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Monthly Archives: May 2013

Using Decisions Involving Mortgage-Backed Securities to Challenge Your Wrongful Foreclosure

20 Monday May 2013

Posted by BNG in Appeal, Case Laws, Case Study, Federal Court, Foreclosure Defense, Fraud, Litigation Strategies, MERS, Mortgage Laws, Pro Se Litigation, Securitization

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Bank of America, Bank of New York, Court, Deutsche Bank, Foreclosure, Nevada, New York, RealtyTrac

In recent times, we have seen that many foreclosure cases that were litigated by Homeowners involve Mortgage Backed Securities.

Nevada’s foreclosure stats jumped 334 percent in February from the same month a year ago, leading the nation in year-over-year percentage gains, online foreclosure listing service RealtyTrac reported late Wednesday.

Other states with huge spikes in foreclosure activity include Maryland (319 percent), Washington (172 percent), New York (139 percent) and New Jersey (70 percent).

RealtyTrac showed 15,281 foreclosure filings on U.S. properties in February, a 2 percent increase from the previous month but down 25 percent from a year ago. Foreclosure filings include default notices, scheduled auctions and bank repossessions.

Florida had the nation’s highest foreclosure rate for the sixth straight month with one in every 282 housing units receiving a foreclosure filing, more than three times the national average.

Nevada was No. 2 for the fifth straight month with one in every 320 housing units receiving a filing.

“At a high level, the U.S. foreclosure inferno has been effectively contained and should be reduced to a slow burn in the next two years,” said RealtyTrac Vice President Daren Blomquist. “But dangerous foreclosure flare-ups are still popping up in states where foreclosures have been delayed by a lengthy court process or by new legislation making it more difficult to foreclose outside of the court system.”

When Homeowners are faced with a hurdle of fighting foreclosure to save their homes, some of the argument that has been proven effective in the Courts involves Securitization of the mortgages and the assignments involved in the transfer of the mortgages.

The following cases were some of the cases where valid arguments involving securitizations were used to defeat the Banks and Lenders in the Courts.  Orders to these cases shows that the case was either Dismissed without Prejudice or Summary Judgment that were reversed on Appeal.

CASE STUDIES:

Augenstein v. Deutsche Bank National Trust Company,

No. 2009-CA-000058-MR, Kentucky Ct. Appeals 2011

Trust: Soundview Home Loan Trust 2005-OPT4

Summary judgment for bank vacated and remanded.

“In this case, the complaint was filed on December 17, 2007, but the assignment of mortgage was not executed until January 3, 2008. Thus, Deutsche Bank had no present interest when it filed its complaint and failed to take any steps to correct this. Allowing Deutsche Bank to commence this action at a time when it lacked standing impermissibly allowed litigation to commence based upon mere expectancy of an interest.”

Bank of America v. Kabba,

276 P.3d 1006, 2012 OK 23

Trust: Structured Asset Investment Loan Trust Series 2004-BNC2

“In the present case, Appellee has only presented evidence of an indorsed-in-blank note and an “Assignment of Mortgage.” Appellee must prove that it is the holder of the note or the nonholder in possession who has the rights of a holder prior to the filing of the foreclosure proceeding. In the present matter the timeliness of the transfer is in question. Since Bank of America did not file the blank indorsement until it filed its motion for summary judgment it is impossible to determine from the record when Bank of America acquired its interest in the underlying note.”

Bank of New York v. Gindele,

1st Dist. No. C-090251, 2010-Ohio-542

Trust: CWALT Alternative Loan Trust 2006-40T1

“A thorough review of the record reveals that the sole indication of its interest as mortgagee is an after-acquired assignment; and the bank failed to produce any evidence in the trial court affirmatively establishing a preexisting interest. Bank of New York has also asserted both that it had acted as an agent, and that its predecessor in interest had later ratified its foreclosure complaint. But because at the time of filing neither agency nor ratification had been alleged or documented, we will not entertain this argument on appeal.”

Bank of NY v. Cupo,

2012 WL 611849 (N.J.Super.App. Div. 2011

Motion to vacate default judgment was reversed for further findings on issue of standing, suggesting that lack of standing might make a judgment void, rather than treating standing as waived by default judgment.

Bank of New York v. Mulligan,

Index 29399/07 (August 25, 2010)

Trust: CWALT 2006-OC1

Mortgage Amount: $392,000

Bank’s application for an order of reference was denied  without prejudice.

“The Court will grant plaintiff, BNY an order of reference when it presents: an affidavit by either an officer of BNY or someone with a valid power of attorney from BNY, possessing personal knowledge of the facts; an affidavit from EJy Harless clarifying his employment history for the past three years and what corporation he serves as an officer; and, an affidavit by an officer of BNY, explaining why BNY would purchase a nonperforming loan from MERS, as nominee for DECISION ONE.”

Bank of New York v. Myers,

Index 18236/2008 (February 23, 2009)

Trust: CWABS 2006-22

The Bank’s summary judgment motion was denied, but within 60 days of the decision, the Bank was required to submit an Affidavit from Keri Selman explaining her employment history for the past three years and why Selman did not have a conflict of interest as the signor of many entities.

Bank of New York v. Orosco,

2007 NY SLIP OP 31501(U) (November 19, 2007)

Trust: CWABS, Series 2006-SD2

Mortgage Amount: $436,000

“Plaintiff must address a second matter if it applies for an order of reference after demonstrating that the alleged assignment was recorded. Plaintiff’s application is the third application for an order of reference received by me in the past several days that contain an affidavit from Keri Selman. In the instant action, she alleges to be an Assistant Vice-president of the Bank of New York. On November 16,2007, I denied an application for an order of reference in which Keri Selman, in her affidavit of merit claims to be “Vice President of COUNTRYWIDE HOME LOANS, Attorney in fact for BANK OF NEW YORK.” The Court is concerned that Ms. Selman might be engaged in a subterfuge, wearing various corporate hats. Before granting an application for an order of reference, the Court requires an affidavit from Ms. Selman describing her employment history for the past three years.”

Bank of New York v. Raftogianis,

13 A.3d 435 (2010), 418 N.J.Super. 323

Trust: American Home Mort. Investment Trust 2004-4

Mortgage Amount: $1,380,000

“Plaintiff, however, failed to establish that it was entitled to enforce the note as of the time the complaint was filed. In this case, there are no compelling reasons to permit plaintiff to proceed in this action. Accordingly, the complaint has been dismissed. That dismissal is without prejudice to plaintiff’s right to institute a new action to foreclose at any time, provided that any new complaint must be accompanied by an appropriate certification, executed by one with personal knowledge of the circumstances, confirming that plaintiff is in possession of the original note as of the date any new action is filed. That certification must indicate the physical location of the note and the name of the individual or entity in possession.”

Bank of New York v. Silverberg,

86 AD3d 274, 926 N.Y.S.2d 532 (2d Dept 2011)

Trust: CWALT 2007-14-T2

Mortgage Amount: $479,000

“In sum, because MERS was never the lawful holder or assignee of the notes described and identified in the consolidation agreement, the corrected assignment of mortgage is a nullity, and MERS was without authority to assign the power to foreclose to the plaintiff.  Consequently, the plaintiff failed to show that it had standing to foreclose.”

Bank of New York Mellon v. Teague,

Case No. 27-2009-CA-003121, Hernando Co. FL 2012

Trust: Novastar Mortgage Funding Trust 2005-1

“Second, to be entitled to foreclose, Plaintiff had to have been the holder of the Note and Mortgage at the time it filed this lawsuit.  The undisputed, summary judgment evidence before the Court was that Plaintiff was not the holder at the inception of this case as Plaintiff did not have the original Note in its possession when it filed suit and the Note did not contain the requisite endorsement. The fact that Plaintiff filed what it contends is an original note on June 28, 2012 does not change this result, as the endorsement on that Note is to a different company, not Plaintiff, and even if the Note had been properly endorsed, the fact that Plaintiff may have been the holder as of June, 2012 does not change its lack of standing at the inception of this case…

The motion is granted and this case is dismissed without prejudice.” (cites omitted)

Bank of New York v. Trezza,

14 Misc. 3d 1201(A), 2006 NY Slip Op 52367(U)

Trust: CWABS 2004-5

“In support of its motion, the plaintiff submits a purported assignment of the mortgage from MERS to the plaintiff; however, the mortgage does not empower MERS to assign the mortgage to any other entity. Furthermore, there is no proof that the Lender had previously assigned the mortgage to MERS, nor is there any other evidence to establish the plaintiff’s ownership rights under the mortgage.

Based on the foregoing, the plaintiff has failed to establish that it has standing as a plaintiff in this matter.”

Bank of New York v. Singh, 

Index No. 22434/2007, Kings County (December 14,  2007)

Trust: CWABS, Series 2004-6

An order of reference was denied where the mortgage assignment was executed on June 28, 2007, with an antedated effective date of May 31, 2007.  Suit was commenced on June 20, 2007. Judge Kurtz found that such an attempt to retroactively assign the mortgage was insufficient to establish plaintiff’s ownership interest at the time the action was commenced.

Bank of New York v. Torres,

Index No. 31704/2006, Kings County (March 11, 2008)

Trust: CWABS 2005-6

“ORDERED that the plaintiff’s ex parte application for an Order of Reference in Mortgage Foreclosure is denied without prejudice to renew due to plaintiffs failure to demonstrate its ownership of the note and mortgage sufficient to convey standing upon this plaintiff to commence this lawsuit on November 13,2006…”

Beaumont v. Bank of New York Mellon,

81 So.3d 553,554 (Fla. Dist. Ct. App. 2012)

Trust: NovaStar Mortgage Funding Trust 2005-3

Summary judgment for bank reversed and remanded.

“There is no evidence showing that Beaumont was on notice prior to the time his answer was filed that ownership of the note had been transferred from NovaStar to Mellon. In fact, the claimed transfer, alleged to have occurred on the day suit was filed, was either concealed by NovaStar for more than three years while it continued to pursue the action, or NovaStar backdated the assignment it finally produced on July 23, 2010, as justification for substituting Mellon as plaintiff. Under these circumstances, Beaumont may raise lack of standing when suit was filed as a defense.”

Congress v. U.S. Bank,

2100934, AL Ct. Civ. App. 

Trust: 2007-EMX1

Mortgage Amount: $104,400

“The trial court should have evaluated the issue whether the allonge had been created after the first trial under the preponderance-of-the-evidence standard. Because it used the higher clear-and-convincing-evidence standard to evaluate Congress’s evidence, this court has no choice but to reverse the trial court’s judgment and remand the cause to the trial court for it to evaluate the evidence adduced at trial under the appropriate standard of proof.”

 

Cutler v. U.S. Bank, N.A.,

Case No. 2D10-5709 (Fla. 2d DCA 2012)

Trust: Structured Asset Investment Loan Trust, 2006- BNC3

Summary judgment for Bank reversed and remanded.

“Accordingly, a genuine issue of material fact remained as to whether U.S. Bank was the proper holder of the note at the time it initiated the foreclosure action. The note includes the allonge endorsed in blank, but the allonge is not dated. If indeed U.S. Bank cannot establish that the allonge took effect prior to the date of the complaint, it did not have standing to bring suit…

Because a genuine issue of material fact remains, the trial court erred in entering a final summary judgment.”

Davenport v. HSBC Bank USA,

739 N.W.2d 383 (Mich. Ct. App. 2007)

“In this case, defendant did not own the mortgage or an interest in the mortgage on October 27, 2005. Nonetheless, defendant proceeded to commence foreclosure proceedings at that time. Quite simply, defendant did not yet own the indebtedness that it sought to foreclose. The circuit court erred by determining that defendant’s noncompliance with the statutory requirements did not nullify the foreclosure proceedings. Because defendant lacked the statutory authority to foreclose, the foreclosure proceedings were void ab initio. We vacate the foreclosure proceedings and remand for proceedings consistent with this opinion.”

Deutsche Bank National Trust Co.v. Alemany,

Index: 11677/2007

(N.Y. Sup. Ct. Suffolk Co. 2008)

Trust: Soundview Home Loan Trust, 2006-OPT3

“ORDERED that plaintiffs ex parte application for an Order of Reference is denied without prejudice to resubmit due to plaintiffs failure to provide: … (2) proof on standing to commence this action as it appears plaintiff did not own the note and mortgage when the action was commenced…”

Deutsche Bank National Trust Company v. Barnett,

88 A.D.3d 636, 931 N.Y.S.2d 630

Trust: FFMLT 2005-FF11

Summary judgment of foreclosure in favor of bank reversed.

“However, the documentation submitted failed to establish that, prior to commencement of the action, the plaintiff was the holder or assignee of both the note and mortgage. The plaintiff submitted copies of two different versions of an undated allonge which was purportedly affixed to the original note pursuant to UCC 3-202 (2). Moreover, these allonges purporting to endorse the note from First Franklin, a Division of National City Bank of Indiana (hereinafter Franklin of Indiana) to the plaintiff conflict with the copy of the note submitted, which contains undated endorsements from Franklin of Indiana to First Franklin Financial Corporation (hereinafter Franklin Financial), then from Franklin Financial in blank.

“…The plaintiff also failed to establish that the note was physically delivered to it prior to the commencement of this action.”

 

Deutsche Bank National Trust Company v. Bialobrzeski,

3 A.3d 183 (Conn App. Ct. 2010)

Trust: Long Beach Mortgage Loan Trust 2006-3

The judgment for the trust was reversed and the case was remanded for a hearing on the motion to dismiss.

“The key to resolving the defendant’s claim is a determination of when the note came into the plaintiff’s possession. We cannot review the claim because Judge Domnarski made no factual finding as to when the plaintiff acquired the note. Without that factual determination, we are unable to say whether Judge Domnarski improperly denied the defendant’s motion to dismiss. Although it is the appellant’s responsibility to provide an adequate record for review; see Practice Book §§ 60-5 and 61-10; that cannot be the end of the matter because it concerns the trial court’s subject matter jurisdiction.

Deutsche Bank National Trust Company v. Brumbaugh,

2012 OK 3, 270 P.3d 151

Trust: Long Beach Mortgage Loan Trust 2002-1

Summary judgment for bank reversed and remanded.

“To commence a foreclosure action in Oklahoma, a plaintiff must demonstrate it has a right to enforce the note and, absent a showing of ownership, the plaintiff lacks standing… Being a person entitled to enforce the note is an essential requirement to initiate a foreclosure lawsuit. In the present case, there is a question of fact as to when Appellee became a holder, and thus, a person entitled to enforce the note. Therefore, summary judgment is not appropriate. If Deutsche Bank became a person entitled to enforce the note as either a holder or nonholder in possession who has the rights of a holder after the foreclosure action was filed, then the case may be dismissed without prejudice and the action may be re-filed in the name of the proper party. We reverse the granting of summary judgment by the trial court and remand back for further determinations as to when Appellee acquired its interest in the note.” (cites omitted)

Deutsche Bank National Trust Co. v. Byrams,

2012 OK 4, 275 P.3d 129

Trust: Argent Securities, Inc. ABPT Certs., Series 2006-W2

Mortgage amount: $526,320

Summary judgment of foreclosure in favor of bank reversed and remanded.

“The assignment of a mortgage is not the same as an assignment of the note. If a person is trying to establish it is a nonholder in possession who has the rights of a holder it must bear the burden of establishing its status as a nonholder in possession with the rights of a holder. Appellee must establish delivery of the note as well as the purpose of that delivery. In the present case, it appears Appellee is trying to use the assignment of mortgage in order to establish the purpose of delivery. The assignment of mortgage purports to transfer “the following described mortgage, securing the payment of a certain promissory note(s) for the sum listed below, together with all rights therein and thereto, all liens created or secured thereby, all obligations therein described, the money due and to become due thereon with interest, and all rights accrued or to accrue under such mortgage.” This language has been determined by other jurisdictions to not effect an assignment of a note but to be useful only in identifying the mortgage. Therefore, this language is neither proof of transfer of the note nor proof of the purpose of any alleged transfer.” (cites omitted)

Deutsche Bank National Trust Company v. Cabaroy,

Index: 9245/2007

 (N.Y. Sup. Ct. Suffolk Co. 2008)

Trust: New Century Home Equity Loan Trust, 2006-1

“ORDERED that the plaintiffs ex parte application for an Order of Reference in Mortgage Foreclosure is denied without prejudice to resubmit due to plaintiffs failure to provide: (1) proof of plaintiffs standing to commence this action;”

Deutsche Bank National Trust Company v. Castellanos,

2008 NY Slip Op 50033(U)

(N.Y. Sup. Ct. Kings Co. 2008)

Trust: Argent Mort. Sec., Inc. ABPT Certs., Series 2005-W4

Mortgage Amount: $382,500

“Did Mr. Rivas somehow change employers on July 21, 2006 or he is concurrently a Vice President of both assignor Argent Mortgage Company, LLC and assignee Deutsche Bank? If he is a Vice President of both the assignor and the assignee, this would create a conflict of interest and render the July 21, 2006-assignment void.

Also, Mr. Rivas claims that Argent Mortgage Company, LLC is located at 1100

Town and Country Road, Suite 200, Orange, California, while Deutsche Bank has its offices at One City Boulevard West, Orange, California. Did Mr. Rivas execute the assignment at 100 Town and Country Road, Suite 200, and then travel to One City Boulevard West, with the same notary public, M. Reveles, in tow? The Court is concerned that there may be fraud on the part of Deutsche Bank, Argent Mortgage Company, LLC, and/or MTGLQ Investors, L.P., or at least malfeasance. If plaintiff renews its motion for a judgment of foreclosure and sale, the Court requires a satisfactory explanation by Mr. Rivas of his recent employment history.”

Deutsche Bank National Trust Co. v. Clouden,

Index No. 277/07

(N.Y. Sup. Ct. Kings Co. 2007)

Trust: Argent Mort. Sec., Inc. ABPT Certs., Series 2005-W3

Mortgage Amount: $382,500

“In the instant action, Argent’s defective assignment to Deutsche Bank affects the standing of Deutsche Bank to bring this action. The recorded assignment from Argent to Deutsche Bank, made by “Tamara Price, as Authorized Agent” on behalf of “AMC Mortgage Services Inc. as authorized agent,” lacks any power of attorney granted by Argent to AMC Mortgage Services, Inc. and/or Tamara Price to act on its behalf.”

Deutsche Bank National Trust Company v. Benjamin Cruz,

Index No. 31645/06

(N.Y. Sup. Ct. Kings Co. 2008)

Trust: Soundview Home Loan Trust 2005-OPT3

“In support of plaintiff’s application, it submits a purported assignment of the mortgage from the original lender to plaintiff. The purported assignment is dated October 27, 2006. However, such an attempt to retroactively assign the mortgage is insufficient to establish plaintiff’s ownership interest at the time the action was commenced.”

Deutsche Bank National Trust Company v. Yobanna Cruz,

Index No. 2085/07

(N.Y. Sup. Ct. Kings Co. 2007)

Trust: Long Beach Mort. Loan Trust 2006-2

Mortgage Amount: $382,500

“In support of plaintiffs application, it submits a purported assignment of the mortgage from the original lender to plaintiff. The purported assignment is dated January 18, 2007 and states in pertinent part “effective January 12, 2007.” However, such an attempt to retroactively assign the mortgage is insufficient to establish plaintiff’s ownership interest at the time the action was commenced.”

Deutsche Bank National Trust Company v. Cuesta,

2012 NY Slip Op 32590(U) (N.Y. Sup. Ct. Suffolk Co.  2012)

Trust: American Home Mortgage Investment Trust,

Series 2007-2

Deutsche Bank’s motion for an order of reference was denied without prejudice, and Deutsche Bank was warned that if it chose to refile, it must include:

“4) Evidentiary proof, including an affidavit from an individual with personal knowledge of the facts as to the proper and timely assignment of the subject note and mortgage or endorsement of the subject note and assignment of the subject mortgage, sufficient to establish that plaintiff was the owner or holder of the subject note and mortgage at the time the action was commenced…

In his affidavit, the plaintiff’s representative has not addressed the particulars of the transfer of the note or the assignment of the mortgage to the plaintiff. Additionally, the assignment dated January 27, 2011, which is referred to in the plaintiff’s complaint, has not been attached to the moving papers.”

Deutsche Bank v. Decker,

Case 09-20548-CI-13 (Pinellas County, Florida, 2010)

Trust: Morgan Stanley Dean Witter Cap. PSA dated 5-1- 2001

“However, there remain two concerns.

