Best way to rob a bank is to own one – William Black
Reuters-
Top banks impeded a federal inquiry into their foreclosure processes, according to a report released Tuesday, dragging their feet on turning over documents and blocking investigators’ attempts to interview bank employees.
The inquiry led to the wide-ranging $25 billion mortgage settlement with the five largest mortgage servicers that was announced last month and filed in federal court on Monday.
But the banks hampered an early investigation into whether they were pursuing unlawful foreclosures through shoddy paperwork and lax controls, the inspector general’s office at the U.S. Department of Housing and Urban Development said in its report.
Bank of America (BAC.N), for example, provided only excerpts of files, incomplete documents, and conflicting information to government investigators, and refused to provide some of its foreclosure policies.
It also limited employee interviews, and refused to let employees answer certain questions, the report said.
As Abigail Field says “I thought the indictment that led to the far-too-weak settlement was damning enough;” check out the HUD OIG reports:
Audit Reports
The following reports disclose conditions noted during the identified audit period. They do not necessarily reflect current conditions at the subject auditee. Any questions regarding the current status of corrective actions recommended in these reports should be directed to the report addressee.
FEATURED
To save time we have provided these quick access links to the recently featured Audit Memorandums. You can also find all memorandums in their respective state sections with summaries.
The $25 billion mortgage servicing settlement means more due diligence work for servicers when assessing the work of law firms and other third parties assisting with foreclosures and bankruptcies.
The national mortgage servicer settlement involving the nation’s top five mortgage servicers shows firms taxed with ensuring that all law firms, trustees, subservicers and other third parties handling foreclosure or mortgage servicing activities are in line with best practices outlined in the settlement agreement.
The settlement, agreed to in February, was officially filed with the court on Monday.
Servicers are required to survey the firm’s qualifications, practices, information security for document handling and financial viability, according to settlement documents.
This famous postgame rant from former Arizona Cardinals coach Denny Green after his team’s epic meltdown on Monday Night Football against the Bears could just as easily apply to my reaction to reading the official terms of the Attorney General Foreclosure Settlement (the “AGFS”), filed today. The nation’s largest banks get off with a relatively small penalty (much of it paid by investors or in “credits” for things the banks should already be doing) in return for releases across a broad spectrum of misconduct that pervades just about every dark corner of mortgage servicing. The categories of servicer misconduct are laid out in detail in the complaint filed today in D.C. Federal Court, and include the following:
Providing false or misleading information to borrowers,
Overcharging borrowers and investors for services of dubious value,
Denying relief to eligible borrowers,
Foreclosing on borrowers who were pursuing loan mods in good faith,
Submitting forged or fraudulent documents and making false statements in foreclosure and bankruptcy proceedings
Losing or destroying promissory notes and deeds of trust,
Lying to borrowers about the reasons for denying their loan mods,
Signing affidavits without personal knowledge and under false identities,
Improperly charging excessive fees related to foreclosures,
Foreclosing on servicemembers on active duty,
Making false claims to the government for insurance coverage, and
Being unorganized, understaffed, and generally slower than molasses to respond to borrowers desperately in need of relief, while servicing fees continue to accrue.
57. In the course of their conduct, management and oversight of loan modifications in the plaintiff States, the Banks have engaged in a pattern of unfair and deceptive practices.
58. The Banks’ failure to discharge their required loan modification obligations, and related unfair and deceptive practices, include, but are not limited to, the following:
a. failing to perform proper loan modification underwriting;
b. failing to gather or losing loan modification application documentation and other paper work;
c. failing to provide adequate staffing to implement programs;
d. failing to adequately train staff responsible for loan modifications;
e. failing to establish adequate processes for loan modifications;
f. allowing borrowers to stay in trial modifications for excessive time periods;
g. wrongfully denying modification applications;
h. failing to respond to borrower inquiries;
i. providing false or misleading information to consumers while referring loans to foreclosure during the loan modification application process;
j. providing false or misleading information to consumers while initiating foreclosures where the borrower was in good faith actively pursuing a loss mitigation alternative offered by the Bank;
k. providing false or misleading information to consumers while scheduling and conducting foreclosure sales during the loan application process and during trial loan modification periods;
l. misrepresenting to borrowers that loss mitigation programs would provide relief from the initiation of foreclosure or further foreclosure efforts;
m. failing to provide accurate and timely information to borrowers who are in need of, and eligible for, loss mitigation services, including loan modifications;
n. falsely advising borrowers that they must be at least 60 days delinquent in loan payments to qualify for a loan modification;
o. miscalculating borrowers’ eligibility for loan modification programs and improperly denying loan modification relief to eligible borrowers;
p. misleading borrowers by representing that loan modification applications will be handled promptly when Banks regularly fail to act on loan modifications in a timely manner;
q. failing to properly process borrowers’ applications for loan modifications, including failing to account for documents submitted by borrowers and failing to respond to borrowers’ reasonable requests for information and assistance;
r. failing to assign adequate staff resources with sufficient training to handle the demand from distressed borrowers; and
s. misleading borrowers by providing false or deceptive reasons for denial of loan modifications.
Due to public interest in this case, the Department of Justice is releasing documents that may not be in an accessible format. If you have a disability and the format of any material on the site interferes with your ability to access some information, please email the Department of Justice webmaster at webmaster@usdoj.gov or contact Alisa Finelli at 202.514.2007. To enable us to respond in a manner that will be of most help to you, please indicate the nature of the accessibility problem, your preferred format (electronic format (ASCII, etc.), standard print, large print, etc.), the web address of the requested material, and your full contact information so we can reach you if questions arise while fulfilling your request.
Does anyone care how many lives were destroyed by these banks and continue to get hammered everyday??
