If the AG’s think they can settle the greatest theft in history, let them read this story…it’s not only people who are in default.

HuffPO-

In July 2009, Roy and Sheila Bowers refinanced the mortgage on their suburban ranch home in Topeka, Kansas. The couple wanted to take advantage of the low interest rates that were all the rage at the time.

Roy, a truck driver, and Sheila, a former hotel housekeeping supervisor, knew their new loan from Wells Fargo would enable them to save $198.86 a month – a nice chunk to help with gas and groceries.

But what the Bowers never imagined was that their old loan, the one Wells Fargo told them was paid off, would resurrect itself, trashing their credit report, scotching their son’s student loans and throwing the whole family into foreclosure. All, they say, even though they didn’t miss a single mortgage payment.

The Bowers aren’t alone…

[HUFFINGTONPOST]

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

You know it’s going to end badly when these joker of banks screw with the wrong person!

HuffPO-

Christine Jackson’s three-bedroom wood-frame home in Indianapolis is in danger of foreclosure. It’s not because she can’t afford her mortgage, but because of a bank error, she said.

Jackson is one among thousands of homeowners from all walks of life who have complained that the major banks that service their mortgages have made frequent errors in calculating their loans. These errors include slapping unnecessary inspection fees onto accounts, misapplying payments in violation of Fannie Mae and Freddie Mac guidelines and “force-placing” expensive insurance onto homes that are already insured.

Jackson knows all this all too well because she is a lawyer who represents homeowners trying to stave off foreclosure. Often, those clients have claimed that their bank or mortgage servicer made a mistake in tabulating the cost of their loan, triggering a wrongful default. Jackson, 54, a former fraud investigator for the Internal Revenue Service, now understands firsthand the frustration that her clients face.

[HUFFINGTONPOST]

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

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

EMERALD GARDENS
CONDOMINIUM ASSOCIATION,
Appellant,

v.

U.S. BANK N.A., AS TRUSTEE FOR
THE REGISTERED HOLDERS OF
MASTR ASSET BACKED
SECURITIES TRUST, 2006-AM1,
MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 2006-AM1,
Respondent.

Leach, A.C.J. — Emerald Greens Condominium Association (Association)
appeals a trial court’s decision setting aside an order of default and vacating a
decree quieting title in real property. Because U.S. Bank failed to appear in the
Association’s quiet title action for reasons other than mistake, inadvertence,
surprise, or excusable neglect, and failed to present prima facie evidence of a
defense to the Association’s claim, we reverse and direct the trial court to
reinstate the order of default and decree quieting title in the Association.

FACTS

Elizabeth Swanson secured a purchase money loan from Aames Funding
Corporation, d/b/a Aames Home Loan (Aames), with a deed of trust, recorded in
a first lien position against her condominium unit.

In April 2007, Ocwen Loan Servicing LLC recorded a notice of trustee’s
sale for this property that identified U.S. Bank as the current beneficiary of the
deed of trust. The notice recited that Swanson’s condominium was

subject to that certain Deed of Trust dated 9/9/2005, recorded
10/3/2005, . . . from ELIZABETH SWANSON . . . as Grantor(s), to
KAREN L. GIBBON, PS, as Trustee, to secure an obligation in
favor of AAMES FUNDING CORPORATION DBA AAMES HOME
LOAN, as Beneficiary, . . . the beneficial interest in which was
assigned by AAMES FUNDING CORPORATION DBA AAMES
HOME LOAN to U.S. Bank, N.A., as Trustee for the registered
holders of MASTR Asset Backed Securities Trust.

But this recital was not true. Instead, on May 25, 2007, Accredited Home
Lenders Inc., successor by merger to Aames, assigned “[a]ll beneficial interest”
in the deed of trust to Ocwen Loan Servicing. Then, on June 1, 2007, Ocwen
assigned its interest to U.S. Bank. These two assignments were recorded with
the Snohomish County Auditor on June 15, 2007.

Earlier, on May 15, the Association filed a complaint against Swanson
and Aames, seeking to foreclose a lien for unpaid condominium assessments on
Swanson’s unit. Three days later, the Association recorded a lis pendens
against the property.

