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Tag Archives: New York

Wrongful Foreclosure Homeowner Wins – State Law Prevailed While Securitizatiion Failed

22 Sunday Dec 2013

Posted by BNG in Affirmative Defenses, Appeal, Case Laws, Case Study, Federal Court, Foreclosure Defense, Fraud, Judicial States, Legal Research, Litigation Strategies, Loan Modification, Non-Judicial States, Pleadings, Pro Se Litigation, Securitization, State Court, Trial Strategies, Your Legal Rights

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Bank of America, California Court of Appeal, Deed of Trust, Foreclosure, Glaski, New York, Thomas Glaski, Washington Mutual

CASE STUDY:

INTRODUCTION

Before Washington Mutual Bank, FA (WaMu) was seized by federal banking regulators in 2008, it made many residential real estate loans and used those loans as collateral for mortgage-backed securities.1

Many of the loans went into default, which led to nonjudicial foreclosure proceedings.

Some of the foreclosures generated lawsuits,  which raised a wide variety of claims.

The allegations that the instant case shares with some of the other lawsuits are that

(1) documents related to the foreclosure contained forged signatures of Deborah Brignac and (2) the foreclosing entity was not the true owner of the loan because its chain of ownership had been broken by a defective transfer of the loan to the securitized trust established for the mortgage-backed securities. Here, the specific defect alleged is that the attempted transfers were made after the closing date of the securitized trust holding the pooled mortgages and therefore the transfers were ineffective.

In this appeal, the borrower contends the trial court erred by sustaining defendants’ demurrer as to all of his causes of action attacking the nonjudicial foreclosure. We conclude that, although the borrower’s allegations are somewhat confusing and may contain contradictions, he nonetheless has stated a wrongful foreclosure claim under the lenient standards applied to demurrers. We conclude that a borrower may challenge the securitized trust’s chain of ownership by alleging the attempts to transfer the deed of trust to the securitized trust (which was formed under New York law) occurred after the trust’s closing date. Transfers that violate the terms of the trust instrument are void under New York trust law, and borrowers have standing to challenge void assignments of their loans even though they are not a party to, or a third party beneficiary of, the assignment agreement.

H. Causes of Action Stated Based on the foregoing, we conclude that Glaski’s fourth cause of action has stated a claim for wrongful foreclosure. It follows that Glaski also has stated claims for quiet title (third cause of action), declaratory relief (fifth cause of action), cancellation of instruments (eighth cause of action), and unfair business practices under Business and Professions Code section 17200 (ninth cause of action).

We therefore reverse the judgment of dismissal and remand for further proceedings.

THOMAS A. GLASKI, Plaintiff and Appellant,
v.
BANK OF AMERICA, NATIONAL ASSOCIATION et al. Defendants and Respondents.

No. F064556.
Court of Appeals of California, Fifth District.
Filed July 31, 2013.
Publish order August 8, 2013.
Law Offices of Richard L. Antognini and Richard L. Antognini; Law Offices of Catarina M. Benitez and Catarina M. Benitez, for Plaintiff and Appellant.

AlvaradoSmith, Theodore E. Bacon, and Mikel A. Glavinovich, for Defendants and Respondents.

CERTIFIED FOR PUBLICATION
OPINION

FRANSON, J.

INTRODUCTION

INTRODUCTION

Before Washington Mutual Bank, FA (WaMu) was seized by federal banking regulators in 2008, it made many residential real estate loans and used those loans as collateral for mortgage-backed securities.[1] Many of the loans went into default, which led to nonjudicial foreclosure proceedings. Some of the foreclosures generated lawsuits, which raised a wide variety of claims. The allegations that the instant case shares with some of the other lawsuits are that (1) documents related to the foreclosure contained forged signatures of Deborah Brignac and (2) the foreclosing entity was not the true owner of the loan because its chain of ownership had been broken by a defective transfer of the loan to the securitized trust established for the mortgage-backed securities. Here, the specific defect alleged is that the attempted transfers were made after the closing date of the securitized trust holding the pooled mortgages and therefore the transfers were ineffective.

In this appeal, the borrower contends the trial court erred by sustaining defendants’ demurrer as to all of his causes of action attacking the nonjudicial foreclosure. We conclude that, although the borrower’s allegations are somewhat confusing and may contain contradictions, he nonetheless has stated a wrongful foreclosure claim under the lenient standards applied to demurrers. We conclude that a borrower may challenge the securitized trust’s chain of ownership by alleging the attempts to transfer the deed of trust to the securitized trust (which was formed under New York law) occurred after the trust’s closing date. Transfers that violate the terms of the trust instrument are void under New York trust law, and borrowers have standing to challenge void assignments of their loans even though they are not a party to, or a third party beneficiary of, the assignment agreement.

We therefore reverse the judgment of dismissal and remand for further proceedings.

FACTS – The Loan

Thomas A. Glaski, a resident of Fresno County, is the plaintiff and appellant in this lawsuit. The operative second amended complaint (SAC) alleges the following: In July 2005, Glaski purchased a home in Fresno for $812,000 (the Property). To finance the purchase, Glaski obtained a $650,000 loan from WaMu. Initial monthly payments were approximately $1,700. Glaski executed a promissory note and a deed of trust that granted WaMu a security interest in the Property (the Glaski deed of trust). Both documents were dated July 6, 2005. The Glaski deed of trust identified WaMu as the lender and the beneficiary, defendant California Reconveyance Company (California Reconveyance) as the trustee, and Glaski as the borrower.

Paragraph 20 of the Glaski deed of trust contained the traditional terms of a deed of trust and states that the note, together with the deed of trust, can be sold one or more times without prior notice to the borrower. In this case, a number of transfers purportedly occurred. The validity of attempts to transfer Glaski’s note and deed of trust to a securitized trust is a fundamental issue in this appeal.

Paragraph 22—another provision typical of deeds of trust—sets forth the remedies available to the lender in the event of a default. Those remedies include (1) the lender’s right to accelerate the debt after notice to the borrower and (2) the lender’s right to “invoke the power of sale” after the borrower has been given written notice of default and of the lender’s election to cause the property to be sold. Thus, under the Glaski deed of trust, it is the lender-beneficiary who decides whether to pursue nonjudicial foreclosure in the event of an uncured default by the borrower. The trustee implements the lender-beneficiary’s decision by conducting the nonjudicial foreclosure.[2]

Glaski’s loan had an adjustable interest rate, which caused his monthly loan payment to increase to $1,900 in August 2006 and to $2,100 in August 2007. In August 2008, Glaski attempted to work with WaMu’s loan modification department to obtain a modification of the loan. There is no dispute that Glaski defaulted on the loan by failing to make the monthly installment payments.

Creation of the WaMu Securitized Trust

In late 2005, the WaMu Mortgage Pass-Through Certificates Series 2005-AR17 Trust was formed as a common law trust (WaMu Securitized Trust) under New York law. The corpus of the trust consists of a pool of residential mortgage notes purportedly secured by liens on residential real estate. La Salle Bank, N.A., was the original trustee for the WaMu Securitized Trust.[3] Glaski alleges that the WaMu Securitized Trust has no continuing duties other than to hold assets and to issue various series of certificates of investment. A description of the certificates of investment as well as the categories of mortgage loans is included in the prospectus filed with the Securities and Exchange Commission (SEC) on October 21, 2005. Glaski alleges that the investment certificates issued by the WaMu Securitized Trust were duly registered with the SEC.

The closing date for the WaMu Securitized Trust was December 21, 2005, or 90 days thereafter. Glaski alleges that the attempt to assign his note and deed of trust to the WaMu Securitized Trust was made after the closing date and, therefore, the assignment was ineffective. (See fn. 12, post.)

WaMu’s Failure and Transfers of the Loan

In September 2008, WaMu was seized by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation (FDIC) was appointed as a receiver for WaMu. That same day, the FDIC, in its capacity as receiver, sold the assets and liabilities of WaMu to defendant JPMorgan Chase Bank, N.A., (JP Morgan). This transaction was documented by a “PURCHASE AND ASSUMPTION AGREEMENT WHOLE BANK” (boldface and underlining omitted) between the FDIC and JP Morgan dated as of September 25, 2008. If Glaski’s loan was not validly transferred to the WaMu Securitized Trust, it is possible, though not certain, that JP Morgan acquired the Glaski deed of trust when it purchased WaMu assets from the FDIC.[4] JP Morgan also might have acquired the right to service the loans held by the WaMu Securitized Trust.

In September 2008, Glaski spoke to a representative of defendant Chase Home Finance LLC (Chase),[5] which he believed was an agent of JP Morgan, and made an oral agreement to start the loan modification process. Glaski believed that Chase had taken over loan modification negotiations from WaMu.

On December 9, 2008, two documents related to the Glaski deed of trust were recorded with the Fresno County Recorder: (1) an “ASSIGNMENT OF DEED OF TRUST” and (2) a “NOTICE OF DEFAULT AND ELECTION TO SELL UNDER DEED OF TRUST” (boldface omitted; hereinafter the NOD). The assignment stated that JP Morgan transferred and assigned all beneficial interest under the Glaski deed of trust to “LaSalle Bank NA as trustee for WaMu [Securitized Trust]” together with the note described in and secured by the Glaski deed of trust.[6]

Notice of Default and Sale of the Property

The NOD informed Glaski that (1) the Property was in foreclosure because he was behind in his payments[7] and (2) the Property could be sold without any court action. The NOD also stated that “the present beneficiary under” the Glaski deed of trust had delivered to the trustee a written declaration and demand for sale. According to the NOD, all sums secured by the deed of trust had been declared immediately due and payable and that the beneficiary elected to cause the Property to be sold to satisfy that obligation.

The NOD stated the amount of past due payments was $11,200.78 as of December 8, 2008.[8] It also stated: “To find out the amount you must pay, or to arrange for payment to stop the foreclosure, … contact: JPMorgan Chase Bank, National Association, at 7301 BAYMEADOWS WAY, JACKSONVILLE, FL 32256, (877) 926-8937.”

Approximately three months after the NOD was recorded and served, the next official step in the nonjudicial foreclosure process occurred. On March 12, 2009, a “NOTICE OF TRUSTEE’S SALE” was recorded by the Fresno County Recorder (notice of sale). The sale was scheduled for April 1, 2009. The notice stated that Glaski was in default under his deed of trust and estimated the amount owed at $734,115.10.

The notice of sale indicated it was signed on March 10, 2009, by Deborah Brignac, as Vice President for California Reconveyance. Glaski alleges that Brignac’s signature was forged to effectuate a fraudulent foreclosure and trustee’s sale of his primary residence.

Glaski alleges that from March until May 2009, he was led to believe by his negotiations with Chase that a loan modification was in process with JP Morgan.

Despite these negotiations, a nonjudicial foreclosure sale of the Property was conducted on May 27, 2009. Bank of America, as successor trustee for the WaMu Securitized Trust and beneficiary under the Glaski deed of trust, was the highest bidder at the sale.

On June 15, 2009, another “ASSIGNMENT OF DEED OF TRUST” was recorded with the Fresno County Recorder. This assignment, like the assignment recorded in December 2008, identified JP Morgan as the assigning party. The entity receiving all beneficial interest under the Glaski deed of trust was identified as Bank of America, “as successor by merger to `LaSalle Bank NA as trustee for WaMu [Securitized Trust]. …”[9] The assignment of deed of trust indicates it was signed by Brignac, as Vice President for JP Morgan. Glaski alleges that Brignac’s signature was forged.

The very next document filed by the Fresno County Recorder on June 15, 2009, was a “TRUSTEE’S DEED UPON SALE.” (Boldface omitted.) The trustee’s deed upon sale stated that California Reconveyance, as the duly appointed trustee under the Glaski deed of trust, granted and conveyed to Bank of America, as successor by merger to La Salle NA as trustee for the WaMu Securitized Trust, all of its right, title and interest to the Property. The trustee’s deed upon sale stated that the amount of the unpaid debt and costs was $738,238.04 and that the grantee, paid $339,150 at the trustee’s sale, either in lawful money or by credit bid.

PROCEEDINGS

In October 2009, Glaski filed his original complaint. In August 2011, Glaski filed the SAC, which alleged the following numbered causes of action:

(1) Fraud against JPMorgan and California Reconveyance for the alleged forged signatures of Deborah Brignac as vice president for California Reconveyance and then as vice president of JPMorgan;

(2) Fraud against all defendants for their failure to timely and properly transfer the Glaski loan to the WaMu Securitized Trust and their representations to the contrary;

(3) Quiet title against Bank of America, Chase, and California Reconveyance based on the broken chain of title caused by the defective transfer of the loan to the WaMu Securitized Trust;

(4) Wrongful foreclosure against all defendants, based on the forged signatures of Deborah Brignac and the failure to timely and properly transfer the Glaski loan to the WaMu Securitized Trust;

(5) Declaratory relief against all defendants, based on the above acts by defendants;

(8) Cancellation of various foreclosure documents against all defendants, based on the above acts by the defendants; and

(9) Unfair practices under California Business and Professions Code section 17200, et seq., against all defendants.

Among other things, Glaski raised questions regarding the chain of ownership, by contending that the defendants were not the lender or beneficiary under his deed of trust and, therefore, did not have the authority to foreclose.

In September 2011, defendants filed a demurrer that challenged each cause of action in the SAC on the grounds that it failed to state facts sufficient to constitute a claim for relief. With respect to the wrongful foreclosure cause of action, defendants argued that Glaski failed to allege (1) any procedural irregularity that would justify setting aside the presumptively valid trustee’s sale and (2) that he could tender the amount owed if the trustee’s sale were set aside.

To support their demurrer to the SAC, defendants filed a request for judicial notice concerning (1) Order No. 2008-36 of the Office of Thrift Supervision, dated September 25, 2008, appointing the FDIC as receiver of Washington Mutual Bank and (2) the Purchase and Assumption Agreement Whole Bank between the FDIC and JP Morgan dated as of September 25, 2008, concerning the assets, deposits and liabilities of Washington Mutual Bank.[10]

Glaski opposed the demurrer, arguing that breaks in the chain of ownership of his deed of trust were sufficiently alleged. He asserted that Brignac’s signature was forged and the assignment bearing that forgery was void. His opposition also provided a more detailed explanation of his argument that his deed of trust had not been effectively transferred to the WaMu Securitized Trust that held the pool of mortgage loans. Thus, in Glaski’s view, Bank of America’s claim as the successor trustee is flawed because the trust never held his loan.

On November 15, 2011, the trial court heard argument from counsel regarding the demurrer. Counsel for Glaski argued, among other things, that the possible ratification of the allegedly forged signatures of Brignac presented an issue of fact that could not be resolved at the pleading stage.

Later that day, the court filed a minute order adopting its tentative ruling. As background for the issues presented in this appeal, we will describe the trial court’s ruling on Glaski’s two fraud causes of action and his wrongful foreclosure cause of action.

The ruling stated that the first cause of action for fraud was based on an allegation that defendants misrepresented material information by causing a forged signature to be placed on the June 2009 assignment of deed of trust. The ruling stated that if the signature of Brignac was forged, California Reconveyance “ratified the signature by treating it as valid.” As an additional rationale, the ruling cited Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149 (Gomes) for the proposition that the exhaustive nature of California’s nonjudicial foreclosure scheme prohibited the introduction of additional requirements challenging the authority of the lender’s nominee to initiate nonjudicial foreclosure.