NICK TIMIRAOS-
Banks won a handful of concessions in the landmark $25 billion settlement of alleged foreclosure abuses, as federal officials struck a balance between their desire to be tough on lenders and the need to provide immediate relief to the housing market.
A key sticking point in the year-long negotiations was how to structure mortgage write-downs, and who should bear the losses.
The banks that are party to the settlement—Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co ., and Wells Fargo & Co .—heavily and publicly resisted initial government proposals that they absorb the hit for write-downs of loans held by investors for which the banks collect payments. They argued that doing so amounted to transfers of wealth to Fannie Mae, Freddie Mac, and investors in mortgage-backed securities such as hedge funds and pensions.
A previously announced $25 billion settlement between five major banks accused of abusive mortgage practices and government officials will be filed in federal court on Monday, people familiar with the matter said late Friday.
The pact unveiled Feb. 9 is expected to result in payments and other mortgage relief for about one million borrowers, but must first be approved by a judge.
Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup Inc and Ally Financial Inc agreed to the settlement after 16 months of negotiations with state attorneys general and federal agencies, including the U.S. Justice Department and the U.S. Department of Housing and Urban Development.
But the fine print took another month to finalize.
Negotiators had hoped to file a settlement on Friday, but the deal was held up at the last minute over a disagreement between Nevada and Bank of America, people familiar with the matter said.
Just when you’ve thought you’ve seen, read it all.
David Dayen-
I think my disgust over federal housing policy is just about complete. As you know, we’re still waiting for the actual terms of the foreclosure fraud settlement, more than one month after the announcement. But more information has dribbled out, not much of it to the good. Michael Hiltzik rounded up some of the more troubling issues. He mentions that OCC penalties will get folded into the settlement, basically charging $0 for their violations. The Federal Reserve did the same thing. He mentions the Ted Gayer study showing that only 500,000 borrowers will even be eligible for the principal reduction in the settlement, half of what HUD and other regulators promised. And he adds that the Treasury Department restored all HAMP incentive payments for servicers who failed to meet their obligations under the programs. As Hiltzik writes, “If the banks had shown as much forbearance toward their struggling borrowers as these three agencies have shown toward the banks, the foreclosure settlement wouldn’t have been necessary in the first place.”
New York government officials are continuing their assault against foreclosure actions where Mortgage Electronic Registration Systems, Inc. (“MERS”) was the assignee of the mortgage, and challenges to foreclosures involving MERS are increasingly gaining traction in New York courts. Recently, the New York State Attorney General filed a complaint against MERS and several banks alleging fraud and deception in foreclosure proceedings. People v. JPMorgan Chase Bank N.A., No. 2012/2768 (N.Y. Sup. Ct. Feb. 3, 2012). In addition, three New York trial courts have decided motions involving standing and other issues in such actions. CIT Group/Consumer Fin., Inc. v. Platt, 33 Misc. 3d 1231(A) (N.Y. Sup. Ct. 2011); U.S. Bank N.A. v. Bressler, 33 Misc. 3d 1231(A) (N.Y. Sup. Ct. 2011); Bank of New York Mellon v. Martinez, 33 Misc. 3d 1215(A) (N.Y. Sup. Ct. 2011). Two courts ruled against the foreclosing banks, finding they did not have standing to foreclose where MERS assigned a mortgage without express authority to do so or sufficient documentation evidencing that the note was also transferred. Although the third court dismissed a lack of standing defense, it did so solely for procedural reasons.
U.S. Bank National Association, as Trustee, for CSFB ARMT 2006-2, 3476 Stateview Boulevard, Ft. Mill, SC 29715, Plaintiff,
against
Dorcas Nyarkoha, et al., Defendants.
13409/2009
Appearances of Counsel:
For the Plaintiff:Hogan Lovells U.S. LLP, by Allison J. Schoenthal, Danielle Mastriano, & Nicole Schiavo, Esqs., 875 Third Avenue, New York, NY 10022
For Defendant Dorcas Nyarkoha: Sumani Lanka, Esq., The Legal Aid Society – – Civil Practice, 120-46 Queens Boulevard, Kew Gardens, New York 11415-1204
Charles J. Markey, J.
The following papers numbered 1 to 13 read on this motion by defendant Dorcas Nyarkoha, pursuant to CPLR 3012(d), for leave to serve and file a late answer, as proposed.
Papers Numbered
Notice of Motion – Affidavits – Exhibits ……………………………………………………………….1-4
This mortgage foreclosure action raises two controversial issues that will persist in the case law, with incongruent and inconsistent results, until a definitive ruling is eventually made by the New York Court of Appeals. The first issue, especially in the area of mortgage foreclosures, where the statutory framework provides for a conference to all answering defendants in an attempted foreclosure of a residential mortgage (see, CPLR 3408, L 2008, ch 472, § 3), is whether or not a non-answering defendant’s failure to answer timely be excused because he or she relied on ongoing settlement talks, discussions, and negotiations. The second thorny issue is whether or not a plaintiff bank’s alleged lack of standing is a meritorious defense that may be asserted by a defendant seeking permission to file a late answer.
Defendant Nyarkoha, in effect, moves to vacate her default in answering the complaint and for leave to serve a late verified answer as proposed. She claims that her default is excusable, insofar as she believed her engagement in settlement negotiations with plaintiff’s [*2]servicing agent, Wells Fargo Home Mortgage Inc. d/b/a America’s Servicing Company (“ASC”), excused her from taking further action with respect to the suit. Defendant Nyarkoha also claims she has meritorious defenses and counterclaims. The plaintiff opposes the motion.
