Brad, Joshua Stein and I have posted Dirt Lawyers and Dirty REMICs: A Debate to SSRN (also on BePress). Brad and I had posted our side of the debate at various points, but the entire back and forth is contained in this one handy download. The abstract reads:
In mid-2013, Professors Bradley T. Borden and David J. Reiss published an article in the American Bar Association’s PROBATE & PROPERTY journal (May/June 2013, at 13), about the disconnect between the securitization process and the mechanics of mortgage assignments. The Borden/Reiss article discussed potential legal and tax issues caused by sloppiness in mortgage assignments.
Joshua Stein responded to the Borden/Reiss article, arguing that the technicalities of mortgage assignments serve no real purpose and should be eliminated. That article appeared in the November/December 2013 issue of the same publication, at 6.
Stein’s response was accompanied by a commentary from Professors Borden and Reiss, which also appeared in the November/December 2013 issue, at 8.
The court in deciding Babrauskas v. Paramount Equity Mortg., 2013 U.S. Dist. LEXIS 152561 (W.D. Wash. Oct. 23, 2013) dismissed the plaintiff’s complaint.
Plaintiff alleged that Paramount’s loan origination practices, MERS’ involvement in the original deed of trust, and the subsequent defects in assignments gave rise to claims under the Washington Consumer Protection Act (“CPA”) and/or the Washington Deed of Trust Act (“DTA”).
Plaintiff also asserted claims of fraud, breach of the covenant of good faith and fair dealing, and quiet title. Defendants sought dismissal of all of plaintiff’s claims under Rule 12(b)(6).
The court found that the plaintiff’s insistence that MERS’ involvement somehow strips subsequent holders of beneficiary status was simply incorrect. With regards to the representation regarding MERS’ status as beneficiary, the court found that the plaintiff had not alleged that he relied on that representation or that he suffered damages caused by MERS’ misrepresentation.
The court found that the plaintiff had not, therefore, asserted a viable cause of action under the CPA regarding the representation that MERS was the beneficiary. Further, the plaintiff’s claims under the DTA therefore failed as a matter of law. Plaintiff also had failed to allege facts that gave rise to a plausible claim that defendants could be liable for a breach of the covenant of good faith and fair dealing. Having failed to allege facts raising a plausible inference that plaintiff had satisfied the loan obligation or was otherwise entitled to free and clear title to the property, plaintiff’s quiet title claim was deemed defective.
The plaintiff in Cuddeback v. Bear Stearns Residential Mortg. Corp., 2013 U.S. Dist. LEXIS 152989 (W.D. Wash. Sept. 10, 2013) brought claims against Bear Stearns, EMC, Wells Fargo (collectively, “Defendants”) for wrongful foreclosure, fraud, quiet title and declaratory relief pursuant to Washington law. The plaintiff also sought damages arising from violations of the Real Estate and Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2607, and the Truth in Lending Act (“TILA”), 15 U.S.C. § 1641(g).
Defendants filed a motion to dismiss plaintiff’s complaint pursuant to Fed. R. Civ. P. 12(b)(6). The court granted the defendants’ motion to dismiss as they found that plaintiff failed to state a claim for which relief could be granted.
The court in deciding Lawrence v. Sadek, 2013 U.S. Dist. LEXIS 153074 (C.D. Cal. Oct. 21, 2013) dismissed the plaintiff’s claims.
The plaintiff’s complaint alleged that defendant breached a fiduciary duty by allowing the plaintiff to enter the loan agreement knowing that she would default.
Plaintiff claimed, defendant owed her a fiduciary duty because Quick Loan, plaintiff’s lender, was a “client” of Peterson’s employer and co-defendant ETS Services. Peterson in response, argued that (1) she did not owe a fiduciary duty to plaintiff because neither she nor her employer ETS Services were parties to the loan transaction, and (2) even if she or her employer were parties to the transaction, lenders generally do not owe a fiduciary duty to borrowers.
Defendant Peterson filed a motion to dismiss pursuant to FRCP 12(b)(6). The Court held a hearing and after considering the parties’ arguments, the court found that the plaintiff’s claim should be dismissed because Peterson did not owe a fiduciary duty to plaintiff.
The court in deciding Bergman v. Bank of Am., N.A., 2013 U.S. Dist. LEXIS 153173 (N.D. Cal. Oct. 23, 2013) dismissed the plaintiff’s complaint.
Most of plaintiffs’ claims were based on one of two legal theories.
First, the plaintiffs based their arguments on the alleged sale of the DOT from Bank of America to the Securitized Trust, the plaintiffs argued that the sale divested Bank of America of its beneficial interest in the DOT. Plaintiff also alleged that because the DOT was never properly assigned, the Securitized Trust also did not hold the beneficial interest. They alleged that, accordingly, the true beneficiaries are the Securitized Trust’s certificate holders.
Second, the plaintiffs based their argument on the alleged involvement of PK Properties in illegal bid-rigging activities, including activities that allegedly tainted the trustee’s sale for the Property.
The court, after considering the arguments provided by the plaintiff, granted the defendants’ motion and dismissed the complaint.
Enterprise and the Urban Land Institute have issued a report, Bending the Cost Curve on Affordable Rental Development: Understanding the Drivers of Cost, that identifies affordable housing development’s “most commonly cited cost drivers, provides a brief overview of their impact and applicability, and includes high-level recommendations to promote a more efficient delivery system.” (4). As the report notes,
Affordable housing delivery is shaped by a number of procedures, regulations, and policies instituted at all levels of the system—each with associated costs. Development costs may be dictated by site constraints, design elements, local land use and zoning restrictions, building codes, delays in the development process, efforts to reduce long-term operating costs, and the affordable housing finance system. Most affordable developments rely on multiple funding streams, both equity and debt, each of which carries its own set of requirements and compliance costs. While there may be some alignment of affordable housing land use regulations, financing tools, or programs, far too often developers must seek a complex series of approvals or obtain waivers to bring a project to fruition. This process alone can introduce costs through delays to the development timeline as well as introduce additional uncertainty and risk, which, in addition to regulatory barriers, can also increase costs. (3)
While the report offers no shocking insights into affordable housing’s cost drivers, it does provide a good overview. It also brings to mind research that NYU’s Furman Center did some years ago about the drivers of the high cost of housing construction in New York City.
Given that Mayor-Elect de Blasio has put affordable housing at the center of his campaign, his team should focus on reducing these costs as part of his overall affordable housing strategy. Mayors Bloomberg and Giuliani were not able to make any significant progress on this issue, even though doing so would be quite consistent with their approach to governance. Perhaps that makes it even more of a compelling goal for the de Blasio Administration.
The plaintiff in Hines v. Wells Fargo Bank, N.A., 2013 U.S. Dist. LEXIS 153895 (S.D. Tex. Oct. 28, 2013), contended that defendants could not show an unbroken chain of title to enforce the note because MERS had no authority to assign the note to Deutsche Bank. However, the court eventually dismissed the plaintiff’s claims with prejudice.
The plaintiff sought a declaration from the court that any foreclosure of her home would be wrongful because none of the defendants had standing to foreclose. The plaintiff claimed that this was due to defects in the assignment and securitization process.
The plaintiff’s wrongful foreclosure allegations could be grouped into two categories: (1) MERS lacked authority to assign the deed and note from First NLC to Deutsche Bank; and (2) defendants did not comply with the securitization requirements of the applicable Pooling and Servicing Agreement (“PSA”). However, the court found that under recent Fifth Circuit case law, both of the plaintiff’s grounds for her claims failed. Thus, the court decided that her wrongful foreclosure claim must be dismissed.