IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
September 18, 2013 Session

MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.

V.

CARLTON J. DITTO, ET. AL.

Appeal from the Chancery Court for Hamilton County
No. 12-0058 Hon. W. Frank Brown, III, Chancellor

No. E2012-02292-COA-R3-CV – Filed January 2, 2014

This appeal involves the purchase of property at a tax sale. MERS filed suit against
Purchaser to invalidate his purchase of property because it had not received notice of the sale
even though it was listed as a beneficiary or nominee on the deed of trust. Purchaser claimed
that MERS was not entitled to notice because MERS did not have an interest in the property.
Purchaser also alleged that MERS failed to properly commence its lawsuit because it did not
remit the proper funds pursuant to Tennessee Code Annotated section 67-5-2504(c). The
trial court refused to set aside the tax sale, holding that the applicable notice requirements
were met and that Purchaser was the holder of legal title to the property. MERS appeals. We
affirm the decision of the trial court.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed; Case Remanded

J OHN W. M CC LARTY, J., delivered the opinion of the Court, in which C HARLES D. S USANO,
J R., P.J., and D. M ICHAEL S WINEY, J., joined.

Caroline B. Stefaniak, Chattanooga, Tennessee, and JoAnn T. Sandifer, St. Louis, Missouri,
for the appellant, Mortgage Electronic Registration Systems, Inc.

Carlton J. Ditto, Chattanooga, Tennessee, Pro Se.

Rheubin Taylor and James C. Davey, Chattanooga, Tennessee, for the appellee, Hamilton
County f/u/b State of Tennessee.
 OPINION

I. BACKGROUND

MERSCORP, Inc., the parent company of Mortgage Electronic Registration Systems,
Inc. (“MERS”), was developed “to serve as the mortgagee of record and operate an electronic
registration system for tracking interests in mortgage loans.” Lending institutions pay an
annual subscription fee to MERS “for the electronic processing and tracking of ownership
and transfers of mortgages.” When lenders in the MERS system execute a deed of trust, the
lender designates MERS as a beneficiary or nominee. The lender retains the promissory note
and the servicing rights of the mortgage. By designating MERS on the deed, the lender is
able to sell the mortgage to another MERS member without having to record the transfer in
the county office, thereby avoiding the payment of recording fees. MERS tracks the sale of
the mortgage and is tasked with providing the current lender with any notices concerning the
property throughout the life of the mortgage. If a mortgage within the system is sold to a
nonmember, MERS assigns the mortgage to the new lender, ending any involvement by
MERS.

The property at issue in this case was initially purchased by Joseph L. Dossett and
Gerald Dossett, as joint tenants with rights of survivorship. The recorded Deed of Trust (“the
Deed”) provided that the property was encumbered by a mortgage held by Choice Capital
Funding, Inc. (“Capital”). The Deed identified Robbie McLean as the trustee and MERS as
the beneficiary, “acting solely as a nominee for [Capital] and [Capital’s] successors and
assigns.” The Deed provided an address for MERS and Capital and further provided, in
pertinent part,

TRANSFER OF RIGHTS OF THE PROPERTY

The beneficiary of this Security Instrument is MERS (solely as nominee for
[Capital] and [Capital’s] successors and assigns) and the successors and
assigns of MERS. This Security Instrument secures to [Capital]: (i) the
repayment of the Loan, and all renewals, extensions and modifications of the
Note; and (ii) the performance of Borrower’s covenants and agreements under
this Security Instrument and the Note. . . . Borrower understands and agrees
that MERS holds only legal title to the interests granted by Borrower in this
Security Instrument, but, if necessary to comply with law or custom, MERS (as
nominee for [Capital] and [Capital’s] successors and assigns) has the right: to
exercise any or all of those interests, including, but not limited to, the right to
foreclose and sell the property; and to take any action required of Lender
including, but not limited to, release and cancelling this Security Instrument.

-2-
 Following the purchase of the property, the Dossetts failed to remit the applicable
taxes on the property. In 2010, Hamilton County filed a delinquent tax suit against a number
of property owners, including the Dossetts. The Dossetts and Capital1 were provided notice
of the suit. MERS was not provided notice. Following the continued failure of the Dossetts
to remit the applicable taxes, the property was sold at a public tax sale to Carlton J. Ditto
(“Purchaser”). The sale was confirmed by judicial decree.

On January 27, 2012, MERS filed a petition to set aside the tax sale and for a
declaratory judgment. The suit filed by MERS was consolidated with the initial suit to
recoup the delinquent taxes, thereby adding Hamilton County as a party. MERS alleged that
the sale was unconstitutional and should be set aside because it never received notice of the
delinquent tax suit or the corresponding sale. Purchaser responded with a motion to dismiss,
asserting that MERS failed to properly commence its suit because it never tendered the
required funds pursuant to Tennessee Code Annotated section 67-5-2504(c). Later,
Purchaser and MERS filed competing motions requesting a judgment on the pleadings.
Purchaser renewed its initial argument that MERS failed to properly commence the suit and
alternatively asserted that MERS was not entitled to notice because it did not have a valid
interest in the property. Hamilton County responded to MERS by asserting that MERS was
not entitled to notice of the sale because MERS was not a beneficiary of the Deed. Hamilton
County noted that the “language purporting to identify MERS as the beneficiary [was]
ambiguous and inconsistent” and that MERS was “not entitled to, and [did] not claim, any
of the benefits to which a deed of trust beneficiary is entitled.”

