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Richard v. Schneiderman & Sherman et al – MI SC instead of granting leave to appeal, VACATED the judgment & remanded the case pursuant to Res. Funding v. Saurman

Richard v. Schneiderman & Sherman et al – MI SC instead of granting leave to appeal, VACATED the judgment & remanded the case pursuant to Res. Funding v. Saurman


Michigan Supreme Court
Lansing, Michigan

January 30, 2012

AARON RICHARD,
Plaintiff-Appellee,

v

SCHNEIDERMAN & SHERMAN, P.C.,
Defendant-Appellant,

and

GMAC MORTGAGE, and MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS,
INC.,
Defendants-Appellees.
_________________________________________/

By order of December 29, 2011, the proceedings in this case were automatically
stayed by the filing of a petition in bankruptcy. On order of the Court, the bankruptcy
stay having been lifted and the case having been reopened, the application for leave to
appeal the August 25, 2011 judgment of the Court of Appeals is considered and, pursuant
to MCR 7.302(H)(1), in lieu of granting leave to appeal, we VACATE the judgment of
the Court of Appeals and we REMAND this case to the Court of Appeals for
reconsideration in light of Residential Funding Co, LLC, f/k/a Residential Funding Corp
v Saurman, 490 Mich ___ (decided November 16, 2011).

MARILYN KELLY, J., would grant leave to appeal.

[ipaper docId=80054632 access_key=key-2z5i88cweuptt2lfxnk height=600 width=600 /]

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Richard v. SCHNEIDERMAN & SHERMAN, PC | MI Appeals Court Vacates, Reversed/Remands “MERS is not entitled to utilize foreclosure by advertisement where it does not own the underlying note”

Richard v. SCHNEIDERMAN & SHERMAN, PC | MI Appeals Court Vacates, Reversed/Remands “MERS is not entitled to utilize foreclosure by advertisement where it does not own the underlying note”


AARON RICHARD, Plaintiff-Appellant,

v.

SCHNEIDERMAN & SHERMAN, P.C., GMAC MORTGAGE and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendants-Appellees.

No. 297353.

Court of Appeals of Michigan.

August 11, 2011, 9:00 a.m.

Before: BORRELLO, P.J., and METER and SHAPIRO, JJ.

PER CURIAM.

Plaintiff, Aaron Richard, appeals as of right an order granting summary disposition in favor of defendants, Schneiderman & Sherman, P.C. (Schneiderman), GMAC Mortgage (GMAC), and Mortgage Electronic Registration Systems, Inc. (MERS). We reverse the trial court’s grant of summary disposition, vacate the foreclosure proceeding, and remand further proceedings consistent with this opinion.

This case arises from plaintiff’s attempts to challenge the foreclosure and sale of property he owned located at 19952 Hubbell in Detroit. Plaintiff purchased the property in part through a $50,000 loan, executed on May 4, 2006, from Homecomings Financial Network, Inc. The loan was secured by a May 4, 2006, mortgage with MERS, as the nominee of Homecomings.

It is not clear from the record when plaintiff fell behind on his mortgage payments. However, on October 9, 2009, Schneiderman, acting as GMAC’s agent, mailed plaintiff a notice stating that his mortgage was in default and informing him of his rights, including to request mediation. The outstanding debt owed to GMAC was listed as $50,267.78. Ultimately, MERS began non-judicial foreclosure by advertisement under MCL 600.3201, et seq., and purchased the property at the subsequent sheriff’s sale.

Plaintiff filed suit, in pro per, during the redemption period, alleging that the sheriff’s sale was “flawed” on numerous grounds and asserted that MERS did not hold any rights to the debt. Defendants filed for summary disposition, asserting, among other things, that the sheriff’s sale was “not only legal, but also valid, as all required procedures were followed.” The trial court granted summary disposition in favor of defendants and dismissed plaintiff’s claim.

Although many of plaintiff’s claims are without merit, it is clear that the sheriff’s sale was invalid because, although MERS was only a mortgagee, MERS foreclosed on plaintiff’s property utilizing non-judicial foreclosure by advertisement. This Court has held that MERS is not entitled to utilize foreclosure by advertisement where it does not own the underlying note. Residential Funding Co, Inc v Saurman, ___ Mich App ___; ___ NW2d ___ (Docket Nos. 290248, 291443; April 21, 2011), slip op at 11. Under such circumstances, “MERS’ inability to comply with the statutory requirements rendered the foreclosure proceedings . . . void ab initio.Id. Because the application of Saurman is dispositive, we must determine whether Saurman is retroactive and, if so, whether to assign it full or limited retroactivity.

