SUPERIOR COURT OF CALIFORNIA COUNTY OF ORANGE CENTRAL JUSTICE CENTER
DATE: 12/09/2013 TIME: 11 :34:00 AM JUDICIAL OFFICER PRESIDING: Thierry Patrick Colaw CLERK: P. Rief REPORTERIERM: None BAI LIFF/COURT ATTENDANT: Edwin Hong DEPT: C25 CASE NO: 30-2013-00651662-CU-OR-CJC CASE INIT.DATE: OS/23/2013 CASE TITLE: Lucas VS. Meridian Foreclosure Service CASE CATEGORY: Civil- Unlimited CASE TYPE: Other Real Property EVENT ID/DOCUMENT 10: 71856341 EVENT TYPE: Under Submission Ruling APPEARANCES
DEMURRER BY DEFENDANTS DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE OF THE INDYMAC INDX MORTGAGE LOAN TRUST 2007-AR11 , MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-AR11 UNDER THE POOLING AND SERVICING AGREEMENT DATED APRIL 1, 2007; ONEWEST BANK, FSB; AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC.
There are no appearances by any party.
The court, having taken the above-entitled matter under submission on 12/06/2013 and having fully considered the arguments of all parties, both written and oral, as well as the evidence presented , now rules as follows:
NOTICE OF RULING
EXCERPTS:
The Demurrer to the 1st cause of action (Declaratory Relief) as to all Defendants is OVERRULED. Plaintiffs are not merely challenging the foreclosure process under Gomes v. Countrywide Home Loans, Inc. (2011 ) 192 Cal.App.4th 1149 and/or based on issues with the securitization of the loan and violation of the PSA. Rather, Plaintiffs allege that the loan never made it into the trust pursuant to Glaski v. Bank of America, National Association (2013) 218 Cal.App.4th 1079. (See, First Amended Complaint, at 1m 41-47.) Defendants have failed to sufficiently establish that the factual allegation is insufficient as a matter of law. In addition, federal district court cases are not binding on this court. The parties should move forward with discovery to determine whether the loan was transferred to a securitized trust, when it was transferred, and which state’s trust laws apply.
[…] The Demurrer to the 5th cause of action (Violation of Bus, & prof. Code § 17200) as against OneWest and MERS is OVERRULED, First, Plaintiffs have alleged sufficient facts showing that they have suffered an injury in fact, and therefore have standing to sue. In addition, Plaintiffs have alleged an “unlawful” business act with sufficient particularity (i.e., the facts alleged in support of the declaratory relief and violation of Civil Code § 2924.12 causes of action are all incorporated into this cause of action).
[…] It is questionable whether tender is required in this case. First, this is a pre-foreclosure sale case. Second, the cases cited to by Defendants are factually distinguishable in that they are not pre non-judicial foreclosure sale cases. Third, Plaintiffs are challenging the validity of Defendants’ authority to foreclose under Glaski. The Court of Appeal in Glaski stated: “Tender is not required where the foreclosure sale is void, rather than voidable, such as when a plaintiff proves that the entity lacked the authority to foreclose on the property.” (Glaski v. Bank of America, National Association (2013) 218 Cal.App.4th 1079, 1100; see also, Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 112 and Arnolds Management Corp. v. Eischen (1984) 158 Cal. App. 3d 575, 579.) Thus, Plaintiffs are alleging that the foreclosure sale in this case is void as a matter of law pursuant to Glaski, and that tender is therefore not required.
CONTACT: Elliot Burg, Assistant Attorney General, (802) 828-5507
December 11, 2013
The Office of Vermont Attorney General William H. Sorrell has filed suit against Bank of America for violating Vermont’s foreclosure mediation statute and Consumer Protection Act in foreclosure actions brought by the Bank against local homeowners.
According to the complaint filed in Washington Superior Court in Montpelier, Bank of America, based in Charlotte, North Carolina, (a) failed or refused to comply with mediation settlements in Vermont state court foreclosure actions to which it previously agreed; (b) billed foreclosure defendants (the homeowners) for more money than their mediation settlements provided; and (c) sent mailings to homeowners containing misrepresentations, including misrepresentations about the amount of money due the Bank and the status of the foreclosure action.
The complaint describes two such foreclosure cases involving repeated breaches by the Bank of negotiated settlements reached during the course of mediation. It asks the court to prohibit future violations of law, award appropriate monetary relief to affected Vermont homeowners, impose $10,000 in civil penalties for each violation of law, reimburse the State’s fees and costs, and grant other appropriate relief. Any Vermont homeowner who was sued in foreclosure by Bank of America and entered into a settlement of the case through mediation, but where the Bank did not comply with the terms of the settlement, is asked to contact the Attorney General’s Office at (802) 828-5507, or by email to glavely@atg.state.vt.us.
WASHINGTON, DC – Fannie Mae (FNMA/OTC) announced today that it will issue an eviction moratorium for the holidays, as it has done in previous years. The company will suspend evictions of foreclosed single family and 2-4 unit properties from December 18, 2013 through and including January 3, 2014. For this period, legal and administrative proceedings for evictions may continue, but families living in foreclosed properties will be allowed to remain in the home.
“The holiday season is meant for quality time with family and we want to relieve anyone of the anxiety of leaving their home during this season,” said Terry Edwards, Chief Operating Officer for Fannie Mae. “We encourage any homeowner who is having difficulty making their mortgage payment to reach out for help right away. Fannie Mae will continue to help borrowers avoid foreclosure whenever possible.”
This year, Fannie Mae made it easier for a delinquent borrower to stay in their home when we introduced the Streamlined Modification which is available once someone experiences a hardship that causes them to be 90 days late with their mortgage payment.
MCLEAN, VA–(Marketwired – Dec 12, 2013) – Freddie Mac (OTCQB: FMCC) today announced a nationwide suspension of eviction lock-outs between December 18, 2013 and January 3, 2014. The moratorium applies to all foreclosed occupied single family homes and 2-4 unit properties that had Freddie Mac owned-or guaranteed mortgages.
News Quote:
Attribute to Chris Bowden, Senior Vice President of REO at Freddie Mac.
“At this time of year we want to bring some relief to families who confronted financial difficulties and went through foreclosure. We also want to remind homeowners going into the New Year facing financial challenges to reach out for help as soon as they can by calling their mortgage servicer.”
News Facts:
The two-week holiday suspension will apply to eviction lockouts on Freddie Mac-owned REO homes but will not affect other pre- or post-foreclosure activities.
Although no evictions will take place, firms handling local evictions for Freddie Mac may continue to file documentation in preparation for evictions scheduled after the suspension ends in January 2014.
JPMorgan Chase is reportedly about to cut a sweet deal to dodge criminal charges over its role in the Bernie Madoff Ponzi scheme. It’s just the latest evidence that, despite their tough talk, U.S. prosecutors still think some banks are too big to jail.
JPMorgan is close to paying about $2 billion to settle claims that, as Madoff’s main bank for many years, it ignored blatant signs that Madoff was up to no good, the New York Times reports. As part of the deal, JPMorgan will also enter what’s known as a deferred prosecution agreement, where everybody will agree that the biggest U.S. bank broke criminal laws and also that prosecutors don’t plan to do anything about it, as long as JPMorgan keeps its nose clean.
Prosecutors, including U.S. Attorney Preet Bharara, considered and rejected the idea of making the bank actually plead guilty to criminal charges, according to the NYT. That’s disappointing, considering it was Bharara who declared this summer: “I don’t think anyone is too big to indict, no one is too big to jail. There’s enough moral hazard in the industry. If you give people a blank check and tell them they have a get-out-of-jail-free card because of their size…that’s a very dangerous thing.”
Quiet Title is a critical term with which every homeowner should become familiar. A quiet title action, brought by an individual homeowner, is possibly the one sensible and legal alternative approach to the City of Richmond’s proposed plan to seize underwater mortgages under eminent domain. Quiet Title is also a potential legal remedy to growing bank foreclosures of underwater mortgages in Richmond, Contra Costa County, California, and the US.
What is Quiet Title?
Facing government seizure on the one hand, and potential foreclosure from predatory financial institutions on the other, individual homeowners are faced with a King Kong v Godzilla no-win situation. Individual homeowners are completely marginalized by powerful corporate interests including cities (Richmond), banks, Wall Street finance, and large national loan servicing agents, who will easily spend tens of millions of dollars to defend their respective claims in court.