As to the second cause of action for fraud, the ruling noted the allegation that the Glaski deed of trust was transferred to the WaMu Securitized Trust after the trust’s closing date and summarized the claim as asserting that the Glaski deed of trust had been improperly transferred and, therefore, the assignment was void ab initio. The ruling rejected this claim, stating: “[T]o reiterate, Gomes v. Countrywide, supra holds that there is no legal basis to challenge the authority of the trustee, mortgagee, beneficiary, or any of their authorized agents to initiate the foreclosure process citing Civil Code § 2924, subd. (a)(1).”

The ruling stated that the fourth cause of action for wrongful foreclosure was “based upon the invalidity of the foreclosure sale conducted on May 27, 2009 due to the `forged’ signature of Deborah Brignac and the failure of Defendants to `provide a chain of title of the note and the mortgage.’” The ruling stated that, as explained earlier, “these contentions are meritless” and sustained the general demurrer to the wrongful foreclosure claim without leave to amend.

Subsequently, a judgment of dismissal was entered and Glaski filed a notice of appeal.

DISCUSSION
I. STANDARD OF REVIEW

The trial court sustained the demurrer to the SAC on the ground that it did “not state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).) The standard of review applicable to such an order is well settled. “[W]e examine the complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory. …” (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415.)

When conducting this de novo review, “[w]e give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] Further, we treat the demurrer as admitting all material facts properly pleaded, but do not assume the truth of contentions, deductions or conclusions of law. [Citations.]” (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865.) Our consideration of the facts alleged includes “those evidentiary facts found in recitals of exhibits attached to a complaint.” (Satten v. Webb (2002) 99 Cal.App.4th 365, 375.) “We also consider matters which may be judicially noticed.” (Serrano v. Priest (1971) 5 Cal.3d 584, 591; see Code Civ. Proc., § 430.30, subd. (a) [use of judicial notice with demurrer].) Courts can take judicial notice of the existence, content and authenticity of public records and other specified documents, but do not take judicial notice of the truth of the factual matters asserted in those documents. (Mangini v. R.J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1063, overruled on other grounds in In re Tobacco Cases II (2007) 41 Cal.4th 1257, 1262.) We note “in passing upon the question of the sufficiency or insufficiency of a complaint to state a cause of action, it is wholly beyond the scope of the inquiry to ascertain whether the facts stated are true or untrue” as “[t]hat is always the ultimate question to be determined by the evidence upon a trial of the questions of fact.” (Colm v. Francis (1916) 30 Cal.App. 742, 752.))

II. FRAUD
A. Rules for Pleading Fraud

The elements of a fraud cause of action are (1) misrepresentation, (2) knowledge of the falsity or scienter, (3) intent to defraud—that is, induce reliance, (4) justifiable reliance, and (5) resulting damages. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) These elements may not be pleaded in a general or conclusory fashion. (Id. at p. 645.) Fraud must be pled specifically—that is, a plaintiff must plead facts that show with particularity the elements of the cause of action. (Ibid.)

In their demurrer, defendants contended facts establishing detrimental reliance were not alleged.

B. First Cause of Action for Fraud, Lack of Specific Allegations of Reliance

B. First Cause of Action for Fraud, Lack of Specific Allegations of Reliance

Glaski’s first cause of action, which alleges a fraud implemented through forged documents, alleges that defendants’ act “caused Plaintiff to rely on the recorded documents and ultimately lose the property which served as his primary residence, and caused Plaintiff further damage, proof of which will be made at trial.”

This allegation is a general allegation of reliance and damage. It does not identify the particular acts Glaski took because of the alleged forgeries. Similarly, it does not identify any acts that Glaski did not take because of his reliance on the alleged forgeries. Therefore, we conclude that Glaski’s conclusory allegation of reliance is insufficient under the rules of law that require fraud to be pled specifically. (Lazar v. Superior Court, supra, 12 Cal.4th at p. 645.)

The next question is whether the trial court abused its discretion in sustaining the demurrer to the first fraud cause of action without leave to amend.

In March 2011, the trial court granted Glaski leave to amend when ruling on defendants’ motion for judgment on the pleadings. The court indicated that Glaski’s complaint had jumbled together many different statutes and theories of liability and directed Glaski to avoid “chain letter” allegations in his amended pleading.

Glaski’s first amended complaint set forth two fraud causes of action that are similar to those included in the SAC.

Defendants demurred to the first amended complaint. The trial court’s minute order states: “Plaintiff is advised for the last time to plead each cause of action such that only the essential elements for the claim are set forth without reincorporation of lengthy `general allegations’. In other words, the `facts’ to be pleaded are those upon which liability depends (i.e., `the facts constituting the cause of action’).”

After Glaski filed his SAC, defendants filed a demurrer. Glaski then filed an opposition that asserted he had properly alleged detrimental reliance. He did not argue he could amend to allege specifically the action he took or did not take because of his reliance on the alleged forgeries.

Accordingly, Glaski failed to carry his burden of demonstrating he could allege with the requisite specificity the elements of justifiable reliance and damages resulting from that reliance. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 318 [the burden of articulating how a defective pleading could be cured is squarely on the plaintiff].) Therefore, we conclude that the trial court did not abuse its discretion when it denied leave to amend as to the SAC’s first cause of action for fraud.
C. Second Fraud Cause of Action, Lack of Specific Allegations of Reliance

Glaski’s second cause of action for fraud alleged that WaMu failed to transfer his note and deed of trust into the WaMu Securitized Trust back in 2005. Glaski further alleged, in essence, that defendants attempted to rectify WaMu’s failure by engaging in a fraudulent scheme to assign his note and deed of trust into the WaMu Securitized Trust. The scheme was implemented in 2008 and 2009 and its purpose was to enable defendants to fraudulently foreclosure against the Property.

The second cause of action for fraud attempts to allege detrimental reliance in the following sentence: “Defendants, and each of them, also knew that the act of recording the Assignment of Deed of trust without the authorization to do so would cause Plaintiff to rely upon Defendants’ actions by attempting to negotiate a loan modification with representatives of Chase Home Finance, LLC, agents of JP MORGAN.” The assignment mentioned in this allegation is the assignment of deed of trust recorded in June 2009—no other assignment of deed of trust is referred to in the second cause of action.

The allegation of reliance does not withstand scrutiny. The act of recording the allegedly fraudulent assignment occurred in June 2009, after the trustee’s sale of the Property had been conducted. If Glaski was induced to negotiate a loan modification at that time, it is unclear how negotiations occurring after the May 2009 trustee’s sale could have diverted him from stopping the trustee’s sale. Thus, Glaski’s allegation of reliance is not connected to any detriment or damage.

Because Glaski has not demonstrated how this defect in his fraud allegations could be cured by amendment, we conclude that the trial court did not abuse its discretion in denying leave to amend the second cause of action in the SAC.
III. WRONGFUL FORECLOSURE BY NONHOLDER OF THE DEED OF TRUST
A. Glaski’s Theory of Wrongful Foreclosure

Glaski’s theory that the foreclosure was wrongful is based on (1) the position that paragraph 22 of the Glaski deed of trust authorizes only the lender-beneficiary (or its assignee) to (a) accelerate the loan after a default and (b) elect to cause the Property to be sold and (2) the allegation that a nonholder of the deed of trust, rather than the true beneficiary, instructed California Reconveyance to initiate the foreclosure.[11]

In particular, Glaski alleges that (1) the corpus of the WaMu Securitized Trust was a pool of residential mortgage notes purportedly secured by liens on residential real estate; (2) section 2.05 of “the Pooling and Servicing Agreement” required that all mortgage files transferred to the WaMu Securitized Trust be delivered to the trustee or initial custodian of the WaMu Securitized Trust before the closing date of the trust (which was allegedly set for December 21, 2005, or 90 days thereafter); (3) the trustee or initial custodian was required to identify all such records as being held by or on behalf of the WaMu Securitized Trust; (4) Glaski’s note and loan were not transferred to the WaMu Securitized Trust prior to its closing date; (5) the assignment of the Glaski deed of trust did not occur by the closing date in December 2005; (6) the transfer to the trust attempted by the assignment of deed of trust recorded on June 15, 2009, occurred long after the trust was closed; and (7) the attempted assignment was ineffective as the WaMu Securitized Trust could not have accepted the Glaski deed of trust after the closing date because of the pooling and servicing agreement and the statutory requirements applicable to a Real Estate Mortgage Investment Conduit (REMIC) trust.[12]
B. Wrongful Foreclosure by a Nonholder of the Deed of Trust

The theory that a foreclosure was wrongful because it was initiated by a nonholder of the deed of trust has also been phrased as (1) the foreclosing party lacking standing to foreclose or (2) the chain of title relied upon by the foreclosing party containing breaks or defects. (See Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 764; Herrera v. Deutsche Bank National Trust Co., supra, 196 Cal.App.4th 1366 [Deutsche Bank not entitled to summary judgment on wrongful foreclosure claim because it failed to show a chain of ownership that would establish it was the true beneficiary under the deed of trust]; Guerroro v. Greenpoint Mortgage Funding, Inc. (9th Cir. 2010) 403 Fed.Appx. 154, 156 [rejecting a wrongful foreclosure claim because, among other things, plaintiffs “have not pleaded any facts to rebut the unbroken chain of title”].)

In Barrionuevo v. Chase Bank, N.A. (N.D.Cal. 2012) 885 F.Supp.2d 964, the district court stated: “Several courts have recognized the existence of a valid cause of action for wrongful foreclosure where a party alleged not to be the true beneficiary instructs the trustee to file a Notice of Default and initiate nonjudicial foreclosure.” (Id. at p. 973.) We agree with this statement of law, but believe that properly alleging a cause of action under this theory requires more than simply stating that the defendant who invoked the power of sale was not the true beneficiary under the deed of trust. Rather, a plaintiff asserting this theory must allege facts that show the defendant who invoked the power of sale was not the true beneficiary. (See Herrera v. Federal National Mortgage Assn. (2012) 205 Cal.App.4th 1495, 1506 [plaintiff failed to plead specific facts demonstrating the transfer of the note and deed of trust were invalid].)
C. Borrower’s Standing to Raise a Defect in an Assignment

One basis for claiming that a foreclosing party did not hold the deed of trust is that the assignment relied upon by that party was ineffective. When a borrower asserts an assignment was ineffective, a question often arises about the borrower’s standing to challenge the assignment of the loan (note and deed of trust)—an assignment to which the borrower is not a party. (E.g., Conlin v. Mortgage Electronic Registration Systems, Inc. (6th Cir. 2013) 714 F.3d 355, 361 [third party may only challenge an assignment if that challenge would render the assignment absolutely invalid or ineffective, or void]; Culhane v. Aurora Loan Services of Nebraska (1st Cir. 2013) 708 F.3d 282, 291 [under Massachusetts law, mortgagor has standing to challenge a mortgage assignment as invalid, ineffective or void]; Gilbert v. Chase Home Finance, LLC (E.D.Cal., May 28, 2013, No. 1:13-CV-265 AWI SKO) 2013 WL 2318890.)[13]

California’s version of the principle concerning a third party’s ability to challenge an assignment has been stated in a secondary authority as follows:

“Where an assignment is merely voidable at the election of the assignor, third parties, and particularly the obligor, cannot … successfully challenge the validity or effectiveness of the transfer.” (7 Cal.Jur.3d (2012) Assignments, § 43.)

This statement implies that a borrower can challenge an assignment of his or her note and deed of trust if the defect asserted would void the assignment. (See Reinagel v. Deutsche Bank National Trust Co. (5th Cir. 2013) ___ F.3d ___ [2013 WL 3480207 at p. *3] [following majority rule that an obligor may raise any ground that renders the assignment void, rather than merely voidable].) We adopt this view of the law and turn to the question whether Glaski’s allegations have presented a theory under which the challenged assignments are void, not merely voidable.

We reject the view that a borrower’s challenge to an assignment must fail once it is determined that the borrower was not a party to, or third party beneficiary of, the assignment agreement. Cases adopting that position “paint with too broad a brush.” (Culhane v. Aurora Loan Services of Nebraska, supra, 708 F.3d at p. 290.) Instead, courts should proceed to the question whether the assignment was void.

D. Voidness of a Post-Closing Date Transfers to a Securitized Trust

Here, the SAC includes a broad allegation that the WaMu Securitized Trust “did not have standing to foreclosure on the … Property, as Defendants cannot provide the entire chain of title of the note and the [deed of trust].”[14]

More specifically, the SAC identifies two possible chains of title under which Bank of America, as trustee for the WaMu Securitized Trust, could claim to be the holder of the Glaski deed of trust and alleges that each possible chain of title suffers from the same defect—a transfer that occurred after the closing date of the trust.

First, Glaski addresses the possibility that (1) Bank of America’s chain of title is based on its status as successor trustee for the WaMu Securitized Trust and (2) the Glaski deed of trust became part of the WaMu Securitized Trust’s property when the securitized trust was created in 2005. The SAC alleges that WaMu did not transfer Glaski’s note and deed of trust into the WaMu Securitized Trust prior to the closing date established by the pooling and servicing agreement. If WaMu’s attempted transfer was void, then Bank of America could not claim to be the holder of the Glaski deed of trust simply by virtue of being the successor trustee of the WaMu Securitized Trust.

Second, Glaski addresses the possibility that Bank of America acquired Glaski’s deed of trust from JP Morgan, which may have acquired it from the FDIC. Glaski contends this alternate chain of title also is defective because JP Morgan’s attempt to transfer the Glaski deed of trust to Bank of America, as trustee for the WaMu Securitized Trust, occurred after the trust’s closing date. Glaski specifically alleges JP Morgan’s attempted assignment of the deed of trust to the WaMu Securitized Trust in June 2009 occurred long after the WaMu Securitized Trust closed (i.e., 90 days after December 21, 2005).

Based on these allegations, we will address whether a post-closing date transfer into a securitized trust is the type of defect that would render the transfer void. Other allegations relevant to this inquiry are that the WaMu Securitized Trust (1) was formed in 2005 under New York law and (2) was subject to the requirements imposed on REMIC trusts (entities that do not pay federal income tax) by the Internal Revenue Code.

The allegation that the WaMu Securitized Trust was formed under New York law supports the conclusion that New York law governs the operation of the trust. New York Estates, Powers & Trusts Law section 7-2.4, provides: “If the trust is expressed in an instrument creating the estate of the trustee, every sale, conveyance or other act of the trustee in contravention of the trust, except as authorized by this article and by any other provision of law, is void.”[15]

Because the WaMu Securitized Trust was created by the pooling and servicing agreement and that agreement establishes a closing date after which the trust may no longer accept loans, this statutory provision provides a legal basis for concluding that the trustee’s attempt to accept a loan after the closing date would be void as an act in contravention of the trust document.

We are aware that some courts have considered the role of New York law and rejected the post-closing date theory on the grounds that the New York statute is not interpreted literally, but treats acts in contravention of the trust instrument as merely voidable. (Calderon v. Bank of America, N.A. (W.D.Tex., Apr. 23, 2013, No. SA:12-CV-00121-DAE) ___ F.Supp.2d ___, [2013 WL 1741951 at p. *12] [transfer of plaintiffs’ note, if it violated PSA, would merely be voidable and therefore plaintiffs do not have standing to challenge it]; Bank of America National Association v. Bassman FBT, L.L.C. (Ill.Ct.App. 2012) 981 N.E.2d 1, 8 [following cases that treat ultra vires acts as merely voidable].)