Defendant Nyarkoha states that she was out of the country at the time of the service of the copy of the summons and complaint, but after her return on June 28, 2009, contacted ASC, seeking to obtain a modification of the subject mortgage. ASC, which participated in the federal Home Affordable Modification Program (“HAMP”), accepted her application for loan modification under HAMP. Defendant Nyarkoha entered into a three-month Trial Period Plan with ASC through HAMP, commencing October 1, 2009, and attended seven conferences held in the Residential Foreclosure Part, wherein she was represented by the Legal Aid Society for the purpose of the conferences.
While the case was assigned to that Part, defendant Nyarkoha twice moved, in effect, to stop the running of interest on the mortgage debt. Both motions were denied. In addition, defendant Nyarkoha filed, on July 1, 2010, a pro se motion for leave to serve an answer to the complaint, which motion was repeatedly adjourned. The case was released from the Residential Foreclosure Part on December 1, 2010.
On December 28, 2010, the Legal Aid Society served and filed a notice of appearance on behalf of defendant Nyarkoha in this action. On January 27, 2011, defendant Nyarkoha served and filed a notice, indicating her withdrawal of the pro se motion for leave to serve a late answer, without prejudice to her right to refile it. The instant motion was filed six months later.
Regarding defendant Nyarkoha’s argument that she relied on ongoing settlement discussions and negotiations, the cases are mixed. A number of cases show a great reluctance, if not loathing, for such a defense as an excuse for not taking concrete action in a litigation, such as filing an answer (see, e.g., Community Preservation Corp. v Bridgewater Condominiums, LLC, 89 AD3d 784 [2nd Dept. 2011] [reliance on settlement discussions does not constitute reasonable excuse]; Mellon v Izmirligil, 88 AD3d 930 [2nd Dept. 2011] [motion to vacate was properly denied]; Maspeth Fed. Sav. & Loan Assn. v McGown, 77 AD3d 889, supra [purported reliance [*3]on settlement discussions was unsubstantiated]; Jamieson v Roman, 36 AD3d 861 [2nd Dept. 2007] [upholding denial of motion to vacate default despite party’s claim of ongoing settlement discussions, since party delayed in appearing after being served with a copy of the judgment]; Flora Co. v Ingilis, 233 AD2d 418 [2nd Dept. 1996] [reliance on settlement discussions was questionable at best]; Bank of New York v Jayaswal, 33 Misc 3d 1214(A), 2011 WL 5061626, 2011 NY Slip Op 51922(U) [Sup Ct Suffolk County 2011] [Whelan, J.] [denying motion to file a late answer, court stated that “the mere engagement in discussions aimed at a potential modification of the subject mortgage loan may not serve as a means to open up an otherwise inexcusable default in answering the summons and complaint by the defendant/mortgagor.”; discussing the competing cases and reasoning that defendant’s conversation with the plaintiff bank’s “operations consultant” could not be reasonably characterized as “legal advice” that “allegedly duped defendant . . . into not answering the complaint in a timely manner.”).
The defense or excuse of a party’s abstaining from taking any action in good faith reliance on ongoing settlement discussions and negotiations has, nevertheless, been sustained if the underlying facts and circumstances are substantiated and reasonable (see, e.g., Performance Constr. Corp. v Huntington Bldg., LLC, 68 AD3d 737, 738 [2nd Dept. 2009] [record revealed that party was actively engaged in settlement negotiations, and adversary unfairly and manipulatively failed to disclose plan to enter default judgment]; Scarlett v McCarthy, 2 AD3d 623 [2nd Dept. 2003]; HSBC Bank USA, N.A. v Cayo, ____ Misc 3d, 934 NYS2d 792, 794 [Sup Ct Kings County 2011] [party presented meritorious defense and substantiated belief that action was stayed pending settlement talks]; Emigrant Mortgage, Inc. v Abbey, 2011 WL 972555, 2011 NY Slip Op 30600(U) [Sup Ct Queens County 2011] [McDonald, J.]).
This Court, in the present action, concludes that defendant Nyarkoha’s reliance upon settlement negotiations with ASC was reasonable and her participation in the conferences is substantiated and thus constituting a sufficient and reasonable excuse for her failure to serve an answer through at least December 1, 2010.
To the extent Defendant Nyarkoha’s pro se motion for leave to serve a late answer was withdrawn prior to its submission, and the instant motion was not made for another six months, such additional delay may be attributable to her counsel and constitutes, at most, law office failure, which is excusable (see, CPLR 2005). Plaintiff has not demonstrated it has been prejudiced by the additional delay (see, Merchants Ins. Group v. Hudson Valley Fire Protection Co., Inc.,72 AD3d 762, 764 [2nd Dept. 2010]).
Plaintiff made no motion seeking any relief during that six-month period, notwithstanding that the order dated December 1, 2010, permitted it to seek an order of reference, and makes no cross motion for such relief. A strong public policy, furthermore, exists favoring the disposition of matters on their merits (see, Berardo v Guillet, 86 AD3d 459, 459 [1st Dept. 2011]; Yu v Vantage Mgt. Servs., LLC, 85 AD3d 564[1st Dept. 2011]; Billingly v Blagrove, 84 AD3d 848, 849 [2nd Dept. 2011]; Khanal v Sheldon, 74 AD3d 894, 896 [2nd Dept. 2010]; Rakowicz v [*4]Fashion Institute of Technology, 65 AD3d 536, 537 [2nd Dept. 2009]; Reed v Grossi, 59 AD3d 509, 511-512 [2nd Dept. 2009]; Bunch v Dollar Budget, Inc., 12 AD3d 391 [2nd Dept. 2004]).