A Quiet Title Action is a lawsuit to determine who owns a piece of real estate, and so “quiet” any disputes over the title. Only a homeowner can bring Quiet Title Action against unlawful claims, including from banks, on the lien of a property. An action to Quiet Title gives property owners an opportunity to inexpensively defend themselves, to restore order to their chains of titles caused by the mortgage meltdown, and to render their properties marketable once again, free of third-, fourth-, or fifth-party claims.
US BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR JP MORGAN MORTGAGE ACQUISITION CORP. JPMAC 2006-FREI 10790 Rancho Bernardo Road San Diego CA 92127, Plaintiff, v. YOLANDE NICHOLSON, “JOHN DOE”, NANCY ENGELHARDT, Defendants.
McCabe, Weisberg & Conway, P.C. By Jose O. Hasbun, Esq. 145 Huguenot Street, Suite 210 New Rochelle, NY 10801 Attorneys for Plaintiff.
Alice A. Nicholson, Esq. 26 Court Street, Suite 603 Brooklyn, NY 11242 Attorney for Defendant Nicholson
JOHN J.J. JONES, Jr., Judge.
ORDERED that the motion by the plaintiff, US Bank National Association, as Trustee for JP Morgan Mortgage Acquisition Corp. JPMAC 2006-FRE1 10790 Rancho Bernardo Road San Diego CA 92127 [“the plaintiff’], for an order vacating the Order of Reference dated December 18, 2009, granting a Second Order of Reference and permitting the plaintiff to proceed with foreclosure (motion sequence 005), and the cross motion by the defendant Yolande Nicholson for an Order compelling the acceptance of the Answer previously served upon the plaintiff, dismissing the complaint for the failure to comply with REAL PROPERTY ACTIONS AND PROCEEDINGS LAW [“RPAPL”] § 1303, and denying the plaintiffs motion for a judgment of foreclosure and granting the defendant summary judgment dismissing the complaint (motion sequence 006), are decided together; and it is further
ORDERED that so much of the plaintiffs motion seeking an order vacating the Order of Reference dated December 18, 2009, is granted; and it is further
ORDERED that so much of the plaintiffs motion seeking a Second Order of Reference and permitting the plaintiff to proceed with foreclosure is denied; and it is further
ORDERED that so much of the cross motion by the defendant Yolande Nicholson [“the defendant” or “Nicholson”] for an Order compelling the acceptance of the Answer previously served upon the plaintiff, is granted, and the cross motion is otherwise denied.
Plaintiff’s Motion for a New Order of Reference
This foreclosure action involves a loan made by Fremont Investment & Loan [“Fremont”] to the defendant on October 14, 2005, in the amount of $632,000.00, secured by a mortgage executed by the defendant on that same date. The mortgage indicates that for purposes of recording Mortgage Electronic Recording Systems, Inc., [“MERS”], is the mortgagee of record. The instant action to foreclose the mortgage was commenced on behalf of the plaintiff on May 8, 2008, by the now-defunct law firm of Steven J. Baum, P.C. It was not until ten days later, on May 18, 2008, that the mortgage was purportedly assigned by MERS as nominee for Fremont to the plaintiff
On two prior occasions the plaintiff sought an Order Appointing a Referee and to Compute. The plaintiff withdrew the first application submitted on December 3, 2008. The second application was submitted on September 30, 2009; the resulting Order of Reference which the plaintiff now seeks to vacate was granted on December 18, 2009. In addition, the plaintiff withdrew a previous motion for a Judgment of Foreclosure and Sale on October 18, 2010.
According to the plaintiffs moving papers, the current law firm representing the plaintiff attempted to comply with the Office of Court Administration’s memorandum dated October 20, 2010, as supplemented, requiring counsel to consult with a representative of the lender and confirm the factual accuracy of the allegations set forth in the complaint and any supporting affidavits or affirmations filed with the Court, as well as the accuracy of the notarizations contained in the supporting documents. Counsel consulted with its client and was advised that the plaintiff could not confirm the accuracy with regard to execution and/or notarization of the prior Affidavit of Fact dated April 21, 2009. Thus, the plaintiff now seeks an order vacating the December, 2009, Order of Reference that was based on the April, 2009 affidavit, and granting a new Order of Reference in order to move forward with the foreclosure.
In support of the plaintiffs application it submitted, inter alia, an “Attorney Statement” dated May 13, 2013, contending that the “subject [n]ote was transferred via indorsement in blank”, referring to an Exhibit attached to the moving papers. The Exhibit consisted of a copy of the note signed by the defendant, and a separate undated page containing no identifying information connecting it with the subject note. Rather, the only writing on the page is a stamp that purports to be a blank indorsement with a signature of one “Michael Koch”, identified as “Fremont Investment & Loan, Vice President”.
The plaintiff contends that the effect of the blank indorsement was to make the note payable to bearer pursuant to UCC § 1-201(5), which may be negotiated by transfer of possession alone relying on UCC §§ 3-204[2] and 3-202 [1]. The “Attorney Statement” contends that under UCC § 9-203 (9) (g), the assignment or transfer by the seller of a security interest in the note automatically transfers a corresponding interest in the mortgage to the assignee, thereby rendering an actual assignment unnecessary. The argument is obviously intended to remedy the fact that the plaintiff was not assigned the mortgage until ten days after it commenced the action to foreclose (see generallyBank of New York v. Silverberg, 86 A.D.3d 274, 926 N.Y.S.2d 532 [2d Dept. 2011] [“In a mortgage foreclosure action, a plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced”]).
The “Attorney Statement” relies on the affidavit of Carrie S. Patridge, dated April 15, 2013, as support for the statement that the plaintiff has been in “continuous possession of the Note (and Mortgage) since the commencement of the action”. Patridge is described as the Vice President of the loan servicer authorized to act on the plaintiff’s behalf. The Patridge affidavit states that the defendant defaulted on December 1, 2007, the default has not been cured, and that a notice of default was sent to the defendant on February 11, 2008.
Although the Patridge affidavit states that the plaintiff is the holder of the note, conspicuously absent from the affidavit or anywhere else in the moving papers is evidence that the plaintiff was the holder of the note and mortgage when the action was commenced on May 8, 2008. The “Attorney Statement” does not provide proof when, if ever, Fremont indorsed the subject note to the plaintiff or transferred possession of it. It merely references the Patridge affidavit for the proposition that the plaintiff is in possession of the note, and the UCC for the further proposition that transfer of possession of the note to the plaintiff automatically transferred possession of the mortgage.
The “Attorney Statement” also chronicles that the indorsement of the note was “later memorialized” by the assignment of mortgage dated May 18, 2008, which was later recorded. Anecdotally, although the assignment is dated May 18, 2008, the notary on the assignment is dated May 1, 2008.
Regarding the statutory notice required by RPAPL § 1303, the Attorney Statement states that counsel for the plaintiff provided the process server with the summons and complaint, printed on white paper, together with the notice required by RPAPL § 1303 (a), referring to the attached “Exhibit G”. That exhibit contains a two-page yellow notice with language required by § 1303 by an amendment to the statute that did not take effect until August 5, 2008 (L. 2008, c. 472, §1, eff. August 5. 2008). The action was commenced on May 8, 2008.
The affidavit of service indicates that service of the summons and complaint and § 1303 notice was made by serving a person of suitable age and discretion, one Nancy Engelhardt. Engelhardt is described in the affidavit of service as a co-occupant female, approximately 31 to 39 years of age, 5’4″ to 5′ 7″ tall, 125 to 149 pounds with red hair. The Attorney Statement claims that none of the defendants answered the complaint with the exception of Nicholson, who appeared and requested notice of the application. Based on the foregoing, the plaintiff seeks a new Order of Reference.
Defendant’s Opposition and Cross Motion
The cross motion seeks an Order compelling the acceptance of the Answer previously served upon the plaintiff, dismissing the complaint for the failure to comply with RPAPL § 1303, and denying the plaintiffs motion for a judgment of foreclosure and granting the defendant summary judgment dismissing the complaint. Two grounds for the relief sought include the failure to fulfill a condition precedent to suit, i.e., the service of a § 1303 notice, and the plaintiff’s lack of standing to commence the action.
