What if we all could write our own rules with loopholes? This is why America is broken.

Corruption at its best.

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.

Decided on October 7, 2013

CV-008157-13

Solomon and Solomon, P.C., Attorneys for Plaintiff, Box 15019, Columbia Circle, Albany, New York, 12212-5019, 518-456-8100; Akbar A. Asharia, Esq., Attorney for Defendant, 66 West 82nd Street, No. 1A, New York, New York 10024.

Michael A. Ciaffa, J.

The following papers have been considered by the Court

on this motion: submitted October 2, 2013

________________________________________________________________________

Papers Numbered

________________________________________________________________________

Notice of Motion, Affirmation & Exhibits Annexed………………………1 – 2

Affirmation in Opposition…………………………………………………………..3

Reply Affirmation…………………………………………………………………….. 4

Plaintiff moves for summary judgment upon a claimed credit card debt. Defendant opposes the motion.

Under well settled standards governing motions for summary judgment in consumer debt matters, the plaintiff must submit “evidentiary proof in admissible form” in order to demonstrate its entitlement to judgment as a matter of law. See CACH, LLC v Fatima, 2011 NY Slip Op 51510 (Dist Ct Nassau Co.); see also American Express v Badalamenti, 2010 NY Slip Op 52238 (Dist Ct Nassau Co.); Citibank v Martin, 11 Misc 3d 219 (Civ Ct NY Co. 2005). Once again, plaintiff’s moving papers fail to establish its prima facie entitlement to judgment as a matter of law against the defendant. See, e.g. Capital One Bank v Cavallo, index no. 20634/12, decision dated August 29, 2013 (Dist Ct [*2]Nassau Co.); Capital One Bank v Alonzo, index no. 14136/11, decision dated May 28, 2013 (Dist Ct Nassau Co.); Capital One Bank v Rodgers, index no. 5244/12, decision dated May 3, 2013 (Dist Ct Nassau Co.). In the absence of adequate proof, in proper evidentiary form, establishing plaintiff’s entitlement to judgment as a matter of law, the motion must be denied without regard to the sufficiency of defendant’s opposing papers. See Winegrad v NYU Med. Center, 64 NY2d 851 (1985).

Notably, the complaint in this case contains only a single cause of action, seeking judgment upon an alleged “account stated.” In order to make out such a claim, the movant must “demonstrate that plaintiff mailed defendant a statement of account and that defendant retained such a statement for an unreasonable period of time without objecting thereto.” Discover Bank v. Williamson, 2007 NY Slip Op 50231 (App Term, 2d Dept). The moving affidavit of Wandi Chamberlain fails to make such a demonstration.

The affidavit, on its face, has the look and feel of a “robo-signed affidavit” that was prepared in blank, in advance, without knowing the identity of the person who would be asked to sign it. This fact, by itself, gives the Court pause. See American Express v Badalamenti, supra. More importantly, according to Ms. Chamberlain’s affidavit, her employment as a “Litigation Support Representative for Capital One Services, LLC” commenced just two months before the date of her affidavit (May 17, 2013). Given her limited tenure with the company, she is hardly in a position to attest to the actual mailing of the statements in question, which bear dates between November 2008 and November 2011. Nor has she demonstrated her personal knowledge of plaintiff’s standard office practices and procedures for mailing account statements to credit card customers during the time period covered by the statements.

In the context of no-fault matters, the Appellate Term has often held that similar affidavits from recently employed claims representatives are insufficient, per se, to prove mailing of required forms on dates predating the person’s employment. See, e.g. South Nassau Orthopedic Surgery & Sports Medicine, PC v Auto One Ins. Co., 2011 NY Slip Op 51300 (App Term 2d Dept); Friendly Physician, PC v GEICO, 2010 NY Slip Op 51770 (App Term, 2d Dept). Similarly, here, since the affidavit of Ms. Chamberlain admits that she began working for the company several years after the account statements were allegedly mailed to defendant, and since plaintiff did not otherwise establish the actual mailing of the statements or its standard office practices and procedures for the mailing of the statements during the pertinent time period, defendant’s proof failed to establish a necessary factual predicate for an account stated claim.

In the absence of competent proof of mailing of the account statements to defendant, plaintiff’s moving papers are insufficient, as a matter of law, to “shift the burden to defendant” respecting the merits of the account stated claim. See Discover Bank v Williamson, supra. Consequently, plaintiff’s motion for summary judgment upon the “account stated” cause of action must be DENIED.

Finally, to the extent that plaintiff’s moving papers can be read as seeking summary [*3]judgment on grounds of breach of contract, the Court notes that the complaint does not plead such a breach of contract cause of action. While the Court retains the discretion to grant summary judgment upon an unpleaded cause of action if “the proof supports such a claim and if the opposing party has not been mislead to its prejudice,” see Kramer v Kanalis, 49 AD3d 263, 264 (1st Dept 2008), plaintiff’s moving papers fail to submit sufficient “evidentiary proof in admissible form” establishing plaintiff’s entitlement to judgment as a matter of law upon grounds of breach of a credit card agreement.

Among other defects, plaintiff’s motion makes no effort to tender proof of the terms of all applicable credit card agreements during the period when charges were incurred. This is a fundamental and necessary element of a claim for breach of a credit card agreement. See Citibank v. Martin, supra; see also Capital One Bank v Cavallo, supra; Capital One Bank v Peterson, index no. 3722/13, decision dated August 22, 2013 (Dist Ct Nassau Co.); Capital One Bank v Savarese, index no. 2413/11, decision dated June 21, 2012 (Dist Ct Nassau Co.); Citibank v Zaharis, index no. 20670/10, decision dated October 18, 2011 (Sup Ct Queens Co.). Nor do plaintiff’s papers address the often complex issue of its entitlement to interest upon unpaid balances at rates which appear to exceed New York’s usury limits. Compare Chase Bank v Fisher, 28 Misc 3d 440 (Dist Ct Nassau Co. 2010), with Citibank v Hansen, 28 Misc 3d 195 (Dist Ct Nassau Co. 2010).