“[T]he general rule is that judicial decisions are to be given complete retroactive effect.” Hyde v Univ of Mich Bd of Regents, 426 Mich 223, 240; 393 NW2d 847 (1986). “Complete prospective application has generally been limited to decisions which overrule clear and uncontradicted case law.” Id.

Rules determined in opinions that apply retroactively apply to all cases “still open on direct review and as to all events, regardless of whether such events predate or postdate our announcement of the rule[s].” Harper v Virginia Dep’t of Taxation, 509 US 86, 97, 113 S Ct 2510, 125 L Ed 2d 74 (1993). Rules determined in opinions that apply prospectively only, on the other hand, not only do not apply to cases still open on direct review, but do not even apply to the parties in the cases in which the rules are declared. See Pohutski v City of Allen Park, 465 Mich 675, 699, 641 NW2d 219 (2002). [McNeel v Farm Bureau Ins, 289 Mich App 76, 94; 795 NW2d 205 (2010).]

Given that this Court applied its holding to the cases in Saurman, it is clear that the holding in Saurman has been afforded at least limited retroactivity.[1] However, cases given limited retroactivity apply “in pending cases where the issue had been raised and preserved,” Stein v Southeastern Mich Family Planning Project, Inc, 432 Mich 198, 201; 438 NW2d 876 (1989), while cases with full retroactivity apply to all cases then pending. This distinction makes a difference because, although plaintiff contested the foreclosure, he did not specifically raise and preserve the issue of whether MERS has the authority to foreclose by advertisement. Thus, Saurman is only applicable to this case if it is granted full retroactivity.

“The threshold question is whether `the decision clearly established a new principle of law.'” Rowland v Washtenaw Co Rd Comm, 477 Mich 197, 220; 731 NW2d 41 (2007) (citation omitted). Our Supreme Court has held that cases that properly interpret statutes, even if prior caselaw has held differently, “restore[] legitimacy to the law” and, thus, are “not a declaration of a new rule, but . . . a vindication of controlling legal authority.” Id. at 222 (quotation marks and citation omitted). In Saurman, this Court interpreted MCL 600.3204(1)(d). There was no existing caselaw and, therefore, it did not overrule any law or reconstrue a statute. See Hyde, 426 Mich at 240. Consequently, this Court’s decision in Saurman was not “tantamount to a new rule of law,” see Rowland, 477 Mich at 222 n 17, and, therefore should be given full retroactive effect.[2] Hence, Saurman is applicable to the instant case, rendering the foreclosure proceedings void ab initio. Saurman, ___ Mich App at ___, slip op at 11.

Accordingly, we reverse the trial court’s grant of summary disposition, vacate the foreclosure proceeding, and remand for further proceedings consistent with this opinion. We do not retain jurisdiction.

[1] In addition, “there is a serious question as to whether it is constitutionally legitimate for this Court to render purely prospective opinions, as such ruling are, in essence, advisory opinions.” Rowland v Washtenaw Co Rd Comm, 477 Mich 197, 221; 731 NW2d 41 (2007), quoting Wayne Co v Hathcock, 471 Mich 445, 485 n 98; 684 NW2d 765 (2004).

[2] We reiterate the general rule that a retroactive decision cannot serve to reopen those cases that are already closed. Thus, where the time to oppose the foreclosure by advertisement, the time to oppose the resulting eviction, and the time to appeal from those actions have run, a party may not rely on Saurman in an attempt to reopen those cases to recover possession or ownership.

[ipaper docId=62409203 access_key=key-1dg3grocmbnrusk3fz4 height=600 width=600 /]

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NY Judge Spinner Denies 86 Applications for JUDGMENT OF FORECLOSURE AND SALE Due to No Affirmation by Plaintiff Counsel

NY Judge Spinner Denies 86 Applications for JUDGMENT OF FORECLOSURE AND SALE Due to No Affirmation by Plaintiff Counsel


Excerpt:

Plaintiff has applied to this Court for the granting of a Judgment of Foreclosure & Sale pursuant to RPAPL § 1351. The express provisions of the Administrative Order of the Chief Administrative Judge of the Courts, no. A0548/10 require the filing of an Affirmation by Plaintiff’s counsel. No such Affirmation has been filed in this proceeding, in derogation of the aforesaid mandate. Accordingly, this application must be denied.