According to the attorney for Nicholson, even before the defendant’s default, she has been pursuing a loan modification and has provided a voluminous number of documents toward that goal. The defendant denies that the summons and complaint with the required § 1303 notice was ever properly served upon her. In an affidavit dated August 1, 2013, Nicholson denied that she ever received the notice and challenges that the pleadings and the required notice were ever served on Engelhardt who she describes as 5′ 2″ or less, middle-aged, and very thin, weighing much less than the 125-149 pounds as reported by the process server in the affidavit of service. Nicholson also denied that she ever received the required § 1303 notice with any of the copies of the summonses and complaints that were subsequently mailed or left at her home.
Nicholson also attested that the § 1303 notice accompanying the judgment of foreclosure that was ultimately withdrawn on October 18, 2010, is not the same § 1303 notice that is attached as an Exhibit to the instant motion for a new Order of Reference. A review of the plaintiffs withdrawn motion for a Judgment of Foreclosure and Sale confirms this. The “Attorney Statement in Reply/Opposition to Cross-Motion”, dismisses the discrepancy in the § 1303 notices attached to the withdrawn Judgment of Foreclosure and the pending motion for a new Order of Reference, respectively.
The affidavit of service indicates that service on Nicholson was complete on May 20, 2008. By email to Tracy Fourtner of the Baum law firm on July 11, 2008, defense counsel requested an extension of time to answer the complaint until August 15, 2008. Defense counsel affirms that Tracy Fourtner of the Baum law firm told her that the law firm was considering discontinuing the action because the parties were entering into an agreement. Eventually Kathleen Bartkus of the Baum law firm responded by email to defense counsel’s request for an extension to answer: “please be advised our file is on hold due to your client has entered into a forbearance plan. Please advise if you still intend on answering the complaint. Also please forward a signed Notice of Appearance.” Although defense counsel filed a Notice of Appearance, the defendant claims never to have received a forbearance agreement.
By Order to Show Cause signed by this Court dated November 12, 2009, the defendant requested that the Court grant leave to file an Answer pursuant to CPLR 3012(d), vacate any order or judgment previously granted, and order a settlement conference pursuant to CPLR 3408. A proposed Verified Answer was annexed to the Order to Show Cause. The defendant’s Order to Show Cause was submitted at a time when the second motion for an Order of Reference was pending. According to the Court’s internal case management system, it appears that the movant failed to file the signed Order to Show Cause with Special Term. The defendant disputes this and provides proof of filing and service on the cross motion. In any event, the defendant’s motion for leave to file an Answer and schedule a settlement conference, was never marked fully submitted for a decision. The plaintiff was granted an Order of Reference on December 18, 2009. Some time after the Order of Reference was granted, at the defendant’s request, the Court scheduled a settlement conference for April 15, 2010.
At that point, defense counsel asserts that plaintiff’s counsel agreed to accept the Answer that was originally annexed to the November, 2009 Order to Show Cause. The Answer was mailed to the Baum law firm on April 15, 2010, the same day as the first settlement conference. In the Answer, the defendant asserted the affirmative defense of lack of standing and the plaintiff’s failure to provide the statutory notice required by RPAPL § 1303, among other defenses. According to the information maintained by the Court’s computerized database, foreclosure settlement conferences were held in this Court’s Specialized Mortgage Foreclosure Conference Part on April 15, 2010, June 16, 2010, and November 17, 2010.
The plaintiff moved for a judgment of foreclosure and sale on August 10, 2010. It is undisputed that the plaintiff moved for a judgment of foreclosure while the defendant was submitting documents to the plaintiff for review of a loan modification. Although the plaintiff sought a default judgment, the attorney fee application in the proposed judgment of foreclosure sought fees based on its attorneys’ appearance at settlement conferences and for “Review of answer”. By Order dated October 26, 2010, the plaintiff withdrew the motion for a Judgment of Foreclosure.
From October 26, 2010, until recently, this matter remained on the Court’s “shadow docket”[1]. By Order dated May 17, 2013, the Court directed the plaintiff to either proceed with the action or discontinue it. The Order provided that upon the plaintiff’s failure to act within ninety days, the Court “may” dismiss the action; the Order did not make a dismissal automatic upon the expiration of the ninety day period. In any event, by Notice of Motion dated May 13, 2013, the plaintiff moved for a new Order of Reference.
The plaintiff maintains that the defendant’s failure to raise its alleged lack of standing as an affirmative defense in an answer or in a timely motion to dismiss the complaint constituted a waiver of the defense (see generallyEM>Wells Fargo Bank Minn., N.A. v. Mastropaolo, 42 A.D.3d at 250). otably, the plaintiff submitted an “Attorney Statement in Reply/Opposition to the Cross-Motion” dated August 7, 2013, [“the Reply Statement”], rather than an attorney’s affirmation. Plaintiff’s attorney submitted no evidence controverting defense counsel’s assertion in her affirmation that in response to counsel’s request for an extension of time to answer in July of 2008, 1) Tracy Fourtner of the Baum law firm told counsel that the Baum law firm was considering discontinuing the action because the parties were entering into an agreement, and 2) on the day of the first settlement conference on April 15, 2010, plaintiff’s counsel accepted the defendant’s Answer that had first been provided as an attachment to the November, 2009 Order to Show Cause to compel acceptance of the Answer.
Counsel’s unsworn and conclusory “Reply Statement” asserting that defense counsel’s affirmation is bald and self-serving, and fails to demonstrate an agreement to accept a late Answer, is not based on personal knowledge, lacks evidentiary value, and is insufficient to support the plaintiff’s motion for a new Order of Reference or to defeat the defendant’s cross motion (Zuckerman v City of New York, 49 N.Y.2d 557, 427 N.Y.S.2d 595, 404 N.E.2d 718 [1980]; Assets Recovery 26 LLC v Rivera, 39 Misc.3d 1240(A), 2013 WL 2996135 [N.Y. Sup.]; see alsoLaSalle Bank, NA v. Pace, 100 A.D.3d 970, 970-971, 955 N.Y.S.2d 161 [2d Dept. 2012] [stating that attorney affirmation filed in compliance with Administrative Order 548-10, as supplemented by Administrative Order 431-11, is not itself substantive evidence supporting summary judgment] ).
The Reply Statement simply dismisses its predecessor law firm’s emails referring to the fact that the “tile [wa]s on hold” and that the parties were “enter[ing] into a forebearance plan”. It bears repeating that plaintiff’s attorney’s Reply Statement is not affirmed, is not based on counsel’s personal knowledge, and relies on no evidence whatsoever to refute the defendant’s assertions.
Under the circumstances, the Court concludes that even assuming that the defendant defaulted in answering the complaint, under the circumstances as outlined above, the defendant has established a reasonable excuse for a default in answering (Braynin v. Dunleavy, 109 A.D.3d 571, 970 N.Y.S.2d 611 [2d Dept. 2013]). Thus, the issue of the plaintiffs standing to commence the action is properly before the Court (Homecomings Financial, LLC v Guldi, 108 A.D.3d 506, 508, 969 N.Y.S.2d 470 [2d Dept. 2013]).
This case is distinguishable from those cases where a borrower relies on an unsubstantiated loan modification to excuse a default (compareDeutsche Bank Nat. Trust Co. v. Gutierrez, 102 A.D.3d 825, 958 N.Y.S.2d 472 [2d Dept. 2013]). Here, no evidence has been produced to refute the defendant’s assertions that the parties were working toward a loan modification at least until the last foreclosure settlement conference in November of 2010. Thereafter, there was no further action on the part of the plaintiff until the Court sua sponte calendared the matter for a status conference in May of this year and essentially insisted that the plaintiff “fish or cut bait”. It is also telling, and uncontradicted, that in the plaintiffs fee application that was part of the withdrawn Judgment of Foreclosure, the plaintiffs attorney included charges for attending the 2010 settlement conferences and for “Review of answer”. Thus, all the direct and circumstantial evidence supports the defendant’s version of what transpired and in the exercise of this Court’s discretion constitutes a reasonable excuse for the defendant’s default in answering the complaint. (cf.Maspeth Federal Savings & Loan Ass’n, 77 A.D.3d 889, 909 N.Y.S.2d 403 [2d Dept. 2010]).