For all these reasons, plaintiff’s motion is DENIED, and the merits of plaintiff’s claim are reserved for trial. To move the matter forward, plaintiff is directed to serve full and complete responses to defendant’s discovery requests within 30 days. Upon completion of discovery, the matter will be scheduled for trial through the filing of a notice of trial by counsel for either party.

So Ordered:

District Court Judge

Dated:October 7, 2013

Still not enough! But what loans are involved in this and will homeowners be notified?

Only reason these ponzi’s are still in business is because the regulators are on their payroll. Other mobsters would have been put out of business a long time ago!

Bloomberg-

JPMorgan Chase & Co.’s record $13 billion deal to end U.S. probes of its mortgage-bond sales would free the nation’s largest bank from mounting civil disputes with the government while leaving a criminal inquiry unresolved.

The tentative pact with the Department of Justice increased from an $11 billion proposal last month and would mark the largest amount paid by a financial firm in a settlement with the U.S. The deal wouldn’t release the bank from potential criminal liability, at the insistence of U.S. Attorney General Eric Holder, according to terms described by a person familiar with the talks, who asked not to be named because they were private.

[BLOOMBERG]

UPDATE:

For JPMorgan, ending criminal probe proves impossible for now

JPMorgan Chase & Co CEO Jamie Dimon has pleaded with and complained to the U.S. Justice Department but cannot convince the government to end its criminal probe of his bank because prosecutors are not yet certain of their findings, people familiar with the matter said.

Dimon has negotiated a tentative $13 billion deal to settle many of the U.S. investigations into mortgage bonds that JPMorgan – and the banks it bought during the financial crisis – sold to investors.

But the criminal investigation proved to be a sticking point during negotiations, the sources said, and Dimon’s inability to win this point underscores the breadth of the problems his bank faces even after it resolves these mortgage suits.

[REUTERS]

Who’s really paying this off? What loans are involved in this bribe?

Reuters-

U.S. housing regulators are looking to fine Bank of America more than $6 billion for its role in misleading mortgage agencies during the housing boom, compared with the $4 billion to be paid by JPMorgan Chase & Co, the Financial Times reported on its website, citing people familiar with the matter.

The FT said the Federal Housing Finance Agency (FHFA), pursuing claims on behalf of finance agencies Fannie Mae and Freddie Mac that back about half the existing U.S. home loans, are seeking the penalty.

[REUTERS]

By Michael T. Pines (michaelt.attyconsultant@gmail.com)

I am getting a lot of questions about Glaski and concern it may be depublished. It may not be as big a concern as you think.  There is lots of other law out there.

Prior to the now infamous California case of Glaski v. Bank of America among foreclosure activists, a number of trial courts had held the banks liable on the same theory.  Articles had been published on the topic.  I worked with a class action firm in Texas and they already got a class action certified on this basis. It is definitely a trend, and only a matter of time before another published opinion is issued.

For those who may not be aware, Glaski is based on the “New York Trust Theory”.

Parties to securitization could operate only as stipulated in the pooling and servicing agreement that created that particular deal. Over 100 years of precedents in New York have produced well settled case law that deems actions outside what the trustee is specifically authorized to do as “void acts” having no legal force. The rigidity of New York trust law has serious implications for mortgage securitizations. The PSAs required that the notes (the borrower IOUs) be transferred to the trust in a very specific fashion (endorsed with wet ink signatures through a particular set of parties) before a cut-off date, which typically was no later than 90 days after the trust closing. There also had to be a recordation of assignments through a specific procedure.  There is no legal way to remedy the problem after the fact. Here is the typical chain of transfers that was supposed to occur:

In their rush to securitize as many loans as possible (and greed, some estimate in the trillions of dollars), they didn’t do either the transfer of the Notes or assignments of the mortgage.  The size of the RMBS market, according to the Bond Association, was in fact in the trillions of dollars and continued started to grow after 2005 (as discussed recently on stopforeclosurefraud.com, “Back In The Pool: Inside The RMBS Comeback”).  Here are the numbers according to the Bond Association :

2005: USD 0.967 trillion
2004: USD 1.019 trillion
2003: USD 2.131 trillion
2002: USD 1.444 trillion
2001: USD 1.093 trillion
—————————————————————————————————————————

A FEW OF THE PRIOR CASES ARE AS FOLLOWS.

The earliest court of appeal case I am aware of to discuss the New York trust theory, was in 2011.  U.S. Bank v. Congress (Alabama Court of Appeals).  Although it focused on the allonge, it was very significant and scary for the banks.

The solution in the Congress case for the banks, appears for the banks to have been a practice that has since become troublingly become common: a fabricated allonge.  An allonge is an attachment to a note that is so firmly affixed that it can’t travel separately. The fact that a note was submitted to the court in the Congress case and an allonge that fixed all the problems appeared magically, on the eve of trial, looked highly suspect.

The case was ruled in favor of the US Bank, in a narrow and strained opinion (which was touted as significant by reliable securitization industry booster Paul Jackson). It argued that the case was an ejectment action (the final step to get the borrower out after the foreclosure was final).  It was also discussed by securitization expert, Georgetown law professor Adam Levitin who tried to minimize it (maybe prompted by the banks or a Too Big To Fail Mentality?)

http://www.nakedcapitalism.com/2011/03/adam-levitin-alabama-mortgage-ruling-doesn%E2%80%99t-have-precedential-value-anywhere.html

Here is the case:

http://deadlyclear.files.wordpress.com/2012/11/96437660-alabama-appeals-court-ruling-u-s-bank-v-congress-june-8-2011.pdf.

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In Texas bankruptcy court in 2013, there was this decision:

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
BROWNSVILLE DIVISION
IN RE:  GILBERTO SALDIVAR, SANDRA
CANALES SALDIVAR,
CASE NO: 11-10689

This case can be found on Pacer or I will send it on request.  This seems to have caught on with bankruptcy attorneys in Texas, and is perhaps what led to the first class action, I am aware of being filed there.

———————————————————————————————————————————-

In New York in 2013, there was a decision in the trial court.  Since the theory is based on N.Y. law, the court provided detail about the law in that state.

Wells Fargo v. Erobobo, 2013, New York Slip Op. 50675 OU.

