600.3204(1)(d),
the Legislature has limited foreclosure by advertisement to those parties with ownership of an
interest in the note and that because the mortgagee was not “the owner . . . of an interest in the
indebtedness secured by the mortgage[,]” MCL 600.3204(1)(d), it lacked the authority to
foreclose by advertisement:

Applying these considerations to the present case, it becomes obvious that
MERS did not have the authority to foreclose by advertisement on defendants’
properties. Pursuant to the mortgages, defendants were the mortgagors and
MERS was the mortgagee. However, it was the plaintiff lenders that lent
defendants money pursuant to the terms of the notes. MERS, as mortgagee, only
held an interest in the property as security for the note, not an interest in the note
itself. MERS could not attempt to enforce the notes nor could it obtain any
payment on the loans on its own behalf or on behalf of the lender. Moreover, the
mortgage specifically clarified that, although MERS was the mortgagee, MERS
held “only legal title to the interest granted” by defendants in the mortgage.
Consequently, the interest in the mortgage represented, at most, an interest in
defendants’ properties. MERS was not referred to in any way in the notes and
only Homecomings held the notes. The record evidence establishes that MERS
owned neither the notes, nor an interest, legal share, or right in the notes. The
only interest MERS possessed was in the properties through the mortgages.
Given that the notes and mortgages are separate documents, evidencing separate
obligations and interests, MERS’ interest in the mortgage did not give it an
interest in the debt. [Saurman, slip op pp 10-11 (emphasis in original; footnote
omitted).]

[ipaper docId=62108439 access_key=key-1qner0p8mcrew6up4vh1 height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (0)

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”

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”


NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION

DOCKET NO. A-4221-09T3

BANK OF NEW YORK AS TRUSTEE FOR
THE CERTIFICATE HOLDERS CWALT
2004 26T1,
Plaintiff-Respondent,

v.

SARAH G. LAKS and EDWARD
EINHORN, her husband,
Defendants-Appellants,
and
PNC BANK, NATIONAL ASSOCIATION,
Defendant.
___________________________________
Submitted May 23, 2011 – Decided August 8, 2011

EXCERPTS:

The defendants in an action to foreclose a residential mortgage appeal from the denial of their motion to vacate the judgment of foreclosure and dismiss the complaint without prejudice. We reverse and remand for entry of an order granting that relief.

[…]

Laks missed her May 2008 payment on the note and every monthly payment thereafter. On August 13, Countrywide Home Loans,3 plaintiff’s loan servicer, sent a notice of intention to foreclose to Laks by certified mail, return receipt requested. The notice of intention recited that Countrywide was acting on behalf of the owner of Laks’s promissory note, without identifying the owner. The notice of intention also warned that if Laks did not pay $21,279.64 to Countrywide within 30 days, then Laks’s noteholder, again not identified, would institute foreclosure proceedings against her. The notice concluded by advising Laks that if she did not agree that default had occurred or if she disputed the amount required to cure her default, she could contact Countrywide at an address and telephone number stated in the notice. Nowhere on the notice was Laks informed that plaintiff was the owner of her promissory note nor was she given plaintiff’s address. Three days before the foreclosure complaint was filed, MERS assigned Laks and Einhorn’s mortgage to plaintiff.

[…]

Thus, compliance with this notice provision is, in effect, a condition the lender must satisfy in order to either “accelerate the maturity of any residential mortgage obligation” or “commence any foreclosure or other legal action to take possession of the residential property which is the subject of the mortgage.” N.J.S.A. 2A:50-56(a). In fact, with narrow exceptions inapplicable here, “[c]ompliance with [N.J.S.A. 2A:50-56] shall be set forth in the pleadings of any legal action” to foreclose a residential mortgage. N.J.S.A. 2A:50- 56(f). The notice of intention must include specific information “state[d] in a manner calculated to make the debtor aware of the situation[.]” N.J.S.A. 2A:50-56(c).5 The information the Legislature has deemed essential to the Act’s purpose includes:

“the particular obligation or real estate security interest”; “the nature of the default claimed”; the debtor’s right to cure the default; what the debtor must do to cure; and the date by which it must be done to avoid the filing of a foreclosure complaint. N.J.S.A. 2A:50-56(c)(1)-(5). The notice also must advise the debtor of the consequences of a failure to cure —specifically, that the lender may take steps to terminate the debtor’s ownership of the property by filing a foreclosure action and that the debtor will be required to pay the lender’s court costs and counsel fees if the debtor does not cure.
N.J.S.A. 2A:50-56(c)(6)-(7). In addition to the foregoing information about rights, responsibilities and consequences, the Legislature has determined that the notice of intention must include three items of information that are best characterized as helpful to a debtor interested in curing default. The first two are advice to seek counsel from an attorney — including references to the New Jersey Bar Association, Lawyer Referral Service and Legal Services — and a list of programs providing assistance for those seeking to cure default. N.J.S.A. 2A:50-56(c)(9)-(10). The third, and the one critical in this case, is “the name and address of the lender and the telephone number of a representative of the lender whom the debtor may contact if the 9 A-4221-09T3 debtor disagrees with the lender’s assertion that a default has occurred or the correctness of the mortgage lender’s calculation of the amount required to cure default.” N.J.S.A. 2A:50- 56(c)(11).

There is no question that the notice of intention mailed to Laks did not provide the name or address of the lender as required by subsection (c)(11). The notice of intention named no entity other than the mortgage servicer, Countrywide.

[…]

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

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



Posted in STOP FORECLOSURE FRAUDComments (0)

MAZINE v. M & I BANK | FL 1DCA Reversed “Affidavit Fail, Undisputed not the holder of the mortgage and note”

MAZINE v. M & I BANK | FL 1DCA Reversed “Affidavit Fail, Undisputed not the holder of the mortgage and note”


MOSHE MAZINE and JAACOV E. BOUSKILA, Appellants,
v.
M & I BANK, Appellee.

Case No. 1D10-2127.

District Court of Appeal of Florida, First District.

Opinion filed July 22, 2011.

David H. Charlip of Charlip Law Group, LC, Aventura, for Appellants.

Erin Berger, Florida Default Law Group, PL, Tampa, for Appellee.

VAN NORTWICK, J.

Moshe Mazine and Jaacov Bouskila appeal an amended final judgment of mortgage foreclosure in favor of M & I Bank, appellee. Because the documentary evidence necessary to establish the amount owed under the note and mortgage was admitted without proper foundation and it is undisputed that M & I Bank was not the holder of the mortgage and note, we reverse and remand for further proceedings.

The party seeking foreclosure must present evidence that it owns and holds the note and mortgage to establish standing to proceed with a foreclosure action. Servedio v. U.S. Bank Nat. Ass’n, 46 So. 3d 1105 (Fla. 4th DCA 2010). Because a promissory note is a negotiable instrument and because a mortgage provides the security for the repayment of the note, the person having standing to foreclose a note secured by a mortgage may be either the holder of the note or a nonholder in possession of the note who has the rights of a holder. See § 673.3011, Fla. Stat. (2009); Taylor v. Deutsche Bank Nat. Trust Co., 44 So. 3d 618 (Fla. 5th DCA 2010). An allegation of default in a complaint must be proven by competent evidence. See Terra Firma Holdings v. Fairwinds Credit Union, 15 So. 3d 885 (Fla. 2d DCA 2009).

In January 2009, M & I Bank filed a complaint seeking foreclosure of a mortgage naming Mazine and Bouskila as party defendants. An amended complaint later followed, but the named plaintiff remained the same. After several motions challenging the sufficiency of service of process and personal jurisdiction, Bouskila eventually filed an answer which denied almost all of allegations of the amended complaint, including the allegation that Bouskila secured a mortgage on the real property at issue and the allegation as to amount in default. Mazine did not file an answer but moved to dismiss the amended complaint on several grounds, including the ground that the entity listed on the note and mortgage was “M & I Marshall & Ilsley Bank,” not the named plaintiff, “M & I Bank.” The motion to dismiss was not considered by the trial court before the cause was heard at a bench trial.

The only witness to testify at the bench trial regarding the allegations of the amended complaint was David Taxdal, the regional security officer for “M & I Marshall and Ilsley Bank” in the State of Florida. According to Taxdal’s testimony, his “duties and responsibilities are fraud investigation, internal investigation and physical security for the branches” in Florida, and he does not originate loans, service loans or collect loans in default. Through Taxdal, the bank attempted to introduce several documents, including an affidavit as to amounts due and owing. The affidavit was executed by Michael Koontz, who did not appear at trial, and the bank sought to introduce it as a business record. Taxdal testified that he had no knowledge as to who prepared the documents submitted at trial by the bank as he is not involved in the preparation of documents such as the ones proffered by the bank, that he does not keep records as a records custodian, that he has no personal knowledge as to how the information in the affidavit as to the amounts due and owing was determined or whether it was prepared in the normal course of business, and that he did not know whether such information was accurate.

Counsel for the defendants vigorously opposed admission of the affidavit of indebtedness, the only evidence of the amount allegedly in delinquency, as a business record. Counsel observed that the affiant (Koontz) was not subject to cross-examination, and that given the matters to which Taxdal testified it was evident that Taxdal “has no knowledge of the basis upon which this affidavit was prepared.”

The trial court denied defendants’ objection and admitted the affidavit without explanation. This was error. Before a document may be admitted as a business record, a foundation for such admission must be laid. Section 90.803(6), Florida Statutes (2010), allows the admission of records of a regularly kept business activity when the business record was made at or near the time of the matters reported and when the business record is made by a person having personal knowledge of the matters reported or when the information supplied in the record is supplied by a person with knowledge. Further, it must be shown that the business record was kept in the ordinary course of a regularly conducted business activity and that it is the regular practice of the business keeping the record to make such a business record. Yisrael v. State, 993 So. 2d 952 (Fla. 2008). While it is not necessary to call the individual who prepared the document, the witness through whom a document is being offered must be able to show each of the requirements for establishing a proper foundation. Forester v. Norman Roger Jewell & Brooks, 610 So. 2d 1369, 1373 (Fla. 1st DCA 1992).

Here, none of the requirements for admission of a business record were met. As noted, Taxdal candidly admitted that he had no knowledge as to the preparation or maintenance of the documents offered by the bank, including the affidavit as to amounts due and owing. Taxdal did not testify and, indeed, could not testify, that the affidavit as to the amounts owed was actually kept in the regular course of business. Further, he did not know if the source of the information contained in the affidavit was correct. He did not know if the amounts reported in the affidavit were accurate. There was no attempt to admit the affidavit by certification or declaration pursuant to section 90.803(6)(c), Florida Statutes.

Accordingly, because no foundation was laid, the admission of the affidavit was erroneous. Because the affidavit was the only evidence as to the amount of defendants’ default, the error was harmful necessitating that the amended final judgment of foreclosure be reversed.

Furthermore, the trial court erred in denying appellants’ motion for a directed verdict given the lack of proof that the named plaintiff and appellee, M & I Bank, holds the mortgage and note. “M & I Marshall & Ilsley Bank” is shown as the holder of both the note and mortgage. At the time the bank offered the affidavit as to amounts due and owing into evidence, Taxdal testified that M & I Bank FSB — which we assume is M & I Bank — and M & I Marshall and Ilsley Bank are different entities.[1] The amended judgment of foreclosure styles the prevailing party as “M & I Bank,” not “M & I Marshall and Ilsley Bank.” To have standing to foreclose, it must be demonstrated that the plaintiff holds the note and mortgage in question. See Khan v. Bank of America, N.A., 58 So. 3d 927 (Fla. 5th DCA 2011), and Philogene v. ABN Amro Mtg. Group, Inc., 948 So. 2d 45 (Fla. 4th DCA 2006). Therefore, because M & I Bank had not demonstrated it possessed the standing to proceed in the foreclosure action, we must reverse on this issue as well.

REVERSED and REMANDED for further proceedings consistent with this opinion.

LEWIS, and ROBERTS, JJ., CONCUR.

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

[1] Although M & I Bank filed a motion to substitute a party by which M & I Marshall and Isley Bank was to be substituted for M & I Bank, the trial court never acted upon this motion. We note that, while the name of the bank in the mortgage and note is spelled “M & I Marshall and Ilsley“, the motion to substitute spells the name somewhat differently, “M & I Marshall and Isley” (italics added).

[ipaper docId=61100838 access_key=key-ornuztyl7h6yfklsalr height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (1)

Mortgage Electronic Registration Systems, Inc. v. Reiley | Wisconsin Appeals Court Reverses “whose mortgage is in a superior position”

Mortgage Electronic Registration Systems, Inc. v. Reiley | Wisconsin Appeals Court Reverses “whose mortgage is in a superior position”



COURT OF APPEALS

DECISION

DATED AND FILED


July 26, 2011

A. John Voelker

Acting Clerk of Court of Appeals




NOTICE



This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports.


A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. SeeWis. Stat. § 808.10 and Rule 809.62.




Appeal No.

2010AP2336

Cir. Ct. No. 2008CV555

STATE OF WISCONSIN

IN COURT OF APPEALS


DISTRICT II




Mortgage Electronic Registration Systems, Inc., as

nominee for New Century Mortgage Corporation,

Plaintiff-Respondent,

v.

Steven M. Reiley, Sabrina L. Reiley and M&M Construction,

LLC,

Defendants,

Solutions Properties, Inc.,

Defendant-Appellant.



APPEAL from a judgment of the circuit court for Walworth County: JOHN R. RACE, Judge. Reversed and cause remanded for further proceedings.