It is, therefore,

ORDERED that the within application by the Plaintiff shall be and the same is hereby denied without prejudice.

[ipaper docId=59494902 access_key=key-264kx7256bxnizbtwjpy height=600 width=600 /]

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Goldman to Sell Litton Loan Servicing to Ocwen Financial for $264 Million

Goldman to Sell Litton Loan Servicing to Ocwen Financial for $264 Million


Just recently it was announced that the NY Fed is probing Goldman Sachs mortgage servicing unit Litton Loan Servicing

BLOOMBERG-

Goldman Sachs Group Inc. (GS) agreed to sell Litton Loan Servicing LP to Ocwen Financial Corp. (OCN) for $263.7 million in cash, ending the New York-based bank’s 3-1/2 year experiment in processing home-loan payments.

In addition to the cash payment, which may be adjusted at closing, Ocwen will pay about $337.4 million to retire some of Litton’s debt, according to a filing by West Palm Beach, Florida-based Ocwen. The sale of Litton comes two months after Goldman Sachs wrote down the value of the mortgage-servicing business by about $200 million.


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Tennessee Foreclosure Bill Fight Rages, Threatens Public Info

Tennessee Foreclosure Bill Fight Rages, Threatens Public Info


Two news related articles for you below…

Knoxville News Sentinel-

NASHVILLE – Legislation to cut back on the number and length of home foreclosure legal notices now required in Tennessee is being pushed by bankers who stand to save money if the bill passes and opposed by newspapers that stand to lose money.

While that is clear, the two sides – both aided by a contingent of lobbyists – clashed sharply over whether the proposed change would benefit financially strapped homeowners and the general public as the bill advanced in the House last week.

Then jump over to MurfreesboroPost-

All a bank need do is:

1. Serve a single letter of notification to the homeowner.

2. Publish three public notices of foreclosure in the area newspaper.

3. Sell the property at auction.

The only way to slow down the process is to file bankruptcy.

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MA Dist. Court “Breach of Good Faith, Concerns Over Scheduled Foreclosure Sale” ALPINO v. JPMORGAN

MA Dist. Court “Breach of Good Faith, Concerns Over Scheduled Foreclosure Sale” ALPINO v. JPMORGAN


RONALDO ALPINO and ILMA ALPINO, Plaintiffs,
v.
JPMORGAN CHASE BANK, NATIONAL ASS’N Defendants.

Civil No. 1:10-12040-PBS.United States District Court, D. Massachusetts.

April 21, 2011.

MEMORANDUM AND ORDER

PATTI B. SARIS, District Judge.

I. Introduction

This cases arises after the defendant’s foreclosure of the plaintiffs’ home. The plaintiffs have alleged the following: the defendant breached the duty of good faith and reasonable diligence inherent in every mortgage contract in Massachusetts (Count I); the defendant breached its contract with the United States under the Home Affordable Modification Program (Count II); the defendant violated Mass. Gen. L. c. 244, § 14, regarding the operation of a foreclosure sale (Count III); and the defendant intentionally inflicted emotional distress (Count IV).

On November 24, 2010, the case was removed to federal court on the basis of diversity and federal question jurisdiction, see 28 U.S.C. §§ 1331, 1332, the federal question being the defendant’s alleged breach of the HAMP government contract. The defendant then filed a motion to dismiss. After considering the record, the Court DENIES the motion in part and ALLOWS the motion in part without prejudice to the filing of an amended complaint.

II. Factual Background

A) The Alpinos’ Mortgage:

The Court derives the following facts from the complaint (“Compl.”). For the purposes of this motion to dismiss, the facts are taken to be true. See Ashcroft v. Iqbal, 129 S. Ct. 1937, 1941 (2009).

The Alpinos purchased their home in December of 2002. In early 2004, they refinanced their original mortgage loan with a new loan from Washington Mutual Bank, Federal Association (“Washington Mutual”) in the amount of $366,000, secured by a first mortgage on their property. The loan is a 30 year, adjustable rate mortgage, which annually adjusts to 2.65% above the average of the prior 12 monthly yields of the one year United States Treasury Securities.

