IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

Senior District Judge Richard P. Matsch
Civil Action No. 13-cv-02672-RPM

ONEWEST BANK, FSB,
a Delaware Corporation,
Plaintiff,

v.

BRUCE C. MCDONALD,
Defendant

ORDER OF DISMISSAL

This action is one of a series of actions arising out of a foreclosure proceeding initiated
by OneWest Bank, FSB (“OneWest”) against Bruce C. McDonald (“McDonald”) in September,
2009, in Saguache County, Colorado. The complaint in this action describes the chronology of
that foreclosure proceeding and two subsequent civil actions – the federal action captioned Bruce
C. McDonald v. One West Bank, F.S.B., Civil Action No. 10-cv-01749-RPM, in the United
States District Court for the District of Colorado (“the federal action”) and a state court quiet
title action captioned McDonald v. OneWest Bank, F.S.B. and Federal Home Loan Mortgage
Corporation, 2010CV 6, in the District Court for Saguache County, Colorado (“the state court
quiet title action”). (Compl. ¶¶ 17- 62).

The complaint initiating this case alleges that on April 9, 2013, McDonald filed another
state court civil action, captioned McDonald v. OneWest Bank, FSB, Case No. 2013CV5, in the
District Court for Saguache County, Colorado, seeking damages against OneWest in the amount
of approximately $6 million for its conduct in connection with the foreclosure proceeding (“the
state court damages action”). (Compl. ¶¶ 5, 63-67).

In this declaratory judgment action OneWest seeks a determination that the order and
judgment of dismissal dated December 27, 2010 in the federal action (“the Federal Judgment”)
supersedes and invalidates a default judgment entered against OneWest and the Federal Home
Loan Mortgage Corporation on November 16, 2010, in the state court quiet title action (“the
State Court Default Judgment”). OneWest contends that the Federal Court Judgment and the
State Court Default Judgment are “inherently inconsistent” and further contends that under a
conflicts doctrine known as the “last-in time rule,” the more recent Federal Court Judgment takes
precedence over the earlier State Court Default Judgment. (Compl. ¶¶ 8-11, 71-81). OneWest
seeks an order from this Court declaring that legal conclusion.

In short, OneWest seeks this Court’s opinion about which judgment should be given
preclusive effect in McDonald’s state court damages action. (See Compl. ¶ 64, alleging that
“McDonald appears to contend that the Federal Court Judgment does not bind him ….” and ¶ 68,
alleging that “McDonald’s theories and claims for relief [in the state court damages action] are
inconsistent with the Federal Court Judgment.”)

McDonald moved for dismissal pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6), arguing
(1) that the Rooker-Feldman doctrine deprives this court of subject matter jurisdiction; (2) the
two judgments are not inconsistent, and (3) that the State Court Judgment precludes
consideration of OneWest’s “last-in-time” argument.

In response, OneWest contends that the Rooker-Feldman doctrine is inapplicable,
asserting that the complaint does not request a review of the State Court Default Judgment.
According to OneWest, its complaint merely asks this Court to perform the function of applying
the last-in-time rule to determine which of the two inconsistent judgments has priority.
Contrary to OneWest’s argument, this court lacks jurisdiction to grant the relief it
requests. “The Rooker–Feldman doctrine limits the power of lower federal courts to review
decisions of state courts.” Jicarilla Apache Nation v. Rio Arriba County, 440 F.3d 1202, 1207
(10th Cir. 2006). The doctrine applies to federal cases “brought by state-court losers
complaining of injuries caused by state-court judgments rendered before the district court
proceedings commenced and inviting district court review and rejection of those judgments.”
Bolden v. City of Topeka, 441 F.3d 1129, 1142-43 (10th Cir. 2006) (quoting Exxon Mobil Corp.
v. Saudi Basic Industries Corp., 544 U.S. 280, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005)). That is
exactly the circumstance presented here. Judgment was entered by default against OneWest in
the state court quiet title action, and that judgment was affirmed by the Colorado Court of
Appeals. OneWest now invites this court to reject that default judgment. Despite OneWest’s
attempt to artfully characterize its complaint, the Rooker-Feldman doctrine deprives this court of
jurisdiction to provide the requested relief. Although the Rooker-Feldman doctrine “does not
otherwise override or supplant preclusion doctrine,” Booker, 441 F.3d at 1143, it would be
impossible for this court to determine which, if either, of the two judgments should have
preclusive effect in a subsequent action without reviewing the State Court Default Judgment and
the process by which it was obtained.

Even if the Rooker-Feldman doctrine were not an impediment, this court would decline
to exercise jurisdiction over OneWest’s declaratory judgment action. The United States
Supreme Court has explained that the Declaratory Judgment Act, 28 U.S.C. § 2201, “is an
enabling Act, which confers a discretion on the courts rather than an absolute right upon the
litigant.” Public Serv. Comm’n of Utah v. Wycoff Co., 344 U.S. 237, 241 (1952); see also Kunkel
v. Cont’l Cas. Co., 866 F.2d 1269, 1273 (10th Cir. 1989) (“[T]he existence of a ‘case’ in the
constitutional sense does not confer upon a litigant an absolute right to a declaratory
judgment.”). “Whether to entertain a justiciable declaratory judgment action is a matter
committed to the sound discretion of the trial court.” Kunkel, 866 F.2d at 1273 (citing Alabama
State Fed’n of Labor v. McAdory, 325 U.S. 450, 462, (1945)). Applicable considerations
include:

(1) whether the declaratory action would settle the controversy; (2) whether it would
serve a useful purpose in clarifying the legal relations in issue; (3) whether the
declaratory remedy is being used merely for the purpose of “procedural fencing” or
“to provide an arena for a race for res judicata;” (4) whether use of a declaratory
action would increase friction between federal and state courts and improperly
encroach upon state jurisdiction; and (5) whether there is an alternative remedy
which is better or more effective.

Kunkel, 866 F.2d at 1275, n.4 (citing Allstate Ins. Co. v. Green, 825 F.2d 1061, 1063 (6th
Cir.1987)). The Tenth Circuit has recognized that “[a] federal court generally should not
entertain a declaratory judgment action over which it has jurisdiction if the same fact-dependent
issues are likely to be decided in another pending proceeding.” Kunkel, 866 F.2d at 1276.
The obvious motive for OneWest’s filing of this declaratory action is to obtain an
advantage in McDonald’s pending state court damages action. That “procedural fencing”
weighs against the issuance of declaratory relief by this Court. More importantly, a declaration
by this Court determining the priority of the two judgments would improperly encroach upon the
state court’s jurisdiction and increase friction between the federal and state courts. The state
court will determine what, if any, effect this court’s judgment will have in the action pending
before it.

Based on the foregoing, it is
ORDERED that the defendant’s motion to dismiss the complaint [#9] is granted. The
clerk shall enter judgment dismissing this civil action and awarding costs to the defendant.

Date: February 14, 2014
BY THE COURT:
s/Richard P. Matsch
Richard P. Matsch, Senior District Judge

NBC MONTANA-

A woman who sued US Bank alleging the company defrauded her when she sought a $300,000 loan to buy a condo in Bozeman has been awarded $6 million in damages.

Gallatin County jury on Friday awarded 55-year-old Mary McCulley $1 million in compensatory damages and $5 million in punitive damages for fraud.

McCulley sued in October 2009, alleging that between the time she signed the promissory note and when the loan went through, the condo’s deed changed from residential to commercial use and her expected 30-year mortgage became an 18-month commercial loan. She was unable to refinance, so she sold the condo to repay the loan.

[NBC MONTANA]

Bank of New York v. Romero, 33,224 (N.M. 2014)
New Mexico Supreme Court

Date Filed: February 13th, 2014

Status: Precedential

Docket Number: 33,224

Fingerprint: 3c58b2ff03a9ac5d37f59ef968e78224f47b5eb0

IN THE SUPREME COURT OF THE STATE OF NEW MEXICO

Opinion Number:

Filing Date: February 13, 2014

Docket No. 33,224

BANK OF NEW YORK as Trustee for POPULAR
FINANCIAL SERVICES MORTGAGE/PASS
THROUGH CERTIFICATE SERIES #2006,

Plaintiff-Respondent,

v.

JOSEPH A. ROMERO and MARY ROMERO,
a/k/a MARY O. ROMERO, a/k/a MARIA ROMERO,

Defendants-Petitioners.

ORIGINAL APPEAL ON CERTIORARI
James A. Hall, District Judge

Joshua R. Simms, P.C.
Joshua R. Simms
Albuquerque, NM

Frederick M. Rowe
Daniel Yohalem
Katherine Elizabeth Murray
Santa Fe, NM

for Petitioners

Rose Little Brand & Associates, P.C.
Eraina Marie Edwards
Albuquerque, NM

Severson & Werson
Jan T. Chilton
San Francisco, CA

for Respondents

1
Gary K. King, Attorney General
Joel Cruz-Esparza, Assistant Attorney General
Karen J. Meyers, Assistant Attorney General
Santa Fe, NM

for Amicus Curiae New Mexico Attorney General

Nancy Ana Garner
Santa Fe, NM

for Amicus Curiae Civic Amici

Rodey, Dickason, Sloan, Akin & Robb, P.A.
Edward R. Ricco
John P. Burton
Albuquerque, NM

James J. White
Ann Arbor, MI

for Amicus Curiae New Mexico Bankers Association

OPINION

DANIELS, Justice.

{1} We granted certiorari to review recurring procedural and substantive issues in home
mortgage foreclosure actions. We hold that the Bank of New York did not establish its
lawful standing in this case to file a home mortgage foreclosure action. We also hold that a
borrower’s ability to repay a home mortgage loan is one of the “borrower’s circumstances”
that lenders and courts must consider in determining compliance with the New Mexico
Home Loan Protection Act, NMSA 1978, §§ 58-21A-1 to -14 (2003, as amended through
2009) (the HLPA), which prohibits home mortgage refinancing that does not provide a
reasonable, tangible net benefit to the borrower. Finally, we hold that the HLPA is not
preempted by federal law. We reverse the Court of Appeals and district court and remand
to the district court with instructions to vacate its foreclosure judgment and to dismiss the
Bank of New York’s foreclosure action for lack of standing.

I. FACTUAL AND PROCEDURAL BACKGROUND

{2} On June 26, 2006, Joseph and Mary Romero signed a promissory note with Equity
One, Inc. to borrow $227,240 to refinance their Chimayo home. As security for the loan, the
Romeros signed a mortgage contract with the Mortgage Electronic Registration Systems

2
(MERS), as the nominee for Equity One, pledging their home as collateral for the loan.

{3} The Romeros allege that Equity One cold-called them and urged them to refinance
their home for access to their home’s equity. The terms of the Equity One loan were not an
improvement over their current home loan: Equity One’s interest rate was higher (starting
at 8.1 percent and increasing to 14 percent compared to 7.71 percent), the Romeros’ monthly
payments were greater ($1,683.28 compared to $1,256.39), and the loan amount due was
greater ($227,240 compared to $176,450). However, the Romeros would receive a cash
payout of nearly $43,000, which would cover about $12,000 in new closing costs and
provide them with about $30,000 to pay off other debts.

{4} Both parties agree that the Romeros’ loan was a no income, no assets loan (NINA)
and that documentation of their income was never requested or verified. The Romeros owned
a music store in Espanola, New Mexico, and Mr. Romero allegedly told Equity One that the
store provided him an income of $5,600 a month. Also known as liar loans because they are
based solely on the professed income of the self-employed, NINA loans have since been
specifically prohibited in New Mexico by a 2009 amendment to the HLPA and also by
federal law. See NMSA 1978, § 58-21A-4(C)-(D) (requiring a creditor to document a
borrower’s ability to repay); 15 U.S.C.A. § 1639c(a)(1) (2010) (requiring creditors to make
a reasonable and good-faith effort to determine a borrower’s ability to repay); see also Pub.
L. No. 111-203, § 1411(a)(1), 124 Stat. 2142 (2010) (same). The Romeros stated that they
did not read the note or the mortgage contracts thoroughly before signing them, allegedly
because of limited time for review, the complexity of the documents, and their own limited
education. They admit having signed a document prepared by Equity One reciting that the
home loan provided them a “reasonable tangible net benefit” based on the $30,000 cash
payout.

{5} The Romeros soon became delinquent on their increased loan payments. On April
1, 2008, a third party—the Bank of New York, identifying itself as a trustee for Popular
Financial Services Mortgage—filed a complaint in the First Judicial District Court seeking
foreclosure on the Romeros’ home and claiming to be the holder of the Romeros’ note and
mortgage with the right of enforcement.

{6} The Romeros responded by arguing, among other things, that the Bank of New York
lacked standing to foreclose because nothing in the complaint established how the Bank of
New York was a holder of the note and mortgage contracts the Romeros signed with Equity
One. According to the Romeros, Securities and Exchange Commission filings showed that
their loan certificate series was once owned by Popular ABS Mortgage and not Popular
Financial Services Mortgage and that the holder was JPMorgan Chase. The Romeros also
raised several counterclaims, only one of which is relevant to this appeal: that the loan
violated the antiflipping provisions of the New Mexico HLPA, Section 58-21A-4(B) (2003).

