Uniform Law Commission
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Contact:
Michael Kerr, ULC Legislative Director, michael.kerr@uniformlaws.org
Katie Robinson, ULC Communications Officer, katie.robinson@uniformlaws.org

For Immediate Release:

Seven states have enacted the 2010 Amendments to Article 9 of the UCC

June 15, 2011 – Seven states – Indiana, Minnesota, Nebraska, Nevada, North Dakota, Texas, and Washington – are the first states to adopt important amendments to the Uniform Commercial Code (UCC) Article 9.  The 2010 Amendments are designed to go into effect simultaneously on July 1, 2013; many more states are expected to enact the amendments next year.

Continue reading [NCCUSL]

WSJ–

Banks trying to foreclose on homeowners are hitting another roadblock, as some delinquent borrowers are successfully arguing that their mortgage companies can’t prove they own the loans and therefore don’t have the right to foreclose.

These “show me the paper” cases have been winding through the courts for several years. But in recent months, some judges have been siding with borrowers and stopping foreclosures after concluding that banks’ paperwork problems are more serious than previously thought and raise broader ethical questions.

KINGMAN HOLDINGS, LLC

v.

CITIMORTGAGE, INC. and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.

CASE NO. 4:10-CV-619

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS, SHERMAN DIVISION

2011 U.S. Dist. LEXIS 52770

April 21, 2011, Decided

April 21, 2011, Filed

COUNSEL: [*1] For Kingman Holdings LLC, Plaintiff: Kenneth Stuart Harter, LEAD ATTORNEY,Law Office of Kenneth S. Harter, Carrollton, TX.

For CitiMortgage, Inc., Defendant: Joshua James Bennett, LEAD ATTORNEY, Christopher Charles Townsend, Akerman Senterfitt, LLP-Dallas, Dallas, TX.

For Mortgage Electronic Registration Systems, Inc., Reston, Va, Defendant: Joshua James Bennett, Akerman Senterfitt, LLP-Dallas, Dallas, TX.

JUDGES: AMOS L. MAZZANT, UNITED STATES MAGISTRATE JUDGE.

OPINION BY: AMOS L. MAZZANT

OPINION

REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

Pending before the Court is CitiMortgage, Inc. and Mortgage Electronic Registration Systems, Inc.’s Motion to Dismiss for Failure to State a Claim (Dkt. #10). The Court, having considered the relevant pleadings, finds that Defendants’ Motion to Dismiss should be granted in part and denied in part.

Plaintiff filed his Original Petition in the 380th Judicial District Court of Collin County on October 29, 2010, against CitiMortgage, Inc. (“CitiMortgage”), seeking to extinguish CitiMortgage’s security interest through a quiet title claim. On November 10, 2010, CitiMortgage removed this case to this Court (Dkt. #1). On January 7, 2011, Plaintiff filed its Amended Complaint  [*2] (Dkt. #6). Mortgage Electronic Registration Systems, Inc. (“MERS”) was added as a Defendant.

On or about April 7, 2008, Robert A. Ross, II and Lisa M. Ross (the “Rosses”) purchased the property located at 1410 Cedar Lake, Prosper, Texas (the “Property”) and executed a Note and Deed of Trust. The Note and Deed of Trust was in the name of Bankers Financial Mortgage Group. The Deed of Trust named MERS as a beneficiary, as nominee for Bankers Financial Mortgage Group. On September 7, 2010, Plaintiff purchased the Property through “a junior lien foreclosure sale.” On December 23, 2009, MERS recorded an Assignment of Deed of Trust to CitiMortgage. Nate Blackstun (“Blackstun”) executed the assignment on MERS’ behalf.

Plaintiff alleges that the assignment by MERS to CitiMortgage is void for the following reasons: (1) Blackstun was not appointed as vice president by MERS’ board of directors; and (2) MERS was without authority to transfer the Note. Plaintiff claims that the Deed of Trust is a cloud on its title and sues to quiet title in the Property and claims the assignment violates Chapiter 12 of the Texas Civil Practices and Remedies Code. Alternatively, Plaintiff sues to enforce its equity  [*3] in redemption.

On February 25, 2011, Defendants filed their motion to dismiss (Dkt. #10). On March 14, 2011, Plaintiff filed a response (Dkt. #12). Defendants filed a reply on March 24, 2011 (Dkt. #15).

Defendants move for dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure, which authorizes certain defenses to be presented via pretrial motions. A Rule 12(b)(6) motion to dismiss argues that, irrespective of jurisdiction, the complaint fails to assert facts that give rise to legal liability of the defendant. The Federal Rules of Civil Procedure require that each claim in a complaint include “a short and plain statement . . . showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The claims must include enough factual allegations “to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570).

Rule 12(b)(6) provides that a party may move for dismissal  [*4] of an action for failure to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). The Court must accept as true all well-pleaded facts contained in the plaintiff’s complaint and view them in the light most favourable to the plaintiff. Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). In deciding a Rule 12(b)(6) motion, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007); Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009). “The Supreme Court recently expounded upon the Twombly standard, explaining that ‘[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Gonzalez, 577 F.3d at 603 (quoting Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “It follows, that ‘where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint  [*5] has alleged – but it has not ‘shown’ – ‘that the pleader is entitled to relief.'” Id.

In Iqbal, the Supreme Court established a two-step approach for assessing the sufficiency of a complaint in the context of a Rule 12(b)(6) motion. First, the Court identifies conclusory allegations and proceeds to disregard them, for they are “not entitled to the assumption of truth.” Iqbal, 129 S.Ct. at 1951. Second, the Court “consider[s] the factual allegations in [the complaint] to determine if they plausibly suggest an entitlement to relief.” Id. “This standard ‘simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of’ the necessary claims or elements.” Morgan v. Hubert, 335 F. App’x 466, 469 (5th Cir. 2009). This evaluation will “be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 129 S.Ct. at 1950.

In determining whether to grant a motion to dismiss, a district court may generally not “go outside the complaint.” Scanlan v. Tex. A & M Univ., 343 F.3d 533, 536 (5th Cir. 2003). When ruling on a motion to dismiss a pro se complaint, however, a district court is “required to look beyond  [*6] the [plaintiff’s] formal complaint and to consider as amendments to the complaint those materials subsequently filed.” Howard v. King, 707 F.2d 215, 220 (5th Cir. 1983); Clark v. Huntleigh Corp., 119 F. App’x 666, 667 (5th Cir. 2005) (finding that because of plaintiff’s pro se status, “precedent compels us to examine all of his complaint, including the attachments”); Fed. R. Civ. P. 8(e) (“Pleadings must be construed so as to do justice.”). Furthermore, a district court may consider documents attached to a motion to dismiss if they are referred to in the plaintiff’s complaint and are central to the plaintiff’s claim. Scanlan, 343 F.3d at 536.