Like many Americans, when the economy began failing in 2008, the Alpinos had difficulty keeping up on their mortgage payments. Meanwhile in September 2008, Washington Mutual collapsed, and JPMorgan Chase Bank (“JPMorgan”) became its successor in interest to a number of financial interests, including the Alpinos’ mortgage and refinancing loan. The Alpinos contacted JPMorgan to see about adjusting their payments in order to avoid default. They “diligently provided JPMorgan with all the information requested” and “negotiated in good faith for a forbearance agreement, loan modification, or any other way to save their home from foreclosure.” (Compl. ¶ 15.) JPMorgan refused to modify, and when the Alpinos failed to stay current on their mortgage, the bank scheduled a foreclosure sale.

Besides the failure to consider a mortgage payment modification, this action also concerns events occurring at the scheduled foreclosure sale. The Alpinos allege that they arrived at their property around 4:15 pm on March 2, 2010 — fifteen minutes after the scheduled foreclosure auction was supposed to take place — and found a group of approximately twenty people. Mr. Alpino asked some of the people gathered whether the sale had already occurred. He was told that it had not. At that point he went inside the home to call a lawyer. Ms. Alpino remained outside waiting for the auction. After about ten minutes, all but two of the potential purchasers had left. After several more minutes, these remaining two individuals had left as well. According to Ms. Alpino, at no time during this period did an auctioneer appear to fly an auction flag or hold an auction. Nonetheless, the defendant asserts that it conducted a sale and that it “became the absolute title holder to the [Alpinos’ home].” (Def. Mem. at 3.)

B) The Home Affordable Modification Program (HAMP):

In February 2009 the President announced the Homeowner Affordability and Stability Plan to help millions of Americans restructure their mortgages and stay in their homes in the face of impending default and foreclosure. (See Doc. 7, Ex. A (“Supp. Directive”) at 1.) As part of that plan the government created the Home Affordable Modification Program (HAMP).

Among other things, HAMP creates a cost sharing system, whereby the government helps reduce the impact of mortgage modifications on lenders. In exchange, the program asks servicers to standardize and systemize a process for mortgage modification, including the implementation of the net present value (NPV) test. NPV compares the expected cash flow from a modified loan with the cash flow from the unmodified loan. If the expected cash flow from the modified loan exceeds the amount from the unmodified loan, then the loan servicer must modify the loan. Id. at 4. In considering a loan for modification, servicers must perform a “Standard Modification Waterfall.” Id. at 8. This process requires servicers to apply a series of modification steps that work to reduce loan monthly payments to as close as possible to 31 percent of the homeowners gross monthly income. See generally Morris at 10 n.3.

Servicers opt into HAMP by executing Servicer Participation Agreements (SPAs). These agreements between servicers and Fannie Mae, in its capacity as a financial agent for the United States, require servicers to consider all eligible mortgage loans for modification unless prohibited by the rules of an application pooling and servicing agreement (PSA), which establish private label securitizations of mortgages. See id. at 1. But even in the face of PSAs that prohibit modification, “[p]articipating servicers are required to use reasonable efforts to remove any prohibitions and obtain waivers or approvals from all necessary parties in order to carry out any modification under HAMP.” Id.

Despite these provisions, homeowners have not always seen the benefits HAMP was intended to foster. During the first year of operation, HAMP resulted in the permanent modification of only 230,801 mortgages, well below the target objective of three to four million borrowers. See Jean Braucher, Humpty Dumpty and the Foreclosure Crisis: Lessons from the Lackluster First Year of the Home Affordable Modification Program (HAMP), 52 Ariz. L. Rev. 727, 739 (2010). In June 2010, the Government Accountability Office traced some of this underperformance to servicers’ failure to adequately solicit HAMP eligible borrowers and to promptly respond to borrower inquiries regarding HAMP modifications. See U.S. Gov’t Accountability Office, GAO-10-634, Troubled Asset Relief Program, Further Actions Needed to Fully and Equitably Implement Foreclosure Mitigation Programs i (2010).

The defendant allegedly signed an SPA with the government and is a HAMP participant. (Comp. ¶ 19.)

