May 29, 2014
Connecticut Court Rejects Invalid Assignment and Standing Claims
The court in deciding Bank of Am., N.A. v. Samaha, 2013 Conn. Super. (Conn. Super. Ct., 2013) granted summary judgment in favor of the plaintiff.
Plaintiff sought to foreclose a mortgage executed by Joseph Samaha and Denise Samaha in favor of the Webster Bank in the principal amount of $162,000.00.
The defendant raised several special defenses to this foreclosure action. First, the defendant asserted that the plaintiff did not have standing to bring this litigation. Second, the defendant claimed that as a result of the death of one of the makers of the note, Joseph Samaha, that his estate had an indivisible interest in the subject property and was subject to probate court jurisdiction. Third, the defendant challenged the authority of MERS to assign this mortgage to the plaintiff. Four, that the defendant had tendered payment with regard to the note and she alleged accord and satisfaction. Fifth, the defendant challenged whether or not the note in question was a negotiable instrument.
Regarding the first special defense, the court decided that the plaintiff had standing.
The court found there was simply no authority for the defendant’s second assertion. Further, the court found there were no facts alleged in the special defense and there is no affidavit from the defendant providing any factual foundation for the third assertion. Regarding the fourth special defense the court found that the mere assertion of this defense, without any evidence to support it, and thereby contest or create a material issue of fact for a motion of summary judgment is insufficient. Lastly, the fifth special defense was deemed to be an assertion of a legal conclusion.
The court in deciding this case granted the plaintiff’s motion for summary judgment.
May 29, 2014 | Permalink | No Comments
Reiss on Prepaying Your Mortgage
Newsday quoted me in Prepaying Your Mortgage. It reads,
You’ve heard that it’s good to be early — whether for work, a job interview, or going to bed. But what about prepaying your mortgage? When does it make sense?
THE PROS
Fewer payments and a faster payoff are appealing. “For many people it’s a no-brainer to prepay . . . Essentially you’re getting a guaranteed return in the form of the interest you aren’t paying,” says David Reiss, who teaches residential real estate finance at Brooklyn Law School. “It’s hard to find an investment in today’s market that gives you an equivalent risk-adjusted return.”
Money you no longer put toward the mortgage can go elsewhere. Being mortgage-free in retirement helps cash flow on a fixed income, points out Leslie Tayne, a Melville attorney specializing in financial issues.
Take your monthly payment, divide it in half and make that payment every two weeks. On a typical mortgage, this could shave off almost four years, says Jason Auerbach of First Choice Lending Services in Manhattan.
THE CONS
Paying extra on your loan “means you can’t use that money for other more important things such as contributing to a retirement account,” Tayne says. If your assets are earning a higher rate of return than the interest rate on your mortgage, it doesn’t make sense to pay early. Run the numbers.
Also, once the loan is paid, will you miss the tax deduction? Does your loan carry a prepayment penalty? Can you really afford to pay extra? Better know the answers to such questions, advises Jeff Tanenbaum, a broker with Halstead Property in Manhattan.
May 29, 2014 | Permalink | No Comments
May 28, 2014
Reiss on Castro at HUD
Law360 quoted me in Obama Chooses San Antonio Mayor As Next HUD Chief (behind a paywall). It reads in part,
President Barack Obama on Friday nominated San Antonio Mayor Julian Castro to be the next secretary of housing and urban development, a move that observers say will result in the continuation of his administration’s housing policies.
If confirmed, Castro would take over an agency that is still dealing with the after-effects of the bursting of the housing bubble in 2007 and the resulting foreclosure crisis. HUD is also struggling to deal with a dearth of affordable housing in major metropolitan areas and reforming the Federal Housing Administration’s work.
Obama called Castro an “all-star” who has done a “fantastic job” in San Antonio over the last five years.
“He’s become a leader in housing and economic development,” the president said.
Speaking at the White House on Friday, Castro said that he looked forward to helping Americans get access to “good, safe affordable housing.”
“We are in a century of cities. America’s cities are growing again and housing is at the top of the agenda,” Castro said.
Castro would take over HUD from outgoing Secretary Shaun Donovan, whom Obama nominated to lead the Office of Management and Budget. Donovan would in turn replace Sylvia Mathews Burwell, Obama’s nominee to be the next secretary of health and human services.