The motion papers, in the case at bar, adequately demonstrate that the defendant Nyarkoha may have a meritorious defense based upon lack of standing (compare Citigroup Global Markets Realty Corp. v. Randolph Bowling, 25 Misc 3d 1244(A), 2009 WL 4893940, 2009 NY Slip Op 52567(U), slip op at 3 [Sup Ct Kings County 2011] [standing issue was not raised as a last minute gesture to avert sale of property and was thus properly raised on a motion to file a late answer] with Deutsche Bank Nat. Trust Co. v. Young, 66 AD3d 819,819 [2nd Dept. 2009] [upholding lower court’s denial of motion to vacate default in mortgage foreclosure action, Second Department stated that “the Supreme Court did not err in determining that they waived the issue of standing by failing to timely appear or answer”] and HSBC Bank, USA v. Dammond, 59 AD3d 679, 680 [2nd Dept. 2009] [where it was “undisputed that the respondent was personally served” and the defendant did not raise the standing defense until “immediately prior to the date scheduled for the sale of the property,” the Second Department stated: “The respondent waived any argument that HSBC lacked standing to commence the foreclosure action. Having failed to interpose an answer or file a timely pre-answer motion which asserted the defense of standing, the respondent waived such defense pursuant to CPLR 3211(e).”]; and Deutsche Bank Nat. Trust Co. v. Pietranico, 33 Misc 3d 528 [Sup Ct Suffolk County 2011] [Whelan, J.] [alleged lack of standing was untimely asserted on motion to vacate a default in a mortgage foreclosure action]; see, U.S. Bank, N.A. v Collymore, 68 AD3d 752 [2nd Dept. 2009] [upholding denial of plaintiff bank’s motion for summary judgment and appointment of a referee, Second Department stated: “Contrary to the Bank’s contentions, it failed to demonstrate its prima facie entitlement to judgment as a matter of law because it did not submit sufficient evidence to demonstrate its standing as the lawful holder or assignee of the subject note on the date it commenced this action.”]).
In the present action, the assignment agreement indicates that the mortgage, “[t]ogether with all moneys . . . owing or that may . . . become due or owing in [r]espect thereof,” were assigned by First United Mortgage Banking Corp. to plaintiff on May 12, 2009. The endorsement on the underlying note, however, is undated, and in blank and without recourse, and the affidavit of Jennifer Robinson, the vice-president of loan documentation for Wells Fargo, indicates that the note was physically delivered to Wells Fargo as custodian for plaintiff “prior to the commencement of this action on May 25, 2009.” The action, however, was commenced on May 21, 2009, and Ms. Robinson does not state the actual date of physical delivery of the note.
The Court holds, under the circumstances of the present action, that the alleged lack of standing of the plaintiff bank may be considered on a motion to vacate a default in a mortgage foreclosure action. Absent express legislation barring a litigant from proving a meritorious defense in an attempt to vacate a default because of an alleged lack of standing, courts should not engraft such a prohibition on the case law of this State.
The Court grants defendant’s motion for leave to serve a late answer is granted, and the [*5]proposed answer annexed to the motion papers shall be deemed served upon service of a copy of this order bearing the date stamp of the County Clerk, with notice of entry. Plaintiff shall serve a reply or move with respect to the answer, within 30 days of the service of a copy of this order with notice of entry. Defendant Nyarkoha shall file a copy of the answer within 20 days of service of a copy of this order with notice of entry.
The foregoing constitutes the decision, opinion, and order of the Court.
Bank of America NA prevented homeowners from receiving mortgage-loan modifications under a federal program in order to avoid millions of dollars in losses while benefitting from financial incentives for participating in the program, according to a complaint unsealed in federal court Wednesday.
The suit is the second whistleblower complaint unsealed so far with apparent ties to the $1 billion False Claims Act settlement announced by Bank of America and the U.S. Attorney’s Office for the Eastern District of New York on February 9.
After years of incompetence, intransigence, malevolence and whatever else may explain how mortgage companies have managed to screw over millions of troubled American homeowners, a fix is finally at hand.
Officials have presented the deal as justice for the so-called robo-signing scandal, whereby major mortgage companies improperly foreclosed on millions of properties. They have touted its centerpiece: a $20 billion fund stocked with fines paid by the mortgage companies, which will deliver relief to as many as 1 million troubled borrowers via lowered monthly payments, principal reduction and refinanced loan terms.
Someday the mortgage settlement will be filed in court and thus we will get to see its terms. Which day? Who knows—the latest deadline, the end of February, passed in silence, and annual reports filed at the end of the month with the SEC by Wells Fargo, JPMorgan Chase and Ally Bank, three putative deal signers, unequivocally stated there’s no final deal yet. As Wells put it, 19 days after the deal was announced:
“Furthermore, there can be no assurance as to when or whether a definitive agreement regarding the settlement will be reached and finalized or that it will be on terms consistent with the settlement in principle.”
Still, enough details of the agreement ‘in principle’ have been released, including by Wells in that annual report, for me to write this guide.
The settlement has four basic moving parts: money, lawsuit peace/liability release, mortgage servicing standards, and enforcement. I’m going to look at all four in three different posts. This one focuses on the money in the settlement.
Understanding the Money In the Mortgage Settlement
THE CIT GROUP/CONSUMER FINANCE, INC., Plaintiff, v. BRUCE W. PLATT, SOLE HEIR AT LAW OF DORSEY PLATT AND MARY PLATT, AND “JOHN DOE NO. 1” THROUGH “JOHN DOE #10,” THE LAST 10 NAMES BEING FICTITIOUS AND UNKNOWN TO THE PLAINTIFF, THE PERSONS OR PARTIES INTENDED BEING THE PERSONS OR PARTIES, IF ANY, HAVING OR CLAIMING AN INTEREST IN OR LIEN UPON THE MORTGAGED PREMISES DESCRIBED IN THE VERIFIED COMPLAINT, Defendants.
11410/08.
Supreme Court, Queens County.
Decided December 7, 2011.