Before Hoover, P.J., Peterson and Brunner, JJ.

¶1 PER CURIAM.   Solutions Properties, Inc., appeals a summary judgment in favor of Mortgage Electronic Registration Systems, Inc. (“MERS”). The issue concerns whose mortgage is in a superior position. We conclude factual disputes precluded summary judgment and therefore reverse and remand.

¶2 This matter arises from the purchase of real estate in Lake Geneva by Steven and Sabrina Reiley from William Roth. The Reileys sought a mortgage from New Century Mortgage Corporation to finance the purchase. New Century approved a loan for $180,000 but required a first mortgage lien as security. The Reileys also planned to sign a mortgage with M&M Construction, LLC, for $45,000 at closing. Sheila and Michael Minon were owners of M&M, and the M&M mortgage related to home remodeling.

¶3 New Century sought a title commitment from New Millenium Title Corporation, located in Brookfield. New Millenium contracted with remote agent Gerald Wilcox to act as its agent to close the loan in Walworth County. The closing occurred on December 29, 2006. Sheila Minon recorded the M&M mortgage on January 9, 2007.[1] The deed from Roth and the mortgage to MERS, as nominee for New Century, were recorded on February 5, 2007.

¶4 Nearly a year after the sale to the Reileys, M&M assigned its mortgage to Solutions Properties. Solutions Properties’ principal operating officer, Douglas Norton, had contacted the Minons after their names came up as defendants in a foreclosure action. Norton was interested in purchasing their property before it went through foreclosure. Instead, Solutions Properties purchased M&M’s mortgage.

¶5 Prior to purchasing the M&M mortgage, Norton received a title report that showed the M&M mortgage to be in first priority. Norton also instructed his assistant to contact the Walworth County Register of Deeds to confirm that the M&M mortgage was recorded prior to other mortgages or liens on the property. Norton also testified at his deposition that the Minons told him “that there was a fire, that there was a $180,000 second mortgage that was put into the house to improve it and that satisfied any lingering question that I would have had about the 45,000 first and 180,000 second. That was a reasonable explanation to me.”

¶6 The Reileys subsequently defaulted on the loan to New Century. When a foreclosure action was about to be commenced, it was determined that the M&M mortgage was recorded prior to New Century’s mortgage. MERS then commenced this action for a declaratory judgment to determine the priority of the two mortgages. The circuit court granted summary judgment in favor of MERS, concluding that “the Defendant Solutions Properties was clearly on notice that the Plaintiff’s lien was a purchase money mortgage.” Therefore, the court reasoned that MERS’ mortgage had priority as a matter of law. Solutions Properties now appeals.

¶7 We review summary judgment independently, applying the same methodology as the circuit court. Green Spring Farms v. Kersten, 136 Wis. 2d 304, 315-17, 401 N.W.2d 816 (1987). The methodology is often recited and we need not repeat it. Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Wis. Stat. § 802.08(2).[2]

¶8 Solutions Properties argues that under Wis. Stat. §§ 706.08 and 706.09, the M&M mortgage is superior in priority because it was recorded earlier than the New Century mortgage. Solutions Properties contends that it was a good faith purchaser without actual or constructive notice of any adverse claims.

9 Wisconsin Stat. § 706.08(1)(a) protects purchasers of real estate against adverse claims that are not properly recorded as provided by law. See Associates Fin. Servs. Co. v. Brown, 2002 WI App 300, ¶9, 258 Wis. 2d 915, 656 N.W.2d 56. It provides that “every conveyance that is not recorded as provided by law shall be void as against any subsequent purchaser, in good faith and for a valuable consideration, of the same real estate or any portion of the same real estate whose conveyance is recorded first.” Wis. Stat. § 706.08(1)(a). A purchaser or mortgagee in good faith is one without notice of existing rights in land. Grosskopf Oil, Inc. v. Winter, 156 Wis. 2d 575, 584, 457 N.W.2d 514 (Ct. App. 1990). Wisconsin Stat. § 706.09(1) provides that “[a] purchaser for a valuable consideration, without notice as defined in sub. (2) … shall take” priority over an adverse claim. “To be entitled to the benefits of [§ 706.09], a purchaser must not have notice of the adverse claim ….” Schapiro v. Security Sav. & Loan Ass’n, 149 Wis. 2d 176, 186, 441 N.W.2d 241 (Ct. App. 1989). Though § 706.08 does not use the word “notice,” the requirement that a bona fide purchaser lack notice of an adverse claim has long been understood to be a part of the statute. Bank of New Glarus v. Swartwood, 2006 WI App 224, ¶24, 297 Wis. 2d 458, 725 N.W.2d 944.

¶10 MERS insists Solutions Properties is not a good faith purchaser without notice because, had Norton searched the record, he would have discovered the recording of the mortgage to New Century from the Reileys, which was recorded immediately after the deed. MERS argues that a review of that mortgage shows at the top of the first page in bold letters, “Purchase Money MORTGAGE.” MERS contends that under Northern State Bank v. Toal, 69 Wis. 2d 50, 230 N.W.2d 153 (1975), a purchase money mortgage is superior to any other claim as a matter of law.

¶11 However, MERS overstates the holding of Toal. The issue in that case was whether Toal’s purchase money mortgage on real estate took precedence over a judgment a creditor held against Toal before he acquired the real estate covered by the mortgage. Id. at 51. Toal listed the prior judgment as a debt when he made the home mortgage loan application. Id. at 51-52. He later defaulted on the mortgage payments, and the judgment holder and the lender disputed which took priority, the prior judgment or the purchase money mortgage. Id. Relying upon authority stating that a purchase money mortgage has priority over earlier judgments and judgment liens against the mortgagor, our supreme court ruled in favor of the lender. Id. at 55-56. The court considered, however, only the priority of a purchase money mortgage in relation to pre-existing judgments against the mortgagee, not one mortgage’s priority over another. Accordingly, Toal is not dispositive.

¶12 Here, a factual dispute concerning whether Norton performed a reasonable inquiry precluded summary judgment. For instance, Solutions Properties asserts that it contacted Sheila Minon, an M&M principal, and obtained a letter report from her. Solutions also called the register of deeds. MERS concedes that “both Ms. Minon and the register of deeds confirmed that M&M had a first mortgage,” but claims that Solutions Properties “should have been aware that these representations were contrary to the actual record.” However, MERS does not fully elaborate on exactly why this information was contrary to the record. In fact, the record showed that the M&M mortgage recorded prior to the New Century mortgage contained no indication that there were mortgages or liens that had priority.

¶13 In addition, MERS refers to closing documents, including a HUD-1 settlement statement reflecting that the parties to the closing anticipated that a second mortgage in the amount of $45,000 in favor of M&M was to be recorded after the mortgage to New Century. MERS also refers to the Reileys’ loan application that required New Century be granted a first mortgage lien on the real estate. However, it is unclear whether these documents were available in the public record, or if the documents were even referred to in the public record.

¶14 MERS also concedes a factual dispute concerning whether Sheila Minon told representatives of Solutions Properties “that M&M had a second mortgage that had been recorded as a first.” As mentioned previously, Norton testified at his deposition that the Minons told him “that there was a fire in the house” and that “there was a $180,000 second mortgage that was put into the house to improve it ….” MERS also insists that Solutions Properties “should have called New Century to inquire as to the nature of its interest ….” However, we have stated that purchasers for value are not required to see if there is any way conceivable that an interest might possibly be discovered. See Associates Fin. Servs., 258 Wis. 2d 915, ¶14.

¶15 Accordingly, we conclude the circuit court erred by determining that Solutions Properties was on notice of an adverse claim as a matter of law. We therefore reverse the grant of summary judgment and remand for further proceedings concerning the reasonableness of Solutions Properties’ inquiry.[3]

By the Court.—Judgment reversed and cause remanded for further proceedings.

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


[1] After closing, Wilcox hand delivered the documents to New Millennium, except for the mortgage to M&M, which was retained by Wilcox. Wilcox faxed to New Millennium the M&M mortgage. Copies of the deed and M&M mortgage as executed at the closing were sent to New Century for certification.

There are discrepancies between the certified M&M mortgage that was faxed to New Millennium and the M&M mortgage that was recorded in Walworth County. The first page of the certified mortgage states that the mortgage was subject to the first mortgage to New Century. The first page of the recorded M&M mortgage states that the mortgage was subject to “NONE.” The fourth page of the recorded mortgage shows a Liberty Banc Mortgage fax number while the certified mortgage does not.

[2] References to the Wisconsin Statutes are to the 2005-06 version unless noted.

[3] MERS also argues that the circuit court’s decision rested upon equitable principles. However, we cannot discern that the court based its ruling on equitable principles and therefore decline to address the doctrine of equitable subrogation.

[ipaper docId=61071374 access_key=key-k7h4apik40uvcx7fc30 height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (0)

LAURENCIO v DEUTSCHE BANK NATIONAL TRUST | FL 2nd DCA Reversed “Acceleration Letter, Bank’s failure to comply with its own documents”

LAURENCIO v DEUTSCHE BANK NATIONAL TRUST | FL 2nd DCA Reversed “Acceleration Letter, Bank’s failure to comply with its own documents”


IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT

PEDRO F. LAURENCIO; ESTEVES
PEDRO a/k/a ADELAIDA LAURENCIO;
ACCREDITED HOME LENDERS, INC.,
Successor by Merger to Aames Funding
Corporation d/b/a Aames Home Loan;
CITY OF CAPE CORAL; TENANT #1 n/k/a
ADALAEIDA LAURENCIO; and
TENANT #2 n/k/a PEDRO LAURENCIO,

Appellants,

v.

DEUTSCHE BANK NATIONAL TRUST
COMPANY, as Indenture Trustee of the
Aames Mortgage Investment Trust 2005-1,

Appellee.

Opinion filed July 27, 2011.
Appeal from the Circuit Court for Lee
County; Hugh E. Starnes, Judge.

EXCERPTS:

On December 9, 2008, Deutsche Bank’s attorneys sent Laurencio a letter stating that, pursuant to the terms of the Note and Mortgage, Deutsche Bank had “accelerated all sums due and owing, which means that the entire principal balance and all other sums recoverable under the terms of the promissory Note and Mortgage are now due.” The letter stated that the amount owed was $200,715.27. The letter also informed Laurencio: “This law firm is in the process of filing a Complaint on the promissory Note and Mortgage to foreclose on real estate.” Two days later, the bank filed a mortgage foreclosure complaint and attached this letter to the complaint.

Paragraph 22 of Laurencio’s mortgage set forth presuit requirements, including a requirement that Deutsche Bank give Laurencio thirty days’ notice and an opportunity to cure the default prior to filing suit:

Acceleration; Remedies. Lender shall give notice to Borrower prior to acceleration following Borrower’s breach of any covenant or agreement in this SecurityInstrument (but not prior to acceleration under Section 18[3] unless Applicable Law provides otherwise). The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument, foreclosure by judicial proceeding and sale of the Property. The notice shall further inform Borrower of the right to reinstate after acceleration and the right to assert in the foreclosure proceeding the non-existence of a default or any other defense of Borrower to acceleration and foreclosure. If the default is not cured on or before the date specified in the notice, Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may foreclose this Security Agreement by judicial proceeding. Lender shall be entitled to collect all expenses incurred in pursuing the remedies provided in this Section 22, including, but not limited to, all attorneys’ fees and costs of title evidence.

(Underline emphasis added.) Clearly, Deutsche Bank’s letter did not comply with paragraph 22.

[…]

In this case, Deutsche Bank failed to meet its summary judgment burden because the record before the trial court reflected a genuine issue of material fact as to whether Deutsche Bank had complied with conditions precedent to filing the foreclosure action. In a case with nearly identical facts, this court recently reversed a summary judgment of foreclosure. See Konsulian v. Busey Bank, N.A., 61 So. 3d 1283 (Fla. 2d DCA 2011). In Konsulian, we concluded that the bank was not entitled to summary judgment because it had not established that it had met the conditions precedent to
filing suit. Id. at 1285. The record in that case did not establish that the bank had given the defendant the notice which the mortgage required. Id. We reach the same conclusion in this case.

[…]

[ipaper docId=61071319 access_key=key-1q3x7z75en6tuxeyjtnp height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (1)

Ambac Assur. UK Ltd. v J.P. Morgan Inv. Mgt., Inc. | NY APPEALS COURT REVERSED “Jamie Dimon, the subprime securities market “could go up in smoke”

Ambac Assur. UK Ltd. v J.P. Morgan Inv. Mgt., Inc. | NY APPEALS COURT REVERSED “Jamie Dimon, the subprime securities market “could go up in smoke”


Decided on July 14, 2011

SUPREME COURT, APPELLATE DIVISION

First Judicial Department
David B. Saxe, J.P.
James M. Catterson
Rolando T. Acosta
Sheila Abdus-Salaam
Nelson S. Román, JJ.
Index 650259/09
5034


[*1]Ambac Assurance UK Limited, etc., Plaintiff-Appellant,

v

J.P. Morgan Investment Management, Inc., Defendant-Respondent.


Plaintiff appeals from an order of the Supreme Court, New York County (Barbara R. Kapnick, J.), entered March 25, 2010, which granted defendant’s motion to dismiss the complaint.

Shapiro Forman Allen & Sava LLP, New York
(Michael I. Allen and Yoram Miller
of counsel), for appellant.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, New
York (Richard A. Rosen,
John F. Baughman, Farrah R.
Berse and Jennifer K.
Vakiener of counsel), for
respondent.