Despite the foregoing cases, we will join those courts that have read the New York statute literally. We recognize that a literal reading and application of the statute may not always be appropriate because, in some contexts, a literal reading might defeat the statutory purpose by harming, rather than protecting, the beneficiaries of the trust. In this case, however, we believe applying the statute to void the attempted transfer is justified because it protects the beneficiaries of the WaMu Securitized Trust from the potential adverse tax consequence of the trust losing its status as a REMIC trust under the Internal Revenue Code. Because the literal interpretation furthers the statutory purpose, we join the position stated by a New York court approximately two months ago: “Under New York Trust Law, every sale, conveyance or other act of the trustee in contravention of the trust is void. EPTL § 7-2.4. Therefore, the acceptance of the note and mortgage by the trustee after the date the trust closed, would be void.” (Wells Fargo Bank, N.A. v. Erobobo (Apr. 29, 2013) 39 Misc.3d 1220(A), 2013 WL 1831799, slip opn. p. 8; see Levitin & Twomey, Mortgage Servicing, supra, 28 Yale J. on Reg. at p. 14, fn. 35 [under New York law, any transfer to the trust in contravention of the trust documents is void].) Relying on Erobobo, a bankruptcy court recently concluded “that under New York law, assignment of the Saldivars’ Note after the start up day is void ab initio. As such, none of the Saldivars’ claims will be dismissed for lack of standing.” (In re Saldivar (Bankr.S.D.Tex., Jun. 5, 2013, No. 11-10689) 2013 WL 2452699, at p. *4.)

We conclude that Glaski’s factual allegations regarding post-closing date attempts to transfer his deed of trust into the WaMu Securitized Trust are sufficient to state a basis for concluding the attempted transfers were void. As a result, Glaski has a stated cognizable claim for wrongful foreclosure under the theory that the entity invoking the power of sale (i.e., Bank of America in its capacity as trustee for the WaMu Securitized Trust) was not the holder of the Glaski deed of trust.[16]

We are aware that that some federal district courts sitting in California have rejected the post-closing date theory of invalidity on the grounds that the borrower does not have standing to challenge an assignment between two other parties. (Aniel v. GMAC Mortgage, LLC (N.D.Cal., Nov. 2, 2012, No. C 12-04201 SBA) 2012 WL 5389706 [joining courts that held borrowers lack standing to assert the loan transfer occurred outside the temporal bounds prescribed by the pooling and servicing agreement]; Almutarreb v. Bank of New York Trust Co., N.A. (N.D.Cal., Sept. 24, 2012, No. C 12-3061 EMC) 2012 WL 4371410.) These cases are not persuasive because they do not address the principle that a borrower may challenge an assignment that is void and they do not apply New York trust law to the operation of the securitized trusts in question.
E. Application of Gomes

The next question we address is whether Glaski’s wrongful foreclosure claim is precluded by the principles set forth in Gomes, supra, 192 Cal.App.4th 1149, a case relied upon by the trial court in sustaining the demurrer. Gomes was a pre-foreclosure action brought by a borrower against the lender, trustee under a deed and trust, and MERS, a national electronic registry that tracks the transfer of ownership interests and servicing rights in mortgage loans in the secondary mortgage market. (Id. at p. 1151.) The subject trust deed identified MERS as a nominee for the lender and that MERS is the beneficiary under the trust deed. After initiation of a nonjudicial forclosure, borrower sued for wrongful initiation of foreclosure, alleging that the current owner of the note did not authorize MERS, the nominee, to proceed with the foreclosure. The appellate court held that California’s nonjudicial foreclosure system, outlined in Civil Code sections 2924 through 2924k, is a “`comprehensive framework for the regulation of a nonjudicial foreclosure sale’” that did not allow for a challenge to the authority of the person initiating the foreclosure. (Gomes, supra, at p. 1154.)

In Naranjo v. SBMC Mortgage (S.D.Cal., Jul. 24, 2012, No. 11-CV-2229-L(WVG)) 2012 WL 3030370 (Naranjo), the district court addressed the scope of Gomes, stating:

“In Gomes, the California Court of Appeal held that a plaintiff does not have a right to bring an action to determine the nominee’s authorization to proceed with a nonjudicial foreclosure on behalf of a noteholder. [Citation.] The nominee in Gomes was MERS. [Citation.] Here, Plaintiff is not seeking such a determination. The role of the nominee is not central to this action as it was in Gomes. Rather, Plaintiff alleges that the transfer of rights to the WAMU Trust is improper, thus Defendants consequently lack the legal right to either collect on the debt or enforce the underlying security interest.” (Naranjo, supra, 2012 WL 3030370, at p. *3.)

Thus, the court in Naranjo did not interpret Gomes as barring a claim that was essentially the same as the post-closing date claim Glaski is asserting in this case.

Furthermore, the limited nature of the holding in Gomes is demonstrated by the Gomes court’s discussion of three federal cases relied upon by Mr. Gomes. The court stated that the federal cases were not on point because none recognized a cause of action requiring the noteholder’s nominee to prove its authority to initiate a foreclosure proceeding. (Gomes, supra, 192 Cal.App.4th at p. 1155.) The Gomes court described one of the federal cases by stating that “the plaintiff alleged wrongful foreclosure on the ground that assignments of the deed of trust had been improperly backdated, and thus the wrong party had initiated the foreclosure process. [Citaiton.] No such infirmity is alleged here.” (Ibid.; see Lester v. J.P. Morgan Chase Bank (N.D.Cal., Feb. 20, 2013) ___ F.Supp.2d ___, [2013 WL 633333, p. *7] [concluding Gomes did not preclude the plaintiff from challenging JP Morgan’s authority to foreclose].) The Gomes court also stated it was significant that in each of the three federal cases, “the plaintiff’s complaint identified a specific factual basis for alleging that the foreclosure was not initiated by the correct party.” (Gomes, supra, at p. 1156.)

The instant case is distinguishable from Gomes on at least two grounds. First, like Naranjo, Glaski has alleged that the entity claiming to be the noteholder was not the true owner of the note. In contrast, the principle set forth in Gomes concerns the authority of the noteholder’s nominee, MERS. Second, Glaski has alleged specific grounds for his theory that the foreclosure was not conducted at the direction of the correct party.

In view of the limiting statements included in the Gomes opinion, we do not interpret it as barring claims that challenge a foreclosure based on specific allegations that an attempt to transfer the deed of trust was void. Our interpretation, which allows borrowers to pursue questions regarding the chain of ownership, is compatible with Herrera v. Deutsche Bank National Trust Co., supra, 196 Cal.App.4th 1366. In that case, the court concluded that triable issues of material fact existed regarding alleged breaks in the chain of ownership of the deed of trust in question. (Id. at p. 1378.) Those triable issues existed because Deutsche Bank’s motion for summary judgment failed to establish it was the beneficiary under that deed of trust. (Ibid.)
F. Tender

Defendants contend that Glaski’s claims for wrongful foreclosure, cancellation of instruments and quiet title are defective because Glaski failed to allege that he made a valid and viable tender of payment of the indebtedness. (See Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal.App.3d 112, 117 [“valid and viable tender of payment of the indebtedness owing is essential to an action to cancel a voidable sale under a deed of trust”].)

Glaski contends that he is not required to allege he tendered payment of the loan balance because (1) there are many exceptions to the tender rule, (2) defendants have offered no authority for the proposition that the absence of a tender bars a claim for damages,[17] and (3) the tender rule is a principle of equity and its application should not be decided against him at the pleading stage.

Tender is not required where the foreclosure sale is void, rather than voidable, such as when a plaintiff proves that the entity lacked the authority to foreclose on the property. (Lester v. J.P. Morgan Chase Bank, supra, ___ F.Supp.2d ___, [2013 WL 633333, p. *8]; 4 Miller & Starr, Cal. Real Estate (3d ed. 2003) Deeds of Trust, § 10:212, p. 686.)

Accordingly, we cannot uphold the demurrer to the wrongful foreclosure claim based on the absence of an allegation that Glaski tendered the amount due under his loan. Thus, we need not address the other exceptions to the tender requirement. (See e.g., Onofrio v. Rice (1997) 55 Cal.App.4th 413, 424 [tender may not be required where it would be inequitable to do so].)
G. Remedy of Setting Aside Trustee’s Sale

Defendants argue that the allegedly ineffective transfer to the WaMu Securitized Trust was a mistake that occurred outside the confines of the statutory nonjudicial foreclosure proceeding and, pursuant to Nguyen v. Calhoun (2003) 105 Cal.App.4th 428, 445, that mistake does not provide a basis for invalidating the trustee’s sale.

First, this argument does not negate the possibility that other types of relief, such as damages, are available to Glaski. (See generally, Annot., Recognition of Action for Damages for Wrongful Foreclosure—Types of Action, supra, 82 A.L.R.6th 43.)

Second, “where a plaintiff alleges that the entity lacked authority to foreclose on the property, the foreclosure sale would be void. [Citation.]” (Lester v. J.P. Morgan Chase Bank, supra, ___ F.Supp.2d ___, [2013 WL 633333, p. *8].)

Consequently, we conclude that Nguyen v. Calhoun, supra, 105 Cal.App.4th 428 does not deprive Glaski of the opportunity to prove the foreclosure sale was void based on a lack of authority.
H. Causes of Action Stated

Based on the foregoing, we conclude that Glaski’s fourth cause of action has stated a claim for wrongful foreclosure. It follows that Glaski also has stated claims for quiet title (third cause of action), declaratory relief (fifth cause of action), cancellation of instruments (eighth cause of action), and unfair business practices under Business and Professions Code section 17200 (ninth cause of action). (See Susilo v. Wells Fargo Bank, N.A. (C.D.Cal. 2011) 796 F.Supp.2d 1177, 1196 [plaintiff’s wrongful foreclosure claims served as predicate violations for her UCL claim].)
IV. JUDICIAL NOTICE
A. Glaski’s Request for Judicial Notice

When Glaski filed his opening brief, he also filed a request for judicial notice of (1) a Consent Judgment entered on April 4, 2012, by the United States District Court of the District of Columbia in United States v. Bank of America Corp. (D.D.C. No. 12-CV-00361); (2) the Settlement Term Sheet attached to the Consent Judgment; and (3) the federal and state release documents attached to the Consent Judgment as Exhibits F and G.

Defendants opposed the request for judicial notice on the ground that the request violated the requirements in California Rules of Court, rule 8.252 because it was not filed with a separate proposed order, did not state why the matter to be noticed was relevant to the appeal, and did not state whether the matters were submitted to the trial court and, if so, whether that court took judicial notice of the matters.

The documents included in Glaski’s request for judicial notice may provide background information and insight into robo-signing[18] and other problems that the lending industry has had with the procedures used to foreclose on defaulted mortgages. However, these documents do not directly affect whether the allegations in the SAC are sufficient to state a cause of action. Therefore, we deny Glaski’s request for judicial notice.
B. Defendants’ Request for Judicial Notice of Assignment

The “ASSIGNMENT OF DEED OF TRUST” recorded on December 9, 2008, that stated JP Morgan transferred and assigned all beneficial interest under the Glaski deed of trust to “LaSalle Bank NA as trustee for WaMu [Securitized Trust]” together with the note described in and secured by the Glaski deed of trust was not attached to the SAC as an exhibit. That document is part of the appellate record because the respondents’ appendix includes a copy of defendants’ request for judicial notice that was filed in June 2011 to support a motion for judgment on the pleadings.

In ruling on defendants’ request for judicial notice, the trial court stated that it could only take judicial notice that certain documents in the request, including the assignment of deed of trust, had been recorded, but it could not take judicial notice of factual matters stated in those documents. This ruling is correct and unchallenged on appeal. Therefore, like the trial court, we will take judicial notice of the existence and recordation of the December 2008 assignment, but we “do not take notice of the truth of matters stated therein.” (Herrera v. Deutsche Bank National Trust Co., supra, 196 Cal.App.4th at p. 1375.) As a result, the assignment of deed of trust does not establish that JP Morgan was, in fact, the holder of the beneficial interest in the Glaski deed of trust that the assignment states was transferred to LaSalle Bank. Similarly, it does not establish that LaSalle Bank in fact became the owner or holder of that beneficial interest.

Because the document does not establish these facts for purposes of this demurrer, it does not cure either of the breaks in the two alternate chains of ownership challenged in the SAC. Therefore, the December 2008 assignment does not provide a basis for sustaining the demurrer.
DISPOSITION

The judgment of dismissal is reversed. The trial court is directed to vacate its order sustaining the general demurrer and to enter a new order overruling that demurrer as to the third, fourth, fifth, eighth and ninth causes of action.

Glaski’s request for judicial notice filed on September 25, 2012, is denied.

Glaski shall recover his costs on appeal.

Wiseman, Acting P.J. and Kane, J., concurs.
ORDER GRANTING REQUEST FOR PUBLICATION

As the nonpublished opinion filed on July 31, 2013, in the above entitled matter hereby meets the standards for publication specified in the California Rules of Court, rule 8.1105(c), it is ordered that the opinion be certified for publication in the Official Reports.

KANE, J., concur.

[1] Mortgage-backed securities are created through a complex process known as “securization.” (See Levitin & Twomey, Mortgage Servicing (2011) 28 Yale J. on Reg. 1, 13 [“a mortgage securitization transaction is extremely complex”].) In simplified terms, “securitization” is the process where (1) many loans are bundled together and transferred to a passive entity, such as a trust, and (2) the trust holds the loans and issues investment securities that are repaid from the mortgage payments made on the loans. (Oppenheim & Trask-Rahn, Deconstructing the Black Magic of Securitized Trusts: How the Mortgage-Backed Securitization Process is Hurting the Banking Industry’s Ability to Foreclose and Proving the Best Offense for a Foreclosure Defense (2012) 41 Stetson L.Rev. 745, 753-754 (hereinafter, Deconstructing Securitized Trusts).) Hence, the securities issued by the trust are “mortgage-backed.” For purposes of this opinion, we will refer to such a trust as a “securitized trust.”

[2] Civil Code section 2924, subdivision (a)(1) states that a “trustee, mortgagee, or beneficiary, or any of their authorized agents” may initiate the nonjudicial foreclosure process. This statute and the provision of the Glaski deed of trust are the basis for Glaski’s position that the nonjudicial foreclosure in this case was wrongful—namely, that the power of sale in the Glaski deed of trust was invoked by an entity that was not the true beneficiary.

[3] Glaski’s pleading does not allege that LaSalle Bank was the original trustee when the WaMu Securitized Trust was formed in late 2005, but filings with the Securities and Exchange Commission identify LaSalle Bank as the original trustee. We provide this information for background purposes only and it plays no role in our decision in this appeal.

[4] Another possibility, which was acknowledged by both sides at oral argument, is that the true holder of the note and deed of trust cannot be determined at this stage of the proceedings. This lack of certainty regarding who holds the deed of trust is not uncommon when a securitized trust is involved. (See Mortgage and Asset Backed Securities Litigation Handbook (2012) § 5:114 [often difficult for securitized trust to prove ownership by showing a chain of assignments of the loan from the originating lender].)

[5] It appears this company is no longer a separate entity. The certificate of interested entities filed with the respondents’ brief refers to “JPMorgan Chase Bank, N.A. as successor by merger to Chase Home Finance, LLC.”

[6] One controversy presented by this appeal is whether this court should consider the December 9, 2008, assignment of deed of trust, which is not an exhibit to the SAC. Because the trial court took judicial notice of the existence and recordation of the assignment earlier in the litigation, we too will consider the assignment, but will not presume the matters stated therein are true. (See pt. IV.B, post.) For instance, we will not assume that JP Morgan actually held any interests that it could assign to LaSalle Bank. (See Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1375 [taking judicial notice of a recorded assignment does not establish assignee’s ownership of deed of trust].)

[7] Specifically, the notice stated that his August 2008 installment payment and all subsequent installment payments had not been made.

