Effective April 1, servicers managing Freddie Mac loans will no longer be allowed to foreclose on properties in the name of Mortgage Electronic Registration Systems (MERS).

Freddi Mac’s announcement  states

We have updated the Guide to eliminate the option for the foreclosure counsel or trustee to conduct a
foreclosure in the name of MERS. Effective for Mortgages registered with MERS that are referred to
foreclosure on or after April 1, 2011, Servicers must prepare an assignment of the Security Instrument
from MERS to the Servicer and instruct the foreclosure counsel or trustee to foreclose in the Servicer’s
name and take title in Freddie Mac’s name.

As required in Section 66.17, Foreclosing in the Servicer’s Name, Servicers must record the prepared
assignment where required by State law. State mandated recording fees are not reimbursable by Freddie
Mac, are not considered part of the Freddie Mac allowable attorney fees and must not be billed to the
Borrower.

Servicers should refer to updated Section 66.17 and Section 66.54, Vesting the Title and Avoiding
Transfer Taxes, for additional information.

[ipaper docId=51478894 access_key=key-uycf5vbb5ste8n2go4r height=600 width=600 /]

Before you go down to the “New Device” take a look back when THE FLORIDA BANKER’S ASSOCIATION ADMITTED THAT NOTES ARE DESTROYED:

This is a direct quote from the Florida Banker’s Association Comments to the Supreme Court of Florida files September 30, 2009:

“It is a reality of commerce that virtually all paper documents related to a note and mortgage are converted to electronic files almost immediately after the loan is closed. Individual loans, as electronic data, are compiled into portfolios which are transferred to the secondary market, frequently as mortgage-backed securities.

The reason “many firms file lost note counts as a standard alternative pleading in the complaint” is because the physical document was deliberately eliminated to avoid confusion immediately upon its conversion to an electronic file. See State Street Bank and Trust Company v. Lord, 851 So. 2d 790 (Fla. 4th DCA 2003). Electronic storage is almost universally acknowledged as safer, more efficient and less expensive than maintaining the originals in hard copy, which bears the concomitant costs of physical indexing, archiving and maintaining security. It is a standard in the industry and becoming the benchmark of modern efficiency across the spectrum of commerce—including the court system.”

Now if there is no issues surrounding what everyone is shouting from their roof tops, then why integrate a new software that was suppose to have been implemented already to “Improves Efficiency & Transparency of Electronic Mortgage Transactions” within MERS itself?

THEY KNOW THEY HAVE A PROBLEM!

Now from SYS-CON on SmartSAFE

“During the foreclosure crisis of the last few years we saw many instances where the original and subsequent paperwork was lost, destroyed or misfiled when loans were bought and sold,” commented Kelly Purcell, Executive Vice President for Wave’s eSignSystems division. “Mortgages are sold several times throughout the life of a loan, and electronic mortgages address the problem of the ‘lost note,’ while improving efficiency in the process.”

This will debut during next week’s MBA National Technology in Mortgage Banking Conference and Expo 2011 (at the Westin Diplomat Resort & Spa in Ft. Lauderdale, Fla.).

Will this be the new system that will eventually take over MERS as MOM?

This one is both “Smart & Safe” <wink>

“[A] forged deed is a nullity and vests no title in a grantee. [Cit.] As such, even a bona fide purchaser for value without notice of a forgery cannot acquire good title from a grantee in a forged deed, or those holding under such a grantee, because the grantee has no title to convey.” Brock v. Yale Mortgage Co

Anonymous via his source post crucial information that has been known but not in detail.

Attorneys and Attorney Generals nationwide have been working diligently against the banks in order to keep their clients in their homes. You must keep in mind that there are several levels of indiscriminate behavior going on, keeping these efforts at bay. For now, however, I will give you a general overview of how some of the tracking systems interact and how the reporting works, so that those with the power to subpoena documents for their clients know where to find the correct documentation to support their individual cases, because as Abigail Fields points out, “It would certainly be provable/disprovable by subpoenaing documents.”

In order to do that, however, an attorney would need to know where to look. If you were to only subpoena generic loan information, you will only be provided with the System of Record (SOR) data, which previous posts have clearly proved do not show the full picture as there are several common ways of removing information from the system of record both individually and en masse. As the email trail clearly shows, there is always an audit trail in the back end if you know what to ask for.

From the Palm Beach Post

Florida Bar President Mayanne Downs predicts some Florida attorneys will pay the ultimate professional price for foreclosure-related wrongdoing – disbarment – as investigations mount statewide.

“It’s the death penalty of the legal profession,” said Downs, who spoke to The Palm Beach Post’s editorial board this week about legislative proposals affecting the courts and the state’s ongoing foreclosure tumult.

The bar, which is responsible for investigating complaints of attorney misconduct, has 222 foreclosure fraud cases open on 157 lawyers.

A federal jury awarded a Fort Benning Soldier more than $20 million on Monday in a case against Coldwell Banker Mortgage — an amount the plaintiff’s attorney called necessary to get the company’s attention.

Jurors in the case of David Brash v. PHH Mortgage Corp., doing business as Coldwell Banker, deliberated for about six hours before ruling in Brash’s favor. During the six-day trial, jurors heard that Coldwell Banker improperly reported Brash, 29, to credit bureaus which led to a “serious delinquency” on his credit report, that it refused to answer his questions or correct his account and damaged him emotionally, physically and financially, his attorneys and court documents say.

Source: Housing Wire

The Securities and Exchange Commission upheld a New York City Pension Funds request that big bank shareholders will get to vote on whether or not those vested financial institutions conduct foreclosure reviews.

