As we’ve discussed the “where’s the note?” problem of mortgage securitizations, some readers who are old enough to have sold a home more than once have said that while they’d gotten a cancelled mortgage note back on their first sale, on a more recent one, they hadn’t. They were concerned, and as this post will show, they are right to be.
By way of background, the popular press has done the public a disservice by talking about “mortgages”. A “mortgage” consists of two instruments: a promissory note, which is a IOU, and a lien against the property, which is referred to as a mortgage (in non-judicial foreclosure states, they are typically called a deed of trust and confer somewhat different rights, but we’ll put that aside for purposes of this discussion).
What appears to be happening on all too often in Florida is that when borrowers signed warranty deeds in lieu of foreclosure when they can no longer keep these homes, they often get only a satisfaction of mortgage, not a cancelled note. This is not what is supposed to happen...
Once you read the allegations in the cases included in this post, I strongly suspect you will agree that the “ruining lives” in the headline is not an exaggeration. And as important, these two cases, with very similar fact sets, also suggest that these abuses are not mere “mistakes”. These are clearly well established practices that Chase can’t be bothered to clean up, since cleaning them up costs money and letting them continue is more profitable.
Both cases took place in Alabama. In both cases, the borrowers had made every mortgage payment on time. One was a couple with three children, the Barnetts. The second is a widow, Besty Barlow, but her husband was still alive when this ugly saga started.
JPMORGAN CHASE BANK, as Trustee )
on Behalf of the Registered Certificate Holders )
of GSAMP Trust 2004-SEA2, Mortgage )
Pass-Through Certificates, Series 2004-SEA2,
The Kafkaesque character of this litigation is difficult to deny. Having failed to receive a summons that may have been improperly served upon them, Marilyn and Michael Elliott learned that a default judgment had been entered against them, foreclosing on their home because of a mortgage that was allegedly in default. The home was sold in a sheriff?s sale to the lending bank. Feeling confused and suspicious, they turned to the Indiana Attorney General, who directed them to file a complaint with the Comptroller of the Currency. The Comptroller?s investigation revealed that Chase Bank, the ostensible plaintiff herein, is entirely unaware of the foreclosure proceeding. Moreover, Chase?s records show that the mortgage was paid in full in 2001. Chase, therefore, executed and recorded a satisfaction of mortgage. Notwithstanding the satisfaction of mortgage, Chase?s loan servicer—Ocwen Bank—continued to prosecute this action in Chase?s name, attempting to force the Elliotts out of their home even though there has never been a trial and the lending bank has declared that the mortgage was paid in full. Finding this situation untenable, we reverse and remand for trial.
Appellants-defendants Marilyn L. Elliott and Michael S. Elliott appeal the trial court?s order denying their motion for relief from judgment on the foreclosure complaint of JPMorgan Chase Bank (Chase). The Elliotts raise two issues, one of which we find dispositive: that they are entitled to relief from judgment pursuant to Trial Rule 60(B) because, during the pendency of this litigation, Chase executed and recorded a satisfaction of the mortgage. Finding that the Elliotts are entitled to relief from judgment, we reverse and remand for trial.
Honorable Karen V. Murphy
Justice of the Supreme Court
Index No. 5541/09
IN THE MATTER OF:
MORTGAGE ELECTRONIC REGISTRATION
SYSTEMS, INC. as NOMINEE for ENCORE
DIANA ESPOSITO a/kla DIANE ESPOSITO;
BANK OF AMERICA, N. ; NASSAU COUNTY
The supporting affidavits are in conflict with the recorded satisfaction in that the
satisfaction executed by MERS as nominee for Encore states that there had been no
assignments.There is a purported, and as yet unrecorded assignment from MERS as nominee
for Encore to Bank of America dated March 12, 2009.This Court is left to question the
motivation behind MERS’ assignment of a mortgage previously satisfied of record during
the pendency of this matter.There is no proof that MERS physically delivered the note and
mortgage to Bank of America prior to the date ofthe assignment. (See Wells Fargo Bank,
N.A. v. Marchione , 2009 WL 3380639 (2d Dept. , 2009)).
The following documents appear to be either stamped in or scanned in but in no way signed by any human on this earth.
This also backs up Angela Nolan deposition where she states:
Let me explain the process. This is an electronic signature, so there’s certain states that allow electronic signatures. And I believe I sent you documentation on that where we sign our name, it’s scanned into a database, then the signatures are applied electronically.
So here is some of the examples…. and do not ask me to get ALL that are there because I will need an entire year to gather them all.