In Texas bankruptcy court an order was issued 2013:

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
BROWNSVILLE DIVISION
IN RE:  GILBERTO SALDIVAR, SANDRA
CANALES SALDIVAR,
CASE NO: 11-10689

This case can be found on Pacer or I will send it on request.  This seems to have caught on with bankruptcy attorneys in Texas, and is perhaps what led to the first class action I am aware of on this theory being filed there.
——————————————————————————————————————————— 

Also a good article had been written in the NY Business Law Journal | Summer 2012 | Vol. 16 | No. 1.

Advanced Standin g Issues in Securitized Mortgage Foreclosure
By Charles H. Wallshein
———————————————————————————————————————————-

YET ANOTHER CRISIS WAITING TO HAPPEN – COMMERCIAL LOANS HAVE THESE PROBLEMS TOO!

In 2012, the case of Bank of Am. Nat’l Ass’n v. Bassman FBT, 2012 Ill. App. LEXIS 487 (Ill. App. Ct. 2d Dist. 2012 was decided issued a ruling in a commercial mortgage foreclosure case.  In my mind, this case was very significant because it applied to an area that hasn’t even been touched yet – securitization of commercial property loans which is another disaster waiting to happen.  Many don’t recognize the many of the same problems with the securitization in the “RMBS” market exist in commercial securitization in the “CMBS” Market.  In fact, few seem to know, they used MERS for commercial loans too. (This is an area I focus on in the Savings and Loan crisis).

Bank of Am. Nat’l Ass’n v. Bassman is mainly a choice of law opinion, but there are two interesting things about the case. First, the Illinois court very clearly understood the securitization fail standing argument made by the defendants and was taking it seriously. Second, the Illinois court applied New York law to the interpretation of the PSA. 

But it gets worse.

THE REMICS HAVE ALSO FAILED WITH ENORMOUS TAX IMPLICATIONS.

As if this crisis wasn’t bad enough, and lastly, I want to mention another enormous problem because the REMICs fail also.

A REMIC (Real Estate Mortgage Investment Conduit) or special purpose vehicle (SPV) is an entity that is created for the specific purpose of being a tax free pass-through for interest income generated by pooled mortgages. This allowed investors to purchase shares or certificates in a mortgage pool that was only taxed once at the investor level. The REMIC rules allowed the mortgage pools to collect interest income from the pool and disburse that income the certificate holders tax free at the pool level.   REMIC rules are very specific, and to qualify as a REMIC under federal and state tax codes, the SPV had to meet very stringent requirements.  The REMICs also require a timely transfer of the Note and Mortgage within certain time limits of the closure of the securitized trust that didn’t occur. They are incorporated into the PSA.

If the IRS decided to go after the institutional investors for their tax liability, the numbers would be enormous.  However, this would of course hurt “the 1%”, but would improve the deficit, the the economy, and us. Given the “Too Big To Fail” approach of the government, and the fact there is little distinction between the government and the financial institutions, don’t hold your breath.

This article is for informational purposes only. It is not legal advice. You should seek counsel from a licensed attorney if you have legal questions.

NO negotiating with terrorists! When are they going to stop letting these cartels call every single shot?

8 News Now-

Major lending banks are still failing to play by new foreclosure rules in Nevada, according to the Attorney General’s Office.

Nevada’s Attorney General says she is giving those banks new deadlines to shape up or pay fines.

It is a story repeated too much through the 8 News NOW’s Desert Underwater series: Nevada homeowners reach out to their banks to refinance, only to get their runaround and have their paperwork lost.

Attorney General Catherine Cortez Masto has had enough and says she is planning to fine banks unless that stops.

[8 NEWS NOW]

Orlando Sentinel-

‘Very well forged’

Orlando attorney Nicole Benjamin said she was horrified when she learned from news reporters that her name was used in the fraudulent documents that helped spring two murderers from state prison in North Florida.

“I completely had no idea,” Benjamin said after she had a chance to examine the phony orders that freed them. “I don’t have anything to do with this.”

Benjamin, who has practiced law for 12 years, said she has never met Jenkins or Walker and doesn’t represent murder defendants.

[ORLANDO SENTINEL]

Andrew M. Cuomo
Governor

Benjamin M. Lawsky
Superintendent

October 18, 2013

Hon. A. Gail Prudenti
Chief Administrative Judge of the Courts
25 Beaver Street, 11th Floor
New York, NY 10004

Re: Proposed rules for the use of statewide forms in consumer credit actions seeking award of a default judgment.

Dear Judge Prudenti:

The New York State Department of Financial Services (the “Department”) appreciates the opportunity to comment on the proposed court rules requiring the use of standardized affidavits in consumer credit actions seeking default judgments. The Department is deeply engaged in fighting abusive and deceptive debt collection activity in New York. On July 25, 2013, the Department proposed a regulation that would address the most egregious pre-litigation collection abuses. The Department believes that reform of debt collectors’ litigation abuses are also critical – and while the Court’s proposed rules are a positive first step – we believe bolder reform is necessary. These reforms, as described further below, could include the following:

• Stronger affidavits to stop “robo-signing” and ensure debt collectors actually review a consumer’s file
• Require debt collectors to include important information about these debts in the affidavit
• Require debt collectors to include documentation evidencing the debt with the complaint
• Requiring debt collectors to send consumers a pre-complaint notice before commencing a collection lawsuit
• Demanding demonstrable proof of service when a debt collector moves for a default judgment
• Provide consumers an opportunity to vacate a default judgment if a debt collector violates the Court’s rules

In 2011, the former New York State Banking and Insurance Departments were merged to create a more modern and efficient regulator, and to fill regulatory gaps that would protect consumers of financial products and services. The Financial Services Law created the new Department and empowered it with regulatory authority over financial products and services previously unsupervised by the predecessor departments. The Department’s first major initiative pursuant to its “gap” authority was the August announcement of a proposed debt collection regulation.