Shareholders of Bank of America (: ), Citigroup (: ) and Wells Fargo (WFC: 31.27 -0.76%) will vote at annual meetings this spring, because of the ruling. Wells did not contend the proposal at the SEC. In January, The New York City Comptroller John Liu asked the boards of the banks and JPMorgan Chase (JPM: 45.20 -0.59%) to conduct the reviews to catch potential problems related to robo-signing and other documentation issues.

Read full story… HOUSING WIRE

Florida’s Sen. Joe Negron is obviously in the dark! According to the Palm Beach Post

Negron also objected to Palmer using the term “foreclosure mills” when referring to South Florida law firms specializing in foreclosures, some of which are now being sued or under investigation for alleged fraud.

“In most occupations, whether it’s making doughnuts or running a sporting goods store, having more volume is better than having less volume. It may, in fact, be a commentary on your capability and your competitive advantage rather than something that we should disparage,” Negron said. “Foreclosure mill could also be called very busy law firm because you provide excellent service to your clients.”

Perhaps a better comparison would have been a puppy mill. Wouldn’t you agree it’s about quality, not quantity?

[image credit: Flickr]

MARILYN L. ELLIOTT and
MICHAEL S. ELLIOTT,

vs.

JPMORGAN CHASE BANK, as Trustee )
on Behalf of the Registered Certificate Holders )
of GSAMP Trust 2004-SEA2, Mortgage )
Pass-Through Certificates, Series 2004-SEA2,

Excerpt:

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.

Continue reading below…

[ipaper docId=51356659 access_key=key-22pw686f4zvo6cdkg0bi height=600 width=600 /]

via The Home Equity Theft Reporter a fantastic site!

• The Complaint alleges that CitiMortgage accepted billions in government bailout money under the Troubled Asset Relief Program (“TARP”) earmarked to help struggling homeowners avoid foreclosure. CitiMortgage, like other TARP-funded financial institutions, is contractually obligated to modify mortgage loans it services for homeowners who qualify under HAMP, a federal program designed to abate the foreclosure crisis by providing mortgage loan modifications to eligible homeowners.

• According to the lawsuit, CitiMortgage systematically slows or thwarts homeowners’ requests to modify mortgages, depriving borrowers of federal bailout funds that could save them from foreclosure. The bank ends up reaping the financial benefits provided by TARP-funds and also collects higher fees and interest rates associated with stressed home loans.

[ipaper docId=51354545 access_key=key-110nt06t5dzfjcbfh57p 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.

Georgia’s newly elected Attorney General Sam Olens is clearly not part of any 50 state settlement. According to AJC, on Tuesday House Bill 237 is moving closer to passing.

This bill if passed, will criminalize falsifying foreclosure documents, not simply errors or typos. The bill would go into effect on July 1, and will give both the attorney general and district attorneys the power to subpoena. Florida you listening?

Georgians make sure this goes smoothly and do all you can.

Perhaps Mr. Olens should take over Mr. Millers position of leading the pack?

[image: Doug Thompson]

From HuffingtonPost:

For the 12 months ended Dec. 31, Stumpf was awarded a salary of $3.24 million, a performance-based stock bonus of $11 million, and a cash bonus of $3.3 million, according to documents filed with the Securities and Exchange Commission on Monday. That compares to a salary of $5.6 million, a stock award of $13.08 million, and zero cash bonus in 2009.

Stumpf’s total compensation of $18.7 million in 2009 made him among the nation’s highest-paid bank CEOs.

Stumpf’s perks totaled $28,531 and included matching contributions to his retirement plan, home security system expenses, a car and a driver.

From the Wall Street Journal:

The Federal Reserve‘s net income surged 53% to $81.74 billion last year from 2009 mainly due to higher earnings from securities the central bank bought to counter the financial crisis, according to final audited results released Tuesday.

Almost all of that income — $79.27 billion — will be sent back to the U.S. Treasury. The record transfer marks a 68% increase from the $47.43 billion the Fed sent back to Treasury in 2009. The figures were slightly higher than preliminary results published in January.

To fight the financial crisis, the Fed bought securities whose value had collapsed due to fear and uncertainty in markets and set up emergency lending programs for banks and firms, thus boosting its balance sheet. The central bank came under attack for taking too many risk with taxpayers money and putting itself in a position to suffer losses.

Send in the Clowns via WikiPedia

The “clowns” in the title do not refer to circus clowns. Instead, they symbolize fools, as Sondheim explained in a 1990 interview:

I get a lot of letters over the years asking what the title means and what the song’s about; I never thought it would be in any way esoteric. I wanted to use theatrical imagery in the song, because she’s an actress,^[1] but it’s not supposed to be a ‘circus’…. [I]t’s a theater reference meaning ‘if the show isn’t going well, let’s send in the clowns‘; in other words, ‘let’s do the jokes.’ I always want to know, when I’m writing a song, what the end is going to be, so ‘Send in the Clowns’ didn’t settle in until I got the notion, ‘Don’t bother, they’re here’ which means that ‘We are the fools.’

In a 2008 interview, Sondheim further clarified:

As I think of it now, the song could have been called ‘Send in the Fools.’ I knew I was writing a song in which Desirée is saying, ‘aren’t we foolish’ or ‘aren’t we fools’? Well, a synonym for fools is clowns, but ‘Send in the Fools’ doesn’t have the same ring to it.^[2]

By Andrew Frye – Mar 21, 2011 11:26 PM ET

American International Group Inc. (AIG) may face rival bids to its $15.7 billion offer to repurchase mortgage-backed securities it was forced to turn over to the Federal Reserve Bank of New York during a rescue by taxpayers.