The Association served Aames, but it failed to appear in the action. On
July 6, 2007, the Association obtained entry of an order of default against
Aames. On October 12, 2007, the court entered a “Stipulated/Default Judgment,
Order and Foreclosure Decree.” Swanson stipulated to its entry through
counsel. The decree (1) awarded judgment to the Association and declared its
lien valid and exempt from homestead protection, (2) foreclosed the lien and
directed the sheriff to sell the property if the judgment was not promptly paid,
and (3) declared the rights of Aames and all persons claiming under it to be
subordinate to the Association’s lien and foreclosed those rights, except for any
right of redemption.

The Association purchased the condominium unit at a sheriff’s sale held
in February 2009. After the one-year redemption period expired without
redemption by any party, the Association received a sheriff’s deed conveying the
property to it.

U.S. Bank claims that it first became aware of the lien foreclosure
proceedings in February 2010, after it completed foreclosure of its deed of trust.1
Shortly afterward, U.S. Bank’s attorney Kelly Sutherland sent the Association’s
attorney, Patrick McDonald, a letter, stating, “Pursuant to our telephone
conversation, this office is representing [U.S. Bank,] successor beneficiary
holders of the 1st [Deed of Trust] on . . . the subject loan. My clients are
disputing the priority of the Sheriff’s Deed.” Sutherland also asked McDonald to
“provide . . . [a] breakdown of your client’s total amount of Judgment, including
any attorney fees and advances for taxes and other liens on . . . the subject
loan.” McDonald responded by letter a few days later. He wrote,

As you know, Emerald Gardens Condominium Association . . .
properly served the lender of record and foreclosed the lender’s
interest in the above-referenced condominium unit . . . .
As a result, my client bid the full judgment amount at the
sheriff’s sale, the redemption period expired without redemption by
any party, a sheriff’s deed was issued to the Association, and the
Association now owns the property free and clear. Therefore,
there is no judgment balance upon which to give a payoff as you
request.

Two months later, in an effort to remove any potential cloud on the title,
the Association served U.S. Bank with a summons and complaint to quiet title to
the subject property.2 U.S. Bank, the only defendant in the action, failed to
appear or file an answer within the 20 days allowed by CR 4. The Association
then obtained entry of an order of default and an order and decree quieting title
in its favor.

U.S. Bank moved to set aside the default and vacate the decree under
CR 55 and CR 60. A court commissioner granted the relief requested. The trial
court denied the Association’s motion for revision.
The Association appeals.

STANDARD OF REVIEW

When a party appeals an order denying revision of a court
commissioner’s decision, this court reviews the superior court’s decision, not the
commissioner’s.3 We review a trial court’s decision on both a motion for default
judgment and a motion to vacate a default judgment for an abuse of discretion.4
Discretion is abused if it is based on untenable grounds or reasons,5 and a
decision is untenable if it rests on an erroneous application of law.6 We review
questions of law de novo.7

ANALYSIS

We must decide whether the trial court abused its discretion when it
denied the Association’s motion for revision. This requires resolution of three
underlying issues: (1) whether U.S. Bank was entitled to notice of the
Association’s motion for default under CR 55(a)(3), (2) whether U.S. Bank
presented substantial evidence of a prima facie defense available to it in the
quiet title action, and (3) whether U.S. Bank’s failure to appear in the quiet title
action was due to surprise or excusable neglect.

A court will set aside a default judgment entered against a party entitled to
notice who did not receive it.8 The Association argues that U.S. Bank was not
entitled to notice of the motion for default because neither U.S. Bank nor
Sutherland appeared in the quiet title action. In response, U.S. Bank asserts
that Sutherland’s prelitigation contacts with McDonald substantially complied
with any appearance requirement. Thus, according to U.S. Bank, it was entitled
to notice of the Association’s motion for default. We agree with the Association.
CR 55(a)(3) requires notice of a motion for default be given to any party
who has appeared in the action. It states,

Any party who has appeared in the action for any purpose shall be
served with a written notice of motion for default and the supporting
affidavit at least 5 days before the hearing on the motion. Any
party who has not appeared before the motion for default and
supporting affidavit are filed is not entitled to a notice of the motion.