CATTERSON, J.

In this breach of contract action, the plaintiff seeks to recover damages for the loss of [*2]more than $1 billion from investment accounts created to fund notes it guaranteed. The plaintiff alleges that the defendant, investment manager J.P. Morgan Investment Management Inc., failed to manage the accounts. Instead, defendant continued to hold toxic subprime securities in the accounts while its corporate parent, J.P. Morgan Chase, reduced its exposure to the same type of securities based on its knowledge that they “could go up in smoke.”

We are asked to determine if the plaintiff’s allegations are sufficient to survive a CPLR 3211 motion to dismiss where the plaintiff concedes that the defendant adhered to the contractual limitations on purchasing subprime securities.

The undisputed facts of the case are as follows: The plaintiff, Ambac Assured U.K., guaranteed timely payment of principal and interest for certain notes issued by Ballantyne, a special purpose vehicle established to reinsure term life insurance policies. To capitalize itself and finance the required reserves, Ballantyne issued more than $2 billion in securities.

On May 2, 2006, Ballantyne and the defendant entered into an investment management agreement (hereinafter referred to as the “IMA”) pursuant to which defendant agreed to act as the investment advisor for $1.65 billion of the proceeds raised by Ballantyne via its sale of the notes [FN1]. Pursuant to the IMA, Ballantyne opened two accounts: the Reinsurance Trust Account and the Pre-Funded Account over which the defendant had full investment authority subject to the investment guidelines.

The guidelines state that the goal of the investment policy “is to obtain reasonable income while providing a high level of safety of capital” (emphasis added). They identify the nature, quality and diversification requirements of the investments and contain specific limitations for investments on the basis of sectors and ratings.

The guidelines set forth the percentage of account assets which could be invested in each class and sector. Accordingly, permitted securities included home equity loan asset-backed securities (hereinafter referred to as “HELOS”) and mortgage-backed securities like Alt-A’s (hereinafter referred to as “MBS”). These securities required ratings of “A” through “AAA,” and could not exceed percentages of 60% and 50% of the accounts, respectively.

The IMA also contains a “Discharge of Liability” provision which states that the defendant does not guarantee the future performance of the accounts or any specific level of performance. It further states that the defendant shall have no liability for any losses “except to the extent such [l]osses are judicially determined to be proximately caused by the gross negligence or willful misconduct of [defendant] (emphasis added).” While the IMA is governed by New York law, it further requires that investments be made in compliance with Chapter 13 of the Delaware Insurance Code.

As of May 2006, the defendant began purchasing securities for the accounts. The record reflects that as of January 2007, approximately 30% of the assets in each account was invested in [*3]MBS, and approximately 59% of assets in both accounts was invested in HELOS. Subsequently, the accounts began sustaining losses. On December 28, 2007, after the accounts suffered significant losses, the guidelines were modified to require the defendant to seek approval from Ballantyne and the plaintiff before buying or selling assets for the accounts. The amended guidelines contained the same investment goal as the original guidelines, namely, obtaining “reasonable income while providing a high level of safety of capital.”

Approximately, one year later, in October 2008, Ballantyne terminated the defendant as its investment advisor. By this time, the accounts allegedly had lost $1 billion of the $1.65 billion entrusted to the defendant just 30 months earlier.
Ballantyne subsequently failed to make scheduled payments under the notes, and the plaintiff’s guarantees were called upon.

In or about June 2009, the plaintiff commenced this action on behalf of Ballantyne seeking damages arising from the defendant’s alleged breaches of the IMA, and of Chapter 13 of the Delaware Insurance Code. The plaintiff also alleges a breach of fiduciary duty, and a tort cause of action in gross negligence.

The plaintiff’s allegations stem from an article in Fortune magazine, published in September 2008 in which J.P. Morgan Chase CEO, Jamie Dimon, was quoted as having concluded as early as October 2006 that the subprime securities market “could go up in smoke.” He was further described as having instructed his subordinates to “watch out for subprime,” directing the head of securitized products to “sell a lot of our positions.” Shawn Tully, Fortune, Jamie Dimon’s Swat Team, How J.P. Morgan’s CEO and his crew are helping the big bank beat the credit crunch, September 2, 2008.[FN2]

The plaintiff alleges that the defendant continued to purchase and hold such subprime securities as the HELOS and MBS in Ballantyne’s accounts even after J.P. Morgan Chase had “evidence about the growing risk of collapse of the [s]ubprime [s]ecurities market.”[FN3] Hence, the plaintiff alleges that the defendant breached the agreement by failing to manage the accounts in [*4]accordance with the stated objective of seeking a “reasonable income and a high level of safety of capital.”

The defendant made a pre-answer motion to dismiss the complaint pursuant to CPLR 3211(a)(1) and (7). It argued, inter alia, that the breach of contract claim should be dismissed because the defendant had complied with the guidelines, and did not act with gross negligence or willful misconduct or violate the Delaware Insurance Code. The defendant further argued that Dimon’s statements, as reported in Fortune, did not concern the type of securities at issue here. It also argued that the tort claims were pre-empted by the Martin Act.[FN4]

The court granted the motion dismissing the complaint, and noted, inter alia, that the plaintiff had conceded that the defendant had not exceeded the percentage limitations contained in the guidelines. The court, relying on our determination in Guerrand-Hermès v Morgan & Co. (2 AD3d 235, 769 N.Y.S.2d 240 (1st Dept. 2003), lv. denied, 2 NY3d 707, 781 N.Y.S.2d 288, 814 N.E.2d 460 (2004)), held that “[m]erely alleging failure to pursue an investment objective, where defendant actually followed the specific diversification requirements contained in the Guidelines that were intended to implement that objective, is not sufficient to set forth a claim for breach of contract.”

The court further found that statements made by Dimon concerning the market, as reported in Fortune and MarketWatch articles, referred to collateralized debt obligations (CDOs) and mortgage lending, and did not concern the type of mortgage-backed securities at issue here.

We now reverse and reinstate the complaint in its entirety. We find that, at this stage of the pleadings the motion court should have accepted the plaintiff’s allegations as true, given the plaintiff the benefit of every possible inference, and simply ascertained whether plaintiff’s allegations evidenced a cognizable cause of action. See Assured Guar.(UK) Ltd. v. J.P. Morgan Inv. Mgt. Inc., 80 AD3d 293, 915 N.Y.S.2d 7 (1st Dept. 2010), lv. granted, N.Y. Slip Op. 64361[u] (1st Dept. 2011), supra, citing Samiento v. World Yacht Inc., 10 NY3d 70, 79, 854 N.Y.S.2d 83, 87, 883 N.E.2d 990, 994 (2008). For the reasons set forth below, we further find that the motion court erred in failing to conclude that the plaintiff’s allegations are sufficient to sustain a breach of contract claim.

As a threshold matter, we reject the motion court’s observation that the basis for the plaintiff’s allegations, namely, CEO Dimon’s statements in Fortune did not concern the type of securities held in the subject accounts. For the same reasons, we also reject the defendant’s [*5]reiteration, on appeal, that the articles are not evidence of the defendant’s knowledge about the subject securities because the securities referred to in the article are SIVs and CDOs which were never purchased for the accounts.

We are not required to determine at this stage if, at the time of the events described in the complaint, there was a distinction for investment purposes between the Dimon-referenced CDOs (the underlying value of which was based on subprime mortgages)[FN5] and the securities in the subject accounts which were home equity loan asset-backed securities and mortgage-backed securities allegedly also comprised of subprime loans. As the plaintiff asserts, and as the articles in the record establish, Dimon’s concern embraced the entire mortgage market, including mortgage lending and mortgage products. Particularly relevant is the following excerpt from Fortune :

“One red flag came from the mortgage servicing business… [I]n October 2006, the chief of servicing said that late payments on subprime loans were rising at an alarming rate. The data showed that loans originated by competitors like First Franklin and American Home were performing three times worse than J.P. Morgan’s subprime mortgages. We concluded that underwriting standards were deteriorating across the industry’ says Dimon.”

This, the article states, led to his team “mostly exiting the business of securitizing subprime mortgages” with the result that in late 2006, J.P. Morgan Chase “started slashing its holdings of subprime debt. It sold more than $12 billion in subprime mortgages that it had originated.”

The plaintiff’s breach of contract claim rests on the allegation that while J.P. Morgan was actively divesting itself of the risky subprime mortgages it had originated, the defendant was doing nothing about riskier subprime mortgages originated by others and held in the subject accounts [FN6]. In other words, that the defendant continued to invest in securities which it knew were [*6]entirely incompatible with plaintiff’s investment objective and stated goal to “obtain reasonable income while providing a high level of safety of capital.”

Precedent, therefore would appear to mandate a finding that the plaintiff, at the very least, has sufficiently alleged gross negligence as a basis for its breach of contract claim. See Assured Guar. (U.K.) Ltd. v. J.P. Morgan Inv. Mgt. Inc., 80 AD3d at 305, 915 N.Y.S.2d at 16 (plaintiff’s stated goal was “reasonable income while providing a high level of safety of capital”, but defendant invested “substantially all” of the assets in subprime securities which it knew were risky), citing Colnaghi, U.S.A. v. Jewelers Protection Servs., 81 N.Y.2d 821, 823-824, 595 N.Y.S.2d 381, 383, 611 N.E.2d 282, 284 (1993) (gross negligence consists of conduct that evinces a reckless disregard for the rights of others or smacks’ of intentional wrongdoing”).

This is entirely consistent with our holding in Assured. The defendant in this case misapprehends our holding by relying merely on the decretal paragraph in Assured [FN7]. The defendant thus argues that Assured mandates dismissal of a breach of contract claim where an investment manager has discretionary authority, and is in compliance with the contractual diversification requirements.

This is error. The omission in the decretal paragraph is not reflective of the holding. In Assured, we simply did not address the issue that the defendant raises here, viz., that compliance with the sector and ratings limitation provision forecloses a breach of contract action. To the extent that it was silent as to this argument, no principle was enunciated.

Nor does our ruling in CMMF, LLC v. J.P. Morgan Inv. Mgt. Inc. (78 AD3d 562, 915 N.Y.S.2d 2 (2010)) help the defendant as to this issue. In that case, this Court sustained a breach of contract cause of action on the basis of the plaintiff’s allegations that the defendant breached the sector and ratings limitations provision of the agreement. CMMF, 78 AD3d at 563, 915 N.Y.S.2d at 5. That determination, however, does not stand for the proposition that the provision must be allegedly violated in order for a plaintiff’s breach of contract claim to survive. [*7]It simply means, the Court did not need to reach the issue we are now asked to determine.

Here, the defendant asserts — and the plaintiff concedes — that the subject subprime securities did not exceed the percentages set forth in the agreement — even after the guidelines were amended. Thus, contends the defendant, the motion court properly dismissed the breach of contract claim finding that defendant had followed the “specific diversification requirements.”

Notwithstanding its concession, the plaintiff asserts that the motion court erred in its ruling because it ignored fundamental principles of contract construction. We agree. See e.g. Greenfield v. Philles Records, 98 N.Y.2d 562, 569, 750 N.Y.S.2d 565, 569, 780 N.E.2d 166, 170 (2002)(well established that unambiguous contracts must be interpreted in accordance with their plain meaning); see also Two Guys from Harrison-N.Y. v. S.F.R. Realty Assoc., 63 N.Y.2d 396, 403, 482 N.Y.S.2d 465, 468, 472 N.E.2d 315, 318 (1984); 150 Broadway N.Y. Assoc. L.P. v. Bodner, 14 AD3d 1, 6, 784 N.Y.S.2d 63, 66 (1st Dept. 2004) (contracts must be construed to “avoid an interpretation that would leave contractual clauses meaningless”) (internal quotation marks and citations omitted).

In this case, the motion court overlooked the plain meaning of the IMA by misreading the limitations provision as a requirements provision. Indeed, the defendant’s argument that the accounts, at any one time, did not hold more than the 50 to 60% of subprime Alt-A mortgage securities as permitted by the IMA suggests that the distinction between “limitation” and “requirement” still eludes the defendant.

The plain meaning of “limitations” connotes a point beyond which a party may not proceed. It is not a target that a party is obligated to meet which would instead constitute a “requirement.” Accordingly, any reliance by the motion court or defendant on our determination to dismiss the breach of contract claim in Guerrand-Hermes v. Morgan & Co. (2 AD3d 235, 769 N.Y.S.2d 240 (2003), supra) is misplaced. The facts and contract language are distinguishable. In that case, there were, indeed, specific “investment guidelines diversification requirements” that were intended to implement the objective. Guerrand-Hermes, 2 AD3d at 238, 769 N.Y.S.2d at 244. The investment management agreement provided, inter alia, that $18 million was to be invested in a leveraged portfolio of emerging market debt securities. Moreover, the plaintiff acknowledged that he understood there were risks associated with investing in emerging markets, and that investment in such markets “can lead to losses of principal, including all of the $18 million equity invested, or more.” 2 AD3d at 236, 769 N.Y.S.2d at 241.

In this case, there were no specific requirements as to investing in any particular types of securities. Certainly, there was no warning or any acknowledgement that all assets could be lost. The diversification provision listed HELOS and Alt-A’s as securities in which the defendant was permitted to invest, up to certain percentage limits of the account assets. However, the diversification provision did not require the defendant to invest in them at all.