The first is related to evidence that the Plaintiff had standing at the time the original complaint was initially filed. The “new” assignment does not solve this problem because it was executed on February 17, 2010, and thus does not demonstrate standing in 2009…

The second problem is related to the ownership issue but is focused on the validity of the newly obtained assignment.  At the hearing Defendant’s counsel indicated concerns regarding this document based upon his assertion that the 2010 assignment was from a company that went bankrupt years ago…”

(Dismissal granted of bank/plaintiff’s first amended complaint)

Deutsche Bank National Trust Co. v. Ezagui,

Index: 3724/07

(N.Y. Sup. Ct. Kings Co. 2007)

Trust: Ameriquest Mortgage Securities, Inc., ABPT

Certificates, Series 2004-R10

Mortgage Amount: $412,250

“According to plaintiff’s application, defendant Ezaguis’ default began with the nonpayment of principal and interest due on September 1, 2006. Yet, more than five months later, plaintiff DEUTSCHE BANK was willing to take an assignment of a nonperforming loan from AMERIQUEST. Further, both assignor AMC, as Attorney in Fact for AMERIQUEST, and assignee, DEUTSCHE BANK, have the same address, 505 City Parkway West, Orange, CA 92868. Plaintiff’s “affidavit of amount due,” submitted in support of the instant application for a default order of reference was executed by Tamara Price, on February 16, 2007. Ms. Price states that “I am the Vice President for DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE OF AMERIQUEST MORTGAGE SECURITIES, INC., ASSET-BACKED PASS THROUGH CERTIFICATES, SERIES 2004-R10, UNDER THE POOLING AND SERVICING AGREEMENT DATED AS OF OCTOBER 1, 2004, WITHOUT RECOURSE (DEUTSCHE BANK).” However, the February 7, 2007 assignment from AMERIQUEST, by AMC, its Attorney in Fact, is executed by Tamara Price, Vice President of AMC. The Tamara Price signatures on both the February 7, 2007 affidavit and the February 16, 2007 assignment are identical. Did Ms. Price change employers from February 7, 2007 to February 16, 2007? The Court is concerned that there may be fraud on the part of AMERIQUEST, or at least malfeasance. Before granting an application for an order of reference, the Court requires an affidavit from Ms. Price, describing her employment history for the past three years. Further, irrespective of her employment history, Ms. Price must explain why DEUTSCHE BANK would purchase a nonperforming loan from AMERIQUEST, and why  DEUTSCHE BANK shares office space in Orange, California, with AMERIQUEST.”

Deutsche Bank National Trust Company v. Gilbert,

2012 IL App (2d) 120164, No. 2-12-0164 (September  25, 2012)

Trust: GSAMP Trust 2005-WMC2

“Deutsche Bank attempted to rebut this apparent lack of standing by pointing to the Assignment and the Loch affidavit. However, these items lack evidentiary value. Before the trial court, Deutsche Bank argued that the language of the Assignment established that the transfer of the mortgage had occurred years earlier, on November 1, 2005. On appeal, however, Deutsche Bank wisely abandons that argument (which finds no support in the actual language of the Assignment), and now concedes that the Assignment “does not establish anything about when Plaintiff [Deutsche Bank] obtained its interest in the subject loan.” We agree with this statement. Although the Assignment contains two dates—the date of the trust for which Deutsche Bank is a trustee, and the date on which the Assignment was executed and notarized—it does not explicitly state when the mortgage was assigned to Deutsche Bank. All that can be known about when the assignment took place is that it was no later than the date on which the Assignment was executed.”

Deutsche Bank National Trust Company v. Grant,

Index: 39192/07

(N.Y. Sup. Ct. Kings Co. 2008)

Trust: Soundview Home Loan Trust 2006-OPT2

Mortgage Amount: $456,000

“Also, the Court requires an explanation from an officer of plaintiff DEUTSCHE BANK as to why, in the middle of our national subprime mortgage financial crisis, DEUTSCHE BANK purchased a non-performing loan [from] OPTION ONE.  The Court wonders if DEUTSCHE BANK violated a corporate fiduciary duty to its stockholders with the purchase of a loan that defaulted more than five months prior to its assignment to DEUTSCHE BANK.”

 

Deutsche Bank National Trust Co. v. Haque,

36 Misc. 3d 1203(A)

(N.Y. Sup. Ct. Queens Co. 2012)

Trust: Home Equity Mortgage Loan Trust, Series INABS

2005-B

Mortgage Amount: $279,200

“In addition, to the extent Plaintiff Deutsche Bank asserts the note was transferred to ”the trust,” pursuant to a “pooling and servicing” agreement between IndyMac ABS, Inc. as depositor, IndyMac Bank SM as seller and “master servicer” and Home Equity Mortgage Loan Asset-Backed Trust, Series INABS 2005-B, issuer, such agreement does not establish that IndyMac assigned the note to plaintiff Deutsche Bank.  Plaintiff Deutsche Bank does not otherwise allege a basis for a valid assignment of the note.” (cites omitted)

 

Deutsche Bank National Trust Co. v. Harris,

Index: 35549/07

(N.Y. Sup. Ct. Kings Co. 2008)

Mortgage Amount: $408,000

Deutsche Bank’s Motion was denied without prejudice, with leave to renew, providing the Court:

“…a satisfactory explanation to various questions with respect to: the October 23, 2007 assignment of the instant mortgage to plaintiff, DEUTSCHE BANK NATIONAL TRUST COMPANY (DEUTSCHE BANK); the employment history of one Erica Johnson-Seck, who executed the affidavit of facts in the instant application as an officer of DEUTSCHE BANK; plaintiff DEUTSCHE BANK’S purchase of the instant non- performing loan; and why does INDYMAC BANK, F.S.B., (INDYMAC), MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (MERS), and plaintiff DEUTSCHE BANK all share office space at 460 Sierra Madre Villa, Pasadena, CA 91107.”

Deutsche Bank National Trust Co. v. Maraj,

2008 NY Slip Op 50176 (U)

(N.Y. Sup. Ct. Kings Co. 2008)

Trust: INDX 2006-AR6

Mortgage Amount: $440,000

“With the assignor MERS and assignee DEUTSCHE BANK appearing to be engaged in possible fraudulent activity by: having the same person execute the assignment and then the affidavit of facts in support of the instant application; DEUTSCHE BANK’s purchase of a non-performing loan from INDYMAC; and, the sharing of office space in Suite 400/500 in Kansas City, the Court wonders if the instant foreclosure action is a corporate “Kansas City Shuffle,” a complex confidence game…

A Kansas City Shuffle is when everybody looks right, you go left . . .

It’s not something people hear about. Falls on deaf ears mostly . . .

No small matter. Requires a lot of planning. Involves a lot of people. People connected by the slightest of events. Like whispers in the night, in that place that never forgets, even when those people do.

In this foreclosure action is plaintiff DEUTSCHE BANK, with its “principal place of business” in Kansas City attempting to make the Court look right while it goes left?”

Deutsche Bank National Trust Co. v. Marche,

Index: 9156/07

(N.Y. Sup. Ct. Kings Co. 2009)

Trust: Securitized AB Receivable LLC Trust 2006-FR4

“Why an Order should not be made and entered:

VACATING the order of foreclosure and dismissing the instant action in its entirety upon the grounds that (i) Plaintiff has misrepresented itself by alleging that it is the owner and holder of the mortgage in order to fraudulently commence this action when in fact no valid assignment has been made to Plaintiff from Fremont Investment & Loan; (ii) that this Court lacks subject matter jurisdiction where Plaintiff is not and has not been the true owner and holder of the note and mortgage at issue; and (iii) that the assignment at issue is champertous in violation of Section 489 of the New York State Judiciary Law because the sole purpose of the defective assignment was to facilitate fraudulent litigation begun by Plaintiff prior to the assignment’s execution.”

Deutsche Bank National Trust Co. v. Matthews,

2012 OK 14, 273 P.3d 43 (2012)

Trust: JP Morgan Mortgage Acquisition Trust 2007-CH3

Summary Judgment for bank reversed and remanded.

“However, the Assignment of Real Estate Mortgage attached to its motion for summary judgment is executed on June 9, 2009, by a Vice President of Chase Bank USA, N.A. The note attached to its motion for summary judgment, however, shows an allonge from Chase Bank USA, N.A., to Chase Home Finance, LLC. Further, this purported transfer of the note occurred six months after the action was commenced. Deutsche Bank also by its own admission states it acquired its interest in the note and mortgage subsequent to the filing of this action.”

Deutsche Bank v. McCarthy,

Case No. 1:07 3071 (N.D. Ohio) (Judge Dowd)

Trust: Argent Mortgage Securities, ABPT Certs., Series 2005-W5

“The Northern District of Ohio is swamped with foreclosure cases brought in diversity. A large number of these cases are brought by plaintiffs who declare that they are holders of the note and mortgage but who initially supply no proof of that fact. When pressed, it is typically the case, as here, that the plaintiff actually is not the holder of the note and mortgage until some time after the filing of the complaint (often mere days!) and had, therefore, made a false statement to the court. Sometimes that statement of ownership is only in the complaint; sometimes, as in the instant case, it is actually in a sworn affidavit. See Doc. No. 1-4, ¶ 7. This is completely unacceptable, especially because this situation is likely to be repeated if not stopped by Court order.”

Deutsche Bank National Trust Company v. McRae

27 Misc.3d 247 (Sup. Ct. Alleghany County 2010)

Trust: not identified.

To establish standing, the bank submitted an additional copy of a note which was different from the one attached to the complaint. The court rejected it, stating: “Obviously, the endorsements…post-date the commencement of this case…and are ineffective.”

Deutsche Bank National Trust Co. v. Mitchell,

27 A.3d 1229 – NJ Appellate Div. 2011

Trust: Long Beach Mortgage Loan Trust 2006-3

Mortgage Amount: $150,000

Summary judgment reversed.

“After reviewing the record in light of the contentions advanced on appeal, we reverse the grant of summary judgment and final judgment and vacate the sheriff’s sale, holding that Deutsche Bank did not prove it had standing at the time it filed the original complaint. The assignment was not perfected until after the filing of the complaint, and plaintiff presented no evidence of having possessed the underlying note prior to filing the complaint. If plaintiff did not have the note when it filed the original complaint, it lacked standing to do so, and it could not obtain standing by filing an amended complaint. Given that Deutsche Bank has not demonstrated standing, we cannot decide at this time whether it was a holder in due course of the mortgage.”

Deutsche Bank National Trust Co. v. Nicholls.

Index 2248/07

(N.Y. Sup. Ct. Kings Co. 2008)

Trust: Long Beach Mort. Loan Trust 2005-WL2

“In support of plaintiff’s application, it submits a purported assignment of the mortgage from the original lender to plaintiff. The purported assignment is dated January 24, 2007 and states in pertinent part “[e]ffective January 17, 2007.” However, such an attempt to retroactively assign the mortgage is insufficient to establish plaintiff’s ownership interest at the time the action was commenced. … Plaintiffs attempt to foreclose upon a mortgage in which it had no “legal or equitable interest was without foundation in law or fact…”

Deutsche Bank National Trust Company v. Parisella,

VT App. Ct., 2010, Docket No. S0758-09 CnC

Trust: FFMLT Trust 2005-FF11

Homeowner’s Motion to Dismiss granted.

“The court concludes that a plaintiff seeking foreclosure lacks standing unless it can show it was entitled to enforce the mortgage at the time it filed its complaint for foreclosure…

Here, there is no evidence in the record indicating that Deutsche Bank was the assignee of the note when it filed its complaint on June 15, 2009.  Nor is there even an allegation to that effect.  There is an allegation that the mortgage was assigned to Deutsche Bank before it filed its complaint, but since the note is a negotiable instrument, the transfer of the mortgage does not also transfer the note…

Deutsche Bank National Trust Company v. Richardson,

2012 OK 15, __P.3d__

Trust: MASTR 2007-02

Summary Judgment for bank reversed and remanded.

“In the present case, Appellee has presented evidence in support of the motion for summary judgment of an indorsed-in-blank note, and an “Assignment of Mortgage” both arguably obtained after the filing of the petition. Appellee must prove it is the holder of the note or the nonholder in possession who has the rights of a holder prior to the filing of the foreclosure proceeding. In the present matter the timeliness of the transfer is a disputed fact issue. Since Deutsche Bank did not file the blank indorsement until it filed its motion for summary judgment it is impossible to determine from the record when Deutsche Bank acquired its interest in the underlying note.”

Deutsche Bank National Trust Co. v. Ryan,

Index 33315/07 (January 29, 2008)

(N.Y. Sup. Ct. Kings Co. 2008)

Trust: Long Beach Mort. Loan Trust 2005-WL1

An order of reference was denied by Judge Kurtz where the bank plead a mortgage assignment executed, September 31, 2007, after the suit was commenced August 31, 2007, but with an attempted backdate to July 30, 2007.

Deutsche Bank National Trust Co. v. Ryan,

Case No. 2011-12070, Hillsborough Co. Fla. 2012

Trust: Novastar Mortgage Funding Trust, 2006-5

“Second, Plaintiff lacked standing at the inception of this case. Though Plaintiff alleged it had standing, the Note attached to its Complaint lacked an endorsement, and Plaintiff introduced no sworn evidence to overcome Defendant’s affidavit that it lacked standing when it filed suit…

In light of the foregoing, this case is dismissed without prejudice and without leave to amend.”

Deutsche Bank National Trust Co. v. Sampson III,

Index 26320/07 (January 16, 2008)

(N.Y. Sup. Ct. Kings Co. 2009)

Trust: HSBC Bank USA, Inc., Series HASCO 2006-HE1

“The purported assignment is dated August 10, 2007 and states in pertinent part “this assignment is effective as of the 22nd day of June, 2007.” However, such an attempt to retroactively assign the mortgage is insufficient to establish plaintiff’s ownership interest at the time the action was commenced. Plaintiff’s attempt to foreclose upon a mortgage in which it had no “legal or equitable interest was without foundation in law or fact…” (cites omitted)

Deutsche Bank National Trust Company v. Seidlin,

Index:105162/2009 NY County, 2011NY Slip Op

31551(U)

Trust: American Home Mortgage Assets Trust 2006-5

Mortgage Amount: $580,000

Bank’s motion granted for leave to voluntarily   discontinue the action “due to the assignment of mortgage being incorrectly and/or incompletely acknowledged” after two years of litigation.

Deutsche Bank National Trust Co. v. Steele,

2008 U.S. Dist. LEXIS 4937 (S.D. Ohio January 8, 2008)

“I cannot tell from the exhibits plaintiff has submitted in support of its motion whether Deutsche Bank owned the note and mortgage when the complaint was filed. Plaintiff alleges ownership in the complaint, but defendants’ answer does not admit the truth of that allegation…The Court cannot grant summary judgment unless Deutsche Bank offers evidence from which a finder could conclude by a preponderance that it owned the note and mortgage when the complaint was filed.  Further, if plaintiff has evidence of ownership, it must explain how that ownership is consistent with the uncontroverted evidence that when the complaint was filed, MERS was the mortgage holder acting on behalf of Mortgageit, Inc.”

Deutsche Bank National Trust Company v. Vasquez,

Index: 4924/11, 2012 NY Slip Op 31395(U)

Trust: Morgan Stanley ABS Cap. I, Inc. Trust, 2007-HE7

Mortgage Amount: $435,100

“A foreclosure plaintiff has the requisite standing to commence a mortgage foreclosure action if “it is both the holder or assignee of the subject mortgage and the of the underlying note at the time the action is commenced”… In this action plaintiff does not allege that it is an assignee of the Note, but instead, as previously referenced, produced a copy of the original Note between defendants and New Century. They argue that delivery of the unindorsed Note was sufficient to confer standing. On the prior motion the court overlooked the necessity of proper indorsement required to transfer ownership and render the transferee a holder…

Also influencing this court’s determination on reargument are the repeated issues regarding standing which revolve around proper assignments, particularly of mortgage notes which have ensued following creation of the MERS system and the birth of mortgage backed securities.”

Deutsche Bank National Trust Company v. Williams,

Case No. 11-00632 (D. Hawaii 2011)

Trust: Morgan Stanley ABS Capital I, Inc. Trust 2007- NC1

“This evidence presents two problems for Plaintiff. First, if Plaintiff did indeed obtain the Mortgage and Note through a 2007 PSA, then the 2007 PSA is yet another reason why the January 13, 2009 assignment is a nullity and the Complaint’s assertion that Plaintiff obtained the Mortgage and Note from Home 123 is untrue. Second, the evidence presented does not actually establish that Plaintiff received the Mortgage and Note through the PSA — there is no evidence on the record establishing what mortgages were included in the PSA. Thus, although Plaintiff might have obtained the Mortgage and Note through this PSA, there is no evidence showing or even suggesting that this is indeed the case. As a  result, there is no evidence — at least on the record presented before the court –creating a genuine issue of material fact that Plaintiff was assigned the Mortgage and Note on which it now seeks to foreclose.”

Deutsche Bank National Trust Company v. Wilson,

Case A-1384-09T1, N.J. App. Div. 2011

Trust: WaMu 2007-HEI Trust

Summary judgment of foreclosure was reversed and remanded “to resolve the issue of the bona fides of the assignment.”  The issue regarding the assignment was discussed in Footnote 1:

“The assignment was executed by an individual identified as Laura Hescott who signed the assignment as an assistant vice-president of Washington Mutual Bank. Ms. Hescott has been identified as an employee of Lender Processing Services, Inc. (“LPS”), a servicer of default mortgages. The bona fides of the practices of this service provider have been the subject of increased judicial scrutiny. See, e.g., In re Taylor, 407 B.R. 618, 623 (Bankr. E.D. Pa. 2009).”

 

Deutsche Bank Trust Company Americas v. McCoy,

20 Misc 3d 1202 (A) 2010 NY Slip Op 51664(U)

Trust not disclosed.

“Although the February 28, 2008 assignment states it is “effective January 19, 2008,” such attempt at retroactivity is ineffectual. If an assignment is in writing, the execution date is generally controlling and a written assignment claiming an earlier effective date is deficient, unless it is accompanied by proof that the physical delivery of the note and mortgage was, in fact, previously effectuated…A retroactive assignment cannot be used to confer standing upon the assignee in a foreclosure action commenced prior to the execution of the assignment… (Plaintiff’s failure to submit proper proof, including an affidavit from one with personal knowledge, that the plaintiff was the holder of the note and mortgage at the time the action was commenced, requires denial of the plaintiff’s application for an order of reference. (cites omitted)

Deutsche Bank Trust Company Americas v. Peabody,

866 N.Y.S. 2d 91 (N.Y. Sup. Ct. 2008)

Trust not disclosed.

Mortgage Amount: $320,000

Foreclosure dismissed.

“Again, here, there is no evidence that it took physical delivery of the note and mortgage before commencing this action, and again, the written assignment was signed after the defendant was served. The assignment’s language purporting to give it retroactive effect, absent a prior or contemporary delivery of the note and mortgage, is insufficient to grant it standing.”

Feltus v. U.S. Bank, N.A.

80 So.3d 375 (Fla. 2nd DCA 2011)

Trust: MASTR Adj. Rate Mortgage Trust 2007-3

Summary judgment for bank reversed.

“The properly filed pleadings before the court when it heard U.S. Bank’s motion for summary judgment were a complaint seeking to reestablish a lost note to which was attached a copy of a note made payable to Countrywide, N.A., Feltus’s answer and affirmative defenses alleging that the note attached to the complaint contradicts the allegation of the complaint that U.S. Bank is the owner of the note, a motion for summary judgment alleging a lost note of which U.S. Bank is the owner, and an affidavit of indebtedness alleging that U.S. Bank was the owner and holder of the note described in the complaint. The endorsed note that U.S. Bank claimed was now in its possession was not properly before the court at the summary judgment hearing because U.S. Bank never properly amended its complaint.2 In addition, the complaint failed to allege that U.S. Bank “was entitled to enforce the instrument when loss of possession occurred, or has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred.” § 673.3091(a). The affidavit of indebtedness provided no assistance in this regard because the affiant did not assert any personal knowledge of how U.S. Bank would have come to own or hold the note.” (cites omitted)

Federal Home Loan Mortgage Corporation v. Schwartwald,

Slip Opinion No. 2012-Ohio-5017

On October 31, 2012, the Ohio Supreme Court addressed the issue of standing in foreclosures.  Although this case did not involve a mortgage-backed trust, it will have a significant impact on foreclosures by trusts because the Court ruled that the Federal Home Loan Mortgage Corporation lacked standing to sue when it obtained the mortgage by an assignment from the real party in interest after the foreclosure suit was commenced. This was yet another case where the note was “not available” at commencement.  Later in the case, Federal Home Loan filed a copy of the note, with undated endorsements.  The motion for summary judgment was supported by an Affidavit signed by well-known Wells Fargo robo-signer John Herman Kennerty.  The appellate court had ruled that Federal Home Loan cured the lack of standing defect by the assignment of the mortgage and transfer of the note prior to entry of judgment. The Ohio Supreme Court disagreed – citing decisions taken by Courts in Connecticut, Florida, Maine, Missouri, Oklahoma and Vermont.