III. Standard

The plaintiffs’ burden is to plead “sufficient matter, accepted as true, to state a claim for relief that is plausible on its face.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atlantic v. Twombly, 550 U.S. 544, 570 (2007)). “A case has `facial plausibility’ when plaintiff pleads factual content that allows the court to draw a reasonable inference that the defendant is liable for the misconduct alleged.” Id. Where a complaint pleads facts that are “merely consistent with” a defendant’s liability, it “stops short of the line between possibility and plausibility of `entitlement to relief.'” Id. In considering the adequacy of pleadings, a court must take as true the factual allegations in the plaintiff’s pleadings and must make all reasonable inferences in favor of the plaintiff. Rivera v. Rhode Island, 402 F.3d 27, 33 (1st Cir. 2005).

IV. Claims

Because it colors the resolution of the plaintiffs’ state law claims, the Court begins by discussing Count II, the plaintiffs’ claim for breach of the SPA between JPMorgan and the United States.

A) Count II

In order to bring a claim for breach of the SPA between the defendant and the United States Department of Treasury, the Alpinos must demonstrate that they are the third party beneficiaries of this agreement. See Speleos v. BAC Home Loans Servicing, 10-11503, 2010 WL 5174510, * 4 (D. Mass. Dec. 14, 2010)(“Speleos”). Of the number of federal courts to have considered this issue, the majority have held that homeowners are not the intended beneficiaries of these agreements and, thus, do not have a claim for breach of contract arising from lenders or servicers’ failures to abide by the terms of HAMP in considering inquiries related to mortgage modifications. See Speleos at * 3 (collecting cases). Only one court has held to the contrary. See Marques v. Wells Fargo Home Mortgage, Inc., 09-1985-L, 2010 WL 3212131 (S.D. Calif. Aug. 12, 2010) (“Marques”).

In December, this court denied a homeowner third party beneficiary status under HAMP. See Speleos (Gorton, J.). Quoting at length from the HAMP guidelines and Treasury announcements explaining the program, the court held that the borrower could make out a “colorable” claim that HAMP was intended to benefit homeowners. Id. at *5. However, the court ultimately concluded that a finding that homeowners could sue for the breach of an SPA was not consistent with the terms of the contract, which stated that the rights and remedies outlined in the SPA were “for our benefit and that of our successors and assigns.” Id.

The court in Marques arrived at the opposite conclusion after highlighting the numerous requirements HAMP imposes on servicers with regard to their interactions with borrowers. For example, the court noted that the “agreement expressly provides that the `[s]ervicer shall perform the Services for all mortgage loans it services. . . .'” Marques at *5 (quoting SPA at § 2(A)). Thus, the court held: “The Agreement on its face expresses a clear intent to directly benefit the eligible borrowers.'” Marques at *6.

There is compelling evidence that the government intended to benefit homeowners when it implemented the HAMP program, and the contractual language highlighted by the court in Marques requiring servicers to consider all eligible mortgages for HAMP modifications is illustrative of this design. But on its own, this language merely stresses that servicers are required to perform these obligations, not that private parties necessarily have third party beneficiary status to enforce them. As the Supreme Court recently illuminated in reversing the Ninth Circuit’s decision in Cnty. of Santa Clara v. Astra USA, Inc., 588 F.3d 1237 (9th Cir. 2009), rev’d, 131 S.Ct. 1342 (2011), the test for determining whether a plaintiff is a third party beneficiary to a government contract must focus on whether the contract intended to provide the plaintiff with a legal cause of action, not just whether the plaintiff falls within a class of individuals that the contract and its underlying policies seek to benefit. See Astra USA, Inc. v. Santa Clara Cnty., 131 S.Ct. 1342, 1348 (2011)(“The distinction between an intention to benefit a third party and an intention that the third party should have the right to enforce that intention is emphasized where the promisee is a governmental entity.” (quoting 9 J. Murray, Corbin on Contracts §45.6, p. 92 (rev. ed. 2007)(internal quotation marks omitted)).

Guided by this principle, the Court adopts the reasoning in Speleos. Despite HAMP’s general purpose to benefit homeowners, the SPA contains clear language limiting the class of actors who can enforce its terms. It states: “The Agreement shall inure to the benefit of and be binding upon the parties to the Agreement and their permitted successors-in-interest.” (See Pl. Ex. A (“SPA”) at § 11(B).) In the face of this language, and the Supreme Court’s recent holding in Astra, the Alpinos cannot demonstrate that they are the intended beneficiaries of the SPA. For this reason, Count II must be dismissed.