The plaintiff asserts therefore, that adhering to the maximum contractually permitted percentages despite “seismic changes to the economy, to world markets and J.P. Morgan’s own internal conclusion[s] [about an impending financial meltdown in the housing market],” suggests the very opposite of managing the accounts and exercising discretion as to whether the securities should be held at all. We agree. [*8]

Action or non-action in accordance with a provision that limits rather than mandates certain actions does not immunize defendant from a breach of contract claim when that action/non-action is egregiously at odds with the stated contractual requirement that defendant pursue the investment objective of reasonable income and high level of safety of capital. As the plaintiff correctly asserts, the motion court’s holding that there was no breach of agreement so long as the defendant did not exceed the maximums stated in the sector and ratings provisions would allow the defendant to insulate itself from liability by closing its eyes to known risks, and so would render the contract’s stated goal of “a high level of safety of capital” impermissibly meaningless. See e.g. Two Guys From Harrison-N.Y., 63 N.Y.2d at 403, 482 N.Y.S.2d at 468.

Contrary to the defendant’s argument, plaintiff’s claim is not based on the allegation of failure to achieve — no matter how strenuously the defendant attempts to recast the allegations so that it can then cite to precedent mandating dismissal of the complaint on such basis. See CMMF, LLC, 78 AD3d at 563, 915 N.Y.S.2d at 5 (no breach of contract claim may be sustained based on a failure to achieve an investment objective where investment manager has discretionary authority), citing Vladimir v. Cowperthwait, 42 AD3d 413, 839 N.Y.S.2d 761 (1st Dept. 2007). That the defendant failed to achieve the goal of reasonable income and high safety of capital is undisputed, as is the foreclosure of plaintiff’s pursuit of a claim on that basis. See CMMF, LLC, at 563, 915 N.Y.S.2d at 5. Here, however, the plaintiff’s claim rests on the allegations that, notwithstanding its adherence to certain limitations, the defendant failed to manage the accounts in accordance with the agreed upon objective. Had it done so, plaintiff asserts, it might have followed the path taken by JP Morgan Chase to divest itself of securities based on subprime mortgages before the losses turned catastrophic.[FN8] Instead, as the defendant concedes, the accounts were for the most part invested by January 2007, “with minimal subsequent account activity” until Ballantyne closed the accounts almost two years later. As such the plaintiff’s allegations are sufficient to sustain a breach of contract claim. See Sergeants Benevolent Assn. Annuity Fund v. Renck, 2004 WL 5278824 (Sup. Ct, N.Y. County 2004)(plaintiffs’ breach of contract claim upheld against defendant investment brokerage on allegations that defendant would not have lost $27 million had it pursued the conservative investment plan required by the contract), rev’d on other grounds, 19 AD3d 107, 796 N.Y.S.2d 77 (1st Dept 2005); see also Scalp & Blade v. Advest, Inc., 281 AD2d 882, 883 [4th Dept 2001].

We reject the defendant’s contention that Sergeants Benevolent Assn. Annuity Fund is [*9]distinguishable. The defendant argues that, in that case, defendant breached the agreement to pursue “conservative capital appreciation” by investing in highly volatile, risky tech, communications and internet stocks which were not permitted by any provision of the contract. We find this argument unpersuasive for the reasons already stated above. Whether permitted or not, once the defendant acquired information about the riskiness of subprime securities it was also aware that such securities were incompatible with the stated investment objective of the accounts.

The plaintiff has also sufficiently alleged that defendant breached the Delaware Insurance Code. 18 Del C. § 1305(4) provides: “An insurer shall not at any [one] time have more than 50% of its assets invested in obligations under § 1323 of this title, exclusive of that portion of such obligations guaranteed or insured by an agency of the United States government.” Obligations under § 1323(a) are “bonds, notes or other evidences of indebtedness secured by first or second mortgages,” and are not limited to individual mortgages. Therefore, section 1323 covers more than 50% of the securities contained in the accounts. See Assured, 80 AD3d at 305, 915 N.Y.S.2d at 16.

We further reject the defendant’s argument that it complied with § 1308 of the Delaware Code, and that compliance with any section is sufficient to render an investment compliant with the Code. The defendant maintains that the securities at issue met the requirements contained in § 1308, as they were all rated “A” or higher by Standard and Poor’s, or “A2” or higher by Moody’s at the time of purchase. However, the statements of record only reflect holdings in the accounts as of two dates, May 31, 2006 and January 31, 2007, and do not, on their face, establish any regulatory compliance. Thus, defendant has failed to demonstrate conclusively, through documentary evidence, that it complied with this section.

The defendant has not established entitlement to dismissal of plaintiff’s claims as time-barred. Section 7(d) of the IMA provided that the plaintiff was obligated to “object in writing” as “to any act or transaction […] within a period of ninety (90) days from the date of receipt of any statement” from the defendant. The holding in Assured is not applicable here since the plaintiff did not initially assert that the amended guidelines (in writing) constituted an objection as they did in Assured (80 AD3d at 304, 915 N.Y.S.2d at 15); nor does the record reflect that Ballantyne made a prior oral objection that resulted in the amended guidelines. In any event, whereas the amended guidelines in Assured restricted the defendant making future investments in cash equivalents, no such restriction applied here, but on the contrary included the list of the permitted securities.

However, as the motion court correctly noted, the plaintiff’s claims are based on defendant’s failure to manage the accounts in accordance with the investment objective rather than upon any specific act or transaction. Hence, they are based on conduct that would not have shown on any statement, namely, that defendant failed to follow a course of action with respect to the accounts despite its awareness of the declining subprime securities market and its own divestiture of such securities. Such knowledge, which is the cornerstone of the plaintiff’s allegations, is not a fact which would be evident in the statements. Thus, the defendant has not established entitlement to pre-answer dismissal on the ground that the action is time-barred. [*10]

Finally, assuming, arguendo, that the appeal pending in the Court of Appeals affirms this Court’s finding that plaintiff’s tort claims for gross negligence and breach of fiduciary duty are not preempted by New York General Business Law § 352 et seq. (the Martin Act), we find that neither are they duplicative of the breach of contract claim. See Assured, 80 AD3d at 306, 915 N.Y.S.2d at 17.

Accordingly, the order of the Supreme Court, New York County (Barbara R. Kapnick, J.), entered March 25, 2010, which granted defendant’s motion to dismiss the complaint, should be reversed, on the law, with costs, and the motion denied.

All concur.


Order, Supreme Court, New York County (Barbara R. Kapnick, J.), entered March 25, 2010, reversed, on the law, with costs, and the motion to dismiss the complaint denied.

Opinion by Catterson, J. All concur.
Saxe, J.P., Catterson, Acosta, Abdus-Salaam, Román, JJ.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: JULY 14, 2011

DEPUTY CLERK

Footnotes

Footnote 1:Plaintiff is a third-party beneficiary of the IMA and is entitled to enforce Ballantyne’s rights thereunder.

Footnote 2: The article states that “J.P. Morgan mostly exited the business of securitizing subprime mortgages when it was still booming, shunning now notorious instruments such as SIVs (structured investment vehicles) and CDOs (collateralized debt obligations).”

Footnote 3:The article also indicates that any information available to J.P. Morgan Chase would have been made available to its affiliates. It states: “The Dimon team…mine every part of the business for detailed information – especially data that point to trouble – then share it at warp speed throughout the corporation.”

Footnote 4:This issue is not argued by the parties on appeal in light of this Court’s decisions in Assured Guar. (U.K.) Ltd. v. J.P. Morgan Inv. Mgt. Inc., 80 AD3d 293, 915 N.Y.S.2d 7 (1st Dept. 2010), lv. granted, N.Y. Slip Op. 64361[u](1st Dept. 2011) and CMMF, LLC v. J.P. Morgan Inv. Mgt. Inc., 78 AD3d 562, 915 N.Y.S.2d 2 (1st Dept. 2010), but defendant reserved its right to so argue, if appropriate, following consideration of the issue by the Court of Appeals.

Footnote 5:A fact established in the record by defendant’s exhibit, an article titled, “Turmoil in the Financial Markets,” which states as follows: “The credit crisis arose from losses in mortgage loans… Many of these loans were subprime’ loans… Mortgage originators sold the home loan mortgages to others, including off balance sheet entities created by investment banks. These entities issued structured notes called collateralized debit [sic] obligation[s] (CDOs), secured by groups of home mortgage loans.”

Footnote 6:These apparently included — as reflected in the record though not noted by the plaintiff — mortgages originated by the above-named competitor First Franklin, whose defaults were apparently known to J.P. Morgan Chase in October 2006 to be three times worse than its own, but which were still being held for the accounts at the time of amended guidelines in December 2007.

Footnote 7:Compare Assured, 80 AD3d at 305, 915 N.Y.S.2d at 16 (plaintiff’s contract claim sufficiently alleges gross negligence to survive a motion to dismiss) with Assured, 80 AD3d at 306, 915 N.Y.S.2d at 17 (order “should be modified […] to reinstate the contract claims based on alleged violation of Delaware Insurance Code Chapter 13 that accrued on or after June 26, 2007, as well as its claims for breach of fiduciary duty and gross negligence […]and otherwise affirmed).

Footnote 8:At oral argument, defendant argued that management of the accounts included its assessment of whether to sell, or whether securities would regain their value. For purposes of the defendant’s motion to dismiss, we reject that theory of management in view of the plaintiff’s allegations that J.P. Morgan’s concerns in October 2006 led to it divesting itself of similar securities when subprime securities were still being held in the subject accounts 15 months later.

[ipaper docId=60041277 access_key=key-ugsqu10gyjhhwo1rhso height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (0)

LEYVA v. National Default Servicing Corp. | Nevada Supreme Court Remand and Reverse “Defective ASMT, U.C.C Article 3, No Endorsement, In Re Pasillas, Wells Fargo, MortgageIt”

LEYVA v. National Default Servicing Corp. | Nevada Supreme Court Remand and Reverse “Defective ASMT, U.C.C Article 3, No Endorsement, In Re Pasillas, Wells Fargo, MortgageIt”


Cite as: Leyva v. National Default Servicing Corp.

127 Nev. Adv. Op. No. 40

July 7, 2011

IN THE SUPREME COURT OF THE STATE OF NEVADA

No. 55216

MOISES LEYVA,

Appellant,

vs.

NATIONAL DEFAULT SERVICING CORP.; AMERICA’S SERVICING COMPANY; AND WELLS FARGO,

Respondents.

Appeal from a district court order denying a petition for judicial review in a foreclosure mediation action.  Eighth Judicial District Court, Clark County; Donald M. Mosley, Judge.

Reversed and remanded.

Crosby & Associates and David M. Crosby and Troy S. Fox, Las Vegas, for Appellant.

Snell & Wilmer, LLP, and Gregory A. Brower and Cynthia Lynn Alexander, Las Vegas, for Respondents America’s Servicing Company and Wells Fargo.

Wilde & Associates and Gregory L. Wilde, Las Vegas, for Respondent National Default Servicing Corp.

BEFORE THE COURT EN BANC.

OPINION

By the Court, HARDESTY, J.:

In this appeal, we consider issues arising out of Nevada’s Foreclosure Mediation Program.  First, we must determine whether a homeowner who is not the original mortgagor is a proper party to participate in the program.  We conclude that the Foreclosure Mediation statute, NRS 107.086, and the Foreclosure Mediation Rules (FMRs) dictate that a homeowner, even if he or she is not the named mortgagor, is a proper party entitled to request mediation following a notice of default.

Second, we must determine if a party is considered to have complied with the applicable statute and FMRs governing document production in a mediation proceeding by producing what the district court referred to as “essential documents.”  In this, we address whether substantial compliance satisfies the mandates of the statute and FMRs.  Because we conclude that strict compliance is compelled by NRS 107.086(4) and (5), that the assignment offered was defective, and that no endorsement of the mortgage note was provided according to Article 3 of the Uniform Commercial Code, we conclude that Wells Fargo failed to produce the documents required under NRS 107.086(4).  Additionally, we recently concluded in Pasillas v. HSBC Bank USA, 127 Nev. ___, ___ P.3d ___ (Adv. Op. No. 39, July 7, 2011), that a party’s failure to produce the enumerated documents required by NRS 107.086 and the FMRs prohibits the district court from directing the program administrator to certify the mediation so that the foreclosure process can proceed.  Here, we again conclude that, due to the statute’s and the FMRs’ mandatory language regarding document production, a party is considered to have fully complied with the statute and rules only upon production of all documents required.  Failure to do so is a sanctionable offense, and the district court is prohibited from allowing the foreclosure process to proceed.  Therefore, we must reverse and remand this case to the district court for it to determine appropriate sanctions against respondents.[1]

FACTS AND PROCEDURAL HISTORY

Appellant Moises Leyva received and recorded a quitclaim deed in 2007 in exchange for taking over monthly mortgage payments on a residence in Las Vegas.  Leyva did not expressly assume the mortgage note, however, and it remained in the original mortgagor’s name, Michael Curtis Ramos.  Nonetheless, Leyva made the mortgage payments in Leyva’s name to respondent Wells Fargo’s servicing company for 25 months.  Thereafter, Leyva defaulted on the mortgage and, upon receiving a notice of election to sell, decided to pursue mediation through the Foreclosure Mediation Program.  Both he and Ramos signed the form electing to mediate.  The mediation occurred on September 23, 2009,[2] and Leyva, Ramos, and Wells Fargo were represented by counsel at the mediation.  Leyva was present at the mediation, while Ramos was available by telephone.  At the mediation, Wells Fargo produced a certified copy of the original deed of trust and mortgage note, on both of which MortgageIT, Inc., not Wells Fargo, was named as the lender, as well as a notarized statement from a Wells Fargo employee asserting that Wells Fargo was in possession of the deed of trust and mortgage note, as well as any assignments thereto.  Wells Fargo did not submit copies of any assignments.  The parties failed to resolve the foreclosure at the mediation, and the mediator’s statement indicated that Wells Fargo failed to bring the statutorily required documents to the mediation.  The mediator did not, however, indicate that Wells Fargo participated in the mediation in bad faith.