Gascue v. HSBC USA, N.A.,

__So.3d__ (Fla. 4th DCA 2012)

Trust: Deutsche Alt-B Securities Mortgage Loan Trust, Series 2006-AB4

Reversal and remand of denial of motion to vacate final judgment of foreclosure.

“There is no evidence on the record indicating that Bank was the holder of the mortgage at the time the complaint was filed. Just as in Rigby, Bank attached a mortgage to its complaint in which it was not listed as the lender, but rather “Pinnacle Direct Funding” was. The only evidence that Bank is the owner and holder of the note is a sworn affidavit. However, this affidavit was filed three years after the complaint and does not establish when Bank became the holder of either the note or the mortgage, much less establish that Bank was the holder of said instruments at the time the complaint was filed. See id. (reversing the trial court in part because the supporting affidavit in that case did not establish the date on which the bank acquired possession of the note).”

Gee v. U.S. Bank, N.A.,

72 So.3d 211 (Fla. 5th DCA 2011)

Trust: Structured Asset Investment Loan Trust 2005-10

“Here, the record does not contain the original Mortgage. To prove its ownership, U.S. Bank filed a copy of the Mortgage as well as two assignments. The first assignment transferred the Mortgage from Advent Mortgage, the original mortgagee, to Option One. The second assignment purported to transfer the mortgage from American Home, as successor in interest of Option One, to U.S. Bank. However, and significant to our consideration, U.S. Bank provided nothing to demonstrate how American Home came to be the successor in interest to Option One.

Incredibly, U.S. Bank argues that “[i]t would be inequitable for [Ms. Gee] to avoid foreclosure based on the absence of an endorsement to [it].” But that argument flies in the face of well-established precedent requiring the party seeking foreclosure to present evidence that it owns and holds the note and mortgage in question in order to proceed with a foreclosure action.” (cites omitted)

(Summary Judgment reversed.)

Gonzalez v. Deutsche Bank National Trust Company,

Case No. 2D10-5561 (Fla. 2d DCA 2012)

Trust: American Home Mortgage Investment Trust

2006-1

“The problem is that the additional stamp and handwritten notation transferring the note from American Home Mortgage to Deutsche Bank is not dated. Accordingly, Deutsche Bank failed to establish its standing by showing that it possessed the note when it filed the lawsuit. See Country Place Cmty. Ass’n v. J.P. Morgan Mortg. Acquisition Corp., 51 So. 3d 1176, 1179 (Fla. 2d DCA 2010) (“Because J.P. Morgan did not own or possess the note and mortgage when it filed its lawsuit, it lacked standing to maintain the foreclosure action.”). As a result, Deutsche Bank has not refuted Gonzalez’s affirmative defense, and a genuine issue of material fact exists that should have precluded the entry of summary judgment.”

(Summary judgment for Deutsche Bank reversed.)

HSBC Bank USA, N.A. v. Antrobus,

20 Misc 3d 1127(A), 2008 NY Slip Op 51639(U)

(N.Y. Sup. Ct. Kings Co. 2008)

Trust: Renaissance Home Equity Loan Trust 2006-4

Mortgage Amount: $465,000

“Therefore, the instant application for an order of reference is denied without prejudice, with leave to renew. The Court will grant an order of reference to plaintiff HSBC upon presentation to this court of: an affidavit by either an officer of HSBC or someone with a valid power of attorney from HSBC, possessing personal knowledge of the facts; an affidavit from Scott Anderson clarifying his employment history for the past three years and what corporation he serves as an officer; and, an affidavit by an officer of HSBC explaining why HSBC purchased a nonperforming loan from Delta Funding Corporation, and why HSBC, OCWEN, MERS, Deutsche Bank and Goldman Sachs all share office space in Suite 100.”

HSBC Bank USA v. Beirne,

212-Ohio-1386, Ohio App. Ct. 9th District

Summary judgment for bank reversed.

“In the affidavit that was attached to the supplement to the motion for summary judgment, Mr. Spradling averred that HSBC had been assigned the loan on June 5, 2009, and that “[a] true and correct copy of the Assignment was attached to the Complaint filed by HSBC.”  However, a review of the complaint and the exhibits attached thereto reveals that there was no evidence that the note had been assigned to HSBC.  Moreover, an assignment dated June 5, 2009, could not have been attached to the complaint which was filed on May 11, 2009.”

HSBC Bank USA, N.A. v. Charlevagne,

20 Misc 3d 1128(A), 2008 NY Slip Op 51652(U)

(N.Y. Sup. Ct. Kings Co. 2008)

Trust: Renaissance Home Equity Loan Trust 2005-3

Mortgage Amount: $480,000

“Therefore, the instant application for an order of reference and related relief is denied without prejudice. The Court will grant plaintiff HSBC an order of reference and related relief when it submits an affidavit by either an officer of HSBC, or someone with a valid power of attorney from HSBC, possessing personal knowledge of the facts.”

HSBC Bank USA v. Cherry,

18 Misc3d 1102 (A), 2007 NY Slip Op 52378(U)

(N.Y. Sup. Ct. Kings Co. 2008)

Trust: Renaissance Home Equity Loan Trust 2005-4

“Further, the Court, upon renewal of the application for an order of reference requires a satisfactory explanation to questions with respect to: the assignment of the instant nonperforming mortgage loan from the original lender, Delta Funding Corporation to HSBC Bank; the employment history of one Scott Anderson, who assigned this mortgage to HSBC and then swears to be HSBC’s servicing agent; and the relationship between HSBC, Ocwen Federal Bank, FSB (OCWEN), Deutsche Bank and Goldman Sachs, who all seem to share office space at Suite 100 of 1661 Worthington Road, West Palm Beach, Florida 33409 (Suite 100).”

HSBC Bank USA v. Cipriani,

Index: 12365-2007

(N.Y. Sup. Ct. Suffolk Co. 2008)

Trust: SG Mort. Sec. Trust 2005-OPT1

Order for reference denied without prejudice. To resubmit, plaintiff must provide “proof on standing to commence this action as it appears that the plaintiff did not own the note and mortgage when the action was commenced.”

HSBC Mortgage Services, Inc. v. Jack, 

Index No: 14750/2007

(N.Y. Sup. Ct. Suffolk County 2008)

Denied without prejudice due to bank’s failure to provide proof that it had standing to bring the action.

 

HSBC Bank USA v. Palladino,

2011 IL App (2d) No. 08-CH-4548

Trust: Fremont Home Loan Trust 2006-D

Summary judgment reversed and remanded.

“In the present case, there are genuine issues of material fact with respect to whether there was an assignment of the mortgage and note from Fremont to HSBC Bank. Although HSBC Bank represents that it produced the assignment, the document on which it relies, by its very terms, was, at worst, not an assignment and, at best, inherently inconsistent as to whether it was an assignment. Indeed, the document states that MERS as nominee for Fremont “did” assign (past tense) the mortgage and note to HSBC Bank prior to November 13, 2008, yet also states that the assignment “is” made (present tense) without recourse and without representation or warranty.

In addition to the purported assignment’s inconsistent terms, the document upon which HSBC Bank relies is vague with respect to the date of the purported assignment. The document has a stamp which appears to reflect that it was recorded on December 17, 2008, but states that the assignment was made “prior to” November 13, 2008. The document itself is undated, as is the notary’s certificate. The date of the assignment is material because standing to sue must exist at the time the action is commenced.” (cites omitted)

HSBC Bank USA v. Perez,

Case No. EQ4970 (Washington County, Iowa 2009)

Trust: Fieldstone Mort. Investment Trust 2005-2

“The Perezs argue that the Pooling and Servicing Agreement for Fieldstone Mortgage Investment Trust Series 2005-2 governs when and how the Trustee in this case, HSBC Bank, the Plaintiff, may acquire notes and mortgages.  Additionally, that agreement governs when and how a mortgage owned by the trust may be foreclosed upon.  The Perezs further state that the agreement prohibits the acquisition of mortgages that are in default…The Plaintiff has also submitted documentation that shows the transfer of interest in the mortgage from Fieldstone to HSBC occurred on February 9, 2009.  Clearly, based upon the Plaintiff’s own documentation, the default occurred prior to the transfer.

According to the Transfer and Servicing Agreement submitted by the Perezs, and allegedly applicable to the Plaintiff, the trust servicer is only allowed to “substitute a defaulted Mortgage Loan with a Qualifying Substitute Mortgage Loan…This document seems to state that the mortgage at issue could only be transferred if it were current on the date it was transferred.  Accordingly, it appears that this mortgage was inappropriately transferred to the Plaintiff as it was in default at the time of transfer.  As such, a question is raised regarding whether the present Plaintiff has standing to bring this foreclosure action.”

HSBC Bank USA, N.A. v. Sene,

34 Misc 3d 1232 (A), 2012 NY Slip Op 50352(U)

(N.Y. Sup. Ct. Kings Co. 2012)

Trust: Ace Securities Corp. Home Equity Loan Trust

2007-HE4

“During the bad faith hearing, two separate notes with attendant assignments were put into evidence by the plaintiff…

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 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…

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.”

James v. U.S. Bank, N.A.,

D. Maine, No. 2:09-cv-84-JHR, January 31, 2011

Trust: BAFC 2006-1

Sanctions were imposed because of an Affidavit  submitted by GMAC employee and exposed robo-signer Jeffrey Stephan:

“In the case at hand, however, GMAC, the party that submitted the affidavit and the affiant’s employer, was on notice that the conduct at issue here was unacceptable to the courts, which rely on sworn affidavits as admissible evidence in connection with motions for summary judgment. In 2006, an identical jurat signed under identical circumstances resulted in the imposition of sanctions against GMAC in Florida. Affidavit of Thomas A Cox (Docket No. 153) ¶ 4 & Exhs. B-D. GMAC’s assertion that these sanctions applied only “within the State of Florida,” Plaintiff and GMAC Mortgage LLC’s Memorandum in Opposition to Defendant’s Motion for Relief Pursuant to Fed. R. Civ. P. 56(g) (Docket No. 177) at 7, is specious. It would be clear to any lawyer representing GMAC in any court action, including those involved in the Florida action, that a jurat should not be signed under the circumstances involved in that case or here and that such a jurat will never be acceptable to any court. Stephan’s actions in this case strike at the heart of any court’s procedures, are egregious under the circumstances, and must be deemed worthy of sanctions.

LaSalle Bank, N.A. v. Ahearn,

59 A.D.3d 911, 875 N.Y.S. 2d 595 (N.Y. App. Div. 2009)

Trust: Bear Stearns Asset-Backed Securities I, LLC,

Series 2004-FR3

Mortgage Amount: $180,000

“Here, the written assignment submitted by plaintiff was indisputably written subsequent to the commencement of this action and the record contains no other proof demonstrating that there was a physical delivery of the mortgage prior to bringing the foreclosure action (see id.). In fact, the language in the amended complaint indicating that the assignment to plaintiff had not yet occurred would clearly contradict any assertion to the contrary. Accordingly, Supreme Court correctly found that plaintiff did not have standing and the amended complaint must be dismissed, without prejudice.”

LaSalle Bank v. Charleus 

Index No. 22733/2007 (January 3, 2008)

(N.Y. Sup. Ct. Kings Co. 2008)

An order of reference was denied by Judge Kurtz where the bank plead a mortgage assignment executed, July 2, 2007, after the suit was commenced June 22, 2007, but with an attempted backdate to June 21, 2007.

 

LaSalle Bank v. Lamy,

12 Misc.3d 1191(A), 824 N.Y.S.2d 769

“The court thus finds that this purported, undated, indorsement by “allonge” to the note by the original lender in favor of the plaintiff and the December 29, 2005 written assignment of the note and mortgage by MERS to the plaintiff failed to pass ownership of the note and mortgage to the plaintiff prior or subsequent to the commencement of this action. Consequently, the original lender remains the owner of both the note and mortgage since no proper assignment of the either the note or the mortgage was ever made by the original lender/owner to the plaintiff or to the plaintiff’s purported assignee. Under these circumstances, the plaintiff has no cognizable claims for the relief demanded in its complaint.”

LaSalle Bank v. Smalls,

Index No. 28128/2007 (January 3, 2008)

(N.Y. Sup. Ct. Kings Co. 2008)

An order of reference was denied by Judge Kurtz where the bank plead a mortgage assignment executed, September 31, 2007, after the suit was commenced August 31, 2007, but with an attempted backdate to July 30, 2007.

McLean v. JP Morgan Chase Bank, N.A.,

79 So.3d 170 (Fla. 4th DCA 2012)

Trust: Structured Asset Mortgage Investments II, Inc.,

Series 2006-ARS

“Nonetheless, the record evidence is insufficient to demonstrate that Chase had standing to foreclose at the time the lawsuit was filed. The mortgage was assigned to Chase three days after Chase filed the instant foreclosure complaint. More importantly, the original note contained an undated special endorsement in Chase’s favor, and the affidavit filed in support of summary judgment did not state when the endorsement was made to Chase. Furthermore, the affidavit, which was dated after the lawsuit was filed, did not specifically state when Chase became the owner of the note and mortgage, nor did the affidavit indicate that Chase was the owner of the note and mortgage before suit was filed. Therefore, Chase failed to submit any record evidence proving that it had the right to enforce the note on the date the complaint was filed.” (footnotes omitted)

Naranjo v. SBMC Mortgage,

No. 3:11-cv-02229-L-WVG, Dkt. #20

(S.D. Cal. July 24, 2012)

Trust: WMALT 2006-AR4

Mortgage Amount: $825,000

Defendant Trustee’s Motion to Dismiss Denied in Part.

“The vital allegation in this case is the assignment of the loan into
the WAMU Trust was not completed by May 30, 2006 as required by the Trust Agreement. [*10] This allegation gives rise to a plausible inference that the subsequent assignment, substitution, and notice of default and election to sell may also be improper. Defendants wholly fail to address that issue. (See Defs.’ Mot. 3:16-6:2; Defs.’ Reply 2:13-4:4.) This reason alone is sufficient to deny Defendants’ motion with respect to this issue.”

Pino v. Bank of New York,

76 So. 3d 927 (Fla. 4th DCA 2011)

Trust: CWALT 2006-OC8

Mortgage Amount: $162,400

Florida Supreme Court decision pending. The appeal court certified the question to the Florida Supreme Court because “many, many mortgage foreclosures appear tainted with suspect documents.”

“As conveyed by the Fourth District in the decision below, the plaintiffs and now respondents in this Court, the Bank of New York Mellon, et al. (BNY Mellon), commenced an action in the trial court to foreclose a mortgage against the defendant and now petitioner in this Court, Roman Pino. See Pino v. Bank of New York Mellon, 57 So.3d 950, 951 (Fla. 4th DCA 2011). Thereafter, Pino moved for sanctions, alleging that BNY Mellon had filed a fraudulent assignment of mortgage. Id. In response, BNY Mellon filed a notice of voluntary dismissal of the foreclosure action. Id. at 952. Five months later, BNY Mellon refiled an identical action to foreclose the same mortgage. Id. In the original, dismissed action, Pino filed a motion seeking to vacate the voluntary dismissal pursuant to Florida Rule of Civil Procedure 1.540(b)on the grounds of fraud on the court and requesting dismissal of BNY Mellon’s newly filed action as a consequent sanction. Pino, 57 So.3d at 952. The trial court denied Pino’s motion, essentially holding that because the prior action had been voluntarily dismissed, the court lacked jurisdiction, and thus the authority, to consider any relief. Id.” (footnotes omitted)

Richards v. HSBC Bank,

__So.3d__, 2012 WL 2359656 (Fla. 5th DCA 2012)

Trust: PHH 2007-2

Summary judgment for bank reversed on appeal.

“While the assignment reflected that the mortgage had been assigned from Century 21 to HSBC, the allonge to the note reflected that Bishops Gate Residential Mortgage Trust was to be the note’s payee…

Thus the allonge was inconsistent with the assignment and contradicted the allegation in the complaint that HSBC was the holder of the note…

Furthermore, the affidavits filed by HSBC did not explain the relationship between HSBC and Bishops Gate Residential Mortgage Trust, nor otherwise aver facts conclusively showing that HSBC was the holder of the note.

 

Rigby v. Wells Fargo, N.A.,

__So.3d__, 2012 WL1108428 (Fla. 4th DCA 2012)

Trust: Option One Mortgage Loan Trust 2007-FXD2

Mortgage Amount: $165,600

“The Bank has not shown that it was holder of the note at the time the complaint was filed. The note containing a special endorsement in favor of the bank was not dated. The assignment of mortgage, dated May 22, 2008, indicates that Bank did not acquire the mortgage until the day after the complaint was filed. Finally, neither the affidavit, nor the technical admissions made by the Rigbys, establishes the date on which Bank acquired possession of the note and there is no evidence in the record establishing that an equitable transfer of the mortgage occurred prior to the date the complaint was filed.”

(Summary judgment reversed and remanded.)

 

Servedio v. U.S. Bank, N.A.,

46 So. 3d 1105 (Fla. 4th DCA 2010)

Trust: Terwin Mortgage Trust 2007-AHL1

Mortgage Amount: $252,000

“The issue presented in this appeal is whether the trial court erred in granting a final summary judgment of foreclosure where appellee failed to file with the court a copy of the original note and mortgage prior to the entry of judgment.  Because the absence of the original note created a genuine issue of material fact regarding appellee’s standing to foreclose on the mortgage, summary judgment was not proper. We reverse.”

U.S. Bank v. Alexander,

2012 OK 43

Trust: Credit Suisse First Boston HEAT 2005-4

Mortgage Amount: $63,920

“As previously identified, the dispositive issue is whether or not Appellee had standing at the time Appellee filed their first amended petition. We hold that the issue of standing as well as other material issues of fact remain that must be determined by the trial court. Therefore summary judgment was inappropriate.”

U.S. Bank, N.A. v. Auguste,

Index: 18695-2007 (November 27, 2007)

(N.Y. Sup. Ct. Kings Co. 2007)

Trust: CSMC Mort. Backed PT Certs., Series 2007-1

“In support of plaintiffs application, it submits a purported assignment of the mortgage from Mortgage Electronic Registration Systems, Inc., acting as Nominee for First United, to plaintiff. The purported assignment is dated July 9, 2007, and states in pertinent part “this assignment is effective on or before November 22, 2006.” However, such an attempt to retroactively assign the mortgage is insufficient to establish plaintiff’s ownership interest at the time the action was commenced.”

U.S. Bank, N.A. v. Baber,

280 P.2d 956 (2012 OK 55)

Trust: Security National Mortgage Loan Trust 2006-1

“Being a person entitled to enforce the note is an essential requirement to initiate a foreclosure lawsuit. In the present case, there is a question of fact as to when Appellee became a holder, and thus, a person entitled to enforce the note. Therefore, summary judgment is not appropriate. If Deutsche Bank became a person entitled to enforce the note as either a holder or nonholder in possession who has the rights of a holder after the foreclosure action was filed, then the case may be dismissed without prejudice and the action may be re-filed in the name of the proper party. We reverse the granting of summary judgment by the trial court and remand back for further determinations as to when Appellee acquired its interest in the note.”