ROBERT J. McDONALD, J.Upon the foregoing papers it is ordered that the motion is determined as follows:Plaintiff commenced this action on May 6, 2008, seeking to foreclose on a mortgage given by defendant Bruce W. Platt, “as sole heir at law of Dorsey Platt and Mary Platt,” to secure his indebtedness in the principal amount of $484,000.00 plus interest, pursuant to a promissory note, with respect to the real property known as 224-19 143rd Avenue, Laurelton, New York. The mortgage lists Mortgage Electronic Registration Systems, Inc. (MERS) as the nominee of Wilmington Finance, Inc. (Wilmington) and its assignees, refers to MERS as the mortgagee for the purpose of recording, and provides that the underlying promissory note is in favor of Wilmington. Further, the mortgage provides that “MERS holds only legal title to the rights granted by [defendant Platt] …, but, if necessary to comply with law or custom,” MERS has the right to foreclose and “to take any action required of [Wilmington].” In its complaint, plaintiff alleged that it was the holder of the subject mortgage pursuant to an assignment dated April 1, 2008, and that defendant Platt defaulted under the terms of the mortgage and note by failing to make the monthly installment payment of interest due on November 1, 2007 and thereafter, and as a consequence, it elected to accelerate the entire mortgage debt.Defendant Platt, appearing pro se, served a verified answer, asserting affirmative defenses based upon lack of standing, failure by plaintiff to serve him with notices pursuant to RPAPL 1303 and 1304, and fraud. Defendant Platt claims that the mortgage is a subprime mortgage loan and that he did not receive the requisite statutory notices. He further claims that the lender and mortgage broker conspired to obtain an inflated appraisal of the subject premises and falsified his income, to induce him to enter into a mortgage loan beyond that which he could afford.
A residential foreclosure conference was held on March 8, 2011, but did not result in a settlement. By order of the same date, it was determined that the action could proceed by motion.
With respect to that branch of the motion by plaintiff for summary judgment as against defendant Platt, it is well established that the proponent of a summary judgment motion “must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact” (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). The failure to make such a prima facie showing requires the denial of the motion regardless of the sufficiency of the opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]). In support of its motion, plaintiff offers a copy of the pleadings, affidavits of service, an affirmation by its counsel, a copy of the subject mortgage, underlying note and allonge, assignments, and an affidavit of Paul Laird, a vice president of Vericrest Financial, Inc., the attorney in fact for plaintiff, attesting to defendant Platt’s default under the mortgage and note.
Plaintiff has failed to establish its prima facie entitlement to judgment as a matter of law. “CPLR 3212 (b) provides that a summary judgment motion shall be supported by affidavit’ of a person having knowledge of the facts’ as well as other admissible evidence (see GTF Mktg. v Colonial Aluminum Sales, 66 NY2d 965, 967 [1985])” (JMD Holding Corp. v Congress Fin. Corp., 4 NY3d 373, 384 [2005]). The affidavit of Paul Laird is without evidentiary value insofar as the basis of his knowledge and representations regarding the mortgage documents and defendant Platt’s default in payment are not revealed or inferable (see Zuckerman v City of New York, 49 NY2d 557, 562-563 [1980]). In addition, because the complaint is verified by counsel, who lacks personal knowledge of the facts, it also does not constitute competent evidence to stand in the place of a proper affidavit of merit (see Alvarez v Prospect Hosp., 68 NY2d at 327 [1986]). That branch of the motion by plaintiff for summary judgment against defendant Platt is denied.
With respect to that branch of plaintiff’s motion to strike the affirmative defense asserted by defendant Platt based upon lack of standing,
Plaintiff offers a copy of an assignment executed by Bonnie McGinnis, “ASST. SECRETARY,” which purports to show the subject mortgage, together with the note, were assigned by MERS to plaintiff on April 1, 2008.
Plaintiff, however, has failed to demonstrate that MERS initially physically possessed the note or had the authority from Wilmington to assign it (see Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95 [2011]). Wilmington is not a party to the assignment, and the mortgage itself does not specifically give MERS the right, as the nominee or agent of the Wilmington, to assign the underlying note (see Bank of New York v Silverberg, 86 AD3d 274 [2011]; Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95 [2011],supra). To the extent plaintiff presents a copy of an undated allonge, executed by one “Don Malabuyo,” on behalf of Wilmington, to demonstrate the note was endorsed to it without recourse, the allonge merely indicates that Malabuyo is the “Designated Signer,” which, without more, is insufficient to show Malabuyo had the requisite authority to act on behalf of Wilmington. Moreover, to the degree plaintiff offers the affidavit of Paul Laird, a vice-president of Vericrest Financial, Inc., to show the allonge was created “[c]oncurrently” with the assignment, Laird does not indicate he had personal knowledge of the date of the execution of such allonge, or of Malabuyo’s authority. The affirmation of Michael H. Cohn, Esq., counsel for plaintiff, dated June 10, 2011, indicating Brian Casey, “Assistant Vice President,” “confirmed” to Cohn the factual accuracy of the allegations set forth in … [the] supporting affirmations filed with the Court,” cannot serve to fill these gaps in evidence. The attorney’s affirmation does not make clear to which entity Casey serves as an assistant vice-president, and in any event, to the degree it relates to when the allonge was executed and the authority of Malabuyo, it constitutes hearsay, and lacks probative value. Plaintiff additionally has failed to establish that the allonge is “so firmly affixed” to the note “as to become part thereof” (UCC 3-202[2]; Slutsky v Blooming Grove Inn, 147 AD2d 208 [1989]). That branch of the motion by plaintiff to dismiss the affirmative defense asserted by defendant Platt based upon lack of standing is denied.
