January 19, 2014
California Court Dismisses All Seven Causes of Action Arising Out of the Alleged Wrongful Foreclosure of Plaintiff’s Home
The court in deciding Dorn v. Countrywide Home Loans, 2013 Cal. App. Unpub. LEXIS 7356 (Cal. App. 2d Dist. 2013) concluded that the trial court did not abuse its discretion in dismissing the action; the court thus affirmed the lower courts decision.
Plaintiff Jason Dorn appealed from a judgment dismissing his action against defendants America’s Wholesale Lender, Countrywide Bank, Bank of America Home Loan Services, MERS, and ReconTrust.
Plaintiff filed a complaint asserting causes of action for: (1) declaratory relief: fraud in the execution, (2) declaratory relief: failure of consideration, (3) declaratory relief: existence of an obligation — no creation of rights, (4) declaratory relief: existence of an obligation — no creation of rights,(5) injunctive relief, (6) accounting.
After considering arguments the court ultimately affirmed the lower court’s decision to dismiss.
The court in deciding GMAC Mortg., LLC v. Poley, 2013 Wisc. App. LEXIS 872 (Wis. Ct. App. 2013) affirmed the lower court’s decision in granting summary judgment in favor of GMAC.
In this foreclosure action, the circuit court granted summary judgment in favor of the mortgagee, GMAC Mortgage LLC. On appeal, mortgagor James Poley argued that the court should have stayed this foreclosure action as a result of a federal bankruptcy proceeding initiated by GMAC during the pendency of this action and, in any case, erred in granting summary judgment in favor of GMAC.
After considering the arguments the court concluded that the lower court did not err in determining that the bankruptcy proceeding did not prevent Poley from opposing summary judgment. The court also concluded that the lower court properly granted summary judgment. Therefore the court affirmed the decision of the lower court in all respects.
The court in deciding Wargelin v. Bank of Am., 2013 U.S. Dist. LEXIS 146326 ( E.D. Mich. 2013) ultimately granted defendants’ motion for summary judgment.
Plaintiff brought an action arising out of a foreclosure and subsequent sheriff’s sale of his residential property. Count I of plaintiff’s action was violation of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq. Count II, was for breach of implied covenant of good faith and fair dealing. Count III involved defamation of title. Count IV was discharge of lien and claim to quiet title. Count V of the plaintiff’s complaint was for a violation of Mich. Comp. Laws §600.3205a.
Count VI of the plaintiff’s complaint was intentional infliction of emotional distress. Count VII was request for equitable, declaratory & injunctive relief; count VIII, Fraudulent Misrepresentation; count IX, quiet title; count XI, silent fraud and bad faith promises. Count XII of the claim was for breach of contract and wrongful foreclosure. Lastly, count XIII arose out of a violation of Michigan Foreclosure Law and Count XVI, violation of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681s-2(b).
The defendants maintained that all of the plaintiff’s claims challenging the foreclosure sale were subject to dismissal because these claims were based on a purported breach of an oral modification agreement, therefore these claims were barred by the statute of frauds. Defendants also argued that plaintiff’s failure to redeem the property within the redemption period precluded plaintiff from raising any claims associated with the foreclosure.
January 18, 2014
The court in deciding Mottale v. Kimball Tirey & St. John, LLP, 2013 U.S. Dist. 146293 (S.D. Cal. Oct. 9, 2013) ultimately granted the defendants’ motion to dismiss.
Plaintiff alleged unnamed investors brought an unlawful detainer action in state court foreclosed his home. Plaintiff also alleged his loans were securitized from a pool of funds provided by unknown investors who misrepresented the identities of the actual lenders. Plaintiff alleged that the assignment was invalid and fraudulent because the assignment documents were forged and defective. Plaintiff further alleged the notice of default (“NOD”) was void because BAC had “no prior recorded interest” in the Property when Recontrust recorded the NOD. Lastly, the plaintiff alleged that the NTS 2 was also fraudulent because Reconstrust had no legal right to record a substitution of trustee.
Defendants moved to dismiss plaintiff’s complaint on several grounds. First, defendants argued that the plaintiff failed to show he tendered the amount owed under default, and thus plaintiff lacked standing to challenge the foreclosure.
Second, defendants argue several courts in California have rejected plaintiff’s securitization theory. Defendants further contend that possession of the promissory note was not a pre-requisite to commence a non-judicial foreclosure proceeding. Defendants also pointed to a number of deficiencies in the complaint, including failure to joint an indispensible party and defective and insufficient claims under other statutes.
After considering both arguments, the court granted defendants’ motion to dismiss.
The court in deciding Beka Realty LLC v JP Morgan Chase Bank, N.A., 41 Misc. 3d 1213(A) (N.Y. Sup. Ct. 2013) ultimately granted Chase’s motion for an order dismissing plaintiff’s claims.