Defendants move to dismiss all claims, asserting that Plaintiff has failed to plead facts that would support a request to quiet title. First, Plaintiff asserts a claim to quiet title. Plaintiff argues that the original payee of the Note no longer owns and holds the Note and therefore may not enforce the Deed of Trust. Plaintiff also alleges that Blackstun has no authority to execute the assignment to CitiMortgage.

Defendants move to dismiss this claim because Plaintiff cannot plead sufficient facts to prevail on a trespass-to-try-title case. Specifically,  [*7] Defendants assert that Plaintiff fails to adequately explain why the Deed of Trust is void merely because the assignment is allegedly void. Defendants also assert that Plaintiff cannot sue to quiet title relying on nothing more than a purported weakness in its opponents’ claim.

“To prevail in a trespass-to-try-title action, Plaintiff must usually (1) prove a regular chain of conveyances from the sovereign, (2) establish superior title out of a common source, (3) prove title by limitations, or (4) prove title by prior possession coupled with proof that possession was not abandoned.” Martin v. Amerman, 133 S.W.3d 262, 265 (Tex. 2004)(citation omitted). “The pleading rules are detailed and formal, and require a plaintiff to prevail on the superiority of his title, not on the weakness of a defendant’s title.” Id. (citation omitted).

Defendants assert that the only way Plaintiff can extinguish their interest in the Property is to plead and prove a trespass-to-try-title action based upon Plaintiff’s superior title to the Property. The Court agrees. Plaintiff does not assert a superior title, and it alleges no facts that would support this claim. Plaintiff merely asserts legal conclusions,  [*8] and until Plaintiff pleads a proper claim to a superior title, Plaintiff’s claim is not plausible.

Although the factual situation does raise interesting questions under Texas law regarding the splitting of the Deed of Trust from the Note, this issue has not been properly presented to this Court. Even if CitiMortgage is not the holder of the Note, Plaintiff purchased the Property at an inferior loan foreclosure and took the Property subject to superior liens. “Foreclosure does not terminate interests in the foreclosed real estate that are senior to the mortgage being foreclosed. In fact, the general rule is that the successful bidder at a junior lien foreclosure takes title subject to the prior liens.” Conversion Properties, L.L.C. v. Kessler, 994 S.W.2d 810, 813 (Tex. App.-Dallas 1999, pet. denied)(citations omitted). Because Plaintiff has failed to allege that it owns superior title to the Property, its claim to quiet title should be dismissed. Furthermore, Plaintiff’s complaint is regarding the assignment, and no facts are pleaded that the Deed of Trust is invalid.

Defendants move to dismiss Plaintiff’s second claim for equity of redemption because Plaintiff has not tendered the redemption  [*9] amount. Defendants assert that although Plaintiff asserts it is “ready, willing and able to cure any default under the note,” this allegation is insufficient to satisfy the requirements of Plaintiff’s equitable claim. Defendants assert that Plaintiff cannot obtain equity without first tendering the redemption amount, which would be the full amount of CitiMortgage’s lien and its foreclosure costs, not merely the amount in default.

Texas courts have made clear that “a necessary prerequisite to the … recovery of title … is tender of whatever amount is owed on the note.” Fillion v. David Silvers Company, 709 S.W.2d 240, 246 (Tex. App.-Houston [14th Dist.] 1986, writ ref’d n.r.e.); see also Lambert v. First National Bank of Bowie, 993 S.W.2d 833, 835-36 (Tex. App.-Fort Worth 1999, pet. denied); Grella v. Berry, 647 S.W.2d 15, 18 (Tex. App.-Houston [1st Dist.] 1982, no writ). “[I]t is a principle of equity that to obtain equitable relief the applicant must have done equity.” Grella, 647 S.W.2d at 18. Plaintiff’s failure to “do equity”-that is, its failure to tender the amount due on the loan-prevents this Court from granting Plaintiff equitable relief. See Lambert, 993 S.W.2d at 835-36.

Plaintiff  [*10] asserts that CitiMortgage has never advised Plaintiff the sum of money required to be tendered in order to cure any default under the underlying Note. Plaintiff’s argument is misplaced. In Texas, “[t]ender of whatever sum is owed on the mortgage debt is a condition precedent” to recovery of title. See Fillion, 709 S.W.2d at 246 (citing Willoughby v. Jones, 151 Tex. 435, 251 S.W.2d 508 (Tex. 1952)). Plaintiff has not tendered the amount CitiMortgage claims is owed on the loan, nor has it attempted to tender any other amount. Plaintiff’s failure to affirmatively demonstrate its ability to tender any amount bars the Court from granting Plaintiff equitable relief.

Defendants next move to dismiss Plaintiff’s claim under Chapter 12 of the Civil Practices and Remedies Code because Plaintiff failed to satisfy Federal Rule of Civil Procedure 9(b).

Section 12.002(a) of the Texas Civil Practices and Remedies Code establishes the requirements for a fraudulent lien cause of action as follows:

A person may not make, present, or use a document or other record with: (1) knowledge that the document or other record is a fraudulent court record or a fraudulent lien or claim against real or personal property  [*11] or an interest in real or personal property;

(2) intent that the document or other record be given the same legal effect as a court record or document of a court created by or established under the constitution or laws of this state or the United States or another entity listed in Section 37.01, Penal Code, evidencing a valid lien or claim against real or personal property or an interest in real or personal property; and

(3) intent to cause another person to suffer:

(A) physical injury;

(B) financial injury; or

(C) mental anguish or emotional distress.

Tex. Civ. Prac. & Rem. Code ß 12.002(a).

Someone who violates the fraudulent lien statute may become liable to an injured person to the greater of $10,000 or the actual damages caused by such violation in addition to incurring liability for court costs, reasonable attorney’s fees, and even exemplary damages as determined by the court. Tex, Civ. Prac. & Rem. Code ß 12.002(b).

Section 12.002 requires a showing that Defendants made, presented, or used a document with: (1) knowledge that the document was a fraudulent lien or claim against real or personal property or an interest in real or personal property; (2) intent that the document or other  [*12] record be given legal effect; and (3) intent to cause another person to suffer: (A) physical injury; (B) financial injury; or (C) mental anguish or emotional distress. Tex. Civ. Prac. & Rem. Code ß 12.002(a); see Aland v. Martin, 271 S.W.3d 424, 430 (Tex. App.-Dallas 2008, no pet.). Plaintiff has the burden to prove all three elements of its claim. See Preston Gate, LP v. Bukaty, 248 S.W.3d 892, 896-97 (Tex. App.-Dallas 2008, no pet.). In the context of Section 12.002(a)(3), Texas courts have interpreted the “intent” element to require only that the person filing the fraudulent lien be aware of the harmful effect that filing such a lien could have on a landowner. Taylor Elec. Services, Inc. v. Armstrong Elec. Supply Co., 167 S.W.3d 522, 531-32 (Tex. App.-Ft. Worth 2005, no pet.).