The Department’s proposed rules regulate pre-litigation collection activities. The principal ideas addressed are:

• Raise the requirements for information that must be provided to a consumer before collection activities can begin. Collectors of a charged off debt will need to provide a breakdown of each charge and fee added to the debt and each payment made after charge off.
• Provide greater protections to consumers when they dispute the validity of the alleged debt. Anytime a consumer disputes the validity of the debt, even on the phone, debt collectors will need to provide documentation proving that the debt is valid, such as a copy of the signed contract or documents evidencing the transaction resulting in the indebtedness, the final account statement, and a statement explaining the “chain-of-title” of the debt.
• Disclose to consumers their rights under the Exempt Income Protection Act so that consumers will know that some sources of income are protected from garnishment.
• If a debt collector tries to collect on a debt after the statute of limitations has expired, the collector will need to inform the alleged debtor of this fact and that this is an affirmative defense in the event of a suit. This is important since many alleged debtors are not represented by counsel and are surprised when collectors unearth very old debts that have gone uncollected for years.
• Provide consumers written confirmation of any debt settlement agreement to ensure that creditors honor any settlement agreements, including those made with debt buyers earlier in the chain-of-title.

While I am confident that this proposed regulation is an important step to rein in unscrupulous debt collectors and ensure safe and fair credit practices in New York, reforming how creditors collect debt in the New York courts is an important next step. We are encouraged to see that the Office of Court Administration is eager to reform debt collection litigation practices in New York. The Department believes, however, that the proposed rules could go much further to address the significant debt collection litigation abuses that have a profound impact on New Yorkers and the state court system.

Studies abound documenting the endemic abuses in debt collection litigation1. This research and the Department’s consumer complaints show that debt collectors often file collection lawsuits with little to no information supporting their claims. This is especially problematic in the rapidly growing debt buying market, where debts are sold off for pennies on the dollar and debt buyers aggressively work to get consumers to pay. To keeps costs low, debt buyers typically purchase debts with little if any documentation as to ownership and amount owed. Due to the lack of records, consumers frequently complain that collectors are pursuing the wrong person or for the wrong amount of money. When a collector chooses to pursue litigation, collectors rarely provide, or can even access evidence of the debt beyond a few fields of data on a spreadsheet. Unscrupulous collectors have also been found to engage in “sewer service.” This all explains the collection industry’s litigation strategy, which relies on consumers failing to appear in court or if they do appear, being unrepresented by counsel. Should a consumer contest the action, debt collectors typically opt to drop the case completely. These practices are unacceptable. The Department believes that businesses should have the right to fairly collect their debts, and consumers should pay what they owe, but it is intolerable for professional collection companies to abuse the justice system and use the courts as a tool for collecting unverifiable debts from consumers who never had a fair opportunity to contest them.

The Court’s proposed rules expand statewide current New York City Civil Court requirements for prescribed affidavits when filing for a default judgment in a consumer credit action. A study by the New Economy Project in 2013, reviewed the effect of these requirements, and found that none of the sampled default judgment applications complied with the directives, even though default judgments were granted in 97% of these cases2. The New Economy Report also found that, among other problems, it was unclear who attested to the facts or who the affiant worked for, and affiants only attested to facts based “on information and belief,” not personal knowledge. The study raises significant concerns, particularly where in 2011, alone, 82,000 default judgments were granted in debt collection cases in New York. Accordingly, the Department respectfully submits that the proposed affidavits should not only require affiants to attest to “personal knowledge” of the plaintiff’s books and records, but should require affiants to specifically have personal knowledge of the alleged debtor’s records. Further, debt collectors should also allege important facts in the proposed affidavits, such as the date of charge off and the date of last payment, which are necessary to evaluate whether the statute of limitations on a debt has run.

Moreover, the Department urges the Office of Court Administration to adopt further reforms to protect consumers and New York’s justice system. Important reforms could include the following: Debt collectors should send consumers a pre-complaint notice, informing them of impending collection litigation, as well as disclosure of the consumer’s rights and basic information identifying the debt. This would provide an opportunity to the alleged debtor to request more information if needed to evaluate options, such as settling or hiring an attorney. Courts should require enhanced service standards for these consumer credit cases, where service has historically been poor and consumers have typically been unrepresented. If filing for a default judgment in a debt collection case, plaintiffs should provide demonstrable evidence of service, such as a GPS report or time-stamped pictures. Debt collectors should include some documentation evidencing the debt with a complaint, including a final statement sent to the consumer, and, where available, the signed contract or other terms and conditions attached to the debt. Pursuant to the Department’s proposed regulation, these documents will be provided to consumers who request verification of a debt. Also, requiring these documents with a complaint is a logical extension of the regulation’s pre-litigation requirement that would not add significant burden to creditors. Consumers should be provided an adequate opportunity to vacate a default judgment if a debt collector does not comply with the Court’s rules.

The Department would welcome further discussion on these suggestions. The Department believes that its proposed regulation of pre-litigation debt collection activities can complement and strengthen the Court’s efforts in this important area. Please feel free to contact Executive Deputy Superintendent Joy Feigenbaum at (212) 480-6082 to discuss this further.

Very truly yours,
Benjamin M. Lawsky
Superintendent of Financial Services

cc:
John W. McConnell, Esq.
Counsel
Office of Court Administration
25 Beaver Street, 11th Floor
New York, NY 10004

 .
1 Federal Trade Commission, Collecting Consumer Debts: The Challenges of Change (February 2009); The Legal Aid Society et al., Debt Deception: How Debt Buyers Abused the Legal System to Prey on Lower-Income New Yorkers (May 2010); National Consumer Law Center, The Debt Machine: How The Collection Industry Hounds Consumers and Overwhelms Courts (July 2010); Federal Trade Commission, Repairing a Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration (July 2010); Consumer Financial Protection Board, Fair Debt Collection Practices Act: CFOB Annual Report 2013 (March 2013).

2 New Economy Project, The Debt Collection Racket in New York (June 2013).

Carson City, NV – Nevada Attorney General Catherine Cortez Masto announced that DB Structured Products, Inc. (DB) will pay the State $11.5 million as part of an agreement, called an assurance of discontinuance, to resolve an investigation into the firm’s role in purchasing and securitizing subprime and Alt-A mortgage loans in Nevada.