A hearing was held on the competing motions at which MERS offered to submit the
required funds pursuant to section 67-5-2504(c). Following the hearing, the trial court found
that MERS had only a nominal stake in the proceeding and that “because MERS had no true
property interest, it could suffer no injury, and its due process rights were not violated by lack
of notice.” The court further held that MERS was not entitled to notice because MERS had
“no legal or equitable interest in the property sold and [was] not a creditor having a lien on
the property.” The court concluded that the delinquent tax attorney fulfilled the notice
requirements of section 67-5-2502 by issuing notice to the Dossetts and Capital, the only
parties revealed in the records search that held a valid interest in the property. The court
granted Purchaser’s motions, concluding that he retained legal ownership of the property.
This timely appeal followed.

1
Capital sold the mortgage prior to receiving notice of the proceeding. The record is unclear as to the identity
of the current lender.
-3-
 II. ISSUES

We restate the issue raised on appeal by MERS as follows:

A. Whether the trial court erred by refusing to invalidate the sale of the
property when MERS did not receive notice of the suit or the corresponding
sale.

Purchaser raised an issue for our review that we restate as follows:

B. Whether MERS was precluded from relief pursuant to Tennessee Code
Annotated section 67-5-2504(c).

III. STANDARD OF REVIEW

This appeal presents legal issues. The trial court’s conclusions of law are subject to
a de novo review with no presumption of correctness. Blackburn v. Blackburn,

270 S.W.3d 42

, 47 (Tenn. 2008); Union Carbide Corp. v. Huddleston,

854 S.W.2d 87

, 91 (Tenn. 1993).
Additionally, when this court reviews a trial court’s ruling on a motion for judgment on the
pleadings, we must accept as true “all well-pleaded facts and all reasonable inferences drawn
therefrom” alleged by the parties opposing the motion. Cherokee Country Club, Inc. v. City
of Knoxville,

152 S.W.3d 466

, 470 (Tenn. 2004); McClenahan v. Cooley,

806 S.W.2d 767

,
769 (Tenn. 1991).

IV. DISCUSSION

A.

MERS argues that the sale of the property should be invalidated because Hamilton
County violated the statutory notice requirements, codified at Tennessee Code Annotated
section 67-5-2502, and the Due Process Clause of the Fourteenth Amendment by failing to
provide notice of the proceeding or the corresponding sale. Purchaser responds that MERS
did not have standing to bring suit because it had not “sustained any injury or damage as a
result of not being notified of the tax sale.”2 MERS responds that it sustained injury or
damage “both in its own right and as agent for the note holders” and that the elimination of
the lien without notice threatens its “fundamental business model.”

2
Hamilton County did not file a responsive brief.
-4-
 The Due Process Clause of the Fourteenth Amendment provides that states may not
“deprive any person of life, liberty, or property, without due process of law[.]” U.S. Const.
amend XIV, § 1. “In 1950, the U.S. Supreme Court recognized that an action cannot proceed
against a person or entity that would affect an interest in life, liberty, or property unless the
State first provides ‘notice reasonably calculated, under all the circumstances, to apprise
interested parties of the pendency of the action and afford them an opportunity to present
their objections.”’ Bullington v. Greene Cnty.,

88 S.W.3d 571

, 576 (Tenn. Ct. App. 2002)
(quoting Mullane v. Cent. Hanover Bank & Trust Co.,

339 U.S. 306

, 314 (1950)). The
Supreme Court specifically instructed states to “make efforts to provide actual notice to all
interested parties” of an action affecting property rights. Mennonite Bd. of Missions v.
Adams,

462 U.S. 791

, 796 n.3 (1983). “When the mortgagee is identified in a mortgage that
is publicly recorded, constructive notice by publication must be supplemented by notice
mailed to the mortgagee’s last known available address, or by personal service. But unless
the mortgagee is not reasonably identifiable, constructive notice alone does not satisfy the
mandate of Mullane.” Id. at 798 (footnote omitted). Relative to notice of delinquent tax
sales in Tennessee, the Code provides, in pertinent part,

(c) The delinquent tax attorney shall make a reasonable search of the public
records in the offices of the assessor of property, trustee, local office where
wills are recorded, and register of deeds and give notice to persons identified
by the search as having an interest in the property to be sold.

Tenn. Code Ann. § 67-5-2502(c).

In order to pursue an action to set aside the sale of the property for lack of notice,
MERS must have standing to file suit. The doctrine of standing invokes “whether a
particular litigant is entitled to have a court decide the merits of a dispute or of particular
issues.” American Civil Liberties Union of Tennessee v. Darnell,

195 S.W.3d 612

, 619
(Tenn. 2006) (citing Warth v. Seldin,

422 U.S. 490

, 498 (1975); Knierim v. Leatherwood,

542 S.W.2d 806

, 808 (Tenn. 1976)). In Darnell, the Court explained the concept of standing by
stating,

Grounded upon “concern about the proper – and properly limited – role of the
courts in a democratic society,” the doctrine of standing precludes courts from
adjudicating “an action at the instance of one whose rights have not been
invaded or infringed.” The doctrine of standing restricts “[t]he exercise of
judicial power, which can so profoundly affect the lives, liberty, and property
of those to whom it extends, . . . to litigants who can show ‘injury in fact’
resulting from the action which they seek to have the court adjudicate.”
Without limitations such as standing and other closely related doctrines “the

-5-
 courts would be called upon to decide abstract questions of wide public
significance even though other governmental institutions may be more
competent to address the questions and even though judicial intervention may
be unnecessary to protect individual rights.”