Defendants assert that Plaintiff’s section 12.002 claim lacks plausibility because it rests on legal conclusions instead of facts and that Plaintiff has failed to allege facts to show that MERS made, presented or used the assignment with knowledge that it was a fraudulent court record or a fraudulent lien or claim against the Property, that MERS intended the assignment be given the same legal effect as a court  [*13] record evidencing a valid lien against the Property, and that MERS intended to cause another person to suffer financial injury.

Defendants argue that Plaintiff alleges that MERS’ corporate secretary appointed Blackstun as a MERS assistant secretary, and the appointment was not valid because Blackstun’s appointment was not also approved by MERS’ board of directors, as allegedly required by MERS’ by-laws. Defendants argue that this is negligence at best, and not fraud. Defendants also assert that the party that would be the defrauded party would be MERS, not Plaintiff, and that Plaintiff’s interest in the Property is wholly unaffected by the assignment.

Plaintiff argues that the Assignment filed in the property records is a fraudulent lien claim. Plaintiff alleges that the assignment is void because it was executed by a person neither employed nor authorized by MERS to execute a conveyance. Plaintiff alleges that MERS intended that the document be given the same effect as a lawfully executed instrument, and the execution and filing of the documents were done for the purpose of harming Plaintiff. Plaintiff alleges that there was a scheme on the part of a MERS officer to bypass the Board  [*14] of Directors and cloak others with authority only allowed by the Board of Directors. Plaintiff argues that this is not an inadvertent failure to comply with a duty, but rather an intentional act, done knowingly with the specific intent that the consequences of his action be brought to fruition.

In this case it is alleged that MERS did not properly appoint Blackstun as an officer of MERS and that Blackstun did not have authority to bind MERS, and when Blackstun executed the assignment, it caused MERS to file a fraudulent document in the deed records. The Court finds that Plaintiff has stated a plausible claim, in part, because Defendants fail to address the issue of the legal effect of Blackstun not being authorized to execute the assignment. If he had no such authority, MERS would know that fact. It appears to be more than mere negligence by MERS. Discovery should be allowed, and after discovery is completed, the issue of whether there is a valid claim under ß12.002 can be determined by a motion for summary judgment.

RECOMMENDATION

Based on the foregoing, the Court recommends that CitiMortgage, Inc. and Mortgage Electronic Registration Systems, Inc.’s Motion to Dismiss for Failure to  [*15] State a Claim (Dkt. #10) should be GRANTED in part and Plaintiffs quiet title and equity of redemption claims should be DISMISSED with prejudice. Plaintiffs claim for violation of the Civil Practices and Remedies Code ß 12.002 should remain at this time.

Within fourteen (14) days after service of the magistrate judge’s report, any party may serve and file written objections to the findings and recommendations of the magistrate judge. 28 U.S.C. ß 636(b)(1)(C).

Failure to file written objections to the proposed findings and recommendations contained in this report within fourteen days after service shall bar an aggrieved party from de novo review by the district court of the proposed findings and recommendations and from appellate review of factual findings accepted or adopted by the district court except on grounds of plain error or manifest injustice. Thomas v. Arn, 474 U.S. 140, 148 (1985); Rodriguez v. Bowen, 857 F.2d 275, 276-77 (5th Cir. 1988).

SIGNED this 21st day of April, 2011.

/s/ Amos L. Mazzant

AMOS L. MAZZANT

UNITED STATES MAGISTRATE JUDGE

[ipaper docId=56043736 access_key=key-1qz4okv45crmeznxq9fq height=600 width=600 /]

Courtesy of James McGuire

In The
Court of Appeals
For The
First District of Texas

————————————
NO. 01-10-00020-CV
————————————

WELLS FARGO BANK, N.A., AS TRUSTEE UNDER THE POOLING AND SERVICING AGREEMENT DATED AS OF NOVEMBER 1, 2004 ASSET-BACKED PASS-THROUGH
CERTIFICATES SERIES 2004-WHQ2, Appellant

V.

LAUREANO A. BALLESTAS AND HERMINIA BALLESTAS, Appellees

On Appeal from 55th District Court
Harris County, Texas

Trial Court Cause No. 2009-34409

Excerpt:

A bank lost a trial against the owners of a home because it failed to prove that it owned the note on which it sought to foreclose. The bank then sued the owners again, contending once more that it owned the disputed note. The owners responded that the bank‘s claims are barred by res judicata and collateral estoppel. The trial court agreed and granted summary judgment.

<SNIP>

Conclusion

We hold that the trial court properly granted summary judgment on the bases of res judicata and collateral estoppel. We therefore affirm the judgment of the trial court.

continue below…

[ipaper docId=55288461 access_key=key-24h3zc31ls4ewz7insad height=600 width=600 /]

Via: William A. Roper

MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., AS NOMINEE FOR GREENSPOINT FUNDING, Appellant,
v.
NANCY GROVES, Appellee.

No. 14-10-00090-CV.

Court of Appeals of Texas, Fourteenth District, Houston.

Memorandum Opinion filed April 12, 2011.

Panel consists of Justices Brown, Boyce and Jamison.

MEMORANDUM OPINION

WILLIAM J. BOYCE, Justice.

Nancy Groves sued Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for Greenspoint Funding, to invalidate a deed of trust securing MERS’s alleged lien on Groves’s property. The trial court entered a default judgment against MERS, which then filed this restricted appeal. We affirm.

BACKGROUND

Groves filed her original petition against MERS on May 8, 2009. She alleged that she owns a certain tract of land subject to a lien secured by a deed of trust “accepted and recorded” by MERS. She further alleged that the deed of trust is invalid and asked the trial court to remove it and quiet title in Groves. MERS was served with process but failed to file an answer, and Groves filed a motion for default judgment. The trial court signed a default judgment against MERS stating that (1) Groves owns the property in question; (2) the deed of trust is “void and of no force or effect;” and (3) the deed of trust be removed from the property title.

MERS filed a timely notice of restricted appeal, arguing that (1) “Groves failed to properly state a cause of action and such failure is plain on the face of Groves’s petition;” and (2) “no justiciable controversy is alleged in Groves’s petition.”