The agreement filed in the District Court in Clark County also requires DB to commit to changes in its practice to securitize Nevada mortgages. The $11.5 million will be used for payments to affected borrowers, mortgage fraud enforcement, and pay the costs of the State’s investigation.

“I remain committed to enforcing Nevada’s laws against the players – including those on Wall Street – that contributed to and profited from mortgage lending and sales practices that misled Nevada consumers into loans that they did not understand and could not repay,” said Masto. “The payment from DB will help alleviate some of the injury to Nevada consumers and the changes to its securitization process should help make sure that we do not go down this road again.”

The nearly two year investigation centered upon potential misrepresentations by lenders, including New Century, American Home Mortgage and MortgageIT, to Nevada consumers who took out subprime loans and Alt-A loans that were funded, bought and securitized by DB between 2004 and 2007. These include whether lenders deceived consumers about the actual interest rate and payments on their loans, and the potential payment shock when the initial “teaser” or “interest-only” rates on their mortgages expired.

In addition, the investigation examined whether lenders originated loans with multiple risk features that allowed them to approve loans without proper consideration of the borrowers’ ability to repay. These layered risks included loans that: featured adjustable interest rates, extended amortization periods and pre-payment penalties; were predicated on stated income applications and 100% financing; and were qualified on the basis of initial teaser rates and not the adjusted rates that would be in effect for most of the loan term.

The Nevada Attorney General also examined the extent to which DB was aware of the lenders’ allegedly deceptive practices through its due diligence process when it bought the loans and whether DB substantially assisted these lenders by financing and purchasing their loans.

The agreement includes the following conduct provisions going forward:

• DB only will finance, purchase, or securitize Nevada subprime mortgage loans if it has engaged in a review of such loans and determined that the loans comply with the Nevada Deceptive Trade Practices Act.
• DB will not securitize loans where upon review it has reason to believe that the lender has not adequately disclosed to the borrowers the existence of an initial teaser rate, the potential negative amortization on the loan, the maximum adjusted interest rate or payments, and the potential for payment shock if payments increase after a loan reset or recast.

Borrowers eligible for relief will be notified by the Nevada Attorney General’s Office in the future. No application or qualification process will be required and borrowers will not be required to release any claims that they may have against their lenders or against DB. Only borrowers whose loans were financed or acquired by DB are covered by this Assurance.

The agreement, which follows the Attorney General’s settlements in the last two years with Morgan Stanley and RBS Financial Products, continues her work to hold financial institutions and other entities accountable for their roles in the housing crisis that has imposed an enormous toll on Nevada homeowners and communities and the State’s economy.

In all, the Attorney General has recovered roughly $80 million from banks that funded and purchased deceptively originated mortgage loans. In 2009, Masto settled claims against Wells Fargo for claims that Wachovia Bank misled borrowers about the interest rate and payment due on their mortgages. Doing so misled borrowers about the interest rate and payment due on their mortgages and caused borrowers’ loan payments or principal balances to increase dramatically.

Masto was one of only two attorneys general in the country to file suit against Bank of America in 2010 for consumer fraud in its handling of mortgage modifications and foreclosures. Nevada’s settlement with Bank of America secured $30 million in additional relief for Nevada consumers and the bank’s commitment to at least $750 million of mortgage modifications and short sales in Nevada. The Attorney General’s Office also sued and is currently litigating against Lender Processing Service, which handles half of all foreclosures in the country, for engaging in widespread fraud in executing foreclosure-related documents and improperly controlling the foreclosure process.

Click here to read the assurance of discontinuance.

Fox Business-

A federal appeals court has recently allowed pre-trial depositions of two major figures in the 2008 government bailout of American International Group (AIG), FOX Business Network has learned.

The depositions of Tim Geithner and Hank Paulson in their respective capacities as New York Federal Reserve Bank president and Treasury Secretary took place over the past four weeks, according to people with direct knowledge of the matter. The depositions are part of a lawsuit filed by Starr International alleging that the massive bailout was unconstitutional.

Starr, run by former AIG chief Maurice “Hank” Greenberg, is seeking $25 billion from the federal government.

[FOX BUSINESS]

What properties were they? Did investors approve this?

HW-

JPMorgan Chase (JPM) has donated or sold at a discount more than $250 million in corporate-owned homes to community associations, municipalities, veteran groups and nonprofit housing providers across the country.

The initiative, which is titled the Chase Community Revitalization Program, began in 2009 as part of a corporate-wide effort to help customers and communities cope with the effects of the housing crisis.

Since the program started, the company has donated or sold more than 5,300 properties in 43 different states.

[HOUSING WIRE]

EXCERPTS:

Q. And now we’re talking about legal decision?
5 A. Well, if it’s a legal decision, then I may also
6 consult counsel, outside counsel.
7 Q. And which counsel would you consult?
8 A. Well, I’d either consult inside counsel or I would
9 consult outside counsel. If it’s outside counsel, it would
10 be probably Routh Crabtree Olsen.
11 Q. And your inside counsel, who is that?
12 A. Steve Hicklin and Chuck Katz, and they’re staff
13 attorneys.
14 Q. And do they also work for Routh Crabtree Olsen?
15 A. No. They’re employees of Northwest Trustee
16 Services.
17 Q. And so far as you know, they have no relationship
18 with Northwest’s — or RCO?
19 A. They’re employees of Northwest Trustee.
20 Q. Well, the reason I asked you is I’m involved in
21 another case involving a group called McCarthy Holthus and
22 Quality Loan Servicing.
23 Are you familiar with that?
24 MR. SAKAI: I’m going to object. These questions
25 are outside the scope of your 30(b)(6) notice.
MR. STAFNE: Actually, it says the person who can
2 best testify about Northwest Trustee’s fact-finding and
3 legal decision-making processes for determining proof of
4 ownership of the note.
5 MR. SAKAI: What does that have to do with the
6 case against McCarthy and Holthus?
7 MR. STAFNE: Well, they have attorneys that they
8 have working in-house at Quality Loan Servicing and they
9 come from McCarthy Holthus, which also owns them, and in
10 this case, as you know, RCO actually owns, or at least its
11 owners own Northwest Trustee.
12 BY MR. STAFNE:
13 Q. So I’m just trying to determine if you know
14 whether these counsel that act as inside counsel also have
15 any relationship to RCO?
16 MR. SAKAI: I just want to note our objection.
17 I’m not here to engage you in argument. I believe you’re
18 incorrect, but I just want to note the objection.
19 Jeff, all I’m saying is I believe the question is
20 outside the scope of your notice. I want you to answer as
21 you can based on personal knowledge.
22 THE WITNESS: So which question am I answering?
23 Do I know about the McCarthy and Holthus —
24 BY MR. STAFNE:
25 Q. No. That was just an example to kind of help you
out.
2 A. Okay.
3 Q. Do you know either way whether the two in-house
4 counsel, Northwest Trustee Services, have any relationship
5 with RCO?
6 A. I’m not sure I understand what you mean by
7 “relationship.” They’re employees of Northwest Trustee.
8 Could they talk to RCO? Yes, they could talk to RCO. Do I
9 know that they do? Do I know whether they consult? They
10 may occasionally consult.
11 Q. And why do you say that?
12 A. I don’t know. I think the reason I say that is
13 because, like any attorney, they may consult with another
14 attorney. I’m not saying that it may be on a specific case,
15 but it’s — if you knew another attorney in town and you
16 decided that you would talk to them about something because
17 they may have knowledge about it, then maybe that’s
18 something that you would do.
19 I don’t know that you’ve explained what you mean
20 by “relationship.” So it’s a hard question to answer.
21 Q. Well, I think you’ve done a very good job. Thank
22 you.