With respect to that branch of the motion by plaintiff to dismiss the affirmative defense asserted by defendant Platt based upon failure to comply with RPAPL 1303, the version of RPAPL 1303 in effect at the time of the commencement of the action (L 2006, c 308, § 4, effective February 1, 2007, amended L 2007, c 154, § 13, effective July 3, 2007), required that “[t]he foreclosing party in a mortgage foreclosure action, which involves residential real property consisting of owner-occupied one-to-four family dwellings” provide notice to the mortgagor, in accordance with the provisions of the section, with regard to information and assistance about the foreclosure process. The statute set forth the specific language and format of the notice, requiring that the notice be “on its own page,” be “in bold, fourteen-point type,” be “printed on colored paper that is other than the color of the summons and complaint,” and have its title be in “bold, twenty-point type.” The statute also required the notice to be “delivered” with the summons and complaint in the foreclosure action (RPAPL 1303[2]). Proper service of the notice pursuant to RPAPL 1303 is a condition precedent to the commencement of the action which is the plaintiff’s burden to meet (see First Natl. Bank of Chicago v Silver, 73 AD3d 162, 169 [2010]; see also Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 102 [2011],supra).
Plaintiff offers an affidavit of service dated June 6, 2008 of a licensed process server, which indicates, among other things, that attempts were made at effecting personal delivery of a copy of the summons and complaint, together with a notice required by RPAPL 1303, upon defendant Platt at his dwelling place at the mortgaged premises, on May 23, 2008, May 28, 2008 and June 4, 2008, at various stated times, and an unsuccessful inquiry was made of a neighbor to determine Platt’s place of employment. The affidavit also indicates that on June 4, 2008, at 2:17 P.M., the process server affixed copies of the summons and complaint, and the RPAPL 1303 notice, to the door of the premises, and in addition, mailed, on June 6, 2008, copies of the summons and complaint and the RPAPL 1303 notice to defendant Platt at his last known residence. Plaintiff, however, has failed to present a copy of the notice served with the copy of the summons and complaint. Under such circumstances, this court cannot determine whether plaintiff strictly complied with the requirements of RPAPL 1303. That branch of the motion by plaintiff to strike the affirmative defense based upon failure to comply with RPAPL 1303 is denied.
That branch of the motion by plaintiff to strike the affirmative defense based upon failure to comply with RPAPL 1304 is granted. Defendant Platt asserts that plaintiff failed to serve him with a notice pursuant to RPAPL 1304 prior to commencing the action. That statute was enacted and made effective after the institution of this action (see L 2008, c 472, §§ 2, 28 [approved August 5, 2008, eff. Sept. 1, 2008]). The Legislature made no explicit provision for retroactive application, and the court also is unaware of any case wherein the statute was retroactively applied to any date prior to the statute’s effective date. Thus, plaintiff was not obligated to comply with the requirements found in RPAPL 1304 as a condition precedent to bringing this action, and the affirmative defense based upon noncompliance with RPAPL 1304 is without merit.
With respect to that branch of the motion by plaintiff to dismiss the affirmative defense asserted by defendant Platt based upon alleged fraud, plaintiff offers a copy of the mortgage loan application submitted to Wilmington on behalf of defendant Platt, indicating Platt’s gross monthly income to be $8975.00. The application includes an acknowledgment by defendant Platt that the information provided therein was “true and correct,” as of February 23, 2003, and is executed by defendant Platt. Plaintiff also offers a copy of an appraisal dated February 2, 2007 of the subject premises, prepared by Ronald S. Faltz, of R & D Appraisals, LLC, and relied upon by Wilmington in financing the loan. The appraisal indicates the property had a fair market value of $615,000.00 as of February 2, 2007. Defendant Platt has failed to present any evidence to raise a triable issue of fact as to whether Wilmington, or plaintiff, committed fraud or conspired to commit fraud in the preparation of these documents, or to induce him to enter into the mortgage transaction. That branch of the motion by plaintiff to dismiss the affirmative defense asserted by defendant Platt based upon alleged fraud or conspiracy to commit fraud is granted.
With respect to that branch of the motion for leave to amend the caption deleting reference to the “John Doe” defendants, the only defendants named in the summons and complaint are defendants Platt and “John Doe #1” through “John Doe #10.” Plaintiff asserts it has been determined that defendants “John Doe #1” through “John Doe #10” are not necessary parties to the action. Plaintiff, however, presents two affidavits of service of a licensed process server dated June 6, 2008, indicating service of process upon defendants Platt and “Jane Doe #1-#30” pursuant to CPLR 308(4). Each affidavit indicates that the licensed process server spoke with one “Mr. Graham,” a neighbor, who allegedly stated that “the defendant/respondent lives at the aforementioned address but was unable to divulge the defendant’s/respondent’s place of employment.” It is unclear whether a “Jane Doe” has been joined by plaintiff as a party defendant and the caption should be amended to substitute “Jane Doe #1″” for “John Doe #1” (see Douglas v Kohart, 196 App Div 84 [1921]; Krotchta v Green, 121 Misc 2d 471 [1983]; see also Empire Sav. Bank v Towers Co., 54 AD2d 574 [1976]). Plaintiff notably asserts that “all of the [d]efendants have been served with the summons and verified complaint in this action as appears by the affidavits of service on file in this action” and “[n]one of the [d]efendants have appeared herein except Bruce W. Platt” (emphasis supplied). Under such circumstances, that branch of the motion for leave to amend the caption deleting reference to the “John Doe” defendants is denied without prejudice to renewal upon a proper showing that “Jane Doe” is not a necessary party defendant.
That branch of the motion by plaintiff to substitute BoNY for it, and for leave to amend the cation to reflect the substitution is denied. A question of fact exists as to whether plaintiff has standing to bring this action, and therefore, plaintiff has failed to establish prima facie that it has standing to assign the subject mortgage and note to BoNY.
There’s house trouble on the East End of Long Island.
Five years after the housing bubble burst, the number of unsold Hamptons homes has hit a 30-year high while prices have plummeted.