ANALYSIS

A restricted appeal is available when (1) it is filed within six months after the trial court signed the judgment; (2) by a party to the suit; (3) who, either in person or through counsel, did not participate at trial and did not timely file any post-judgment motions or requests for findings of fact and conclusions of law; and (4) error is apparent from the face of the record. Tex. R. App. P. 26.1(c), 30; Alexander v. Lynda’s Boutique, 134 S.W.3d 845, 848 (Tex. 2004). The face of the record consists of all papers on file in the appeal. Osteen v. Osteen, 38 S.W.3d 809, 813 (Tex. App.-Houston [14th Dist.] 2001, no pet.).

MERS, a party to this suit, did not participate in the trial court and did not file any post-judgment motion or request for findings of fact or conclusions of law. MERS filed its notice of restricted appeal on January 26, 2010, less than six months after the trial court signed the default judgment on September 25, 2009. Accordingly, the only issue in this restricted appeal is whether error is plain on the record’s face. See Tex. R. App. P. 26.1(c), 30; Alexander, 134 S.W.3d at 848.

I. Groves’s Pleadings

MERS argues in its first issue that error is plain on the record’s face because Groves’s pleading does not properly raise a claim for which the trial court could grant relief. According to MERS, Groves’s pleading does not raise a viable claim because Groves (1) failed to base her claim on the superiority of her own title to the property; and (2) requested only declaratory relief under the Declaratory Judgment Act.

Groves stated in her petition:

Nancy Groves, Plaintiff, petitions the court pursuant to the Declaratory Judgment Act . . . for a declaration of the invalidity of certain documents and claim held by the Defendant, [MERS], in order to quiet title to the property in which Plaintiff has an interest, and for cause of action shows:

* * *

3. Plaintiff’s Interest in Property. The plaintiff is the owner of a certain tract of land located in Harris County, Texas, as shown in the Assessment Lien Deed recorded under document number V230924 in the official Public records of Tarrant County, Texas, and more particularly described as Lot Thirteen (13), in Block Two (2), of Summerwood, Section 4, Seven Oaks Village, an addition in Harris County, Texas, according to the map or plat thereof recorded in Film Code No. 388 of the Map Records of Harris, County, Texas.

* * *

5. Invalidity of Defendant’s Claim. The Deed of Trust under which the Defendant or the Lender or Lender’s assigns asserts an interest that interferes with Plaintiff’s title, although appearing valid on its face, is in fact invalid and of no force or effect. The Plaintiff will show that Defendant nor the Lender’s assigns is not the holder of the original Real Estate Lien note that is secured by the Deed of Trust.

Groves also requested “other and further relief for which Plaintiff may be justly entitled” based on allegations that (1) she owns the property in question; (2) MERS accepted and recorded a deed of trust securing an alleged lien on the property; and (3) the deed of trust “is in fact invalid and of no force or effect.”

The trial court’s judgment states:

[T]he court Orders and Adjudges, that [Groves] is the owner of [the property].

The court further Orders and Adjudges that the Deed of Trust filed is void and has no force or effect.

The court further orders the deed of trust removed from the title to the property made the subject of this litigation.

A. Strength of Title

MERS first argues that the judgment was in error because Groves pleaded “a quiet title (or trespass-to-try-title) claim” but did not “base her claim solely on the strength of her own title.” MERS argues that suits to quiet title must be based on the strength of the claimant’s own title, rather than the weakness of the adverse claimant’s title. See, e.g., Fricks v. Hancock, 45 S.W.3d 322, 327 (Tex. App.-Corpus Christi 2001, no pet.). Resolution of this contention requires consideration of the different types of claims that have been characterized as suits to quiet title. The case law is not entirely consistent on this issue.

A suit to quiet title is equitable in nature, and the principal issue in such suits is “`the existence of a cloud on the title that equity will remove.'” Florey v. Estate of McConnell, 212 S.W.3d 439, 448 (Tex. App.-Austin 2006, pet. denied)Bell v. Ott, 606 S.W.2d 942, 952 (Tex. Civ. App.-Waco 1980, writ ref’d n.r.e.)). A “cloud” on legal title includes any deed, contract, judgment lien or other instrument, not void on its face, that purports to convey an interest in or makes any charge upon the land of the true owner, the invalidity of which would require proof. Wright v. Matthews, 26 S.W.3d 575, 578 (Tex. App.-Beaumont 2000, pet. denied). A suit to quiet title “`enable[s] the holder of the feeblest equity to remove from his way to legal title any unlawful hindrance having the appearance of better right.'” Florey, 212 S.W.3d at 448 (quoting Thomson v. Locke, 1 S.W.112, 115 (Tex. 1886)). (quoting

Courts have used the term “suit to quiet title” to refer to legal disputes regarding

(1) title to and possession of real property; and (2) the validity of other “clouds” on an undisputed owner’s title to real property. Compare Alkas v. United Sav. Ass’n of Tex., Inc., 672 S.W.2d 852, 855-56 (Tex. App.-Corpus Christi 1984, writ ref’d n.r.e.) (suit to adjudicate ownership of property to determine whether creditors of original owner retained interest in property purportedly conveyed to new owner was action “to quiet title”), with Sw. Guar. Trust Co. v. Hardy Rd. 13.4 Joint Venture, 981 S.W.2d 951, 956-57 (Tex. App.-Houston [1st Dist.] 1998, pet. denied) (undisputed property owner’s action to invalidate lien and deed of trust securing lien constituted suit “to quiet title”); see also Florey, 212 S.W.3d at 449 (distinguishing between “suits to quiet title that are equivalent to trespass-to-try-title actions” and suits to quiet title involving interests that only “indirectly impact” title to and possession of real property).^[1]

The first type of claim, which involves title to and possession of real property, is essentially “the equivalent to [a] trespass-to-try-title action[].” See Florey, 212 S.W.3d at 449; see also Sani v. Powell, 153 S.W.3d 736, 746 (Tex. App.-Dallas 2005, pet. denied) (quiet title claim involving allegedly invalid tax sale of property characterized as trespass to try title action). “A trespass to try title action is the method of determining title to lands, tenements, or other real property.” Tex. Prop. Code Ann. § 22.001 (Vernon 2000). A trespass to try title action “is typically used to clear problems in chains of title or to recover possession of land unlawfully withheld from a rightful owner.” See Martin v. Amerman, 133 S.W.3d 262, 265 (Tex. 2004), superseded by statute, Tex. Civ. Prac. & Rem. Code Ann. § 37.004 (Vernon 2008) (reversing Martin‘s holding that relief under the Declaratory Judgment Act was unavailable for boundary dispute). It is the exclusive remedy by which to resolve competing claims to property. Jordan v. Bustamante, 158 S.W.3d 29, 34 (Tex. App.-Houston [14th Dist.] 2005, pet. denied). Courts require claimants bringing this type of “suit to quiet title” to base their claims on the strength of their own title. See Kennedy Con., Inc. v. Forman, 316 S.W.3d 129, 135 (Tex. App.-Houston [14th Dist.] 2010, no pet.); Alkas, 672 S.W.2d at 857. To recover, a claimant must establish a prima facie right of title by proving one of the following: (1) a regular chain of conveyances from the sovereign; (2) a superior title out of a common source; (3) title by limitations; or (4) prior possession, which has not been abandoned. Kennedy Con., Inc., 316 S.W.3d at 135.