[8] The signature block at the end of the NOD indicated it was signed by Colleen Irby as assistant secretary for California Reconveyance. The first page of the notice stated that recording was requested by California Reconveyance. Affidavits of mailing attached to the SAC stated that the declarant mailed copies of the notice of default to Glaski at his home address and to Bank of America, care of Custom Recording Solutions, at an address in Santa Ana, California. The affidavits of mailing are the earliest documents in the appellate record indicating that Bank of America had any involvement with Glaski’s loan.

[9] Bank of America took over La Salle Bank by merger in 2007.

[10] The trial court did not explicitly rule on defendants’ request for judicial notice of these documents, but referred to matters set forth in these documents in its ruling. Therefore, for purposes of this appeal, we will infer that the trial court granted the request.

[11] The claim that a foreclosure was conducted by or at the direction of a nonholder of mortgage rights often arises where the mortgage has been securitized. (Buchwalter, Cause of Action in Tort for Wrongful Foreclosure of Residential Mortgage, 52 Causes of Action Second (2012) 119, 149 [§ 11 addresses foreclosure by a nonholder of mortgage rights].)

[12] This allegation comports with the following view of pooling and servicing agreements and the federal tax code provisions applicable to REMIC trusts. “Once the bundled mortgages are given to a depositor, the [pooling and servicing agreement] and IRS tax code provisions require that the mortgages be transferred to the trust within a certain time frame, usually ninety dates from the date the trust is created. After such time, the trust closes and any subsequent transfers are invalid. The reason for this is purely economic for the trust. If the mortgages are properly transferred within the ninety-day open period, and then the trust properly closes, the trust is allowed to maintain REMIC tax status.” (Deconstructing Securitized Trusts, supra, 41 Stetson L.Rev. at pp. 757-758.)

[13] “Although we may not rely on unpublished California cases, the California Rules of Court do not prohibit citation to unpublished federal cases, which may properly be cited as persuasive, although not binding, authority.” (Landmark Screens, LLC v. Morgan, Lewis & Bockius, LLP (2010) 183 Cal.App.4th 238, 251, fn. 6, citing Cal. Rules of Court, rule 8.1115.)

[14] Although this allegation and the remainder of the SAC do not explicitly identify the trustee of the WaMu Securitized Trust as the entity that invoked the power of sale, it is reasonable to interpret the allegation in this manner. Such an interpretation is consistent with the position taken by Glaski’s attorney at the hearing on the demurrer, where she argued that the WaMu Securitized Trust did not obtain Glaski’s loan and thus was precluded from proceeding with the foreclosure.

[15] The statutory purpose is “to protect trust beneficiaries from unauthorized actions by the trustee.” (Turano, Practice Commentaries, McKinney’s Consolidated Laws of New York, Book 17B, EPTL § 7-2.4.)

[16] Because Glaski has stated a claim for relief in his wrongful foreclosure action, we need not address his alternate theory that the foreclosure was void because it was implemented by forged documents. (Genesis Environmental Services v. San Joaquin Valley Unified Air Pollution Control Dist. (2003) 113 Cal.App.4th 597, 603 [appellate inquiry ends and reversal is required once court determines a cause of action was stated under any legal theory].) We note, however, that California law provides that ratification generally is an affirmative defense and must be specially pleaded by the party asserting it. (See Reina v. Erassarret (1949) 90 Cal.App.2d 418, 424 [ratification is an affirmative defense and the defendant ordinarily bears the burden of proof]; 49A Cal.Jur.3d (2010) Pleading, § 186, p. 319 [defenses that must be specially pleaded include waiver, estoppel and ratification].) Also, “[w]hether there has been ratification of a forged signature is ordinarily a question of fact.” (Common Wealth Ins. Systems, Inc. v. Kersten (1974) 40 Cal.App.3d 1014, 1026; see Brock v. Yale Mortg. Corp. (Ga. 2010) 700 S.E.2d 583, 588 [ratification may be expressed or implied from acts of principal and “is usually a fact question for the jury”; wife had forged husband’s signature on quitclaim deed].)

[17] See generally, Annotation, Recognition of Action for Damages for Wrongful Foreclosure—Types of Action (2013) 82 A.L.R.6th 43 (claims that a foreclosure is “wrongful” can be tort-based, statute-based, and contract-based).

[18] Claims of misrepresentation or fraud related to robo-signing of foreclosure documents is addressed in Buchwalter, Cause of Action in Tort for Wrongful Foreclosure of Residential Mortgage, 52 Causes of Action Second, supra, at pages 147 to 149.

INDEPENDENT REVIEW & COMMENTS:

Glaski v Bank of America: Mortgagor’s Defense Based on Lender’s Failure to Properly Securitize a Loan


Roger Bernhardt


Golden Gate University – School of Law

September 29, 2013

CEB 36 Real Property Law Reporter 111, September 2013


Abstract:     

Commentary on a recent California decision holding that a lender might be unable to enforce an improperly securitized loan.

Accepted Paper Series

Glaski v Bank of America: Mortgagor’s Defense Based on Lender’s Failure to Properly Securitize a Loan.
Glaski v Bank of America (2013) 218 CA4th 1079 Before being placed into receivership, Washington Mutual Bank (WaMu) established a pool of residential loans as collateral for mortgage-backed securities. New York law governed the resulting securitized trust. According to the lender, the trust included Borrower’s defaulted loan. Bank of America, which claimed it was successor trustee and beneficiary of the trust, purchased Borrower’s property at the trustee’s sale. There were two possible chains of title through which Bank of America could have claimed
to be successor trustee. (Notably, at the demurrer stage, the parties acknowledged that they could not be certain who truly held Borrower’s note.) Borrower challenged both conceivable chains of title as having
been assigned after the trust closing date. The trial court sustained Bank of America’s demurrer without leave to amend.
The court of appeal reversed in part. The court ruled that a borrower may challenge an assignment as being void even if that borrower was not a party to, or a third party beneficiary of, that assignment. Such a
challenge effectively states a claim for wrongful foreclosure. Disagreeing with Texas and Illinois courts, the court literally and strictly construed the applicable New York statute, which states that any act by a trustee in contravention of the trust document is void (218 CA4th at 1096): Because the WaMu Securitized Trust was created by the pooling and servicing agreement and that agreement establishes a closing date after which the trust may no longer accept loans, this statutory provision provides a legal basis for concluding that the trustee’s attempt to accept a loan after the closing date would be void as an act in contravention of the trust document.
This is significant because the borrower need not tender payment of indebtedness when the foreclosure sale is void.
THE EDITOR’S TAKE: If some lenders are reacting with shock and horror to this decision, that is probably only because they reacted too giddily to Gomes v Countrywide Home Loans, Inc. (2011) 192 CA4th 1149 (reported at 34 CEB RPLR 66 (Mar. 2011)) and similar decisions that they took to mean that their nonjudicial foreclosures were completely immune from judicial review. Because I think that Glaski simply holds that some borrower foreclosure challenges may warrant factual investigation (rather than outright dismissal at the pleading stage), I do not find this decision that earth-shaking.
Two of this plaintiff’s major contentions were in fact entirely rejected at the demurrer level: —That the foreclosure was fraudulent because the statutory notices looked robosigned (“forged”); and —That the loan documents were not truly transferred into the loan pool.
Only the borrower’s wrongful foreclosure count survived into the next round. If the bank can show that the documents were handled in proper fashion, it should be able to dispose of this last issue on summary
judgment.
Bank of America appeared to not prevail on demurrer on this issue because the record did include two deed of trust assignments that had been recorded outside the Real Estate Mortgage Investment Conduit (REMIC) period and did not include any evidence showing that the loan was put into the securitization pool within the proper REMIC period. The court’s ruling that a transfer into a trust that is made too late may constitute a void rather than voidable transfer (to not jeopardize the tax-exempt status of the other assets in the trust) seems like a sane conclusion. That ruling does no harm to securitization pools that were created with proper attention to the necessary timetables. (It probably also has only slight effect on loans that were improperly securitized,
other than to require that a different procedure be followed for their foreclosure.)

In this case, the fact that two assignments of a deed of trust were recorded after trust closure proves almost nothing about when the loans themselves were actually transferred into the trust pool, it having been a common practice back then not to record assignments until some other development made recording appropriate. I suspect that it was only the combination of seeing two “belatedly” recorded assignments and also seeing no indication of any timely made document deposits into the trust pool that led to court to say that the borrower had sufficiently alleged an invalid (i.e., void) attempted transfer into the trust. Because that seemed to be a factual possibility, on remand, the court logically should ask whether the pool trustee was the rightful party to conduct the foreclosure of the deed of trust, or whether that should have been done by someone else.

While courts may not want to find their dockets cluttered with frivolous attacks on valid foreclosures, they are probably equally averse to allowing potentially meritorious challenges to wrongful foreclosures to be rejected out of hand.  —Roger Bernhardt

From CEB 36 Real Property Law Reporter 111, September 2013, © The Regents of the University of California, reprinted with permission of CEB.”

If you find yourself in an unfortunate situation of losing or about to your home to wrongful fraudulent foreclosure, and need a complete package  that will help you challenge these fraudsters and save your home from foreclosure visit: http://www.fightforeclosure.net

B. First Cause of Action for Fraud, Lack of Specific Allegations of Reliance – See more at: http://stopforeclosurefraud.com/2013/08/01/glaski-v-bank-of-america-ca5-5th-appellate-district-securitization-failed-ny-trust-law-applied-ruling-to-protect-remic-status-non-judicial-foreclosure-statutes-irrelevant-because-sa/#sthash.jRAaLypz.dpuf

II. FRAUD

A. Rules for Pleading Fraud

We therefore reverse the judgment of dismissal and remand for further proceedings. – See more at: http://stopforeclosurefraud.com/2013/08/01/glaski-v-bank-of-america-ca5-5th-appellate-district-securitization-failed-ny-trust-law-applied-ruling-to-protect-remic-status-non-judicial-foreclosure-statutes-irrelevant-because-sa/#sthash.jRAaLypz.dpuf
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Why Homeowners Lose on Appeal – A Review of Wrongful Foreclosure Appeal Case

02 Monday Dec 2013

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

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Tags

Arizona, Bank of America, Florida, MERS, Mortgage Electronic Registration System, New York, Washington, Wells Fargo

A CASE IN REVIEW (1)

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

No. 09-17364    D.C. No. 2:09-cv-00517-JAT

OLGA CERVANTES, an unmarried
woman; CARLOS ALMENDAREZ, a
married man; ARTURO MAXIMO, a
married man, individually and on
behalf of a class of similarly
situated individuals,
Plaintiffs-Appellants,
v.

OPINION
COUNTRYWIDE HOME LOANS, INC., a
New York corporation; MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS,
INC., a subsidiary of MERSCORP,
INC., a Delaware corporation; ý MERSCORP, INC.; FEDERAL HOME
LOAN MORTGAGE CORPORATION, a
foreign corporation, AKA Freddie
Mac; FEDERAL NATIONAL
MORTGAGE ASSOCIATION, a foreign
corporation; GMAC MORTGAGE,
LLC, a Delaware corporation;
NATIONAL CITY MORTGAGE, a
foreign company and a division of
National City Bank, a foreign
company; J.P. MORGAN CHASE
BANK, N.A., a New York
corporation; CITIMORTGAGE, INC., a
New York corporation;

HSBC MORTGAGE CORPORATION,
U.S.A., a Delaware corporation;
AIG UNITED GUARANTY
CORPORATION, a foreign
corporation; WELLS FARGO BANK,
N.A., a California corporation,
DBA Wells Fargo Home Equity;
BANK OF AMERICA, N.A., a foreign
corporation; GE MONEY BANK, a
foreign company; PNC FINANCIAL
SERVICES GROUP, INC., a
Pennsylvania corporation; No. 09-17364
NATIONAL CITY CORPORATION, a D.C. No. subsidiary of PNC Financial  Services Group; N 2:09-cv-00517-JAT ATIONAL CITY
BANK, a subsidiary of National OPINION
City Corporation; MERRILL LYNCH
& COMPANY, INC., a subsidiary of
Bank of America Corporation;
FIRST FRANKLIN FINANCIAL
CORPORATION, a subsidiary of
Merrill Lynch & Company, Inc.;
LASALLE BANK, N.A., a subsidiary
of Bank of America; TIFFANY &
BOSCO P.A., an Arizona
professional association,
Defendants-Appellees.

Appeal from the United States District Court
for the District of Arizona
James A. Teilborg, District Judge, Presiding
Argued and Submitted
February 16, 2011—San Francisco, California
Filed September 7, 2011

Before: Richard C. Tallman, Johnnie B. Rawlinson,* and
Consuelo M. Callahan, Circuit Judges.
Opinion by Judge Callahan

*Due to the death of the Honorable David R. Thompson, the Honorable
Johnnie B. Rawlinson, United States Circuit Judge for the Ninth Circuit,
has been drawn to replace him on this panel. Judge Rawlinson has read
the briefs, reviewed the record, and listened to the audio recording of oral
argument held on February 16, 2011.

COUNSEL
William A. Nebeker and Valerie R. Edwards, Koeller
Nebeker Carlson & Haluck, LLP, Phoenix, Arizona, and Robert
Hager and Treva Hearne, Hager & Hearne, Reno, Nevada,
for the appellants.
Timothy J. Thomason, Mariscal Weeks McIntyre & Friedlander,
P.A., Phoenix, Arizona, Thomas M. Hefferon, Goodwin
Procter, LLP, Washington, DC, Howard N. Cayne,
Arnold & Porter, LLP, Washington, DC, Stephen E. Hart,
Federal Housing Finance Agency, Washington, DC, Mark S.
Landman, Landman Corsini Ballaine & Ford P.C., New York,
New York, and Robert M. Brochin, Morgan, Lewis & Bockius,
LLP, Miami, Florida, for the appellees.

OPINION

CALLAHAN, Circuit Judge:
This is a putative class action challenging origination and
foreclosure procedures for home loans maintained within the
Mortgage Electronic Registration System (MERS). The plaintiffs
appeal from the dismissal of their First Amended Complaint
for failure to state a claim. In their complaint, the
plaintiffs allege conspiracies by their lenders and others to use
MERS to commit fraud. They also allege that their lenders
violated the Truth in Lending Act (TILA), 15 U.S.C. § 1601
et seq., and the Arizona Consumer Fraud Act, Ariz. Rev. Stat.
§ 44-1522, and committed the tort of intentional infliction of
emotional distress by targeting the plaintiffs for loans they
could not repay. The plaintiffs were denied leave to file their
proposed Second Amended Complaint, and to add a new
claim for wrongful foreclosure based upon the operation of
the MERS system.

On appeal, the plaintiffs stand by the sufficiency of some
of their claims, but primarily contend that they could cure any
pleading deficiencies with a newly amended complaint, which
would include a claim for wrongful foreclosure. We are
unpersuaded that the plaintiffs’ allegations are sufficient to
support their claims. Although the plaintiffs allege that
aspects of the MERS system are fraudulent, they cannot
establish that they were misinformed about the MERS system,
relied on any misinformation in entering into their home
loans, or were injured as a result of the misinformation. If
anything, the allegations suggest that the plaintiffs were
informed of the exact aspects of the MERS system that they
now complain about when they agreed to enter into their
home loans. Further, although the plaintiffs contend that they
can state a claim for wrongful foreclosure, Arizona state law
does not currently recognize this cause of action, and their
claim is, in any case, without a basis. The plaintiffs’ claim
depends upon the conclusion that any home loan within the MERS system is unenforceable through a foreclosure sale, but
that conclusion is unsupported by the facts and law on which
they rely. Because the plaintiffs fail to establish a plausible
basis for relief on these and their other claims raised on
appeal, we affirm the district court’s dismissal of the complaint
without leave to amend.