A stunning 48 homes worth more than $1 million are in foreclosure, according to the industry monitor PropertyShark.com.
They include some Gatsby-esque mansions, like a $4.9 million, three-story property on 2.1 acres in Westhampton Beach with seven bedrooms, five-and-a-half baths, guest cottage, tennis court, cabana and bayside pool.
Nevada Attorney General Catherine Cortez Masto recently spoke with the Sun discussing Nevada’s participation in the national mortgage settlement as well as a separate agreement the state made with Bank of America. See here for a news story about the settlement. Here’s an edited transcript of the conversation.
HSBC Bank USA, N.A. as Trustee of behalf of ACE Securities Corp. Home Equity Loan Trust And for the Registered Holders of Ace Securities Corp. Home Equity Loan Trust, Series 2007-HE4, Asset Backed Pass-Through Certificates, Plaintiff,
against
Marie Sene, et al, Defendants.
18600/09
Plaintiff was represented by Alissa L. Wilson, Esq., Shapiro, DiCaro & Barak, LLC, 250 Mile Crossing Blvd., Rochester, NY 14624. Defendant was represented by Yolande I. Nicholson, PC, 26 Court St., Brooklyn, NY 11242.
Herbert Kramer, J.
The following papers have been read on this motion:
Notice of Motion/Order to Show Cause/Papers Numbered
Good faith is absent when two versions of the assignment of the note are presented to the Court. Parties are required to come into the court with clean hands despite having instituted the action prior to the effective date of CPLR §3408.[FN1] [*2]
This matter was referred to this Court for a bad faith hearing under the appropriate statutory scheme. See CPLR §3408.
The instant matter illustrated the wild west mentality that was so prevalent in the early part of this past decade, which allowed for practically anyone breathing to obtain a mortgage by signing their name.[FN2] It appears that the process of securitization of mortgages led to major improprieties, this case being a prime example.
However, all of that pales in significance to what follows. During the bad faith hearing, two separate notes with attendant assignments were put into evidence by the plaintiff.
The first was in Exhibit “C.” of plaintiff’s “1.” which is the summons and complaint filed on July 23, 2009.The note itself was endorsed by Marie Sene, only. In addition, there is an allonge, dated July 15, 2009, with the “effective date” of April 30, 2007, signed by Kevin M. Jackson.[FN3]
The allonge is assigned to “HSBC Bank USA, N.A. as Trustee on behalf of Ace Securities Corp. Home Equity Loan Trust and for the Registered Holders of Ace Securities Corp., Home Equity Loan Trust, Series 2007-HE4, asset backed Pass-Through Certificates, without recourse, representation or warranty express or implied…”
The second note was introduced as Exhibit “E.” of plaintiff’s “1.” labeled as the note and assignment. That note included an endorsement from Marjorie Jorgensen, the Collateral Control Manager or ResMae Mortgage Corporation in addition to Ms. Sene’s signature. There was also a purported allonge which was not permitted into evidence. However, the existence of an allonge does not explain the apparent disparity between the two assignments. Both cannot be accurate.[FN4]
This Court emphatically now joins the judicial chorus who have been wary of the paperwork supplied by plaintiffs and their representatives. There is ample reason for Chief Judge’s requirement for an attorney affirmation in residential foreclosure cases. As stated by [*3]Chief Judge Jonathan Lippman,”we cannot allow the courts in New York State to stand idly and be party to what we now know is a deeply flawed process, especially when that process involves basic human needs-such as a family home-during this period of economic crisis.”[FN5]
Furthermore, the form affidavit which is now required by Administrative Order 548/10 states that “numerous and widespread insufficiencies in foreclosure filings in various courts around the nation were reported by major mortgage lenders and other authorities…”. See also, HSBC Bank v. Taher, 932 N.Y.S2d 760 [2011].[FN6]
It is clear in this case, without further hearings, that a fraud has been committed upon this Court. Thus, the only remedy that can be utilized by this Court is to stay these proceedings and any mortgage foreclosure until this matter is cleared up to the satisfaction of this Court.
Further, in connection with this matter, the litigants were directed to submit memorandums of law on issues that arose during the hearing. Plaintiff submitted an affirmation with exhibits. Therein plaintiff attempts to establish Ocwen’s authority to sign as “attorney in fact” for ResMae corporation.
Allegedly, Ocwen’s authority arises from a limited power of attorney attached as exhibit “H.” to Plaintiff’s “1.” The power of attorney between ResMae Mortgage Corporation (the Servicer) and Ocwen, grants the “express power and authority to, for any mortgage loan transferred by the Servicer to Ocwen under that certain Pooling and Servicing Agreement between the Servicer and Deutsche Bank National Trust Company dated March 1, 2006.”
Oddly, the pooling and servicing agreement submitted as plaintiff’s Exhibit “2.” allegedly evidencing Ocwen’s power of attorney is dated April 1, 2007 and is between Ace Securities Corp., Ocwen Loan Servicing, LLC, GMAC Mortgage, LLC, Wells Fargo Bank, National Association, HSBC Bank USA, NA. These submissions fail to establish that Ocwen was granted authority as ResMae’s attorney-in-fact. Regardless, the defect in the assignments remain.
This Court is further reporting the matter to the District Attorney, Kings County, the Attorney General of the State of New York and the U.S. Attorney for the Eastern District of New York. Copies of the two notes are annexed hereto and made a part hereof.
This constitutes the decision and order of the Court.
J.S.C.