The second type of claim, which involves other “clouds” on an undisputed owner’s title to real property, challenges an adverse interest that impacts title and possession only indirectly. See Florey, 212 S.W.3d at 449; see also Max Duncan Family Inv., Ltd. v. NTFN Inc., 267 S.W.3d 447, 453-54 (Tex. App.-Dallas 2008, pet. denied) (undisputed property owner’s suit to invalidate promissory note and lien securing note “involve[d] more than just title and possession of real property”); Cadle Co. v. Ortiz, 227 S.W.3d 831, 837-38 (Tex. App.-Corpus Christi 2007, pet. denied) (undisputed property owner’s post-foreclosure suit to invalidate mechanic’s lien distinguished from trespass to try title action); Sw. Guar. Trust Co., 981 S.W.2d at 957 (undisputed property owner’s action to declare lien invalid was “really one to quiet title”). A claim is sufficiently adverse if its assertion would cast a cloud on the owner’s enjoyment of the property. See Katz v. Rodriguez, 563 S.W.2d 627, 629 (Tex. Civ. App.-Corpus Christi 1977, writ ref’d n.r.e.). To remove such a cloud, a plaintiff must “allege right, title, or ownership in herself with sufficient certainty to enable the court to see she has a right of ownership that will warrant judicial interference.” Wright, 26 S.W.3d at 578.

MERS does not dispute that Groves holds title to the property subject to the deed of trust; Groves does not dispute that the deed of trust securing the lien belongs to MERS. Groves’s claim that the deed is invalid does not directly implicate any issues to be resolved by a trespass to try title suit. See Tex. Prop. Code Ann. § 22.001 (Vernon 2000) (“A trespass to try title action is the method of determining title to lands, tenements, or other real property.”); Martin, 133 S.W.3d at 265 (trespass to try title statute is “typically used to clear problems in chains of title or to recover possession of land unlawfully withheld from a rightful owner”); see also Deutsche Bank Nat’l Trust Co. v. Stockdick Land Co., No. 14-09-00617-CV, 2011 WL 321742, at *10 (Tex. App.-Houston [14th Dist.] Feb. 3, 2011, no pet.) (“If the Bank succeeds in its arguments . . . then the Property is subject to the Bank’s lien. If not, then the Property is not subject to the lien. In any event, title to the Property or to the liens is not in question . . . . [The Bank] is not required to pursue a trespass-to-try-title action.”). Therefore, Groves’s claim is not in the nature of a trespass to try title action and she was not required to base her claim upon the strength of her own title.

Groves alleged in her pleading that she owns the property by virtue of her recorded deed. This satisfies the requirement that she “allege right, title, or ownership in herself with sufficient certainty to enable the court to see she has a right of ownership that will warrant judicial interference” in the issue of the deed of trust’s validity. Wright, 26 S.W.3d 575.^[2] Therefore, Groves’s pleadings do not establish error on the face of the record.

B. Relief under Declaratory Judgment Act

MERS alternatively argues that “the trespass-to-try-title statutes [are] Groves’s sole remedy” and complains that Groves “did not raise a cause of action under those statutes” because she requested only declaratory relief under the Declaratory Judgment Act. MERS bases its argument on Martin v. Amerman, 133 S.W.3d at 267-68. The holding in Martin rested upon the court’s characterization of section 22.001 of the Texas Property Code as the exclusive remedy for trespass to try title actions. See id.

We need not decide whether Martin precludes Groves’s request for declaratory relief under the Declaratory Judgment Act in this case.^[3] Groves requested relief under the Declaratory Judgment Act, as well as “other and further relief to which [she] may be justly entitled.” The trial court’s judgment does not indicate that it granted her request to “quiet title” exclusively under the Declaratory Judgment Act. Accordingly, no error appears on the face of this record. SeeAlexander, 134 S.W.3d at 848. Tex. R. App. P. 26.1(c), 30;

We overrule MERS’s first issue.

II. Justiciable Controversy

MERS argues in its second issue that the trial court lacked jurisdiction over the action because Groves “failed to allege a justiciable controversy under the Declaratory Judgment Act.”

A justiciable controversy between the parties must exist at every stage of the legal proceedings. Williams v. Lara, 52 S.W.3d 171, 184 (Tex. 2001). We cannot decide moot controversies. Nat’l Collegiate Athletic Ass’n v. Jones, 1 S.W.3d 83, 86 (Tex. 1999). “In order to maintain a suit to quiet title, there must be an assertion by the defendant of a claim to some interest adverse to plaintiff’s title; and the claim must be one that, if enforced, would interfere with the plaintiff’s enjoyment of the property.” Mauro v. Lavlies, 386 S.W.2d 825, 826-27 (Tex. Civ. App.-Beaumont 1964, no writ) (internal quotation omitted) (no justiciable controversy existed because the judgments defendants obtained against plaintiffs asserted no claims against plaintiffs’ property and defendants made no attempt to create a lien upon property or to have property sold to satisfy judgments).

Groves alleged in her petition that MERS’s deed of trust “purported to create a lien for security purposes on Plaintiff’s property as described.” This alleged lien constitutes an adverse interest to Groves’s title, which, if enforced, would interfere with her enjoyment of the property. See id. Therefore, a justiciable controversy existed, and the trial court had subject matter jurisdiction over the case. See Williams, 52 S.W.3d at 184; Mauro, 386 S.W.2d at 826-27.^[4]

We overrule MERS’s second issue.

CONCLUSION

Having overruled both of MERS’s issues on appeal, we affirm the trial court’s judgment.

[1] Other decisions have stated that a suit to quiet title is distinct from a trespass to try title action. See, e.g., Longoria v. Lasater, 292 S.W.3d 156, 165 n.7 (Tex. App.-San Antonio 2009, pet. denied); Fricks v. Hancock, 45 S.W.3d 322, 327 (Tex. App.-Corpus Christi 2001, no pet.); McCammon v. Ischy, No. 03-06-00707-CV, 2010 WL 1930149, at *7 (Tex. App.-Austin May 12, 2010, pet. denied) (mem. op.).

BLOOMBERG

Oklahoma Plan

Oklahoma Attorney General Scott Pruitt is seeking an alternative settlement with banks that respects “the appropriate role of attorneys general,” his office said in a statement today. The settlement could be a model for other states, Pruitt said.