195 S.W.3d at 619-20 (citations with explanatory information and footnote omitted). In
order to establish standing, a claimant must show three elements:

(1) a distinct and palpable injury, as opposed to a conjectural or hypothetical
injury; (2) a causal connection between the claimed injury and the challenged
conduct; and (3) the alleged injury is capable of being redressed by a favorable
decision of the courts.

See Lynch v. City of Jellico,205 S.W.3d 384, 395 (Tenn. 2006) (citations omitted). The
primary focus of a standing inquiry is on the party, not the merits of the claim. Metro. Air
Research Testing Auth., Inc. v. Metro. Gov’t of Nashville and Davidson Cnty.,842 S.W.2d 611

, 615 (Tenn. Ct. App. 1992).

This appears to be an issue of first impression in this court. We acknowledge that
numerous courts from other jurisdictions have considered the ability of MERS to intervene
or participate in litigation regarding property in the MERS system. These cases have yielded
conflicting results. See, e.g., Culhane v. Aurora Loan Servs. of Nebraska,

708 F.3d 282, 294
(1st Cir. 2013) (holding that MERS had the authority to transfer title to a loan servicing
company); Commonwealth Prop. Advocates, LLC v. Mortg. Elec. Registration Sys., Inc.,

680 F.3d 1194, 1204-05 (10th Cir. 2011) (holding that MERS had the authority to foreclose on
behalf of the current lender even absent authorization by every investor holding an interest);
Cervantes v. Countrywide Home Loans, Inc.,

656 F.3d 1034

, 1044-45 (9th Cir. 2011)
(recognizing that “[t]he legality of MERS’s role as a beneficiary may be at issue where
MERS initiates foreclosure in its own name” but ultimately holding that a claim for wrongful
foreclosure had not been raised when the trustees initiated the foreclosure); Mortg. Elec.
Registration Sys., Inc. v. Bellistri, No. 4:09-CV-731 CAS,

2010 WL 2720802

, at *11-16
(E.D. Mo. July 1, 2010) (holding that MERS was entitled to notice of right of redemption in
quiet title action because MERS held a protected property interest); Mortg. Elec. Registration
Sys., Inc. v. Southwest Homes of Arkansas,

301 S.W.3d 1

, 8-9 (Ark. 2009) (upholding denial
of motion to set aside decree of foreclosure because MERS held no property interest);
Citimortgage, Inc. v. Barabas, 975 N.E. 2d 805, 813-18 (Ind. 2012) (holding that MERS’s
assignee had right to intervene in foreclosure proceeding but stopped short of asserting that
MERS was independently entitled to notice); Landmark Nat. Bank v. Kesler,

216 P.3d 158

(Kan. 2009) (denying motion to set aside foreclosure because the record lacked evidence as
to whether MERS suffered prejudice and would have had a meritorious defense and ruling

-6-
that MERS suffered no injury); Mortg. Elec. Registration Sys., Inc. v. Saunders,

2 A.3d 289,
296-97 (Me. 2010) (holding that MERS lacked standing to initiate a foreclosure proceeding
because it never obtained an independent interest in the subject property). While these cases
present a general background upon which to frame our analysis, the cases are not binding
upon this court. The district court orders cited by MERS are also not binding upon this court
in our determination as to whether MERS had standing to sue for lack of notice. Leggett v.
308 S.W.3d 843, 871 (Tenn. 2010).

As previously stated, the Deed at issue in this case provided that MERS held “legal
title to the interests granted by” the Dossetts and thatif necessary to comply with law or custom, MERS (as nominee for [Capital]
and [Capital’s] successors and assigns) has the right: to exercise any or all of
those interests, including, but not limited to, the right to foreclose and sell the
property; and to take any action required.

(Emphasis added). MERS is not pursuing this action on behalf of the current lender as an
assignee. Cf. Sprint Commc’ns Co., L.P. v. APPC Servs., Inc.,

554 U.S. 269

(2008)
(upholding the history and tradition providing that “an assignee for collection may properly
bring suit to redress the injury originally suffered by his assignor”). Instead, MERS asserts
that it was independently entitled to notice because it possessed a constitutionally protected
property interest as a result of being named beneficiary or nominee on the Deed.

Despite the alleged assignment, MERS was never given an independent interest in the
property. See generally Saunders, 2 A.3d at 296-97 (holding that MERS never obtained an
independent interest in the subject property). The Dossetts were instructed to mail payments
and notices to the current lender that held the promissory note, while MERS solely recouped
payment for its services from the current lender and was specifically relegated to the role of
nominee relative to the interests transferred by the Dossetts. Nominee is defined, by Black’s
Law Dictionary, 9th edition, as “[a] person designated to act in place of another, usu. in a
very limited way” or as “[a] party who holds bare legal title for the benefit of others or who
receives and distributes funds for the benefit of others.” MERS even argued in a prior case
that it was “contractually prohibited from exercising any rights with respect to the mortgages
(i.e., foreclosure) without the authorization of the members.” See generally Mortg. Elec.
Registration Sys., Inc. v. Nebraska Dept. of Banking and Fin.,

704 N.W.2d 784

, 787 (Neb.
2005).