{7} The Bank responded by providing (1) a document showing that MERS as a nominee
for Equity One assigned the Romeros’ mortgage to the Bank of New York on June 25, 2008,

3
three months after the Bank filed the foreclosure complaint and (2) the affidavit of Ann
Kelley, senior vice president for Litton Loan Servicing LP, stating that Equity One intended
to transfer the note and assign the mortgage to the Bank of New York prior to the Bank’s
filing of the foreclosure complaint. However, the Bank of New York admits that Kelley’s
employer Litton Loan Servicing did not begin servicing the Romeros’ loan until November
1, 2008, seven months after the foreclosure complaint was filed in district court.

{8} At a bench trial, Kevin Flannigan, a senior litigation processor for Litton Loan
Servicing, testified on behalf of the Bank of New York. Flannigan asserted that the copies
of the note and mortgage admitted as trial evidence by the Bank of New York were copies
of the originals and also testified that the Bank of New York had physical possession of both
the note and mortgage at the time it filed the foreclosure complaint.

{9} The Romeros objected to Flannigan’s testimony, arguing that he lacked personal
knowledge to make these claims given that Litton Loan Servicing was not a servicer for the
Bank of New York until after the foreclosure complaint was filed and the MERS assignment
occurred. The district court allowed the testimony based on the business records exception
because Flannigan was the present custodian of records.

{10} The Romeros also pointed out that the copy of the “original” note Flannigan
purportedly authenticated was different from the “original” note attached to the Bank of New
York’s foreclosure complaint. While the note attached to the complaint as a true copy was
not indorsed, the “original” admitted at trial was indorsed twice: first, with a blank
indorsement by Equity One and second, with a special indorsement made payable to
JPMorgan Chase. When asked whether either of those two indorsements included the Bank
of New York, Flannigan conceded that neither did, but he claimed that his review of the
records indicated the note had been transferred to the Bank of New York based on a pooling
and servicing agreement document that was never entered into evidence.

{11} The district court also heard testimony on the circumstances of the loan, the points
and fees charged, and the calculus used to determine a reasonable, tangible net benefit.
Following trial, the district court issued a written order finding that the Flannigan testimony
and the assignment of the mortgage established the Bank of New York as the proper holder
of the Romeros’ note and concluding that the loan did not violate the HLPA because the cash
payment to the Romeros provided a reasonable, tangible net benefit. The district court also
determined that because the Bank of New York was a national bank, federal law preempted
the protections of the HLPA.

{12} On appeal, the Court of Appeals affirmed the district court’s rulings that the Bank
of New York had standing to foreclose and that the HLPA had not been violated but
determined as a result of the latter ruling that it was not necessary to address whether federal
law preempted the HLPA. See Bank of N.Y. v. Romero, 2011-NMCA-110, ¶ 6,

150 N.M. 769

,

266 P.3d 638

(“Because we conclude that substantial evidence exists for each of the
district court’s findings and conclusions, and we affirm on those grounds, we do not address

4
the Romeros’ preemption argument.”).

{13} We granted the Romeros’ petition for writ of certiorari.

II. DISCUSSION

A. The Bank of New York Lacks Standing to Foreclose

1. Preservation

{14} As a preliminary matter, we address the Bank of New York’s argument that the
Romeros waived their challenge of the Bank’s standing in this Court and the Court of
Appeals by failing to provide the evidentiary support required by Rule 12-213(A)(3) NMRA.
See Bank of N.Y., 2011-NMCA-110, ¶¶ 20-21 (dismissing the Romeros’ challenge to
standing as without authority and based primarily on the note’s bearer-stamp assignment to
JPMorgan Chase); see also Rule 12-213(A)(3) (“A contention that a verdict, judgment or
finding of fact is not supported by substantial evidence shall be deemed waived unless the
summary of proceedings includes the substance of the evidence bearing upon the
proposition.”).

{15} We have recognized that “the lack of [standing] is a potential jurisdictional defect
which ‘may not be waived and may be raised at any stage of the proceedings, even sua
sponte by the appellate court.’” Gunaji v. Macias, 2001-NMSC-028, ¶ 20,

130 N.M. 734

,

31 P.3d 1008

(citation omitted). While we disagree that the Romeros waived their standing
claim, because their challenge has been and remains largely based on the note’s indorsement
to JPMorgan Chase, whether the Romeros failed to fully develop their standing argument
before the Court of Appeals is immaterial. This Court may reach the issue of standing based
on prudential concerns. See New Energy Economy, Inc. v. Shoobridge, 2010-NMSC-049, ¶
16,

149 N.M. 42

,

243 P.3d 746

(“Indeed, ‘prudential rules’ of judicial self-governance, like
standing, ripeness, and mootness, are ‘founded in concern about the proper—and properly
limited—role of courts in a democratic society’ and are always relevant concerns.” (citation
omitted)). Accordingly, we address the merits of the standing challenge.

2. Standards of Review

{16} The Bank argues that under a substantial evidence standard of review, it presented
sufficient evidence to the district court that it had the right to enforce the Romeros’
promissory note based primarily on its possession of the note, the June 25, 2008, assignment
letter by MERS, and the trial testimony of Kevin Flannigan. By contrast, the Romeros argue
that none of the Bank’s evidence demonstrates standing because (1) possession alone is
insufficient, (2) the “original” note introduced by the Bank of New York at trial with the two
undated indorsements includes a special indorsement to JPMorgan Chase, which cannot be
ignored in favor of the blank indorsement, (3) the June 25, 2008, assignment letter from
MERS occurred after the Bank of New York filed its complaint, and as a mere assignment

5
of the mortgage does not act as a lawful transfer of the note, and (4) the statements by Ann
Kelley and Kevin Flannigan are inadmissible because both lack personal knowledge given
that Litton Loan Servicing did not begin servicing loans for the Bank of New York until
seven months after the foreclosure complaint was filed and after the purported transfer of the
loan occurred. For the following reasons, we agree with the Romeros.

{17} The Bank of New York does not dispute that it was required to demonstrate under
New Mexico’s Uniform Commercial Code (UCC) that it had standing to bring a foreclosure
action at the time it filed suit. See NMSA 1978, § 55-3-301 (1992) (defining who is entitled
to enforce a negotiable interest such as a note); see also NMSA 1978, § 55-3-104(a), (b), (e)
(1992) (identifying a promissory note as a negotiable instrument); ACLU of N.M. v. City of
Albuquerque, 2008-NMSC-045, ¶ 9 n.1,

144 N.M. 471

,

188 P.3d 1222

(recognizing standing
as a jurisdictional prerequisite for a statutory cause of action); Lujan v. Defenders of Wildlife,

504 U.S. 555

, 570-71 n.5 (1992) (“[S]tanding is to be determined as of the commencement
of suit.”); accord 55 Am. Jur. 2d Mortgages § 584 (2009) (“A plaintiff has no foundation in
law or fact to foreclose upon a mortgage in which the plaintiff has no legal or equitable
interest.”). One reason for such a requirement is simple: “One who is not a party to a contract
cannot maintain a suit upon it. If [the entity] was a successor in interest to a party on the
[contract], it was incumbent upon it to prove this to the court.” L.R. Prop. Mgmt., Inc. v.
Grebe, 1981-NMSC-035, ¶ 7,

96 N.M. 22

,

627 P.2d 864

(citation omitted). The Bank of
New York had the burden of establishing timely ownership of the note and the mortgage to
support its entitlement to pursue a foreclosure action. See Gonzales v. Tama, 1988-NMSC-
016, ¶ 7,

106 N.M. 737

,

749 P.2d 1116

(“One who holds a note secured by a mortgage has
two separate and independent remedies, which he may pursue successively or concurrently;
one is on the note against the person and property of the debtor, and the other is by
foreclosure to enforce the mortgage lien upon his real estate.” (internal quotation marks and
citation omitted)).

{18} Because the district court determined after a trial on the issue that the Bank of New
York established standing as a factual matter, we review the district court’s determination
under a substantial evidence standard of review. See Sims v. Sims, 1996-NMSC-078, ¶ 65,

122 N.M. 618

,

930 P.2d 153

(“We have many times stated the standard of review of a trial
court’s findings of fact: Findings of fact made by the district court will not be disturbed if
they are supported by substantial evidence.”). “‘Substantial evidence’ means relevant
evidence that a reasonable mind could accept as adequate to support a conclusion.” Id. “This
Court will resolve all disputed facts and indulge all reasonable inferences in favor of the trial
court’s findings.” Id. However, “[w]hen the resolution of the issue depends upon the
interpretation of documentary evidence, this Court is in as good a position as the trial court
to interpret the evidence.” Kirkpatrick v. Introspect Healthcare Corp., 1992-NMSC-070, ¶
14,

114 N.M. 706

, 845 P.2d 800; see also United Nuclear Corp. v. Gen. Atomic Co., 1979-
NMSC-036, ¶ 62,

93 N.M. 105

,

597 P.2d 290

(“‘Where all or substantially all of the
evidence on a material issue is documentary or by deposition, the Supreme Court will
examine and weigh it, and will review the record, giving some weight to the findings of the
trial judge on such issue.’” (citation omitted)).

6
3. None of the Bank’s Evidence Demonstrates Standing to Foreclose

{19} The Bank of New York argues that in order to demonstrate standing, it was required
to prove that before it filed suit, it either (1) had physical possession of the Romeros’ note
indorsed to it or indorsed in blank or (2) received the note with the right to enforcement, as
required by the UCC. See § 55-3-301 (defining “[p]erson entitled to enforce” a negotiable
instrument). While we agree with the Bank that our state’s UCC governs how a party
becomes legally entitled to enforce a negotiable instrument such as the note for a home loan,
we disagree that the Bank put forth such evidence.

a. Possession of a Note Specially Indorsed to JPMorgan Chase Does Not Establish
the Bank of New York as a Holder

{20} Section 55-3-301 of the UCC provides three ways in which a third party can enforce
a negotiable instrument such as a note. Id. (“‘Person entitled to enforce’ an instrument means
(i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the
rights of a holder, or (iii) a person not in possession of the instrument who is entitled to
enforce the [lost, destroyed, stolen, or mistakenly transferred] instrument pursuant to [certain
UCC enforcement provisions].”); see also § 55-3-104(a)(1), (b), (e) (defining “negotiable
instrument” as including a “note” made “payable to bearer or to order”). Because the Bank’s
arguments rest on the fact that it was in physical possession of the Romeros’ note, we need
to consider only the first two categories of eligibility to enforce under Section 55-3-301.

{21} The UCC defines the first type of “person entitled to enforce” a note—the “holder”
of the instrument—as “the person in possession of a negotiable instrument that is payable
either to bearer or to an identified person that is the person in possession.” NMSA 1978, §
55-1-201(b)(21)(A) (2005); see also Frederick M. Hart & William F. Willier, Negotiable
Instruments Under the Uniform Commercial Code, § 12.02(1) at 12-13 to 12-15 (2012)
(“The first requirement of being a holder is possession of the instrument. However,
possession is not necessarily sufficient to make one a holder. . . . The payee is always a
holder if the payee has possession. Whether other persons qualify as a holder depends upon
whether the instrument initially is payable to order or payable to bearer, and whether the
instrument has been indorsed.” (footnotes omitted)). Accordingly, a third party must prove
both physical possession and the right to enforcement through either a proper indorsement
or a transfer by negotiation. See NMSA 1978, § 55-3-201(a) (1992) (“‘Negotiation’ means
a transfer of possession . . . of an instrument by a person other than the issuer to a person
who thereby becomes its holder.”). Because in this case the Romeros’ note was clearly made
payable to the order of Equity One, we must determine whether the Bank provided sufficient
evidence of how it became a “holder” by either an indorsement or transfer.

{22} Without explanation, the note introduced at trial differed significantly from the
original note attached to the foreclosure complaint, despite testimony at trial that the Bank
of New York had physical possession of the Romeros’ note from the time the foreclosure
complaint was filed on April 1, 2008. Neither the unindorsed note nor the twice-indorsed

7
note establishes the Bank as a holder.

{23} Possession of an unindorsed note made payable to a third party does not establish the
right of enforcement, just as finding a lost check made payable to a particular party does not
allow the finder to cash it. See NMSA 1978, § 55-3-109 cmt. 1 (1992) (“An instrument that
is payable to an identified person cannot be negotiated without the indorsement of the
identified person.”). The Bank’s possession of the Romeros’ unindorsed note made payable
to Equity One does not establish the Bank’s entitlement to enforcement.