BLOOMBERG– David McLaughlin and Prashant Gopal

Georgia Attorney General Sam Olens said he has “significant concerns” about a proposal to reduce loan balances for some homeowners as part of a settlement of a nationwide foreclosure probe, joining at least seven other states that have criticized such a plan.

A deal with the top mortgage servicers in the U.S. that includes writedowns could encourage homeowners who are current on their loans to stop making payments, Olens, a Republican, said today in a telephone interview.

“You’re declaring in advance who the winners and losers are,” Olens said. “I’m a little concerned that this process disengages the normal market forces.”

The Texas House of Representatives passed a bill that requires new disclosure requirements for mortgage servicing:

ELLERY G. PENNINGTON AND
LAURA M. PENNINGTON, on behalf
of themselves and all others similarly
situated,

v.

HSBC BANK USA, NATIONAL
ASSOCIATION and WELLS FARGO
BANK, N.A.,

Excerpt:

Plaintiffs bring this action against Wells Fargo Bank, N.A., its division Wells Fargo Home Mortgage, and HSBC Bank USA (collectively, “Defendants”) on behalf of Texas resident home equity loan borrowers who were offered loan modifications by Defendants after March 3, 2007.

<SNIP>

Defendants then railroaded borrowers into foreclosure by setting up so many roadblocks to modification that borrowers would finally cry uncle in the face of bureaucratic stonewalling, incompetence, misrepresentations, deception, and fraud. Meanwhile, borrowers subjected to Defendants’ misconduct would have interest charges running against them during the pendency of Defendants’ purported “review” of their loans. An already distressed loan situation became all but impossible to escape because of Defendants’ misconduct and deception. Borrowers’ interest arrearages for the months and years they got chewed up in Defendants’ maniacal mortgage meatgrinder made any loan modification prospect remote almost to the point of impossibility.

[ipaper docId=53317457 access_key=key-1b3paohwpl798rl0bbts height=600 width=600 /]

By Robert Schmidt and Tom Schoenberg

(Updates with excerpt from letter in fourth paragraph.)

March 22 (Bloomberg) — Four more Republican state attorneys general are opposing a plan to resolve a nationwide probe of foreclosure and mortgage-servicing practices because the terms may foster a “moral hazard.”

In a letter today to Iowa Attorney General Tom Miller, a Democrat who has taken the lead in the investigation, the officials objected to new documentation requirements and principal reductions outlined in the proposed settlement submitted to the country’s top mortgage-servicing companies this month.

By Donal Griffin and Dakin Campbell – Feb 8, 2011 12:00 AM ET

Citigroup Inc., the third-largest U.S. bank, settled or lost at least five claims in 2010 brought by borrowers who accused the bank of filing fraudulent mortgage documents provided by a Texas firm.

In the most recent settlement in December, a bankrupt homeowner in Wappingers Falls, New York, challenged Citigroup’s use of a mortgage “assignment,” which shows the transfer of ownership of a mortgage. It was signed by an employee at Orion Financial Group Inc., a Southlake, Texas, firm that provides document services to lenders.

The document was “of fraudulent nature and questionable origin,” the borrower’s attorney, Linda Tirelli, wrote in an August objection to the bank’s claim at U.S. Bankruptcy Court in New York. Citigroup created and filed the assignment after proceedings began because it otherwise couldn’t prove its right to collect the debt, she wrote in an e-mail. The bank denied the allegations and didn’t admit liability in the settlement.

MUST WATCH ORION’S VIDEO

http://www.orionfgi.com/video.html

By Prashant Gopal and Thom Weidlich – Feb 1, 2011 3:16 PM ET

A JPMorgan Chase & Co. branch in El Paso, Texas, may have furniture and computers seized by the sheriff unless the bank complies with a judge’s order to pay the legal bills of a single mother whose eviction case he dismissed.

The manager of the Chase branch was served on Jan. 26 with court papers that instructed the New York-based company to pay attorney Richard A. Roman’s $5,000 in fees, according to Detective Hector Lara, an El Paso County sheriff’s officer. The manager, Jose Gomez, told Lara that the branch’s gear is protected by the Federal Deposit Insurance Corp. and that he would contact the bank’s security staff and the Federal Bureau of Investigation, Lara said today in a telephone interview.

Lara said he’s waiting for an opinion from the county attorney on whether the bank’s property can be seized.

“They don’t have a problem putting my client out in the street,” Roman said. “But when somebody prevails against a bank, they pull every string in the book to avoid paying.”

[ipaper docId=47639881 access_key=key-d2ak3tkz5ccj8d89ayl height=600 width=600 /]

via: A. Campbell

Excerpt:

The Court has considered the pleadings, evidence and the arguments of the parties’ counsel and/or representative in this cause and is of the opinion that judgment should be rendered for defendants.

The Court makes the following findings:

A Temporary Restraining Order was signed by the Presiding Judge of the 448th Judicial District Court and was in effect at the time of the foreclosure sale; and

The Foreclosure sale was conducted irrespective of the Order of the 448th Judicial District Court and title is presently at issue.

It is accordingly ORDERED, ADJUDGED AND DECREED that:

Continue reading below…

[ipaper docId=47639881 access_key=key-d2ak3tkz5ccj8d89ayl height=600 width=600 /]

By Nadia Vanderhoof
TCPalm
Posted December 3, 2010 at 11:46 a.m.

PORT ST. LUCIE — About 10 p.m. the Saturday after Thanksgiving, Cathy Hammers abruptly was woken up by a continuous loud banging on the front door of her Virginia home.

With two kids in college and a third touring the country in a rock band, she thought law enforcement was at her door with bad news of a possible car accident involving a family member.

Instead, Hammers was served foreclosure papers by Texas-based Nationstar Mortgage and the Fort Lauderdale law firm of Marshall Watson on a Port St. Lucie home Hammers and her parents sold in 1994 — a property she hasn’t owned or seen in 15 years.

“He was ringing the door bell, banging real hard on the door … the dogs were going crazy,” Hammer said. “When I asked him who he was. He asked me if I was Cathy and told me I was being served foreclosure papers. He said he was a process server with ASAP Legal Services and then just took off.”

According to court documents filed in St. Lucie County, a quit claim deed and satisfaction of mortgage were filed by Hammers and her parents on the home at 2291 S.W. Susset Lane in 1994.

Treasure Coast legal experts say Hammers’ case could be one of the most unusual to occur within the 19th Judicial Circuit, which encompasses Martin, St. Lucie, Indian River and Okeechobee counties.