Barclays Plc (BARC) is among investors considering making a counter offer, the Financial Times reported, citing unidentified people familiar with the matter. Seth Martin, a Barclays spokesman in New York, declined to comment.

PHH MORTGAGE CORPORATION, PLAINTIFF-RESPONDENT,
THE DAILY REPORTER PUBLISHING COMPANY, RESPONDENT,
v.
SCOTT P. MATTFELD AND SHELLEY P. MATTFELD, DEFENDANTS-APPELLANTS.

No. 2010AP612.

Court of Appeals of Wisconsin, District II.

Opinion Filed: March 16, 2011.

Before Neubauer, P.J., Anderson and Reilly, JJ.

¶ 1 NEUBAUER, P.J.

Scott P. Mattfeld and Shelley P. Mattfeld appeal from an order denying their motion for relief from a default judgment of foreclosure entered in favor of PHH Mortgage Corporation.^[1] They also appeal the circuit court’s order granting The Daily Reporter Publishing Company’s motion to quash a subpoena to testify. The Mattfelds contend that because of defects in the service of the summons and complaint the circuit court lacked the personal jurisdiction necessary to enter a default judgment. We agree. The record supports the Mattfelds’ contention that they are entitled to relief from judgment under WIS. STAT. § 806.07 (2009-10)^[2] because PHH Mortgage failed to publish the summons in a newspaper likely to give notice in the area where Scott or Shelley resided, as required by WIS. STAT. § 801.11(1)(c). We reverse the circuit court’s order denying the Mattfelds’ motion for relief and remand with direction to vacate the default judgment.

BACKGROUND

¶ 2 PHH Mortgage filed a summons and complaint for foreclosure of mortgage on August 6, 2008, naming Scott P. and Shelley P. Mattfield. Attached to the complaint is a copy of the mortgage indicating the correct spelling of the Mattfelds’ surname. The record also includes an invoice from The Daily Reporter for the publication of a real estate notice (“PHH Mtge vs. Scott P. Mattfield”) on October 7, 14 and 21 of 2008, and proof of publication. The proof of publication contains a notarized statement by the publisher that The Daily Reporter “is a public newspaper of general circulation, printed and published daily … in the City of Milwaukee, in said county.”

¶ 3 PHH Mortgage filed a motion for default judgment on December 1, 2008. In support of its motion, PHH Mortgage submitted the proof of publication and two affidavits of nonservice completed by process server Dwayne Turner. The proof of publication and affidavits of nonservice reflect that throughout the period of attempted service, the Mattfelds were incorrectly identified as the Mattfields. At the court’s request, PHH Mortgage’s attorney explained in correspondence dated January 2, 2009, that “[c]opies of the summons and complaint were never sent to the Mattfields at the Lannon Road address in Menomonee Falls on the date of publication … because our process server had been unable to find either Scott or Shelley Mattfield during several visits to that address in August of 2008.” The letter listed PHH Mortgage’s attempt to locate the “Mattfields” which included Internet searches, directory assistance, divorce records and voting records. PHH Mortgage’s attorney also stated: “CCAP posted new address information for both Shelley and Scott Mattfield on 11/26/08; we will mail a copy of this letter to each address today.” On January 6, 2009, the circuit court, Judge Kathryn Foster presiding, entered an order for judgment and judgment of foreclosure and sale in the amount of $373,068.12.^[3]

¶ 4 On July 29, 2009, Scott Mattfeld’s attorney wrote to Judge Foster to advise that “Scott P. Mattfeld (mistakenly named in the pleadings as Mattfield)” had not been aware of the foreclosure proceedings. He contended that there had been various serious jurisdictional defects in service, “(in addition to the misspelling of the defendants’ surnames),” namely: (1) PHH Mortgage had used The Daily Reporter, a Milwaukee county publisher of legal notices and not a publication of general circulation in Waukesha county and (2) PHH Mortgage had notice that the property was vacant and as early as November 12, 2008, had notice of the address changes from the post office but never sent a copy of the summons and complaint to either new address. Scott maintained that the court “in all probability lacked jurisdiction to enter the various judgments, orders and rulings” and enclosed a proposed temporary injunction for the court’s consideration pending the filing of a WIS. STAT. § 806.07 motion for relief from judgment. Judge Foster entered the temporary injunction on July 31, 2009.

¶ 5 On September 9, 2009, the Mattfelds filed a WIS. STAT. § 806.07 motion to vacate the judgment of foreclosure. The Mattfelds argued under § 806.07(1) that the judgment was void due to the court’s lack of jurisdiction resulting from the failure of service of process. The circuit court, Judge Donald J. Hassin now presiding, denied the Mattfelds’ motion to vacate and dismiss the complaint. The Mattfelds moved for reconsideration. The Mattfelds argued that PHH Mortgage had failed to exercise due diligence in service of process and that the publication and mail service attempt was insufficient. With respect to publication, the Mattfelds maintained that PHH Mortgage’s attempt to obtain substitute service via publication under WIS. STAT. § 801.11(1)(c) had failed because The Daily Reporter is a publication limited to Milwaukee and does not meet the standard for legal publication in Menomonee Falls under WIS. STAT. § 985.02(1), which requires that publication be made in “a newspaper likely to give notice in the area or to the person affected.” The Mattfelds anticipated presenting further evidence as to the October 2008 circulation numbers in Menomonee Falls for The Daily Reporter, Waukesha Freeman and Milwaukee Journal Sentinel. The Mattfelds also cited PHH Mortgage’s failure to mail either of them a copy of the summons and complaint as a further shortcoming under § 801.11(1)(c).