[…]

Q. If I were to tell you that the notice of
3 foreclosure identifies SPS as Northwest Trustee Services’
4 client and Mr. Lemelson is the borrower, would you dispute
5 that? And I will get that document for you, but….
6 A. I think what you’re doing is you’re asking me to
7 step outside of 61.24. If you want to call SPS who referred
8 the loan to me for the foreclosure as my client outside of
9 61.24, yes, I would agree with that.
10 Q. Okay. So they’re your client?
11 A. They’re my client, but I rep — I also represent
12 HSBC Bank because they’re the beneficiary in the rest of
13 that.
14 Q. And you use, if you’ve got a problem, RCO as your
15 outside counsel?
16 A. Yes.
17 Q. So let me ask you this: Doesn’t it appear to you
18 that you’ve got RCO, Northwest Trustee Services, SPS, and
19 HSBC all working together against the borrower,
20 Mr. Lemelson?
21 MR. SAKAI: I’m going to make an objection that’s
22 outside the scope of the 30(b)(6) notice.
23 MR. STAFNE: Okay. Thank you.
24 BY MR. STAFNE:
25 Q. Go ahead and answer, sir.
A. I don’t agree with the term “working against.”
2 Q. And what don’t you agree with the term “working
3 against”?
4 A. Well, under the statute I have to be impartial to
5 both parties. I have to work on the benefit of both
6 parties, the beneficiary and the grantors.
7 Q. But your client is, you say, not only SPS, the
8 servicer, but also the beneficiary. So is Mr. Lemelson in
9 the same position as your client?
10 A. Well, he deserves a fair process. He deserves
11 that I do the process correctly.
12 Q. And the way you view the process is you get this
13 document from these people who are your clients and you go
14 ahead and do the nonjudicial foreclosure, correct, under —
15 A. Yes. That’s what the statute tells me to do, yes.
16 Q. Let’s get back to that statute.
17 You know, unfortunately I had someone who was new
18 prepare these things and so I’m not as familiar with the
19 exhibits as I like to be, but why don’t we go back to
20 Exhibit 1, which has the statute.
Do you remember Exhibit 1?
22 A. Yes.
23 Q. Would you read Subsection B of RCW 61.24.030(7)?
24 A. Unless the trustee has violated — is that the
25 part?
Q. Mm-hmm.
2 A. “Unless the trustee has violated his or her duty
3 under RCW 61.24.010(4), the trustee is entitled to rely on
4 the beneficiary’s declaration as evidence of proof required
5 under this subsection.”
6 Q. Now, what’s your understanding of the meaning of
7 that?
8 A. Well, if I read 61.24.010(4), the trustee or
9 successor trustee has a duty of good faith to the borrower
10 or beneficiary and grantors.
11 Q. So do you read it as saying that you cannot rely
12 on the declaration if you violate any duty of good faith
13 toward Mr. Lemelson?
14 MR. SAKAI: Objection to the form of the question.
15 Calls for a legal conclusion.
16 THE WITNESS: The basic reading of it would
17 suggest that.
18 BY MR. STAFNE:
19 Q. And do you have any — is that what you do? I
20 mean, you say you follow the statute. That’s your procedure
21 when you say a basic reading of the statute suggests that,
22 it doesn’t give me much indication that that’s what you do.
23 Is that what you do when you’re acting as a trustee for
24 Northwest Trustee Services?
25 A. Yes.

[…]

Q. And that’s not a department in Northwest Trustee
12 Services?
13 A. It is now, yes.
14 Q. And when did it become a department?
15 A. I think we took it over less than 30 days ago.
16 Q. And when you say you took it over, where was it
17 before?
18 A. RCO.
19 Q. And why was it at RCO?
20 A. Because we didn’t have in-house counsel for
21 Northwest Trustee to refer those matters to.
22 Q. So RCO was deciding issues raised by borrowers
23 when they were disputing?
24 A. Yes.
services company for RCO, if you know?
2 A. I don’t know if I’ve ever heard that statement
3 before.
4 Q. Do you know what —
5 A. Legal services company? I don’t think so.
6 Q. Do you know what a legal services company is?
7 A. Not really.
8 MR. STAFNE: You’re lucky, I can’t read any of my
9 notes. Thank you. It’s been a pleasure.

[…]

Q. Just one.
6 When you say your business decision, what do you
7 mean by that?
8 A. Well, I’m a trustee. I’m a business. I’m an L —
9 I’m an Inc.
10 Q. Okay. And you work for —
11 A. I guess that’s all I meant by that.
12 Q. No, it’s important because when I look at your Web
13 site, you advertise that you represent mortgage lenders?
14 A. As a trustee, correct.