“When I talked to Marshall Watson, Sonya in their litigation department, and asked why I was being served foreclosure papers on a mortgage I did not sign, on a property I haven’t lived in for almost 20 years, she got snippety with me and asked if I had an attorney. Why would I need an attorney when they’ve made the mistake?” Hammers said.

By Thom Weidlich, Laurel Brubaker Calkins and Jody Shenn – Oct 26, 2010 12:01 AM ET

Kathy D. Patrick is a Houston lawyer who spends her Sundays teaching children about God. The rest of the week, according to one attorney who knows her, she can be “as frightening as a pit bull on steroids.”

That’s bad news for issuers of mortgage-backed securities like Bank of America Corp. Patrick represents bond investors including the Federal Reserve Bank of New York and BlackRock Inc. who are seeking to force the bank to buy back bad home loans, claiming the debt failed to match contractual promises about its quality.

Her law firm, Gibbs & Bruns LLP, is a 30-lawyer outfit that says it specializes in “bet the company” litigation. This month, it reached a settlement with JPMorgan Chase & Co. and Bank of Montreal stemming from an alleged fraud at a Canadian gold company. Earlier this year, Goldman Sachs Group Inc. and UBS AG settled with the firm over the sale of $550 million in mortgage-backed securities. Patrick reached that settlement on behalf of her clients just two months after filing suit.

Patrick, 50, is “fearless and tenacious,” said Dan Cogdell, a Houston criminal-defense lawyer who said she is capable of pit bull-like aggressiveness “if the need be.” If she succeeds in getting Bank of America to settle, it may trigger more calls for buybacks in the $1.4 trillion market for so-called non-agency mortgage securities, which lack government backing.

Bank costs from repurchasing mortgages in such securities may total as much as $179.2 billion, including expenses related to suits against bond underwriters, Chris Gamaitoni, a Compass Point Research and Trading LLC analyst, estimated in August.

$1.73 Billion

In June 2009, Patrick got Credit Suisse Group AG and Deutsche Bank AG to agree to pay $1.73 billion to end litigation over their decision to back out of the leveraged buyout of Huntsman Corp. Her firm is suing Zurich-based Credit Suisse as bond underwriter for a now-defunct Ohio company that sold securities based on health-care providers’ unpaid bills.

“She has a deep understanding of the banking process and the constraints, motivations and incentives of the banking industry,” said Harry M. Reasoner, a partner at Vinson & Elkins LLP in Houston, who also represented Huntsman.

In the fight against Charlotte, North Carolina-based Bank of America, Patrick represents the biggest bond investors in the U.S., including Pacific Investment Management Co., which runs the world’s biggest bond fund.

$47 Billion

On Oct. 18, she wrote Bank of America and Bank of New York Mellon Corp., the trustee for $47 billion of bonds created by Bank of America’s Countrywide Financial unit. In the letter, she accused Countrywide of failing to service the home loans properly. Her clients want Bank of America, which bought Countrywide in 2008, to take back some of the underlying loans, and are questioning its servicing as a way to broaden their legal options, Patrick said the next day.

“We continue to review and assess the letter, and have a number of questions about its content, including whether these investors have standing to bring these claims,” Bank of America Chief Financial Officer Charles H. Noski said Oct. 19 on a conference call with analysts. “We continue to believe the servicer is in compliance with the servicing obligations.”

.

?

October 25, 2010, 8:54 PM EDT

By Margaret Cronin Fisk

(Updates with spokesman’s comment in second paragraph.)

Oct. 25 (Bloomberg) — Texas Attorney General Greg Abbott sent subpoenas to JPMorgan Chase & Co., Bank of America Corp. and seven other banks or loan servicers seeking information about foreclosure practices, a spokesman said.

“The state is subpoenaing information and documents,” Jerry Strickland, the spokesman, said in an interview. He didn’t elaborate. The state also subpoenaed Ally Financial Inc., CitiMortgage Inc. and Wells Fargo & Co.

Abbott began investigating foreclosure practices in Texas following the disclosure of a December deposition in which an employee of Ally’s GMAC Mortgage unit testified that his team signed about 10,000 documents a month without verifying their accuracy. On Oct. 13, all 50 state attorneys general announced a joint investigation of foreclosures.

The Texas subpoenas followed letters sent by Abbott’s office to 30 loan servicers on Oct. 4, asking them to halt foreclosures in the state pending a review of their practices.

Abbott asked banks then to identify employees who filed faulty affidavits or other documents in the state and identify foreclosures that used such documents. He also asked lenders and servicers to halt all sales of properties previously foreclosed upon and stop all evictions.

Twenty-six of those companies responded to the letters, according to a spreadsheet of answers sent today by Strickland.

.

JPMorgan, Bank of America Face `Hydra’ of State Foreclosure Investigations

By Margaret Cronin Fisk – Oct 6, 2010 12:01 AM ET

JPMorgan Chase & Co., Bank of America Corp. and Ally Financial Inc., defending allegations of fraudulent home foreclosures from customers and Congress, may face the most financial peril from investigations by state attorneys general.

Authorities in at least seven states are probing whether lenders used false documents and signatures to justify hundreds of thousands of foreclosures, and the number of these inquiries will grow, according to state officials and legal experts.

“You’re going to see a tremendous amount of activity with all the AGs in the U.S.,” Ohio Attorney General Richard Cordray said in an interview. “We have a high degree of skepticism that the corners that were cut are truly legal.”

JPMorgan, Bank of America and Ally have curtailed foreclosures or evictions in 23 states where courts have jurisdiction over home seizures.

While homeowners in those states and elsewhere must usually show damages to win a lawsuit, “attorneys general can just sue over deceptive sales practices and get penalties,” said Christopher Peterson, a University of Utah law professor who specializes in commercial and contract law.

In Ohio, penalties include fines up to $25,000 per violation, with each false affidavit or document considered a violation, according to state law enforcement officials. In Iowa, fines rise to a maximum of $40,000 for each violation.

Foreclosure Freeze

This penalty would apply to “every instance of an affidavit that was filed improperly or every time facts were attested to that weren’t true,” said Cordray. His counterpart in Connecticut, Richard Blumenthal, has called for a freeze on foreclosures and said the submissions are a “possible fraud on the court.”

Officials in Ohio and Connecticut, along with Florida, Texas, North Carolina, Iowa and Illinois, said they are investigating mortgage foreclosure practices.

Continue reading …BLOOMBERG

.

Monday, August 30, 2010

Attorney General Abbott Charges Home Loan Servicer With Violating State Debt Collection Laws

American Home Mortgage Servicing Inc. failed to properly process requests

AUSTIN – Texas Attorney General Greg Abbott today charged Coppell-based American Home Mortgage Servicing Inc. (AHMS) with using illegal debt collection tactics and improperly misleading struggling homeowners.