     I.
The focus of this lawsuit—and many others around the
country—is the MERS system.

1. How MERS works
MERS is a private electronic database, operated by MERSCORP,
Inc., that tracks the transfer of the “beneficial interest”
in home loans, as well as any changes in loan servicers. After
a borrower takes out a home loan, the original lender may sell
all or a portion of its beneficial interest in the loan and change
loan servicers. The owner of the beneficial interest is entitled
to repayment of the loan. For simplicity, we will refer to the
owner of the beneficial interest as the “lender.” The servicer
of the loan collects payments from the borrower, sends payments
to the lender, and handles administrative aspects of the
loan. Many of the companies that participate in the mortgage
industry—by originating loans, buying or investing in the
beneficial interest in loans, or servicing loans—are members
of MERS and pay a fee to use the tracking system. See Jackson
v. Mortg. Elec. Registration Sys., Inc., 770 N.W.2d 487,
490 (Minn. 2009).

When a borrower takes out a home loan, the borrower executes
two documents in favor of the lender: (1) a promissory
note to repay the loan, and (2) a deed of trust, or mortgage,
that transfers legal title in the property as collateral to secure
the loan in the event of default. State laws require the lender
to record the deed in the county in which the property is located. Any subsequent sale or assignment of the deed must
be recorded in the county records, as well.

This recording process became cumbersome to the mortgage
industry, particularly as the trading of loans increased.
See Robert E. Dordan, Mortgage Electronic Registration Systems
(MERS), Its Recent Legal Battles, and the Chance for a
Peaceful Existence, 12 Loy. J. Pub. Int. L. 177, 178 (2010).
It has become common for original lenders to bundle the beneficial
interest in individual loans and sell them to investors
as mortgage-backed securities, which may themselves be
traded. See id. at 180; Jackson, 770 N.W.2d at 490. MERS
was designed to avoid the need to record multiple transfers of
the deed by serving as the nominal record holder of the deed
on behalf of the original lender and any subsequent lender.
Jackson, 770 N.W.2d at 490.

At the origination of the loan, MERS is designated in the
deed of trust as a nominee for the lender and the lender’s
“successors and assigns,” and as the deed’s “beneficiary”
which holds legal title to the security interest conveyed. If the
lender sells or assigns the beneficial interest in the loan to
another MERS member, the change is recorded only in the
MERS database, not in county records, because MERS continues
to hold the deed on the new lender’s behalf. If the beneficial
interest in the loan is sold to a non-MERS member, the
transfer of the deed from MERS to the new lender is recorded
in county records and the loan is no longer tracked in the
MERS system.
In the event of a default on the loan, the lender may initiate
foreclosure in its own name, or may appoint a trustee to initiate
foreclosure on the lender’s behalf. However, to have the
legal power to foreclose, the trustee must have authority to act
as the holder, or agent of the holder, of both the deed and the
note together. See Landmark Nat’l Bank v. Kesler, 216 P.3d
158, 167 (Kan. 2009). The deed and note must be held
together because the holder of the note is only entitled to repayment, and does not have the right under the deed to use
the property as a means of satisfying repayment. Id. Conversely,
the holder of the deed alone does not have a right to
repayment and, thus, does not have an interest in foreclosing
on the property to satisfy repayment. Id. One of the main
premises of the plaintiffs’ lawsuit here is that the MERS system
impermissibly “splits” the note and deed by facilitating
the transfer of the beneficial interest in the loan among lenders
while maintaining MERS as the nominal holder of the
deed.
The plaintiffs’ lawsuit is also premised on the fact that
MERS does not have a financial interest in the loans, which,
according to the plaintiffs, renders MERS’s status as a beneficiary
a sham. MERS is not involved in originating the loan,
does not have any right to payments on the loan, and does not
service the loan. MERS relies on its members to have someone
on their own staff become a MERS officer with the
authority to sign documents on behalf of MERS. See Dordan,
12 Loy. J. Pub. Int. L. at 182; Jackson, 770 N.W.2d at 491.
As a result, most of the actions taken in MERS’s own name
are carried out by staff at the companies that sell and buy the
beneficial interest in the loans. Id.

2. The named plaintiffs
The three named plaintiffs in this case, Olga Cervantes,
Carlos Almendarez, and Arturo Maximo, obtained home
loans or refinanced existing loans in 2006. All three signed
promissory notes with their lenders—Cervantes with Countrywide
Home Loans, and Almendarez and Maximo with First
Franklin. Each executed a deed of trust in favor of his or her
lender, naming MERS as the “beneficiary” and as the “nominee”
for the lender and lender’s “successors and assigns.”
All three plaintiffs are Hispanic, and Almendarez and Maximo
do not speak or read English. Almendarez and Maximo
negotiated the mortgage loans with their lenders in Spanish, but were provided with, and signed, copies of their loan documents
written in English.
The plaintiffs subsequently defaulted on their loans. Following
Cervantes’s default, trustee Recontrust Company initiated
non-judicial foreclosure proceedings by recording a
notice of a trustee’s sale in the county records. The parties
have not addressed the status of the noticed sale. Following
defaults by Almendarez and Maximo, their lender, First
Franklin, appointed LaSalle Bank as its trustee to initiate nonjudicial
foreclosure proceedings. MERS recorded documents
with the county assigning its beneficial interest in the deeds
of trust to La Salle Bank. Later, Michael Bosco of Tiffany &
Bosco was substituted in as First Franklin’s trustee. Michael
Bosco sold Almendarez’s house at public auction in February
2009. The sale of Maximo’s property was cancelled in April
2009.

3. Procedural history
Cervantes filed suit in March 2009. Almendarez and Maximo
joined the lawsuit, and the plaintiffs filed their First
Amended Complaint a few days later. The First Amended
Complaint names several defendants, including the plaintiffs’
lenders, the trustees for the lenders, MERS, and MERS members
who are named only as co-conspirators based on their
role in using the MERS system. The defendants filed several
motions to dismiss, prompting the plaintiffs to file a motion
for leave to amend, along with a proposed Second Amended
Complaint. The district court held a hearing on the various
motions, at which the plaintiffs orally proposed to amend their
complaint with a wrongful foreclosure claim. The district
court granted the motions to dismiss the First Amended Complaint,
and denied the motion for leave to amend on the
ground that amendment would be futile. The plaintiffs appeal.

    II.
We have jurisdiction under 28 U.S.C. § 1291. We review
de novo the district court’s dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6).
Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097,
1102 (9th Cir. 2008). “To survive a motion to dismiss, a complaint
must contain sufficient factual matter, accepted as true,
to state a claim to relief that is plausible on its face.” Ashcroft
v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (internal quotation
marks omitted). Dismissal is proper when the complaint does
not make out a cognizable legal theory or does not allege sufficient
facts to support a cognizable legal theory. Mendiondo,
521 F.3d at 1104. A complaint that alleges only “labels and
conclusions” or a “formulaic recitation of the elements of the
cause of action” will not survive dismissal. Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007).

The district court’s denial of leave to amend the complaint
is reviewed for an abuse of discretion. Gompper v. VISX, Inc.,
298 F.3d 893, 898 (9th Cir. 2002). Although leave to amend
should be given freely, a district court may dismiss without
leave where a plaintiff ’s proposed amendments would fail to
cure the pleading deficiencies and amendment would be
futile. See Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection
Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990) (per curiam).1

1The plaintiffs have requested that we take judicial notice of orders of
the United States District Court for the District of Arizona dismissing
complaints without prejudice in pending multidistrict litigation concerning
MERS. The plaintiffs imply that it was inconsistent for the same district
court to deny leave to amend here. We deny the requests because the
orders are not relevant.

                               III.
The plaintiffs challenge the dismissal of their complaint
without leave to amend but, on appeal, only address the district
court’s: (1) dismissal of their claim for conspiracy to
commit fraud through the MERS system; (2) failure to
address their oral request for leave to add a wrongful foreclosure
claim; (3) dismissal of trustee Tiffany & Bosco from the suit; (4) denial of leave to amend their pleadings regarding equitable tolling of their TILA and Arizona Consumer Fraud Act claims; and (5) dismissal of their claim for intentional infliction of emotional distress. We address these claims in
turn, and do not consider the dismissed claims that are not
raised on appeal. Entm’t Research Group v. Genesis Creative
Group, 122 F.3d 1211, 1217 (9th Cir. 1997) (“We will not
consider any claims that were not actually argued in [appellant’s]
opening brief.”).

1. Conspiracy to commit fraud through the MERS
system
On appeal, the plaintiffs contend that they sufficiently
alleged a conspiracy among MERS members to commit fraud.
In count seven of the First Amended Complaint, they allege
that MERS members conspired to commit fraud by using
MERS as a sham beneficiary, promoting and facilitating predatory
lending practices through the use of MERS, and making
it impossible for borrowers or regulators to track the changes
in lenders.

[1] Under Arizona law, a claim of civil conspiracy must be
based on an underlying tort, such as fraud in this instance.
Baker ex rel. Hall Brake Supply, Inc. v. Stewart Title & Trust
of Phoenix, Inc., 5 P.3d 249, 256 (Ariz. Ct. App. 2000). To
show fraud, a plaintiff must identify “(1) a representation; (2)
its falsity; (3) its materiality; (4) the speaker’s knowledge of
its falsity or ignorance of its truth; (5) the speaker’s intent that
it be acted upon by the recipient in the manner reasonably
contemplated; (6) the hearer’s ignorance of its falsity; (7) the
hearer’s reliance on its truth; (8) the right to rely on it; [and]
(9) his consequent and proximate injury.” Echols v. Beauty
Built Homes, Inc., 647 P.2d 629, 631 (Ariz. 1982).

[2] The plaintiffs’ allegations fail to address several of
these necessary elements for a fraud claim. The plaintiffs have
not identified any representations made to them about the MERS system and its role in their home loans that were false
and material. None of their allegations indicate that the plaintiffs
were misinformed about MERS’s role as a beneficiary,
or the possibility that their loans would be resold and tracked
through the MERS system. Similarly, the plaintiffs have not
alleged that they relied on any misrepresentations about
MERS in deciding to enter into their home loans, or that they
would not have entered into the loans if they had more information
about how MERS worked. Finally, the plaintiffs have
failed to show that the designation of MERS as a beneficiary
caused them any injury by, for example, affecting the terms
of their loans, their ability to repay the loans, or their obligations
as borrowers. Although the plaintiffs allege that they
were “deprived of the right to attempt to modify their toxic
loans, as the true identity of the actual beneficial owner was
intentionally hidden” from them, they do not support this bare
assertion with any explanation as to how the operation of the
MERS system actually stymied their efforts to identify and
contact the relevant party to modify their loans. Thus, the
plaintiffs fail to state a claim for conspiracy to commit fraud
through the MERS system, and dismissal of the claim was
proper.

[3] While the plaintiffs’ allegations alone fail to raise a
plausible fraud claim, we also note that their claim is undercut
by the terms in Cervantes’s standard deed of trust, which
describe MERS’s role in the home loan.2 For example, the
plaintiffs allege they were defrauded because MERS is a
“sham” beneficiary without a financial interest in the loan, yet
the disclosures in the deed indicate that MERS is acting
“solely as a nominee for Lender and Lender’s successors and
assigns” and holds “only legal title to the interest granted by Borrower in this Security Instrument.” Further, while the
plaintiffs indicate that MERS was used to hide who owned the
loan, the deed states that the loan or a partial interest in it “can
be sold one or more times without prior notice to Borrower,”
but that “[i]f there is a change in Loan Servicer, Borrower will
be given written notice of the change” as required by consumer
protection laws. Finally, the deed indicates that MERS
has “the right to foreclose and sell the property.” By signing
the deeds of trust, the plaintiffs agreed to the terms and were
on notice of the contents. See Kenly v. Miracle Props., 412 F.
Supp. 1072, 1075 (D. Ariz. 1976) (explaining that a deed of
trust is “an essentially private contractual arrangement”). In
light of the explicit terms of the standard deed signed by Cervantes,
it does not appear that the plaintiffs were misinformed
about MERS’s role in their home loans.

2Cervantes’s deed of trust, attached to MERSCORP’s reply in support
of its motion to dismiss, may be considered at the pleadings stage because the complaint references and relies on the deed, and its authenticity is unquestioned. See Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007) (per curiam).

[4] Moreover, amendment would be futile. In their proposed
Second Amended Complaint, the plaintiffs seek to add
further detail concerning how MERS works in general and
how it has facilitated the trade in mortgage-backed securities.
But none of the new allegations cure the First Amended Complaint’s
deficiencies: the plaintiffs have not shown that they
received material misrepresentations about MERS that they
detrimentally relied upon. Accordingly, we affirm the district
court’s dismissal, without leave to amend, of the claim for
conspiracy to commit fraud through the MERS system.

2. Wrongful foreclosure
The plaintiffs contend that the district court abused its discretion
by dismissing their complaint without leave to add a
wrongful foreclosure claim. The only mention of a wrongful
foreclosure claim was during the hearing on the plaintiffs’
motion for leave to amend and the defendants’ motions to dismiss.
Although the plaintiffs expressed their intention to add
a wrongful foreclosure claim, they failed to include it in their
proposed Second Amended Complaint. Moreover, during the
hearing, the plaintiffs stated only a general theory of the claim: they posited that any foreclosure on a home loan tracked in the MERS system is “wrongful” because MERS is not a true beneficiary. As the plaintiffs describe it on appeal, their claim is that “the MERS system was used to facilitate wrongful foreclosure based on the naming of MERS as the
beneficiary on the deed of trust, which results in the note and
deed of trust being split and unenforceable.”

[5] The plaintiffs’ oral request to add a wrongful foreclosure
claim was procedurally improper and substantively
unsupported. The district court’s local rules require the plaintiffs
to submit a copy of the proposed amended pleadings
along with a motion for leave to amend. See D. Ariz. Civ. L.
R. 15.1. The plaintiffs failed to do so. Further, they failed to
provide the district court with an explanation of the legal and
factual grounds for adding the claim. It is particularly notable
here that Arizona state courts have not yet recognized a
wrongful foreclosure cause of action. Although a federal court
exercising diversity jurisdiction is “at liberty to predict the
future course of [a state’s] law,” plaintiffs choosing “the federal
forum . . . [are] not entitled to trailblazing initiatives
under [state law].” Ed Peters Jewelry Co. v. C & J Jewelry
Co., Inc., 124 F.3d 252, 262- 63 (1st Cir. 1997) (affirming
dismissal of a wrongful foreclosure claim when no such
action existed under state law). Under the circumstances, we
conclude that it was not an abuse of discretion for the district
court to deny leave to amend without addressing the plaintiffs’
proposed claim for wrongful foreclosure. See Gardner
v. Martino (In re Gardner), 563 F.3d 981, 991 (9th Cir. 2009)
(concluding that the district court did not abuse its discretion
by denying leave to amend where the party seeking leave
failed to attach a proposed amended complaint in violation of
local rules and failed to articulate a factual and legal basis for
amendment).