U.S. Bank, N.A. v. Collymore,

68 AD3d 752 (2009), 890 NYS2d 578

“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. The Bank’s evidentiary submissions were insufficient to establish that MERS effectively assigned the subject note to it prior to the commencement of this action…, and the mere assignment of the mortgage without an effective assignment of the underlying note is a nullity…Furthermore, the Bank failed to establish that the note was physically delivered to it prior to the commencement of the action. The affidavit of a vice-president of the Bank submitted in support of summary judgment did not indicate when the note was physically delivered to the Bank, and the version of the note attached to the vice-president’s affidavit contained an undated indorsement in blank by the original lender. Furthermore, the Bank’s reply submissions included a different version of the note and an affidavit from a director of the Residential Funding Corporation which contradicted the affidavit of the Bank’s vice-president in tracing the history of transfers of the mortgage and note to the Bank. In view of the Bank’s incomplete and conflicting evidentiary submissions, an issue of fact remains as to whether it had standing to commence this action.” (cites omitted)

U.S. Bank v. Dellarmo,

94 A.D.3d 746 (2012), 942 N.Y.S.2d 122

Trust: First Franklin Mortgage Loan Trust, 2006-FF2

“However, inasmuch as the complaint does not allege that the note was physically delivered to the plaintiff, and nothing in the plaintiff’s submission in opposition to Dellarmo’s motion could support a finding that such physical delivery occurred, the corrective assignment cannot be given retroactive effect… Moreover, both the unrecorded April 11, 2006, assignment and the recorded corrective assignment indicate only that the mortgage was assigned to the plaintiff. Since an assignment of a mortgage without the underlying debt is a nullity… the plaintiff has failed to demonstrate that it had standing to commence this action…

Accordingly, the Supreme Court should have granted Dellarmo’s motion pursuant to CPLR 3211 (a) to dismiss the complaint insofar as asserted against him for lack of standing.” (cites omitted)

U.S. Bank, N.A. v. Duvall,

Cuyahoga App. No. 94714, 2010-Ohio-6478

Trust: CMLTI 2007-WFHE2

Mortgage Amount: $92,000

“Accordingly, we conclude that plaintiff had no standing to file a foreclosure action against defendants on October 15, 2007, because, at that time, Wells Fargo owned the mortgage. Plaintiff failed in its burden of demonstrating that it was the real party in interest at the time the complaint was filed. Plaintiff’s sole assignment of error is overruled.”

U.S. Bank, N.A. v. Githira,

17 LCR 697 (2009),  MISC 08-386385 (Essex Co. Mass. 2009)

Trust: Home Equity Asset Trust, Series 2005-9

Plaintiff U.S. Bank was seeking to remove a cloud on its title to a parcel of land stemming from plaintiff’s exercise of the power of sale contained in the mortgage before it received authority to do so under the provisions of the Servicemembers’ Civil Relief Act.  The complaint did not mention any other title defects.

Citing Justice Long’s ruling in Ibanez, Justice Charles W. Trombly, Jr., dismissed plaintiff’s petition to remove the cloud on the title, holding that plaintiff was not even the holder of the mortgage, by record or in fact, on the day of the foreclosure sale.  Specifically, the Court found that the foreclosure auction took place and was recorded prior to the execution and recording of an assignment of mortgage that made plaintiff the holder of the mortgage upon which it had foreclosed.

U.S. Bank, N.A. v. Grant,

Index: 11133-2007

(N.Y. Sup. Ct. Kings Co. 2007)

Trust: Asset Backed Securities Corp. Home Equity Loan

Trust, Series OOMC 2006-HE3

“In support of plaintiffs application, it submits a purported assignment of the mortgage from Option One to plaintiff. The purported assignment is dated July 9, 2007, and states in pertinent part “Effective Date: March 28, 2007.” However, such an attempt to retroactively assign the mortgage is insufficient to establish plaintiff’s ownership interest at the time the action was commenced.”

U.S. Bank, N.A. v. Ibanez,

941 N.E. 2d 40, (Mass. 2011)

Trust: Structured Asset Securities Corp. Mortgage PT

Certs., Series 2006-Z

The court in Ibanez rejected application of the “mortgage follows the note” rule, holding that mere possession of properly indorsed negotiable instruments did not give the foreclosing parties authority to conduct a valid non-judicial sale. In other words, one’s status as a party entitled to enforce a note did not satisfy the requirement under state law to be a mortgagee. The court acknowledged that a transferee of a note might have an equitable right to obtain a court order that that the mortgage be transferred to it. However, the potential to assert such a claim did not make the noteholder a “mortgagee.”  The Massachusetts statute required that the foreclosing party have an actual assignment of the mortgage when proceeding to sale., and further held that Assignments in Blank assign nothing and that retroactive assignments are not effective even if it was an industry-wide practice.

U.S. Bank, N.A. v. Madero,

80 AD3d 751, 915 N.Y.S. 2d 612

Trust: not identified

Mortgage Amount: $570,000

“Here, the plaintiff failed to demonstrate its prima facie entitlement to judgment as a matter of law because it did not establish that it had standing, as the lawful holder or assignee of the subject note on the date it commenced this action, to commence the action.” (cites omitted)

U.S. Bank, N.A. v. Merino,

16 Misc.3d 209

(N.Y. Sup. Ct. Suffolk Co. 2007)

“First, the assignment from Argent to Ameriquest was executed by Jose Burgos as agent for Argent. On the same date, however, the purported assignment from Ameriquest to the plaintiff was also executed by Mr. Burgos, this time as agent for Ameriquest. In effect, the mortgage was purportedly assigned by Mr. Burgos to Mr. Burgos, and then, in turn, by Mr. Burgos to the plaintiff…The moving papers contain no proof that Mr. Burgos had either entity’s authority to act in a dual agency capacity. Therefore, the court is unable to conclude that the assignments were validly executed, or that the plaintiff had an ownership interest in the subject mortgage at the time of the filing of this action. Since a party has no foundation in law or fact to foreclose upon a mortgage without establishing its legal or equitable interest, the plaintiff’s motion must be denied.”

U.S. Bank, N.A. v. Middlekauff,

Case No. 10 19844, Hillsborough Co. Fla. 2012

Trust: CSFB Mortgage-Backed Trust, Series 2005-9

“First, Plaintiff lacked standing at the inception of this case. Although the Note attached to the Amended Complaint contains an allonge, the undisputed summary judgment evidence before the Court establishes that this allonge was created post-filing. As Plaintiff lacked standing when it filed this lawsuit, dismissal is required.” (cite omitted)

U.S. Bank v. Moore,

2012 OK 32

GSAA Home Equity Trust 2006-6

Mortgage Amount: $282,000

“It is a fundamental precept of the law to expect a foreclosing party to actually be in possession of its claimed interest in the Note, and to have the proper supporting documentation in hand when filing suit, showing the history of the Note, so that the defendant is duly apprised of the rights of the plaintiff. This is accomplished by showing the party is a holder of the instrument or a nonholder in possession of the instrument who has the rights of a holder, or a person not in possession of the instrument who is entitled to enforce the instrument…”

U.S. Bank, N.A. v. Roundtree,

Index: 009148/2007

(N.Y. Sup. Ct. Suffolk Co. 2007)

Trust: MASTR Alternative Loan Trust 2006-HE1

“Since MERS, Inc. had no ownership interest in said note, it could not assign it to the plaintiff and any assignment purportedly transferring the ownership interest from Fremont Investment and Loan to the plaintiff by a MERS, Inc. assignment of said note is a nullity.” (cites omitted)

… In view of the foregoing, the instant motion (#001) is denied as it is apparent from the documentary submissions of the plaintiff that it was not the owner of the note at the time of the commencement of this action.”

U.S. Bank, N.A. v. Villaruel,

Index: 25277/2008

(N.Y. Sup. Ct. Kings Co. 2008)

Trust: SG Mort. Sec. AB Certs., Series 2006-FRE2

“The purported assignment is dated August 3, 2007 and states in pertinent part “[t]his assignment is effective as of the 10th day of June, 2007.” However, such an attempt to retroactively assign the mortgage is insufficient to establish plaintiff’s ownership interest at the time the action was commenced. Plaintiff’s attempt to foreclose upon a mortgage in which it had no “legal or equitable interest was without foundation in law or fact…” (cites omitted)

Verizzo v. Bank of New York,

28 So.3d 976 (Fla. 2d DCA 2010)

Trust: Novastar Mortgage Funding Trust, Series 2006-3

“In addition to the procedural error of the late service and filing of the summary judgment evidence, those documents reflect that at least one genuine issue of material fact exists. The promissory note shows that Novastar endorsed the note to “JPMorgan Chase Bank, as Trustee.” Nothing in the record reflects assignment or endorsement of the note by JPMorgan Chase Bank to the Bank of New York or MERS. Thus, there is a genuine issue of material fact as to whether the Bank of New York owns and holds the note and has standing to foreclose the mortgage.”

(Summary judgment reversed and remanded.)

Wells Fargo Bank, N.A. v. Ford,

418 N.J. Super. 592 (App. Div. 2011)

Mortgage Amount: $403,750

“For these reasons, the summary judgment granted to Wells Fargo must be reversed and the case remanded to the trial court because Wells Fargo did not establish its standing to pursue this foreclosure action by competent evidence. On the remand, defendant may conduct appropriate discovery, including taking the deposition of Baxley and the person who purported to assign the mortgage and note to Wells Fargo on behalf of Argent.”

 

Wells Fargo Bank, N.A. v. Hampton,

Index: 25957/2007 (January 3, 2008)

(N.Y. Sup. Ct. Kings Co. 2008)

Trust: Option One Mort. Loan Trust 2007-1

“The purported assignment is dated August 1, 2007 and states in pertinent part “[e]ffective as of June 10, 2007.” However, such an attempt to retroactively assign the mortgage is insufficient to establish plaintiff’s ownership interest at the time the action was commenced. Plaintiff’s attempt to foreclose upon a mortgage in which it had no “legal or equitable interest was without foundation in law or fact…” (cites omitted)

Wells Fargo Bank, N.A. v.  Heath,

212 OK 54

Trust: Option One Mortgage Loan Trust 2005-4

Standing was not established by the materials attached to Appellee’s petition or motion for summary judgment because there was no attached indorsed note nor was there an assignment of the note. Therefore, we find the trial court based its decision on an erroneous conclusion of law. There existed a substantial issue of material fact that needed to be addressed at trial. Even though the Appellants did not respond to the motion for summary judgment, the trial court should have denied the motion sua sponte.

 

Wells Fargo Bank v. Larace,

941 N.E. 2d 40, (Mass. 2011)

Trust: ABFC 2005-OPT1

See U.S. Bank v. Ibanez above.  These were consolidated cases.

Wells Fargo Bank v. Lupori,

8 A3d 919 (Pa. Super. Ct. 2010)

Trust: MLMI Trust, Series 2005-FF6

“On appeal, Wells Fargo cites Mallory for the proposition that a plaintiff’s complaint in foreclosure need not allege the existence of a completed and recorded assignment of the subject mortgage to the plaintiff. We conclude, however, that this Court’s opinion in Mallory is distinguishable from the instant matter. In Mallory, the bank alleged that it was the owner of the subject mortgage and also alleged the existence of a pending assignment of the mortgage to the bank. In contrast, Wells Fargo has failed to do either of those things. Since the complaint contains no mention of the alleged assignment from Corporation to Wells Fargo or any allegation that Wells Fargo was the owner of the Luporis’ mortgage,the complaint does not comply with Rule 1147(a)(1). The alleged April 1, 2005 assignment from Corporation to Wells Fargo was dehors the record as of the time of the default judgment. Since the record did not support entry of the default judgment, the trial court erred in declining to strike the judgment from the record.” (footnote omitted)

Wells Fargo Bank, N.A. v. Marchione,

69 AD 3d 204, 887 N.Y.S. 2d 615 (2d Dept 2009)

Trust: Option One Mortgage Loan Trust

“Here, it is clear that the date of the execution of the assignment was after the commencement of the action. If an assignment is in writing, “the execution date is generally controlling and a written assignment claiming an earlier effective date is deficient unless it is accompanied by proof that the physical delivery of the note and mortgage was, in fact, previously effectuated” (LaSalle Bank Natl. Assn., 59 AD3d at 912). While recognizing that in some circumstances parties to an agreement may bind themselves retroactively, “the fiction of retroactivity . . . should not be applied to affect adversely the rights of third persons” (Debreceni v Outlet Co., 784 F2d 13, 20; see also 2 Lord, Williston on Contracts § 6:61, at 893 [4th ed]). Thus, a retroactive assignment cannot be used to confer standing upon the assignee in a foreclosure action commenced prior to the execution of the assignment (see LaSalle Bank Natl. Assn., 59 AD3d 912). We disagree with the contention of Wells Fargo that public policy favors permitting less than strict compliance with the requirement that, in order to commence a foreclosure action, a plaintiff must have a legal or equitable interest in the subject mortgage.

Wells Fargo also argues that if the action were to be dismissed, the result would be a waste of judicial resources, as it would simply commence another action as soon as the original action was dismissed. Wells Fargo might have reached this conclusion earlier in its calculus to commence the lawsuit prior to the execution of the assignment.”

Wells Fargo Bank, N.A. v. Mastropaolo,

42 AD3d 239

Trust Amount: $369,000

“Here, the plaintiff failed to demonstrate its prima facie entitlement to judgment as a matter of law because it did not establish that it had standing, as the lawful holder or assignee of the subject note on the date it commenced this action, to commence the action…” (cites omitted)

Wells Fargo Bank, N.A. v. McNee

2011 NY Slip Op 33325(U)

Trust: BCAP LLC 2007-AA3

Mortgage Amount: $644,566

Plaintiff’s arguments notwithstanding, this Court is not persuaded by Wells Fargo’s laborious interpretation of the myriad of transfer documents or the breadth of the language employed therein to confer standing upon it. “[L]anguage cannot overcome the requirement that the foreclosing party be both the holder or assignee of the subject mortgage, and the holder or assignee of the underlying note at the time a foreclosure action is commenced…”  In this case, Wells Fargo has adduced no proof in opposition to McNee’s cross motion(s) sufficient to demonstrate that it was either.

Zervas v. Wells Fargo Bank, N.A.,

__So.3d__ (Fla. 2d DCA 2012)

Trust: MLMI Trust Series 2005-FM1

Summary judgment for bank reversed.

“We also note that the mortgage and note attached to the complaint show the lender to be Fremont Investment and Loan. On April 1, 2010, approximately six months after the complaint was filed, Wells Fargo filed a lost note affidavit, which alleged that the note was lost by its attorney sometime after the attorney received it on November 2, 2009. In their motion to dismiss, the Zervases alleged, among other grounds, that Wells Fargo did not have standing to bring the foreclosure complaint because it did not have a written assignment of the loan. Then on July 26, 2010, seven days before the hearing on the motion for summary judgment, Wells Fargo filed the note as a supplemental exhibit to its complaint. The note contains an endorsement in blank, but there is no evidence in the record establishing that the endorsement in blank was made to Wells Fargo prior to the filing of the foreclosure complaint. See Feltus v. U.S. Bank Nat’l Ass’n, 80 So.3d 375, 377 n.2 (Fla. 2d DCA 2012) (holding that bank was required “to prove the endorsement in blank was effectuated before the lawsuit was filed”).”

Fight Your Foreclosure TODAY and Save Your Home! Or Do Nothing and Lose Your Home!

The old adage is, “He who represents himself has a fool for a client.”   The reality has become, “He who is represented is usually taken for a fool.” Your interest is at stake and you are your best advocate!

For more information on how you can effectively use already prepared “Trial Ready Pleadings”; backed up by hundreds of well researched and well documented Case Law Arguments involving Securitization and Mortgage Backed Securities in “Pro Se Litigation” where the courts have ruled favorably for Pro Se Plaintiffs resulting to a successful fight and ultimately saving their home, visit http://www.fightforeclosure.net

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Issues Involving Mortgage-Backed Securities

19 Sunday May 2013

Posted by BNG in Foreclosure Defense, Legal Research, Litigation Strategies, Mortgage Laws, Pleadings, Securitization, Trial Strategies

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Adam Levitin, Alabama, Bank of America, Foreclosure, Horace, PSA, Securitization, Uniform Commercial Code

This topic examines how you can effectively use Securitization Issues to your advantage when challenging your wrongful foreclosure.

CASE STUDY 1:

Two years ago, an Alabama judge issued a short, conclusory order that stopped foreclosure on the home of a beleaguered family, and also prevents the same bank in the case from trying to foreclose against that couple, ever again. This may not seem like big news — but upon review of the underlying documents, the extraordinarily important nature of the decision and the case becomes obvious.

No Securitization, No Foreclosure

The couple involved, the Horaces, took out a predatory mortgage with Encore Credit Corp in November, 2005. Apparently Encore sold their loan to EMC Mortgage Corp, who then tried to securitize it in a Bear Stearns deal. If the securitization had been done properly, in February 2006 the trust created to hold the loans would have acquired the Horace loan. Once the Horaces defaulted, as they did in 2007, the trustee would have been able to foreclose on the Horaces.

And that’s why this case is so big: the judge found the securitization of the Horace loan wasn’t done properly, so the trustee — LaSalle National Bank Association, now part of Bank of America (BAC) — couldn’t foreclose. In making that decision, the judge is the first to really address the issue, head-on: If a screwed-up securitization process meant a loan never got securitized, can a bank foreclose under the state versions of the Uniform Commercial Code anyway? This judge says no, finding that since the securitization was busted, the trust didn’t have the right to foreclose, period.

Since the judge’s order doesn’t explain, how should people understand his decision? Luckily, the underlying documents make the judge’s decision obvious.

No Endorsements

The key contract creating the securitization is called a “Pooling and Servicing Agreement” (pooling as in creating a pool of mortgages, and servicing as in servicing those mortgages.) The PSA for the deal involving the Horace mortgage is here and has very specific requirements about how the trust can acquire loans. One of the easiest requirements to check is the way the loan’s promissory note is supposed to be endorsed — just look at the note.

According to Section 2.01 of the PSA, the note should have been endorsed from Encore to EMC to a Bear Stearns entity. At that point, Bear could either endorse the note specifically to the trustee, or endorse it “in blank.” But the note produced was simply endorsed in blank by Encore. As a result, the trust never got the Horace loan, explained securitization expert Tom Adams in his affidavit.

But wait, argued the bank, it doesn’t matter if if the trust owns the loan — it just has to be a “holder” under the Alabama version of the UCC (Uniform Commercial Code), and the trust is a holder. The problem with that argument is securitization trusts aren’t allowed to simply take property willy-nilly. In fact, to preserve their special tax status, they are forbidden from taking property after their cut-off dates, which in this case was February 28, 2006. As a result, if the trust doesn’t own the loan according to the PSA it can’t receive the proceeds of the foreclosure or the title to the home, even if it’s allowed to foreclose as a holder.

Holder Status Can’t Solve Standing Problem

Allowing a trust to foreclose based on holder status when it doesn’t own the loan would seem to create yet another type of clouded title issue. I mean, it’s absurd to say the trust foreclosed and took title as a matter of the UCC, but to also have it be true that the trust can’t take title as a matter of its own formational documents. And what would happen to the proceeds of the foreclosure sale? That’s why people making this type of argument keep pointing out that the UCC allows people to contract around it and PSAs are properly viewed as such a contracting around agreement.

I’m sure the bank’s side will claim the judge was wrong, that he disagreed with another recent Alabama case that’s been heavily covered, US Bank vs. Congress. And there is a superficial if flat disagreement: In this case, the judge said the Horaces were beneficiaries of the PSA and so could raise the issue of the loan’s ownership; in Congress the judge said the homeowners weren’t party to the PSA and so couldn’t raise the issue.

But as Adam Levitin explained, the Congress decision was procedurally weird, and as a result the PSA argument wasn’t about standing, as it was in Horace and generally would be in foreclosure cases (as opposed to eviction cases, like Congress). And what did happen to the Congress proceeds? How solid is that securitization trust’s tax status now anyway?

In short, in the only case I can find that has ruled squarely on the issue, a busted securitization prevents foreclosure by the trust that thinks it owns the loan. Yes, it’s just one case, and an Alabama trial level one at that. But it’s still significant.

Homeowners Right to Raise Securitization Issue

As far as right-to-raise-the-ownership issue, I think the Horace judge was just being “belt and suspenders” in finding the homeowners were beneficiaries of the PSA. Why do homeowners have to be beneficiaries of the PSA to raise the issue of the trust’s ownership of their loans? The homeowners aren’t trying to enforce the agreement, they’re simply trying to show the foreclosing trust doesn’t have standing. Standing is a threshold issue to any litigation and the homeowners axiomatically have the right to raise it.

As Nick Wooten, the Horaces’ attorney, said:

“This is just one example of hundreds I have seen where servicers were trying to force through a foreclosure in the name of a trust that clearly had no interest in the underlying loan according to the terms of the pooling and servicing agreement. This conduct is a fraud on the borrower, a fraud on the investors and a fraud on the court. Thankfully Judge Johnson recognized the utter failure of the securitization transaction and would not overlook the fact that the trust had no interest in this loan.”

All that remains for the Horaces, a couple with a special needs child and whose default was triggered not only by the predatory nature of the loan, but also by Mrs. Horace’s temporary illness and Mr. Horace’s loss of overtime, is to ask a jury to compensate them for the mental anguish caused by the wrongful foreclosure.