Leyva then filed a petition for judicial review in district court, claiming that Wells Fargo mediated in bad faith and that it should be sanctioned.  After conducting hearings on the petition, the district court found that

there is a lack of showing of bad faith on the part of [Wells Fargo] in that all essential documents were provided, contrary to the indication of the mediator, and that [Wells Fargo] otherwise negotiated in good faith notwithstanding the fact that an agreement was not reached.

Absent timely appeal, a Letter of Certification shall enter.

(Emphasis added.)  This appeal followed.[3]

DISCUSSION

In resolving this appeal, as a preliminary matter, we must determine whether Leyva could properly elect to mediate and participate in the mediation even though he was not a named party on the mortgage note and did not assume the note in his purchase of the residence.  Determining that he could participate as the title holder of record, we next consider whether the district court erred in finding that Wells Fargo brought “all essential documents” to the mediation.  In doing so, we address Wells Fargo’s argument that possessing the original mortgage note and deed of trust is sufficient to demonstrate ownership of the same.  We conclude that Wells Fargo failed to produce the documents required under the applicable statute and FMRs and to otherwise show that it had an enforceable interest in the property subject of the mediation.  Accordingly, the district court abused its discretion, and sanctions are warranted pursuant to our holding in Pasillas, 127 Nev. at ___, ___ P.3d at ___.

Leyva was a proper party to the mediation

Wells Fargo first argues that because Leyva was neither the grantor on the deed of trust nor the obligor on the note, he was not a proper party to the mediation.  We disagree.

NRS 107.086(3) allows “[t]he grantor or the person who holds the title of record” to elect to mediate.  (Emphasis added.)  Similarly, FMR 5(1) states that “any grantor or person who holds the title of record and is the owner-occupant of a residence” is eligible to participate in the Foreclosure Mediation Program.  (Emphasis added.)  Leyva recorded his ownership of the subject property in March 2007 and is therefore clearly the title holder of record eligible to participate in the Foreclosure Mediation Program.

Even though the mortgage note remained in Ramos’s name, this bifurcation of title ownership and liability on the note served only to potentially limit the foreclosure solutions available to Leyva at the mediation, not to exclude all possible remedies.  And while Wells Fargo argues that modification was not an option because Leyva lacked authority over the loan, the record reflects that Ramos, the person with such authority, signed the election-of-mediation form, was represented by counsel at the mediation, and was available by telephone during the mediation.  Therefore, Wells Fargo’s argument lacks merit.  Regardless, because both NRS 107.086(3) and FMR 5(1) permit the person holding the title of record to mediate, and Wells Fargo does not dispute that Leyva possessed a valid, recorded quitclaim deed, we conclude that Leyva could properly elect to mediate and was eligible to participate in the Foreclosure Mediation Program.

Wells Fargo failed to meet the mediation program’s documentation requirements, compelling consideration of sanctions

In Pasillas, we held that if a party fails to (1) provide the required documents, or (2) either attend the mediation in person or, if the beneficiary attends through a representative, that person fails to have authority to modify the loan or access to such a person, the district court is required to impose appropriate sanctions.  127 Nev. at ___, ___ P.3d at ___. Here, despite Wells Fargo’s failure to bring the assignments for the mortgage note and deed of trust, the district court refused to impose sanctions.[4]  “[W]e . . . review a district court’s decision regarding the imposition of sanctions for a party’s participation in the Foreclosure Mediation Program under an abuse of discretion standard.”  Id.

Wells Fargo concedes that it did not provide written assignments of the deed of trust and mortgage note as required by NRS 107.086(4) and FMR 5(6).  Nevertheless, it argues that it fulfilled the purpose of the statute and rule, and thus, its failure to bring actual copies of any assignments was harmless.  In essence, Wells Fargo asserts that its failure to strictly comply with the statute’s and FMRs’ requirements should not subject it to sanctions, because it substantially complied with those requirements.

“Substantial compliance may be sufficient ‘to avoid harsh, unfair or absurd consequences.’  Under certain procedural statutes and rules, however, failure to strictly comply . . . can be fatal to a case.”  Leven v. Frey, 123 Nev. 399, 407, 168 P.3d 712, 717 (2007) (quoting 3 Norman J. Singer, Statutes and Statutory Construction § 57:19, at 58 (6th ed. 2001)).  To determine whether a statute and rule require strict compliance or substantial compliance, this court looks at the language used and policy and equity considerations.  Id. at 406-07, 168 P.3d at 717.  In so doing, we examine whether the purpose of the statute or rule can be adequately served in a manner other than by technical compliance with the statutory or rule language.  See id. at 407 n.27, 168 P.3d at 717 n.27 (citing White v. Prince George’s County, 877 A.2d 1129, 1137 (Md. Ct. Spec. App. 2005) (“Where the purpose of the notice requirements is fulfilled, but not necessarily in a manner technically compliant with all of the terms of the statute, this Court has found such substantial compliance to satisfy the statute.” (internal quotation omitted))).

Here, both the statutory language and that of the FMRs provide that the beneficiary “shall” bring the enumerated documents, and we have previously recognized that “‘shall’ is mandatory unless the statute demands a different construction to carry out the clear intent of the legislature.”  S.N.E.A. v. Daines, 108 Nev. 15, 19, 824 P.2d 276, 278 (1992); see also Pasillas, 127 Nev. at ___, ___ P.3d at ___.  The legislative intent behind requiring a party to produce the assignments of the deed of trust and mortgage note is to ensure that whoever is foreclosing “actually owns the note” and has authority to modify the loan.  See Hearing on A.B. 149 Before the Joint Comm. on Commerce and Labor, 75th Leg. (Nev., February 11, 2009) (testimony of Assemblywoman Barbara Buckley).  Thus, we determine that NRS 107.086 and the FMRs necessitate strict compliance.

Because we conclude that strict compliance is necessary, we must discuss what constitutes a valid assignment of deeds of trust and mortgage notes.  Transfers of deeds of trust and mortgage notes are distinctly separate, thus we discuss each one in turn.

The deed of trust, with any assignments, identifies the person who is foreclosing

In this case, Wells Fargo was not the original named beneficiary on the deed of trust, but it contends on appeal that it has the right to foreclose as the assignee of the original beneficiary, MortgageIT.  Although Wells Fargo conceded during oral argument that it did not provide the written assignment, it claims that because it provided a certified copy of the deed of trust and a notarized statement from its employee claiming that it was the rightful owner of the deed of trust, no written assignment was necessary.  We disagree.

A deed of trust is an instrument that “secure[s] the performance of an obligation or the payment of any debt.”  NRS 107.020.  This court has previously held that a deed of trust “constitutes a conveyance of land as defined by NRS 111.010.”[5]  Ray v. Hawkins, 76 Nev. 164, 166, 350 P.2d 998, 999 (1960).  The statute of frauds governs when a conveyance creates or assigns an interest in land:

No estate or interest in lands, . . . nor any trust or power over or concerning lands, or in any manner relating thereto, shall be created, granted, assigned, surrendered or declared . . . , unless . . . by deed or conveyance, in writing, subscribed by the party creating, granting, assigning, surrendering or declaring the same, or by the party’s lawful agent thereunto authorized in writing.

NRS 111.205(1) (emphases added).  Thus, to prove that MortgageIT properly assigned its interest in land via the deed of trust to Wells Fargo, Wells Fargo needed to provide a signed writing from MortgageIT demonstrating that transfer of interest.  No such assignment was provided at the mediation or to the district court, and the statement from Wells Fargo itself is insufficient proof of assignment.  Absent a proper assignment of a deed of trust, Wells Fargo lacks standing to pursue foreclosure proceedings against Leyva.

Mortgage note

The proper method of transferring the right to payment under a mortgage note is governed by Article 3 of the Uniform Commercial Code- Negotiable Instruments, because a mortgage note is a negotiable instrument.[6]  Birkland v. Silver State Financial Services, Inc., No. 2:10-CV-00035-KJD-LRL, 2010 WL 3419372, at *4 (D. Nev. Aug. 25, 2010).  The obligor on the note has the right to know the identity of the entity that is “entitled to enforce” the mortgage note under Article 3, see NRS 104.3301, “[o]therwise, the [homeowner] may pay funds to a stranger in the case.”  In re Veal, No. 09-14808, 2011 WL 2304200, at *16 (B.A.P. 9th Cir. June 10, 2011) (holding, in a bankruptcy case, that AHMSI did not prove that it was the party entitled to enforce, and receive payments from, a mortgage note because it “presented no evidence as to who possessed the original Note.  It also presented no evidence showing [e]ndorsement of the note either in its favor or in favor of Wells Fargo, for whom AHMSI allegedly was servicing the [bankrupt party’s] Loan.”).  If the homeowner pays funds to a “stranger in the case,” then his or her obligation on the note would not be reduced by the payments made. See id. at *7 (“if a[n obligor on a mortgage note] makes a payment to a ‘person entitled to enforce,’ the obligation is satisfied on a dollar for dollar basis, and the [obligor] never has to pay that amount again”).

Wells Fargo argues that, under Nevada law, possession of the original note allowed it to enforce the note.  We disagree and take this opportunity to clarify the applicability of Article 3 to mortgage notes, as we anticipate increasing participation in the Foreclosure Mediation Program, as well as a corresponding increase in the number of foreclosure appeals in this state.  As discussed below, we conclude that Article 3 clearly requires Wells Fargo to demonstrate more than mere possession of the original note to be able to enforce a negotiable instrument under the facts of this case.

Pursuant to NRS 104.3102(1), Article 3 applies to negotiable instruments.  Negotiable instruments are defined as

an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

(a) Is payable to bearer or to order at the time it is issued or first comes into possession of a holder;

(b) Is payable on demand or at a definite time; and

(c) Does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money.

NRS 104.3104(1).  Thus, a mortgage note is a negotiable instrument, and any negotiation of a mortgage note must be done in accordance with Article 3.

A note can be made payable to bearer or payable to order.  NRS 104.3109.  If the note is payable to bearer, that “indicates that the person in possession of the promise or order is entitled to payment.”  NRS 104.3109(1)(a).  However, “[a] promise or order that is not payable to bearer is payable to order if it is payable to the order of an identified person . . . . A promise or order that is payable to order is payable to the identified person.”  NRS 104.3109(2).

For a note in order form to be enforceable by a party other than to whom the note is originally payable, the note must be either negotiated or transferred.[7]  A “‘[n]egotiation’ means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.”  NRS 104.3201(1).  “[I]f an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its endorsement by the holder.”[8]  NRS 104.3201(2) (emphasis added).  An “endorsement” is a signature that is “made on an instrument for the purpose of negotiating the instrument.”  NRS 104.3204(1).  Thus, if the note is payable to the order of an identifiable party, but is then sold or otherwise assigned to a new party, it must be endorsed by the party to whom it was originally payable for the note to be considered properly negotiated to the new party.  Once a proper negotiation occurs, the new party, or “note holder,” with possession is entitled to enforce the note.  NRS 104.1201(2)(u)(1) (“Holder means . . . [t]he person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.”).

If a party cannot attain “holder” status by showing a valid negotiation, the party may establish its right to enforce the note by showing that the note has been validly transferred.  NRS 104.3203(2).  The only distinction between a negotiation and a transfer is that, in the case of a transfer, the note need not be endorsed by the party who is relinquishing enforcement rights.  Because a transferred note is not endorsed, however, the party seeking to establish its right to enforce the note “must account for possession of the unendorsed instrument by proving the transaction through which the transferee acquired it.”  U.C.C. § 3-203 cmt. 2 (explaining the effect of § 3-203(b), codified in Nevada as NRS 104.3203(2)).  In other words, because the party seeking to enforce the note cannot “prove” its right to enforce through the use of a valid endorsement, the party must “prove” by some other means that it was given possession of the note for the purpose of enforcing it.[9]

In this case, the adjustable rate mortgage note provides:  “In return for a loan that I have received, I promise to pay U.S. $192,000.00 . . . plus interest, to the order of Lender.  Lender is [MortgageIT, Inc.]” (emphasis added).  Because the mortgage note is payable to the order of a specific party, MortgageIT, to negotiate the note to a new party, in this case Wells Fargo, Wells Fargo must have possession of the note and the note must be properly endorsed by MortgageIT.  See NRS 104.3201(2).  No such endorsement was included in the documents produced at mediation or in the documents filed with the district court, nor was a valid assignment produced as proof of the note’s transfer, and mere possession does not entitle Wells Fargo to enforce the note.  Therefore, because the mortgage note is payable to MortgageIT, unless Wells Fargo can prove that the note was properly endorsed or validly transferred, thereby making it the party entitled to enforce the note, it has not demonstrated authority to mediate the note.