Additionally, MERS did not suffer an injury by the sale of the property at issue as
evidenced by the fact that MERS did not discover that the property had been sold until
approximately 19 months after the sale. The record reflects that the only injury suffered by

-7-
MERS related to the future effect this case could have on its business model, which is reliant
upon the avoidance of county recording fees by placing the onus on the county to provide
notice to MERS instead of the current lender. We fail to see how this is a distinct and
palpable injury capable of being redressed by this court. Accordingly, we uphold the trial
court’s grant of Purchaser’s motion for judgment on the pleadings because MERS did not
have standing to file suit.

B.

In the event of further review, we must address Purchaser’s assertion that compliance
with section 67-5-2504(c) was a prerequisite for relief. The Code provides, in pertinent part,

No suit shall be commenced in any court of the state to invalidate any tax title
to land until the party suing shall have paid or tendered to the clerk of the court
where the suit is brought the amount of the bid and all taxes subsequently
accrued, with interest and charges as provided in this part.

Tenn. Code Ann. § 67-5-2504(c). The parties agree that MERS did not tender the
appropriate funds; however, MERS asserted at the hearing that it remained willing and able
to tender the funds if directed to by the trial court.

This issue has been addressed by this court with conflicting results. In 2002, this court
set aside a tax sale for lack of notice even though the plaintiff did not remit the required
funds until he was directed to by the trial court. Bullington v. Greene Cnty.,

88 S.W.3d 571

,
575-81 (Tenn. Ct. App. 2002); see also Bass v. Wilkins, Madison Equity No. 1,

1989 WL 11736

(Tenn. Ct. App. Feb. 15, 1989) (“[W]here the decree affirming the sale is void,
payment or tender of the amount bid as required by the statute is not a prerequisite for
relief.”). Conversely, in 1998, this court held that compliance with section 67-5-2504(c) was
a prerequisite for filing a suit to set aside a tax sale. Ewell v. Hill, No. 02A01-9608-CH-
00178,

1998 WL 18142

, at *3 (Tenn. Ct. App. Jan. 21, 1998), perm. app. denied (Tenn. July
13, 1998) (acknowledging conflicting case law on the issue). The court in Ewell did not
reach the issue of whether the decree affirming the sale was void for lack of the
constitutionally required notice. Id.

Tennessee Supreme Court Rule 4(G)(1) provides, in pertinent part,

An unpublished opinion shall be considered controlling authority between the
parties to the case when relevant under the doctrines of the law of the case, res
judicata, collateral estoppel, or in a criminal, post-conviction, or habeas corpus
action involving the same defendant. Unless designated “Not For Citation,”

-8-
 “DCRO” or “DNP” pursuant to subsection (F) of this Rule, unpublished
opinions for all other purposes shall be considered persuasive authority.

Considering that Bullington is a published opinion and more recent in time, we conclude that
the failure to tender the appropriate funds when filing the petition to set aside the sale was
not a prerequisite for relief.

V. CONCLUSION

The judgment of the trial court is affirmed, and the case is remanded for such further
proceedings as may be necessary. Costs of the appeal are taxed to the appellant, Mortgage
Electronic Registration Systems, Inc.

______________________________________
JOHN W. McCLARTY, JUDGE

 

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

There is no embarrassment her folks as we know they don’t give a shit what we think.

Hope they use protection!

AMERICAN BANKER-

Regulators are hoping to release an interim final rule next week designed to satisfy banker demands to change a provision of the Volcker Rule that threatens to force smaller institutions to take millions of dollars in write-offs.

[AMERICAN BANKER]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

This is why the world is falling apart!

IDIOTS!!

HuffPO-

Financial industry lobbyists are among those being asked to suggest who should replace Sandra Braunstein, the retiring Federal Reserve official who oversaw the regulator’s lackluster efforts to protect consumers in the years preceding the U.S. mortgage meltdown.

Braunstein, who has led the Fed’s consumer affairs division since April 2004, did not respond to an emailed request for comment. Her plan to leave the Fed has not been previously reported, nor has the Fed’s outreach to identify potential replacements.

As Braunstein prepares to leave her post, concerns are mounting among consumer advocates that the Fed may pick a financial industry ally who may want to weaken consumer protections. Lonnie Taylor of Diversified Search, an executive search firm retained by the Fed, has asked financial industry lobbyists for recommendations on who should replace Braunstein, people familiar with the matter said.

[HUFFINGTONPOST]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

Bringing it back home after taking the fall.

We know what was up!

HW-

Fidelity National Financial (FNF) said Thursday after market close that it had completed its planned acquisition of mortgage tech and service provider Lender Processing Services (LPS).

“We are excited to consummate the LPS acquisition and bring its market-leading technology solutions and services back into the FNF family,” said FNF Chairman William P. Foley, II.

“This combination creates a larger, broader, more diversified and recurring revenue base for FNF and makes us the nation’s leading provider of transaction services and technology solutions to the real estate and mortgage industries.”

[HOUSING WIRE]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

STATE OF OHIO, COLUMBIANA COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT

BAC HOME LOANS SERVICING, L.P.
fka COUNTRYWIDE HOME LOANS
SERVICING L.P.

PLAINTIFF-APPELLEE

VS.

WALTER J. BLYTHE, et al.