¶ 6 The Mattfelds attempted to subpoena the publisher of the The Daily Reporter in order to obtain circulation information. The Daily Reporter sought, and was granted by the circuit court, an order to quash the subpoena. Following an evidentiary hearing on January 22, 2010, the circuit court denied the Mattfelds’ motion for relief from judgment. The Mattfelds appeal.

DISCUSSION

¶ 7 WISCONSIN STAT. § 806.07(1)(d) allows relief from a judgment or order if a “judgment is void.” A judgment is void for purposes of § 806.07 when the court rendering it lacked subject matter or personal jurisdiction. Richards v. First Union Secs., 2006 WI 55, ¶15, 290 Wis. 2d 620, 714 N.W.2d 913. A court gains jurisdiction over the parties only by valid personal and substituted service. See WIS. STAT. § 801.04; see also Span v. Span, 52 Wis. 2d 786, 789, 191 N.W.2d 209 (1971). Wisconsin compels strict compliance with the rules of statutory service, even though the consequences may appear to be harsh. Useni v. Boudron, 2003 WI App 98, ¶13, 264 Wis. 2d 783, 662 N.W.2d 672.

¶ 8 When a motion to reopen involves a question of proper service, the burden of proof is on the party seeking, pursuant to WIS. STAT. § 806.07, to set aside or vacate a default judgment. See Richards, 290 Wis. 2d 620, ¶27. The evidence necessary to set aside a default judgment is evidence sufficient to allow a court to determine that the circuit court’s findings of fact were contrary to the great weight and clear preponderance of the credible evidence. Id.

¶ 9 In their motion for postjudgment relief and on appeal, the Mattfelds challenge the sufficiency of service under WIS. STAT. § 801.11(1)(c) which governs personal jurisdiction. It provides that if “with reasonable diligence” a person cannot be served in person or by leaving a copy of the summons and complaint with a family member or competent adult at his or her usual place of abode, service may be made by publication. Sec. 801.11(1). Specifically,

(c) If with reasonable diligence the defendant cannot be served [in person or by leaving a copy of the summons and complaint with a family member or competent adult at his or her usual place of abode] service may be made by publication of the summons as a class 3 notice, under [WIS. STAT.] ch. 985, and by mailing. If the defendant’s post-office address is known or can with reasonable diligence be ascertained, there shall be mailed to the defendant, at or immediately prior to the first publication, a copy of the summons and a copy of the complaint. The mailing may be omitted if the post-office address cannot be ascertained with reasonable diligence.

The Mattfelds contend both that PHH Mortgage did not exercise reasonable diligence in serving them personally and that PHH Mortgage failed to comply with WIS. STAT. ch. 985 when it published the summons. Based on our review of the record, we conclude that the Mattfelds have demonstrated that the circuit court’s finding as to compliance with ch. 985 is contrary to the great weight of the evidence.

¶ 10 WISCONSIN STAT. § 985.02 governs “[m]ethod of notification.” It provides in relevant part that “[e]xcept as otherwise provided by law, a legal notice shall be published in a newspaper likely to give notice in the area or to the person affected.” (Emphasis added.) Proof of publication is required by WIS. STAT. § 985.12 in the form of an affidavit of printing “annexed to a copy of the notice clipped from the newspaper, and specifying the date of each insertion.” See^[4] In contrast, PHH Mortgage’s proof of publication for notice of the sheriff’s foreclosure sale published in the Waukesha Freeman newspaper contains a statement from the billing coordinator for the Waukesha Freeman, “a public newspaper of general circulation, printed and published … in the City of Waukesha, in Waukesha County, Wisconsin.” It is undisputed that at that time of publication the Mattfelds’ last known residence was in Menomonee Falls in Waukesha county, and that Scott Mattfeld still resided in Menomonee Falls in October 2008. § 985.12(1). Here, the affidavit of printing indicates that The Daily Reporter “is a public newspaper of general circulation, printed and published daily … in the City of Milwaukee, in said county.” While PHH Mortgage asserted that “The Daily Reporter is the predominant newspaper to publish legal notices in the Milwaukee Metropolitan area,” it failed to provide any evidence to that effect. Indeed, a later affidavit submitted by the publisher notes that “The Daily Reporter is a newspaper that is distributed throughout the State of Wisconsin,” but also states that it is “a qualified legal newspaper in Milwaukee County, but it is not a qualified legal newspaper in Waukesha County, where the property that is a subject of the action is located.”

¶ 11 While PHH Mortgage asserts that the Mattfelds failed to provide argument or authority as to why The Daily Reporter would not have given notice to the Mattfelds, the undisputed record as it stood at the time of the default judgment failed to establish that publication in a newspaper “printed and published daily … in the City of Milwaukee, in said county” would have been likely to provide notice to a resident of Menomonee Falls in Waukesha county.^[5][6] Although The Daily Reporter publisher later averred that the newspaper is distributed throughout Wisconsin, the only mention of Waukesha county was that The Daily Reporter was not qualified in that county. This again failed to establish that publication in The Daily Reporter would have been likely to provide notice to a resident of Waukesha county. The circuit court’s finding to the contrary was against the great weight of the evidence of record at the time of the Mattfelds’ WIS. STAT. § 806.07 motion to reopen.