In dismissing Count II, the Court recognizes the difficulty homeowners have had in realizing the benefits of HAMP. HAMP enforcement tends to focus on servicers’ responsibilities after a loan has been modified and seek to protect “the Treasury for overpaying [incentives].” Marques at * 6. There has been little enforcement of the requirement that servicers consider eligible loans for modification. One recent article has noted that part of the problem Treasury has had in encouraging HAMP compliance may lie in the conflict between the incentives of loan servicers and mortgage loan holders. Servicers, who often administer mortgage loans that have been packaged and sold off to third-party holders in complicated securities instruments, will sometimes see greater returns from a foreclosure than a modification, even if the modification increases cash flows to mortgage holders. See, Adam J. Levitin & Tara Twomey, Mortgage Servicing, 28 Yale J. on Reg. 1 (2011).

This does not mean that homeowners like the Alpinos are without a means of redress. Even though the Alpinos cannot bring a claim directly for breach of the SPA agreement, the defendant’s failure to abide by HAMP’s terms may give rise to other causes of action under state law. Specifically, as this Court held in Morris, the Alpinos may have a cause of action under Mass. Gen. L. ch. 93A, the Consumer Protection Act, for the defendant’s failure to consider them for a HAMP modification, as long as they can show that this failure was deceptive or unfair under § 93A. See Morris at 7-8; see also Bosque v. Wells Fargo Bank, N.A., No. 10-10311, 2011 WL 304725, at *7-*8 (D. Mass. Jan. 26, 2011) (denying motion to dismiss Chapter 93A claim arising out of HAMP application). They may also be able to allege that the defendant’s failures amounted to negligence, for HAMP affects the mortgage lender’s legal duties. Speleos at *6 (stating, with regard to HAMP, that a “claim for negligence based on a statutory or regulatory violation can survive even where there is no private cause of action under that statute or regulation.”). In other words, even if the Alpinos do not have a federal cause of action under HAMP, some violations of HAMP may form the basis of state law causes of action. Count II is dismissed without prejudice.

B) Counts I and III

The Alpinos also allege that the defendant breached its “duty of good faith and reasonable diligence.” This claim does not concern HAMP or the SPA; rather, it posits the violation of independent state-law duties inherent in every mortgage contract in Massachusetts. Along with this claim, in Count III, the Alpinos allege that the defendant violated the Massachusetts foreclosure statute by failing to conduct an open public auction under the mortgage’s power of sale. See Mass. Gen. L. c. 244 § 14.

In Massachusetts “the basic rule of law applicable to the foreclosure of real estate mortgages is that `a mortgagee in exercising a power of sale in a mortgage must act in good faith and must use reasonable diligence to protect the interests of the mortgagor.'” Seppala & Aho Const. Co., Inc. v. Petersen, 373 Mass. 316, 367 N.E.2d 613, 616 (Mass 1977)(citations omitted). Technical compliance with the rules governing the foreclosure procedure does not necessarily ensure that a mortgagee has met its obligations under the law. If the mortgagee does not exercise good faith in the execution of a foreclosure, then the foreclosure sale is invalid. See Edry v. Rhode Island Hospital Trust Bank, 201 B.R. 604, 607 (Bankr. D. Mass. 1996) (finding that a mortgagee’s failure to make reasonable efforts to sell the property for the highest value possible invalidated a foreclosure sale). “[T]his responsibility is [even] `more exacting’ where the mortgage holder becomes the buyer at the foreclosure sale. .. .” U.S. Nat. Bank Ass’n v. Ibanez, 458 Mass. 637, 941 N.E.2d 40, 50 n. 16 (citations omitted).

Here, the Alpinos press two different theories of liability under Count I. First, they allege that the defendant breached its duties by failing to consider the Alpinos for a mortgage modification. Second, they argue that the defendant’s alleged failure to hold the auction in a reasonable manner is a violation of the inherent duty of good faith and reasonable diligence.