DEFENDANTS-APPELLANTS

{¶1} Appellant Walter J. Blythe appeals the Columbiana County Common
Pleas Court’s decision granting summary judgment in favor of Appellee, BAC Home
Loans Servicing, L.P., in a foreclosure action. Appellant challenges the trial court’s
finding that Appellee had standing to foreclose in the absence of evidence that
Appellee was the holder of the note creating the obligation. Appellant relies on the
material submitted by Appellee in support of this claim. Because the copy of the note
filed by Appellee is specifically indorsed to Countrywide Bank, FSB, not Appellee,
and there is nothing to indicate otherwise, Appellee has failed to demonstrate that it
has standing to accelerate the note and foreclose the mortgage. The judgment of the
trial court is reversed and the suit dismissed for lack of standing.

Statement of Facts

{¶2} On May 2, 2007 Appellant financed the purchase of a house located at
32282 Wooddale Dr., Hanoverton, Ohio, 44423 with a loan issued by Quicken Loans
Inc. Appellant signed a promissory note as the sole obligor in the amount of
$116,000.00. The note named the lender, Quicken Loans Inc., as the sole obligee.
The promissory note was transferred by Quicken Loans Inc. in an undated special
indorsement on page three of the note. The indorsement reads “WITHOUT
RECOURSE Pay To the Order of Countrywide Bank, FSB” and was signed by Scott
Johnson, capture manager for Quicken Loans, Inc. (1/27/12 Status Aff., Exh. A.)

{¶3} The note was secured by a mortgage on the Wooddale property
granted by Appellant to Mortgage Electronic Registration Systems, Inc. (“MERS”) as
mortgagee “acting solely as a nominee for Lender and Lender’s successors and
assigns.” (9/1/10 Complaint, Exh. B, Mortgage, p. 1.) Quicken Loans Inc. is
identified in the mortgage as the lender. (9/1/10 Complaint, Exh. B, Mortgage, p. 2.)
The mortgage was recorded in Columbiana County on either June 11 or August 11,
2007; the copy provided by Appellee is not clear. The mortgage, without reference to
the note, appears to have been assigned by MERS “as nominee for Quicken Loans,
Inc.” to BAC Home Loans Servicing, LP, on March 22, 2010. (9/1/10 Complaint,
Assignment.) The assignment was prepared by Lerner, Sampson, and Rothfuss,
executed in Cincinnati, Ohio, and recorded in Columbiana County on either March 26
or March 28, 2010 (copy provided by Appellee is unclear).

{¶4} Appellee alleges that the account is due and owing from October 1,
2009, in the amount of $116,000.00, with interest accruing at the amount specified in
the note from October of 2009. The accounting provided by Appellee reflects
payment by the homeowner every month between the June, 2007 origination of the
loan and October of 2009, when payment was apparently made for the month in
which the default is alleged to have occurred. The accounting provided by Appellee
reflects a zero balance for each month of the documented life of the loan. Appellee
alleged default under the terms of the mortgage but does not specify nonpayment or
otherwise identify the default that gave rise to acceleration and foreclosure.
Procedural History

{¶5} Appellee filed this foreclosure action in Columbiana County on
September 1, 2010. The complaint was served via certified mail on or about
September 14, 2010 and completed on September 17, 2010. On September 30,
2010, Appellant filed a timely answer to the complaint denying all allegations in the
complaint, alleging as a defense that Appellee had failed to state a claim on which
relief could be granted, and asserting his right to equitable redemption. The matter
was then referred to mediation.

{¶6} Appellee moved for summary judgment, without leave and well beyond
the dispositive motion’s deadline, on January 27, 2012. On that same date Appellee
separately filed an affidavit of status of account and military affidavit and a second
military affidavit. (1/27/12 Status Aff.) It is unclear, but one or both of these may be
the “Affidavit Supporting Plaintiff’s Motion for Summary Judgment” mentioned in
Appellee’s motion. (Motion for Summary Judgment, p. 2) The status of account
affidavit was executed in Texas by Gregory Higeons, an Assistant Vice President of
BAC Home Loan Servicing, LP. He does not specify a date of default, but states
generally that the account is due “from the date of default” in the amount of
$116,000.00 “together with interest thereon” “at the rate specified in the note.”
(1/27/12 Status Aff., ¶3.) Copies of the note, mortgage, and an accounting are
attached to the affidavit but are not referenced in or incorporated by the affidavit.
(1/27/12 Status Aff.) Appellee’s complaint and Appellant’s brief both suggest that
Appellant has filed personal bankruptcy. No evidence of bankruptcy or discharge
appears in the record.

{¶7} Appellant filed a response in opposition to summary judgment and a
motion to strike the summary judgment motion which was filed without leave in
violation of the trial court’s dispositive motion schedule. In opposition, Appellant
argued that Appellee lacked standing to foreclose and was not the real party in
interest due to the absence of evidence in the record showing a transfer of interest in
the note to Appellee. Appellee did not respond. The trial court overruled the motion
to strike and granted Appellee’s motion for summary judgment on February 17, 2012.
Final judgment granting summary judgment and a decree in foreclosure was entered
on February 24, 2012. Appellant filed a timely appeal of both orders. Appellant
sought a stay of execution, which the trial court conditioned on a supersedeas bond
of $50,000.00. It is unclear whether bond has been posted and no order granting a
stay appears in the record.