Defendant’s Meritorious Defense
Where standing is put into issue by the defendant, “the plaintiff must prove its standing in order to be entitled to relief’ (U.S. Bank, N.A. v. Collymore, 68 A.D.3d 752, 753, 890 N.Y.S.2d 578; seeWells Fargo Bank Minn., N.A. v. Mastropaolo, 42 A.D.3d 239, 242, 837 N.Y.S.2d 247). The plaintiff has failed to demonstrate that it had standing when it commenced the action because there is no proof that the plaintiff was in possession of the subject note when the action was commenced. The “Attorney Statement” refers to the Patridge affidavit to establish the plaintiff’s possession but this bootstrapping argument fails. Patridge, a Vice President for the loan servicer, states “[t]he plaintiff is the holder of the note and Chase is the servicer of the loan and is authorized to act on behalf of the holder of the Note.”
Moreover, the critical proposition upon which the plaintiffs entire argument rests is not without doubt. The mostly blank and undated piece of paper with nothing but a purported signature of “Michael Koch” as Vice President, attached as movant’s Exhibit B, does not demonstrate that the plaintiff was the holder of the subject note when the action was commenced (Assets Recovery 26 LLC v Rivera, 39 Misc.3d 1240(A), 2013 WI, 2996135 [N.Y. Sup.] Deutsche Bank National Trust Co. v Haller, 100 A.D.3d 680, 954 N.Y.S.2d 551 [2d Dept. 2012]).
Thus, even assuming that the previous counsel for the plaintiff did riot agree to accept the defendant’s late Answer on April 15, 2010, the Court concludes that the Answer is deemed served on the plaintiff as of that date as the defendant has established both a reasonable excuse for the failure to Answer and a meritorious defense (seeEquicredit Corp. of America v. Campbell, 73 A.D.3d 1119, 900 N.Y.S.2d 907 [2d Dept. 2010]).
RPAPL § 1303
In First National Bank of Chicago v. Silver, (73 A.D.3d 162, 899 N.Y.S.2d 256 [2d Dept 2010] ), the Appellate Division Second Department found that compliance with RPAPL § 1303, which mandates notice to a mortgagor under the Home Equity Theft Prevention Act (REAL PROPERTY LAW § 265-a “HETPA”), is a mandatory condition precedent to foreclosure, compliance with which must be established by plaintiff. The failure to demonstrate compliance is not an affirmative defense, but may be raised at any time. Id. at 166. The Silver Court held that plaintiffs failure to demonstrate compliance with the notice requirement mandates dismissal of the action (73 A.D.3d at 169, 899 N.Y.S.2d 256; see alsoAurora Loan Services, LLC v. Weisblum, 85 A.D.3d 95, 102-103, 923 N.Y.S.2d 609 [2d Dept. 2011]).
Here, the defendant denies that she was ever served with the statutorily required notice. Unlike the defendant in Aurora Loan Services, LLC v. Weisblum,supra, Nicholson’s is not a bare and unsubstantiated denial of receipt which is admittedly insufficient to rebut the presumption of proper service created by an affidavit of service (seeDeutsche Bank Nat. Trust Co. v. White, ___ N.Y.S.2d ___. 2013 WL 5539360 [2d Dept. 2013]).
Contrary to plaintiffs attorney’s “Reply Statement”, Nicholson provided an affidavit dated August 1, 2013, with a description of the individual purportedly served pursuant to CPLR 308 (2) that is substantially at odds with the process server’s description of the person served in the affidavit of service (Emigrant Mortg. Co., Inc. v. Westervelt, 105 A.D.3d 896, 964 N.Y.S.2d 543 [2d Dept. 2013]).
In addition, the plaintiff makes little or no attempt to address the defendant’s proof that the copy of the § 1303 notice that supported the withdrawn judgment of foreclosure and sale is not the same notice as the one annexed to the moving papers for a new Order of Reference. As discussed in detail in a scholarly article authored by Mark C. Dillon, Associate Justice of the Appellate Division of the New York State Supreme Court, Second Judicial Department, the RPAPL portion of HETPA, RPAPL § 1303 was enacted in 2006, originally effective as of February 1, 2007, and underwent some tweaking by amendments enacted in 2007, 2008, 2009, 2010, and 2011 (see “Unsettled Times Make Well-Settled Law: Recent Developments in New York State’s Residential Mortgage Foreclosure Statutes and Case Law, 76 Albany Law Review 1085, 1114 [2012-2013]). The plaintiff has failed to establish that it satisfied the statutory-specific notice to the defendant with the service of the summons and complaint that was in effect at the time the action was commenced. For that reason alone, the plaintiff’s motion for a new Order of Reference is denied.
MERS Undermines the Integrity of Public Land Records
MERS’ express purpose is to “eliminate[] the need to prepare and record assignments when trading mortgage loans.”
Evade county recording fees, avoid publicly recording mortgage transfers, facilitate the rapid sale and securitization of mortgages en masse and shorten foreclosure times
Effectively supplanted the public recording system, undermining the integrity of centuries old system of land record-keeping
WHAT DO WE NOW KNOW ABOUT MERS?
A shell company with no economic interest in any mortgage loan
23 shareholders: originating and servicing (Bank of America, CitiMortgage, Inc.); GSEs (Fannie Mae and Freddie Mac); mortgage and title insurance companies (First Title Insurance Company); and the Mortgage Bankers Association
Responsible for tracking approximately 70 million loans
Estimated $2 billion in avoided recording fees
Average mortgage transferred 2 to 3 times
70 full time employees
20,000 “certifying officers”—execute paperwork to initiate foreclosures with little to no supervision
A Mortgage in Kentucky
Home mortgage consists of two documents: -Promissory note -Mortgage
KRS 382.360(3): After the initial recording of a mortgage, all assignments of a mortgage must be recorded in a county clerk’s office.
“The assignment of the note…necessarily carries with it the assignment of the indemnifying mortgage…”
Napier v. Duff, 136 S.W.2d. 1083, 1085 (Ky. 1939).
MERS as Mortgagee
A “mortgagee” is “[o]ne to whom property is mortgaged; the mortgage creditor; or a lender.” BLACK’S LAW DICTIONARY 1104 (9TH ED. 2009).
“In a twist of logic from what you might first think, the borrower offers the lender a mortgage on the property as a guarantee to repay the loan agreed upon by the two parties. So the mortgagee is usually the party that stands to lose if the loan is not repaid. That said, MERS is listed as mortgagee on mortgages to be registered in the MERS system by its members. This is a listing in name only. Or to put it another way, MERS is a nominee.”
MERS own definition of “mortgagee of record” in MERS Training at p. 149
MERS AS FORECLOSING PARTY
In Kentucky, MERS represented that 8,500 foreclosures brought by MERS members naming MERS as the plaintiff
Prior to July 2011, MERS’ own rules allowed for foreclosures to be brought in its name
MERS never the real party in interest; never holds the note
“One of the key things has been eliminating foreclosures in MERS’ name. That’s been a lightning rod for a lot of people because it created consumer confusion. The consumer doesn’t understand who MERS is, even though it’s buried in their contract.”
MERS CEO BILL BECKMANN IN 2011
MERS as Record Keeper
MERS purports to stand in shoes of traditional public records system for 70 million mortgages
Systemic and total failure to ensure integrity, reliability and accuracy of data -49 MERS foreclosures reviewed in one KY county -MERS provided data on only 43 -19 of 43: info on MERS inconsistent with actual judicial record -11 of 43: MERS has no record of a foreclosure occurring -8 of 43: foreclosing party does not match up with Court record
“We did not have a robust process to make sure all the data on our system was accurate, timely and reliable. Our view was that is the servicer’s data and they’re relying on it for their own transactions, they’re using their own systems, so we don’t have to double check.”
MERS CEO Bill Beckmann, 2011
Kentucky’s Claims
Count I: Violation of Mandatory Recording Statute
“Well, they can do [what] other states have done, and they can work with the legislature to impose certain requirements. For example, they could change the recording laws and require that the financial instruments at issue be recorded.” Statement of MERS Attorney in response to Delaware judge’s questioning at oral argument on Delaware’s motion to dismiss.