{24} The Bank’s possession of a note with two indorsements, one of which restricts
payment to JPMorgan Chase, also does not establish the Bank’s entitlement to enforcement.
The UCC recognizes two types of indorsements for the purposes of negotiating an
instrument. A blank indorsement, as its name suggests, does not identify a person to whom
the instrument is payable but instead makes it payable to anyone who holds it as bearer
paper. See NMSA 1978, § 55-3-205(b) (1992) (“If an indorsement is made by the holder of
an instrument and it is not a special indorsement, it is a ‘blank indorsement.’”). “When
indorsed in blank, an instrument becomes payable to bearer and may be negotiated by
transfer of possession alone until specially indorsed.” Id.

{25} By contrast, a special indorsement “identifies a person to whom it makes the
instrument payable.” Section 55-3-205(a). “When specially indorsed, an instrument becomes
payable to the identified person and may be negotiated only by the indorsement of that
person.” Id.; accord Baxter Dunaway, Law of Distressed Real Estate, § 24:105 (2011)
(“When an instrument is payable to an identified person, only that person may be the holder.
A person in possession of an instrument not made payable to his order can only become a
holder by obtaining the prior holder’s indorsement.”).

{26} The trial copy of the Romeros’ note contained two undated indorsements: a blank
indorsement by Equity One and a special indorsement by Equity One to JPMorgan Chase.
Although we agree with the Bank that if the Romeros’ note contained only a blank
indorsement from Equity One, that blank indorsement would have established the Bank as
a holder because the Bank would have been in possession of bearer paper, that is not the
situation before us. The Bank’s copy of the Romeros’ note contained two indorsements, and
the restrictive, special indorsement to JPMorgan Chase establishes JPMorgan Chase as the
proper holder of the Romeros’ note absent some evidence by JPMorgan Chase to the
contrary. See Cadle Co. v. Wallach Concrete, Inc., 1995-NMSC-039, ¶ 14,

120 N.M. 56

,

897 P.2d 1104

(“[A] special indorser . . . has the right to direct the payment and to require the
indorsement of his indorsee as evidence of the satisfaction of own obligation. Without such
an indorsement, a transferee cannot qualify as a holder in due course.” (omission in original)
(internal quotation marks and citation omitted)). Because JPMorgan Chase did not
subsequently indorse the note, either in blank or to the Bank of New York, the Bank of New
York cannot establish itself as the holder of the Romeros’ note simply by possession.

{27} Rather than demonstrate timely ownership of the note and mortgage through

8
JPMorgan Chase, the Bank of New York urges this Court to infer that the special
indorsement was a mistake and that we should rely only on the blank indorsement. We are
not persuaded. The Bank provides no authority and we know of none that exists to support
its argument that the payment restrictions created by a special indorsement can be ignored
contrary to our long-held rules on indorsements and the rights they create. See, e.g., id.
(rejecting each of two entities as a holder because a note lacked the requisite indorsement
following a special indorsement); accord NMSA 1978, § 55-3-204(c) (1992) (“For the
purpose of determining whether the transferee of an instrument is a holder, an indorsement
that transfers a security interest in the instrument is effective as an unqualified indorsement
of the instrument.”).

{28} Accordingly, we conclude that the Bank of New York’s possession of the twice-
indorsed note restricting payment to JPMorgan Chase does not establish the Bank of New
York as a holder with the right of enforcement.

b. None of the Bank of New York’s Evidence Demonstrates a Transfer of the
Romeros’ Note

{29} The second type of “person entitled to enforce” a note under the UCC is a third party
in possession who demonstrates that it was given the rights of a holder. See § 55-3-301
(“‘Person entitled to enforce’ an instrument means . . . a nonholder in possession of the
instrument who has the rights of a holder.”). This provision requires a nonholder to prove
both possession and the transfer of such rights. See NMSA 1978, § 55-3-203(a)-(b) (1992)
(defining what constitutes a transfer and vesting in a transferee only those rights held by the
transferor). A claimed transferee must establish its right to enforce the note. See § 55-3-203
cmt. 2 (“[An] instrument [unindorsed upon transfer], by its terms, is not payable to the
transferee and the transferee must account for possession of the unindorsed instrument by
proving the transaction through which the transferee acquired it.”).

{30} Under this second category, the Bank of New York relies on the testimony of Kevin
Flannigan, an employee of Litton Loan Servicing who maintained that his review of loan
servicing records indicated that the Bank of New York was the transferee of the note. The
Romeros objected to Flannigan’s testimony at trial, an objection that the district court
overruled under the business records exception. We agree with the Romeros that Flannigan’s
testimony was inadmissible and does not establish a proper transfer.

{31} As the Bank of New York admits, Flannigan’s employer, Litton Loan Servicing, did
not begin working for the Bank of New York as its servicing agent until November 1,
2008—seven months after the April 1, 2008, foreclosure complaint was filed. Prior to this
date, Popular Mortgage Servicing, Inc. serviced the Bank of New York’s loans. Flannigan
had no personal knowledge to support his testimony that transfer of the Romeros’ note to the
Bank of New York prior to the filing of the foreclosure complaint was proper because
Flannigan did not yet work for the Bank of New York. See Rule 11-602 NMRA (“A witness
may testify to a matter only if evidence is introduced sufficient to support a finding that the

9
witness has personal knowledge of the matter. Evidence to prove personal knowledge may
consist of the witness’s own testimony.”). We make a similar conclusion about the affidavit
of Ann Kelley, who also testified about the status of the Romeros’ loan based on her work
for Litton Loan Servicing. As with Flannigan’s testimony, such statements by Kelley were
inadmissible because they lacked personal knowledge.

{32} When pressed about Flannigan’s basis of knowledge on cross-examination,
Flannigan merely stated that “our records do indicate” the Bank of New York as the holder
of the note based on “a pooling and servicing agreement.” No such business record itself was
offered or admitted as a business records hearsay exception. See Rule 11-803(F) NMRA
(2007) (naming this category of hearsay exceptions as “records of regularly conducted
activity”).

{33} The district court erred in admitting the testimony of Flannigan as a custodian of
records under the exception to the inadmissibility of hearsay for “business records” that are
made in the regular course of business and are generally admissible at trial under certain
conditions. See Rule 11-803(F) (2007) (citing the version of the rule in effect at the time of
trial). The business records exception allows the records themselves to be admissible but not
simply statements about the purported contents of the records. See State v. Cofer,
2011-NMCA-085, ¶ 17,

150 N.M. 483

,

261 P.3d 1115

(holding that, based on the plain
language of Rule 11-803(F) (2007), “it is clear that the business records exception requires
some form of document that satisfies the rule’s foundational elements to be offered and
admitted into evidence and that testimony alone does not qualify under this exception to the
hearsay rule” and concluding that “‘testimony regarding the contents of business records,
unsupported by the records themselves, by one without personal knowledge of the facts
constitutes inadmissible hearsay.’” (citation omitted)). Neither Flannigan’s testimony nor
Kelley’s affidavit can substantiate the existence of documents evidencing a transfer if those
documents are not entered into evidence. Accordingly, Flannigan’s trial testimony cannot
establish that the Romeros’ note was transferred to the Bank of New York.

{34} We also reject the Bank’s argument that it can enforce the Romeros’ note because
it was assigned the mortgage by MERS. An assignment of a mortgage vests only those rights
to the mortgage that were vested in the assigning entity and nothing more. See § 55-3-203(b)
(“Transfer of an instrument, whether or not the transfer is a negotiation, vests in the
transferee any right of the transferor to enforce the instrument, including any right as a
holder in due course.”); accord Hart & Willier, supra, § 12.03(2) at 12-27 (“Th[is] shelter
rule puts the transferee in the shoes of the transferor.”).

{35} Here, as Equity One and MERS explained to the district court in a joint filing seeking
to be dismissed as third parties to the Romeros’ counterclaims, “MERS . . . is merely the
nominee for Equity One, Inc. in the underlying Mortgage and was not the actual lender.
MERS is a national electronic registry which keeps track of the changes in servicing and
ownership of mortgage loans.” See also Christopher L. Peterson, Foreclosure, Subprime
Mortgage Lending, and the Mortgage Electronic Registration System, 78 U. Cin. L. Rev.

10
1359, 1361-63 (2010) (explaining that MERS was created by the banking industry to
electronically track and record mortgages in order to avoid local and state recording fees).
The Romeros’ mortgage contract reiterates the MERS role, describing “MERS [a]s a
separate corporation that is acting solely as a nominee for Lender and Lender’s successors
and assigns.” A “nominee” is defined as “[a] person designated to act in place of another,
usu. in a very limited way.” Black’s Law Dictionary 1149 (9th ed. 2009). As a nominee for
Equity One on the mortgage contract, MERS could assign the mortgage but lacked any
authority to assign the Romeros’ note. Although this Court has never explicitly ruled on the
issue of whether the assignment of a mortgage could carry with it the transfer of a note, we
have long recognized the separate functions that note and mortgage contracts perform in
foreclosure actions. See First Nat’l Bank of Belen v. Luce, 1974-NMSC-098, ¶ 8,

87 N.M. 94

,

529 P.2d 760

(holding that because the assignment of a mortgage to a bank did not
convey an interest in the loan contract, the bank was not entitled to foreclose on the
mortgage); Simson v. Bilderbeck, Inc., 1966-NMSC-170, ¶¶ 13-14,

76 N.M. 667

,

417 P.2d 803

(explaining that “[t]he right of the assignee to enforce the mortgage is dependent upon
his right to enforce the note” and noting that “[b]oth the note and mortgage were assigned
to plaintiff. Having a right under the statute to enforce the note, he could foreclose the
mortgage.”); accord 55 Am. Jur. 2d Mortgages § 584 (“A mortgage securing the repayment
of a promissory note follows the note, and thus, only the rightful owner of the note has the
right to enforce the mortgage.”); Dunaway, supra, § 24:18 (“The mortgage only secures the
payment of the debt, has no life independent of the debt, and cannot be separately
transferred. If the intent of the lender is to transfer only the security interest (the mortgage),
this cannot legally be done and the transfer of the mortgage without the debt would be a
nullity.”). These separate contractual functions—where the note is the loan and the mortgage
is a pledged security for that loan—cannot be ignored simply by the advent of modern
technology and the MERS electronic mortgage registry system.

{36} The MERS assignment fails for several additional reasons. First, it does not explain
the conflicting special indorsement of the note to JPMorgan Chase. Second, its assignment
of the mortgage to the Bank of New York on June 25, 2008, three months after the
foreclosure complaint was filed, does not establish a proper transfer prior to the filing date
of the foreclosure suit. Third, except for the inadmissible affidavit of Ann Kelley and trial
testimony of Kevin Flannigan, nothing in the record substantiates the Bank’s claim that the
MERS assignment was meant to memorialize an earlier transfer to the Bank of New York.
Accordingly, neither the MERS assignment nor Flannigan’s testimony establish the Bank
of New York as a nonholder in possession with the rights of a holder by transfer.

c. Failure of Another Entity to Claim Ownership of the Romeros’ Note Does Not
Make the Bank of New York a Holder

{37} Finally, the Bank of New York urges this Court to adopt the district court’s inference
that if the Bank was not the proper holder of the Romeros’ note, then third-party-defendant
Equity One would have claimed to be the rightful holder, and Equity One made no such
claim.

11
{38} The simple fact that Equity One does not claim ownership of the Romeros’ note does
not establish that the note was properly transferred to the Bank of New York. In fact, the
evidence in the record indicates that JPMorgan Chase may be the lawful holder of the
Romeros’ note, as reflected in the note’s special indorsement. As this Court has recognized,

The whole purpose of the concept of a negotiable instrument under
Article 3 [of the UCC] is to declare that transferees in the ordinary course of
business are only to be held liable for information appearing in the
instrument itself and will not be expected to know of any limitations on
negotiability or changes in terms, etc., contained in any separate documents.

First State Bank at Gallup v. Clark, 1977-NMSC-088, ¶ 10,

91 N.M. 117

, 570 P.2d 1144.
In addition, the UCC clarifies that the Bank of New York is not afforded any assumption of
enforcement without proper documentation:

Because the transferee is not a holder, there is no presumption under Section
[55-]3-308 [(1992) (entitling a holder in due course to payment by production
and upon signature)] that the transferee, by producing the instrument, is
entitled to payment. The instrument, by its terms, is not payable to the
transferee and the transferee must account for possession of the unindorsed
instrument by proving the transaction through which the transferee acquired
it.

Section 55-3-203 cmt. 2. Because the Bank of New York did not introduce any evidence
demonstrating that it was a party with the right to enforce the Romeros’ note either by an
indorsement or proper transfer, we hold that the Bank’s standing to foreclose on the
Romeros’ mortgage was not supported by substantial evidence, and we reverse the contrary
determinations of the courts below.