Perhaps BofA will just want to cut a check now, rather than wait for that verdict. (As of publication BofA had not returned a request for comment.)

No one is suggesting the Horaces get a free house; they still owe their debt, and whomever they owe it to has the right to foreclose on it. Wooten explained to me that the depositor –in this case, the Bear Stearns entity –i s probably that party. Moreover if the Horaces wanted to sell and move, they’d have to quiet title and would be wise to escrow the mortgage pay off amount, if that amount can be figured out. But for now the Horaces get some real peace, even if a larger mess remains.

Much Bigger Than A Single Foreclosure

The Horaces aren’t the only ones affected by the issues in this case.

Homeowners everywhere that are being foreclosed on by securitization trusts — many, many people — can start making these arguments. And if their loan’s PSA is like the Horaces, they should win. At least, Wooten hopes so:

“Judge Johnson stopped a fraud in progress. I am hopeful that other courts will consider more seriously the very serious issues that are easily obscured in the flood of foreclosures that are overwhelming our Courts and reject the systemic and ongoing fraud that is being perpetrated by the mortgage servicers. Until Courts actively push back against the massive documentary fraud being shoveled at them by mortgage servicers this fraudulent conduct will not end.”

The issues stretch past homeowners to investors, too.

Investors in this particular mortgage-backed security, take note: What are the odds that the Horace note is the only one that wasn’t properly endorsed? I’d say nil, and not just because evidence in other cases, such as Kemp from New Jersey, suggests the practice was common. This securitization deal was done by Bear Stearns, which other litigation reveals was far from careful with its securitizations. So the original investors in this deal should speed dial their lawyers.

And investors in bubble-vintage mortgage backed securities, the ones that went from AAA gold to junk overnight, might want to call their attorneys too; this deal was in 2006, and in the securitization frenzy that followed processes can only have gotten worse.

Some investors are already suing, but the cases are at very early stages. Nonetheless, as cases like the Horaces’ come to light, the odds seem to tilt in investors’ favor — meaning they seem increasingly likely to ultimately succeed in forcing banks to buy back securities or pay damages for securities fraud connected with their sale. And that makes the Bank Bailout II scenario detailed by the Congressional Oversight Panel more possible.

The final, very striking feature of this case is what didn’t happen: No piece of paper covered in the proper endorsements –an allonge — magically appeared at the eleventh hour. The magical appearance of endorsements, whether on notes or on allonges, has been a hallmark of foreclosures done in the robosigning era. And investors, as you pursue your suits based on busted securitizations, that’s something to watch out for.

My, but the banks made a mess when they forced the fee-machine of mortgage securitizations into overdrive. The consequences are still unfolding, but one consequence just might be a whole lot of properties that securitization trusts can’t foreclose on.

CASE STUDY 2:

In the fall of 2012, a Michigan state court issued an important decision that may affect thousands of foreclosures, HSBC Bank, USA v. Young, No 11-693 (Cir. Ct. Mich. Oct. 16, 2012). HSBC filed an action for possession of Mary Young’s home after a mortgage foreclosure by advertisement. The district court granted HSBC’s motion for summary disposition and defendant Young was granted leave to appeal. The Court reversed the trial court’s summary disposition order and remanded for further proceedings. HSBC filed a motion for reconsideration.

     Young refinanced her home with Wells Fargo Home Mortgage on April 22, 2004. Young defaulted and received notices of default from Wells Fargo in February, April and August of 2008.  In January 0f 2009, Wells Fargo and Young entered into a Loan Modification Agreement.  The Agreement was on Wells Fargo letterhead and signed by an officer of Wells Fargo which was described as the lender.

     Young did not keep up with her payments.  On March 11, 2010, HSBC commenced foreclosure by advertisement and bought the house at sheriff’s sale.  On November 8, 2010, HSBC filed a complaint for possession in the district court.

     Young argued that HSBC lacked standing because neither the mortgage nor the note had been validly and effectively transferred to HSBC.

     Young claimed that a purported mortgage assignment to HSBC as Trustee for Wells Fargo Home Equity Loan Trust 2004-2, dated October 8, 2008, was void because it did not agree with the terms of the Pooling and Servicing Agreement (“PSA”) that governed the trust and because HSBC also did not have an ownership interest in the note.

     Young argued that HSBC did not own the note because HSBC produced a copy of the note in discovery on February 14, 2011, that showed the note was payable to Wells Fargo as lender and there were no endorsements or allonges.  About one month later, HSBC produced another copy of the same note, this one with a stamped and typed endorsement to Wells Fargo, with no date indicating when the endorsement occurred.

     HSBC argued that Young lacked standing to challenge the assignment because Young was not a party to the PSA or a third-party beneficiary, arguing that Michigan law was well-settled. But Circuit Court Judge Melinda Morris found that argument to be erroneous, and the issue undecided by the Michigan Court of Appeals or Supreme Court.  Noting conflicting authority in other jurisdictions, Judge Morris relied on the decision in Butler v. Deutsche Bank Trust Co. Americas, ___F Supp 2d___, ___; 2012 WL 3518560, *6-7 (D Mass 2012):

Courts in this district are in agreement that a mortgagor lacks standing to challenge the assignment of his mortgage directly if he is neither a party to nor a third-party beneficiary of the assignment contract…

     However, “the question of whether [a mortgagor has] standing to challenge [an] assignment is different form the question of whether [he has] standing to challenge the foreclosure on the basis that [the foreclosing entity] did not properly hold the mortgage at the time of the foreclosure.” …A number of decisions have held that mortgagors have standing to challenge a foreclosure sale as void due to an allegedly invalid assignment…

                                       *       *       *

     Mortgagors challenging foreclosure sales that are void due to invalid assignments have standing to do so because they have demonstrated “a concrete and particularized injury in fact, a causal connection that permits tracing the claimed injury to the defendant’s actions, and likelihood that prevailing in the action will afford some redress for the injury.” …

     I do not, however, hold that a mortgagor has standing to challenge a foreclosure on the basis of just any potentially invalidating deficiency in an assignment.  Massachusetts case law distinguishes between void and voidable assignments…If an assignment is voidable, but has not been avoided, then the assignee has legal title to convey to the purchaser at a foreclosure sale. If an assignment is void, then the assignee was assigned nothing and has nothing to convey to the purchaser at the foreclosure sale.  Where a “grantor has nothing to convey…[t]he purported conveyance is a nullity, notwithstanding the parties’ intent.”…

     Here, however, Butler fails to allege facts or present legal argument sufficient to establish that the assignments to Deutsche Bank were void due to their failure to comply with the Pooling and Servicing Agreement…

     This distinction is very important because in most foreclosure cases, the homeowner is not trying to enforce the PSA, but to present evidence that an assignment was invalid.  The vast majority of foreclosures involve cases with unendorsed notes or with endorsements that are not dated.  Like the Young case, the vast majority of foreclosures by trusts also involve mortgage assignments created years after the trust closing date and an assignment of a non-performing loan.  Assignments after the closing date and assignments of non-performing loans, and particularly the combination – assignment of a non-performing loan after the closing date – are almost always violations of trust PSAs.

     The simple truth is that trusts were established (and sold) with rules to protect investors from such foolhardy action on the part of a trustee such as suddenly acquiring non-performing loans years after the trust closing date.  When trust rules are violated, there can be serious negative tax consequences for the trust: the IRS could decide that the trust does not qualify for favorable REMIC status.

In the vast majority of cases, there is no real underlying financial transaction as reported in the mortgage assignment.  If the records of the loans entering and leaving the loan pool of the trust are examined, they simply do not match up with the assignments.  These later dated assignments were almost always made by document mills, mortgage servicers and foreclosure law firm employees solely to provide some proof to the courts that the trustee has standing to foreclose.  In other words, these later dated assignments are almost always fraudulent.

It is also important to note that these assignments are not just robo-signed, that is, signed by someone with no knowledge of the underlying facts, or signed by someone who is signing his or her (or someone else’s name) several thousand times a day.  These assignments falsely state the date on which the trust acquired the mortgage.

Because most note endorsements are non-existent or non-dated, the only date in most cases involving mortgages claimed by mortgage-backed trusts is the false date on these assignments.

For More Info on How To Challenge Your Wrongful Foreclosure Using Mortgage Securitization Arguments Visit http://www.fightforeclosure.net

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How to Effectively and Strategically Challenge and Win Your Wrongful Foreclosure Against Your Bank or Lender

18 Saturday May 2013

Posted by BNG in Affirmative Defenses, Foreclosure Defense, Judicial States, Loan Modification, Non-Judicial States, Your Legal Rights

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California, Foreclosure, Mortgage loan, Real Estate Settlement Procedures Act, RESPA, TILA, Trustee, United States

The key factors in making sound decision as to how to fight your foreclosure are based on whether your State has a Judicial or non-judicial foreclosure process.

It is vital to determine your strengths and weaknesses in order to know whether to use OFFENSIVE or DEFENSIVE tactics and strategies.

First of all you have non-judicial and judicial foreclosure states. Non-judicial basically means that instead of signing a conventional mortgage and note, you signed a document that says you give up your right to a judicial proceeding. So the pretender lender or lender simply instructs the Trustee to sell the property, giving you some notice. Of course the question of who is the lender, what is a beneficiary under a deed of trust, what is a creditor and who owns the loan NOW (if anyone) are all issues that come into play in litigation.

In a non-judicial state you generally are required to bring the matter to court by filing a lawsuit. In states like California, the fore-closers usually do an end run around you by filing an unlawful detainer as soon as they can in a court of lower jurisdiction which by law cannot hear your claims regarding the illegality of the mortgage or foreclosure.

In a judicial state the foreclosure must be the one who files suit and you have considerably more power to resist the attempt to foreclose.

These are the stage process:

Stage 1: No notice of default has been sent.

In this case you want to get a forensic analysis that is as complete as humanly possible TILA, RESPA, securitization, title, chain of custody, predatory loan practices, fraud, fabricated documents, forged documents etc. I call this the FOUR WALL ANALYSIS, meaning they have no way to get out of the mess they created. Then you want a QWR (Qualified Written Request) and DVL (Debt Validation Letter along with complaints to various Federal and State agencies. If they fail to respond or fail to answer your questions you file a suit against the party who received the QWR, the party who originated the loan (even if they are out of business), and John Does 1-1000 being the owners of mortgage backed bonds that are evidence of the investors ownership in the pool of mortgages, of which yours is one. The suit is simple, it seeks to stop the servicer from receiving any payments, install a receiver over the servicer’s accounts, order them to answer the simple question as to Who is my creditor and how do I get a full accounting FROM THE CREDITOR? Alternative counts would be quiet title and damages under TILA, RESPA, SEC, etc.

Tactically you want to present the forensic declaration and simply say that you have retained an expert witness who states in his declaration that the creditor does not include any of the parties disclosed to you thus far. This [prevents you from satisfying the Federal mandate to attempt modification or settlement of the loan. You’ve asked (QWR and DVL) and they won’t tell. DON’T GET INTO INTRICATE ARGUMENTS CONCERNING SECURITIZATION UNTIL IT IS NECESSARY TO DO SO WHICH SHOULD BE AFTER A FEW HEARINGS ON MOTIONS TO COMPEL THEM TO ANSWER.

IN OTHER WORDS YOU ARE SIMPLY TELLING THE JUDGE THAT YOUR EXPERT HAS PRESENTED FACTS AND OPINION THAT CONTRADICT AND VARY FROM THE REPRESENTATIONS OF COUNSEL AND THE PARTIES WHO HAVE BEEN DISCLOSED TO YOU THUS FAR.

YOU WANT TO KNOW WHO THE OTHER PARTIES ARE, IF ANY, AND WHAT MONEY EXCHANGED HANDS WITH RESPECT TO YOUR LOAN. YOU WANT EVIDENCE, NOT REPRESENTATIONS OF COUNSEL. YOU WANT DISCOVERY OR AN ORDER TO ANSWER THE QWR OR DVL. YOU WANT AN EVIDENTIARY HEARING IF IT IS NECESSARY.

Avoid legal argument and go straight for discovery saying that you want to be able to approach the creditor, whoever it is, and in order to do that you have a Federal Statutory right (RESPA) to the name of a person, a telephone number and an address of the creditor i.e., the one who is now minus money as a result of the funding of the loan. You’ve asked, they won’t answer.

Contemporaneously you want to get a temporary restraining order preventing them from taking any further action with respect to transferring, executing documents, transferring money, or collecting money until they have satisfied your demand for information and you have certified compliance with the court. Depending upon your circumstances you can offer to tender the monthly payment into the court registry or simply leave that out.

You can also file a bankruptcy petition especially if you are delinquent in payments or are about to become delinquent.

STAGE 2: Notice of Default Received

Believe it or not this is where the errors begin by the pretender lenders. You want to challenge authority, authenticity, the amount claimed due, the signatory, the notary, the loan number and anything else that is appropriate. Then go back to stage 1 and follow that track. In order to effectively do this you need to have that forensic analysis and I don’t mean the TILA Audit that is offered by so many companies using off the shelf software. You could probably buy the software yourself for less money than you pay those companies. I emphasize again that you need a FOUR WALL ANALYSIS.

Stage 3 Non-Judicial State, Notice of Sale received:

State statutes usually give you a tiny window of opportunity to contest the sale and the statute usually contains exact provisions on how you can do that or else your objection doesn’t count. At this point you need to secure the services of competent, knowledgeable, experienced legal counsel professionals who have been fighting with these pretender lenders for a while. Anything less and you are likely to be sorely disappointed unless you landed, by luck of the draw, one of the increasing number of judges you are demonstrating their understanding and anger at this fraud.

Stage 4: Judicial State: Served with Process:

You must answer usually within 20 days. Failure to do so, along with your affirmative defenses and counterclaims, could result in a default followed by a default judgment followed by a Final Judgment of Foreclosure. See above steps.

Stage 5: Sale already occurred

You obviously need to reverse that situation. Usually the allegation is that the sale should be vacated because of fraud on the court (judicial) or fraudulent abuse of non-judicial process. This is a motion or Petitioner but it must be accompanied by a lawsuit, properly served and noticed to the other side. You probably need to name the purchaser at sale, and ask for a TRO  (Temporary Restraining Order) that stops them from moving the property or the money around any further until your questions are answered (see above). At the risk of sounding like a broken record, you need a good forensic analyst and a good lawyer.

Stage 6: Eviction (Unlawful Detainer Filed or Judgment entered:

Same as Stage 5.

What are some examples of financial injury due to errors, misrepresentations, or other deficiencies in the foreclosure process?

Listed below are examples of situations that may have led to financial injury. This list does not include all situations.

The mortgage balance amount at the time of the foreclosure action was more than you actually owed.

You were doing everything the modification agreement required, but the foreclosure sale still happened.

The foreclosure action occurred while you were protected by bankruptcy.
You requested assistance/modification, submitted complete documents on time, and were waiting for a decision when the foreclosure sale occurred.

Fees charged or mortgage payments were inaccurately calculated, processed, or applied.

The foreclosure action occurred on a mortgage that was obtained before active duty military service began and while on active duty, or within 9 months after the active duty ended and the service member did not waive his/her rights under the Service Members Civil Relief Act.

If you are ready to take the battle to these interlopers, in order to reclaim the home that is rightfully yours, visit http://www.fightforeclosure.net

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Fight Your Foreclosure Protect Your Most Valuable Asset

18 Saturday May 2013

Posted by BNG in Foreclosure Crisis, Foreclosure Defense, Fraud, Judicial States, Non-Judicial States, Your Legal Rights

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Business, Colorado, Foreclosure, Home insurance, Investing, Law, Real estate, Services

Homeowners have been the victims in this foreclosure epidemic. In every criminal act there is the criminal and the victim.  And like any criminal prosecution, unless the victim comes forward and prosecutes the criminal, the criminal will most likely be set free.  So what does this mean?  It means that more homeowners need to come forward and fight their foreclosures.  There are only a handful of true to the cause advocates that are fighting this fight with an army of pro-se soldiers.

We have now in the homeowners corner, a handful of prosecutors (Senators) that are willing to put the criminals feet to the fire.  We have the potential in front of us to give a criminal element to fraudulent foreclosure actions (which it is and should have always been to begin with).

There is a systematic approach I would like to share with homeowners facing foreclosure and attorneys alike that are engaged in foreclosure defense and that is the sales dynamic.  See there is a simple philosophy in sales that sales managers train their sales representative to do and follow.  Sales is a numbers games so the first rule of sales is (1) the more people you contact the greater your chance at closing a sale.  Sales mangers would require reps to make 100 calls a day because out of those 100 calls maybe 10 could be closed.

This is the same approach being used by foreclosure law firm mills.  File 100 foreclosure and maybe 10 fight back.  This means 90% of their foreclosures go to summary judgment without resistance.  To the parties initiating foreclosures these are great statistics.  It is for this very reason foreclosure law firm mills charge a flat rate of approximately $1,200 per foreclosure.  Any attorney will tell you that they normally charge a retainer of $2,500 to $10,000 to take a case depending on the circumstances surrounding the case at which point they will bill out anywhere from $200 to $350 per hour.  Think about that for a second.  An attorney that spends 10 hours on your case alone who bills out at say $300 an hour cost $3,000.  So what does it say of a foreclosure law firm mill that bills out a flat rate of $1,200 to a multi-million dollar financial institution?

If you can understand the sales philosophy that this is a numbers game with the bets on the homeowner that will not fight to keep their home, then try to understand the adverse affect those initiating these foreclosure actions will face if the homeowner actually defends themselves in litigation.  It would mean the foreclosure law firm mills would not be able to charge a flat rate of $1,200 to the banks or servicers.  It would mean they would have to charge more money to prosecute these foreclosure suits.  Banks don’t want to spend so they would look to other foreclosure mills to represent them which would open up a biding war for their work (which already exist on another level).  It would cause the banks to have to spend more money in litigation to defend their fraudulent behavior and their statics of 90% success to straight summary judgment would decrease.

For The Necessary Tools Needed To Effectively and Vigorously Challenge Your Wrongful Foreclosure, Against Those Interlopers Who Are Fraudulently Trying to Steal Your Home From You, Visit http://www.fightforeclosure.net

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Litigating Trial Loan Modification Against Your Bank or Lender

17 Friday May 2013

Posted by BNG in Banks and Lenders, Foreclosure Defense, Litigation Strategies, Loan Modification, Your Legal Rights

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Foreclosure, HAMP, Home Affordable Modification Program, Loan servicing, Mortgage loan, Mortgage modification, United States, Wells Fargo

If you find yourself wondering whether you can litigate your Trial Loan Modification which your Bank/Lender failed to make permanent, you are not alone. Many homeowners all across the nation found themselves in similar situation. This question has arisen many times lately, and still we do not have a confirmed answer. But nonetheless it can be litigated because the trial loan modification is afterall a contract, and every contract can be enforced. This goes back to the first year law school class of contract. It means offer, acceptance, consideration and execution. Here, it has all the elements of contract formation. All the judicial remedies of a contract are available in this litigation also. Why not? A lender cannot be compelled to modify a contract unless they had taken governmental bailout money and there are federal guidelines about foreclosure and the requirements one has to meet. We are talking about folks who had gotten trial loan modification and the banks is reneging on it. Here, someone signed, accepted the trial loan modification and sent quite few payments in executing the offer, and did their part of the bargain.

In the recent past, NCLS has brought four class action suits on behalf of Massachusetts residents to challenge the failure of Wells Fargo Bank, Bank of America , J.P. Morgan Chase Bank and IndyMac Mortgage Servicers/OneWest Bank to honor their agreements with borrowers to modify mortgages and prevent foreclosures under the United States Treasury’s Home Affordable Modification Program (”HAMP”). The complaints are filed with the United States District Court for the District of Massachusetts and assert claims for breach of contract, breach of the implied covenant of good faith and fair dealing and promissory estoppel under Massachusetts common law arising from the financial institution’s alleged failure to keep its promises to modify eligible loans to prevent foreclosures against homeowners who have lived up to their end of the bargain as required by HAMP.

Here are some of the complaints filed for such litigation.

Complaint NO. 1
http://www.nclc.org/issues/cocounseling/content/hamp-BosqueWFComplaint.pdf

Complaint No. 2
http://www.nclc.org/issues/cocounseling/content/hamp-Johnson-BOA-Complaint.pdf
Complaint No. 4
http://www.nclc.org/issues/cocounseling/content/hamp-DurmicJPMorganChase-Complaint.pdf

Complaint No. 4
http://www.nclc.org/issues/cocounseling/content/hamp-Reyes-OneWest-Complaint.pdf

If you are not getting your permanent loan modification with your Bank or Lender, you can contact your congressman or regulatory agencies using the sample letter below.