The Court need not address the first theory of liability, for it finds that the Alpinos have alleged sufficient facts to surpass a motion to dismiss on their second theory. In claims for a breach of the duty of good faith and reasonable diligence, Massachusetts courts have placed emphasis on a mortgagee’s duty to protect the mortgagor’s interests by seeking a reasonable foreclosure price and ensuring that the mortgagor has notice of the sale. For example, in Bon v. Graves, 216 Mass. 440, 130 N.E. 1023 (1914), the Supreme Judicial Court held that the fact that a mortgagee gave notice of a foreclosure sale in publications of limited circulation, along with the mortgagee’s failure to provide the mortgagor with personal notice of the sale, amounted to a breach of its duties under state law. Id. at 1026 (“The duty of one acting under a power of sale in a mortgage is to use that reasonable degree of effort and diligence to secure and protect the interests of the mortgagor, the owner of the equity of redemption and junior lienors, to the observance of which he is bound by the obligation in good faith.”).

Here, the Alpinos have alleged sufficient facts to raise a plausible claim that the defendant failed to make reasonable efforts to protect the Alpinos’ interests by conducting a fair and open foreclosure sale. See Aurea Aspasia Corp. v. Crosby, 331 Mass. 515, 120 N.E.2d 759, 760-61 (Mass. 1954)(finding that the appearance of an auctioneer, who announced the terms of the sale, and flew a red flag was sufficient to conclude that a foreclosure action had occurred). This would implicate the defendant’s duty to protect the plaintiff’s interests by securing the highest possible price in the foreclosure sale and its duty to ensure that the homeowner had adequate notice of the auction, a duty that is heightened in this case because the defendant allegedly purchased the property at issue.

The plaintiffs have also alleged sufficient facts to establish that the defendant may have violated the Massachusetts foreclosure statute. Mass. Gen. L. c. 244, § 14 addresses a mortgagee’s “foreclosure under power of sale.” Id. Among other things, this section assumes the conducting of a public auction. See id. (providing a model form for the “Mortgagee’s Sale of Real Estate,” which includes specific mention of a “Public Auction” and leaves space for the time, date, and location of the auction.). If the defendant indeed failed to hold a public auction at the time and date noticed, then it violated both the letter and the spirit of the provision.

The fact that the foreclosure sale may not have been properly conducted does not necessarily mean that the Alpinos have asserted valid claims for relief. The plaintiffs allege that the defendant’s actions entitle them to, among other things, the issuance of a preliminary injunction preventing their eviction, a preliminary injunction preventing JPMorgan from selling the property, the granting of “unclouded title” in the property, reasonable damages, and a lis pendens. At a hearing before this Court, the plaintiffs stated that they were also seeking rescission of the mortgage contract. The defendant argues that the only cause of action available to the Alpinos is one in equity for redemption of the mortgage and seeks to dismiss Counts I and III because the Alpinos have not explicitly made a claim for redemption.

Massachusetts law recognizes two different types of actions that can be brought by a mortgagor alleging that his property has been transferred in a wrongful foreclosure sale: “[a]n action of tort, and a proceeding to set aside the foreclosure.” Cambridge Sav. Bank v. Cronin, 289 Mass. 379, 194 N.E. 289, 290 (Mass. 1935). The plaintiffs appear not to be pursuing a tort claim, for such a claim would be inconsistent with their stated desire to retain title to their home. See Rogers v. Barnes, 169 Mass. 179, 47 N.E. 602, 604 (Mass. 1897) (explaining that in cases where the plaintiff successfully brings an action in tort for wrongful foreclosure, which is similar to an action for conversion of personal property, the plaintiff surrenders legal title to the property at issue). Instead, the Court understands them to be seeking an invalidation of the foreclosure sale. Historically, this type of claim was styled as a “bill to set aside the foreclosure and redeem.” See Cambridge Savings Bank, 194 N.E. at 290. Nowhere in their complaint do the Alpinos explicitly state their intent to exercise their right of redemption. But, even assuming that this is the only form of relief available, a failure to explicitly seek a right of redemption does not require dismissal of a claim for equitable relief from an allegedly invalid foreclosure sale. Cf. State Realty Co. of Boston v. MacNeil Bros., Co., 334 Mass. 294, 135 N.E.2d 291, 294-95 (Mass. 1956)(finding that there “was no error in overruling the demurrer of” the mortgagee in a suit for redemption where the “bill for redemption [was] somewhat inartifically drawn” but identified the “mortgage and the parties interested in it, allege[d] that the mortgage is upon property of the plaintiff, and offer[ed] redeem.”). A determination that the foreclosure sale was unlawful will void the sale and return the plaintiffs to the position they were in before the sale allegedly occurred. See Ibanez, 941 N.E.2d at 50 (“[O]ne who sells under a power of sale must follow strictly its terms. If he fails to do so there is no valid execution of the power, and the sale is wholly void.” (internal quotation marks and citations omitted)); see also Rogers v. Barnes, 169 Mass. 179, 47 N.E. 602, 603 (Mass. 1897)(noting that a wrongful foreclosure sale gives rise to a “cloud upon the title of the plaintiff to an equity of redemption in the premises, which cannot be removed without some expense to the plaintiff, and the damages might be more than nominal.”).