B. A Lender Must Consider a Borrower’s Ability to Repay a Home Mortgage Loan
in Determining Whether the Loan Provides a Reasonable, Tangible Net Benefit,
as Required by the New Mexico HLPA

{39} For reasons that are not clear in the record, the Romeros did not appeal the district
court’s judgment in favor of the original lender, Equity One, on the Romeros’ claims that
Equity One violated the HLPA. The Court of Appeals addressed the HLPA violation issue
in the context of the Romeros’ contentions that the alleged violation constituted a defense
to the foreclosure complaint of the Bank of New York by affirming the district court’s
favorable ruling on the Bank of New York’s complaint. As a result of our holding that the
Bank of New York has not established standing to bring a foreclosure action, the issue of
HLPA violation is now moot in this case. But because it is an issue that is likely to be
addressed again in future attempts by whichever institution may be able to establish standing
to foreclose on the Romero home and because it involves a statutory interpretation issue of
substantial public importance in many other cases, we address the conclusion of both the

12
Court of Appeals and the district court that a homeowner’s inability to repay is not among
“all of the circumstances” that the 2003 HLPA, applicable to the Romeros’ loan, requires a
lender to consider under its “flipping” provisions:

No creditor shall knowingly and intentionally engage in the unfair act
or practice of flipping a home loan. As used in this subsection, “flipping a
home loan” means the making of a home loan to a borrower that refinances
an existing home loan when the new loan does not have reasonable, tangible
net benefit to the borrower considering all of the circumstances, including the
terms of both the new and refinanced loans, the cost of the new loan and the
borrower’s circumstances.

Section 58-21A-4(B) (2003); see also Bank of N.Y., 2011-NMCA-110, ¶ 17 (holding that
“while the ability to repay a loan is an important consideration when otherwise assessing a
borrower’s financial situation, we will not read such meaning into the statute’s ‘reasonable,
tangible net benefit’ language”).

{40} “Statutory interpretation is a question of law, which we review de novo.” Hovet v.
Allstate Ins. Co., 2004-NMSC-010, ¶ 10,

135 N.M. 397

, 89 P.3d 69. “[W]hen presented with
a question of statutory construction, we begin our analysis by examining the language
utilized by the Legislature, as the text of the statute is the primary indicator of legislative
intent.” Bishop v. Evangelical Good Samaritan Soc., 2009-NMSC-036, ¶ 11,

146 N.M. 473

,
212 P.3d 361. Under the rules of statutory construction, “[w]hen a statute contains language
which is clear and unambiguous, we must give effect to that language and refrain from
further statutory interpretation.” State ex rel. Helman v. Gallegos, 1994-NMSC-023, ¶ 18,

117 N.M. 346

,

871 P.2d 1352

(internal quotation marks and citation omitted).

{41} The New Mexico Legislature passed the HLPA in 2003 to combat abusive home
mortgage procurement practices, with special concerns about non-income-based loans. See
§ 58-21A-2(A)-(B) (finding that “abusive mortgage lending has become an increasing
problem in New Mexico, exacerbating the loss of equity in homes and causing the number
of foreclosures to increase in recent years” and that “one of the most common forms of
abusive lending is the making of loans that are equity-based, rather than income-based”).
“The [HLPA] shall be liberally construed to carry out its purpose.” Section 58-21A-14.

{42} In 2004, regulations were adopted to clarify that “[t]he reasonable, tangible net
benefit standard in Section 58-21A-4 B NMSA 1978, is inherently dependent upon the
totality of facts and circumstances relating to a specific transaction,” 12.15.5.9(A) NMAC,
and that “each lender should develop and maintain policies and procedures for evaluating
loans in circumstances where an economic test, standing alone, may not be sufficient to
determine that the transaction provides the requisite benefit,” 12.15.5.9(B) NMAC. See also
12.15.5.9(C) NMAC (stating that evaluation of compliance with the HLPA’s loan-flipping
provision “will focus on whether a lender has policies and procedures in place . . . that were
used to determine that borrowers received a reasonable, tangible net benefit in connection

13
with the refinancing of loans”).

{43} The Court of Appeals expressed that it was significant that the Legislature did not
specifically recite the ability to repay as a factor to be considered in the undefined
“borrower’s circumstances” addressed in the antiflipping provisions of Section 58-21A-4(B)
(2003) while the Legislature did specifically recite that factor in a separate section of the
HLPA prohibiting equity stripping in high-cost loans. See Bank of N.Y., 2011-NMCA-110,
¶¶ 11, 17 (noting that the 2003 HLPA “sets forth limitations and prohibited practices for
‘high-cost’ mortgages”); see also § 58-21A-5(H) (2003) (“No creditor shall make a high-cost
home loan without due regard to repayment ability.”). The Court of Appeals inferred from
the specific additional wording in the 2003 statutory provisions for high-cost loans that
“when it enacted Section 58-21A-4(B)” in 2003 the Legislature “chose not to require
consideration and documentation of a borrower’s reasonable ability to repay the loan when
determining what tangible benefit, if any, the borrower would receive from a mortgage
loan.” Bank of N.Y., 2011-NMCA-110, ¶ 17. While comparisons between sections of a
statute can be helpful in determining legislative intent where the statutory language or the
legislative purpose is unclear, we cannot ignore the commands of either the broad plain
language of the HLPA antiflipping provisions, identical in both the 2003 statute and its 2009
amendment and requiring consideration of all circumstances including those of the borrower,
or the express legislative purpose declarations of what the HLPA was enacted to avoid,
including abusive mortgage loans not based on income that result in the loss of borrowers’
homes. We have been presented with no conceivable reason why the Legislature in 2003
would consciously exclude consideration of a borrower’s ability to repay the loan as a factor
of the borrower’s circumstances, and we can think of none. Without an express legislative
direction to that effect, we will not conclude that the Legislature meant to approve mortgage
loans that were doomed to end in failure and foreclosure. Apart from the plain language of
the statute and its express statutory purpose, it is difficult to comprehend how an
unrepayable home mortgage loan that will result in a foreclosure on one’s home and a
deficiency judgment to pay after the borrower is rendered homeless could provide “a
reasonable, tangible net benefit to the borrower.”

{44} In light of the remedial purposes of the HLPA, the broadly inclusive language of the
2003 antiflipping provisions requiring home refinancing to provide a “reasonable, tangible
net benefit to the borrower considering all of the circumstances,” and the reiteration in the
same sentence that “all of the circumstances” includes specific consideration of “the
borrower’s circumstances,” we hold that the ability of a homeowner to have a reasonable
chance of repaying a mortgage loan must be a factor in the “reasonable, tangible net benefit”
analysis required by the antiflipping provisions of the HLPA since the original 2003
enactment. While it is theoretically possible that other factors of a particular buyer’s
individual situation might support a finding of a reasonable, tangible benefit in the totality
of the circumstances despite the difficulty a buyer might have repaying the new loan, neither
court below considered the Romeros’ ability to repay the loan at all in reviewing the totality
of their circumstances, and it is inappropriate for us to make that factual determination on
appeal.

14
{45} Because the Romeros’ mortgage and others like it may come before our courts in the
future, we make some observations to provide guidance in assessing a borrower’s ability to
repay. The lender in this case claimed to rely solely on the Romeros’ unexplained assertion
on a form that they earned $5,600 a month, but the lender did not review tax returns or other
documents that easily would have clarified earning $5,600 as a one-time occurrence. The
Bank argues that the lender was not required to ask the borrowers for proof of their income
but rather that the Romeros were required to provide it, citing 12.15.5.9(G) NMAC
(“Borrowers are responsible for the disclosure of information provided on the application
for a home loan. Truthful disclosure of all relevant facts and financial information
concerning the borrower’s circumstances is required in order for lenders to evaluate and
determine that the refinance loan transaction provides a reasonable, tangible net benefit to
the borrower.”). But under the very next provision in the regulation, a lender cannot avoid
its own obligation to consider real facts and circumstances that might clarify the inaccuracy
of a borrower’s income claim. Id. (“Lenders cannot, however, disregard known facts and
circumstances that may place in question the accuracy of information contained in the
application.”) A lender’s willful blindness to its responsibility to consider the true
circumstances of its borrowers is unacceptable. A full and fair consideration of those
circumstances might well show that a new mortgage loan would put a borrower into a
materially worse situation with respect to the ability to make home loan payments and avoid
foreclosure, consequences of a borrower’s circumstances that cannot be disregarded.

{46} We acknowledge that the Romeros signed their names to a document prepared by the
lender reciting the conclusion that the loan provided them with a reasonable, tangible net
benefit. But if the inclusion of such boilerplate language in the mass of documents a
borrower must sign at closing would substitute for a lender’s conscientious compliance with
the obligations imposed by the HLPA, its protections would be no more than empty words
on paper that could be summarily swept aside by the addition of yet one more document for
the borrower to sign at the closing.

{47} The lender’s own benefit analysis questionnaire in this case should have put the
lender on notice that the loan might not have provided a reasonable, tangible net benefit.

{48} Step one of the questionnaire required the lender to weigh the Romeros’ new loan
against their existing loan and respond to seven questions by comparing factors such as the
loans’ monthly payments and interest rates, determining the time between the original loan
and the refinancing, and indicating whether the borrower received cash. If the new loan
provided five of seven potential benefits as indicated by graded responses to the seven
questions, then the lender’s own formula would result in the finding of a reasonable, tangible
net benefit and no further evaluation would be necessary. Because the Equity One analysis
indicated only one of the seven benefits, net cash to the Romeros at the time of closing,
Equity One was not yet authorized by its own policies to make the loan and needed to
proceed with step two.

{49} Step two required the lender to (1) provide a written “verification or documentation”

15
that the loan was “appropriate for the borrower” and (2) indicate on a preprinted checklist
any of eight reasonable, tangible net benefits the borrower would be receiving. Although
Equity One responded to the second requirement by indicating that the loan refinanced some
of the Romeros’ debt, it left the first blank, offering no verification that the loan was
appropriate for the Romeros based on their ability to repay—a required element of Equity
One’s own benefit analysis. Equity One’s benefit analysis worksheet reviewed and approved
by an Equity One manager on June 26, 2006, speaks for itself, providing unbiased,
documentary evidence of Equity One’s own disregard of the Romeros’ financial
circumstances in violation of the HLPA, whether or not the Romeros signed Equity One’s
document reciting that they received a reasonable, tangible net benefit. See 12.15.5.9(H)
NMAC (“An appropriate analysis reflected in the loan documentation can be helpful in
determining that a lender satisfies the statutory requirement. As part of a lender’s analysis,
a lender may wish to obtain and document an explanation from the borrower regarding any
non-economic benefits the borrower associates with the loan transaction. It should be noted,
however, that because it is incumbent on the lender to conduct an analysis of whether the
borrower received a reasonable, tangible net benefit, a borrower certification, standing alone,
would not necessarily be determinative of whether a loan provided that benefit.”).

{50} Borrowers are certainly not blameless if they try to refinance their homes through
loans they cannot afford. But they do not have a mortgage lender’s expertise, and the
combination of the relative unsophistication of many borrowers and the potential motives
of unscrupulous lenders seeking profits from making loans without regard for the
consequences to homeowners led to the need for statutory reform. See § 58-21A-2
(discussing (A) “abusive mortgage lending” practices, including (B) “making . . . loans that
are equity-based, rather than income based,” (C) “repeatedly refinanc[ing] home loans,”
rewarding lenders with “immediate income” from “points and fees” and (D) victimizing
homeowners with the unnecessary “costs and terms” of “overreaching creditors”). The
HLPA was enacted to prevent the kinds of practices the Romeros allege Equity One engaged
in here: actively soliciting vulnerable homeowners and offering tempting incentives such as
up-front cash to induce them to refinance their mortgages with unfavorable terms or without
regard for the borrowers’ ability to repay the loans and avoid loss of their homes. Whether
the Romeros’ allegations are accurate is not before us, but a court must consider the
allegations in order to determine whether the lender violated the HLPA.

C. Federal Law Does Not Preempt the Protections of the HLPA

{51} Although the Court of Appeals did not review the conclusion of the district court that
federal law preempts the HLPA, see Bank of N.Y., 2011-NMCA-110, ¶ 6, our discussion of
the applicability of the HLPA to New Mexico home mortgage loans would be incomplete
without our addressing the issue.

{52} “The doctrine of preemption is an outgrowth of the Supremacy Clause of Article VI
of the United States Constitution.” Self v. United Parcel Serv., Inc., 1998-NMSC-046, ¶ 7
n.3,

126 N.M. 396

,

970 P.2d 582

(“‘This Constitution, and the Laws of the United States . . .

16
shall be the supreme Law of the Land.’” (quoting Article VI of the United States
Constitution)). “We review issues of statutory and constitutional interpretation de novo.”
State v. Lucero, 2007-NMSC-041, ¶ 8,

142 N.M. 102

, 163 P.3d 489.