Forensic Investigation of the Employee Retirement System of Rhode Island for Rhode Island Council 94, American Federation of State, County and Municipal Employees by Benchmark Financial Services, Inc., October 17, 2013.

I. Executive Summary

Two years ago, Rhode Island’s state pension fund fell victim to a Wall Street coup. It happened when Gina Raimondo, a venture capital manager with an uncertain investment track record of only a few years—a principal in a firm that had been hired by the state to manage a paltry $5 million in pension assets—got herself elected as the General Treasurer of the State of Rhode Island with the financial backing of out-of-state hedge fund managers. Raimondo’s new role endowed her with responsibility for overseeing the state’s entire $7 billion in pension assets.

In short, the foxes (money managers) had taken over management of the henhouse (the pension).

For Raimondo, a 42 year-old Rhode Island native, serving as state treasurer represents a major career boost. It also has presented her with an opportunity to enrich herself and her hedge fund backers at the expense of the state’s pension fund, the public workers who are counting on it to finance their retirements and the taxpayers who could be stuck for millions, or billions, of dollars if it’s mismanaged.

[Click image below for Full Report]

Non-agency RMBS sales have surged in 2013, with volume crossing $70 billion in the first half alone – more than doubling the sector’s output over the same period in 2012. After more than five years of depressed issuance activity following the financial crisis, has the market finally hit the turning point that will allow it to resume its role as a key supplier of new capital to the U.S. housing market?

Join Asset Securitization Report, Bingham, and a roundtable of leading market analysts for a live video broadcast web seminar that will explain the drivers of this year’s surge – including the important reforms and new structures that have rebuilt investor and regulator confidence in the market – and share their forecasts for the next few years.

Key questions to be addressed will include:

• How has the MBS product changed since the pre-crisis market peak?
• How will future changes to the GSEs influence the market, and when?
• What other regulatory initiatives from Washington, DC, should investors and issuers watch for?

Panelists:
Robert Gross, Partner, Bingham McCutchen
Jeffrey Johnson, Partner, Bingham McCutchen
Charles Sweet, Partner, Bingham McCutchen
Darius Kingsley, Managing Director and Co-General Counsel JP Morgan Chase & Co.
James Raezer, Managing Director, Markets, RBS
Ryan Stark, Director Structured Finance, Deutsche Bank Securities

There is a corruption at the heart of American politics, caused by the dependence of Congressional candidates on funding from the tiniest percentage of citizens. That’s the argument at the core of this blistering talk by legal scholar Lawrence Lessig. With rapid-fire visuals, he shows how the funding process weakens the Republic in the most fundamental way, and issues a rallying bipartisan cry that will resonate with many in the U.S. and beyond.

.

via: Gary Dubin

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII

EDWARD YUZON ABUBO, and
SARANNE KAGEL ABUBO,
Plaintiffs,

vs.

THE BANK OF NEW YORK
MELLON; COUNTRYWIDE HOME
LOANS, INC.; MORTGAGE
ELECTRONIC REGISTRATION
SYSTEMS, INC.; BANK OF
AMERICA, N.A.; and DOES 1-50.
Defendants.

ORDER DENYING DEFENDANT BANK OF NEW YORK MELLON’S
MOTION FOR SUMMARY JUDGMENT

I. INTRODUCTION

This action is again before the court after two prior dispositive Orders.
Defendant Bank of New York Mellon (“Defendant” or “BONYM”) moves for
summary judgment on Plaintiffs Edward and Saranne Abubo’s (the “Abubos” or
“Plaintiffs”) only remaining Count — a claim for damages under 15 U.S.C.
§ 1640(a) for BONYM’s alleged failure to honor Plaintiffs’ notice of rescission
under 15 U.S.C. § 1635. Based on the following, the Motion is DENIED.

[…]

I guess the Donald even knows this: $$ Florida AG Pam Bondi Pressured By Targets Of Investigations To Soften Approach, Critics Say … AND The Donald also gave Rick Scott about $100K http://www.letsgettowork.net/contributions/ DIRTY MONEY!

Orlando Sentinel-

Last month, Attorney General Pam Bondi was supposedly thinking about going after Donald Trump for running a get-rich seminar that some Floridians said fleeced them out of thousands of dollars.

New York’s A.G. had already filed suit, saying that Trump’s seminars — conducted there and in Florida — were little more than a “bait and switch” meant to separate customers from their money.

So on Sept. 14, the Sentinel quoted a spokeswoman for Bondi who said that Florida’s attorney general was studying the New York lawsuit to see whether she wanted to take action here as well.

[ORLANDO SENTINEL]

AND Jamie KNEW that at the time…

.

by Jake Bernstein ProPublica, Oct. 15, 2013, 2:46 p.m.

A federal judge rejected the Federal Reserve Bank of New York’s plea to seal documents in a wrongful termination lawsuit filed by a former bank examiner who claims she was fired for doing her job.

U.S. District Judge Ronnie Abrams ruled today in the case by Carmen Segarra against the New York Fed and three employees. Much of the material the Fed hoped to keep off limits, including 67 paragraphs from Segarra’s complaint and multiple exhibits, can be found on ProPublica’s website and others.

“I am not convinced that anything will be accomplished to seal or redact a complaint that is publicly available,” said Abrams in the hearing held at the federal courthouse in lower Manhattan.

Segarra worked for the New York Fed for seven months before being fired in May of last year. She was assigned to examine Goldman Sachs and its conflict-of-interest policies, she said. Segarra said she determined that Goldman’s policies did not meet Fed requirements. Her lawsuit alleges that her bosses tried to convince her otherwise and that she was fired after refusing to change her findings.

Goldman says it has robust methods for managing conflicts of interest and has declined comment on Segarra.

At today’s hearing, New York Fed attorney David Gross accused Segarra of stealing confidential documents, including her own internal emails and meeting minutes. Were the court to allow them to remain public on its own electronic records system, called Pacer, it “would be helping this improper conduct,” Gross said.

Gross compared the New York Fed’s relationship with the financial institutions it supervises to attorney-client privilege. Should the institutions lose faith in the Fed’s ability to keep communications and documents secret, it could spell trouble, he said.