[6] In any event, leave to amend would be futile because
the plaintiffs cannot state a plausible basis for relief. Looking
to states that have recognized substantive wrongful foreclosure claims, we note that such claims typically are available
after foreclosure and are premised on allegations that the borrower
was not in default, or on procedural issues that resulted
in damages to the borrower. See, e.g., Ed Peters Jewelry Co.,
124 F.3d at 263 n.8 (noting that the Massachusetts Supreme
Court recognized a claim for wrongful foreclosure where no
default had occurred in Mechanics Nat’l Bank of Worcester v.
Killeen, 384 N.E.2d 1231, 1236 (Mass. 1979)); Fields v. Millsap
& Singer, P.C., 295 S.W.3d 567, 571 (Mo. Ct. App.
2009) (stating that “a plaintiff seeking damages in a wrongful
foreclosure action must plead and prove that when the foreclosure
proceeding was begun, there was no default on its part
that would give rise to a right to foreclose” (internal alteration
and citation omitted)); Gregorakos v. Wells Fargo Nat’l
Ass’n, 647 S.E.2d 289, 292 (Ga. App. 2007) (“In Georgia, a
plaintiff asserting a claim of wrongful foreclosure must establish
a legal duty owed to it by the foreclosing party, a breach
of that duty, a causal connection between the breach of that
duty and the injury it sustained, and damages.” (internal quotation
marks and alteration omitted)); Collins v. Union Fed.
Sav. & Loan Ass’n, 662 P.2d 610, 623 (Nev. 1983) (“[T]he
material issue of fact in a wrongful foreclosure claim is
whether the trustor was in default when the power of sale was
exercised.”). Similarly, the case that the plaintiffs cite for the
availability of a wrongful foreclosure claim under Arizona
law, Herring v. Countrywide Home Loans, Inc., No. 06-2622,
2007 WL 2051394, at *6 (D. Ariz. July 13, 2007), recognized
such a claim where the borrower was not in default at the time
of foreclosure. The plaintiffs have not alleged that Cervantes’s
or Maximo’s homes were sold and, in any event, all are
in default and have not identified damages. Thus, under the
established theories of wrongful foreclosure, the plaintiffs
have failed to state a claim.

Instead, the plaintiffs advance a novel theory of wrongful
foreclosure. They contend that all transfers of the interests in
the home loans within the MERS system are invalid because
the designation of MERS as a beneficiary is a sham and the system splits the deed from the note, and, thus, no party is in
a position to foreclose.

[7] Even if we were to accept the plaintiffs’ premises that
MERS is a sham beneficiary and the note is split from the
deed, we would reject the plaintiffs’ conclusion that, as a necessary
consequence, no party has the power to foreclose. The
legality of MERS’s role as a beneficiary may be at issue
where MERS initiates foreclosure in its own name, or where
the plaintiffs allege a violation of state recording and foreclosure
statutes based on the designation. See, e.g., Mortgage
Elec. Registration Sys. v. Saunders, 2 A.3d 289, 294-97 (Me.
2010) (concluding that MERS cannot foreclose because it
does not have an independent interest in the loan because it
functions solely as a nominee); Landmark Nat’l Bank, 216
P.3d at 165-69 (same); Hooker v. Northwest Tr. Servs., No.
10-3111, 2011 WL 2119103, at *4 (D. Or. May 25, 2011)
(concluding that the defendants’ failure to register all assignments
of the deed of trust violated the Oregon recording laws
so as to prevent non-judicial foreclosure). But see Jackson,
770 N.W.2d at 501 (concluding that defendants’ failure to
register assignments of the beneficial interest in the mortgage
loan did not violate Minnesota recording laws so as to prevent
non-judicial foreclosure). This case does not present either of
these circumstances and, thus, we do not consider them.

[8] Here, MERS did not initiate foreclosure: the trustees
initiated foreclosure in the name of the lenders. Even if
MERS were a sham beneficiary, the lenders would still be
entitled to repayment of the loans and would be the proper
parties to initiate foreclosure after the plaintiffs defaulted on
their loans. The plaintiffs’ allegations do not call into question
whether the trustees were agents of the lenders. Rather, the
foreclosures against Almendarez and Maximo were initiated
by the trustee Tiffany & Bosco on behalf of First Franklin,
who is the original lender and holder of Almendarez’s and
Maximo’s promissory notes. Although it is unclear from the
pleadings who the current lender is on plaintiff Cervantes’s loan, the allegations do not raise any inference that the trustee
Recontrust Company lacks the authority to act on behalf of
the lender.

Further, the notes and deeds are not irreparably split: the
split only renders the mortgage unenforceable if MERS or the
trustee, as nominal holders of the deeds, are not agents of the
lenders. See Landmark Nat’l Bank, 216 P.3d at 167. Moreover,
the plaintiffs have not alleged violations of Arizona
recording and foreclosure statutes related to the purported
splitting of the notes and deeds.

[9] Accordingly, the plaintiffs have not raised a plausible
claim for wrongful foreclosure, and we conclude that dismissal
of the complaint without leave to add such a claim was
not an abuse of discretion.

3. Injunctive relief against Tiffany & Bosco
[10] The plaintiffs contend that the district court improperly
dismissed the trustee Tiffany & Bosco from this suit
under Arizona Revised Statute 33-807(E). Section 33-807(E)
provides that a “trustee is entitled to be immediately dismissed”
from any action other than one “pertaining to a
breach of the trustee’s obligations,” because the trustee is otherwise
bound by an order entered against a beneficiary for
actions that the trustee took on its behalf. The only breach that
the plaintiffs allege against Tiffany & Bosco is that it failed
to recognize that its appointment was invalid. According to
the plaintiffs, the appointment was invalid because MERS is
a sham beneficiary and lacks power to “appoint” a trustee.
However, a trustee such as Tiffany & Bosco has the “absolute
right” under Arizona law “to rely upon any written direction
or information furnished to him by the beneficiary.” Ariz.
Rev. Stat. § 33-820(A). Thus, Tiffany & Bosco did not have
an obligation to consider whether its presumptively legal
appointment as trustee, which was recorded in the county
records, was invalid based on the original designation of MERS as a beneficiary. Accordingly, Tiffany & Bosco was
properly dismissed.

4. Equitable Tolling and Estoppel
The plaintiffs contend that the district court failed to
address the equitable tolling of their claims under TILA and
the Arizona Consumer Fraud Act and, in any event, abused its
discretion by denying the plaintiffs leave to amend their allegations
in support of equitable tolling and estoppel. A district
court may dismiss a claim “[i]f the running of the statute is
apparent on the face of the complaint.” Jablon v. Dean Witter
& Co., 614 F.2d 677, 682 (9th Cir. 1980). However, a district
court may do so “only if the assertions of the complaint, read
with the required liberality, would not permit the plaintiff to
prove that the statute was tolled.” Id.

[11] The plaintiffs’ claims under TILA and the Arizona
Consumer Fraud Act are subject to one-year statutes of limitations.
15 U.S.C. § 1640(e); Ariz. Rev. Stat. § 12-541(5). Both
limitations periods began to run when the plaintiffs executed
their loan documents, because they could have discovered the
alleged disclosure violations and discrepancies at that time.
See 15 U.S.C. § 1640(e) (the one-year limitations period for
a TILA claim begins when the violation occurred); Alaface v.
Nat’l Inv. Co., 892 P.2d 1375, 1379 (Ariz. Ct. App. 1994) (a
cause of action for consumer fraud under Arizona law accrues
“ ‘when the defrauded party discovers or with reasonable diligence
could have discovered the fraud’ ”). The running of the
limitations periods on both claims is apparent on the face of
the complaint because the plaintiffs obtained their loans in
2006, but commenced their action in 2009.

[12] The plaintiffs have not demonstrated a basis for equitable
tolling of their claims. “We will apply equitable tolling
in situations where, despite all due diligence, the party invoking
equitable tolling is unable to obtain vital information bearing
on the existence of the claim.” Socop-Gonzalez v. I.N.S., 272 F.3d 1176, 1193 (9th Cir. 2001) (internal quotation marks
and alterations omitted). The plaintiffs suggest that their
TILA claim should have been tolled because Almendarez and
Maximo speak only Spanish, but received loan documents
written in English. However, the plaintiffs have not alleged
circumstances beyond their control that prevented them from
seeking a translation of the loan documents that they signed
and received. Thus, the plaintiffs have not stated a basis for
equitable tolling. See Hubbard v. Fidelity Fed. Bank, 91 F.3d
75, 79 (9th Cir. 1996) (per curiam) (declining to toll TILA’s
statute of limitations when “nothing prevented [the mortgagor]
from comparing the loan contract, [the lender’s] initial
disclosures, and TILA’s statutory and regulatory requirements”).

[13] In addition, the plaintiffs have not demonstrated a
basis for equitable estoppel. Equitable estoppel “halts the statute
of limitations when there is active conduct by a defendant,
above and beyond the wrongdoing upon which the plaintiff ’s
claim is filed, to prevent the plaintiff from suing in time.” See
Guerrero v. Gates, 442 F.3d 697, 706 (9th Cir. 2006) (internal
quotation marks omitted). The First Amended Complaint
alleges only that the defendants “fraudulently misrepresented
and concealed the true facts related to the items subject to disclosure.”
The plaintiffs, however, have failed to specify what
true facts are at issue, or to establish that the alleged misrepresentation
and concealment of facts is “above and beyond the
wrongdoing” that forms the basis for their TILA and Arizona
Consumer Fraud Act claims. Guerrero, 442 F.3d at 706.

[14] The district court therefore properly dismissed the
plaintiffs’ claims under both TILA and the Arizona Consumer
Fraud Act as barred by a one-year statute of limitations. The
plaintiffs did not add any new facts to the proposed Second
Amended Complaint, and do not suggest any on appeal, that
would support applying either equitable tolling or equitable
estoppel to their claims. Thus, the district court also did not
abuse its discretion by denying leave to amend.

5. Intentional Infliction of Emotional Distress
The plaintiffs contend that they sufficiently stated a claim
for intentional infliction of emotional distress. When ruling on
a motion to dismiss such a claim under Arizona law, a district
court may determine whether the alleged conduct rises to the
level of “extreme and outrageous.” See Cluff v. Farmers Ins.
Exch., 460 P.2d 666, 668 (Ariz. Ct. App. 1969), overruled on
other grounds by Godbehere v. Phoenix Newspapers, Inc.,
783 P.2d 781 (Ariz. 1989).

[15] Here, the plaintiffs fail to meet that threshold. They
allege that the lenders’ “actions in targeting Plaintiffs for a
loan, misrepresenting the terms and conditions of the loan,
negotiating the loan, and closing the loan” were “extreme and
outrageous because of the Plaintiffs’ vulnerability” and “because
the subject of the loan was each Plaintiff ’s primary residence.”
This conduct, though arguably offensive if true, is
not so outrageous as to go “beyond all possible bounds of
decency.” Lucchesi v. Frederic N. Stimmell, M.D., Ltd., 716
P.2d 1013, 1015 (Ariz. 1986) (en banc). The plaintiffs essentially
allege that the lenders offered them loans that the lenders
knew they could not repay; this is not inherently “extreme
and outrageous.” Moreover, the plaintiffs do not allege any
additional support for their claim in their proposed Second
Amended Complaint. Accordingly, the district court properly
dismissed, without leave to amend, the plaintiffs’ claim for
intentional infliction of emotional distress.

IV.
The district court properly dismissed the plaintiffs’ First
Amended Complaint without leave to amend. The plaintiffs’
claims that focus on the operation of the MERS system ultimately
fail because the plaintiffs have not shown that the
alleged illegalities associated with the MERS system injured
them or violated state law. As part of their fraud claim, the
plaintiffs have not shown that they detrimentally relied upon any misrepresentations about MERS’s role in their loans. Further,
even if we were to accept the plaintiffs’ contention that
MERS is a sham beneficiary and the note is split from the
deed in the MERS system, it does not follow that any attempt
to foreclose after the plaintiffs defaulted on their loans is necessarily
“wrongful.” The plaintiffs’ claims against their original
lenders fail because they have not stated a basis for
equitable tolling or estoppel of the statutes of limitations on
their TILA and Arizona Consumer Fraud Act claims, and
have not identified extreme and outrageous conduct in support
of their claim for intentional infliction of emotional distress.

Thus, we AFFIRM the decision of the district court.

If you have been a victim of wrongful foreclosure and need help in saving your home from fraudulent foreclosure, you need to know the Foreclosure Fundamentals that will ensure that you stick it to these illegal entities rather than having your case thrown out by the courts that favors the deep pockets. To get the real arsenals that will blow the lids off of these crime pots – visit: http://www.fightforeclosure.net

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What Homeowners in Foreclosure Defense Needs to Know About the Issues of “Standing vs. Capacity to Sue”

18 Sunday Aug 2013

Posted by BNG in Affirmative Defenses, Case Laws, Case Study, Federal Court, Foreclosure Defense, Fraud, Judicial States, Litigation Strategies, Mortgage Laws, Non-Judicial States, Pleadings, Pro Se Litigation, State Court, Trial Strategies, Your Legal Rights

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Court, Lawsuit, Mastropaolo, Motion (legal), New York, Plaintiff, Wells Fargo, Wells Fargo Bank

Homeowners in Judicial foreclosure states need to realize that Banks claim of ownership of the note is not an issue of standing but an element of its cause of action which it must plead and prove

The term “standing” has been applied by the courts to two legally distinct concepts. The first is legal capacity, or authority to sue. The second is whether a party has asserted a sufficient interest in the outcome of a dispute.

Standing and capacity to sue are related, but distinguishable legal concepts. Capacity requires an inquiry into the litigant’s status, i.e., its “power to appear and bring its grievance before the court”, while standing requires an inquiry into whether the litigant has “an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue.”

Wells Fargo Bank Minnesota, Nat. Ass’n v Mastropaolo, 42 AD3d239, 242 (2d Dept 2007) (internal citations omitted). Both concepts can result in dismissal on a pre answer motion by the defendant and are waived if not raised in a timely manner.

In some Jurisdictions such as New York, an action may be dismissed based on the grounds that the Plaintiff lacks the legal capacity to sue. CPLR 3211(a)(3) It governs no other basis for dismissal. CPLR 3211(e) provides that a motion to dismiss pursuant to CPLR 3211(a)(3) is waived if not raised in a pre-answer motion or a responsive pleading.

Many decisions treat the question of whether the Plaintiff in a foreclosure action owns the note and mortgage as if it were a question of standing and governed by CPLR 3211(e).

Citigroup Global Markets Realty Corp. v. Randolph Bowling , 25 Misc 3d 1244(A), 906 N.Y.S.2d 778 (Sup. Ct. Kings Cty 2009);  Federal Natl. Mtge. Assn. v. Youkelsone, 303 AD2d546, 546—547 (2d Dept 2003);
Nat’l Mtge. Consultants v. Elizaitis, 23 AD3d 630, 631 (2dDept 2005);
Wells Fargo Bank, N.A. v. Marchione, 2009 NY Slip Op 7624, (2d Dept 2009)

There is a difference between the capacity to sue which gives the right to come into court, and possession of a cause of action which gives the right to relief.  Kittinger v Churchill  Evangelistic Assn Inc., 239 AD 253, 267 NYS 719 (4th Dept 1933). Incapacity to sue is not the same as insufficiency of facts to sue upon. Ward v Petri, 157 NY3d 301 (1898)

In the case of Ohlstein v Hillcrest, a defendant moved to dismiss a complaint in part based on lack of legal capacity to sue where plaintiff had assigned her stock. The Court denied that branch of the motion holding that even if plaintiff had assigned her stock, “the defect to be urged is that the complaint does not estate [sic] a cause of action in favor of the one who is suing, the alleged assignor – not that the plaintiff does not have the legal capacityto sue. Legal incapacity, as properly understood, generally envisages a defect in legal status,not lack of a cause of action in one who is sui juris.” Ohlstein v Hillcrest, 24 Misc 2d 212,214, 195 NYS2d 920, 922 (Sup Ct NY Co 1959).