Regulatory Agency

123 Someplace

Some Where In USA

Dear Regulatory Agency

I am writing to you as a homeowner in foreclosure and wish to draw your attention to issues regarding mortgage loan modification, including the Making Homes Affordable program. The prevailing loan modification policies imposed by government entities and loan servicers expose homeowners to substantial risks in a system designed to generate additional profits to loan servicers and others who reap financial rewards in the foreclosure process, at the expense of consumers.

1. The prohibition against partial payments imposed by many loan servicers quickly forces many homeowners into expensive and unnecessary foreclosure proceedings. A loan servicer may decline a mortgage payment check that is $20 less than the full amount due, with full knowledge – and presumably hope – that it may soon result in thousands of extra dollars in profit should the homeowner later be forced into foreclosure. Such policies are calculated to increase profits to loan servicers, their attorneys and other entities that benefit in the foreclosure process.
2. The notorious “Three Month Trial Period” offered by many loan servicers is fraught with many jeopardizing the homeowners who accept such offers.
a. As loan servicers repeatedly extend the trial period, three months may become a year or two.
b. More than half of all trial periods are cancelled by the loan servicer, most of the time despite the fact the homeowner made timely payments.
c. During this period, foreclosure proceedings remain pending, which permits loan servicers to demand an auction date for the sale of the house, even in cases where the homeowner has fully complied with the Trial Period.
d. No warranty, pledge or agreement is made by the loan servicer upon initiation of the trial period. Servicers are under no obligation to do anything other than re-review the loan modification application. This provides ample incentive to loan servicers to prolong the trial period and revive foreclosure proceedings, after gaining many thousands more dollars from hapless homeowners who were led to believe the trial period would end in a timely manner, including an approval of their loan modification.
e. No details are revealed in advance to homeowners by loan servicers regarding the vaguely-possible, future successful loan modification. Many distressed homeowners have completed the trial period only to receive a loan modification that is financially questionable, such as an ARM mortgage.
f. Further, many loan servicers are misrepresenting the “Three Month Trial” to homeowners as a HAMP product, when in fact the only loan modification available to such homeowners is one of the loan servicer’s own creation and often designed to maximize the potential for default and thus, servicer profits.
3. In many cases, homeowners are awaiting loan modification review while simultaneously in foreclosure. As loan servicers are notoriously slow to both review such applications and respond to homeowner inquiries, auction dates are often set before the loan modification application has been approved or denied. No auction date should be set before a loan modification application has been approved or denied.
4. Many loan servicers require that homeowners not attempt to sell their homes while undergoing a loan modification review. For homeowners already in foreclosure, this policy places them significantly at risk of losing their homes and/or equity in the event the loan modification is denied or has not been approved before the auction date imposed by a court.
a. Homeowners participating in the trial period are also prohibited from placing their homes on the market, which as described above can be a lengthy process, again exposing them to the risk of losing their homes and/or equity.
b. When facing or defending themselves in a foreclosure or while undergoing the often lengthy process of loan modification, a homeowner’s right to sell the property themselves must not be infringed upon in order to generate additional profit to loan servicers. These policies effectively remove a distressed homeowner’s last recourse to mitigate their losses.

In summary, distressed homeowners are inadequately protected under these predatory policies. To more fairly balance the needs of loan servicers and the protection of homeowners, these policies should be implemented and enforced by the appropriate regulatory agencies:

1. Loan servicers should accept and properly apply partial payments of overdue mortgage accounts.
2. Efforts must be made and enforced to ensure that homeowners are able to reliably reach and/or obtain responses to their inquiries of loan servicers.
3. Loan modifications must be reviewed in a timely manner, preferably with a pre-defined time limit.
4. “Three Month Trial Periods” should be accurately identified to homeowners as to whether or not the trial period is related to a HAMP loan modification or the loan servicer’s in-house loan modification.
5. “Three Month Trial Periods” should not be extended, except upon homeowner’s request.
6. Pending foreclosure cases should be promptly dismissed upon the initiation of any loan modification “Trial Period.”
7. Truth-in-Lending Disclosures and all other such disclosures and settlement statements currently required of mortgage lenders should be provided to homeowners before the initiation of any “Trial Period.” This would allow homeowners to make an informed decision regarding the financial suitability of the future loan modification, while still allowing loan servicers to rescind such agreements upon the failure of the homeowner to successfully complete the “Trial Period.”
8. In a pending foreclosure proceeding, no auction date should be set before a loan modification application has been approved or denied.
9. The right of a homeowner to sell the property should not be restricted during foreclosure or loan modification review.
10. All regulations and laws applying to consumer loans, such as RESPA and TILA, must also fairly apply to loan modifications. If first mortgage and refinanced mortgages are subject to such regulations, why are loan modifications not?

Please look into this matter at your earliest convenience.

Thank you in advance for your prompt attention to this important urgent matter.

Sincerely,

John/Jane Doe

After contacting the regulatory agencies or your congressman, if you are not getting the attention or permanent loan modification you feel you deserve, you can visit www.fightforeclosure.net to get your foreclosure litigation package and effectively pursue your next Cause of Action in order to get your Trial Loan Modification Offer, permanently modified.

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Foreclosure Deficiency Judgment Nevada Mortgage Laws

17 Friday May 2013

Posted by BNG in Non-Judicial States

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Business, Debt, Deficiency judgment, Florida, Foreclosure, Nevada, Uniform Commercial Code, United States

NEVADA MORTGAGE LAWS:
In this session, we are going to discuss in somewhat greater details the Nevada Mortgage Laws and how to handle the looming foreclosure crisis which has made state of Nevada in the highest ranks in USA. Once we are educated in these laws, our next step should be how to fight and fight back vehemently because banks are not changing their ways and tactics. An educated borrower is the best defense against foreclosure and its aftermath.

NRS 40.430 Action for recovery of debt secured by mortgage or other lien; “action” defined.
Nevada has only One Action Law for the recovery of any debt, or for the enforcement of any right secured by a mortgage or other lien upon real estate. That action must be in accordance with the provisions of NRS 40.430 to 40.459, inclusive. In that action, the judgment must be rendered for the amount found due the plaintiff, and the court, by its decree or judgment, may direct a sale of the encumbered property, or such part thereof as is necessary, and apply the proceeds of the sale as provided in NRS 40.462.

What is One Action Rule of Nevada?
This section must be construed to permit a secured creditor to realize upon the collateral for a debt or other obligation agreed upon by the debtor and creditor when the debt or other obligation was incurred. A sale directed by the court pursuant to subsection 1 must be conducted in the same manner as the sale of real property upon execution, by the sheriff of the county in which the encumbered land is situated, and if the encumbered land is situated in two or more counties, the court shall direct the sheriff of one of the counties to conduct the sale with like proceedings and effect as if the whole of the encumbered land were situated in that county.

What this One Action Rule Does Not Include?
(a) To appoint a receiver for, or obtain possession of, any real or personal collateral for the debt or as provided in NRS 32.015.(b) To enforce a security interest in, or the assignment of, any rents, issues, profits or other income of any real or personal property.
(c) To enforce a mortgage or other lien upon any real or personal collateral located outside of the State which does not, except as required under the laws of that jurisdiction, result in a personal judgment against the debtor.
(d) For the recovery of damages arising from the commission of a tort, including a recovery under NRS 40.750, or the recovery of any declaratory or equitable relief.
(e) For the exercise of a power of sale pursuant to NRS 107.080.
(f) For the exercise of any right or remedy authorized by chapter 104 of NRS or by the Uniform Commercial Code as enacted in any other state.
(g) For the exercise of any right to set off, or to enforce a pledge in, a deposit account pursuant to a written agreement or pledge.
(h) To draw under a letter of credit.
(i) To enforce an agreement with a surety or guarantor if enforcement of the mortgage or other lien has been automatically stayed pursuant to 11 U.S.C. § 362 or pursuant to an order of a federal bankruptcy court under any other provision of the United States Bankruptcy Code for not less than 120 days following the mailing of notice to the surety or guarantor pursuant to subsection 1 of NRS 107.095.
(j) To collect any debt, or enforce any right, secured by a mortgage or other lien on real property if the property has been sold to a person other than the creditor to satisfy, in whole or in part, a debt or other right secured by a senior mortgage or other senior lien on the property.
(k) Relating to any proceeding in bankruptcy, including the filing of a proof of claim, seeking relief from an automatic stay and any other action to determine the amount or validity of a debt.
(l) For filing a claim pursuant to chapter 147 of NRS or to enforce such a claim which has been disallowed.
(m) Which does not include the collection of the debt or realization of the collateral securing the debt.
(n) Pursuant to NRS 40.507 or 40.508.
(o) Which is exempted from the provisions of this section by specific statute.
(p) To recover costs of suit, costs and expenses of sale, attorneys’ fees and other incidental relief in connection with any action authorized by this subsection.

How Mortgage is Defined Under Nevada Laws?
NRS 40.433 “Mortgage or other lien” defined. A “mortgage or other lien” includes a deed of trust, but does not include a lien which arises pursuant to chapter 108 of NRS, pursuant to an assessment under chapter 116, 117, 119A or 278A of NRS or pursuant to a judgment or decree of any court of competent jurisdiction.

The Judicial Proceedings Are An Affirmative Defense
1. The commencement of or participation in a judicial proceeding in violation of NRS 40.430 does not forfeit any of the rights of a secured creditor in any real or personal collateral, or impair the ability of the creditor to realize upon any real or personal collateral, if the judicial proceeding is:
(a) Stayed or dismissed before entry of a final judgment; or
(b) Converted into an action which does not violate NRS 40.430.
2. If the provisions of NRS 40.430 are timely interposed as an affirmative defense in such a judicial proceeding, upon the motion of any party to the proceeding the court shall:
(a) Dismiss the proceeding without prejudice; or
(b) Grant a continuance and order the amendment of the pleadings to convert the proceeding into an action which does not violate NRS 40.430.
3. The failure to interpose, before the entry of a final judgment, the provisions of NRS 40.430 as an affirmative defense in such a proceeding waives the defense in that proceeding. Such a failure does not affect the validity of the final judgment, but entry of the final judgment releases and discharges the mortgage or other lien.
4. As used in this section, “final judgment” means a judgment which imposes personal liability on the debtor for the payment of money and which may be appealed under the Nevada Rules of Appellate Procedure.

How Surplus Money is Distributed?
NRS 40.440 Disposition of surplus money. If there is surplus money remaining after payment of the amount due on the mortgage or other lien, with costs, the court may cause the same to be paid to the person entitled to it pursuant to NRS 40.462, and in the meantime may direct it to be deposited in court.

FORECLOSURE SALES AND DEFICIENCY JUDGMENTS
I have been asked about deficiency judgment many times. In Nevada, the time period for filing a deficiency judgment by your lender is only 6 months. Recently the Nevada legislature also reduced the time period to six months of any HELOC or second trust deed. Now, these folks cannot file any deficiency judgment if the right has been accrued more than six months. Also, if a collection agency buys any of these loans, they cannot collect more than what they paid for.However, they can file this deficiency judgment and can enforce it later against you. This is a concise summary of all of the laws of deficiency judgment. Please read carefully and seek the help of a licensed attorney before doing anything or filing any action.

What is an Indebtedness?
NRS 40.451 “Indebtedness” defined. “indebtedness” means the principal balance of the obligation secured by a mortgage or other lien on real property, together with all interest accrued and unpaid prior to the time of foreclosure sale, all costs and fees of such a sale, all advances made with respect to the property by the beneficiary, and all other amounts secured by the mortgage or other lien on the real property in favor of the person seeking the deficiency judgment. Such amount constituting a lien is limited to the amount of the consideration paid by the lienholder.

NRS 40.453 Waiver of rights in documents relating to sale of real property against public policy and unenforceable; exception. Except as otherwise provided in NRS 40.495:
1. It is hereby declared by the Legislature to be against public policy for any document relating to the sale of real property to contain any provision whereby a mortgagor or the grantor of a deed of trust or a guarantor or surety of the indebtedness secured thereby, waives any right secured to him by the laws of this state.
2. A court shall not enforce any such provision.

How Deficiency Judgment is Awarded?
NRS 40.455 Deficiency judgment: Award to judgment creditor or beneficiary of deed of trust.
1. Upon application of the judgment creditor or the beneficiary of the deed of trust within 6 months after the date of the foreclosure sale or the trustee’s sale held pursuant to NRS 107.080, respectively, and after the required hearing, the court shall award a deficiency judgment to the judgment creditor or the beneficiary of the deed of trust if it appears from the sheriff’s return or the recital of consideration in the trustee’s deed that there is a deficiency of the proceeds of the sale and a balance remaining due to the judgment creditor or the beneficiary of the deed of trust, respectively.
2. If the indebtedness is secured by more than one parcel of real property, more than one interest in the real property or more than one mortgage or deed of trust, the 6-month period begins to run after the date of the foreclosure sale or trustee’s sale of the last parcel or other interest in the real property securing the indebtedness, but in no event may the application be filed more than 2 years after the initial foreclosure sale or trustee’s sale.

What is the Procedure for a Hearing of a Deficiency Judgment in Nevada? NRS 40.457 1.

Before awarding a deficiency judgment under NRS 40.455, the court shall hold a hearing and shall take evidence presented by either party concerning the fair market value of the property sold as of the date of foreclosure sale or trustee’s sale. Notice of such hearing shall be served upon all defendants who have appeared in the action and against whom a deficiency judgment is sought, or upon their attorneys of record, at least 15 days before the date set for hearing.

2. Upon application of any party made at least 10 days before the date set for the hearing the court shall, or upon its own motion the court may, appoint an appraiser to appraise the property sold as of the date of foreclosure sale or trustee’s sale. Such appraiser shall file with the clerk his appraisal, which is admissible in evidence. The appraiser shall take an oath that he has truly, honestly and impartially appraised the property to the best of his knowledge and ability. Any appraiser so appointed may be called and examined as a witness by any party or by the court. The court shall fix a reasonable compensation for the appraiser, but his fee shall not exceed similar fees for similar services in the county where the encumbered land is situated.
NRS 40.459 Limitations on amount of money judgment. After the hearing, the court shall award a money judgment against the debtor, guarantor or surety who is personally liable for the debt. The court shall not render judgment for more than:

1. The amount by which the amount of the indebtedness which was secured exceeds the fair market value of the property sold at the time of the sale, with interest from the date of the sale; or
2. The amount which is the difference between the amount for which the property was actually sold and the amount of the indebtedness which was secured, with interest from the date of sale, whichever is the lesser amount.

NRS 40.462 Distribution of proceeds of foreclosure sale.
1. Except as otherwise provided by specific statute, this section governs the distribution of the proceeds of a foreclosure sale. The provisions of NRS 40.455, 40.457 and 40.459 do not affect the right to receive those proceeds, which vests at the time of the foreclosure sale. The purchase of any interest in the property at the foreclosure sale, and the subsequent disposition of the property, does not affect the right of the purchaser to the distribution of proceeds pursuant to paragraph (c) of subsection 2 of this section, or to obtain a deficiency judgment pursuant to NRS 40.455, 40.457 and 40.459.
2. The proceeds of a foreclosure sale must be distributed in the following order of priority:
(a) Payment of the reasonable expenses of taking possession, maintaining, protecting and leasing the property, the costs and fees of the foreclosure sale, including reasonable trustee’s fees, applicable taxes and the cost of title insurance and, to the extent provided in the legally enforceable terms of the mortgage or lien, any advances, reasonable attorney’s fees and other legal expenses incurred by the foreclosing creditor and the person conducting the foreclosure sale.
(b) Satisfaction of the obligation being enforced by the foreclosure sale.
(c) Satisfaction of obligations secured by any junior mortgages or liens on the property, in their order of priority.
(d) Payment of the balance of the proceeds, if any, to the debtor or his successor in interest.
If there are conflicting claims to any portion of the proceeds, the person conducting the foreclosure sale is not required to distribute that portion of the proceeds until the validity of the conflicting claims is determined through inter-pleader or otherwise to his satisfaction.
3. A person who claims a right to receive the proceeds of a foreclosure sale pursuant to paragraph (c) of subsection 2 must, upon the written demand of the person conducting the foreclosure sale, provide:
(a) Proof of the obligation upon which he claims his right to the proceeds; and
(b) Proof of his interest in the mortgage or lien, unless that proof appears in the official records of a county in which the property is located.
Such a demand is effective upon personal delivery or upon mailing by registered or certified mail, return receipt requested, to the last known address of the claimant. Failure of a claimant to provide the required proof within 15 days after the effective date of the demand waives his right to receive those proceeds.
4. As used in this section, “foreclosure sale” means the sale of real property to enforce an obligation secured by a mortgage or lien on the property, including the exercise of a trustee’s power of sale pursuant to NRS 107.080.
NRS 40.463 Agreement for assistance in recovering proceeds of foreclosure sale due to debtor or successor in interest; requirements for enforceable agreement; fee must be reasonable.
1. Except as otherwise provided in this section, a debtor or his successor in interest may enter into an agreement with a third party that provides for the third party to assist in the recovery of any balance of the proceeds of a foreclosure sale due to the debtor or his successor in interest pursuant to paragraph (d) of subsection 2 of NRS 40.462.
2. An agreement pursuant to subsection 1:
(a) Must:
(1) Be in writing;
(2) Be signed by the debtor or his successor in interest; and
(3) Contain an acknowledgment of the signature of the debtor or his successor in interest by a notary public; and
(b) May not be entered into less than 30 days after the date on which the foreclosure sale was conducted.
3. Any agreement entered into pursuant to this section that does not comply with subsection 2 is void and unenforceable.
4. Any fee charged by a third party for services provided pursuant to an agreement entered into pursuant to this section must be reasonable. A fee that exceeds $2,500, excluding attorney’s fees and costs, is presumed to be unreasonable. A court shall not enforce an obligation to pay any unreasonable fee, but may require a debtor to pay a reasonable fee that is less than the amount set forth in the agreement.
5. A third party may apply to the court for permission to charge a fee that exceeds $2,500. Any third party applying to the court pursuant to this subsection has the burden of establishing to the court that the fee is reasonable.
6. This section does not preclude a debtor or his successor in interest from contesting the reasonableness of any fee set forth in an agreement entered into pursuant to this section.
7. As used in this section:
(a) “Creditor” means a person due an obligation being enforced by a foreclosure sale conducted pursuant to NRS 40.451 to 40.463, inclusive.
(b) “Debtor” means a person, or the successor in interest of a person, who owes an obligation being enforced by a foreclosure sale conducted pursuant to NRS 40.451 to 40.463, inclusive.
(c) “Third party” means a person who is neither the debtor nor the creditor of a particular obligation being enforced by a foreclosure sale conducted pursuant to NRS 40.451 to 40.463, inclusive.

RIGHTS OF GUARANTOR, SURETY OR OBLIGOR IN REAL PROPERTY

NRS 40.465 “Indebtedness” defined. As used in NRS 40.475, 40.485 and 40.495, “indebtedness” means the principal balance of the obligation, together with all accrued and unpaid interest, and those costs, fees, advances and other amounts secured by the mortgage or lien upon real property.
NRS 40.475 Remedy against mortgagor or grantor; assignment of creditor’s rights to guarantor, surety or obligor. Upon full satisfaction by a guarantor, surety or other obligor, other than the mortgagor or grantor of a deed of trust, of the indebtedness secured by a mortgage or lien upon real property, the paying guarantor, surety or other obligor is entitled to enforce every remedy which the creditor then has against the mortgagor or grantor of the mortgage or lien upon real property, and is entitled to an assignment from the creditor of all of the rights which the creditor then has by way of security for the performance of the indebtedness.
NRS 40.485 Interest in proceeds of secured indebtedness upon partial satisfaction of indebtedness. Immediately upon partial satisfaction by a guarantor, surety or other obligor, other than the mortgagor or grantor of a deed of trust, of the indebtedness secured by a mortgage or lien upon real property, the paying guarantor, surety or other obligor automatically, by operation of law and without further action, receives an interest in the proceeds of the indebtedness secured by the mortgage or lien to the extent of the partial satisfaction, subject only to the creditor’s prior right to recover the balance of the indebtedness owed by the mortgagor or grantor.