{53} The Bank of New York’s argument that federal law preempts the HLPA relies on
regulatory provisions of the New Mexico Regulation and Licensing Department’s Financial
Institutions Division recognizing that “[e]ffective February 12, 2004, the [federal Office of
the Comptroller of Currency] published a final rule that states, in pertinent part: ‘state laws
that obstruct, impair, or condition a national bank’s ability to fully exercise its federally
authorized real estate lending powers do not apply to national banks’ (the ‘OCC
preemption’)” and concluding that “[b]ased on the OCC preemption, since January 1, 2004,
national banks in New Mexico have been authorized to engage in certain banking activities
otherwise prohibited by the [HLPA].” 12.16.76.8(G)-(H) NMAC. These administrative
provisions have not been updated since 2004. See 12.16.76.8 NMAC (noting only one
amendment, on June 15, 2004, since the January 1, 2004, effective date of the regulation).

{54} While the Bank is correct in asserting that the OCC issued a blanket rule in January
2004, see 12 C.F.R. § 34.4(a) (2004) (preempting state laws that impact “a national bank’s
ability to fully exercise its Federally authorized real estate lending powers”), and that the
New Mexico Administrative Code recognizes this OCC rule, neither the Bank nor our
administrative code addresses several actions taken by Congress and the courts since 2004
to disavow the OCC’s broad preemption statement.

{55} In 2007, the United States Supreme Court reiterated its position on preemption by
the National Bank Act (NBA), stating that

[i]n the years since the NBA’s enactment, we have repeatedly made clear that
federal control shields national banking from unduly burdensome and
duplicative state regulation. Federally chartered banks are subject to state
laws of general application in their daily business to the extent such laws do
not conflict with the letter or the general purposes of the NBA.

Watters v.Wachovia Bank, N.A.,

550 U.S. 1

, 11 (2007) (citation omitted). Relying primarily
on an earlier case, Barnett Bank of Marion Cnty., N.A. v. Nelson,

517 U.S. 25

(1996), the
Watters Court clarified that “[s]tates are permitted to regulate the activities of national banks
where doing so does not prevent or significantly interfere with the national bank’s or the
national bank regulator’s exercise of its powers.” Watters, 550 U.S. at 12. “But when state
prescriptions significantly impair the exercise of authority, enumerated or incidental under
the NBA, the State’s regulations must give way.” Id.

{56} Two years later, in Cuomo v. Clearing House Ass’n, L.L.C.,

557 U.S. 519

, 523-24
(2009), the United States Supreme Court specifically addressed “whether the [OCC’s]
regulation purporting to pre-empt state law enforcement can be upheld as a reasonable
interpretation of the National Bank Act.” The Cuomo Court ultimately rejected part of the

17
OCC’s broad statement of its preemption powers as unsupported. See Cuomo, 557 U.S. at
525, 528-29 (distinguishing the power to enforce the law against a national bank, which a
state retains notwithstanding the NBA, from visitorial powers—including audits, general
supervision and control, and oversight of national banks—which the NBA preempts as
exclusive to the OCC). Although the Cuomo Court did not specifically address the
preemption rule on real-estate lending at issue here, its rationale is nonetheless dispositive
in its acknowledgment that “[n]o one denies that the [NBA] leaves in place some state
substantive laws affecting banks,” id. at 529, and in its recognition that states “have enforced
their banking-related laws against national banks for at least 85 years,” id. at 534.

{57} In addition, in 2010, Congress explicitly clarified state law preemption standards for
national banks in Pub. L. No. 111-203, § 1044, 124 Stat. 1376 (2010) of the Dodd-Frank
Wall Street Reform and Consumer Protection Act. The Dodd-Frank Act preempts state
consumer financial law in only three circumstances: (1) if application of the state law “would
have a discriminatory effect on national banks, in comparison with the effect of the law on
a bank chartered by that State,” (2) in accordance with the legal standard set forth in Barnett
Bank when the state law “prevents or significantly interferes with the exercise by the
national bank of its powers,” or (3) by explicit federal preemption. See id.; 12 U.S.C.A. §
25b(b)(1)(A)-(C) (2010).

{58} In response to this legislation, the OCC corrected its 2004 blanket preemption rule
to conform to the legislative clarifications. See Dodd-Frank Act Implementation, 76 Fed.
Reg. 43549-01, 43552 (July 21, 2011) (proposing changes to “the OCC’s regulations relating
to preemption (12 CFR . . . 34.4) (2004 preemption rules) . . . to implement the provisions
of the Dodd-Frank Act that affect the scope of national bank . . . preemption” by removing
from Subsection a the blanket clause, “‘state laws that obstruct, impair or condition a
national bank’s ability to fully exercise its Federally authorized [real estate lending] powers
do not apply to national banks’” and by clarifying in Subsection b that “state law is not
preempted to the extent . . . consistent with the Barnett decision”). Compare 12 C.F.R. §
34.4(a) & (b) (2011), with 12 C.F.R. § 34.4(a) & (b) (2004). Neither Dodd-Frank nor the
corrected OCC regulations created new law concerning the scope of national bank
preemption but instead clarified preexisting requirements of the NBA and the 1996 opinion
of the United States Supreme Court in Barnett.

{59} Applying the Dodd-Frank standard to the HLPA, we conclude that federal law does
not preempt the HLPA. First, our review of the NBA reveals no express preemption of state
consumer protection laws such as the HLPA. Second, the Bank provides no evidence that
conforming to the dictates of the HLPA prevents or significantly interferes with a national
bank’s operations. Third, the HLPA does not create a discriminatory effect; rather, the
HLPA applies to any “creditor,” which the 2003 statute defines as “a person who regularly
[offers or] makes a home loan.” Section 58-21A-3(G) (2003). Any entity that makes home
loans in New Mexico must follow the HLPA, regardless of whether the lender is a state or
nationally chartered bank. See § 58-21A-2 (providing legislative findings on abusive
mortgage lending practices that the HLPA is meant to discourage).

18
{60} Accordingly, we hold that the HLPA is a state law of general applicability that is not
preempted by federal law. We recommend that New Mexico’s Administrative Code be
updated to reflect clarifications of preemption standards since 2004.

III. CONCLUSION

{61} For the reasons stated herein, we reverse the decisions below and remand this matter
to the district court with instructions to vacate its judgment of foreclosure.

{62} IT IS SO ORDERED.

____________________________________
CHARLES W. DANIELS, Justice

WE CONCUR:

____________________________________
PETRA JIMENEZ MAES, Chief Justice

____________________________________
RICHARD C. BOSSON, Justice

____________________________________
EDWARD L. CHÁVEZ, Justice

____________________________________
BARBARA J. VIGIL, Justice

19

Clouded Titles-

This case appears to change the landscape on how quasi in rem quiet title actions are filed! The following blog post is based on current research and is NOT and should NOT be taken as the rendering of legal advice. Consult with an experienced quiet title attorney if you need further assistance.

CASE: Mortgage Electronic Registration Systems, Inc. v Robinson et al

CV 13-7142 PSG (ASx); January 28, 2014

LOS ANGELES — United States District Court Judge Philip S. Gutierrez (the same judge who wrote the opinion in Cervantes v. Countrywide Home Loans) has just done this country a huge favor in granting the Defendant’s motion to dismiss … using the same Rule 12(b)(6) FRCP that the banks have been using on all of those homeowners who are fighting back! It’s deja vu in reverse!

The irony of it all!

This case got its start from a warning shot fired by MERS’ counsel in a letter to attorney Al West of Redondo Beach, California, who has managed to get numerous deeds of trust expunged from the real property records up and down the State of California since the beginning of 2013 in conjunction with orders quieting title to the properties involved. When MERS counsel discovered what happened, it launched a rather terse letter to West, telling him to file a stipulated agreement to reverse his own quiet title actions and expungement orders … like that’s going to happen? The pomposity of it all, right?

[CLOUDED TITLES]

 . . .

Applying the interpretation of “mortgagee” in Eaton to this case, and others that were pending appellate review on the same issue, respects the concern identified in Eaton, supra at 586, that holding as we did could “wreak havoc with the operation and integrity of the title recording and registration systems by calling into question the validity of any title that has a foreclosure sale in the title chain.” Although we now exercise our discretion to allow a limited set of litigants to seek relief on the basis of the interpretation of the term “mortgagee” announced in Eaton, that interpretation of “mortgagee” otherwise remains applicable “only to mortgage foreclosure sales for which the mandatory notice of sale has been given after [June 22, 2012].”
 . . .

Conclusion. We vacate the judgments of dismissal on count one of the complaint, alleging a lack of authority to foreclose. We affirm the judgment of dismissal on counts two, three, and four alleging respectively a violation of G.L. c. 93A, civil conspiracy, and fraud. Finally, we vacate as moot the judgment of dismissal on count five, seeking an injunction. The matter is remanded to the Superior Court for further proceedings consistent with this opinion.

So ordered.
_______________

Galiastro v. MERS

The Massachusetts Judicial Branch

Amicus Announcement

THE SUPREME JUDICIAL COURT IS SOLICITING AMICUS BRIEFS OR MEMORANDA FROM INTERESTED PARTIES IN THE FOLLOWING MATTER PENDING BEFORE THE COURT

ARGUMENT IS SCHEDULED FOR SPRING 2013
AMICUS SUBMISSIONS ARE DUE NO LATER THAN TWO WEEKS BEFORE 
THE FIRST DAY OF THE SITTING IN WHICH THE CASE IS SCHEDULED FOR ARGUMENT

SJC-11299
Anne-Marie Galliastro v. Mortgage Electronic Registration Systems, Inc.

Whether Mortgage Electronic Registration Systems (“MERS”) has standing to pursue a foreclosure in its own right as a named “mortgagee” with ability to act limited solely as a “nominee” and without any ownership interest or rights in the promissory note associated with the mortgage; whether the prospective mandate of Eaton v. Federal National Mortgage Association, 462 Mass. 569 (2012), applies to cases that were pending on appeal at the time that case was decided.

Interested parties may file their briefs in the Office of the Clerk for the Commonwealth, John Adams Courthouse, Suite 1-400, Pemberton Square, Boston MA 02108-1724 (Telephone 617-557-1020). Parties filing amicus briefs are expected to comply with the requirements of Rules 17, 19 and 20 of Mass. Rules of Appellate Procedure. Amicus briefs, to assist the court, should focus on the ramifications of a decision and not solely on the interests of the parties filing such briefs.

February 2013

___________________________________

i8 wamu@i8wamu

MA #foreclosure fighters: Show up 2 support @russ45esq Monday,
October 7th 2013, 9 AM http://bit.ly/GHmgcb 
ANNE-MARIE GALIASTRO vs #MERS

Talk about kicking A**!!

BERGMAN & GUTIERREZ –

On February 10, 2014, Bergman & Gutierrez obtained another significant win against Wells Fargo, defeating Wells Fargo’s motion for summary judgment/adjudication. Through this motion, Wells Fargo had asked the court to issue judgment in its favor by arguing Plaintiffs cannot support any of their legal claims with evidence. Judge Rebecca Riley of the Ventura Superior Court heard the motion and delivered Wells Fargo a stunning and swift defeat. The tentative ruling, which became the court’s final ruling.

Although as the moving party, Wells Fargo carried the burden of establishing that Plaintiffs’ case lacks merit, it failed to attach any of the records that had been exchanged during the lawsuit. The only evidence presented by Wells Fargo was a self-serving, conclusory declaration of Wells Fargo’s “Vice President Loan Documentation,” which it relied upon to support its position that Wells Fargo did nothing wrong during the loan modification process and had no obligation to offer a modification.

[BERGMAN & GUTIERREZ] click for court ruling.

Clouded Titles-

In October of 2012, my firm (DK Consultants LLC) took an audit team into the Williamson County, Texas Courthouse Annex (not so much under stealth) and spent time auditing a batch of 5, 278 MERS-related assignments that were recorded in the Clerk’s official property records from 2010 – 2012. The results were published and released to the media on January 29, 2013 after an exhaustive review of nearly 1,600 assignments, all with the same types of so-called “markers” of document manufacturing.

The common denominator in document manufacturing here was basically involving self-assignment, wherein a member of MERSCORP (because MERS itself has no members), through its supervisory personnel, directs its $10/hr. employees to sign documents as “Vice Presidents” or “Assistant Secretary” of Mortgage Electronic Registration Systems, Inc. (“MERS”).

The use of the MERS System is limited to members of MERSCORP. The MERS System is owned by MERSCORP. Member lenders and servicers pay to join this system and they pay again when they log into the MERS website, which is owned by MERSCORP Holdings, Inc. MERS is broke. MERSCORP has all of the money.

[CLOUDED TITLES]

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

MONTGOMERY COUNTY, PENNSYLVANIA,
RECORDER OF DEEDS, by and through
Nancy J. Becker in her official
capacity as Recorder of Deeds of
Montgomery County, on its own
behalf and on behalf of all others
similarly situated,

Plaintiff,

v.

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

Defendants.

MEMORANDUM AND ORDER

JOYNER, J. February 11, 2014

This matter is presently before the Court on Motion of the
Plaintiff for Class Certification. After careful consideration
of the arguments and evidentiary materials submitted by the
parties, we shall grant the motion.