As we concluded in Pasillas, a foreclosing party’s failure to bring the required documents to the mediation is a sanctionable offense under NRS 107.086 and the FMRs.  Therefore, we conclude that the district court abused its discretion when it denied Leyva’s petition for judicial review.  Accordingly, we reverse the district court’s order and remand this matter to the district court with instructions to determine the appropriate sanctions for Wells Fargo’s violation of the statutory and rule-based requirement.  In doing so, the district court should consider the factors discussed in Pasillas.[10]

DOUGLAS, C.J., and CHERRY, SAITTA, GIBBONS, PICKERING, and PARRAGUIRRE, JJ., concur.

**********FOOTNOTES**********

[1]        Because we reverse on other grounds, we do not reach Leyva’s contention that respondent Wells Fargo also participated in the mediation in bad faith because it refused to offer anything other than a cash-for-keys option to avoiding foreclosure.

[2]        Therefore, this mediation was governed by the Foreclosure Mediation Rules in effect from July 31, 2009, until September 28, 2009, at which time the rules were amended.  See In the Matter of the Adoption of Rules for Foreclosure Mediation, ADKT 435 (Order Adopting Foreclosure Mediation Rules, June 30, 2009, and Order Amending Foreclosure Mediation Rules and Adopting Forms, September 28, 2009).  Although the changes required some renumbering of the rules, the language of the rules important to this case, namely, those specifying who can participate in the mediation and the documents that must be provided, remain essentially the same.

[3]        This court has jurisdiction over the appeal from the district court’s final order in the judicial review proceeding.  Nev. Const. art. 6, § 4; NRAP 3A(b)(1).

[4]        At the time the district court entered its order, the Pasillas opinion had not been published.

[5]        “‘Conveyance’ shall be construed to embrace every instrument in writing, except a last will and testament, whatever may be its form, and by whatever name it may be known in law, by which any estate or interest in lands is created, aliened, assigned or surrendered.”  NRS 111.010(1).

[6]        Article 3 is codified in NRS 104.3101-.3605.

[7]        Since the documents provided at the mediation did not establish transfer of either the mortgage or the note, we express no opinion on the issue addressed in the Restatement (Third) of Property section 5.4 concerning the effect on the mortgage of the note having been transferred or the reverse.

[8]        Under NRS 104.3301(1)(a), a person entitled to enforce an instrument is “[t]he holder of the instrument.”

[9]        To “prove” a transaction under NRS 104.3203(2), a party must present evidence sufficient to establish that it is more likely than not that the transaction took place.  NRS 104.3103(1)(i) (defining “prove”); NRS 104.1201(h) (defining “burden of establishing”).

[10]      In Pasillas, we concluded that the following nonexhaustive list of factors would aid district courts in determining what sanctions are appropriate: “whether the violations were intentional, the amount of prejudice to the nonviolating party, and the violating party’s willingness to mitigate any harm by continuing meaningful negotiation.”  Pasillas v. HSBC Bank USA, 127 Nev. ___, ___, ___ P.3d ___, ___ (Adv. Op. No. 39, July 7, 2011).


*****************************

[ipaper docId=59629180 access_key=key-1rxuzowvxn02h09lwmc9 height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (3)

PASILLAS v. HSBC Bank USA | Nevada Supreme Court Reverse “Sanctionable offenses under the Foreclosure Mediation Program, IBANEZ, AHMSI, Alleged Assignment”

PASILLAS v. HSBC Bank USA | Nevada Supreme Court Reverse “Sanctionable offenses under the Foreclosure Mediation Program, IBANEZ, AHMSI, Alleged Assignment”


Cite as: Pasillas v. HSBC Bank USA

127 Nev. Adv. Op. 39

EMILIANO PASILLAS AND YVETTE PASILLAS, Appellants,
v.
HSBC BANK USA, AS TRUSTEE FOR LUMINENT MORTGAGE TRUST; POWER DEFAULT SERVICES, TRUSTEE; AND AMERICAN HOME MORTGAGE SERVICING, INC., Respondents.

No. 56393.

Supreme Court of Nevada.

July 7, 2011.

Terry J. Thomas, Reno, for Appellants.

Pite Duncan, LLP, and Gregg A. Hubley, Laurel I. Handley, and Cuong M. Nguyen, Las Vegas, for Respondents.

BEFORE THE COURT EN BANC.

OPINION

By the Court, HARDESTY, J.:

In this appeal, we consider issues arising out of Nevada’s Foreclosure Mediation Program and address whether a lender commits sanctionable offenses when it does not produce documents and does not have someone present at the mediation with the authority to modify the loan, as set forth in the applicable statute, NRS 107.086, and the Foreclosure Mediation Rules (FMRs).

Because NRS 107.086 and the FMRs expressly require that certain documents be produced during foreclosure mediation and that someone with authority to modify the loan must be present or accessible during the mediation, we conclude that a party’s failure to comply with these requirements is an offense subject to sanctions by the district court. In such an event, the district court shall not direct the program administrator to certify the mediation to allow the foreclosure process to proceed until the parties have fully complied with the statute and rules governing foreclosure mediation.

Here, because respondents HSBC Bank USA, Power Default Services, and American Home Mortgage Servicing, Inc. (AHMSI), did not bring the required documents to the mediation and did not have access to someone authorized to modify the loan during the mediation, we conclude that the district court erred in denying appellants Emiliano and Yvette Pasillas’s petition for judicial review. Therefore, we reverse the district court’s order and remand this matter to the district court so that the court may determine sanctions.

FACTS AND PROCEDURAL HISTORY

The Pasillases purchased a home in Reno in 2006 with a loan from American Brokers Conduit. The note and deed of trust were allegedly assigned to HSBC.[1] Near the end of 2009, Power Default Services became a substitute trustee, removing HSBC from that role. Allegedly, the servicer for the Pasillases’ loan is AHMSI.[2]

When the Pasillases defaulted on their mortgage and received a notice of election to sell, they elected to mediate pursuant to the Foreclosure Mediation Program provided for in NRS 107.086. Two separate mediations occurred, one on February 18, 2010, and one on March 8, 2010,[3] but neither mediation resulted in a resolution.

While a representative of AHMSI was available by phone at both mediations, it is unclear whether HSBC was present or represented by counsel. There is some disagreement between the parties regarding who the respondents’ attorneys represented at the mediations and at the hearing on the petition for judicial review. In the addendum to the mediator’s statement, the mediator stated that “HSBC . . . was identified as Beneficiary . . . and represented by Cuong Nguyen, Esq. of Pite Duncan, LLP.” In the second mediation, the mediator indicated that “HSBC . . . was again identified as Beneficiary . . . and represented by Heather Hudson, Esq. of Pite Duncan, LLP.” However, in responding to the Pasillases’ petition for judicial review, the Pite Duncan law firm indicated that it was not counsel for HSBC. Specifically, the response opened with the following statement: “Respondents AMERICAN HOME MORTGAGE SERVICING, INC. (`AHMSI’), erroneously named herein as HSBC BANK USA AS TRUSTEE FOR LUMINENT MORTGAGE TRUST.” Respondents also claimed that the Pasillases were “incorrect that Pite Duncan, LLP attended [the mediations] on behalf of HSBC.” At oral argument before this court, respondents’ counsel stated that they represented all of the respondents named in this case at the mediations, but they did not dispute the mediator’s finding that respondents needed additional authority from investors to agree to a loan modification.

After both mediations were completed, the mediator filed a statement indicating that (1) “[t]he parties participated but were unable to agree to a loan modification or make other arrangements,” (2) “[t]he beneficiary or his representative failed to participate in good faith,” and (3) “[t]he beneficiary failed to bring to the mediation each document required.” The mediator also filed an addendum to his statement, wherein he stated that two pages of the mortgage note were missing, that the assignment purportedly assigning the mortgage note and deed of trust to HSBC was incomplete, that instead of an appraisal HSBC provided a broker’s price opinion,[4] and that respondents stated they would need additional investor approval before agreeing to a loan modification. The mediator concluded that he would not recommend that the administrator issue a certificate authorizing further foreclosure proceedings because HSBC “failed to participate in [the] mediation in good faith as evidenced by its failure to produce required documents and information initially, or subsequently to cure its failures.” The Pasillases subsequently filed a petition for judicial review in the district court. In the petition, the Pasillases requested sanctions in the form of a modification of their mortgage and attorney fees.

The district court conducted a short hearing, during which the only issue addressed was the parties’ failure to come to an agreement. The district court did not address whether respondents failed to provide the required documents at the mediation or whether respondents lacked the requisite authority at the mediation to modify the loan. After the hearing, the district court entered an order finding that “Respondents] [have] met the burden to show cause why sanctions should not lie,” and directed the Foreclosure Mediation Program administrator to issue a certification authorizing the foreclosure to proceed. The Pasillases appealed.

DISCUSSION

In resolving this appeal, we must determine whether the district court abused its discretion when it refused to enter sanctions against respondents for failing to satisfy express statutory requirements and allowed respondents to continue with the foreclosure process. We begin our discussion with a brief background of the Foreclosure Mediation Program.

The Foreclosure Mediation Program

The Nevada Legislature enacted the Foreclosure Mediation Program in 2009 in response to the increasing number of foreclosures in this state. Hearing on A.B. 149 Before the Joint Comm. on Commerce and Labor, 75th Leg. (Nev., February 11, 2009) (testimony of Assemblywoman Barbara Buckley). The program requires that a trustee seeking to foreclose on an owner-occupied residence provide an election-of-mediation form along with the notice of default and election to sell. NRS 107.086(2)(a)(3). If the homeowner elects to mediate, both the homeowner and the deed of trust beneficiary must attend, must mediate in good faith, provide certain enumerated documents,[5] and, if the beneficiary attends through a representative, that person must have authority to modify the loan or have “access at all times during the mediation to a person with such authority.” NRS 107.086(4), (5); FMR 5(7)(a). After the conclusion of the mediation, the mediator must file a mediator’s statement with the program administrator, indicating whether all parties complied with the statute and rules governing the program. FMR 12(2). If the beneficiary does not (1) attend the mediation; (2) mediate in good faith; (3) provide the required documents; or (4) if attending through a representative, have a person present with authority to modify the loan or access to such a person, the mediator is required to “submit … a petition and recommendation concerning the imposition of sanctions.”[6] NRS 107.086(5). The homeowner may then file a petition for judicial review with the district court,[7] and the court “may issue an order imposing such sanctions against the beneficiary of the deed of trust or the representative as the court determines appropriate.” See FMR 5(7)(f).[8] But if the district court finds that the parties met the four program requirements, it will direct the program administrator to certify the mediation, allowing the foreclosure process to proceed. See NRS 107.086(2)(c)(2), (3), (6), (7).

Respondents failed to meet the mediation program’s statutory requirements

The Pasillases argue that respondents failed to meet the program’s requirements—the document requirement because respondents failed to bring a complete mortgage note and failed to provide assignments of the note and deed of trust, and the loan modification authority requirement because they failed to have someone present at the mediation with the authority to modify the loan. We agree.

The scope and meaning of a statute is a question of law, which we review de novo. Arguello v. Sunset Station, Inc., 127 Nev. ___, ___ P.3d ___. (Adv. Op. No. 29, June 2, 2011). Court rules are also subject to de novo review. Moon v. McDonald Carano Wilson LLP, 126 Nev. ___, ___, 245 P.3d 1138, 1139 (2010). “When the language in a provision is clear and unambiguous, this court gives `effect to that meaning and will not consider outside sources beyond that statute.'” City of Reno v. Citizens for Cold Springs, 126 Nev. ___, ___, 236 P.3d 10, 16 (2010) (quoting NAIW v. Nevada Self-Insurers Association, 126 Nev. ___, ___, 225 P.3d 1265, 1271 (2010)).

Both NRS 107.086 and the FMRs use the word “shall” or “must” when listing the actions required of parties to a foreclosure mediation. Use of the word “shall” in both the statutory language and the FMRs indicates a duty on the part of the beneficiary, and this court has stated that “`shall’ is mandatory unless the statute demands a different construction to carry out the clear intent of the legislature.” S.N.E.A. v. Daines, 108 Nev. 15, 19, 824 P.2d 276, 278 (1992). Additionally, Black’s Law Dictionary defines “shall” as meaning “imperative or mandatory. . . . inconsistent with a concept of discretion.” 1375 (6th ed. 1990). And as it is used here, “must” is a synonym of “shall.” We conclude that NRS 107.086(4) and (5) and FMR 5(7)(a) clearly and unambiguously mandate that the beneficiary of the deed of trust or its representative (1) attend the mediation, (2) mediate in good faith, (3) provide the required documents, and (4) have a person present with authority to modify the loan or access to such a person.

Here, the mediator’s statement and his addendum to that statement, which were provided to the district court in the Pasillases’ petition for judicial review, clearly set out respondents’ failure to bring the required documents to the mediation and to have someone present with authority to modify the loan. Additionally, respondents do not dispute that they failed to bring all the required documents to the mediation.[9] Although respondents argue on appeal that their counsel at the mediation “had the requisite authority and/or access to a person with the authority to modify the loan,” they do not controvert the mediator’s statement that their counsel claimed at the mediation that additional investor approval was needed in order to modify the loan. The record before the district court demonstrates that respondents failed to meet the statutory requirements. Nonetheless, respondents argue that the district court’s conclusion that sanctions were unwarranted did not constitute an abuse of discretion because, despite the failures noted above, they mediated to resolve the foreclosure in good faith. We disagree.