Argument and Law
Assignment of Error

THE TRIAL COURT ERRED IN GRANTING PLAINTIFF-APPELLEE’S
MOTION FOR SUMMARY JUDGMENT AS GENUINE ISSUES OF
MATERIAL FACT EXISTED AS TO WHETHER THE PLAINTIFFAPPELLEE
IS THE CORRECT PARTY IN INTEREST AND HAD
STANDING TO BRING THE FORECLOSURE ACTION.

{¶8} Appellant contends that the trial court erred in deciding to grant
summary judgment to Appellee because it lacked standing to foreclose. Summary
judgment is governed by Civ.R. 56(C), which states:
Summary judgment shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, written admissions, affidavits,
transcripts of evidence, and written stipulations of fact, if any, timely
filed in the action, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a
matter of law. No evidence or stipulation may be considered except as
stated in this rule. A summary judgment shall not be rendered unless it
appears from the evidence or stipulation, and only from the evidence or
stipulation, that reasonable minds can come to but one conclusion and
that conclusion is adverse to the party against whom the motion for
summary judgment is made, that party being entitled to have the
evidence or stipulation construed most strongly in the party’s favor.
A fact is material if it affects the outcome of the case under the applicable substantive
law. Russell v. Interim Personnel, Inc., 135 Ohio App.3d 301, 733 N.E.2d 1186
(1999). A court may not resolve ambiguities in the evidence presented and is strictly
limited to the evidence or stipulation in the record. Civ.R. 56(C); Inland Refuse
Transfer Co. v. Browning-Ferris Industries of Ohio, Inc., 15 Ohio St.3d 321, 474
N.E.2d 271 (1984).

{¶9} The party seeking summary judgment bears the initial burden of
informing the trial court of the basis of the motion and identifying the portions of the
record which demonstrate the absence of a genuine issue of fact on a material
element of the non-moving party’s claim. Drescher, supra. Once the moving party
meets its initial burden, the burden shifts to the non-moving party to set forth specific
facts demonstrating a genuine issue of material fact does exist. Id. The non-moving
party may not rest upon the allegations and denials in the pleadings, but instead
must submit some evidentiary material showing a genuine dispute over material
facts. Henkle v. Henkle, 75 Ohio App.3d 732, 600 N.E.2d 791 (1991). However,
even a complete failure to respond to a motion for summary judgment does not, by
itself, warrant that the motion be granted. Morris v. Ohio Cas. Ins. Co., 35 Ohio St.3d
45, 47, 517 N.E.2d 904 (1988). In every case, a trial court’s analysis must focus on
whether the movant has satisfied the initial burden to show that reasonable minds
could only conclude that the case should be decided against the nonmoving party.
Id. Only where the movant has discharged this burden does the court move on to
address whether the nonmovant has met its reciprocal burden of establishing that a
genuine issue remains for trial. Id. A trial court should not enter a summary
judgment if it appears that a material fact is genuinely disputed, or if, construing the
allegations most favorably towards the non-moving party, reasonable minds could
draw different conclusions from the undisputed facts. Houndshell v. American States
Ins. Co., 67 Ohio St.2d 427, 424 N.E.2d 311 (1981).

{¶10} Appellant relies on Ohio’s version of Article 3 of the Uniform
Commercial Code, including R.C. 1303.21(B), in support of his argument that
Appellee failed to satisfy its burden to establish standing. R.C. 1303 governs
commercial paper, which includes the note that creates the obligation at issue. R.C.
1303.02, R.C. 1303.03(A), (B), (E)(1). R.C. 1303.21 defines “negotiation” as the
“voluntary or involuntary transfer of possession of an instrument by a person other
than the issuer to a person who by transfer becomes the holder of the instrument.”
R.C. 1303.21(A).

{¶11} Under the same section, “if an instrument is payable to an identified
person [or entity], negotiation requires transfer of possession of the instrument and its
indorsement by the holder. If an instrument is payable to bearer, it may be
negotiated by transfer of possession alone.” R.C. 1303.21(B). Indorsement under
the code “means a signature, other than that of a signer as maker * * * that alone or
accompanied by other words is made on an instrument for any of the following
purposes: (a) [t]o negotiate the instrument.” R.C. 1303.24(A)(1).

{¶12} An indorsement that identifies the person or entity “to whom it makes
the instrument payable” is a special indorsement. R.C. 1303.25(A). “An instrument,
when specially indorsed, becomes payable to the identified person and may be
negotiated only by the indorsement of that person.” R.C. 1303.25(A). A special
indorsement exists in opposition to a blank indorsement, which does not identify a
payee, and instead makes the instrument “payable to bearer” and negotiable “by
transfer of possession alone until specially indorsed.” R.C. 1303.25(B).

{¶13} Appellee claims that ownership of the note is not necessary to enforce
the agreement. While Appellee is correct that R.C. 1303.31(B) allows a person who
is not the owner of the instrument or is in wrongful possession of the instrument to
enforce the instrument, the special indorsement on this note precludes enforcement
by any party other than the named entity. R.C. 1303.25.

{¶14} Appellee argues that it is the “holder” of the instrument. The term
“holder” has specific legal significance in this context and is defined by R.C. 1303.32,
which regulates that the holder must satisfy the applicable requirements included in
that section. The first requirement is that the instrument is “issued or negotiated to
the holder.” R.C. 1303.32(A)(1).