CONCLUSION

¶ 12 We conclude that the Mattfelds carried their burden of proving that PHH Mortgage’s notice by publication failed to effect service on them and thus, the court did not have jurisdiction when it entered the default judgment against them. We reverse the circuit court’s order denying the Mattfelds’ motion to reopen and we remand with direction to vacate the default judgment.

By the Court.—Orders reversed and cause remanded with direction.

Not recommended for publication in the official reports.

[1] The record reflects that Scott and Shelley Mattfeld were in the process of divorcing while this foreclosure action was proceeding. It was unclear during the circuit court proceedings whether Scott’s counsel was representing both Scott and Shelley; however, the appeal was filed naming both Scott Mattfeld and Shelley Mattfeld as appellants and no issue has been raised regarding the application of this appeal to Shelley. We therefore refer to the appellants as the Mattfelds.

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

[3] The property was subsequently sold to PHH Mortgage at a sheriff’s sale.

[4] A qualified newspaper is defined under WIS. STAT. § 985.03. It sets forth the following “qualifications of newspapers” for purposes of publication of legal notices:

(1)(a) No publisher of any newspaper in this state shall be awarded or be entitled to any compensation or fee for the publishing of any legal notice unless, for at least 2 of the 5 years immediately before the date of the notice publication, the newspaper has been published regularly and continuously in the city, village or town where published, and has had a bona fide paid circulation:

1. That has constituted 50% or more of its circulation; and,

2. That has had actual subscribers at each publication of not less than 1,000 copies in 1st and 2nd class cities, or 300 copies if in 3rd and 4th class cities, villages or towns.

….

(c) A newspaper, under this chapter, is a publication appearing at regular intervals and at least once a week, containing reports of happenings of recent occurrence of a varied character, such as political, social, moral and religious subjects, designed to inform the general reader. The definition includes a daily newspaper published in a county having a population of 500,000 or more, devoted principally to business news and publishing of records, which has been designated by the courts of record of the county for publication of legal notices for a period of 6 months or more.

Sec. 985.03(1). We recognize that there is no requirement that a newspaper be the official newspaper of a municipality under WIS. STAT. § 985.06 to meet the requirements of WIS. STAT. § 985.02.

[5] We take judicial notice of the fact that a current “all county” search of the foreclosure notices listed on The Daily Reporter Web site returns 200 notices, all of which are for foreclosures in Milwaukee county. See http://foreclosures.dailyreporter.com/index.cfm?action=fc.list, (visited Jan. 30, 2011).

[6] While the Mattfelds contend that service was defective in other respects, we need not reach these issues. PHH Mortgage’s failure to effect service by publication disposes of all issues on appeal. See Sweet v. Berge, 113 Wis. 2d 61, 67, 334 N.W.2d 559, 562 (Ct. App. 1983) (if resolution of one issue disposes of the appeal, we need not address the other arguments raised).

[ipaper docId=51274811 access_key=key-1e9gv8ymh2tlcuetwzh1 height=600 width=600 /]

KRISTEN BAIN, Plaintiff,
v.
ONEWEST BANK, F.S.B; DEUTSCHE BANK NATIONAL TRUST COMPANY; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC; REGIONAL TRUSTEE SERVICES CORPORATION; Defendants.

Case No. C09-0149-JCC.

United States District Court, W.D. Washington, Seattle.

March 15, 2011.

Excerpt:

F. Consumer Protection Act

Finally, Plaintiff alleges that Defendants violated the Consumer Protection Act (“CPA”). To state a claim under the CPA, Plaintiff must show (1) an unfair or deceptive act or practice, (2) in trade or commerce, (3) that impacts the public interest, (4) which causes injury to the plaintiff in his or her business or property, and (5) which injury is causally linked to the unfair or deceptive act. Griffith v. Centex Real Estate Corp., 969 P.2d 486, 492 (Wash. Ct. App. 1998).

MERS asserts that Plaintiff has not shown an unfair or deceptive practice on its part, has not shown how any act of MERS impacts the public interest, and presents nothing showing injuries caused by an unfair or deceptive practice by MERS. The Court disagrees. Like her other claims arising under the Deed of Trust Act, Plaintiff’s CPA claims depend on whether MERS may be the beneficiary (or nominee of the beneficiary) under Washington state law. MERS’s attempt to serve as the beneficiary may have been improper under state law and it may have led to widespread confusion regarding home ownership, payment delivery, and negotiable positions. If MERS violated state law, its conduct may very well be classified as “unfair” under the CPA. There is no doubt that MERS’s conduct impacts the public interest. See Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 719 P.2d 531, 537-38 (Wash. 1986) (listing factors for determining public interest); Peterson, supra, at 1362 (“Although MERS is a young company, 60 million mortgage loans are registered on its system.”); R. K. Arnold, Yes, There Is Life on MERS, 11 Prob. & Prop. 32, 33 (1997) (“Some have called MERS the most significant event for the mortgage industry since the formation of Fannie Mae and Freddie Mac. Others have compared it to the creation of uniform mortgage instruments, which have become standard throughout the residential mortgage industry. This suggests that the journey to MERS will have a tremendous effect on the mortgage industry.”). And the harm Plaintiff may have suffered because of MERS’s conduct may include expending resources to avert an unlawful foreclosure and preventing Plaintiff from identifying the real beneficiary and negotiating a new arrangement to avoid foreclosure.