Standard of review

At the outset, we establish that we will review a district court’s decision regarding the imposition of sanctions for a party’s participation in the Foreclosure Mediation Program under an abuse of discretion standard. See Arnold v. Kip, 123 Nev. 410, 414, 168 P.3d 1050, 1052 (2007) (abuse of discretion standard used to review district court’s imposition of sanctions on a party for discovery abuses); Banks v. Sunrise Hospital, 120 Nev. 822, 830, 102 P.3d 52, 58 (2004) (reviewing sanctions imposed for spoliation of evidence under an abuse of discretion standard). When determining whether the district court has abused its discretion in such cases, we do not focus on whether the court committed manifest error, but rather we focus on whether the district court made any errors of law.

Failure to satisfy statutory mandates is a sanctionable offense

As discussed above, under NRS 107.086(5), there are four distinct violations a party to a foreclosure mediation can make: (1) “fail[ure] to attend the mediation,” (2) “fail[ure] to participate in the mediation in good faith,” (3) failure to “bring to the mediation each document required,” and (4) failure to demonstrate “the authority or access to a person with the authority [to modify the loan].” If any one of these violations occurs, the mediator must recommend sanctions. Id. If the homeowner petitions for judicial review, “[t]he court may issue an order imposing such sanctions against the beneficiary of the deed of trust or the representative as the court determines appropriate.” Id. We interpret NRS 107.086(5) to mean that the commission of any one of these four statutory violations prohibits the program administrator from certifying the foreclosure process to proceed and may also be sanctionable. See Tarango v. SIIS, 117 Nev. 444, 451 n.20, 25 P.3d 175, 180 n.20 (2001) (explaining that “may” can be interpreted as “shall” in order to carry out the Legislature’s intent, which in the instant case was to make mandatory the requirements set forth in NRS 107.086(5)).

In this case, despite the mediator’s opinion that respondents did not participate in the mediation in good faith based on their failure to comply with the FMRs, the district court did not impose sanctions and instead entered a Letter of Certification that allowed respondents to proceed with the foreclosure process on the Pasillases’ property. The district court essentially ignored the fact that respondents failed to bring “to the mediation each document required” and did “not have the authority or access to a person with the authority” to modify the loan, failures which we determine constitute sanctionable offenses. Thus, the district court’s order directing the program administrator to enter a letter of certification and its failure to consider sanctions was an abuse of discretion because respondents clearly violated NRS 107.086 and the FMRs.[10] This abuse requires us to remand the case for the district court to consider appropriate sanctions.

The nature of the sanctions imposed on the beneficiary or its representative is within the discretion of the district court. We have previously listed factors to aid district courts when considering sanctions as punishment for litigation abuses. See Young v. Johnny Ribeiro Building, 106 Nev. 88, 93, 787 P.2d 777, 780 (1990); see also Bahena v. Goodyear Tire & Rubber Co., 126 Nev. ___, ___, 235 P.3d 592, 598-99 (2010); Arnold, 123 Nev. at 415-16, 168 P.3d at 1053. However, we conclude that other factors, more specific to the foreclosure mediation context, apply when a district court is considering sanctions in such a case. When determining the sanctions to be imposed in a case brought pursuant to NRS 107.086 and the FMRs, district courts should consider the following nonexhaustive list of factors: whether the violations were intentional, the amount of prejudice to the nonviolating party, and the violating party’s willingness to mitigate any harm by continuing meaningful negotiation.

Because, in this case, the foreclosing party’s failure to bring the required documents to the mediation and to have someone present at the mediation with the authority to modify the loan were sanctionable offenses under the Foreclosure Mediation Program, the district court abused its discretion when it denied the Pasillases’ petition for judicial review and ordered the program administrator to enter a letter of certification authorizing the foreclosure process to proceed. Therefore, we reverse the district court’s order and remand this matter to the district court with instructions to determine the appropriate sanctions for respondents’ violations of the statutory and rule-based requirements.

DOUGLAS, C.J., CHERRY, SAITTA, GIBBONS, PICKERING and PARRAGUIRRE, JJ., concur.

[1] The Pasillases claim that HSBC failed to provide a valid assignment; the one it provided during the mediation was signed by American Brokers Conduit but did not state who the assignee was.

[2] The parties do not argue and we do not reach the question of whether AHMSI is a valid agent for HSBC or the real party in interest, or the “person entitled to enforce” the promissory note in this case. See In re Veal, No. 09-14808, 2011 WL 2304200, at *12-14 (B.A.P. 9th Cir. June 10, 2011).

[3] These mediations were governed by the Foreclosure Mediation Rules (FMRs) as amended on November 4, 2009.

[4] We note that while FMR 11(7)(b) currently allows for a broker’s price opinion in lieu of an appraisal, the rules applicable to this matter called for an appraisal without mention of a broker’s price opinion. In the Matter of the Adoption of Rules for Foreclosure Mediation, ADKT 435 (Order Adopting Foreclosure Mediation Rules, June 30, 2009, and Order Amending Foreclosure Mediation Rules and Adopting Forms, November 4, 2009).

[5] With regard to the documents required, NRS 107.086(4) provides that “[t]he beneficiary of the deed of trust shall bring to the mediation the original or a certified copy of the deed of trust, the mortgage note[,] and each assignment of the deed of trust or mortgage note.” The FMRs echo this documentation requirement nearly word for word. FMR 5(7)(a). FMR 7(2) also provides that “[t]he beneficiary of the deed of trust or its representatives shall produce an appraisal. . . and shall prepare an estimate of the `short sale’ value of the residence.”

[6] If the homeowner fails to attend the mediation, the administrator will certify that no mediation is required. NRS 107.086(6).

[7] Generally, if the parties fail to reach an agreement and neither party files a petition for judicial review, the program administrator will certify the mediation, which allows the foreclosure process to proceed. NRS 107.086(3), (6), (7).

[8] The current version of the FMRs requires the district court to review a case de novo when a party files a petition for judicial review. FMR 21(5) (rules including amendments through March 1, 2011). De novo review may include an evidentiary hearing concerning what transpired at the mediation. See Black’s Law Dictionary 924 (9th ed. 2009) (defining “de novo judicial review” as “[a] court’s nondeferential review of an administrative decision, usu[ally] through a review of the administrative record plus any additional evidence the parties present”).

[9] At oral argument, respondents’ counsel argued that an assignment for the mortgage note was provided, but the name of the assignee was missing. We determine that an assignment provided without the name of the assignee is defective for the purposes of the Foreclosure Mediation Program because it does not identify the relevant parties.

The Supreme Judicial Court of Massachusetts recently reached the same conclusion regarding the production of assignments to mortgage notes and deeds of trust, albeit in a slightly different context. In U.S. Bank National Ass’n v. Ibanez, 941 N.E.2d 40 (Mass. 2011), two separate banks foreclosed on the mortgages of two homeowners whose properties the banks then bought at the foreclosure sales. Id. at 44. The banks later filed complaints in the lower court seeking a declaration that they had clear title to the properties. Id. Because the banks failed to show an interest in the mortgages at the time of the foreclosure sales, the sales were invalid, and the lower court entered judgment against the banks. Id. at 45. On appeal, the court determined that, similar to this case, the banks were not the original mortgagees and, therefore, they had to show that the mortgages were properly assigned to them in writings signed by the grantors before they could notice the sales and foreclosures of the properties. Id. at 51. In an attempt to prove that they had the authority to foreclose on the properties, the banks provided contracts purporting to assign to them bundles of mortgages; however, the attachments that identified what mortgages were being assigned were not included in the documents provided. Id. at 52. The court concluded that the banks demonstrated no authority to foreclose on the properties because they did not have the assignments. Id. at 53 (“We have long held that a conveyance of real property, such as a mortgage, that does not name the assignee conveys nothing and is void; we do not regard an assignment of land in blank as giving legal title in land to the bearer of the assignment.”). The court additionally stated that “[a] plaintiff that cannot make this modest showing cannot justly proclaim that it was unfairly denied a declaration of clear title.” Id. at 52. We agree with the rationale that valid assignments are needed when a beneficiary of a deed of trust seeks to foreclose on a property.

[10] Respondents argue that this court should decline to address the Pasillases’ argument that respondents failed to provide someone at the mediation with the authority to modify the loan because it was not raised in the petition for judicial review. First, we note that our decision here would require the district court to impose sanctions even if respondents’ only omission was the failure to provide the required documents. However, we determine that the Pasillases adequately raised this issue in their petition for judicial review by alleging that respondents’ counsel at the mediations did not accurately state who they were representing. Therefore, our decision of the issue is appropriate.

[ipaper docId=59602935 access_key=key-rckck71ucb7lsl18mx6 height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (1)

American Nat’l Ins. Co., v. FDIC | D.C. Appeals Court Reversal “Bondholders, Failed WAMU, JPMorgan Chase “Improper Acts”, FDIC “Intervened”

American Nat’l Ins. Co., v. FDIC | D.C. Appeals Court Reversal “Bondholders, Failed WAMU, JPMorgan Chase “Improper Acts”, FDIC “Intervened”


Justia.com Opinion Summary:: Bondholders of the failed Washington Mutual Bank (“WAMU”) alleged that JPMorgan Chase (“Chase”), through a series of improper acts, pressured the federal government to seize WAMU and then sell to it the bank’s most valuable assets, without any accompanying liabilities, for a drastically undervalued price. The bondholders asserted three Texas state law claims in Texas state court, but after the Federal Deposit Insurance Corporation (“FDIC”) intervened in the lawsuit, the case was removed to federal district court. At issue was whether the district court properly dismissed the complaint, finding that 12 U.S.C. 1821(d)(13)(D)(ii) jurisdictionally barred appellants from obtaining judicial review of their claims because they had not exhausted their administrative remedies under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”). The court held that the suit fell outside the scope of the jurisdictional bar of section 1821(d)(13)(D) because the complaint neither asserted a claim under FIRREA nor constituted an action for payment from, or seeking a determination with respect to, the assets of a depository institution for which the FDIC was receiver. Consequently, the court did not reach alternative arguments and therefore, reversed the decision of the district court and remanded for further proceedings.

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 5, 2011 Decided June 24, 2011
No. 10-5245

AMERICAN NATIONAL INSURANCE COMPANY AND AMERICAN
NATIONAL PROPERTY AND CASUALTY COMPANY,
APPELLANTS
FARM FAMILY LIFE INSURANCE COMPANY AND FARM FAMILY
CASUALTY INSURANCE COMPANY,
APPELLANTS
NATIONAL WESTERN LIFE INSURANCE COMPANY,
APPELLANT
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, AS RECEIVER
FOR WASHINGTON MUTUAL BANK, HENDERSON, NEVADA, ET
AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:09-cv-01743)

[ipaper docId=59573679 access_key=key-14gzpm36aak5gmy21dbu height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (0)

LASALLE v. FULK | Ohio Appeals Court Reversal “Tonya Hopkins Affidavit, AHMSI, Option One, Sand Canyon, Copy of Uncertified Assignment”

LASALLE v. FULK | Ohio Appeals Court Reversal “Tonya Hopkins Affidavit, AHMSI, Option One, Sand Canyon, Copy of Uncertified Assignment”


COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT


LASALLE BANK, N.A.

-vs-

DOUGLAS MARK FULK, ET AL. AND
DAWNETTA G. ANTONACCI


EXCERPT:

{¶8} The Notice of Filing the Assignment of Mortgage states: “Attached hereto as Exhibit A is a recorded assignment of mortgage and reference to the captioned case.” The attachment is a copy of a notarized assignment of mortgage which states Sand Canyon Corporation, FKA Option One Mortgage Corporation grants, bargains, sells, assigns, transfers, conveys, sets over, and delivers to appellee as trustee for Structured Asset Investment Loan Trust, 2004-11, the mortgage securing the payment of a promissory note signed by appellant. The assignment of mortgage is not a certified copy, nor is it accompanied by an affidavit testifying it is a true copy of the original.

[…]

{¶9} In appellee’s affidavit regarding account and military status, Tonya Hopkins alleges she is a duly appointed officer of American Home Mortgage Servicing, Inc., successor in interest to Option One Mortgage Corporation, and competent to testify in the matter. The affidavit states American Home Mortgage Servicing, Inc. provides mortgage and foreclosure related servicing to appellee. The affidavit states that attached to it are Exhibits A and B, true and accurate copies of the original note and mortgage.

[…]

{¶31} Appellee asserts the assignment of mortgage does not need to be authenticated because it is a notarized document. We disagree. It is not a notarized document, but rather a copy of a notarized document. The copy does not state the volume and page wherein it is recorded, and it is not certified by the records custodian. We find it does not constitute proper evidentiary material upon which the court can rely in determining appellee has standing to foreclose on the note and mortgage.

{¶32} Appellee denies the appellant properly endorsed the forbearance agreement, but on remand it should explain the significance of the loan modification agreement signed by appellant and attached to appellee’s complaint. It appears there is an issue of whether appellee retained and credited appellant’s account with payments she submitted pursuant to the agreement.

[…]

[ipaper docId=59409498 access_key=key-1unlwyigroq8pn3d967s height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (0)

WACHOVIA BANK OF DELAWARE v. JACKSON | Ohio Appeals Court SJ Reversed “Noriko Colston Affidavit, Uncertified Recorded Copies of Public Records”

WACHOVIA BANK OF DELAWARE v. JACKSON | Ohio Appeals Court SJ Reversed “Noriko Colston Affidavit, Uncertified Recorded Copies of Public Records”


COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT


WACHOVIA BANK OF DELAWARE, NA

-vs-

IRENE P. JACKSON

EXCERPT:

{¶14} In her first assignment of error, appellant asserts her affidavit in opposition to the motion for summary judgment challenged Wachovia’s allegation it was the holder of the note and mortgage. Appellant’s affidavit states she had been unable to verify that Wachovia Bank of Delaware was authorized to do business in the State of Ohio. She also alleged the affidavit Wachovia submitted in support of its motion for summary judgment was signed by an assistant secretary for a fourth entity claiming power of attorney for the plaintiff and was not sufficient to prove Wachovia is the proper party.