D) Count IV: Intentional Infliction of Emotional Distress:

As explained by the First Circuit, “[u]nder Massachusetts law, an individual is liable for intentional infliction of emotional distress when he, `by extreme and outrageous conduct and without privilege, causes severe emotional distress to another.'” Limone v. U.S., 579 F.3d 79, 91 (1st Cir. 2009) (quoting Agis v. Howard Johnson Co., 371 Mass. 140, 355 N.E.2d 315, 318 (1976)).

Though the defendant may have engaged in some legally cognizable wrongdoing, and though the Alpinos may have suffered greatly, there is no indication that the defendant’s actions were extreme and outrageous. “The usage of the terms outrageous and extreme have become commonplace in today’s society, however, as used by the Agis Court they mean more than `annoyances, or even threats and petty oppressions.'” Harvard Univ. v. Goldstein, No. 961020, 2000 WL 282537, * 2 (Mass. Super. Ct. Feb. 15, 2000) (quoting Conway v. Smerling, 635 N.E.2d 268, 273 (1994)). The plaintiffs have not alleged that the defendant ever asked for more money than they actually owed on the mortgage, see Beecy v. Pucciarelli, 387 Mass. 589, 441 N.E.2d 1035, 1045 (D. Mass. 1982)(finding that attorney’s negligent actions in bringing a collection action against the wrong defendant did not constitute extreme and outrageous conduct), nor do they claim that they have been removed from their home in the wake of the wrongful foreclosure. At most, the defendant failed to consider the plaintiff for a mortgage modification under HAMP and then failed to operate an open and fair foreclosure sale. The Alpinos claim for intentional infliction of emotional distress is dismissed.

ORDER

The Court ALLOWS the motion to dismiss Count II and Count IV. The Court ALLOWS the request for a lis pendens. The Court DENIES the motion to dismiss the remaining counts.

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TENNESSEE The Matlock-Johnson Bill (HB1920 and SB 1299) Ad Errors Will Not Stop Foreclosure Sale

TENNESSEE The Matlock-Johnson Bill (HB1920 and SB 1299) Ad Errors Will Not Stop Foreclosure Sale


Kudos to KnoxNews for this tip

I encourage all Tennesseans to go read this article. Thank the Tennessee Bankers Assoc. for backing this hideous bill. You cannot turn your back on those who continue to be against you! NEVER.

From KnoxNews

The banking industry, it must be noted, bears much of the responsibility for the mortgage crisis that led to the recession. Banks and other lenders convinced too many people to guy mortgages they couldn’t afford. Thousands of Tennesseans are now out of work and having difficulties paying their mortgages.

Granting favors to banks seeking to foreclose on those properties is shameful. The foreclosure process is already too easy, and making it even easier would be brutal.

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

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


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

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

vs.
BARBRA J. SMITH,
Defendant-Appellant.

Excerpt:

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

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

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

REVERSED AND REMANDED WITH DIRECTIONS.

BANK OF NEW YORK v SMITH

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ILLINOIS CLASS ACTION: “Special Process Server” WASHINGTON v. WELLS FARGO, BofA

ILLINOIS CLASS ACTION: “Special Process Server” WASHINGTON v. WELLS FARGO, BofA


Excerpt:

The Special Process Server in the Mortgage Foreclosure Action was
purportedly appointed pursuant to the Administrative Order. The purported
appointment took place before Defendant initiated the Mortgage Foreclosure
Action. The purported appointment violated Section 2O2 and was, therefore,
ineffective, unlawful and void.

WASHINGTON v Wells Fargo, Bank of America

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GARY DUBIN LAW OFFICES FORECLOSURE DEFENSE HAWAII and CALIFORNIA
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Kenneth Eric Trent, www.ForeclosureDestroyer.com

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