Counts II through VII: Kentucky Consumer Protection Act (KRS 367.170(1)) Unfair, false, misleading or deceptive acts or practices in the conduct of trade or commerce
-Failing to record mortgage assignments and creating a registry for the purpose of avoiding mortgage assignments -Foreclosing on Kentucky homeowners -Assigning mortgages after the commencement of foreclosure proceedings -Hiding the true mortgage owner from homeowners, stakeholders and the public -Operating MERS through its members’ employees -Failing to ensure integrity of MERS
Counts VIII and IX: Unjust Enrichment and Fraud (Common Law)
MERS’ DEFENSES
Not an assignment that needs to be recorded under Kentucky law
MERS is not an assignee
Statute doesn’t require promissory note to be recorded
AG has no standing
Separation of Powers
Noerr-Pennington doctrine
Judicial statements privilege
Res Judicata
Failure to state a cause of action under KCPA
No trade or commerce
No unfair, false, misleading or deceptive conduct
WITH FRIENDS LIKE THESE….
11th Hour Move to Intervene by Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac
FHFA is an independent federal agency created pursuant to the Housing and Economic Recover Act of 2008 “(HERA”)
Public history of being at odds with federal housing authorities
Reason for Intervention:
Fannie and Freddie use the MERS System thus their “interests” would be affected by relief sought
Franklin Circuit Judge Allows Attorney General Conway’s Case Against MERS to Move Forward
Press Release Date:
Wednesday, December 11, 2013
Contact Information:
Daniel Kemp Deputy Communications Director 502-696-5659 (office)
Attorney General Jack Conway today announced that a Franklin Circuit Court judge has ruled that the Office of the Attorney General properly alleged violations of Kentucky’s Consumer Protection Act against MERSCORP Holdings, Inc., and its wholly-owned subsidiary Mortgage Electronic Registration Systems, Inc. (MERS).
“I appreciate the court’s careful consideration on this matter, and I am pleased with the result,” General Conway said. “This ruling paves the way to allow my office to hold MERS accountable for its deceptive conduct, and we look forward to continuing our fight for Kentucky consumers.”
MERS was created in 1995 to enable the mortgage industry to avoid paying state recording fees, to facilitate the rapid sale and securitization of mortgages, and to shorten the time it takes to pursue foreclosure actions. Its corporate shareholders include, among others, Bank of America, Wells Fargo, Fannie Mae, Freddie Mac, and the Mortgage Bankers Association. Currently, more than 6,500 MERS members pay for access to the private system. More than 70 million mortgages have been registered on the system.
In January, as a result of General Conway’s investigation of mortgage foreclosure issues in Kentucky, the Attorney General’s office filed a lawsuit in Franklin Circuit Court alleging that MERS had violated Kentucky’s Consumer Protection Act by committing unfair or deceptive trade practices. The lawsuit alleged that since MERS’ creation in 1995, members have avoided paying more than $2 billion in recording fees nationwide. Hundreds of thousands of Kentucky loans are registered in the MERS system.
Additionally, the lawsuit alleged that MERS violated Kentucky’s statute requiring mandatory recording of mortgage assignments, and that MERS had generally committed fraud and unjustly enriched itself at the expense of consumers and the Commonwealth of Kentucky. MERS had moved to dismiss all of the claims on various grounds.
On Dec. 3, the court determined that Attorney General Conway had properly alleged violations of the Consumer Protection Act, as MERS engages in trade or commerce, and that the Attorney General had sufficiently alleged unfair, misleading, or deceptive practices. The court also found that the Attorney General had sufficiently alleged its claims that MERS had committed fraud and had unjustly enriched itself at the expense of the public. The only claim dismissed by the court was the Commonwealth’s allegation that MERS violated the statute requiring recording of mortgage assignments. The court did not determine whether or not MERS had violated the recording statute; the court simply found that the recording statute itself lacks an enforcement mechanism. In all, eight of the nine causes of action brought against MERS by General Conway survived MERS’ motion to dismiss.
Other states have filed similar lawsuits against MERS, including Massachusetts, Delaware and New York. The Kentucky Office of the Attorney General is the first state Attorney General’s office to move past the motion to dismiss stage against MERS.
The Franklin Circuit Court found that the Attorney General had sufficiently stated legal causes of action. It has not yet taken any evidence or ruled on whether MERS committed the alleged violations.
MORTGAGE FORECLOSURE SETTLEMENT
In addition to the MERS lawsuit, General Conway joined 48 other state Attorneys General in negotiating the historic $25 billion national mortgage foreclosure settlement. The Attorneys General uncovered that the nation’s five largest banks had been committing fraud during some foreclosures by filing “robo-signed” documents with the courts.
Kentucky’s share of the settlement totals more than $63.7 million. Thirty-eight million dollars is being allocated by the settlement administrator to consumers who qualify for refinancing, loan write downs, debt restructuring and/or cash payments of up to $2,000. To date, the banks report providing relief to 1,833 Kentucky homeowners. The average borrower received an average of $34,771 in assistance.
Kentucky also received $19.2 million in hard dollars from the banks. The money went to agencies that create affordable housing, provide relief or legal assistance to homeowners facing foreclosure, redevelop foreclosed properties and reduce blight created by vacant properties.
Rep. Jim Himes lets lobbyists and donors write our laws, so we decided to make a “generous donation” of our own. Learn more and take action at https://represent.us/action/operation…
DENVER- Colorado Attorney General John Suthers announced today the Consumer Credit Unit of his office filed a civil lawsuit against United Credit Recovery (UCR), its principal and director, Leonard Potillo (D.O.B. 06/26/65), as well as against GTF Services and Standley & Associates, alleging that they sought to pass off fraudulent bank documents in their attempt to collect on outstanding debts and engaged in deceptive trade practices that harmed consumers.
“UCR faked bank officer signatures on documents to orchestrate a debt-for-sale scheme from which they handsomely profited,” explained Suthers. “The scheme involved thousands of individual accounts totaling tens of millions of dollars,” Suthers continued.
According to the complaint, UCR purchased consumer debt from Wells Fargo and US Bank and then used account information provided by the banks to create hundreds of thousands of fake affidavits purporting to describe and to verify debt owed by consumers. UCR profited by using the fake affidavits in collecting on the debt and in reselling debt to third-party debt collectors.
In addition to using the affidavits for its’ own collection purposes, UCR sold accounts of Colorado consumers to other agencies and distributed the falsely-created affidavits to those agencies. GTF, one such agency, is alleged to have used the affidavits through the debt-collection law firm Standley & Associates, who filed the affidavits in more than 300 debt collection lawsuits against consumers in Colorado.
The fabricated affidavits have assisted in the collection of money from Colorado consumers by being filed in court as evidence of the amount owed and by being presented as validation of the debt directly to Colorado consumers.
The complaint was filed pursuant to the Colorado Consumer Protection Act and the Colorado Fair Debt Collection Practices Act with the Denver County District Court.
Colorado’s complaint asks the courts to completely compensate or restore to their original position, all consumer injured by the defendants.
Attached is an Exhibit that was submitted in a NY bankruptcy case for a trial which settled.
In “newer” foreclosures, there are likely to be robo-redux endorsements fabricated per specs directed by procedures and processes set in place by the entities dealing with loan documentation failures and gaps.
These entities direct the lawyers and the Loan Documentation” or “Note Endorsement” units or “teams”. From what we know, these Note Endorsement teams are comprised of 4-6 people who stamp endorsements on notes whenever a lawyer/servicer/other entity sends / directs / opens a task requesting the team to take care of a note endorsement problem.
My recollection is that some of the servicer settlements (like the protocols approved in NJ) may have provisions related to such fixing of exception riddled document trails.
SUPREME COURT – STA TE OF NEW YORK IAS PART 39 – SUFFOLK COUNTY
WELLS FARGO BANK NA, Plaintiff,
-against-
RANDOLPH A. VIECCO, BOARD OF MANAGERS OF COVENTRY TOWN HOUSES, INC., and “JOHN DOE”, (Said name being fictitious, it being the intention of Plaintiff to designate any and all occupants of premises being foreclosed herein, and any parties, corporations or entities, if any, having or claiming an interest or lien upon the mortgaged premises.) Defendants.