NRS 40.495 Waiver of rights; separate action to enforce obligation; available defenses.
1. The provisions of NRS 40.475 and 40.485 may be waived by the guarantor, surety or other obligor only after default.
2. Except as otherwise provided in subsection 4, a guarantor, surety or other obligor, other than the mortgagor or grantor of a deed of trust, may waive the provisions of NRS 40.430. If a guarantor, surety or other obligor waives the provisions of NRS 40.430, an action for the enforcement of that person’s obligation to pay, satisfy or purchase all or part of an indebtedness or obligation secured by a mortgage or lien upon real property may be maintained separately and independently from:
(a) An action on the debt;
(b) The exercise of any power of sale;
(c) Any action to foreclose or otherwise enforce a mortgage or lien and the indebtedness or obligations secured thereby; and
(d) Any other proceeding against a mortgagor or grantor of a deed of trust.
3. If the obligee maintains an action to foreclose or otherwise enforce a mortgage or lien and the indebtedness or obligations secured thereby, the guarantor, surety or other obligor may assert any legal or equitable defenses provided pursuant to the provisions of NRS 40.451 to 40.463, inclusive.
4. The provisions of NRS 40.430 may not be waived by a guarantor, surety or other obligor if the mortgage or lien:
(a) Secures an indebtedness for which the principal balance of the obligation was never greater than $500,000;
(b) Secures an indebtedness to a seller of real property for which the obligation was originally extended to the seller for any portion of the purchase price;
(c) Is secured by real property which is used primarily for the production of farm products as of the date the mortgage or lien upon the real property is created; or
(d) Is secured by real property upon which:
(1) The owner maintains his principal residence;
(2) There is not more than one residential structure; and
(3) Not more than four families reside.

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Qualified Written Request For Homeowners

17 Friday May 2013

Posted by BNG in Loan Modification, Mortgage Laws, Pro Se Litigation, Your Legal Rights

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Escrow, Good faith estimate, Loan, Loan servicing, Mortgage loan, Real estate, Real Estate Settlement Procedures Act, RESPA

There are excellent provisions in RESPA dealing with Qualified Written Requests. Today, we are going to elaborate on these provisions. However, they are not all inclusive. Section 6 of RESPA provides borrowers with important consumer protections relating to the servicing of their loans. Under Section 6 of RESPA, borrowers who have a problem with the servicing of their loan (including escrow account questions), should contact their loan servicer in writing, outlining the nature of their complaint. The servicer must acknowledge the complaint in writing within 20 business days of receipt of the complaint. Within 60 business days the servicer must resolve the complaint by correcting the account or giving a statement of the reasons for its position. This does not absolve borrowers from continuing the payments. They are no defense to payments.
The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974. RESPA covers loans secured with a mortgage placed on a one-to-four family residential property. These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit.

Loan servicing complaints

A borrower may bring a private law suit, or a group of borrowers may bring a class action suit, within three years, against a servicer who fails to comply with Section 6’s provisions. Borrowers may obtain actual damages, as well as additional damages if there is a pattern of noncompliance. The following is a sample qualified written request from you, the borrower, to a lender.

However, as usual, use of this is not equivalent substitute of a licensed Nevada attorney.
Attention Customer Service:
Subject: [Your loan number]
[Names on loan documents]
[Property and/or mailing address]

This is a “qualified written request” under Section 6 of the Real Estate Settlement Procedures Act (RESPA).
I am writing because:
-Describe the issue or the question you have and/or what action you believe the lender should take.
-Attach copies of any related written materials.
-Describe any conversations with customer service regarding the issue and to whom you spoke recently.
-Describe any previous steps you have taken or attempts to resolve the issue.
-List a day time telephone number in case a customer service representative wishes to contact you.
I understand that under Section 6 of RESPA you are required to acknowledge my request within 20 business days and must try to resolve the issue within 60 business days.

Sincerely,

[Your name]

Here is another example:

Attention Customer Service:
Subject: Loan number xxxxxxxxxx
xxxxxxxx xxxxxxxx xxxxxxxxxxx
x xxxxxxx
Xxxxxxxx, CA xxxxx
This is a “Qualified Written Request” under Section 6 of the Real Estate Settlement Procedures Act (RESPA).

I am writing to request:

(1) Copies of all documents pertaining to the origination of my mortgage including my loan application, Right to Cancel, Deed of Trust, note, adjustable rate note, addendum to the note for the interest only payment period, Truth in Lending statements, Good Faith Estimate (GFE), HUD 1, appraisal, and all required disclosures and rate sheets associated with this transaction for the above referenced loan. The copies should be legible and all documents shall be copied in their entirety.

(2) A copy of the loan history including all payments made, all fees incurred, what has been paid out of the escrow account, and how all payments were applied. This information should cover the entire life of the loan.

(3) We have reasons to believe that the loan terms were misrepresented to us at the time of application and further obscured and/or modified prior to signing. I believe that our income was inflated on the application. I also have reason to believe that certain statements were not provided for my approval prior to closing, and that signatures may have been forged on various documents. It is also my /ours belief that certain documents may have not presented at all. Additionally, I believe that a notary was not present to witness my signatures on several pertinent documents and that this transaction did not take place in a legitimate title/escrow/real-estate office with any title/escrow/real-estate professionals therefore leaving us ill advised at the time of closing.

I/we started the process of trying to renegotiate this loan————when I spoke with your HOPE department. On ——-, I faxed a letter of hardship, along with bank statements and pay stubs as she recommended. I was advised that someone would contact me within 7-10 working days and there would be no problem getting assistance to bring the account current and capitalize the negative escrow. On ——-, I called back, as I hadn’t heard from anyone. I was told my payment was going to be ——

Give details, more details, specific facts here about your dealing with your lender on each time you called them.

Most recently you COUNTRYWIDE have sent a demand for payment. This is an enormous amount which just cannot be paid at this time due to very hardship. The situation is urgent. We and COUNTRYWIDE can not drag there feet in this process. We do not want to incur further inflated fees by our home going into foreclosure.

We are very proactive in keeping our family home. This is our primary homes by all means. We do not want to loose it nor do we have to we can make a reasonable payment.

We have been given the runaround by the voice recognition call routing system on numerous occasions.

We have talked to various agents with different versions of what the loan modification process really entails.

We have been re-routed to the wrong department or individual at dozens of times.

We have been disconnected from helpful individuals, when I unsuccessfully tried to call her back I am told it is because she has no extension.

We have been told that the negotiator handling my loan is unavailable to speak to anyone via telephone. All of these calls are documented in your records.

The customer service provided to us has been less than adequate.

We understand that under Section 6 of RESPA you are required to acknowledge our request within 20 business days and must try to resolve the issue within 60 business days.

In closing, we want a payment we know we can live with one that will not get us in trouble again

Sincerely,

REMEMBER: This letter SHOULD NOT be included with your mortgage payment, but should be sent separately to the customer service address.

You SHOULD continue to make the required mortgage and escrow payment until the request is resolved.

You may bring a private right of action under Section 6, if you suffer damages due to the lender’s servicing of the loan. See the RESPA statute and regulations.

Filing a RESPA complaint

Persons who believe a settlement service provider has violated RESPA in an area in which the Department has enforcement authority (primarily sections 6, 8 and 9), may wish to file a complaint. The complaint should outline the violation and identify the violators by name, address and phone number. Complainants should also provide their own name and phone number for follow up questions from HUD. Requests for confidentiality will be honored. Complaints should be sent to:

Director, Office of RESPA and Interstate Land Sales
US Department of Housing and Urban Development
Room 9154
451 7th Street, SW
Washington, DC 20410
Important Tips From HUD:

What Are the Duties of Loan Servicer to Respond to Borrower Inquiries

-(1) Notice of receipt of inquiry
-(A) In general
-If any servicer of a federally related mortgage loan receives a qualified written request from the borrower (or an agent of the borrower) for information relating to the servicing of such loan, the servicer shall provide a written response acknowledging receipt of the correspondence within 20 days (excluding legal public holidays, Saturdays, and Sundays) unless the action requested is taken within such period.
-(B) Qualified written request
For purposes of this subsection, a qualified written request shall be a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that–
(i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and
(ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.
(2) Action with respect to inquiry
Not later than 60 days (excluding legal public holidays, Saturdays, and Sundays) after the receipt from any borrower of any qualified written request under paragraph (1) and, if applicable, before taking any action with respect to the inquiry of the borrower, the servicer shall–
(A) make appropriate corrections in the account of the borrower, including the crediting of any late charges or penalties, and transmit to the borrower a written notification of such correction (which shall include the name and telephone number of a representative of the servicer who can provide assistance to the borrower);
(B) after conducting an investigation, provide the borrower with a written explanation or clarification that includes–
(i) to the extent applicable, a statement of the reasons for which the servicer believes the account of the borrower is correct as determined by the servicer; and
(ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower; or
(C) after conducting an investigation, provide the borrower with a written explanation or clarification that includes–
(i) information requested by the borrower or an explanation of why the information requested is unavailable or cannot be obtained by the servicer; and
(ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower.
(3) Protection of credit rating
During the 60-day period beginning on the date of the servicer’s receipt from any borrower of a qualified written request relating to a dispute regarding the borrower’s payments, a servicer may not provide information regarding any overdue payment, owed by such borrower and relating to such period or qualified written request, to any consumer reporting agency (as such term is defined under section 1681a of title 15).

(f) Damages and costs
Whoever fails to comply with any provision of this section shall be liable to the borrower for each such failure in the following amounts:
(1) Individuals
In the case of any action by an individual, an amount equal to the sum of–
(A) any actual damages to the borrower as a result of the failure; and
(B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $1,000.
(2) Class actions
In the case of a class action, an amount equal to the sum of–
(A) any actual damages to each of the borrowers in the class as a result of the failure; and
(B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not greater than $1,000 for each member of the class, except that the total amount of damages under this subparagraph in any class action may not exceed the lesser of–
(i) $500,000; or
(ii) 1 percent of the net worth of the servicer.
(3) Costs
In addition to the amounts under paragraph (1) or (2), in the case of any successful action under this section, the costs of the action, together with any attorneys fees incurred in connection with such action as the court may determine to be reasonable under the circumstances.
(4) Nonliability
A transferor or transferee servicer shall not be liable under this subsection for any failure to comply with any requirement under this section if, within 60 days after discovering an error (whether pursuant to a final written examination report or the servicer’s own procedures) and before the commencement of an action under this subsection and the receipt of written notice of the error from the borrower, the servicer notifies the person concerned of the error and makes whatever adjustments are necessary in the appropriate account to ensure that the person will not be required to pay an amount in excess of any amount that the person otherwise would have paid.
(g) Administration of escrow accounts

If the terms of any federally related mortgage loan require the borrower to make payments to the servicer of the loan for deposit into an escrow account for the purpose of assuring payment of taxes, insurance premiums, and other charges with respect to the property, the servicer shall make payments from the escrow account for such taxes,insurance premiums, and other charges in a timely manner as such payments become due.
(h) Preemption of conflicting State laws

Notwithstanding any provision of any law or regulation of any State, a person who makes a federally related mortgage loan or a servicer shall be considered to have complied with the provisions of any such State law or regulation requiring notice to a borrower at the time of application for a loan or transfer of the servicing of a loan if such person or servicer complies with the requirements under this section regarding timing, content, and procedures for notification of the borrower.

The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974. RESPA covers loans secured with a mortgage placed on a one-to-four family residential property. These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit. HUD’s Office of RESPA and Interstate Land Sales is responsible for enforcing RESPA.

Loan servicing complaints

A borrower may bring a private law suit, or a group of borrowers may bring a class action suit, within three years, against a servicer who fails to comply with Section 6’s provisions. Borrowers may obtain actual damages, as well as additional damages if there is a pattern of noncompliance.

The following is a sample qualified written request from you, the borrower, to a lender. Use this format to address complaints under the Real Estate Settlement Procedures Act (RESPA). Be sure to read more about RESPA, and your rights under this Act, elsewhere on the RESPA site.

Attention Customer Service:
Subject: [Your loan number]
[Names on loan documents]
[Property and/or mailing address]
This is a “qualified written request” under Section 6 of the Real Estate Settlement Procedures Act (RESPA).

I am writing because:
-Describe the issue or the question you have and/or what action you believe the lender should take.
-Attach copies of any related written materials.
-Describe any conversations with customer service regarding the issue and to whom you spoke.
-Describe any previous steps you have taken or attempts to resolve the issue.
-List a day time telephone number in case a customer service representative wishes to contact you.
-I understand that under Section 6 of RESPA you are required to acknowledge my request within 20 business days and must try to resolve the issue within 60 business days.

Sincerely,

[Your name]

For a more comprehensive ‘Trial Ready’ Qualified Written Request that is inclusive in your Foreclosure Defense package, please visit http://www.fightforeclosure.net

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Homeowner’s Right of Rescission During Foreclosure

16 Thursday May 2013

Posted by BNG in Affirmative Defenses, Banks and Lenders, Foreclosure Crisis, Foreclosure Defense, Litigation Strategies, Mortgage Laws, Your Legal Rights

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Annual percentage rate, Consumer Credit Protection Act, Federal Home Loan Bank Board, Loan, Real Estate Settlement Procedures Act, Rescission, TILA, Truth in Lending Act

The Right of Rescission:
The right-of-rescission rules are technical, and the consequences of noncompliance can be very costly to the Banks.  Take the time to review the right of rescission rules for closed-end credit.

What is the right of rescission?
The right of rescission is a consumer protection law found within the Truth in Lending Act

Truth In Lending Act — Regulation Z

The Truth in Lending Act (TILA), Title I of the Consumer Credit Protection Act, is aimed at promoting the informed use of consumer credit by requiring disclosures about its terms and costs. In general, this regulation applies to each individual or business that offers or extends credit when the credit is offered or extended to consumers; the credit is subject to a finance charge or is payable by a written agreement in more than four installments; the credit is primarily for personal, family or household purposes; and the loan balance equals or exceeds $25,000.00 or is secured by an interest in real property or a dwelling.

TILA is intended to enable the customer to compare the cost of cash versus credit transaction and the difference in the cost of credit among different lenders. The regulation also requires a maximum interest rate to be stated in variable rate contracts secured by the borrower’s dwelling, imposes limitations on home equity plans that are subject to the requirements of certain sections of the Act and requires a maximum interest that may apply during the term of a mortgage loan. TILA also establishes disclosure standards for advertisements that refer to certain credit terms.

In addition to financial disclosure, TILA provides consumers with substantive rights in connection with certain types of credit transactions to which it relates, including a right of rescission in certain real estate lending transactions, regulation of certain credit card practices and a means for fair and timely resolution of credit billing disputes. This discussion will be limited to those provisions of TILA that relate specifically to the mortgage lending process, including:

1. Early and Final Regulation Z Disclosure Requirements
2. Disclosure Requirements for ARM Loans
3. Right of Rescission
4. Advertising Disclosure Requirements

Early and Final Regulation Z Disclosure Requirements:

TILA requires lenders to make certain disclosures on loans subject to the Real Estate Settlement Procedures Act (RESPA) within three business days after their receipt of a written application. This early disclosure statement is partially based on the initial information provided by the consumer. A final disclosure statement is provided at the time of loan closing. The disclosure is required to be in a specific format and include the following information:

Name and address of creditor
Amount financed
Itemization of amount financed (optional, if Good Faith Estimate is   provided)
Finance charge
Annual percentage rate (APR)
Variable rate information
Payment schedule
Total of payments
Demand feature
Total sales price
Prepayment policy
Late payment policy
Security interest
Insurance requirements
Certain security interest charges
Contract reference
Assumption policy
Required deposit information

Disclosure Requirements for ARM Loans:

If the annual percentage rate on a loan secured by the consumer’s principal dwelling may increase after consummation and the term of the loan exceeds one year, TILA requires additional adjustable rate mortgage disclosures to be provided, including:

The booklet titled Consumer Handbook on Adjustable Rate Mortgages, published by the Board and the Federal Home Loan Bank Board or a suitable substitute.
A loan program disclosure for each variable-rate program in which the consumer expresses an interest. The loan program disclosure shall contain the necessary information as prescribed by Regulation Z.
TILA requires servicers to provide subsequent disclosure to consumers on variable rate transactions in each month an interest rate adjustment takes place.

Right of Rescission:

In a credit transaction in which a security interest is or will be retained or acquired in a consumer’s principal dwelling, each consumer whose ownership is or will be subject to the security interest has the right to rescind the transaction. Lenders are required to deliver two copies of the notice of the right to rescind and one copy of the disclosure statement to each consumer entitled to rescind. The notice must be on a separate document that identifies the rescission period on the transaction and must clearly and conspicuously disclose the retention or acquisition of a security interest in the consumer’s principal dwelling; the consumer’s right to rescind the transaction; and how the consumer may exercise the right to rescind with a form for that purpose, designating the address of the lender’s place of business.

In order to exercise the right to rescind, the consumer must notify the creditor of the rescission by mail, telegram or other means of communication. Notice is considered given when mailed, filed for telegraphic transmission or sent by other means, when delivered to the lender’s designated place of business. The consumer may exercise the right to rescind until midnight of the third business day following consummation of the transaction; delivery of the notice of right to rescind; or delivery of all material disclosures, whichever occurs last. When more than one consumer in a transaction has the right to rescind, the exercise of the right by one consumer shall be effective for all consumers.

When a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void and the consumer will no longer be liable for any amount, including any finance charge. Within 20 calendar days after receipt of a notice of rescission, the lender is required to return any money or property that was given to anyone in connection with the transaction and must take any action necessary to reflect the termination of the security interest. If the lender has not delivered any money or property, the consumer may retain possession until the lender has complied with the above.

The consumer may modify or waive the right to rescind if the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency. To modify or waive the right, the consumer must give the lender a dated written statement that describes the emergency, specifically modifies or waives the right to rescind and bears the signature of all of the consumers entitled to rescind. Printed forms for this purpose are prohibited.

Advertising Disclosure Requirements:

If a lender advertises directly to a consumer, TILA requires the advertisement to disclose the credit terms and rate in a certain manner. If an advertisement for credit states specific credit terms, it may state only those terms that actually are or will be arranged or offered by the lender. If an advertisement states a rate of finance charge, it may state the rate as an “annual percentage rate” (APR) using that term. If the annual percentage rate may be increased after consummation the advertisement must state that fact. The advertisement may not state any other rate, except that a simple annual rate or periodic rate that is applied to an unpaid balance may be stated in conjunction with, but not more conspicuously than, the annual percentage rate.

The closed-end rescission rules discussed in this article are found in Title 12 CFR Regulation Z 226.23

The open-end rescission rules rules discussed in this article are found in Title 12 CFR Regulation Z 226.15

Who is able to rescind a loan?

The right of rescission doesn’t apply just to borrowers.  All consumers who have an ownership interest in the property have the right to rescind.

While other parts of Regulation Z typically focus on the borrowers, this is one area where you need to look beyond the applicants, and identify any and all owners of the home being pledged on the transaction. Often times this will require looking at title work and making note of all fee owners of the property.

What does the right of rescission require of lenders?

The right of rescission requires lenders to provide certain “material disclosures” and multiple copies of the right of rescission notice to EACH owner of the property.  Following proper disclosures, lenders must wait at least three business days (until you are reasonably satisfied that the owners have not rescinded) before disbursing loan proceeds.
When does the three-day rescission time clock begin to tick?

The three-day right of rescission period begins once the material disclosures and notice have been given, and lasts three full business days. Business days are defined by Regulation Z to include all calendar days except Sundays and federal holidays. Saturday IS considered a business day for rescission purposes, regardless of whether your offices are open.

In order to properly complete the Notice of Right to Rescind form, you need to know how to calculate the rescission period.  Consider the following example.

Assume a closing is set for Thursday, November 15th, 2001, and that all material disclosures and notices are provided to the parties at that time. The rescission period would run:

Friday, November 16, 2001;

Saturday, November. 17, 2001, and

Monday, November 19, 2001.

Sunday is not counted since it is not considered a business day. The rescission period would end at midnight on November 19, 2001.
When may a borrower waive the right of rescission?

Regulation Z allows borrowers to waive their rescission rights, but this exception only applies in very limited circumstances. The law is protective of the right of rescission, and you should be too.

Borrowers may waive their rescission rights and receive their loan proceeds immediately only if they have what is called a “bona fide personal financial emergency.” This means a financial emergency of the magnitude that waiting an additional three days will be personally or financially devastating to the borrower.  It might include situations involving natural disasters such as flooding, or a medical emergency that requires immediate funds. When this type of situation does arise, the borrower must provide a written explanation of his or her circumstances to the financial institution. This is not a document that you should draft for the borrower.