The difference was articulated by the Court in the case of  Hebrew Home for Orphans v Freund, 208 Misc. 658, 144 N.Y.S.2d 608 (Sup Ct Bx 1955). The plaintiff in that case sought a judgment declaring that an assignment of a mortgage it held was valid. The defendants moved to dismiss the complaint on the grounds that since the assignment was not accompanied by delivery of the bond and mortgage to plaintiff, plaintiff did not own the bond and mortgage and thus had no legal capacity to sue or standing to maintain the action. The Court denied the motion, stating:

The application to dismiss the complaint on the alleged ground that the plaintiff lacks legal capacity to sue rests upon a misapprehension of the meaning of the term. See Gargiulo v.Gargiulo, 207 Misc. 427, 137 N.Y.S.2d 886. Rule 107(2) of the Rules of Civil Practice relates to a plaintiff’s right to come into Court, and not to his possessing a cause of action. Idat 660-661, 610.

The Court then quotes Kittinger v Churchill for the principle that,

“The provision for dismissal of the complaint where the plaintiff has not the capacity to sue (Rules of Civil Practice, rules 106, 107) has reference to some legal disability, such as infancy, or lunacy, or want of title in the plaintiff to the character in which he sues. There is a difference between capacity to sue, which gives the right to come into court, and possession of a cause of action, which gives the right to relief in court.
Ward v. Petrie, 157 NY 301, 51 N.E. 1002;  Bank of Havana v. Magee,
20 NY 355; Ullman v. Cameron, 186 NY 339, 78 N.E.1074. The plaintiff is an individual suing as such. He is under no disability, and sues in norepresentative capacity. He is entitled to bring his suits before the court, and to cause a summons to be issued, the service of which upon the defendants brings the defendants in to court. There is no lack of capacity to sue.

The other meaning of standing involves whether the party bringing the suit has a sufficient interest in the dispute. Some cases have held that in this context, standing is jurisdictional, reasoning that where there is no aggrieved party, there is no genuine controversy, and where there is no genuine controversy, there is no subject matter  jurisdiction.
Stark v Goldberg, 297 AD2d 203, 204(1st Dept 2002);  xelrod v New York StateTeachers’ Retirement Sys., 154 AD2d 827, 828 (3rd Dept 1989).

Some courts have held that the jurisdiction of the court to hear the controversy is not affected by whether the party pursuing the action is, in fact, a proper party.They have held that if not raised in the answer or pre-answer motion to dismiss, the defense that the a party lacks standing is waived. Wells Fargo Bank Minnesota, Nat. Ass’n v. Perez,70 AD3d 817, 818, 894 N.Y.S.2d 509, 510 (2nd Dept 2010), Countrywide Home Loans, Inc.v. Delphonse, 64 AD3d 624, 625, 883 N.Y.S.2d 135 (2nd Dept 2009),
HSBC Bank, USA v. Dammond, 59 AD3d 679, 680, 875 N.Y.S.2d 490 (2nd Dept 2009)

The issue of whether a Plaintiff owns the mortgage and note is a different question from  whether it has an interest in the dispute. Whether a party has a sufficient interest in the dispute is determined by the facts alleged in the complaint, not whether Plaintiff can prove the allegations.
Wall St. Associates v. Brodsky, 257 AD2d 526, 684 N.Y.S.2d 244 (1st Dept1999),  Kempf v. Magida, 37 AD3d 763, 764, 832 N.Y.S.2d 47, 49 (2nd Dept 2007). For the purpose of determining whether a party has sufficient interest in the case the allegations areassumed to be true.

It is important to note that This issue is not analogous to the issue of whether citizens have standing to seek judicial intervention in response to what they believe to be governmental actions which would impair the rights of members of society, or a particular group of citizens, (e.g. Schulz v. State, 81 NY2d 336, 343, 615 N.E.2d 953, 954 (1993), or whether registered voters have standing to challenge the denial of the right to vote in a referendum pursuant to Section 11 of Article VII of the State Constitution, or whether commercial fishermen have standing to complain of the pollution of the waters from which they derive their living, see also  Leo v. Gen. Elec. Co.,  145 AD2d 291, 294, 538 N.Y.S.2d 844, 847 (2nd Dept 1989). The issue of standing in these types of cases turn on whether the claimants have an interest sufficiently distinct from societyin general.

Foreclosure actions implicate a concrete interest specific to a plaintiff, and the determination must be made as to whether it has been aggrieved and is therefore entitled to receive monetary damages for the alleged breach of the law.

Therefore homeowners needs to realize that when Banks pled that it owns the note and mortgage and asserts the right to foreclose on the mortgage which it asserts is in default. If it is successful in proving its claims, then usually it is entitled to receive the proceeds of the sale of the mortgaged property. Homeowners should understand that the objection that the Plaintiff in fact does not own the note and mortgage is not a defense based on a lack of standing. Courts will usually claim homeowners “does not say” (insufficient facts were alleged). But that the homeowner’s argument is that the facts alleged are not true. It is not a question of whether the Bank has alleged a sufficient interest in the dispute, but of whether the Bank can prove its prima facie case.

In Judicial States where the Banks are the plaintiff; unlike standing, denial of the Plaintiff’s claim that it owns the note and mortgage is not an affirmative defense because it is usually a denial of an allegation in the complaint that is an element of the Plaintiff’s cause of action.

In a Judicial foreclosure case, the Plaintiff must plead and prove as part of its prima facie case that it owns the note and mortgage and has the right to foreclose. Wells Fargo Bank, N.A., 80AD3d 753, 915 N.Y.S.2d 569 (2d Dept 2011); Argent Mtge. Co., LLC v. Mentesana, 79AD3d 1079, 915 N.Y.S.2d 591 (2d Dept 2010); Campaign v Barba , 23 AD3d 327, 805 NYS2d 86 (2nd Dept 2005).

However, it is usually not enough for the Defendant (Homeowner) to filed a pro se “answer” containing a “general denial”, which is a denial of all of “Plaintiff’s allegations”.

In Hoffstaedter v. Lichtenstein , 203 App.Div. 494, 496, 196 N.Y.S. 577 (1st Dept 1922),the First Department held that the general denial put the allegations in the plaintiff’scomplaint in issue. In that case, the defendant executed a note in favor of the plaintiff as a promise to pay for certain goods. When plaintiff brought an action to recover on the note, the defendant answered with a general denial. It went on to state that “[i]t is elementary that under a general denial a defendant may disprove any fact which the plaintiff is required to prove to establish a prima facie cause of action.” Id., at 578.

The Court of Appeals cited  Hoffstaedter v. Lichtenstein in holding that a general denial puts in issue those matters already pled.
Munson v. New York Seed Imp. Co-op., Inc., 64 NY2d 985, 987, 478 N.E.2d 180, 181 (1985).The general denials contained in the answer enable defendant to controvert the facts upon which the plaintiff bases her right to recover. Strook Plush Company v. Talcott, 129 AD 14, 113 NYS 214 (2nd Dept 1908). A generaldenial is sufficient to challenge all of the allegations in a complaint. Bodine v. White , 98 NYS232, 233 (App. Term 1906).The Second Department in Gulati v. Gulati, 60 AD3d 810, 811-12, 876 N.Y.S.2d 430, 432-33 (2nd Dept 2009), held it was that where a claim would not take the plaintiff by surprise and “does not raise issues of fact not appearing on the face of the complaint”, a denial of the allegations in the plaintiff’s complaint was sufficient. It heldthat where the plaintiff alleged as an element of her prima facie case that the defendant abandoned the marital residence without cause or provocation, and the defendant denied these allegations in his answer, defendant did not need to further allege abandonment as an affirmative defense

The Fourth Department in Stevens v. N. Lights Associates, 229 AD2d 1001, 645 N.Y.S.2d 193, 194 (4th Dept 1996), found that a denial by defendant that it was in control of the premises where plaintiff fell did not need to be separately pled as a defense, as the denialof control did not raise any issue of fact which had not already been pled in the complaint.See also
Scully v. Wolff, 56 Misc. 468, 107 N.Y.S. 181 (App. Term 1907),  Bodine v. White,98 N.Y.S. 232 (App. Term 1906).

In this case, Defendant’s contesting Plaintiff’s claim in the complaint that it owns the note and mortgage could not take the Plaintiff by surprise as a general denial contests Plaintiff’s factual allegations in the complaint itself, and does not rely upon extrinsic facts. Since ownership of the note was pled in the complaint and is an element of the Plaintiff’s cause of action, Defendant did not waive the defense that Plaintiff did not own the note, because he made a general denial to the factual allegations contained in the complaint.

In fact, the identity of the owner of the note and mortgage is information that is often in the exclusive possession of the party seeking to foreclose. Mortgages are routinely transferred through MERS, without being recorded. The notes underlying the mortgages, as negotiable instruments, are negotiated by mere delivery without a recorded assignment or notice to the borrower. A defendant has no method to reliably ascertain who in fact owns the note, within the narrow time frame allotted to file an answer.

In jurisdictions such as New York, CPLR 3018(b) provides that an affirmative defense is any matter “which if not pleaded would be likely to take the adverse party by surprise” or “would raise issues of fact not appearing on the face of a prior pleading”.

CPLR 3018(b) also lists some common affirmative defenses, although the list is not exhaustive. The list of affirmative defenses in CPLR 3018(b) are those which raise issues such as res judicata or statute of limitations which are based on facts not previously alleged in the pleadings.

“The defendant has the burden of proof of affirmative defenses, which in effect assume the truth of the allegations of the complaint and present new matter in avoidance thereof.” 57 NY Jur. 2d Evidence and Witnesses 165″.

To survive motion to dismiss or Summary Judgement, it is important that Pro Se Homeowners using “Standing” as a foreclosure defense also review their PSA in order to include missing or lack of assignments.

This defense will be based on “Conveyance from the Depositor to the Trust”.

Homeowners arguments under these defense will be based that the Trustee violated the terms of the trust by acquiring the note directly from the sponsor’s successor in interest rather than from the Depositor, for instance ABC, as required by the PSA.

In Article II, section 2.01 Conveyance of Mortgage Loans, the PSA requires that the Depositor deliver and deposit with the Trustee the original note, the original mortgage and an original assignment . The Trustee is then obligated to provide to the Depositor an acknowledgment of receipt of the assets before the closing date. PSA Article II, Section 2.01.

The rationale behind this requirement is to provide at least two intermediate levels of transfer to ensure the assets are protected from the possible bankruptcy by the originator which permits the security to be provided with the rating required for the securitization to be saleable.
Deconstructing the Black Magic of Securitized Trusts, Roy D. Oppenheim Jacquelyn K. Trask-Rahn 41 Stetson L. Rev. 745 Stetson Law Review (Spring 2012).

So to further the arguement, homeowners should argue that the assignment of the note and mortgage from original lender to Trustee which is called (A-D), rather than from the Depositor ABC violates section 2.01 of the PSA which requires that the Depositor deliver to and deposit the original note, mortgage and assignments to the Trustee.

In most cases, “if homeowner’s pleadings are in order”, meaning (The evidence submitted by homeowner that the note was acquired after the closing date and that assignment was not made by the Depositor), is sufficient to raise questions of fact in the court as to whether the Bank owns the note and mortgage, and usually will Deny motion to Dismiss(in non-juidical States) or preclude granting Bank’s summary judgment (in Judicial States).

The courts will usually find and conclude that the assignment of the homeowner’s note and mortgage, having not been assigned from the Depositor to the Trust, is therefore void as in being in contravention of the PSA.

For More Info How You Can Use Well Structured Pleadings Containing Facts and Case Laws Necessary To Win Your Foreclosure Defense Visit: http://www.fightforeclosure.net

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How Pro Se Foreclosure Defense Litigants Can Effectively Defend & Save Their Homes

25 Thursday Jul 2013

Posted by BNG in Affirmative Defenses, Appeal, Case Laws, Case Study, Discovery Strategies, Federal Court, Foreclosure Defense, Judicial States, Legal Research, Litigation Strategies, MERS, Mortgage Laws, Non-Judicial States, Note - Deed of Trust - Mortgage, Pleadings, Pro Se Litigation, State Court, Trial Strategies, Your Legal Rights

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Courts of New York, HSBC Bank USA, Law, Mortgage loan, New York, Plaintiff, Pro se legal representation in the United States, standing, United States

I    General Answer Issues

•   Be sure to raise lack of standing as a defense in the homeowner’s answer if the plaintiff’s ownership of the note and mortgage is questionable. Standing/capacity to sue may be waived if not raised in the answer.

 •  Late Answers: 

 •  Pro se homeowners often do not file answers and do not seek attorneys until they receive notice of the settlement conference. In these circumstances, homeowner attorneys should serve and file a late answer. If the plaintiff rejects the answer, file a motion to compel acceptance of the late answer.

•   A court may permit a defendant to file a late answer “upon a showing of reasonable excuse for delay or default.” CPLR § 3012(d); Cirillo v.Macy’s, Inc., 61 A.D.3d 538, 540, 877 N.Y.S.2d 281, 283 (1st Dep’t 2009).

•   Mortgagor’s belief that foreclosure action was stayed during ongoing settlement negotiations with mortgagee was reasonable excuse for filing late answer. HSBC Bank USA, N.A. v. Cayo, 2011, 34 Misc.3d 850, 934 N.Y.S.2d 792.

•   Courts have routinely permitted service of a late answer where the delay was not willful, the defendant has meritorious defenses, and service of the answer does not unfairly prejudice the plaintiff. See, e.g., Nickell v. Pathmark Stores, Inc., 44 A.D.3d 631, 632, 843 N.Y.S.2d 177, 178 (2d Dep’t 2007); Jolkovsky v. Legeman, 32 A.D.3d 418, 419, 819 N.Y.S.2d 561, 562 (2d Dep’t 2006); Watson v. Pollacchi, 32 A.D.3d 565, 565-66, 819 N.Y.S.2d 612, 613 (3d Dep’t 2006); Nason v. Fisher, 309 A.D.2d 526, 526, 765 N.Y.S.2d 32, 33 (1st Dep’t 2003)

•   Allowance of a late answer is consistent with New York’s strong public policy in favor of a determination of controversies on the merits. See, e.g., Jones v. 414 Equities LLC, 57 A.D.3d 65, 81, 866 N.Y.S.2d 165, 178 (1st Dep’t 2008);Hosten v. Oladapo, 52 A.D.3d 658, 658-59, 858 N.Y.S.2d 915, 916 (2d Dep’t 2008); Kaiser v. Delaney, 255 A.D.2d 362, 362, 679N.Y.S.2d 686, 687 (2d Dep’t 1998).

Where the defendant has answered but not asserted a standing defense, a motion for leave to amend to assert a standing defense should be granted if such amendment causes no prejudice to plaintiff. U.S. Bank Natl. Assn. v. Sharif, 89 A.D.3d 723, 933 N.Y.S.2d 293, 2011 N.Y. Slip Op. 07835 (2d Dep’t Nov. 1, 2011) (motions for leave to amend should be freely granted absent prejudice or surprise from the delay in seeking leave; reversing denial of leave and holding that trial court should have dismissed for lack of standing upon plaintiff’s failure to submit either written assignment of note or evidence of physical delivery).

• New York law permits reciprocal attorney’s fees for homeowner’s attorney in defending against foreclosure on residential mortgages: RPL § 282.