Footnotes
Footnote 1:The plaintiff asserts that the language of “good faith” contained in CPLR § 3408 does not apply as this action was commenced prior to the February 13, 2010 amendment. Plaintiff does not argue that the remainder of CPLR 3408 is applicable, which directs settlement conferences in residential foreclosure matters. This Court disagrees with plaintiff that its obligation to act in good faith throughout the litigation is dependent upon a statutory mandate. Honeywell International v. National Avionics Sys. Corp., 343 F.Supp.2d 272 [2004]. “A mortgagee who is invoking the aid of foreclosure action, may be required, as condition precedent to relief, to do equity.” Farmers’ & Mechanics’Sav. Bank of City of Lockport v. Eagle Bldg. Co. et al., 271 N.Y.S. 306 [1934]. This Court has purposefully cited a decision from 1934 due to the discussion found therein as to the devastating economic conditions at that time, and unfortunately finds many parallels to the current economic climate.
Footnote 2: This court was prepared to update its decision regarding reverse redlining and whether the rebuttable presumption followed with the assignment of the note and mortgage. See, M & T Mortgage v. Foy, 858 NYS2d 567 [2008]. In this Court’s view, it is unnecessary to delve into the other legal arguments when faced with the conflicting assignments.
Footnote 3:As manager for Resmae Mortgage Corporation by its attorney-in-fact Ocwen Loan Servicing, LLC
Footnote 4:It should also be noted that ResMae filed for bankruptcy protection in 2007.
Footnote 5:In regards to the issuance of Administrative Order 548/10
Footnote 6:The decision outlines the numerous and widespread irregularities specific to HSBC Bank USA, NA, the plaintiff in this case. A, NA, the plaintiff in this case.
Bankers, money changers, predatory lenders and financial criminals are jumping for joy after the United States government unveiled a plan that would allow each and every one of the crooks who conspired to steal trillions of dollars from innocent citizens to escape jail time.
Think about it. If your checking account is a penny overdrawn, you get punished but if you lie, cheat, falsify documents and take homes from everybody but the rich, you get bailed out by politicians.
Government talks about the great proposed settlement deal with Ally Financial, Bank of America, Citibank, JP Morgan Chase and Wells Fargo whereby the banks agreed to pay $5 billion in cash to try to remedy complaints about dubious mortgage practices and foreclosure abuses. But even if you settle with Ali Baba and four other crooks, there are still 35 thieves left to continue to rob you blind.
Since the DOJ failed miserably with mountains of evidence of fraud throughout the loans, lets see what the SEC will do.
CBS-
The SEC appears to be on the verge of doing what the Justice Department has yet to attempt — prosecuting the biggest players responsible for the mortgage securities fiasco that trashed the U.S. economy.
The securities watchdog has sent so-called Wells notices to Goldman Sachs (GS), JPMorgan Chase (JPM), and Wells Fargo (WFC), indicating that the agency may recommend enforcement proceedings against the banking firms. The investigation seems to focus on whether the companies misrepresented the quality of securities based on subprime mortgages that they bundled and sold to investors in the years leading up to the 2008 financial crisis.
It’s embarrassing that the most information we’ve yet received about the foreclosure fraud settlement comes from an annual report to stockholders by Wells Fargo. In other words, we had to wait for the banks to tell us what was in the settlement, I guess because the regulatory officials who negotiated it weren’t entirely proud of their work.
The Wells notice (it begins on page 74) isn’t legal language, and it states clearly that “the terms… do not become final until approval of the settlement agreement by the U.S. District Court and execution of a consent order.” But it provides some more detailed information than the broad sketch that has been released. For example, we have the first breakdown that I’ve seen of the credit system for principal reductions.
first lien principal forgiveness for LTV less than or equal to 175%: 100% credit (must constitute at least 30% of the Consumer Relief Program credits);
first lien principal forgiveness for LTV greater than 175%: 50% credit for portion forgiven over 175% LTV;
forgiveness of forbearance amounts on existing loan modifications – 40% credit;
earned forgiveness over no more than a 3 year period: 85% credit for LTV less than or equal to 175%; 45% credit for forgiveness over 175% LTV;
second lien principal forgiveness: 90% credit for loans 90 days or less delinquent; 50% credit for loans greater than 90 but less than 180 days delinquent; 10% credit for loans 180 days more delinquent. Subject to a number of requirements, servicers participating in the settlement will be obligated to implement second lien principal forgiveness on second mortgages it owns when another participating servicer reduces principal on a first mortgage via its proprietary non-HAMP modification programs (must constitute at least 60% of the Consumer Relief Program credits when combined with the first lien principal forgiveness credits);
deficiency balance waivers on first and second lien loans: 10% credit;
short sale deficiency balance waivers on first and second lien loans: 20% to 100% credit depending on whether the servicer, servicer/lien holder or investor incurs the loss;
payment arrearages forgiveness for unemployed borrowers: 100% credit;
transitional funds paid to homeowners in connection with a short sale or deed-in-lieu of foreclosure for payments in excess of $1,500: 45% credit if a non-GSE investor bears the cost or 100% if the servicer bears the cost;
anti-blight – forgiveness of principal associated with properties where foreclosure is not pursued: 50% credit;
anti-blight – cash costs paid by servicer for property demolition – 100% credit; and
anti-blight – donation of real estate owned properties to qualifying recipients such as non-profit organizations: 100% credit.
Update: My original headline said “Sold Out” where it now says failed. I think it’s more accurate.
Dear State Attorneys General:
Rumor has it that this week we will learn precisely how you failed us all regarding the criminal enterprise that is mortgage servicing and foreclosure in America. That is, rumor has it that more than two weeks after you announced a deal with five bailed-out banks, we’ll all get to see the deal. Well, precisely speaking, we’ll all see the court filing containing the settlement.
Why the Secrecy?
Why aren’t you releasing the deal before filing it? I realize that you’re not officially rulemaking regulators who must seek public comment before finalizing rules. But much of your agreement functions like a regulator’s rule making. So why wouldn’t you, as a matter of good public policy practice, make the deal public for comment before seeking to finalize it with the judge? …
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