Statement of Relevant Facts

Plaintiff Nancy J. Becker is the duly-elected Recorder of
Deeds for Montgomery County, Pennsylvania. Purporting to act in
her official capacity on behalf of herself and all other
similarly situated Pennsylvania County Recorder of Deeds Offices,
Plaintiff’s Complaint seeks to compel Defendants to record all
mortgage assignments that were, are now and will in the future
be, registered within the MERS “system” and pay the attendant
recording fees . With that goal in mind, Plaintiff seeks 1
primarily equitable relief in the form of a declaration and/or
permanent injunction compelling Defendants to record the disputed
mortgage assignments, and an order quieting title and finding
that Defendants were unjustly enriched.

Plaintiff filed her complaint on November 7, 2011.
Defendants moved to dismiss the complaint in its entirety for
failure to state a claim upon which relief may be granted which
was, for the most part denied, on October 19, 2012. 2
Contemporaneous to filing an Answer to Plaintiff’s Complaint,
Defendants filed a Second Motion to Dismiss Plaintiff’s quiet
title claim on December 10, 2012. Following the denial of this
second motion on March 6, 2013, the Plaintiff filed the instant
Motion to Certify Class on April 26, 2013. Specifically, the
proposed class would consist of each county Recorder of Deeds in
Pennsylvania in his or her official capacity and would therefore
consist of 67 members in all. Not surprisingly, Defendants
oppose the motion.

Standards Applicable to Class Certification Requests
“The class action is ‘an exception to the usual rule that
litigation is conducted by and on behalf of the individual named
parties only.’” Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1432,
185 L. Ed.2d 515, 521 (2013)(quoting Califano v. Yamasaki, 442
U.S. 682, 700-701, 99 S. Ct. 2545, 61 L. Ed.2d 176 (1979)). “In
order to justify a departure from that rule, ‘a class
representative must be part of the class and possess the same
interest and suffer the same injury as the class members.’” Wal-
Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2550, 180 L. Ed.2d
374, 388-389 (2011)(quoting, inter alia, East Texas Motor Freight
System, Inc. v. Rodriguez, 431 U.S. 395, 403, 97 S. Ct. 1891, 52
L. Ed.2d 453 (1977)).

The principles and procedures governing class actions are
clearly delineated in Fed. R. Civ. P. 23. The initial
prerequisites are set forth in Rule 23(a), which reads as
follows:

One or more members of a class may sue or be sued as
representative parties on behalf of all members only if:

(1) the class is so numerous that joinder of all members is
impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are
typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately
protect the interests of the class.
Thereafter, under Rule 23(b),

A class action may be maintained if Rule 23(a) is satisfied
and if:

(1) prosecuting separate actions by or against individual
class members would create a risk of:
(A) inconsistent or varying adjudications with respect
to individual class members that would establish
incompatible standards of conduct for the party
opposing the class; or
(B) adjudications with respect to individual class
members that, as a practical matter, would be
dispositive of the interests of the other members not
parties to the individual adjudications or would
substantially impair or impede their ability to protect
their interests;
(2) the party opposing the class has acted or refused to act
on grounds that apply generally to the class, so that final
injunctive relief or corresponding declaratory relief is
appropriate respecting the class as a whole; or
(3) the court finds that the questions of law or fact common
to class members predominate over any questions affecting
only individual members and that a class action is superior
to other available methods for fairly and efficiently
adjudicating the controversy. The matters pertinent to
these findings include:

(A) the class members’ interests in individually
controlling the prosecution or defense of separate
actions;
(B) the extent and nature of any litigation concerning
the controversy already begun by or against class
members;
(C) the desirability or undesirability of concentrating
the litigation of the claims in the particular forum;
and
(D) the likely difficulties in managing a class action.

Under these parameters, “the class action device saves the
resources of both the courts and the parties by permitting an
issue potentially affecting every class member to be litigated in
an economical fashion.” Carrera v. Bayer Corp., 727 F.3d 300,
306 (3d Cir. 2013)(quoting, General Telephone Company of the
Southwest v. Falcon, 457 U.S. 147, 155, 102 S. Ct. 2364, 72 L.
Ed. 2d 740 (1982)). It has been observed that the requirements
set out in Rule 23 are not mere pleading rules – the party
seeking certification bears the burden of establishing each
element of Rule 23 by a preponderance of the evidence. Marcus v.
BMW of North America, LLC, 687 F.3d 583, 591 (3d Cir. 2012). A
party’s assurances to the court that it intends or plans to meet
the requirements is insufficient and thus it has been said that
“[t]he evidence and arguments a district court considers in the
class certification decision call for rigorous analysis.” In re
Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305, 318 (3d
Cir. 2008).

The trial courts are well-positioned to decide which facts
and legal arguments are most important to each Rule 23
requirement and possess broad discretion to control proceedings
and frame issues for consideration. Id., 552 F.3d at 310.
“Careful application of Rule 23 accords with the pivotal status
of class certification in large-scale litigation, because
‘denying or granting class certification is often the defining
moment in class actions for it may sound the “death knell” of the
litigation on the part of plaintiffs or create unwarranted
pressure to settle nonmeritorious claims on the part of
defendants.’” Id, (quoting Newton v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 259 F.3d 154, 162 (3d Cir. 2001)). In
conducting its rigorous analysis, the district courts “must
resolve all factual or legal disputes relevant to class
certification, even if they overlap with the merits – including
disputes touching on elements of the cause of action.” Marcus v.
BMW of North America, 687 F.3d 583, 591 (3d Cir. 2012)(quoting In
re Hydrogen Peroxide, 552 F.3d at 307). Indeed, “Rule 23 gives no
license to shy away from making factual findings that are
necessary to determine whether the Rule’s requirements have been
met.” Id.

[…]

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
January Term 2014

LINDA ZIMMERMAN,
Appellant,

v.
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
Appellee.

No. 4D12-2190

[February 12, 2014]

PER CURIAM.

Linda Zimmerman appeals a final judgment of foreclosure entered in favor of JP Morgan Chase Bank (“Chase”). Appellant raises multiple issues on appeal. We affirm on all except appellant’s argument that Chase failed to establish that it had standing to bring the foreclosure action. On this point Chase rightly concedes error. Standing to foreclose is a “crucial element” in any mortgage foreclosure proceeding and must be established at the inception of the lawsuit. McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). Chase attached to the complaint a photocopy of appellant’s promissory note and mortgage listing Washington Mutual Bank, FA, as the lender. Over one year later, in support of its motion for summary judgment, Chase filed the original note containing an undated endorsement in blank, but failed to file any evidence establishing that Chase obtained possession of the endorsed note prior to filing the complaint.

Because Chase failed to submit any record evidence proving that it had the right to enforce the note on the date the complaint was filed, a material issue of genuine fact exists as to whether Chase had standing at the time the lawsuit was filed, thereby precluding entry of summary judgment. See id.; Gonzalez v. Deutsche Bank Nat’l Trust Co., 95 So. 3d 251, 254 (Fla. 2d DCA 2012). We therefore reverse the final judgment of foreclosure. On remand, Chase must show that it was the holder of the endorsed note on the date the complaint was filed. By contrast, if the evidence shows that the note was endorsed in blank after the lawsuit was filed or that Chase was not the holder of the note on that date, then Chase had no standing at the time the complaint was filed, in which case the trial court should dismiss the instant lawsuit and Chase must file a new complaint. See McLean, 79 So. 3d at 175; Jeff–Ray Corp. v.
Jacobson, 566 So. 2d 885, 886 (Fla. 4th DCA 1990).

Reversed and remanded.

DAMOORGIAN, C.J., GERBER and LEVINE, JJ., concur.

* * *

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; John J. Hoy, Judge; L.T. Case No.
502009CA004918XXXXMB.

Linda Zimmerman, Lake Worth, pro se.

Shayna A. Freyman, Thomas H. Loffredo, and Jeffrey T. Kuntz of Gray
Robinson, P.A., Fort Lauderdale, for appellee.

Not final until disposition of timely filed motion for rehearing.

February 12, 2014

WISBAR-

Do your clients include borrowers, lenders, or businesses that rely on the services of the Mortgage Electronic Registration System (MERS)? If so, you may want to keep your eye on a case that is headed to the Wisconsin Supreme Court.

The court recently accepted review of 10 new cases, summarized below. One is a foreclosure case, Dow Family LLC v. PHH Mortgage Corp., involving a company that bought a condo but later faced a foreclosure action by an apparent assignee.

Dow Family purchased the condo from a couple who originally issued a promissory note to U.S. Bank for $146,000. The note, recorded in 2001, was secured by a mortgage on the condo and listed MERS as the mortgagee. U.S. Bank was a member of MERS.

MERS is a private electronic registration system for mortgages and acts as mortgagee for the loans owned by its members, which include lenders, financial institutions, and servicers who pay a membership fee. Mortgages are recorded but subsequent assignments between MERS members are not. MERS remains the mortgagee.

According to court documents, MERS has saved the banking industry approximately $1 billion in mortgage-related recording fees.

Before the condo purchase, however, a title search revealed two mortgages on the condo. The sellers said the second listed mortgage was just a refinance; there was only one mortgage. The deal closed and showed mortgage satisfaction to U.S. Bank.

Several months later, PHH Mortgage Corporation asserted that a mortgage on the property was not paid in full and was delinquent. Apparently, U.S. Bank’s mortgage assignment to MERS was transferred to PHH Mortgage but it was never recorded.

The circuit court entered a foreclosure judgment for PHH Mortgage. The court of appeals applied the doctrine of equitable assignment and ruled that PHH did not need to prove a written assignment of mortgage to show it held a mortgage interest.

According to court staff, the case implicates MERS and “examines the doctrine of equitable assignment and whether a mortgage automatically transfers upon the transfer of the associated note, without the need for a written mortgage assignment.”

[WISBAR]

According to the class action complaint, Mr. Dimon earned in excess of $130 million from 2005 through 2012. The lawsuit is seeking disgorgement of all illicit profits generated as a result of the bank’s unlawful conduct, as well as an order requiring JPMorgan to enact proper internal control procedures to prevent such fraudulent and illegal conduct from occurring in the future.

Morgan & Morgan –

The securities attorneys in Morgan & Morgan’s New York office have filed a class action lawsuit against James Dimon, who is the CEO, President, and Chairman of the Board of Directors of JPMorgan Chase, alleging that Mr. Dimon and the other members of the bank’s Board of Directors allowed JPMorgan to embark on an unprecedented course of recklessness and unlawful conduct to increase their own personal fortunes.

Since 2009, JPMorgan has paid nearly $32 billion in settlements, fines, and penalties to law enforcement agencies and federal regulators for a wide variety of illegal and criminal behavior. The class action lawsuit describes a number of high-profile scandals involving the once-revered Wall Street bank.

[MORGAN & MORGAN]

image: AP

HA! Good Luck OCWEN… One name Kathy Patrick

Reuters-

A number of institutional investors including BlackRock Inc are considering the possibility of legal action against Ocwen Financial Corp over its mortgage servicing practices, a person familiar with the matter said on Tuesday.

The investors want greater transparency on how Ocwen, the country’s largest nonbank mortgage servicer, manages its mortgages, particularly loan modifications, the person said.

Richard Gillespie, a spokesman for Atlanta-based Ocwen, declined to comment about any possible action by investors. Ocwen said in a statement, “Helping people avoid foreclosure via sustainable modifications are good for our business, the investors who own the mortgages, homeowners and communities.”

[REUTERS]

Gruendel, Bear and Flynn, Js.

Opinion

BEAR, J.

The defendant Michael John Melahn^[1] appeals^[2] from the trial court’s judgment denying his motion to open the strict foreclosure action that was instituted against him by the plaintiff, Wells Fargo Bank, N.A., as trustee.^[3] We conclude that the court had the jurisdiction and authority to open, and that it should have opened, the judgment of strict foreclosure after the running of the law day in order to effectuate the clear terms of its judgment, with which the plaintiff encumbrancer had failed to comply and then falsely certified that it had complied. Accordingly, given the unusual specific facts and circumstances of this case, including the omissions and falsification by the plaintiff constituting its noncompliance with the strict foreclosure judgment of the court, we reverse the judgment of the trial court denying the defendant’s motion to dismiss the strict foreclosure action.