“If [the supervised banks] don’t think it will be confidential, they will be less willing to give that information, to the detriment of the financial system,” said Gross.

Although ruling against the Fed, Abrams asked Segarra and her attorney, Linda Stengle, not to reveal any more confidential supervisory information without first consulting with her. “This is not a gag order,” the judge said. “I am not telling plaintiff she cannot talk about her case.”

Linda Stengle said afterward she was pleased about the ruling but unhappy that there were constraints placed on her client. “It’s important that the public have access to the information” in support of Segarra’s case, she said.

A spokesperson for the New York Fed did not immediately respond to a request for comment.

Follow @Jake_Bernstein

The Original Anti Recourse Laws For First Mortgages Were Written During The Great Depression

By Michael T. Pines

The L.A. Times published an article about Fannie and Freddie going after “Strategic Defaulters.” It states that these former “GSE’s” can sue a homeowner to collect money, implying people who walk away are “bad guys”.

 http://www.latimes.com/business/realestate/la-fi-lew-20131013,0,7334270.story.

This is just plain wrong.  I hate it when the mainstream press does that, and scares people. There is nothing legally FANNIE AND FREDDIE can do.

    California is an “anti-deficiency” state.  These laws were first enacted in the Great Depression in response to the exact same thing that is happening now.  These laws prevent anyone from doing anything to collect a residential real estate loan other than foreclosing and taking the house.  Most attorneys I talk to think it only applies to a purchase money, owner occupied, house, of 1-4 units.  This is also wrong.

The law applies to residential real estate where the loan was a “purchase money” loan on 1-4 units or in some circumstances a refinance (many people incorrectly think the law doesn’t apply to a refinance at all.) 

More importantly whenever a lender does a non-judicial foreclosure, which they always do in California on residential real estate, all they can get is the house. (California allows for either a judicial or non-judicial foreclosure, but non-judicial is used to foreclose on residential real estate without exception in California.)

The California Code of Civil Procedure provides:

580b.  (a) No deficiency judgment shall lie in any event for the
following:

(2) Under a deed of trust or mortgage given to the vendor to
secure payment of the balance of the purchase price of that real
property or estate for years therein.

 (3) Under a deed of trust or mortgage on a dwelling for not more
than four families given to a lender to secure repayment of a loan
which was in fact used to pay all or part of the purchase price of
that dwelling, occupied entirely or in part by the purchaser.
. . .

   (c) No deficiency judgment shall lie in any event on any loan,
refinance, or other credit transaction (collectively, a “credit
transaction”) which is used to refinance a purchase money loan, or
subsequent refinances of a purchase money loan, except to the extent
that in a credit transaction, the lender or creditor advances new
principal (hereafter “new advance”) which is not applied to any
obligation owed or to be owed under the purchase money loan, or to
fees, costs, or related expenses of the credit transaction. Any new
credit transaction shall be deemed to be a purchase money loan except
as to the principal amount of any new advance. For purposes of this
section, any payment of principal shall be deemed to be applied first
to the principal balance of the purchase money loan, and then to the
principal balance of any new advance, and interest payments shall be
applied to any interest due and owing. The provisions of this
subdivision shall only apply to credit transactions that are executed
on or after January 1, 2013.

580d.  No judgment shall be rendered for any deficiency upon a note
secured by a deed of trust or mortgage upon real property or an
estate for years therein hereafter executed in any case in which the
real property or estate for years therein has been sold by the
mortgagee or trustee under power of sale contained in the mortgage or
deed of trust.
. . .

What this means, is that no one can get anything from a homeowner except the house when they go into default.  This is true whether it is a “strategic default” or a default caused by necessity.

Not only that, but big business walks away from property when it is “upside down” all the time.  Yet another example of how one set of rules applies to the 1% and another to the rest of us.

Michael T. Pines

Michael has been a lawyer for over 30 years and has had a real estate license for over 20 years.

He handled litigation against the Resolution Trust Corporation (“RTC”) during the last real estate savings and loan crisis and has been able to see firsthand how history has repeated itself.  He proactively positioned himself within the distressed real estate and assets environment, providing resolutions to buyers and asset holders. He is a successful trial attorney with many victories in front of judges and juries. Michael has argued hundreds of cases at all levels of the courts including the Supreme Court of California. In Barrington v. A.H. Robbins, Michael changed the law in the state of California regarding statutes of limitation.

He also successfully argued cases that resulted in published decisions at the Courts of Appeal. Michael handled complex real estate and insurance litigation involving the insolvency of Glacier General Assurance Company, Cal-Farm Insurance Company, Allied Insurance Company, and others. He recovered tens of millions of dollars for his clients in those cases and established himself as one of the few experts in “financial guarantee bonds” insuring real estate transactions.

Just a few years ago, Michael himself was a fraud victim of EMC Mortgage Corporation/J.P. Morgan Chase . In taking action, Michael discovered he was not alone, and the loan servicer was fined $28 million in early 2008 by the Federal Trade Commission (“FTC”). Michael was written up in the Salt Lake Tribune.

The banks and government hate him.  See, www.4closurefraudpines.com

This article is for informational purposes only. It is not legal advice. You should seek counsel from a licensed attorney if you have legal questions.

image: evasvillage.org

So What was the purchase price and will homeowners who are involved in this sale be notified?

Don’t be fooled by the title.

Freddie Mac-

The Federal Housing Finance Agency is pushing Fannie and Freddie to chase down borrowers who can make home loan payments but choose not to.

LA TIMES-

Anyone thinking of skating on mortgages owned by either Fannie Mae or Freddie Mac may want to think again. As a result of new government reports, the two companies say they are going to do a better job of going after so-called strategic defaulters.

Fannie and Freddie can pursue judgments against borrowers who walk away from their loans even though they have the ability to make their payments. That’s called a strategic default, and many borrowers are taking that step — typically throwing in the towel because their homes are no longer worth as much as they owe.

But when their homes are sold at foreclosure and the proceeds are not enough to cover their outstanding loan balances, it creates a deficiency for which many defaulters either don’t realize they are liable or don’t care.

[LA TIMES]