The same reasoning applies to Regional, who also argued that Plaintiff cannot show an unfair or deceptive practice or show an impact on the public interest. Regional asserts that it acted appropriately because it was candid and forthcoming about its identity and its authority to conduct the foreclosure. That Regional was candid about its role is not dispositive. See Carlile v. Harbour Homes, Inc., 194 P.3d 280, 289 (Wash. Ct. App. 2008) (“An unfair or deceptive act or practice need not be intended to deceive, it need only have the capacity to deceive a substantial portion of the public.”). Moreover, just as MERS has its hands in countless home loans affecting the general public, so too does Regional play a key role in numerous foreclosure actions affecting the general public. MERS and Regional ultimately may bear no liability under the CPA, but this Court will await the state-court analysis before ruling on the parties’ motions for summary judgment.^[5]

III. CONCLUSION

Plaintiff admits that she has been delinquent in her mortgage payments. A ruling favorable to Plaintiff in this case and others like it cannot and should not create a windfall for all homeowners to avoid upholding their end of the mortgage bargain—paying for their homes. But a homeowner’s failure to make payments cannot grant lenders, trustees, and so-called beneficiaries like MERS license to ignore state law and foreclose using any means necessary. Whether these and similar defendants complied with Washington state law remains unclear.

[ipaper docId=51273820 access_key=key-1pq85htk7uwo9kifkkge height=600 width=600 /]

IN THE COURT OF APPEALS OF OHIO
FOURTH APPELLATE DISTRICT
HIGHLAND COUNTY

WELLS FARGO,
vs.
DANA PHILLABAUM

Excerpt:

{¶ 10} The acceleration clause of the note that the appellee executed states, inter alia, as follows:

“If [b]orrower defaults by failing to pay in full any monthly payment, then
[l]ender may, except as limited by regulations of the Secretary in the case of
payment defaults, require immediate payment in full of the principal balance
remaining due and all accrued interest.” (Emphasis added.)2

{¶ 11} Both parties agree that the pertinent federal regulation at issue is set out in Section
203.604(b), Title 24, C.F.R., and requires a “face-to-face” interview between a mortgagor and
mortgagee before three full monthly installments on the mortgage are unpaid. Here, there is no
dispute that the Bank did not conduct such a meeting. Instead, the Bank argues that it falls
under an exception to that requirement because the “mortgaged property is not within 200 miles
of the mortgagee, its servicer, or a branch office of either[.]” (Emphasis added.) Id at (c).
However, appellee’s affidavit in support of his cross-motion for summary judgment states that
“Wells Fargo has at least one branch office within 200 miles of my home” and goes on to explain
that he visited that office on at least one prior occasion. This is sufficient for appellee to carry
his initial Civ.R. 56(C) burden and, thus, the burden shifted to the Bank to provide rebuttal
materials.

continue below…

[ipaper docId=51272954 access_key=key-1p5edmhe9oxf30habdqk height=600 width=600 /]

In re: VIJAY K. TANEJA et al., Chapter 11, Debtors.

Case No. 08-13293-SSM, (Jointly Administered).

United States Bankruptcy Court, E.D. Virginia, Alexandria Division.

March 15, 2011.

Andrew L. Cole, Esquire, Franklin & Prokopik, Baltimore, MD, Counsel for U.S. Bank National Association

H. Jason Gold, Esquire, Wiley Rein, LLP, McLean, VA, Chapter 11 trustee.

James Bruce Davis, Esquire, Bean, Kinney & Korman, P.C., Arlington, VA, Counsel for Virginia Commerce Bank.

John E. Rinaldi, Esquire, Walsh, Colucci, Lubeley, Emrich & Walsh, P.C., Prince William, VA, Counsel for Ann DiMiero and Marshall Vosteen

MEMORANDUM OPINION

STEPHEN S. MITCHELL, Bankruptcy Judge

Before the court is the motion of Specialized Loan Servicing, LLC, as attorney in fact for U.S. Bank National Association, as trustee for Terwin Mortgage Trusts (“U.S. Bank”) to vacate an order entered more than a year ago approving the sale of real estate located at 4621 Holly Avenue, Fairfax, Virginia, free and clear of liens. U.S. Bank, whose deed of trust had been released prior to the bankruptcy filing by what appears to have been a false certificate of satisfaction, was not served with, or given notice of, the sale motion, and the proceeds of the sale (less escrowed sums to satisfy disputed mechanic’s liens) were paid to Virginia Commerce Bank on account of three deeds of trust securing loans it had made. The motion to vacate the sale order is opposed by the chapter 11 trustee; by Ann DiMiero and Marshall Vosteen, the purchasers of the property; and by Virginia Commerce Bank.

Background

On June 9, 2008, Vijay K. Taneja (“the debtor”) and four companies controlled by him, including a mortgage loan originator known as Financial Mortgage, Inc. (“FMI”), filed voluntary petitions in this court for reorganization under chapter 11 of the Bankruptcy Code.^[1] H. Jason Gold was appointed as chapter 11 trustee in all five cases, which are being jointly administered. On June 18, 2008, U.S. Bank filed a proof of claim (Claim No. 1) asserting a secured claim in the amount of $458,449.27. Attached to the proof of claim were copies of a deed of trust note and deed of trust executed by Taneja, both of which identified the collateral as real property located at 4621 Holly Avenue, Fairfax, Virginia. That same day, a “request for special notices and services [sic]” was filed. Although the docket entry states that the request was filed by “U.S Bank National Assciation [sic], as Trustee for Terwin Mortgage Trust 2005-12ALT, Asset-Backed Certificates, Series 2005-12ALT, without recourse, Specialize [sic] Loan Servicing, LLC,” the actual notice does not mention either U.S. Bank or Terwin and identifies only Specialized Loan Servicing, LLC, as the “creditor” and Moss Codilis, L.L.P. as its agent for service of notice. Aside from filing the proof of claim and request for notices, Specialized, U.S. Bank, and Terwin took no other action in the case with respect to the property, such as filing a motion for relief from the automatic stay.