EXCERPT:
Inasmuch as the standing of the plaintiff has now been drawn into question, it was incumbent upon the plaintiff to prove such standing before being entitled to any relief (see, CitiMortgage, Inc. v Rosenthal. 88 AD3d 759, 931 NYS2d 638 [2d Dept 2011]). The standing of a plaintiff in a mortgage foreclosure action is measured by its ownership, holder status or possession of the note and mortgage at the time of the commencement of the action (see. Bank of N. Y. v Silverberg. 86 AD3d 274. 926 NYS2d 532 [2d Dept 20 I I]: U.S. Bank, N.A. v Collymore, 68 AD3d 752. 890 NYS2d 578 [2d Dept 2009]). A mortgage ”is merely security for a debt or other obligation. and cannot exist independently of the debt or obligation” (Deutsche Bank Natl. Trust Co. v Spanos. I 02 AD3d 909, 911, 961 NYS2d 200 [2d Dept 2013] [internal quotation marks and citations omitted]). Holder status is established where the plaintiff is the special indorsee of the note or takes possession of a mortgage note that contains an endorsement in blank on its face or attached thereto. as the mortgage follows an incident thereto (see, Mortgage Elec. Registration ~1·s., Inc. v Coakley, 41 AD3d 674. 838 NYS2d 622 [2d Dept 2007]: First Trust Natl. Assn. v Meisels. 234 AD2cl-+ 14, 651 NYS2d 121 [2d Dept 1996] ). “Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is .sufficient lo transfer the obligation. and the mortgage passes with the debt as an inseparable incident” (U.S. Bank, N.A. v Collymore. 68 AD3d 752. sup at 754 f internal quotation marks and citations omitted]).
In the instant case. the plaintiff failed to establish. prima facia. that it had standing as its evidence did not adequately demonstrate that the note was physically delivered to it prior to the commencement of the action (sec. Deutsche Bank Natl. Trust Co. v Rivas. 95 AD3d 1061. 945 NYS2d ‘”128 l2d Dept 2012/: HSBC Bank USA v Hernandez. 92 AD3cl 8-t3. 939 N\’S:2d 120 [::’.cl fkpt 2tl 1.2 i l. In support or the motion. the plaintiff submitted. inter alia. the affidavit of Bradley Richard a Vice President of Loan Documentation from the plaintiff. In his affidavit. Bradley alleges among other things. that the promissory note was endorsed in blank and is in the plaintiff possession. The plaintiff’s representative however did not provide any factual details concerning when the plaintiff received physical possession of the note. and. thus. the plaintiff failed to establish that had it physical possession of the note prior to commencing this action (sec. Deutsche Bank .Vat/. Trust Co. v Barnett. 88 ,\f)Jd 63(1. 931 \i\S2d 630 r2d Dept 21Jl 1 j). I furthermore. in this case. the note contains two endorsements. the second of which was purportedly made by the plaintiff. Additionally. the plaintiffs officer neither addressed the relevance of the agreement between Washington Mutual Bank and Wells Fargo Funding. nor the relationship, if any. between these entities and the plaintiff. Moreover. if MERS. as nominee of Professional was not the owner of the note. as it appears. it would have lacked the authority to assign the note to plaintiff: and absent an effective transfer of the note. the assignment of the mortgage to plaintiff would be a nullity (si:c. Bank \i YS2cl 92 I 2cl Dept 1988] ). Thus. the issue of standing cannot be determined as a matter of lawon this record. In view of the plaintiffs incomplete and conflicting evidentiary submissions, an issueof fact remains as to whether it had standing to commence this action. The Court now turns to the ten affirmative defenses set forth in the defendant mortgagor’s original answer.
The Senate voted 57-41 on Tuesday to confirm Rep. Mel Watt to head the agency overseeing Fannie Mae and Freddie Mac, ending a long battle by President Obama to install a regulator open to more aggressive action to help struggling homeowners.
Watt, a longtime Democratic congressman from North Carolina, will replace Edward J. DeMarco as director of the Federal Housing Finance Agency. President Obama nominated Watt in May.
“He’s the right person to protect Americans who work hard and play by the rules every day, and he’ll be the right regulator to make sure the kind of crisis we just went through never happens again,” Obama said.
If JPMorgan Chase and the Justice Department thought that all the zeroes at the end of the bank’s multibillion-dollar settlement for mortgage securitization failures would foreclose questions about the bank’s actual wrongdoing, clearly they thought wrong. Days after the much-leaked-about $13 billion deal was finally announced, New York Times columnist Gretchen Morgenson looked at the admissions accompanying the settlement and wondered why it had taken the federal government so long to hold the bank accountable for conduct that’s been in the public domain for years. Morgenson’s column echoed posts at Bloomberg and Slate that also scoffed at JPMorgan “admissions.” On Monday, even a commissioner of the Securities and Exchange Commission piled on. Dan Gallagher, a Republican, criticized the settlement as a penalty on the bank’s current shareholders that’s not justified by JPMorgan’s admitted conduct. “It is not rational,” Gallagher told an audience in Frankfurt at an event organized by the American Chamber of Commerce in Germany.
JACKSONVILLE, Fla., Dec. 10, 2013 /PRNewswire via COMTEX/ — Fidelity National Financial, Inc. FNF+2.67% , a leading provider of title insurance and transaction services to the real estate and mortgage industries, today announced that it has retained J.P. Morgan Securities LLC to work with FNF management to identify strategic alternatives for FNF’s portfolio company investments, potentially including a tracking stock, spin-offs, sales and other potential strategic alternatives, to both monetize and highlight the value of FNF’s portfolio investments for the benefit of its shareholders.
“Our energies are focused on the pending acquisition of Lender Processing Services and opportunities to grow our core businesses,” said FNF Chairman William P. Foley, II. “Future free cash flow from core operations is expected to be used to pay down debt, invest in core operations, pay dividends and repurchase shares and not for acquisitions outside of our core business. The portfolio company investments have significant value which may not be fully reflected in our stock price and we believe there are attractive alternatives we can pursue to unlock the value of these investments for the benefit of FNF and our shareholders. We remain committed to continually prioritizing our resources in order to maximize total shareholder return.”
DFS Regulations Would Permit ‘Shared Appreciation’ Mortgage Modifications – Which Can Benefit Both Homeowners and Investors
Provides New Option for Homeowners who May Have Been Previously Turned down for Relief
Governor Andrew M. Cuomo today announced that his Administration is proposing to expand the mortgage relief options available to struggling ‘underwater’ homeowners, who owe more than the current market value of their homes. The Department of Financial Services (DFS) is issuing proposed regulations that would authorize and encourage “Shared Appreciation” mortgage modifications in New York. Under a shared appreciation modification, banks and mortgage servicers reduce the amount of principal outstanding on a borrower’s mortgage in exchange for a share of the future increase in the value of the home.
“For many homeowners and investors, this innovative approach to mortgage relief could prove to be a win-win,” said Governor Cuomo. “First and foremost it will help keep more families in their homes and out of foreclosure, while at the same time reducing potential losses for investors. That’s good for homeowners, good for local neighborhoods, and good for the long-term strength of the housing market.”
Benjamin M. Lawsky, Superintendent of Financial Services, said: “Principal reduction can provide a life raft for many struggling homeowners who are underwater on their mortgages. In New York, we will continue to explore new options to reach as many homeowners as possible and deliver relief to struggling families facing foreclosure.”
The dramatic drop in home prices that accompanied the financial crisis left millions of homeowners owing more on their mortgages than the value of their homes. Families trapped in these underwater mortgages are generally at much greater risk of losing their homes.
Foreclosures are deeply costly to both the families who lose their homes, as well as the investors who are often forced to take sharp losses and sell the property into a distressed market. Additionally, foreclosures can do great damage to surrounding neighborhoods through the negative impact of blight and vacant properties on communities and home prices. Preventing avoidable foreclosures can be beneficial to homeowners, investors, and local housing markets.
The Cuomo Administration is proposing new regulations authorizing and encouraging banks and mortgage servicers to provide shared appreciation mortgage modification to underwater homeowners facing foreclosure. The homeowners who would be eligible under this regulation include those who are not eligible for existing federal and private foreclosure prevention programs. As such, these regulations could provide new options for homeowners who have previously been turned down for mortgage assistance.