Waiving the right of rescission is not a common practice, mostly because doing it wrong can backfire and create a rescind able loan, causing all kinds of problems down the road.

What happens once the rescission period is over?

After the right-of-rescission period has expired, make sure you feel reasonably certain that the consumer has not rescinded before you disburse the loan proceeds.  There are some risks in disbursing after the third day.  For example, the law allows consumers to exercise their rescission rights by mail, and a rescission is effective when mailed.  Thus, a rescission mailed on the third day after closing is effective even though the lender may not receive it until the fourth or fifth day after the closing. Because of this potential timing problem, Regulation Z suggests that lenders take extra precautions to ensure that the loan has not been rescinded.

To avoid further delay of the loan proceeds, you may want to obtain a confirmation statement from all the owners stating that they have not exercised their rescission rights. Such a written confirmation provides written documentation that the transaction has not been rescinded. Notice of rescission form contains this confirmation language, which can be an effective way to resolve the rescission issue quickly.

(Note, however, that owners should not sign this confirmation until after the three day period is over.  Otherwise, it may look like they have improperly waived their rescission rights.)

What are the consequences of noncompliance?

There are serious consequences for failing to follow the right-of-rescission rules.  First, until a lender provides the material disclosures and the proper Notice of Right to Rescind, the three-business day rescission period does not start to run, and the transaction remains rescindable for up to three years.  And once a consumer rescinds a transaction, the security interest in the property becomes void and you must reimburse the consumer for all of the finance charges collected over the life of the loan.

Keep in mind that most rescission errors are alleged in response to collection actions or other litigation initiated by the lender.  Because of this, it is important to regularly review your institution’s right of rescission compliance program generally, as well as to verify compliance on the individual level before initiating action against any one borrower.

The following article discussed other particulars of this matter:

Right of Rescission in Times of Foreclosure
By Ken Shim, Senior Examiner, Federal Reserve Bank of New York

Reports of rising numbers of foreclosures continue to dominate the evening news. A joint report from the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) issued in March 2010 stated that for the institutions they supervise, mortgages classified as seriously delinquent (in bankruptcy or 60 or more days past due) increased 13.8 percent during the fourth quarter of 2009.  Serious delinquencies for prime mortgages, which make up two-thirds of the mortgages in the institutions’ portfolios, showed a 75 percent increase from a year ago. The report further states that nearly 40 percent of residential mortgage loans for institutions supervised by the OCC and OTS that went through loan modification programs became seriously delinquent only 12 months after the modification. In this economic environment, the number of foreclosures is not likely to decline any time soon.

It is therefore important that lenders pay close attention to the rescission provisions of Regulation Z, the implementing regulation for the Truth in Lending Act (TILA). Rescission provides consumers with the right to rescind certain credit transactions secured by their principal dwelling for up to three business days after consummation. However, if creditors fail to provide borrowers with the notice of the right of rescission or the material TILA disclosures, the rescission period is extended to three years. Attorneys representing borrowers in foreclosure will typically scrutinize the notice and TILA disclosures for any violations that would extend the rescission period to three years.

Transactions Subject to the Right of Rescission

In general, the right of rescission applies to both open-end (§226.15) and closed-end (§226.23) consumer credit transactions secured by the consumer’s principal dwelling. However, certain transactions are exempt. For open-end credit, §226.15(f) exempts a “residential mortgage transaction” (a loan to purchase or construct a principal dwelling) and a credit plan in which a state agency is a creditor. For closed-end credit, §226.23(f) exempts the following transactions: (1) a residential mortgage transaction; (2) a refinancing by the same creditor for a previous extension of credit already secured by the consumer’s principal dwelling; (3) a transaction in which a state agency is a creditor; (4) an advance, other than the initial advance, in a series of advances; and (5) a renewal of optional insurance premiums not considered a refinancing under §226.20(a)(5).

These exemptions can create ambiguities. For example, if a borrower offers her current residence as collateral to finance the construction or purchase of another property to be used as a principal residence in the near future, is the loan subject to rescission? The Official Staff Commentary (OSC) to Regulation Z addresses this issue in comment 226.23(a)(1)-4 for closed-end credit and comment 226.15(a)(1)-6 for open-end credit: Transactions such as bridge loans are subject to the right of rescission. The right of rescission also applies when the bridge loan is secured by both the current residence and the new property to be used as a principal residence. The consumer’s current principal dwelling triggers rescission rights in this circumstance because the bridge loan is secured by the current dwelling and is not for the purpose of purchasing that dwelling. But if the consumer’s construction loan for a new principal dwelling is secured only by the new dwelling, the loan would qualify as a residential mortgage transaction that is exempt from rescission.

Another complex situation is whether the residential mortgage transaction exemption applies when a consumer obtains an open-end credit line and uses a portion of the line for a down payment to purchase a dwelling securing the remainder of the line. In this circumstance, comment 226.15(f)-1 clarifies that only the portion of the line used for the down payment is exempt from the right of rescission.

For refinancing of closed-end credit, the right of rescission applies under comment 226.23(f)-4 if a new creditor is involved or if a new advance is made by the existing creditor. A new advance does not include the cost of the refinancing, such as attorney’s fees, title examination, and insurance fees, if bona fide and reasonable. It also does not include any finance charges paid or payable with the new loan.
Regulatory Requirements

Congress included the right of rescission in the TILA legislation to protect homeowners from the practices of unscrupulous home improvement contractors who obtain liens on their customers’ houses, often without their customers’ knowledge. Representative John Sullivan stated that TILA’s rescission requirements would “strike at home improvement racketeers who trick homeowners, particularly the poor, into signing contracts at exorbitant rates, which turn out to be liens on the family residences.”

To protect homeowners from such abuses, Regulation Z requires lenders to provide, in addition to the TILA disclosure statement, two copies of the notice of the right to rescind to each consumer who has an ownership interest in the property. One copy is for the consumer to send to the lender to rescind the loan during the three-business-day period, and the other copy is for the consumer to keep for his or her records, since it contains important information about the consumer’s rights and responsibilities. However, if the notice is delivered in electronic format in accordance with the Electronic Signatures in Global and National Commerce Act (the E-Sign Act), only one copy has to be provided to each consumer.4 The notice must disclose the retention or acquisition of a security interest in the consumer’s principal dwelling, the consumer’s right to rescind, the procedure for the consumer to exercise the right, the effect of exercising the right of rescission, and the date the rescission period ends.

If the lender fails to provide a properly completed rescission notice or if the creditor fails to deliver any of the material disclosures, the consumer’s right to rescind is extended for a period of three years.5 For example, the United States Court of Appeals for the Seventh Circuit held in Handy v. Anchor Mortgage Corporation, 464 F.3d 760 (7th Cir. 2006), that the rescission period was extended from three business days to three years because the creditor provided the borrower with two different model rescission notice forms: H-8 (the general form) and H-9 (refinancing with original creditor). Form H-8 was appropriate for the transaction. The court held that providing two forms, one of which was incorrect for the transaction, violated TILA’s “clear and conspicuous” requirements. Similarly, in Harris v. OSI Financial Services, Inc., 595 F.Supp.2d 885 (N.D. Ill. 2009), the court extended the rescission period to three years because the creditor used model form H-8 when it should have used form H-9.

Lenders are prohibited from disbursing the funds (other than in escrow), performing services for the consumer, or delivering materials to the consumer until the three-business-day rescission period has ended, and the lender has reasonable assurance that the consumer has not rescinded the transaction. Failure to comply with the three-business-day waiting period requirement can have serious consequences. For example, in Rand Corporation v. Yer Song Moua, 559 F.3d 842 (8th Cir. 2009), the Eighth Circuit held that a creditor who required borrowers to sign a statement at loan closing acknowledging receipt of the rescission notice and falsely stating that the three-day rescission period had passed and that the borrowers had not rescinded the transaction violated TILA and extended the rescission period from three business days to three years. The court cited numerous other decisions that reached the same conclusion.

All consumers with an ownership interest in the property that will be encumbered by the creditor’s security interest must receive a rescission notice, even if they are not applying for credit. Only one consumer’s exercise of the rescission right is necessary to rescind the loan. Therefore, lenders must be certain that each consumer with an ownership interest has agreed not to rescind by the end of the rescission period. The only time lenders are permitted to disburse the funds prior to the end of the rescission period is when the consumer requests the funds based on a bona fide personal financial emergency.

The three-business-day rescission period begins following the date of consummation, delivery of two notices of the right to rescind to each consumer, or delivery of all material disclosures, whichever occurs last. For the purpose of the right of rescission, business day includes all calendar days except Sundays and legal public holidays. Lenders must disclose the last day for the consumer to rescind the loan by applying this correct definition of business day. In Cornerstone Mortgage, Inc. v. Ponzar, 254 S.W.3d 221 (Mo.App. E.D. 2008), the creditor’s rescission notice erroneously stated that the last day for the borrowers to exercise their right of rescission was January 15, 2006. The correct date was January 17, 2006, but the creditor failed to exclude Sunday and a legal holiday when calculating three business days. As a result, the court held that the rescission period was extended to three years. A related problem occurs when the creditor fails to disclose the deadline for exercising the right of rescission in the rescission notice. In Johnson v. Chase Manhattan Bank USA, N.A., 2007 WL 2033833 (E.D.Pa. July 11, 2007), the court extended the rescission period to three years because the creditor left a blank in the deadline area of the rescission notice: “If you cancel by mail or telegram, you must send the notice no later than midnight of [left blank] (or midnight of the third business day following the latest of the three events listed above).”

It is important to understand the definition of “consummation” for the purpose of calculating the three-business-day rescission period. Section 226.2(a)(13) defines “consummation” as “the time that a consumer becomes contractually obligated on a credit transaction.” Comment 226.2(a)(13)-1 clarifies that this determination must be made by reference to applicable state law. For example, in Murphy v. Empire of America, FSA, 746 F.2d 931, 934 (2d Cir. 1984), the Second Circuit concluded, based on New York law, that consummation occurred once the borrowers accepted the lender’s commitment offer.

The meaning of “consummation” is also important for determining whether a consumer can exercise the right of rescission. The Fourth Circuit recently had to determine whether loan applicants could exercise the right of rescission for an unconsummated credit transaction. In Weintraub v. Quicken Loans, Inc., 594 F.3d 270 (4th Cir. 2010), applicants who had been approved for a loan attempted to rescind it prior to closing to obtain a refund of their deposit because the rate increased. The court rejected their rescission request because it found that rescission applies only to consummated credit transactions, and the loan was never consummated. The Weintraub case is discussed in greater detail in “On the Docket.”

Material Disclosures for the Purpose of Rescission

The three-business-day rescission clock commences following the date of consummation, delivery of two notices of the right to rescind, or delivery of all the material disclosures, whichever occurs last. Material disclosures are defined in footnote 36 of §226.15(a)(3) for open-end credit and in footnote 48 of §226.23(a)(3) for closed-end credit. For open-end transactions, the material disclosures are:

the method of determining the finance charge and the balance upon which a finance charge will be imposed;
the annual percentage rate (APR);
the amount or method of determining the amount of any membership or participation fee that could be charged;
the length of the draw period and any repayment period;
an explanation of how the minimum payment is calculated;
the timing of the payments; and
if payment of only the minimum periodic payment may not repay any of the principal or may repay less than the outstanding balance, a statement of this fact as well as that a balloon payment may result.

For closed-end transactions, the material disclosures are:

the APR;
the finance charge;
the amount financed;
the total of payments;
the payment schedule;
the high-cost loan disclosures in §226.32(c) and restrictions in §226.32(d); and
the restrictions on prepayment penalties for higher priced mortgage loans in §226.35(b)(2)

Rescission Tolerance

Creditors should be especially careful with disclosures for the APR, the finance charge, and the payment schedule because violations of these disclosures most frequently trigger the three-year rescission period. Section 226.23(g) provides a tolerance for errors in disclosures affected by the finance charge, including the amount financed and the APR. These disclosures are considered accurate if the disclosed finance charge is understated by no more than 0.5 percent of the face amount of the note or $100, whichever is greater, or if it is overstated by any amount. For a refinance with a new creditor, the disclosures are considered accurate if the finance charge is understated by no more than 1 percent of the face amount of the note or $100, whichever is greater. A special rule applies when the consumer’s principal dwelling securing a consumer credit transaction is in foreclosure. The disclosed finance charge is accurate if it is understated by no more than $35 or if it is overstated. Thus, the margin of error in foreclosure proceedings is lower.

The regulation does not provide any accuracy tolerances for the payment schedule disclosures. Therefore, any error involving this material disclosure can trigger a three-year rescission period. For example, in Hamm v. Ameriquest Mortgage Company, 506 F.3d 525 (7th Cir. 2007), the Seventh Circuit held that a creditor’s disclosure statement that identified the payment amount and the number of payments (360) but failed to state that payments were due monthly violated TILA. As a result, the consumer was granted three years to exercise the right to rescind.

Exercising Rescission Rights

Once the borrower exercises the right of rescission, any security interest the creditor obtained is void, regardless of its status and whether it was recorded or perfected. The borrower cannot be required to pay any amount to the lender or a third party in connection with the credit transaction. Any amounts already paid, including broker fees, application and commitment fees, or fees for a title search or an appraisal, must be refunded. Within 20 calendar days after receipt of the notice of rescission, the lender must take action to terminate the security interest and return any money in connection with the transaction. When the lender has complied with these requirements, the borrower must tender the money or property to the lender.8 If the lender fails to take possession of the money or property within 20 calendar days after the borrower’s tender, the borrower may keep it without further obligation. However, these procedures may be modified by court order.

Statute of Limitation for Rescission

In cases where the right of rescission is extended to three years, the question has arisen whether courts can extend the three-year period. The United States Supreme Court addressed this issue in Beach v. Ocwen Federal Bank, 523 U.S. 410 (1998), where the court held that the borrower’s right of rescission expires three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first, even if the lender failed to provide all material disclosures or notice of the right of rescission. The court based this conclusion on the express language in §125(f) of TILA (15 U.S.C. §1635(f)): “An obligor’s right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first, notwithstanding the fact that the information and forms required under this section or any other disclosures required under this part have not been delivered to the obligor.”

This limitation on extending the three-year period also applies to mortgages in foreclosure under §125(i)(1) of TILA (15 U.S.C. §1635(i)(1)).

Another important limitation on the right of rescission concerns lawsuits seeking class-action certification for violations of the right of rescission. A number of courts have recently held that the right of rescission cannot be adjudicated in a class-action lawsuit because rescission raises individual issues that are not appropriate for class-wide determination. See Andrews v. Chevy Chase Bank, 545 F.3d 570 (7th Cir. 2008), McKenna v. First Horizon Home Loan Corp., 475 F.3d 418 (1st Cir. 2007), and LaLiberte v. Pacific Mercantile Bank, 53 Cal. Rptr.3d 745 (Cal. Ct. App. 2007).

In addition, institutions purchasing loans are subject to the right of rescission. Under §131(c) of TILA, (15 U.S.C. §1641(c)), any consumer who has the right to rescind a transaction may rescind against any assignee. See, for example, Shepeard v. Quality Siding & Window Factory, Inc., 730 F.Supp. 1295 (D.Del. 1990) (allowing consumers to exercise rescission against an assignee).

Conclusion

The current mortgage crisis has made compliance with the requirements of the right of rescission under TILA more important than ever. Creditors must ensure compliance with Regulation Z technical rules related to rescission. At a minimum, lenders must establish clear and detailed procedures and provide sufficient training to their staff to ensure day-to-day compliance with these provisions. One mistake can result in a three-year rescission period and lost fees and interest over that period. Specific issues and questions should be raised with the consumer compliance contact at your Reserve Bank or with your primary regulator.

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Banks and Lenders Getting More Rigid with Loan Qualifications

16 Thursday May 2013

Posted by BNG in Loan Modification

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Asset, Boston, Credit history, Debt-to-income ratio, Evans, Loan, New York Times, Social Security

As regulators crack down on shady lending practices, banks and lending institutions are getting more and more rigid with loan qualifications. In fact, a recent New York Times article detailed one retiree’s struggle to obtain a mortgage even with excellent credit history and healthy retirement and brokerage accounts. In addition to demands for the usual debt standards, lenders also ask for consistent monthly income.

The retiree spotlighted in the article had applied for a $174,000 loan to finance the purchase of an apartment. His brokerage accounts exceed $1 million; he receives monthly Social Security checks and dividend distributions, and he has a credit score of 822. Able to make a 40% down payment, Sanford Evans thought he wouldn’t confront any problems qualifying for the loan. In fact, he would’ve paid all cash if interest rates weren’t so low. It made more financial sense for him to apply for a low-interest loan.

Nevertheless, after being assured by his loan officer that Evans, who was moving from a condo in Boston, would easily qualify, the process dragged on for months. Ultimately, the lender told him there was a problem with his income. Evans supplemented his monthly earnings with a part-time medical writing job for a Boston area hospital. The lender wouldn’t count this as income since he was moving out of Boston. This angered Evans. With more than enough money in the bank, the writing job seemed inconsequential. Evans’ financial security was clear as day on paper.

While most lenders measure income in similar ways, sometimes there are various differences with regard to lender interpretation of income. For “income-deficient, asset-rich” retirees, lenders are starting to use a process known as asset depletion. A fraction of assets are amortized and then applied as income. Ultimately, the process of asset depletion is what qualified Evans for the loan (after several exasperating months). However, by then he had already taken his business elsewhere, to a lender who interpreted his income differently given that he planned to work remotely for the Boston employer.

It’s easy to make assumptions about your own debt-to-income ratio, however, it’s important to understand that various lenders may interpret your borrower profile differently. Ask questions, and clarify lender definitions of income, taxable income, assets, debt, and everything else that a lender plans to evaluate.

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Steps To Complete Your Loan Modification Application

15 Wednesday May 2013

Posted by BNG in Loan Modification

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Bank statement, Computer program, Finance, Financial statement, HAMP, Home Affordable Modification Program, Mortgage loan, Mortgage modification

There is a way that you can gain some control over the outcome of your loan modification and get the help you need and deserve.  You must decide to be as proactive and persistent as possible, after all you are fighting for you family’s home and the bank is not always going to be cooperative.  How can you make sure that you complete your loan modification application correctly and do all the steps the right way?  Here is a checklist you can use to get started.
Step 1:  Before you ever contact the bank to get the loan modification process started, spend just a couple of hours learning the basic guidelines for HAMP-the government bailout plan.  Why this plan?  Well for starters, it is the most aggressive and beneficial for homeowners as it features the lowest terms.  Also, the guidelines for approval are standard and they are published-we know what they are.  It just makes sense to know what you are trying to get approved for before you fill out your application.  Otherwise, how do you know if you fit into the guidelines or not?  This is not the time to “guess”-this is the time to be certain.
Step 2:  Gather all of the required loan modification forms, income documentation, bank statements, monthly bills, and any other paperwork needed to prepare your application.  Set aside several, uninterrupted hours to work on it.  You do not want to start and then have to stop while you search for something-that is distracting and will cause you to make mistakes.  You can follow a checklist of items need in The Complete Loan Modification Guide kit.  You will also learn how to write an effective Hardship Letter to include in your package.
Step 3:  Use all of your income, asset, and monthly expenses to prepare your own financial statement.  Now, this is where it gets tricky.  Your financial statement MUST be completed properly-this means that you have fine tuned your figures so that you know you fit into those HAMP guidelines-the mathematical formula involves your debt ratio, new target payment and disposable income.  How can you know you have done your figures correctly?  Well, you can take a lot of confusion out of preparing your statement by using a software program designed just for homeowners.  This program actually mimics the HAMP guidelines and all you have to do is input your monthly income and monthly expense-all the calculations are done automatically.  You see immediately where any adjustments might need to be made.
Step 4:  Fine tune your budget so that the calculator shows you are passing the HAMP guidelines-then prepare your financial statement using these figures.  Now you can be confident that your budget has the best chance of qualifying.  Follow the checklist to put together your complete, accurate and acceptable loan modification package.
Step 5:  Now you are ready and prepared-call your Bank and tell them you are facing financial difficulties and want to apply for HAMP.  You will be asked to provide your monthly income and expenses-no problem!  You have already done your homework and you can easily and quickly provide the information will need.
Step 6:  Be persistent and follow up at least once a day to make sure that your file is moving forward.  The new guidelines mandate that the bank must provide a final answer to applicants within 30 days of receiving a complete package.  So, now you will have your answer quickly because you knew how to prepare and submit a complete, accurate and acceptable Loan Modification application.

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