According to state investigators, AHMS collections agents used aggressive and unlawful tactics to collect payments from Texas homeowners who had difficulty meeting their payment obligations. The defendant also failed to credit homeowners who properly submitted their payments on time.

In other cases, AHMS agents falsely claimed that homeowners did not make payments so the agents could justify profitable late fees or escrow accounts. The defendant also failed to properly credit homeowners after AHMS agents withdrew funds from the homeowners’ checking accounts. Because of the defendant’s unlawful conduct, homeowners defaulted on their loans, leading to foreclosure proceedings.

Additionally, the defendant claimed to have a “Home Retention Team” to assist distressed homeowners. Many customers found that AHMS could not qualify homeowners and that they were of no help to halt the foreclosure process. Some homeowners who actually obtained loan modifications found that their monthly payments increased rather than decreased, which worsened their problem with foreclosure.

Today’s enforcement action charges AHMS with multiple violations of the Texas Debt Collection Act and the Texas Deceptive Trade Practices Act (DTPA). The State is also seeking civil penalties of up to $20,000 per violation of the DTPA.

_________________________

DinSFLA here: A little more on AHMSI

Recently, Judge Arthur Schack said this in ARGENT MTGE. CO., LLC v. Maitland, 2010 NY Slip Op 51482 – NY: Supreme Court, Kings 2010

Successor plaintiff AHMSI is one of several companies controlled by billionaire investor Wilbur L. Ross, Jr. through his firm, W. L. Ross & Company. Louise Story, in her April 4, 2008 New York Times article, “Investors Stalk the Wounded of Wall Street,” described Mr. Ross as “a dean of vulture investing.” She wrote:

Almost two centuries ago, as Napoleon marched on Waterloo, a scion of the Rothschilds is said to have declared: The time to buy is when blood is running in the streets.

Now as red ink runs on Wall Street, the figurative heirs of the Rothschilds — bankers, traders, hedge fund gurus and takeover artists — are plotting to profit from today’s financial upheaval. These market opportunists — vulture investors in the Wall Street term — have begun to swoop. They are buying up mortgages of hard-pressed homeowners, the bank loans of cash-short businesses, and companies that seem to be hurtling to bankruptcy. And they are trying to buy them all on the cheap. . . .

“The only time you really know you’ve reached the bottom is when you’re back on the other side and things are going back up,” said Wilbur L. Ross, Jr., a dean of vulture investors, who made a fortune buying steel companies when no one else seemed to want them.

Such caution aside, his firm, W. L. Ross & Company, recently spent $2.6 billion for two mortgage servicers [AHMSI and Option One] and a bond insurance company. He said he planned to buy more as hedge funds and other investor sell at bargain prices.

By Lani Rosales on July 15, 2010 | AgentGenius.com

Here at AG, we’ve written about how Bank of America has foreclosed on homes by continuing the foreclosure process even after the home was successfully sold to a new buyer who didn’t even have a loan through Bank of America and we’ve covered how they have foreclosed on addresses they never even had a loan on despite dispute and direct correspondence.

AG columnist, Russell Shaw has remained our most vocal advocate for homeowners and agents having to battle Bank of America. His “Bank of America retard division for short sales” article that outlines the unfair, irrational and possibly illegal behavior of Bank of America remains one of the most read articles here at AG on most days, almost a year after it was originally published.

In steps the Texans

We’ve awaited the day that someone stood up to the documented abuses in a fashion that would impact Bank of America’s bottom line, and today, a group of homeowners are no longer taking it lying down. In true Texas fashion, a class action complaint was just filed and a jury trial has been demanded. Today,
the Texas Housing Justice League joins the 15 homeowners in the suit against Bank of America and its subsidiary BAC Home Loans Servicing.

Interestingly, the claim is using RESPA (Real Estate Settlement and Procedures Act) as grounds for the complaint. The other eight claims are as listed below:

• Count Two: Breach of Contract – Loan Modification Agreement
• Count Three: Breach of Contract – Forbearance Agreement
• Count Four: Breach of Contract-Promissory Note and Deed of Trust
• Count Five: Violation of the Texas Property Code
• Count Six: Breach of Oral Contract-HAMP Trial Modification
• Count Seven: Unreasonable Collection Efforts
• Count Eight: Intentional Misrepresentation
• Count Nine: Texas Debt Collection Act

About the plaintiffs:

According to the Texas Housing Justice League, “Plaintiffs are and represent people who purchased their first homes between 1994 and 2006, usually with loan assistance from the Federal Housing Administration and the U.S. Department of Veterans Affairs. Their loans were all serviced by Defendant BAC, which is a wholly owned subsidiary of Defendant Bank of America, N.A.”

They continue, by noting that “The lawsuit complains not of poor customer service by BAC, but of a systematic home loan servicing scheme that includes hours of telephone runaround, misleading and inconsistent information, lost correspondence, verbal abuse, and extensive delay, all of which have documented costs not only in terms of money, but in health. The facts in this case reveal the harsh reality that underlies the loan servicer’s press statements about loan modifications and forbearance agreements following collapse of the U.S. housing market.”

A suitable summary of the suit:

Denver Realtor, Kristal Kraft says, “In the interest of time, I will now use only the keywords describing the gripes against Bank of America as accused by the Texas Homeowners.

‘Scheme, misleading, inconsistent, lost correspondence, verbal abuse, extensive delay, money, health, harsh, shuffled, no resolution, dysfunctional, barrage of misinformation, misdirection, deliberate inactivity, abuse, harassment, yo-yo. blocked at every turn, labyrinth of transfers, hundreds of hours on the telephone, transferred, never speak to same person again, contradictions, complaints meet with resistance, no supervisors available, unaccountable departments, asked to sign same documents three, four or even five times, negotiators who would not return telephone calls, not isolated incidents, pattern and practice by Bank of America.’”

What will happen next?

One of the Plaintiff’s lawyers, Robert Doggett said on ForeclosureBuzz.com, “It would be hard to imagine that Bank of America and BAC will fight the facts of the case; the question will likely be whether they can get away with it. The servicer will likely claim that poor “customer service” is something that must be accepted like a slow waiter or a bad movie. The difference is of course that homeowners are not merely customers that should expect to be mistreated and lied to — homeowners have a contract with the holder of their home loan and these servicers are the agents for the holder — and moreover, servicing a home loan is not in the realm of someone forgetting your fries or being tricked into seeing Gigli.”

For the full claim, click here.

[ipaper docId=34367809 access_key=key-22j3ru34s5q8ixwyzrmc height=600 width=600 /]

Starting to sound like a broken record with these bank “mistakes”!

6/28/2010 12:55 PM By Kelly Holleran