Taneja acquired title to 4621 Holly Avenue by deed dated May 16, 2005. Contemporaneously with the purchase, deeds of trust were recorded securing a $480,000 loan and a $120,000 loan, both made by FMI. The deed of trust at issue here is dated eight days later (May 24, 2005). It secures $480,000 and contains language that the loan constitutes a refinance of an existing debt with the same lender. Like the original deed of trust, it identifies FMI as the lender and Mortgage Electronic Registration Systems, Inc. (“MERS”)—as nominee for the lender—as the beneficiary. The May 24, 2005, loan was immediately sold into the secondary market and was ultimately assigned to U.S. Bank as trustee for a securitized mortgage pool. No assignments of the deed of trust were recorded in the land records. However, U.S. Bank asserts that the identity of the current holder, or at least servicer, of the loan could be obtained from an Internet web site maintained by MERS using the “mortgage identification number” that appears on the first page of the deed of trust. In any event, in June and July 2005, Taneja, as president of FMI, signed two certificates of satisfaction purporting to release the deed of trust. Oddly, no release of the original (May 16, 2005) $480,000 deed of trust was recorded prior to the bankruptcy filing. Contemporaneously with the releases, Taneja obtained loans from Virginia Commerce Bank (“VCB”) secured by three deeds of trust against the property totaling $2,750,000.

On September 2, 2009, the trustee filed a motion to approve the sale of the property to DiMiero and Vosteen free and clear of liens for $800,000. The motion represented that the chapter 11 trustee had obtained a title report reflecting three VCB deeds of trust, two mechanic’s liens, and two deeds of trust in favor of FMI for which releases had been recorded with incorrect recording references for the original instruments. Notice of the motion was mailed or electronically transmitted to a number of parties, but not to Specialized.^[2] On September 25, 2009, an order was entered approving the sale of the property to DiMiero and Vosteen free and clear of liens, with the order making a finding under § 363(m), Bankruptcy Code, that they were good faith purchasers. The order was amended on October 20, 2009, to address a criminal restitution lien that had been filed by the United States in connection with Taneja’s federal criminal conviction for money laundering, but the substantive provisions otherwise remained the same. The closing took place on November 3, 2009. In connection with the sale, someone—no one seems to know who—recorded a dummied-up certificate of satisfaction of the original (May 16, 2005) $480,000 deed of trust. The report of sale filed by the trustee reflects that $704,401 of the proceeds were paid to Virginia Commerce Bank and $40,465.86 into an escrow for the mechanic’s liens. After payment of commission and closing costs, there were no proceeds for the bankruptcy estate. The present motion to vacate was filed on November 24, 2010.

Discussion

I.

Rule 9024, Federal Rules of Bankruptcy Procedure, incorporates—with certain limitations not relevant here—Rule 60, Federal Rules of Civil Procedure. Rule 60 in turn allows a court to grant relief from a final judgment or order on various grounds, including that “the judgment is void.” Fed.R.Civ.P. 60(b)(4). As the Supreme Court has recently explained in the context of a bankruptcy court order,

[A] void judgment is one so affected by a fundamental infirmity that the infirmity may be raised even after the judgment becomes final. The list of such infirmities is exceedingly short; otherwise, Rule 60(b)(4)’s exception to finality would swallow the rule. “A judgment is not void,” for example, “simply because it is or may have been erroneous.” . . . Instead, Rule 60(b)(4) applies only in the rare instance where a judgment is premised either on a certain type of jurisdictional error or on a violation of due process that deprives a party of notice or the opportunity to be heard.

United Student Aid Funds, Inc. v. Espinosa, 559 U.S. ___, 130 S.Ct. 1367, 1377, 176 L.Ed.2d 158 (2010) (internal citations omitted).

II.

That the trustee’s failure to provide Specialized with notice of the proposed sale constitutes a serious procedural error is clear. Specialized requested copies of all notices, and the court’s order limiting notices in the case required that notice be sent to any party that had filed requests for notices. There is also a larger issue. Rule 6004(c) requires that a motion for authority to sell property free and clear of liens or other interests must “be served on the parties who have liens or other interests in the property to be sold.” By the time the motion to sell had been filed, the trustee had actual notice that Taneja had engaged in a number of fraudulent mortgage loan practices, including the fraudulent release of mortgage loans that had been sold into the secondary market. See HSBC Bank USA, N.A. v. Gold (In re Taneja), 427 B.R. 109 (Bankr. E.D. Va. 2010).^[3] Given the variety and pervasiveness of Taneja’s fraudulent activity, it is astonishing, to say the least, that the trustee would rely solely on a title report in terms of giving notice to possible lien holders, and would not, for example, review the proofs of claim and other pleadings filed in the case to determine if there were parties other than those reflected in the land records with arguable claims. To be sure, the trustee’s strong-arm powers might well, as in HSBC, ultimately allow him to prevail over parties with unrecorded or falsely-released deeds of trust, but due process is not measured by expectations as to the final outcome but by adequate notice and an opportunity to be heard.

III.

Be that as it may, relief under Rule 60(b)(4) vacating the sale order would be appropriate only if there were a reasonable likelihood that U.S. Bank—had it been properly served with the motion—could have successfully objected to the sale of the property free and clear of its lien. The answer seems clear that it could not. Section 363(f)(4) allows a trustee to sell property free and clear of an interest if “the interest is in bona fide dispute.” Given the recorded certificate of satisfaction, U.S. Bank’s lien interest was plainly in bona fide dispute. For that reason, a sale free and clear of its deed of trust could have been approved, with the lien of the deed of trust attaching to the proceeds of sale, thereby leaving for another day the merits of the claimed lien.