Washington courts apply a substantial compliance test to determine whether CR
55(a)(3) requires notice.9

In Morin v. Burris,10 our Supreme Court held that prelitigation contacts
alone are not sufficient to establish substantial compliance with the appearance
requirements of CR 55(a)(3). Instead, those who are properly served with a
summons and complaint must in some way appear and acknowledge the
jurisdiction of the court after they are served and litigation commences.11
Otherwise, “any party to a dispute [could] simply write a letter expressing intent
to contest litigation, then ignore the summons and complaint or other formal
process and wait for the notice of default judgment before deciding whether a
defense is worth pursuing.”12

As Morin makes clear, Sutherland’s prelitigation contact with McDonald
by itself is not sufficient to show substantial compliance with CR 55(a)(3), even
though it expressed an intent to defend. U.S. Bank had no contact with the
Association or its counsel between the time it was served with the summons and
complaint and the order of default entered. U.S. Bank’s failure to appear during
this interval relieved the Association of any obligation to provide the bank with
written notice of a motion for default.

U.S. Bank disagrees. Citing Sacotte Construction, Inc. v. National Fire &
Marine Insurance Co.13 and Old Republic National Title Insurance Co. v. Law
Office of Robert E. Brandt, PLLC,14 the bank claims it substantially complied with
any appearance requirement because McDonald had prior dealings with
Sutherland and knew that Sutherland represented the bank in related matters.15
But neither case supports U.S. Bank’s position. Instead, Sacotte and Old
Republic apply the rule announced in Morin and rely upon contacts made after
the commencement of litigation to establish substantial compliance with
appearance requirements.

In both Sacotte and Old Republic, the defaulted party made an informal
appearance after the plaintiff commenced the action. In Sacotte, the court held
that a telephone call made after litigation had commenced established
substantial compliance with the appearance requirements of CR 55(a)(3)16
Citing Morin, the court stated, “[S]ubstantial compliance can be accomplished
with an informal appearance if the party shows intent to defend and
acknowledges the court’s jurisdiction over the matter after the summons and
complaint are filed.”17 Old Republic is similar. There, the court also held that a
telephone call made after litigation had commenced substantially complied with
the appearance requirements of CR 55(a)(3).18 The court observed that
enforcement of a default judgment would be inequitable where the defendant’s
attorney called the plaintiff’s attorney after the commencement of the legal action
and informed him of his intent to defend.19

Because the bank was not entitled to notice of the motion for default, we
address whether the bank established grounds for vacating the decree under CR
60(b)(1). Generally a default judgment “will [be] liberally set aside . . . pursuant
to CR 55(c) and CR 60 and for equitable reasons in the interests of fairness and
justice.”20 CR 55(c) provides that default judgment may be set aside “in
accordance with rule 60(b).” Grounds for vacating a default judgment under CR
60(b)(1) include “[m]istake, inadvertence, surprise, excusable neglect or
irregularity.” In White v. Holm,21 our Supreme Court announced four factors
which must be shown by a moving party. These factors are whether (1) there is
substantial evidence to support the moving party’s claim of a prima facie
defense; (2) the moving party’s failure to timely appear in the action was
occasioned by mistake, inadvertence, surprise, or excusable neglect; (3) the
moving party acted with due diligence after notice of entry of the default
judgment; and (4) vacating the default judgment would result in a substantial
hardship to the nonmoving party.22 Where a party fails to provide evidence of
factors (1) and (2), no equitable basis exists for vacating a judgment.23 A trial
court abuses its discretion when it vacates a judgment without evidence of these
two factors.24

U.S. Bank failed to present substantial evidence of a prima facie defense.
The Association recorded its lis pendens for its original foreclosure action on
May 18, 2007. The record shows that U.S. Bank acquired its beneficial interest
in the deed of trust later, on June 1, 2007. U.S. Bank presented no evidence
that it acquired any interest before that date. A party that acquires an interest in
real property after a lis pendens is recorded has “constructive notice” of the
proceeding and “shall be bound by all proceedings taken after the filing of such
notice to the same extent as if he or she were a party to the action.”25 U.S.
Bank, therefore, had constructive notice of the Association’s foreclosure action,
and it is bound by those proceedings. In that proceeding, the court foreclosed
the interest of the bank’s predecessor in interest, Aames, and all persons
claiming under it, subject only to a right of redemption. Thus, U.S. Bank cannot
show that it has any defense to the Association’s quiet title action.