{¶15} The note at issue here was originally payable to Quicken Loans, Inc.,
and was transferred (negotiated) by special indorsement, to Countrywide Bank, FSB.
Appellee, BAC Home Loan Servicing, LP is not Countrywide Bank, FSB. The record
from the trial court does not contain any evidentiary material suggesting that Appellee
is transferee or successor in interest of Countrywide Bank, FSB. For the first time on
appeal, Appellee asserts that we “may take judicial notice” that “Countrywide Bank,
FSB was converted to a national banking association under the title of Countrywide
Bank, N.A. and immediately thereafter merged with Bank of America, N.A.”
(Appellee’s Brf., p. 4.) If Appellee were correct and we could take judicial notice of
such facts, they would not be sufficient to establish Appellee’s alleged standing as
the holder of the note.

{¶16} As we have recently noted, “[a] corporate name is a very precise term”
and for this reason even “minor variations in the spelling and punctuation of a
corporate name” can have dispositive legal significance. CitiMortgage v. Foster,
2012-Ohio-6274, ¶12. Appellee, BAC Home Loan Servicing, LP is not Bank of
America, N.A. The two are demonstrably separate corporate entities; one is a limited
partnership, and the other is a national association; that is, a federally regulated
bank. Appellee’s claim that it has holder status by virtue of the merger of two
corporate entities other than itself is meritless.

{¶17} Appellee’s assertion that it is a nonholder in possession and entitled to
enforce is similarly mistaken. As the official comment to R.C. 1303.31/UCC 3-301
indicates, a nonholder in possession must establish that it has “acquired rights of a
holder by subrogation,” by transfer, is a successor to a holder, or “otherwise acquires
the holder’s rights.” (UCC 3-301, official comment 1990, R.C. 1303.31.) To
demonstrate status as a nonholder in possession of specially indorsed commercial
paper, Appellee would have to demonstrate the transfer or acquisition of the paper.
Nothing in this record establishes the transfer or acquisition of Countrywide Bank
FSB’s right to the note by any means. Even if Bank of America, N.A., and not
Appellee, BAC Home Loan Servicing, LP, had filed suit with the exact copy of the
note filed in this instance, Bank of America, N.A. would be required to produce Civ.R.
56 evidence of the transaction, merger, or mergers that gave rise to an interest in the
subject note.

{¶18} At summary judgment, unlike trial, the material a court may consider is
strictly limited: “[n]o evidence or stipulation may be considered except as stated in
this rule.” Civ.R. 56(C). The material explicitly allowed by the rule includes only
“pleadings, depositions, answers to interrogatories, written admissions, affidavits,
transcripts of evidence, and written stipulations of fact.” Civ.R. 56(C). “The proper
method for introducing evidentiary materials not specifically authorized by Civ.R.
56(C) is to incorporate them by reference into a properly framed affidavit.” Citibank v.
McGee, 7th Dist. No. 11 MA 158, 2012-Ohio-5364, ¶14; Civ.R. 56(E). The absence
of a properly framed affidavit requires us to exclude material, even copies of
government records, where that material has not been properly placed in the record.
CitiMortgage v. Foster, supra, ¶9-11 (stating that a copy of a bank’s corporate
registration was not properly before the court and “not evidence to support summary
judgment” because “Appellee did not reference its corporate registration in an
affidavit.”) No certificate of merger or mergers evidencing a relationship between
Countrywide Bank FSB and any other entity appears in this record. The evidence in
the record does not support the right of any party other than Countrywide Bank FSB
to enforce the subject note. Unlike the note produced by CitiMortgage in Foster, the
note Appellee seeks to enforce is not bearer paper. Appellee cannot overcome the
multiple evidentiary deficiencies in this record with a copy of a specifically indorsed
instrument.

{¶19} We note that:
For nearly a century, Ohio courts have held that whenever a promissory
note is secured by a mortgage, the note constitutes the evidence of the
debt and the mortgage is a mere incident to the obligation. Edgar v.
Haines (1923), 109 Ohio St.159, 164, 141 N.E. 837. Therefore, the
negotiation of a note operates as an equitable assignment of the
mortgage, even though the mortgage is not assigned or delivered.
Kuck v. Sommers (1950), 100 N.E.2d 68, 75, 59 Ohio Abs. 400.
U.S. Bank Nat’l. Assn. v. Marcino, 181 Ohio App.3d 328, 2009-Ohio-1178, 908
N.E.2d 1032, ¶52. The note in this instance, unlike the note in Marcino, is not bearer
paper: it is payable to a specific entity and Appellee is not that entity. Countrywide
Bank FSB, not Appellee, is the holder of the note filed in this action. “The current
holder of the note and mortgage is the real party in interest in foreclosure actions.”
Id. at ¶32. “Where a party fails to establish itself as the current holder of the note and
mortgage, summary judgment is inappropriate.” Id.

{¶20} “[S]tanding to sue is part of the common understanding of what it takes
to make a justiciable case.” Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio
St.3d 13, 2012-Ohio-5017, 979 N.E.2d 1214, ¶21, quoting Steel Co. v. Citizens for a
Better Environment, 523 U.S. 83, 102, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).
“[S]tanding is a ‘jurisdictional requirement * * * [i]t is an elementary concept of law
that a party lacks standing to invoke the jurisdiction of the court unless he has, in an
individual or representative capacity, some real interest in the subject matter of the
action.” (Emphasis sic.) Id. at ¶22. “[T]he issue of standing, inasmuch as it is
jurisdictional in nature, may be raised at any time during the pendency of the
proceedings.” Id. “The lack of standing at the commencement of a foreclosure
action requires dismissal of the complaint; however, that dismissal is not an
adjudication on the merits and is therefore without prejudice.” Id. at ¶40. Appellee is
not the holder entitled to enforce the subject note and fails to meet the jurisdictional
requirements to file suit. Due to Appellee’s lack of standing, Appellant’s assignment
of error is sustained, the judgment of the trial court reversed, and the complaint is
dismissed without prejudice.