 II.  Affirmative Defenses and Counter Claims

A.   Standing and Capacity To Sue

 •    Many documents needed to establish standing were “robo-signed”

•   Sloppiness in assigning mortgages to mortgage securitization trusts often makes it difficult for plaintiff trusts (or servicers) to establish standing.

 1.   The Difference Between Standing and Capacity to Sue

 a.   Standing Is Jurisdictional

•   U.S. Constitution Article III – Case and Controversy Requirement

•   Siegel on New York Practice: “It is the law’s policy to allow only an aggrieved person to bring a lawsuit. One not affected by anything a would-be defendant has done or threatens to do ordinarily has no business suing, and a suit of that kind can be dismissed at the threshold for want of jurisdiction without reaching the merits. When one without the requisite grievance does bring suit, and it’s dismissed, the plaintiff is described as lacking “standing to sue” and the dismissal as one for lack of subject matter jurisdiction.”

•   “Standing to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress….The rules governing standing help courts separate the tangible from the abstract or speculative injury, and the genuinely aggrieved from the judicial dilettante or amorphous claimant.” Saratoga County Chamber of Commerce, Inc. v. Pataki,   100 N.Y. 801, 766 N.Y.S.2d 654, 798 N.E.2d 1047 (2003)

•   New York courts have treated standing as a common law concept, in contrast to federal approach, where it rests on constitutional and prudential grounds. New York case law tends to blend standing with capacity to sue.

b. Capacity to Sue v. Standing

•   Capacity to sue goes to the litigant’s status, i.e., its power to appear and bring its grievance before the court. For example, a foreign corporation or LLC may not bring an action unless it is registered with the Secretary of State; minors lack legal capacity, etc.

•   Standing requires an inquiry into whether the litigant has an interest in the claim at issue that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request. Is the relief sought in the case properly sought by this plaintiff?

 2. Standing in a Foreclosure Case

 •  Foreclosing plaintiff must own the note and the mortgage at the inception of the action. Deutsche Bank National Trust Co. v. Barnett, 88, A.D. 3d 636, 931 N.Y.S. 2d 630, 2011 WL 4600619 (2d Dep’t Oct. 4, 2011); Kluge v. Fugazy ,145 A.D. 2d 537, 536 N.Y. S. 2d 92 (2d Dep’t 1988)

•   Note: represents contractual debt obligation Mortgage: represents collateral security for debt

•   Assignment of the mortgage without assignment of the debt, i.e. the note, is a nullity.

•   Assignment must be complete before foreclosure is commenced

•   Assignment can be by written assignment or by physical delivery of note and mortgage.

•   An indorsed note (to the plaintiff or in blank) is not sufficient: the plaintiff must prove physical delivery before the foreclosure was commenced.

•   If a written assignment involved and has a date, the execution date generally controls.

•   Back dated assignment are ineffective absent proof of prior physical delivery. Wells Fargo v. Marchione, 69 A.D. 3d 204, 887 N.Y. S. 2d 615 (2d Dep’t 2009)

 3. Common Assignment Red Flags in Foreclosure Cases

Assignments that jump over links in the chain of title, including timing.

•  Suspicious or contradictory endorsements and allonges.

•  Assignments from MERS as nominee

•  Robo-signing of assignment documents

•  Mortgage-Backed Securities Investment Vehicles: Pooling and Servicing Agreements and non-compliance with trust closing dates and other terms

 4. MERS and Standing

•  Second Department: assignment from MERS when MERS is designated merely as nominee of lender, and never owned note, is ineffective to confer standing on its assignee.

Bank of New York v. Silverberg, 86 A.D. 3d 274, 926 N.Y.S. 2d 532 (2d Dep’t 2011). See also In re Lippold, 2011 WL 3890540 (SDNY Bkrtcy 2011)(MERS, as assignor, could not legally assign the note as prior holder of note and mortgage only conferred legal rights with respect to the mortgage); In re Agard, 444 B.R. 231 (SDNY Bkrtcy 2011) (mortgage naming MERS as nominee did not authorize it to assign)

•  Issues concerning who executes assignments on behalf of MERS (plaintiff’s counsel, robo-signing servicer employees?)

 5. Waiver of Standing Defenses

•  CPLR 3211(e) only provides that capacity to sue is waived; no mention of standing.

•  Wells Fargo Bank v. Mastropaolo, 42 A.D. 3d 239, 837 N.Y.S. 2d 247 (2d Dep’t 2007); HSBC v. Dammond, 59 A.D. 3d 679, 875 N.Y.S. 2d 490, 875 N.Y. S. 2d 490, (2d Dep’t 2009); Countrywide v. Delphonse, 64 A.D. 3d 624, 883 N.Y. S. 2d 135 (2d Dep’t 2009).

•  Cf. Security Pacific Nat’l Bank v. Evans, 31 A.D. 2d 278, 820 N.Y.S. 2d 2 (1stDep’t 2006) (plaintiff lender commenced action after merging with anotherbank; lack of legal capacity waived; not an issue of standing)

•  Some trial courts have held there is no waiver of standing defense where plaintiff had not appeared or answered altogether. Deutsche Bank v. McRae, 894 N.Y. S. 2d 720 (Allegheny Cty. 2010); Citigroup v. Bowling, 25 Misc. 3d 1244A, 906 N.Y. S. 2d 778 (Kings Cty. 2009).

 6.Leave to Amend Answer to Assert Standing Defense

U. S. Bank, Natl. Assn. v. Sharif, 89 A.D. 3d 723,933 N.Y.S. 2d 293, 2011 NY Slip Op 07835 (2d Dep’t Nov. 1, 2011) (reversing denial of leave to amend to assert standing and denial of motion to dismiss for lack of standing where plaintiff demonstrated no prejudice and failed to establish its standing to foreclose). Aurora v. Thomas, 70 A.D. 3d 986, 897 N.Y.S.2d 140 (2d Dep’t 2010) (affirming grant of motion for leave to amend to assert standing and capacity to sue, finding no waiver where documents relied upon were revealed during discovery); HSBC v. Enobakhare, 2010 Slip Op 31925 (U) (Richmond Cty. 2010) (granting motion for leave to amend answer; amended answer could assert defenses that were arguably waived by failure to assert originally)

• Deutsche Bank v. Ramotar, 30 Misc. 3d 1208(A), 2011 WL 66041 (Kings Cty. 2011) (denying summary judgment and order of reference, granting defendant who had previously answered pro se leave to file amended answer asserting standing and robo-signing defenses)

 7. Standing as a Meritorious Defense to Vacate Default Judgments/Plaintiff’s Motions for Default/Summary Judgment/Order of Reference and Absence of Standing

 •  Prima facie case in a foreclosure case requires showing of ownership of note and mortgage. Campaign v. Barba, 23 A.D. 3d 327, 805 N.Y.S. 86 ( 2d Dep’t  2005)

•  Distinction between moving to dismiss for lack of standing when defense has arguably been waived and opposition to plaintiff’s motion for summary judgment and order of reference for failure to establish ownership of note (prima facie case)

8. Sua Sponte  Dismissals on Standing Grounds/Robo-signing Concerns

•  Financial Freedom v. Slinkosky, 28 Misc. 3d 1209(a) (Suffolk Cty. 2010) (denying summary judgment where plaintiff failed to submit note and mortgage and failed to demonstrate standing) HSBC Bank USA, N.A. v Taher, NY Slip Op 51208(U) (Sup. Ct. Kings Cty., July 1, 2011) (denying order of reference, making detailed analysis of robo-signed assignments and affidavits of merit and amounts due, questioning employment histories of individuals who signed papers on behalf of different entities, determining that plaintiff lacked standing to foreclose because, among other reasons, assignment of mortgage from MERS as nominee, which never owned note, was ineffective, and dismissing with prejudice. In light of frivolous motion for order of reference by HSBC and its counsel, court scheduled hearing on sanctions and ordered chief executive officer of HSBC to personally appear at hearing)

9. Standing as Meritorious Defense (for leave to file untimely answer or to vacate default)

 •   Deutsche Bank National Trust Co. v. Ibaiyo,  20910-08 (Queens Ct. 2009) (meritorious defense criteria for CPLR § 3012 motion to extend defendant’s time to answer)

•  Maspeth Federal Av. & Loan Ass’n v. McGown, 77 A.D. 3d 890, 909 N.Y. S. 2d 642 (2d Dep’t 2010) (trial court has considerable discretion on applications to vacate default and extend time to answer when determining existence of meritorious defense and reasonable excuse for default)

 10. True Capacity to Sue Issues

•  BCL §1372 (prohibits lawsuits by foreign corporations not authorized to do business in NY)

• Exception for foreign banking corporations via BCL § 103(a) and Banking Law § 200(4).

•  Sutton Funding LLC v. Parris,  24 Misc. 3d 889, 878 N.Y.S.2d 610 (Kings Cty. 2009) (dismissing foreclosure where plaintiff was not a foreign bank and was not authorized to do business in NY)

 B.  Federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692-1692p

 1. Scope of FDCPA Coverage

a.  Who is covered

•  Applies to debt collectors. § 1692a(6)

•  Debt collector is any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts

•  For §1692f(6) purposes it also includes any business the principal purpose of which is the enforcement of security interests.

 •  Or, any person who regularly collects, directly or indirectly, debts  owed or due or asserted to be owed or due another.

 •  Includes debt buyers

 •  Includes attorneys who regularly collect consumer debts.

 •  There used to be an exemption for attorneys collecting on behalf of and in the name of a client. In 1986, Congress repealed this exemption.

b. Who is not covered

 • Original creditors.  § 1692a(6)(F)(ii)

 • It does include any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. § 1692a(6)

 • Creditors employees or agents collecting in the name of the creditor. § §692a(6)(A)

 • State and federal officials performing their duties, such as the IRS or U.S. Dept. of Education. § 1692a(6)(C)

 • Persons collecting debts not in default, such as some servicers. §1692a(6)(F)(iii)

• Process servers. §1692a(6)(D)

 • At least one court has held that they are covered if they are engaging in sewer service Mel Harris v. Sykes, 757 F.Supp.2d 413 (2010)

 c. What transactions are covered Consumer debts

 •  Consumer is defined in § 1692a(3) as “any natural person obligated or allegedly obligated to pay any debt”

 •  Does not apply to artificial entities, such as corporations Debts are defined in § 1692a(5) as any obligation of a consumer to pay money

 •  underlying transaction must be for money, property, insurance, or services

 •  must be primarily for personal, family or household purposes

 •  no business debts or fines Communications – § 1692a(2)

 •  Means the conveying of information regarding a debt directly or indirectly to any person through any medium

 •  Also applies to statements and activities during the course of litigation. Heintz v. Jenkins , 514 U.S. 291 (1995)

 •  Recent amendments to FDCPA clarify that a legal pleading

cannot be considered an “initial communication” under FDCPA.

•  Note that this is a narrow amendment; other provisions of FDCPA still apply.

 2. Substantive Consumer Protections

 •  Cease communications. § 1692c

 •  Dispute/verification. § 1692g

 •  Notice within 5 days of initial communication

 •  Right to dispute within 30 days of receiving notice

 •  Once debt collector receives dispute in writing, must stop all debt collection activity (including filing a lawsuit) until it provides “verification” of the debt.

 •  NOTE: Local NYC law expands these dispute rights. Under local law, consumers can request verification at any time. NYC Admin Code § 20-493.2.

 •  Verification must include (1) copy of the contract or other agreement creating the obligation to pay (2) copy of final account statement (3) an accounting itemizing the total amount do, specifying principal, interest, and other charges.

 For each additional charge, the debt collection must state the date and basis for the charge. See  § 2-190 of the Rules of the City of New York.

 3. Prohibited Activities

 •  Communications. §§1692b & 1692c

 •  Contacting consumer after consumer sends cease communication letter

 •  Contacting consumer who is represented by counsel

 •  Contacting third parties about a consumer’s debt

 •  Contacting consumer at work if debt collector has reason to know that consumer’s employer prohibits such communication

 •  Common scenario: Debt collector can’t reach consumer, so calls consumer’s neighbor/family member/employer and leaves telephone number and message for the consumer to call back about an important matter. This is a violation.

 •  Harassment or Abuse. § 1692d

 •  Debt collector may not engage in conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with collection of debt

 •  Includes: threats of violence, use of profanity, repeated telephone calls for purpose of harassment, calling without disclosure of identity (e.g. threats to repossess property)

 •  False or Misleading Representations. § 1692e

•  False representation of character, amount, or legal status of any debt (e.g., suing for more interest and fees than is actually owed)

 •  Threat to take any action that cannot legally be taken or is not intended to be taken

 •  Implying that consumer could be arrested or children taken away for nonpayment of debt

 •  Pretending to be attorney, marshal

 •  Making false or inaccurate reports to credit reporting agencies

 •  Unfair Practices. § 1692f

 •  Using unfair or unconscionable means to collect a debt

 •  Collection of any amount (including interest and fees) that is not actually owed

 •  Threatening to take or repossess property (a) without the right; (b) without the intent; (c) if property is exempt

 4. FDCPA Litigation and Remedies

 a. Statute of limitations

 • one year from the date on which the violation occurs – § 1692k(d)

 • No continuing violations doctrine

 b. Jurisdiction

 • May bring in either state or federal court

 • May also bring as a counterclaim in a debt collection suit

 c. Construction

 • Strict liability statute – proof of the debt collector’s intent is not required

 • intent is a factor that can be used when calculating damages

 • Courts apply a “least sophisticated consumer” standard to analyze violations

 d. Remedies

 • Up to $1000 statutory damages

• A majority of courts hold that capped at $1,000 per action no matter how many violations are joined in the lawsuit

 • Per Plaintiff

 • Sometimes per Defendant, depending on the violation

 • Factors used by courts in determining statutory awards:

 • Intent to commit the violation or evade the protections

 • Repetition of the violations

 • Timely correction of the violations

 • Multiple consumers affected by the violations

• Prior violations by the collector for similar acts

 • Actual damages

 • Attorney’s fees

 • Declaratory relief

 • No Injunctive relief

 C. NYS Banking Law Defenses

 1. Banking Law § 6-l

 • Applies to loans made after April 1, 2003.

 • Covers “high – cost home loans”: a first lien residential mortgage loan, not exceeding conforming loan size for a comparable dwelling as established by the Federal National Mortgage Association in which (1) the APR exceeds eight percentage points over the yield on Treasury securities having comparable periods of maturity; or (2) total points and fees exceed 5% of the total loan amount, excluding certain bona fide discount points if total loan is $50,000 or more.

 • Prohibits, inter alia, (1) lending without regard to a borrower’s ability to repay; (2) points and fees in excess of 3% of the loan; (3) loan flipping; (4) kickbacks to mortgage brokers; (5) points and fees when lender refinances its own high-cost loan; (6) balloon payments, negative amortization, and default interest rates.

 • Provides private right of action with 6-year statute of limitations (from origination); actual and statutory damages; attorney fees; possible rescission of the loan.

 • Intentional violation may result in voiding of the loan.

 2. Banking Law § 6-m

 • Covers “sub-prime home loan”: a loan where the fully indexed APR for the first-lien loan exceeds by more than 1.75, or for a subordinate loan by more than 3.75, the average commitment rate for loans in the northeast region with a comparable duration as published in the Freddie Mac Primary Mortgage Market Survey (PMMS) in the week prior to the week in which the lender received a completed loan application.

 • Lenders must take reasonable steps to verify that the borrower has the ability to repay the loan, including taxes and insurance.

 • Prohibitions similar to those in Banking Law §6-l.

 • Lenders must disclose charges for taxes and insurance and must escrow such payments after July 1, 2010.

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

 

 

 

 

 

 

 

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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”).”

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