Beka Realty LLC (plaintiff) brought an action against defendant JP Morgan Chase Bank, N.A. (Chase) for a judgment declaring that the enforcement or foreclosure of the mortgage held by Chase is barred on the claimed basis that Chase lacked ownership of the mortgage, cancelling the mortgage, and awarding it damages for fraud, negligent misrepresentation, and unjust enrichment.
Chase moved, pursuant to CPLR 3211 (a) (1) and (7) and 3016 (b), for an order dismissing plaintiff’s complaint in its entirety, and awarding it reasonable attorneys’ fees, costs, and expenses. The court granted this motion, moreover, the court found that the plaintiff’s five causes of action all failed as a matter of law because each of them was predicated on the unfounded assertion that Chase did not have the right to enforce the Loan. Since the court found that the unrefuted documentary evidence flatly contradicted this assertion, the court found that none of these causes of action stated legally viable claims.
Accordingly Chase’s motion for an order dismissing plaintiff’s complaint in its entirety was granted, and it was declared that Chase is entitled to enforce the Loan.
January 17, 2014
Credit.com quoted me in What Happens to Your Mortgage After Death? It reads in part,
Death isn’t on the minds of most homeowners on closing day, naturally, unless it’s a fear of drowning in paperwork. But it’s really never too early to consider what happens to your mortgage should you pass away.
The financial obligation of a home loan does linger after death. There’s a host of scenarios regarding the mortgage’s ultimate disposition, all colored by a homeowner’s estate planning (or lack thereof) and other legal issues.
It isn’t a particularly pleasant topic, but a little bit of planning and paperwork can save your loved ones from considerable headache and hassle during an already difficult time.
“If you’re really thinking about your family’s long-term interests, purchase insurance so they can stay in your home upon your death, and have a will to make everything administratively easy,” said David Reiss, a law professor at Brooklyn Law School in New York.
Keeping the House
Nearly seven in 10 recent homebuyers are married couples, according to the National Association of Realtors, so we’ll focus on them. The co-borrowing spouse will typically be financially liable for the mortgage moving forward.
A spouse who plans to continue living in the home will need to keep current on payments. If you have a life insurance policy in play, your spouse may be able to use the payoff to keep up with or completely wipe out the mortgage balance.
Reiss recommends homeowners consider term life plans rather than actual mortgage term insurance, which can be more expensive.
* * *
About a third of people 65 and older have a mortgage, according to the U.S. Census. For older homeowners, it’s important to talk with family members about the property’s long-term future.
Children and grandchildren may not share the same desire to keep a house in the family.
“Do you see it as something your family wants to keep?” Reiss said. “You want to make that as financially easy for them as possible.”
January 16, 2014
The Office of Financial Research in the Department of the Treasury has released its 2013 Annual Report. It describes a number of things that should scare you as you put your head on your pillow at night and dream of the financial markets. It also describes some important steps that OFR is taking to get a handle on these potential nightmares.
One of the nightmares, relevant to readers of this blog, are Mortgage REITs. Mortgage Real Estate Investment Trusts (REITs) are “leveraged investment vehicles that borrow shorter-term funds in the repo market and invest in longer-term agency mortgage-backed securities (MBS).” (16) OFR identifies serious problems in this subsector:
Mortgage REITs have grown nearly fourfold since 2008 and now own about $350 billion of MBS, or 5 percent of the agency MBS market. Two firms dominate the sector, collectively holding two-thirds of assets. By leveraging investor funds about eight times, mortgage REITs returned annual dividend yields of about 15 percent to their investors over the past four years, when most fixed-income investments earned far less.Mortgage REITs obtain nearly all of their leverage in the repo market, secured by MBS collateral.
Lenders typically require that borrowers pledge 5 percent more collateral than the value of the loan,which implies that a mortgage REIT that is leveraged eight times must pledge more than 90 percent of its MBS portfolio to secure repo financing, leaving few unencumbered assets on its balance sheet. If repo lenders demand significantly more collateral or refuse to extend credit in adverse circumstances, mortgage REITs may be forced to sell MBS holdings. Timely asset liquidation and settlement may not be feasible in some cases, since a large portion of agency MBS trades occurs in a market that settles only once a month . . ..
Although their MBS holdings account for a relatively small share of the market, distress among mortgage REITs could have impacts on the broader repo market because agency MBS accounts for roughly one-third of the collateral in the triparty repo market. Mortgage REITs also embody interest rate and convexity risks, concentration risk, and leverage. For these reasons, forced-asset sales by mortgage REITs could amplify price declines and volatility in the MBS market and broader funding markets, particularly in an already stressed market. (17)
Sounds like systemic risk to me.
Happily, the report also contains policy proposals to address some of these systemic risk concerns. First and foremost, it proposes the adoption of a Financial Stability Monitor tool to track financial threats. The OFR also proposes mortgage-specific tools. Reiterating the findings in a recent OFR white paper, the report calls for the creation of a universal mortgage identifier so that regulators and researchers can more quickly identify patterns in the mortgage market. Predicting financial crises is still more of an art than a science but it is a good development that OFR is trying to improve the quality of the data that regulators and researchers have about the financial market.