Conclusion

{¶21} Appellee has not established that it is the current holder of the note and
mortgage that are the subject of this action, hence, Appellee does not have standing
to file suit. Appellant’s single assignment of error is sustained and, under
Schwartzwald, the judgment of the trial court is reversed. The complaint is hereby
dismissed without prejudice. All costs are taxed to Appellee.

Donofrio, J., concurs.
DeGenaro, P.J., concurs.

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

With all these settlements happening in the last few weeks, I think there is something significant going on.. perhaps taxes might be involved?

REUTERS-

Deutsche Bank AG has settled a U.S. lawsuit in which shareholders accused it of misrepresenting its ability to handle risks associated with mortgage debt prior to the 2008 financial crisis.

The settlement in principle was disclosed in a filing on Thursday by Deutsche Bank’s lawyers in the U.S. District Court in Manhattan. Terms were not disclosed, and final paperwork is expected within 30 days, the filing said.

Shareholders accused Deutsche Bank of misleading them about its risk management and the underwriting on mortgage debt it packaged and sold, as well as being too slow to take write-downs.

[REUTERS]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

For Immediate Release
Contact:
Corinne Russell
(202) 649-3032

Stefanie Johnson
(202) 649-3030

January 2, 2014

.

..

FHFA Recovers Nearly $8 Billion for Taxpayers in 2013
Through Settlements

Washington, DC – The Federal Housing Finance Agency (FHFA), as conservator of Fannie Mae and Freddie Mac, today announced it has recovered nearly $8 billion on behalf of taxpayers in 2013 through settlements with financial institutions that sold private-label securities (PLS) to Fannie Mae and Freddie Mac between 2005 and 2007. FHFA sued 18 financial institutions in 2011 alleging securities law violations, and in some cases, fraud.

Attached to this news release is a list of the settlements.

Links to 2011 news releases on PLS litigation:

FHFA Sues 17 Firms to Recover Losses to Fannie Mae and Freddie Mac
http://www.fhfa.gov/webfiles/22599/PLSLitigation_final_090211.pdf

FHFA Sues UBS to Recover Losses to Fannie Mae and Freddie Mac
http://www.fhfa.gov/webfiles/21842/UBS072711FINAL.pdf

###

The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.5 trillion in funding for the U.S. mortgage markets and financial institution.

Federal Housing Finance Agency
Update on Private-Label Securities Actions
2013 Settlements and Remaining Cases

In 2011, the Federal Housing Finance Agency initiated litigation against 18 financial institutions involving allegations of securities law violations and, in some instances, fraud in the sale of privatelabel securities (PLS) to Fannie Mae and Freddie Mac. Below is a synopsis of the status of each case, with amounts of any settlements reached in 2013, including a non-litigation settlement.

Settlement amounts result from calculating various factors, including statutory calculations, number of securities, unique circumstances of each matter and litigation risks.

PLS Litigation Settlements

1. General Electric Company $6.25 million
2. CitiGroup Inc. $250 million
3. UBS Americas, Inc. (Union Bank of Switzerland) $885 million
4. J.P. Morgan Chase & Co. $4 billion
5. Deutsche Bank AG $1.925 billion
6. Ally Financial, Inc. $475 million

Non-Litigation PLS Settlement

Wells Fargo Bank, N.A. $335.23 million

Remaining PLS Cases
Southern District of New York Cases:

7. Barclays Bank PLC
8. Bank of America Corp.
9. Credit Suisse Holdings (USA) Inc.
10. First Horizon National Corp.
11. Goldman Sachs & Co.
12. HSBC North America Holdings, Inc. (Hong Kong Shanghai Banking Corp.)
13. Merrill Lynch & Co.
14. Morgan Stanley
15. Nomura Holding America, Inc.
16. SG Americas (Societe Generale)
[Ally Financial, Inc. (certain non-Ally defendants remain in the case)]

District of Connecticut Case:

17. The Royal Bank of Scotland Group, PLC

Central District of California Case:

18. Countrywide Financial Corporation

Source: FHFA Recovers Nearly $8 Billion for Taxpayers in 2013 Through Settlements

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

Is she for real? DELUSIONAL.

My 6 most notorious would have named most of the Wall Street Mob!

PolicyMic-

One is likely a ruthless murderer but has a good chance of walking free. One killed an innocent teenage boy and is now selling paintings on eBay — not from behind bars. Another’s case became a total media circus, and we’re still in for more ahead. Two others majorly escaped the justice they should have faced.

There’s a disturbing trend that runs through the high-profile cases of the year: The criminals have not yet, or will never, face justice they deserve.

[POLICYMIC]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

 

 

 

 

 

Mary Spector

Southern Methodist University – Dedman School of Law

2013

 

Georgetown Journal on Poverty Law Policy, Vol. 20, No. 3, 2013

SMU Dedman School of Law Legal Studies Research Paper No. 132

Abstract:     

image: www.goldenfs.org

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.