This, in turn, squarely raises the question of whether, under this court’s decision in HSBC v. Gold, the trustee could have avoided U.S. Bank’s falsely-released deed of trust under his strong-arm powers as a bona-fide purchaser for value. In HSBC, this court concluded that under Virginia law, a bona fide purchaser would prevail over the holder of a falsely-released deed of trust. U.S. Bank, however, argues that the availability of the MERS web site would have provided constructive notice of U.S. Bank’s interest in the supposedly-released loan, such that a bona fide purchaser could not have relied on the certificate of satisfaction. The court does not concur. No Virginia statute, and no reported decision in Virginia, has recognized a privately-maintained database—which is all the MERS web site is—as an extension of the land records system or as providing constructive notice of mortgage assignments. Nor is there any evidence that title examiners in Virginia, as a matter of custom or practice, review the MERS web site to verify the validity of recorded releases.

The only real difference, but nevertheless a significant one, between the noteholder in HSBC and U.S. Bank in this case is that the deed of trust securing the loan that was purportedly refinanced by the loan that U.S. Bank purchased had not yet been released of record at the time the bankruptcy case was filed. Under the Virginia doctrine of equitable subrogation, as recognized and applied by this court in Mayer v. United States (In re Reasonover), 236 B.R. 219, 231-32 (Bankr. E.D. Va. 1999), vacated and remanded on other grounds, 238 F.3d 414 (4th Cir. 2000) (unpublished table decision), op. on remand, 2001 WL 1168181, 2001 Bankr. LEXIS 2109 (Bankr. E.D. Va., April 16, 2001), U.S. Bank could have claimed the benefit of the May 16, 2005, deed of trust to the extent the loan it purchased had paid off the loan secured by the earlier, and still unreleased, deed of trust. On the present record, it is by no means certain that U.S. Bank could show that the loan it purchased actually paid off the earlier loan (or, for that matter, that the earlier loan had actually been made). In a number of other adversary proceedings filed by the trustee, it is alleged that Taneja, though FMI, operated what was essentially a Ponzi scheme, with the proceeds of new loans not necessarily going to pay off the prior loans on a particular parcel. But even if U.S. Bank might have an uphill battle establishing its equitable subrogation claim, elementary due process requires that it be given the opportunity to do so.

IV.

A determination that U.S. Bank’s due process rights were infringed when it was not given notice of the proposed sale does not, however, require that the sale itself be set aside. As noted, even if U.S. Bank had been given notice and had objected, the court could—and likely would—have approved a sale free and clear of U.S. Bank’s disputed lien. What would have been different is that the sale order would have expressly provided for all the liens, including U.S. Bank’s disputed lien, to attach to the proceeds of sale without alteration of priority, and further proceedings would have been set to adjudicate the validity and relative priority of those liens. That being the case, no basis has been shown for setting aside the sale to DiMiero and Vosteen or for calling into question their title to the property. This is particularly so given the finding of good faith made in the sale order. Under § 363(m), Bankruptcy Code, “[t]he reversal or modification on appeal of an authorization . . . of a sale . . . of property does not affect the validity of a sale . . . under such authorization to an entity that purchased . . . such property in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and such sale . . . were stayed pending appeal.” Although § 363(m) speaks specifically of appeal and does not specifically address a motion to vacate a sale based on a failure to give adequate notice, the policy favoring the title of a purchaser at a bankruptcy sale is very strong, and only the most exceptional circumstances would justify setting such a sale aside. No such circumstances are present in this case.

Instead, the court determines that the appropriate remedy is to vacate only that portion of the sale order directing payment of the sales proceeds to VCB, and to grant relief from the sale order by providing that any non-avoidable lien that U.S. Bank may have shall attach to the proceeds of sale, whether or not subsequently disbursed by the trustee to VCB or other lien claimants. Such relief will be conditioned upon U.S. Bank promptly commencing an adversary proceeding to determine the validity, priority, and extent of its lien. VCB must obviously be made a party to the action, since a ruling establishing the validity of U.S. Bank’s lien would require the trustee to demand repayment from VCB of any sales proceeds previously paid to it.

A separate order will be entered consistent with this opinion.

[1] The four companies were Elite Entertainment, Inc., Case No. 08-13286-SSM; Financial Mortgage, Inc., Case No. 08-13287-SSM; NRM Investments, Inc., Case No. 08-13290-SSM; and Taneja Center, Inc., Case No. 08-13292-SSM.

[2] Notice of the motion was, however, sent to counsel representing U.S. Bank with respect to a different loan.

[3] The complaint in HSBC v. Gold—which outlined precisely the sort of fraud of which U.S. Bank appears to have been a victim—was filed on February 24, 2009, approximately six months prior to the trustee’s motion to sell the Holly Avenue property.

According to South Florida Business Journal:

The lenders are GMAC Mortgage LLC, U.S. Bank, MetLife Bank, Space Coast Credit Union, Chase Home Finance LLC, Ocwen Loan Servicing, Nationstar Mortgage LLC and PNC Bank.

This doesn’t add up because there are others missing. As soon as the rest of the parties such as Wells Fargo, Bank of America, Aurora, Fannie and Freddie come up (if they do) in a lawsuit, we’ll get to see a bit more of what is really going on.