The proposed regulation includes a number of important consumer protection requirements. Under the proposed regulation, banks and mortgage servicers must provide clear and prominent disclosures to borrowers about the terms and nature of the shared appreciation mortgage modification. Additionally, the mortgage investor’s share of the appreciation will be limited to the lesser of: (1) The amount of the reduction in principal, plus interest; or (2) Fifty percent of the amount of appreciation in market value.
To view a copy of the proposed DFS regulations, please visit, link.
The Volcker Rule is the keystone of the most sweeping overhaul of financial regulation since the Depression. The rule imposes some requirements that are tougher than the banks had hoped.
The banking and securities regulators would like us to think they can rein in the country’s biggest financial institutions. They can’t even tame a bunch of nosy journalists. Public expectations for how the Volcker rule plays out in the years to come will be and should be low.
Paying more than 30 percent of your income on rent is what experts call unaffordable. Yet the number of people who fall into that group has reached record numbers, according to a new report from the Joint Center for Housing Studies of Harvard University.
The share of renters who pay more than 30 percent of what they make on housing, or what the study labels “cost-burdened,” rose 12 percentage points last decade, reaching 50 percent in 2010. That includes 27 percent who face a “severe burden,” or in other words, pay more than half of their income on rent, a figure that rose 8 percentage points. Initial estimates show that there were a record 21.1 million renters who were cost-burdened in 2012.
The federal recusal statute says that judges may not sit if they or their family members have even one share of stock in one of the parties involved in the case. However, the rules vary on the state level. In a review of state high court disclosure requirements, The Center for Public Integrity found 14 cases in which judges participated in cases in which they or their spouses held stock in one of the parties.
Not disclosed but she reported earning less than $1,000 in annual dividends.
Case:
A securities-fraud lawsuit brought by a group of shareholders against Regions Financial Corp.
Stock:
3M Co. (MMM)
Estimated value*:
Not disclosed but she reported earning less than $1,000 in annual dividends.
Case:
A change-of-venue petition related to a class-action lawsuit brought by Alabama landowners who claimed that 3M and other companies had polluted their property with dangerous chemicals.
Judge’s response:
Stuart declined to comment about her stock ownership but pointed to Alabama’s Code of Conduct, which states that de minimis levels of stock ownership do not jeopardize a judge’s impartiality.
Denied an appeal to a couple who accused Wells Fargo of predatory lending and unlawful foreclosure.
Judge’s response:
“The justice regrets the error and thanks you for bringing it to her attention,” said court spokesman Cathal Conneely. “The Supreme Court is reexamining its internal conflict of interest procedures to prevent similar errors in the future.”
About $28,300, based on market price of 320 shares.
Case:
A zoning case involving Idexx in a land dispute with its neighbors over quarrying by another neighbor.
Judge’s response:
“At the time that I made the ruling, I didn’t even realize she owned the Idexx stock,” Silver told the Center. “If I had realized it at the time, I would have recused myself.”
A case about banks’ documentation of mortgages, a decision that voided some of the bank’s foreclosures.
Judge’s response:
Court spokeswoman Jennifer Donahue said on behalf of the justice that recusal is only required when a judge has a more than de minimis economic interest that could be substantially affected by the outcome of a proceeding.
Justice Robert Cordy
Stock:
Bank of America (BAC)
Estimated value*:
Not disclosed but more than $1,000. “Several hundred shares,” according to court spokeswoman Jennifer Donahue.
Case:
A case accusing the bank of using unfair and deceptive business practices as a trustee on the leasing of land used as a dump.
Judge’s response:
Court spokeswoman Jennifer Donahue said on his behalf that he owned several hundred shares of Bank of America stock, which she said did not require his recusal under the court’s standards.
The case hinged on whether lawyers from out of state, representing a mother whose baby died, should have been allowed to try the case against a hospital and Abbott, which made the baby formula her infant drank.
Stock:
Wells Fargo & Co. (WFC)
Estimated value*:
Not disclosed but at least $10,000.
Case:
The court’s ruling upheld a lower court’s decision about proving who held a loan in a foreclosure case, which found that Wells Fargo did not need to present an original note to show it held a mortgage.
Stock:
Duke Energy Corp. (DUK)
Estimated value*:
Not disclosed but at least $10,000.
Case:
A case on a rate hike sought by the energy company.
Judge’s response:
He said his ownership stake was not significant and did not affect his decisions.
What now? How much longer will this corruption go on?
Reuters-
Internal JPMorgan Chase & Co (JPM.N) emails and computer files being examined by U.S. authorities show that the bank favored hiring people from prominent Chinese families in order to win investment banking business, the New York Times reported on Saturday.
The documents show that a JPMorgan program designed to prevent questionable hiring practices was ultimately viewed inside the company as “a gateway to doing business with state-owned companies in China,” the Times said, adding that it had reviewed copies of the emails and computer spreadsheets.
In one email, an executive said that hiring sons and daughters of powerful people in China “almost has a linear relationship” with winning assignments, the Times said.
IN THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY, PENNSYLVANIA
Federal Home Loan Bank of Pittsburgh, Plaintiff,
V.
J.P. Morgan Securities LLC, J.P. Morgan Mortgage Acquisition Corp., J.P. Morgan Mortgage Acceptance Corporation I, Chase Home Finance L.L.C., Chase Mortgage Finance Corporation, JPMorgan Chase & Co., Moody’s Corporation, Moody’s Investors Service, Inc., The McGraw-Hill Companies, Inc., and Fitch, Inc., Defendants.
Federal Home Loan Bank of Pittsburgh, Plaintiff,
V.
J.P. Morgan Securities LLC, JPMorgan Chase & Co., Moody’s Corporation, Moody’s Investors Service, Inc., and The McGraw-Hill Companies, Inc., Defendants.
EXCERPT:
15. All of the JPMorgan trusts at issue here also contained many “statedincome” loans, and Pittsburgh FHLB has discovered facts which show significant concern on the part of JPMorgan employees about material misrepresentations regarding borrowers’ reported income levels, and about the performance of certain stated income loan programs. The Statement of Facts does not provide any details about the originator, the vendor, the loan program, or the employees involved. The draft complaint may do so. And even if those facts relate to a different trust or a different program, the knowledge of the employees would certainly be relevant to Pittsburgh FHLB’s claim of fraud, and would support Pittsburgh FHLB’s position that JPMorgan’s conduct with respect to the trusts at issue in this case was not unique, but rather was part of a pattern of fraudulent conduct, involving its entire mortgage platform and related companies, which should be deterred by an award of punitive damages.
16. The lack of specificity in the Statement of Facts has led others to question what it was the DOJ actually found in its investigation that caused JPMorgan to pay $13 billion. Gretchen Morgenson, writing in the New York Times on November 23, 2013 found the Statement of Facts unsatisfying:
Eager to see what the Justice investigation had found, I consulted the statement of facts that accompanied the settlement and that JPMorgan had to acknowledge. There, I reckoned, would be some juicy, new evidence of the bank’s mortgage misdeeds “uncovered” by assiduous investigators armed with subpoena power and other government might.
Perusing the 11-page document, I quickly saw that I’d reckoned wrong. Much of it was the same-old-same-old, a not-very-lively description of a corrupted Wall Street mortgage factory, based largely on some facts that have been in the public domain for years.
In other words, although it took the Justice Department more than five years to pursue a major bank for its role in the mortgage mania, the investigation seems to have unearthed material that, by and large, could have been dug up with a spoon.
(Ex. A, attached.)
17. Given the DOJ’s desire not to have the draft complaint become public until after the settlement was reached, and given JPMorgan’s apparent deep desire to prevent it from ever seeing the light of day, it would not be at all surprising if the draft complaint is a much more detailed account of JPMorgan’s fraudulent conduct, and as such, far more enlightening than the Statement of Facts.
[…]
APPEARANCES:
For Plaintiff, FHLB: Janet C. Evans, Esq.
Randall Tietjen, Esq.
Justin T. Romano, Esq.
William H. Manning, Esq.
Damien A. Riehl, Esq.
For Defendant, JPMorgan: Dorothy J. Spenner, Esq.
Tom Paskowitz, Esq.
Jeremy Stamelman, Esq.