Also, the record does not support U.S. Bank’s claim that its failure to
appear in the quiet title action was due to surprise or excusable neglect. As
explained above, neither U.S. Bank nor Sutherland had any contact with the
court or the Association between the time the bank was served and default
entered. Moreover, U.S. Bank admitted to the trial court that it did not appear
within 20 days because it “uses numerous outside counsel to handle its matters,
[and] it took several weeks before the quiet title pleadings were properly routed
to Mr. Sutherland’s office.” U.S. Bank cites no authority supporting the
proposition that a large corporation’s failure to timely route pleadings to its
attorney is somehow excusable or otherwise warrants setting aside an order of
default. Implicit in the bank’s argument is a notion that large organizations are
entitled to more time to respond to litigation. This notion finds no support in a
legal system that strives to treat all litigants equally.

CONCLUSION

We reverse and remand to the trial court to reinstate the order of default
and decree quieting title to the Association.

WE CONCUR

1 U.S. Bank’s foreclosure proceedings stopped and started several times
due to agreements with Swanson, Swanson’s bankruptcy filing, and efforts to
obtain relief from an automatic stay.

2 The record shows that the Association effected service on May 17 and
filed its complaint on June 10.

3 In re Marriage of Williams, 156 Wn. App. 22, 27, 232 P.3d 573 (2010).
4 Morin v. Burris, 160 Wn.2d 745, 753, 161 P.3d 956 (2007); Hwang v.
McMahill, 103 Wn. App. 945, 949, 15 P.3d 172 (2000).
5 Morin, 160 Wn.2d at 753.
6 State v. Rafay, 167 Wn.2d 644, 655, 222 P.3d 86 (2009) (quoting State
v. Rohrich, 149 Wn.2d 647, 654, 71 P.3d 638 (2003)).
7 Morin, 160 Wn.2d at 753.

8 Morin, 160 Wn.2d at 749.
9 Morin, 160 Wn.2d at 749.
10 160 Wn.2d 745, 757, 161 P.3d 956 (2007).
11 Morin, 160 Wn.2d at 749.

12 Morin, 160 Wn.2d at 757.
13 143 Wn. App. 410, 177 P.3d 1147 (2008).
14 142 Wn. App. 71, 174 P.3d 133 (2007).
15 U.S. Bank alleges that Sutherland represented it in a dispute regarding
the wrongful foreclosure of the property. However, U.S. Bank never filed a
motion to vacate or otherwise challenged the foreclosure decree, which was
adjudicated some three years earlier. Thus, contrary to U.S. Bank’s implication,
no legal action was pending in February 2010.

16 Sacotte, 143 Wn. App. at 416.
17 Sacotte, 143 Wn. App. at 415 (emphasis added).
18 Old Republic, 142 Wn. App. at 73.
19 Old Republic, 142 Wn. App. at 73, 75.

20 Morin, 160 Wn.2d at 749.
21 73 Wn.2d 348, 352, 438 P.2d 581 (1968).
22 White, 73 Wn.2d at 352.
23 Little v. King, 160 Wn.2d 696, 706, 161 P.3d 345 (2007).
24 Little, 160 Wn.2d at 706.

25 RCW 4.28.320; see also Snohomish Reg’l Drug Task Force v. 414
Newberg Rd., 151 Wn. App. 743, 752, 214 P.3d 928 (2009) (once a lis pendens
is filed, any party who subsequently acquires an interest in the property does so
subject to the property’s ultimate disposition in the pending suit), review denied,
168 Wn.2d 1019, 228 P.3d 17 (2010).

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

They saw this coming and they’ve been warned. If a foreclosure moratorium isn’t in the horizon, prepare to see home values sink to all time lows.

The TOO Big TOO Fail… will FAIL all on their own.

 

HW–

Roughly 10.4 million mortgages, or one in five outstanding home loans in the U.S., will likely default if Congress refuses to implement new policy changes to prevent and sell more foreclosures, according to analyst Laurie Goodman from Amherst Securities Group.

At the end of the second quarter, more than 2.7 million long-delinquent loans, others in foreclosure and REO properties sat in the shadow inventory, more than double what it was in the first quarter of 2010 (Click to expand the chart below). With the market averaging roughly 90,000 loan liquidations per month, it would take 32 months, nearly three years, to move through the overhang.

And that number is contingent on no other loans going into default.

[HOUSING WIRE]

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

On June 23, 2009, MERS substituted MTC Financial Inc., d.b.a. Trustee Corps, as trustee. (See Id., Ex. B.) Trustee Corps recorded a notice of trustee’s sale (“NOS”) on or about September 15, 2009, indicating that it would sell the Property on October 5, 2009, (see Id., Ex. C), but Plaintiff claims to have never received notice of the NOS, (see id. ¶ 63).