The following facts inform our review of the defendant’s claim. On September 9, 2010, the plaintiff filed an action against the defendant to foreclose a mortgage on certain of his real property. The defendant was defaulted for failure to appear on November 2, 2010. The court rendered a judgment of strict foreclosure on November 22, 2010, with a law day of January 11, 2011. As part of its judgment, the court ordered the plaintiff to “send notice to nonappearing individual defendants by regular and certified mail in accordance with the standing orders.” Paragraph D of the uniform foreclosure standing orders, form JD-CV-104, provides: “Within 10 days following the entry of judgment of strict foreclosure the plaintiff must send a letter by certified mail, return receipt requested, and by regular mail, to all nonappearing defendant owners of the equity and a copy of the notice must be sent to the clerk’s office. The letter must contain the following information: a.) the letter is being sent by order of the Superior Court; b.) the terms of the judgment of strict foreclosure; c.) nonappearing defendant owner(s) of equity risk the loss of the property if they fail to take steps to protect their interest in the property on or before the defendant owners’ law day; d.) non-appearing defendant owner(s) should either file an individual appearance or have counsel file an appearance in order to protect their interest in the equity. The plaintiff must file the return receipt with the Court. The Plaintiff Must Not File A Certificate Of Foreclosure On The Land Records Before Proof Of Mailing Has Been Filed With The Court.” On November 23, 2010, the court sent notice of the order and judgment to the plaintiff. The plaintiff, however, did not send notice to the defendant until January 7, 2011, four days before his law day, and the certified notice was not delivered to him until January 11, 2011, the actual law day. The notice sent to the then nonappearing defendant also did not contain the important information required by the standing orders, which the court had mandated in its judgment. Despite this deficiency, the plaintiff nevertheless certified to the court that notice had been mailed “in compliance with Uniform Foreclosure Standing Order JD-CV-79^[4] and JD-CV-104 (d), on January 7, 2011, to all counsel and pro se parties of record to this action. . . .”^[5] (Emphasis omitted.)

On February 22, 2011, after the defendant secured legal representation, his attorney filed an appearance in the case, and, on March 31, 2011, he filed a motion to dismiss the foreclosure action due to the plaintiff’s noncompliance with the court’s judgment and the false certification. The plaintiff opposed the motion. On July 14, 2011, the court opened the judgment of strict foreclosure and granted the defendant’s motion to dismiss, holding that because the plaintiff had “failed to comply with the notice requirement of the standing orders, the matter is dismissed as to [the defendant]. . . .” On August 24, 2011, the plaintiff filed a motion to reargue, citing the case of Falls Mill of Vernon Condominium Assn., Inc. v. Sudsbury, 128 Conn. App. 314, 320-21, 15 A.3d 1210 (2011).^[6] The defendant objected to the plaintiff’s motion and argued that the dismissal was a proper sanction for the plaintiff’s failure to adhere to the order contained in the court’s judgment and that it filed a false certification. The court granted the plaintiff’s motion and concluded that, despite the plaintiff’s failure to adhere to the notice requirements contained in the judgment of strict foreclosure, the court was precluded from opening the judgment and dismissing the action because the law day had passed and title had become absolute in the plaintiff. The court therefore vacated its order granting the defendant’s motion to dismiss and then denied the defendant’s motion. This appeal followed.

On appeal, the defendant claims that the court improperly “grant[ed] reargument and vacat[ed] the dismissal” of the foreclosure action against the defendant because “the plaintiff’s initial noncompliance with the trial court’s judgment of strict foreclosure [requiring it] to send notice to the nonappearing defendant in accordance with the uniform foreclosure standing orders, JD-CV-104 . . . [and the] plaintiff’s . . . misrepresenting [its] compliance with the standing order, constitute[d] the sort of fraud . . . and flagrant noncompliance with the specific order of the trial court as to vitiate the strict foreclosure judgment post law day.” The defendant also argues that the standing orders were adopted by the judges of the Superior Court to ensure that nonappearing defendants receive “constitutional and due process protection. . . .” Given the specific facts and circumstances of this case, including the omissions and falsification by the plaintiff constituting its noncompliance with the strict foreclosure judgment of the court, we conclude that the court had the jurisdiction and authority to open the judgment of strict foreclosure in order to effectuate the clear terms of its judgment, including that the plaintiff comply with the uniform foreclosure standing orders, with which the plaintiff had failed to comply despite certifying otherwise.^[7]

“The law governing strict foreclosure lies at the crossroads between the equitable remedies provided by the judiciary and the statutory remedies provided by the legislature. . . . Because foreclosure is peculiarly an equitable action . . . the court may entertain such questions as are necessary to be determined in order that complete justice may be done. . . . In exercising its equitable discretion, however, the court must comply with mandatory statutory provisions that limit the remedies available to a foreclosing mortgagee. . . . It is our adjudicatory responsibility to find the appropriate accommodation between applicable judicial and statutory principles. Just as the legislature is presumed to enact legislation that renders the body of the law coherent and consistent, rather than contradictory and inconsistent. . . [so] courts must discharge their responsibility, in case by case adjudication, to assure that the body of the law—both common and statutory— remains coherent and consistent.” (Citations omitted; internal quotation marks omitted.) New Milford Savings Bank v. Jajer, 244 Conn. 251, 256-57, 708 A.2d 1378 (1998).

We are mindful that Practice Book § 63-1 (b) provides that the “failure to give notice of judgment to a nonappearing party shall not affect the running of the appeal period,” that General Statutes § 49-15 provides that no judgment of strict foreclosure “shall be opened after the title has become absolute in any encumbrancer,” and that “the limitation period of § 49-15 is definitely jurisdictional.” D. Caron & G. Milne, Connecticut Foreclosures (4th Ed. 2004) § 9.01A, p. 197. Nevertheless, as our Supreme Court explained in AvalonBay Communities, Inc. v. Plan & Zoning Commission, 260 Conn. 232, 241, 796 A.2d 1164 (2002): “We reject [a] hypertechnical understanding of the trial court’s continuing jurisdiction to effectuate prior judgments. We conclude, instead, that the trial court’s continuing jurisdiction is not separate from, but, rather, derives from, its equitable authority to vindicate judgments. Moreover, we hold that such equitable authority . . . [derives] from its inherent powers. See Connecticut Pharmaceutical Assn., Inc. v. Milano, 191 Conn. [555, 563, 468 A.2d 1230 (1983)] (recognizing `trial court’s power to fashion a remedy appropriate to the vindication of a prior consent judgment’); Papa v. New Haven Federation of Teachers, 186 Conn. 725, 737, 444 A.2d 196 (1982) (recognizing `the inherent power of the court to coerce compliance with its orders’).” (Emphasis in original; footnote omitted.) See also Rosado v. Bridgeport Roman Catholic Diocesan Corp., 276 Conn. 168, 213, 884 A.2d 981 (2005) (explaining and applying reasoning of AvalonBay Communities, Inc.). In the present case, where the judgment of the court contained the specific notice requirements to which the plaintiff was ordered to adhere, the court necessarily retained the jurisdiction and authority to effectuate its judgment when the plaintiff failed to adhere to the terms of the judgment rendered in its favor and then falsely certified to the court that it had complied.^[8]

“Courts of equity may grant relief from the operation of a judgment when to enforce it is against conscience, and where the appellant had no opportunity to make defense, or was prevented from so doing by accident, or the fraud or improper management of the opposite party, and without fault on his own part. Folwell v. Howell, 117 Conn. 565, 169 A. 199 [1933]; Dante v. Dante, 93 Conn. 160, 105 A. 353 [1919]; Jarvis v. Martin, 77 Conn. 19, 58 A. 15 [1904]; Smith v. Hall, 71 Conn. 427, 42 A. 86 [1899]; Carrington v. Holabird, 17 Conn. 530, 537 [1846], 19 Conn. 83, 87 [1848]; General Statutes § 5701 [now § 52-270].”^[9] Hoey v. Investors’ Mortgage & Guaranty Co., 118 Conn. 226, 230, 171 A. 438 (1934). “Fraud, accident, mistake, and surprise are recognized grounds for equitable interference, when one, without his [or her] own negligence, has lost an opportunity to present a meritorious defense to an action, and the enforcement of the judgment so obtained against him [or her] would be against equity and good conscience, and there is no adequate remedy at law. Lithuanian Brotherhelp Society v. Tunila, 80 Conn. 642, 645, 70 A. 25 (1908). Equity will not, save in rare and extreme cases, relieve against a judgment rendered as the result of a mistake on the part of a party or his [or her] counsel, unless the mistake is unmixed with negligence or . . . unconnected with any negligence or inattention on the part of the judgment debtor. . . . Jarvis v. Martin, [supra, 21]; see Hartford Federal Savings & Loan Assn. v. Stage Harbor Corporation, 181 Conn. 141, 434 A.2d 341 (1980).” (Internal quotation marks omitted.) Cavallo v. Derby Savings Bank, 188 Conn. 281, 285, 449 A.2d 986 (1982); see also Hoey v. Investors’ Mortgage & Guaranty Co., supra, 230-31.

Furthermore, we repeatedly have held that “a trial court has broad discretion to make whole any party who has suffered as a result of another party’s failure to comply with a court order.” (Internal quotation marks omitted.) AvalonBay Communities, Inc. v. Plan & Zoning Commission, supra, 260 Conn. 243, citing Nelson v. Nelson, 13 Conn. App. 355, 367, 536 A.2d 985 (1988) and Clement v. Clement, 34 Conn. App. 641, 647, 643 A.2d 874 (1994). In AvalonBay Communities, Inc., our Supreme Court concluded that “the trial court’s continuing jurisdiction to effectuate its prior judgments, either by summarily ordering compliance with a clear judgment or by interpreting an ambiguous judgment and entering orders to effectuate the judgment as interpreted, is grounded in its inherent powers, and is not limited to cases wherein the noncompliant party is in contempt, family cases, cases involving injunctions, or cases wherein the parties have agreed to continuing jurisdiction.” AvalonBay Communities, Inc. v. Plan & Zoning Commission, supra, 246. The court also addressed the argument of the defendant, who had contended that the court’s jurisdiction in the cases of Clement and Nelson had derived from statutory authority, explaining: “Clement involved a dispute over a property assignment following a marital dissolution and that General Statutes § 46b-86 specifically provides that the trial court does not have continuing jurisdiction to set aside, alter or modify property assignments. See General Statutes § 46b-86 (a) (providing in relevant part that that statute’s provision that order for payment of alimony or support may at any time be continued, set aside, altered or modified by court `shall not apply to [property] assignments under section 46b-81′). We also reject the defendant’s claim that General Statutes § 46b-87 provides for the court’s continuing jurisdiction over cases involving family matters. That statute merely recognizes the court’s common-law contempt power and provides that the court may award attorney’s fees to either party in contempt proceedings related to orders issued under the specified statutes. Moreover, nothing in either Nelson or Clement suggests that the trial court’s continuing jurisdiction in those cases derived from the special nature of marital dissolution cases. Rather, the Appellate Court in Clement specifically stated that, pursuant to [General Statutes] § 52-212a, the trial court `[had] no jurisdiction to open a judgment and affect the property assignment except within four months after the original judgment’; Clement v. Clement, supra, 644-45; but that `it [was] within the equitable powers of the trial court’ to effectuate its prior judgment at any time. . . . Id., 646. Accordingly, the Appellate Court in Clement could have concluded only that the trial court’s continuing jurisdiction over that matter derived from its equitable authority to vindicate judgments.” (Emphasis in original.) AvalonBay Communities, Inc. v. Plan & Zoning Commission, supra, 243-44; see also Rosado v. Bridgeport Roman Catholic Diocesan Corp., supra, 276 Conn. 211-13.

Recently, our Supreme Court again reiterated that “`[e]quity will not, save in rare and extreme cases, relieve against a judgment rendered as the result of a mistake on the part of a party or his counsel, unless the mistake is unmixed with negligence, or . . . unconnected with any negligence or inattention on the part of the judgment debtor, or . . . when the negligence of the party is not one of the producing causes.’ . . . Jarvis v. Martin, supra, [77 Conn.] 21.” Citibank, N.A. v. Lindland, 310 Conn. 147, 174 n.16, 75 A.3d 651 (2013). The court then explained: “Granting relief to [an injured party] in the present case, however, would not constitute a departure from this long established principle. Instead, we are of the view that the circumstances of the present case, which the trial court aptly described as `sui generis,’ constitute precisely the sort of `rare and extreme [case]’; Jarvis v. Martin, supra, 21; in which equity permits a court to provide relief in response to an egregious mistake. See Lomas & Nettleton Co. v. Isacs, 101 Conn. 614, 620-21, 127 A. 6 (1924) (observing that this court has `upheld the power of a court of equity to grant relief from the consequences of an innocent mistake, although the mistake was not unmixed with negligence . . . and although it was a mistake of law. . . [when] the failure to do so would allow one to enrich himself unjustly at the expense of another’ . . .). This is particularly true in the present case given the `highly relevant’ conduct of the plaintiff’s counsel in creating these extraordinary circumstances and given the ease with which this predicament might have been averted if the plaintiff’s counsel had addressed the court with greater accuracy.” Citibank v. Lindland, supra, 174 n. 16.

In the present case, we conclude that this is one of those rare and exceptional circumstances discussed in the foregoing cases. Here, the plaintiff encumbrancer itself failed to comply with the court’s judgment of strict foreclosure, and then falsely certified to the court that it had complied, to the detriment of the then nonappearing defendant owner of the property.^[10] Under such limited circumstances, we conclude that the court had the jurisdiction and authority to open the judgment of strict foreclosure, despite the passing of the law day, and that it abused its discretion when it declined to do so and denied the defendant’s motion to dismiss.