Deborah A. Little, Esq.
Samuel W. Braver, Esq.
For Defendant, Fitch: Christopher L. Filburn, Esq.
Julia Mason Wood, Esq.
Elizabeth F. Collura, Esq.
For Defendant, McGraw-Hill: Tammy L. Roy, Esq.
Jacqueline A. Koscelnik, Esq.
For Defendant, Moody’s: James Regan, Esq.
James J. Coster, Esq.
For Defendant, Countrywide: John J. Falvey, Jr., Esq.
Sharon L. Rusnak, Esq.
Aleksandra Sasha Williams, Esq.
P R O C E E D I N G (12:24 p.m., Counsel present before the Court.) – – –
THE COURT: I do believe I brought another file, so I will be back, because we’re not dealing with whether silicon can cause cancer. (Discussion held off the record.) (Brief pause in proceedings.) (12:28 p.m.)
THE COURT: Okay. We’ll try again. Be seated. Now, we’re starting with the rating agency’s motion, and there’s some 10,000 documents; is that right?
MS. WOOD: Yes, Your Honor.
THE COURT: Okay. And they’re all protected — they’re all SARs reports?
MS. WOOD: They’re all — they are on a log that Plaintiff has prepared of all documents that are subject to the bank examiner privilege.
THE COURT: Okay. That’s what I meant.
Yes, I’m sorry.
MS. WOOD: Yes.
THE COURT: So the Plaintiffs want to take the position that there’s no cause shown for any There are some letters rogatory, I think, both from Countrywide and the rating agencies.
MS. ROY: Standard & Poor’s, yes.
MS. EVANS: So if we could proceed, I’d like to talk through the couple of motions to compel that were on today.
THE COURT: Okay.
MS. EVANS: Are you all right with that? Okay. This is the original that I am filing on the motion to compel for receipt of documents produced to the Department of Justice. (Counsel and the Court exchange documents.) This is against JPMorgan. In August, Your Honor, of this year, JPMorgan announced that, in an SEC filing, that the Department of Justice was conducting civil and criminal investigations relating to its MBS matters activities. Appended to that motion at Tab B is Page 204 of that disclosure, which discloses — JPMorgan discloses that there are parallel investigations. This is up on the right-hand top.
THE COURT: Okay. And what’s the discovery issue?
MS. EVANS: What we would like is all of the documents that were produced in connection with the DOJ investigation. In September of this year, the Department of Justice indicated that it was ready to serve a complaint. My understanding, from public information — whether it’s accurate or not — is the complaint did go to JPMorgan. It’s not public. We don’t have it. JPMorgan entered into settlement negotiations right away — it’s been in the newspaper — for about $11 billion, is the number that was discussed. The last I know, only from public statements or publicly available information, is that Jamie Dimon was involved in the talks and they are stalled on some points.
THE COURT: Okay. So, what are you asking for?
MS. EVANS: The documents that were provided to the Department of Justice in connection with the civil and criminal investigation into the mortgage backed securities.
THE COURT: Okay.
MS. EVANS: It’s the same time frame, too, Your Honor, and the allegations reported in the press are the same.
[…]
MS. EVANS: It goes on to say in the Wall Street Journal article that, “…among the documents is an e-mail from a bank employee warning her superiors that they were vastly overstating the quality of the mortgages being bundled into the securities.”
MR. PASKOWITZ: Again, hearsay.
MS. EVANS: Pardon me. I was kind enough not to interrupt you. I appreciate the courtesy. What we have developed in our case is exactly — this is exactly it. This is — they are looking into the RMBS business, which means all loans; prime, subprime.
THE COURT: So, what are you asking with respect to the two people?
MS. EVANS: What we would like is the documents that they produced pursuant to the subpoenas from the Department of Justice. Now —
THE COURT: Well, what’s that have to do with two people?
MS. EVANS: That should — if it does not include the e-mail, then we do want the identity of the individual who warned her supervisor that they were vastly overstating the quality of the mortgages they bundled into securities.
THE COURT: That you believe JPMorgan can identify that employee?
MS. EVANS: Yeah, I do. This has been a two-year investigation. It started out from the Obama administration. We have known that there have been these subpoenas, and now the Justice Department has decided that it is doing both civil and criminal investigation into its entire MBS activities. That’s JPMorgan’s own disclosure. It’s not just to subprime or Alt A or different kinds of securities. Importantly, I don’t know what Ms. Dailey has to do — Ms. Dailey. Our Special Master; not
Ms. Dailey.
MS. SPENNER: Ms. Dodge.
MS. EVANS: Dodge. She was deciding whether they were using any more search terms. They don’t have to do anything. All they have had to do is download the documents, whatever they were, that they gave to the Department of Justice and deliver them to us. That’s very similar to what S&P did. We would simply agree, as we did in the S&P DOJ documents, that we will treat them highly confidential so you don’t have to go through and delay. We are getting towards the end. I am very excited about that.
THE COURT: Now, there is a — you believe there’s a draft of a complaint that JPMorgan has?
MS. EVANS: I do. All I can tell you is I read it in publications.
MR. PASKOWITZ: That’s our main problem with this whole motion, is that what FHLB is currently asking us is to vastly expand the record in this case when we’re a couple months away from the close of discovery, based on a newspaper article.
THE COURT: Well, I think they could ask you, if there is a draft of a complaint, to turn that over.
MR. PASKOWITZ: Whether there is or is not, I do not know.
THE COURT: If there is.
MR. PASKOWITZ: My concern, I would put on the record, my concern there in the S&P context, whether there was a filed complaint that the government was willing to stand behind, I think you have a very different situation than a draft complaint that they may have turned over to JPMorgan as part of a negotiation. I think there’s a very different factual record there that exists and different implications that can arise.
THE COURT: Okay. I’m going to, for the time being, let you get any drafts of a complaint and the name of that employee, if they have it.
MR. PASKOWITZ: I — okay. I think we have to sort of explore whether there’s any issues turning that over from the government. I don’t know if there are or are not. If a complaint has been shared, whether there are any concerns from the government’s standpoint as to turning that over, I just don’t know sitting here today.
THE COURT: Well, you have the draft?
MR. PASKOWITZ: I do not know that we do.
MS. SPENNER: Says the Wall Street Journal. I have no idea.
THE COURT: The claim is, you have the draft.
MR. PASKOWITZ: The —
MS. SPENNER: Their claim.
THE COURT: Okay. So that, to the extent that you have it, you turn it over.
MS. SPENNER: I can —
MS. EVANS: And the name of the employee?
MS. SPENNER: I can tell you right now that, because we have looked into this, that”,
THE COURT: Well, you’ll just answer it.
MS. SPENNER: Say that — say exactly what I just said?
THE COURT: In your answer.
MR. PASKOWITZ: In our answer.
THE COURT: ‘Tell us who the employee is referred to in the Wall Street Journal.’ sm. 9
MS. EVANS: May I request the information in ten days, Your Honor?
MR. PASKOWITZ: The complaint, again, because we’ll have to explore this issue —
THE COURT: I’ll give you twenty days.
MR. PASKOWITZ: Thank you.
MS. EVANS: Thank you, Your Honor. The next motion, that is kind of a double motion, this is for William King’s documents produced in another piece of litigation, and that is in the FHFA case against JPMorgan. He is a named Defendant. His name is William King. I do want to share with you and tell you something of who he is.
(Indicating) Here’s — here is an organizational chart
JPMorgan Chase & Co. (JPM) had a hearing behind closed doors with a Pennsylvania judge in its bid to keep secret a draft of a government lawsuit related to its $13 billion settlement with the U.S. as well as the identity of an employee who cooperated in a federal probe.
The company is fighting an Oct. 17 order by Judge Stanton Wettick in Pittsburgh that it release the document and the employee’s name to lawyers for the Federal Home Loan Bank of Pittsburgh, who say the material may provide a more detailed account of the U.S. Justice Department probe of JPMorgan that could be used in their lawsuit against the New York-based bank.
“FHLB has not set forth any facts supporting why it needs the draft DOJ complaint or what admissible evidence it might glean from the allegations of a complaint,” Deborah Little, a lawyer for JPMorgan, said in a court filing. “FHLB has not demonstrated any nexus between the DOJ’s investigation and the subject matter of this case.”
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