[…]

{¶24} Wachovia’s affidavit to which appellant refers was signed by Noriko Colston, who identified herself as an assistant secretary of Barclay’s Capital Real  Stark County, Case No. 2010-CA-00291 Estate, Inc., dba HomEq Servicing, as attorney in fact for Wachovia Bank of Delaware. The affidavit recites Wachovia Bank of Delaware was formerly known as First Union National Bank of Delaware, formerly known as First Union Home Equity Bank, N.A., and is the successor in interest to First Union Home Equity Corporation. Colston’s affidavit asserts she has personal knowledge of all the facts contained in the affidavit and is competent to testify. Colston’s affidavit states the copies of the note and mortgage attached to the pleadings are true and accurate copies of the original instruments, but the documents are not attached to the affidavit itself. Colston’s affidavit states Wachovia has exercised its option to accelerate and call due the entire principal balance. Colston’s affidavit states she has examined and has personal knowledge of the appellant’s loan account, which is in default. Finally the affidavit lists the amount due.

[…]

{¶28} Colston’s affidavit identifies the mortgage and the note as accurate copies of the originals, but does not identify any other documents Wachovia submitted to the trial court. Her affidavit states she has examined appellant’s loan account. It does not identify the account as a business record, kept in the regular course of business, nor does it state the records were compiled at or near the occurrence of each event by Stark County, Case No. 2010-CA-00291 persons with knowledge of said events. Colston’s affidavit asserts she has personal knowledge of all the facts contained in her affidavit, but she merely alleges she is an assistant secretary of Barclay’s, without elaborating on how her position with the company relates to or makes her familiar with the appellant’s account records.

[…]

[ipaper docId=59408794 access_key=key-19othygfm12q6v27j4yp height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (0)

Aames Funding Corp. v Houston | NY Appeals Court Reversal “HAMP, Should not have scheduled a foreclosure sale while the appellant’s application was pending”

Aames Funding Corp. v Houston | NY Appeals Court Reversal “HAMP, Should not have scheduled a foreclosure sale while the appellant’s application was pending”


Decided on June 28, 2011

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE DIVISION : SECOND JUDICIAL DEPARTMENT

MARK C. DILLON, J.P.
JOSEPH COVELLO
CHERYL E. CHAMBERS
SHERI S. ROMAN, JJ.
2010-11013
(Index No. 430/05)

[*1]Aames Funding Corporation, etc., respondent,

v

Leonard W. Houston, appellant, et al., defendants.

Leonard W. Houston, Middletown, N.Y., appellant pro se.
Hogan Lovells US, LLP, New York, N.Y. (Allison J.
Schoenthal, Victoria McKenney, and Jessica
L. Ellsworth of counsel), for
respondent.

DECISION & ORDER

In an action to foreclose a mortgage, the defendant Leonard W. Houston appeals from an order of the Supreme Court, Orange County (Cohen, J.), dated October 21, 2010, which denied his motion to stay a foreclosure sale until a determination of his application for a residential mortgage modification pursuant to the Home Affordable Mortgage Program.

ORDERED that the order is reversed, on the law and in the exercise of discretion, with costs, and the appellant’s motion is granted.

On August 15, 2006, a judgment of foreclosure and sale was entered against the appellant and in favor of the plaintiff. In January 2008 the Supreme Court granted a motion by the plaintiff to extend a notice of pendency for an additional three years. By letter dated December 10, 2009, the loan servicer, America’s Servicing Company (hereinafter ASC), notified the defendant Leonard W. Houston (hereinafter the appellant) that he might be eligible for the federal Home Affordable Mortgage Program (hereinafter HAMP). As a result, the appellant submitted an application to ASC. On March 24, 2010, the United States Department of the Treasury issued Supplemental Directive 10-02, which stated, in pertinent part, that “[a] servicer may not refer any loan to foreclosure or conduct a scheduled foreclosure sale unless and until . . . [t]he borrower is evaluated for HAMP and is determined to be ineligible for the program” (emphasis in original).

By letter dated April 30, 2010, ASC notified the appellant that his loan was “currently under review by [ASC’s] Loss Mitigation Department for a loan modification,” and that ASC “currently [had] all the necessary information.” ASC informed the appellant that he would “be contacted with the outcome of the review or if any additional information [was] needed.” The appellant sent additional documents to ASC on July 2, 2010, and August 5, 2010. Meanwhile, the plaintiff published a notice of a foreclosure sale scheduled for August 26, 2010.

By order to show cause dated August 23, 2010, the appellant moved for an emergency stay of the foreclosure sale pending a determination on his application for a residential mortgage modification pursuant to HAMP. The plaintiff opposed the appellant’s application, and requested an order “directing that the foreclosure sale take place immediately.” The plaintiff argued that [*2]Supplemental Directive 10-2 was “no longer in effect and was superseded by the Making Home Affordable Handbook,” and, therefore, that directive was “not controlling.” By order dated October 21, 2010, the Supreme Court denied the appellant’s motion, vacated all stays imposed by the court, and permitted the plaintiff to proceed with the foreclosure sale. We reverse.

The record establishes that ASC participated in the HAMP program and accepted the appellant’s application for loan modification under the HAMP program. Under the circumstances, the plaintiff should not have scheduled a foreclosure sale while the appellant’s loan modification application was pending (see Matter of Cruz v Hacienda Assocs., LLC, 446 BR 1). The plaintiff contends that the appellant is not entitled to a stay of the foreclosure sale because Supplemental Directive 10-2 was superseded by the Making Home Affordable Program Handbook. However, Version 2.0 of the “Making Home Affordable Program Handbook,” in effect at the time the order appealed from was issued, contained the same language as Directive 10-2, to wit: “[a] servicer may not refer any loan to foreclosure or conduct a scheduled foreclosure sale unless and until . . . [t]he borrower is evaluated for HAMP and is determined to be ineligible for the program [emphasis added].” Accordingly, the Supreme Court should have granted the appellant’s motion to stay the foreclosure sale pending a determination of his application for a residential mortgage modification pursuant to HAMP.

As we previously stated on a prior appeal in this matter, the appellant’s contention that the plaintiff lacked standing to commence the foreclosure action is barred by the doctrine of law of the case (see Aames Funding Corp. v Houston, 57 AD3d 808).

In light of our determination, we need not reach the appellant’s remaining contentions.
DILLON, J.P., COVELLO, CHAMBERS and ROMAN, JJ., concur.

ENTER:

Matthew G. Kiernan

Clerk of the Court

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



Posted in STOP FORECLOSURE FRAUDComments (0)

Smith v. Secretary of Veterans Affairs | AL Court of Civil Appeals “BofA Affidavit, Testimony Fail”

Smith v. Secretary of Veterans Affairs | AL Court of Civil Appeals “BofA Affidavit, Testimony Fail”


Frank S. Smith, Jr.,
v.
Secretary of Veterans Affairs, an officer of the United States of America.

No. 2100194.

Court of Civil Appeals of Alabama.

June 24, 2011.

EXCERPT:

The Secretary moved for a summary judgment, asserting that, as a matter of law, he was entitled to possession of the house because, he said, he owned legal title to the house by virtue of the auctioneer’s deed. In support of his motion, the Secretary submitted an affidavit signed by Scott Hiatt, which stated:

“My name is Scott Hiatt, and I am Assistant Vice President and Attorney in Fact for Bank of America, N.A. In my employment capacity, I am personally familiar with the account of Frank S. Smith, Jr. and Juliet L. Smith ….

“On February 22, 2007, Plaintiff, Bank of America, N.A., sold at foreclosure the following real property located in Jefferson County, Alabama:

“[legal description of the house];

“Pursuant to power of sale contained in a promissory note and mortgage executed by Frank S. Smith, Jr. and Juliet L. Smith dated December 29, 1998, to and in favor of Franklin American Mortgage Company by instrument recorded in … the records in the Office of the Judge of Probate, Jefferson County, Alabama, which mortgage was subsequently assigned to The Secretary of Veterans Affairs, an Officer of the United States of America by instrument recorded … and re-recorded in … the said Probate Court Records.

“Frank S. Smith, Jr. and Juliet Smith defaulted in the payments of said indebtedness and the Secretary of Veterans Affairs commenced foreclosure with written notices to Frank S. Smith, Jr. and Juliet Smith and due newspaper publication in The Alabama Messenger.

“Said real property was sold at foreclosure February 22, 2007, for a successful bid of $66,097.50, paid by The Secretary of Veterans Affairs, Purchaser. Frank S. Smith, Jr. and Juliet Smith were notified of said foreclosure sale by letter dated February 28, 2007, sent by certified mail of the foreclosure proceeding and [Frank S. Smith and Juliet Smith] were given ten (10) days to vacate said property.”

(Emphasis added.) Along with Hiatt’s affidavit, the Secretary submitted an uncertified copy of the mortgage; uncertified copies of the subsequent assignments of the mortgagee’s rights under the mortgage, which included an assignment to the Secretary; an uncertified copy of the auctioneer’s deed; an unauthenticated copy of an affidavit by the publisher of the Alabama Messenger; and an unauthenticated copy of a letter dated February 28, 2007, from an attorney representing the Secretary and addressed to Frank and Juliet at the house, which informed them that the Secretary had purchased the house at the foreclosure sale on February 22, 2007, and demanded that they vacate the house within 10 days.

[…]

In the case now before us, Hiatt’s affidavit did not show that Bank of America was a participant in the servicing of the mortgage or in the foreclosure. It did not explain how Hiatt, in his capacity as an officer of, and attorney-in-fact for, Bank of America, would have acquired personal knowledge of the information he testified to in his affidavit. Moreover, none of the documents that accompanied his affidavit were sworn, certified, or otherwise authenticated. Consequently, based on the holding of the supreme court in Crawford, we hold that the testimony contained in Hiatt’s affidavit and the documents that accompanied his affidavit were inadmissible and, therefore, that the trial court erred in entering a summary judgment in favor of the Secretary. Therefore, we reverse the summary judgment and remand the cause for further proceedings consistent with this opinion.

REVERSED AND REMANDED.

Thompson, P.J., and Pittman, Thomas, and Moore, JJ., concur.

[ipaper docId=59028194 access_key=key-stuccaw4i88ynelotew height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (0)

Mississippi Appeals Court Reversal “Service of Process Fail, Default Judgment Void” | TURNER v. DEUTSCHE BANK

Mississippi Appeals Court Reversal “Service of Process Fail, Default Judgment Void” | TURNER v. DEUTSCHE BANK


3 We note that Turner’s argument that Deutsche Bank possessed unclean hands is an equitable defense to the merits of this lawsuit. This is an issue for the chancery court to consider on remand.

ANGELA L. TURNER

v.

DEUTSCHE BANK NATIONAL TRUST
COMPANY

Excerpts:

¶1. Deutsche Bank National Trust Company initiated a foreclosure action in the Warren County Chancery Court and attempted to serve Angela Turner by publication. But before doing so, it neither certified Turner was a non-resident of Mississippi nor alleged she could not be located in the state after a diligent inquiry. Because we find service of process did not strictly comply with the governing rules, we reverse the chancellor’s refusal to set aside the default judgment she entered on behalf of Deutsche Bank when Turner did not respond. We remand the case for further proceedings.

[…]

¶11. Although Deutsche Bank published a summons in the newspaper for three consecutive weeks and filed proof of the publication, Deutsche Bank did not comply with Rule 4(c)(4)(A). It is undisputed that Deutsche Bank never filed a sworn petition or affidavit attesting that Turner was a nonresident or could not be found in Mississippi after a diligent inquiry. Therefore, it follows that Deutsche Bank did not comply with any of the remaining requirements for information that must be included in the petition or affidavit.

¶12. “The rules on service of process are to be strictly construed. If they have not been complied with, the court is without jurisdiction unless the defendant appears of his own volition.” Kolikas v. Kolikas, 821 So. 2d 874, 878 (16) (Miss. Ct. App. 2002) (internal citation omitted). Actual notice does not cure defective process. See, e.g., Mosby v. Gandy, 375 So. 2d 1024, 1027 (Miss. 1979). “Even if a defendant is aware of a suit, the failure to comply with rules for the service of process, coupled with the failure of the defendant voluntarily to appear, prevents a judgment from being entered against him.” Sanghi, 759 So. 2d at 1257 (33).

[…]

¶20. Because service of process in this case failed to comply with Rule 4(c), we find the default judgment entered against Turner is void. Caldwell, 533 So. 2d at 417-18 (finding judgment void for defective process by publication). Thus, the chancery court erred in refusing to set the void judgment aside under Rule 60(b). We reverse and remand for further proceedings in which Deutsche Bank will have the opportunity to serve Turner with process.3

[…]

[ipaper docId=57973243 access_key=key-186gkk5ce8159fjpobb height=600 width=600 /]

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



Posted in STOP FORECLOSURE FRAUDComments (0)

Advert

Archives

Please Support Me!







Write your comment within 199 characters.

All Of These Are Troll Comments