The judgment is reversed and the case is remanded for further proceedings according to law.

In this opinion the other judges concurred.

[1] Also named as defendants in the foreclosure action were Danbury Radiological Associates, P.C., and Danbury Hospital. They, however, are not parties to this appeal. We therefore refer in this opinion to Melahn as the defendant.

[2] This appeal was filed jointly with the appeal of the defendant’s wife, Kathleen Melahn, in a summary process action that the plaintiff had brought against her. The propriety of the joint filing of these appeals and the issues related to Kathleen Melahn’s appeal need not be discussed nor decided because the trial court dismissed the summary process action after the filing of the present appeal. Accordingly, the appeal as it relates to Kathleen Melahn is moot.

The defendant also raises an issue regarding his filing of a motion for a temporary injunction and a writ of audita querela. Because we conclude that the court should have opened the judgment of strict foreclosure to effectuate the terms of that judgment, we need not consider this issue.

[3] The plaintiff has not filed either an appearance or a brief in this appeal.

[4] Form JD-CV-79 contains the standing order in a foreclosure by sale action.

[5] It is unclear from the record whether the trial court clerk sent notice of the judgment of strict foreclosure to the defendant. The order states in relevant part: “via mail to plaintiff—[plaintiff] to send notice per standing orders. . . .” The court’s “Notice of Judgment of Strict Foreclosure” then provides that “Copies sent Tuesday, November 23, 2010 to: MARTHA CROOG LLC [plaintiff’s counsel].” There is no indication that the court also sent notice to the defendant.

[6] We conclude that Falls Mill of Vernon Condominium Assn., Inc. v. Sudsbury, supra, 128 Conn. App. 320-21, is distinguishable from the present case in several respects, including that there was no allegation that the plaintiff in that case had failed to comply with the terms of the court’s judgment or that it had falsely certified compliance, the case did not concern a nonappearing defendant owner, and there was no allegation that the defendant had not received actual notice.

[7] We make no determination on the appropriateness of a dismissal as a sanction for the plaintiff’s failure to comply with the court’s judgment and its improper certification. The appropriate sanction, if any, is discretionary and may be reconsidered by the court on remand.

[8] It is likely that the jurisdictional element presented by the passing of the law day and the vesting of title in a strict foreclosure judgment concerns personal jurisdiction rather than subject matter jurisdiction. See D. Caron & G. Milne, supra, pp. 197-98; see also In re Baby Girl B., 224 Conn. 263, 292, 618 A.2d 1 (1992), citing, inter alia, the strict foreclosure case of Ferguson v. Sabo, 115 Conn. 619, 623, 162 A. 844 (1932), for the proposition that “[o]ur cases have recognized that a party may waive its objection to a trial court’s erroneous exercise of personal jurisdiction. . . .” “Although the limitation period of § 49-15 is definitely jurisdictional, it may still be waived under certain circumstances.” D. Caron & G. Milne, supra, p. 197. This is demonstrated in the case of Ferguson v. Sabo, supra, 619. In Ferguson, the plaintiff obtained a judgment of strict foreclosure, and, following the passing of the law days and the vesting of title, the defendant owner filed a motion to open the judgment, which was granted by the trial court. Id., 620-21. The defendant then filed an answer to the foreclosure complaint and brought a counterclaim against the plaintiff, which the plaintiff answered. Id., 621. The matter was tried to the court, and, following a judgment in favor of the defendant on the counterclaim, the plaintiff filed a motion to open and vacate the judgment, claiming it was null and void because the court did not have jurisdiction to open the judgment in the first place because title had vested in the plaintiff. Id. The Supreme Court disagreed and held that the plaintiff had waived any claim of jurisdictional defect by proceeding with the case. Id., 623.

[9] General Statutes § 52-270 provides in relevant part: “(a) The Superior Court may grant a new trial of any action that may come before it, for mispleading, the discovery of new evidence or want of actual notice of the action to any defendant or of a reasonable opportunity to appear and defend, when a just defense in whole or part existed, or the want of actual notice to any plaintiff of the entry of a nonsuit for failure to appear at trial or dismissal for failure to prosecute with reasonable diligence, or for other reasonable cause, according to the usual rules in such cases. The judges of the Superior Court may in addition provide by rule for the granting of new trials upon prompt request in cases where the parties or their counsel have not adequately protected their rights during the original trial of an action. . . .”

[10] Given the circumstances of the plaintiff’s noncompliance with a clear order and judgment of the court and its false certification to the court, we decline to examine the record for proof of any actual harm to the defendant.

Never underestimate the power of being a MERS member to create any document it wants to use in court at any given time.

ALSO, MERS DOES NOT HAVE MEMBERS! MERS IS A SHELL CORPORATION! THE ALLEGED “MEMBERS” ARE MEMBERS OF MERSCORP HOLDINGS, INC.

The email below:

BE ADVISED the Borrower filed an Objection to our MFR because there is NO assignment on record of Aurora having ownership in the DOT and Note. I prepared an assignment from MERS as nominee for Aegis Wholesale Corporation to MERS as Nominee for Aurora Loan Services. THIS ASSIGNMENT MUST BE BACK DATED AS TO WHEN AURORA ACTUALLY ACQUIRED THIS LOAN!!! I must have this back in my office immediately as the Borrower (pro se) is requesting the Judge to dismiss our action and not allow us anything because we have no standing.

Please execute this and return to me ASAP.

Thank you for your immediate assistance.

.

This case also has TWO DIFFERENT NOTES — here are the endorsements.

 VERSION #2

Better Markets Files Lawsuit Challenging the U.S. Department of Justice’s Unlawful, Unprecedented and Unilateral Agreement Granting JP Morgan Chase Blanket Immunity In Exchange for $13 Billion

Executive Branch Acted as Investigator, Prosecutor, Judge, Jury, Sentencer and Collector without Any Court Review or Approval

(Washington, D.C.) Better Markets, Inc. today filed a lawsuit in U.S. District Court for the District of Columbia challenging the Justice Department’s authority to unilaterally enter into the unprecedented and historic $13 billion agreement with JP Morgan Chase, which was the largest settlement with a single entity in the nation’s history by more than 300%. The November 2013 agreement gave JP Morgan Chase – with no judicial review or approval – blanket civil immunity for years of alleged pervasive, egregious and knowing fraudulent and illegal conduct that contributed to the 2008 financial crash and the worst economy since the Great Depression.

“The Wall Street bailouts were bad enough, but now taxpayers are being forced to accept a secretive backroom deal that may well have been another sweetheart deal. The Justice Department cannot act as prosecutor, jury and judge and extract $13 billion in exchange for blanket civil immunity to the largest, richest, most politically-connected bank on Wall Street. The executive branch does not have this unilateral power because it violates the constitutional requirement of checks and balances,” said Dennis Kelleher, President and CEO of Better Markets, an independent nonprofit organization that promotes the public interest in the financial markets.

“Adding insult to injury, the Department of Justice did all this in an agreement that appears to have been written more to conceal than reveal. For example, it is using the large dollar amount to blind everyone to the reality that they have disclosed no meaningful facts about what JP Morgan Chase did, who did it, who it hurt, how much they profited and how much their clients, customers and others lost. The American people deserve, and the law requires, an independent judicial review to determine whether the settlement is fair and whether it can withstand scrutiny in the light of day,” Mr. Kelleher said.

To put the $13 billion settlement in perspective, the financial crisis that JP Morgan Chase contributed to  will ultimately cost Americans more than $13 trillion and some estimates are that it could cost every man, woman and child in the U.S. as much as $120,000.  A monetary sanction of $13 billion seems small given it contributed to such economic wreckage and given the size of JP Morgan Chase, a bank with $2.4 trillion in assets. The point is, however, that making an informed judgment about the substance of the agreement is simply impossible without judicial review and the disclosure of meaningful information.

Better Markets is asking the court to declare the agreement unlawful and to issue an injunction that would prevent the DOJ from enforcing the agreement until the agreement has been reviewed and approved by a court. As part of the judicial review, a court would have the opportunity to ask the parties for more details, which would become publicly available, about JP Morgan’s violations and the extent of the damages they caused.

A fact sheet and other information on the lawsuit are available on Better Markets’ website.

###

Better Markets is an independent, nonprofit, nonpartisan organization that promotes the public interest in financial reform in the domestic and global capital and commodity markets. Better Markets advocates for transparency, oversight and accountability with the goal of a stronger, safer financial system that is less prone to crisis and failure, thereby eliminating or minimizing the need for more taxpayer funded bailouts.

• The Press Release
• The Fact Sheet
• The Complaint
• The graphics used at the press conference to illustrate the key issues:
  • The Executive Branch/Department of Justice
  • No Checks and Balances
  • The Cost of the Financial Crisis
  • The Key Unprecedented Facts
  • What Is Still Being Kept Secret

Four years ago today, I launched this little big monster of a blog.

Thanks to all the millions out there from all over the globe that have stopped by to read and continue to read my site. Having been this long and yet seeing no real progress for the homeowners, I hope to continue to expose the frauds that nobody seems to want to put an end to for another 4 more years.

A Special Thank You to all the sponsors that make this site possible.

Thank you,

Damian~

Very good read here: Senator Harry Reid Answered Me Back About Extending the Mortgage Debt Forgiveness Act thru 2014

Bloomberg-

Ron Wyden, poised to become the top Senate Democrat on trade and tax policy, said he wants to talk with fellow senators before considering a plan to speed trade deals, marking a delay for a priority of President Barack Obama.

Wyden, an Oregon Democrat, spoke to reporters today in the Capitol after the Senate voted to confirm Senator Max Baucus as ambassador to China. Baucus’s departure means Wyden will become chairman of the Senate Finance panel as soon as next week.

“There have been so many changes in global commerce that a number of senators have simply indicated they want the time to have a chance to discuss these issues,” Wyden said. “I’ve got some listening to do to my colleagues.”

[BLOOMBERG]

Now you can understand why the banks keep getting what they want…

Mother Jones-

On Thursday morning, Sen. Elizabeth Warren (D-Mass.) called on President Barack Obama to nominate more judges to the federal bench who have backgrounds serving the public interest instead of corporate America.

Of Obama’s judicial nominations so far, just ten—fewer than four percent—have worked as lawyers at public interest organizations, according to a report released Thursday by the Alliance for Justice, a network of civil rights organizations. Only 10 nominees have had experience representing workers in labor disputes. Eighty-five percent have been either corporate attorneys or prosecutors. At an event Thursday sponsored by several civil rights organizations, including the Brennan Center for Justice and the Alliance for Justice, Warren called for more balance in the system.

“Power is becoming more and more concentrated on one side,” she said. “Well-financed corporate interests line up to fight for their own privileges and resist any change that would limit corporate excess… We have an opportunity to…fight for something that balances the playing field in the other direction.”

[MOTHER JONES]

Clouded Titles-

In this last segment, I want to touch on recorded assignments (or the lack thereof) and what that means for potentially quieting the title to your property. I speak of this from a paralegal’s point of view. If you have an issue with my thought process, you are certainly encouraged to toss these ideas out to a competent foreclosure defense attorney and get his take on it! I would recommend someone who has actually succeeded in doing a full-blown quiet title action in the quasi in rem realm.

I speak of this process in the sense that in today’s times, with the advent of this so-called “agent place card business model”, the Lenders get to screw over every county recorder and register of deeds by not recording assignments after the original Lender sells the promissory note. This, in effect, has turned the entire quiet title process into a quasi in rem scenario in favor of the homeowner and against the place card agent and any future lender touching its business model.

First … the just desserts …

[CLOUDED TITLES]

Concerns Over The Mortgage Servicer’s Ability To Handle More Loans

WSJ-

A New York state regulator has indefinitely stopped a $2.7B deal by by Ocwen Financial (OCN) to buy mortgage-servicing rights from Wells Fargo (WFC), according to The Wall Street Journal, citing a person familiar with the matter.

[YAHOO] [WALL STREET JOURNAL]

Clouded Titles-

In my last blog post, I discussed the differences between the roles played by Grantors and Grantees and the legal issues resulting therefrom.

In this segment, I’m going to address the issues created when property owners confuse “legal title” and “equitable title” (as opposed to “complete title”) when trying to determine their defined role in the transaction to purchase the property; along with chain of title issues and responsibilities and obligations that enter into the picture as the scenario unfolds (or is expected to unfold at some point in time in the future).

Responsibilities, rights and obligations fall on the shoulders of BOTH the Grantor and the Grantee in the real estate transaction!

I can’t stress enough the idea of fully researching a property’s title BEFORE engaging in a real estate transaction, in light of the previous scenario I discussed involving mesne assignees. The only way to identify the existence of potential mesne assignees is by identifying whether or not the chain of title has been contaminated with “agent-nominees” at any point in time in the chain after January 1, 1995. Most home buyers look at what is only skin deep without realizing that the property’s title may have hidden defects not noticeable to even the most discerning real estate agent.

[CLOUDED TITLES]