The most obvious potential defect in this foreclosure stems from the fact that Trustee Corps was substituted as trustee after it recorded the NOD, but before it recorded the NOS. In Nevada, the power of sale cannot be exercised until one of two particular entities–the beneficiary or the trustee–or an agent thereof, records the NOD. Nev. Rev. Stat. § 107.080(2)(c). Trustee Corps was not such an entity when it recorded the NOD. Thus, unless Trustee Corps can provide evidence indicating that the beneficiary–Taylor–or the trustee–Equity Title–caused Trustee Corps to file the NOD, it may be liable for wrongful foreclosure.
Further complicating matters, some other unusual events occurred prior to the filing

[ipaper docId=36861562 access_key=key-2dltthz8x68xbfnhkc8z height=600 width=600 /]

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

My Comment: If one is not being foreclosed on by the Entity who holds your note why should your credit be affected in the first place? If you raise this issue to the credit agencies I wonder if they will begin to wonder themselves. To be frank the way the future is going WHO WILL WANT CREDIT or NEED ANY CREDIT SCORE! …statement not a question.

Even High-Score Borrowers at Risk of Mortgage Default

By BOB TEDESCHI

Published: March 10, 2010

A HIGH credit score won’t necessarily insulate borrowers from the home-foreclosure crisis, according to a new study from FICO, which creates the credit-scoring formula used by most lenders.

In fact, the report, which was released in late February, suggests that these premium borrowers might be more likely to default on their mortgages than their credit card debt should they encounter financial difficulties.

From May through October 2009, the mortgage default rate for borrowers with credit scores of 760 to 850 was 0.32 percent, versus 0.12 percent for credit cards, according to the report. (FICO considers loans 90 days or more past due to be in default.)

Of course, that mortgage-default level is still far lower than the 4.5 percent rate for all mortgage borrowers during this period, according to FICO, which is based in Minneapolis. But the numbers are nonetheless worrisome, said Rachel Bell, a director of analytics in FICO’s global scoring solutions business, because they mark the first time the mortgage default rate for this category of borrowers exceeded credit card defaults.

In 2007, the mortgage default rate for high-scoring borrowers was 0.08 percent, versus 0.10 percent for bank cards.

Housing counselors offer at least one possible explanation for the shift: some people with financial reversals who are in danger of losing their homes anyway might be more likely to pay back their credit cards, because they still need them to buy groceries and other essential items.

Ms. Bell declined to speculate about the motivations of borrowers. Because the FICO analysis did not look at specific households, she said she could not determine whether a particular family carried both a mortgage and credit cards, and defaulted on one before the other.

But she did say that the growing mortgage problem among households with high FICO scores might be linked to two areas of increasing trouble in the mortgage industry — namely, defaults on vacation homes, and so-called strategic defaults, in which owners abandon homes that are worth less than the mortgage.

The Mortgage Bankers Association, which closely tracks foreclosures and defaults, says it does not track such statistics for vacation homes. But Walter Molony, a spokesman for the National Association of Realtors, said that if foreclosures had risen among vacation homes, their owners would most likely have bought the properties recently and for investment purposes.

The more value a home loses, the more likely an owner will be to consider a strategic default. A study in late 2009 by three university researchers — from the European University Institute, Northwestern University and the University of Chicago — found that when the mortgage exceeds the home’s value by less than 10 percent, homeowners rarely consider a strategic default. But if the value was just half the mortgage amount, 17 percent would abandon the house, and the loan.

FICO did not break out its recent data by state, but its regional data suggest that those with high credit scores in the Northeast were faring better than such people elsewhere. In the Northeast, borrowers with high FICO scores were still twice as likely to default on their credit cards as their mortgages. In 2005, they were four times as likely to default on their credit cards as their mortgages.

Borrowers with FICO scores of 760 and higher generally qualify for a bank’s best mortgage rate, as long as the down payment and monthly income also fall within the bank’s limits. A score of 720 is considered “prime,” and is usually the lowest rate that will allow borrowers to secure the most widely advertised mortgage rates.

FICO does not publish an average FICO score, but the company said the median score was about 720. And for the high FICO borrowers who default, even 720 is a dream score. One default drops such people into the mid-600 range, at best.