Among his major tasks will be overseeing the FHA, which provides a government guarantee on mortgages issued to low-income and first-time homebuyers. The agency, which is led by Commissioner Carol Galante, last year was forced to take a $1.7 billion bailout from the Treasury Department as its reserves were depleted due to losses on bad loans.
In response, the FHA has increased insurance premiums on most new mortgages by 10 basis points and sold off some defaulting mortgages as part of a series of reforms aimed at bolstering its capital levels. Even with those changes, the bailout was necessary.
HUD has also been a key player in the Obama administration’s heavily criticized programs aimed at stemming foreclosures, including the Home Affordable Mortgage Program, and in efforts to develop affordable housing stock around the country.
The department is also at the center of fair lending and fair housing litigation against banks and other lenders.
Castro’s views on those subjects are unknown, but observers expect him to follow closely policies established by his predecessor Donovan.
“Our conversations lead us to believe that Castro is unlikely to deviate materially from the existing FHA single-family strategy,” Isaac Boltansky, an analyst at Compass Point Research & Trading LLC, said in a note to clients.
Castro, 39, is serving his third term as San Antonio’s mayor. A rising star in the Democratic party, Obama tapped Castro to give the keynote address at the 2012 Democratic National Convention in Charlotte, North Carolina.
In many ways the appointment is seen as a political decision as much as a policy one for housing experts, and a departure from Donovan, an expert on housing policy.
“Donovan focused his entire career on housing and affordable housing in particular. He is known for his deep understanding of housing issues. Mayor Castro has had a broader portfolio of concerns as a big city mayor,” said Brooklyn Law School professor David Reiss.
* * *
While Castro has focused on affordable housing issues, the mayor of San Antonio is a nonexecutive position, Reiss noted.
“So his ability to implement his vision will be tested in this new position,” he said.
May 28, 2014 | Permalink | No Comments
Vermont Court Rejects Homeowners’ Request to Dismiss Complaint for Lack of Standing
The court in deciding Deutsche Bank National Trust v. Merritt, 2013 Vt., 225 (Vt. Oct. 1, 2013) ultimately
Defendant homeowners sought to appeal the lower court’s order, which granted substitute plaintiff bank’s motion to dismiss the foreclosure action.
The homeowners raised several arguments regarding the bank’s standing to enforce homeowners’ promissory note, and sought an order dismissing the case. The defendant specified the bank’s lack of standing as the basis for the dismissal request, ordering that any legal charges, assessments and fees assessed by a bank against homeowners in connection with this action be removed from their mortgage debt, and ordering that initial plaintiff OneWest return all mortgage payments received from homeowners with statutory interest.
After considering the defendant’s claim, this court followed the lower court in dismissing the case.
May 27, 2014 | Permalink | No Comments
Reiss on NY RE Regulation
Law360 quoted me in What’s Up Next In NYC Real Estate Legislation (behind a paywall). It reads in part,
New York City lawmakers have introduced a slew of new bills in recent months that could impact commercial real estate owners and developers with changes like new protections for rent-regulated tenants and more public review for zoning changes. Here are explanations and some experts’ thoughts about the proposed laws.
* * *
Fighting Alleged Double Standards for Regulated and Market-Rate Tenants
City Council members Mark Levine and Corey Johnson are drafting a bill to combat what they claim is a trend of property owners unfairly discriminating against their rent-regulated tenants, preventing them from taking advantage of amenities that market-rate tenants can enjoy.
The issue gained a lot of attention last year when news broke that Extell Development Co.’s project at 40 Riverside Drive might have two separate entrances: one for owners of its condominiums and one for those living in the affordable units.
The “poor door” arrangement, which has reportedly been used at several buildings around the city, sparked outrage from tenants, who argued that developers were abusing the 421-a subsidy program, which gives tax abatements in exchange for affordable housing.
Levine and Johnson’s new bill would alter the city’s rental bias code, which protects tenants from discrimination based on race, gender or age, to include rent-regulated as a protected status.
Under de Blasio’s plan for mandatory inclusionary zoning at all new development projects, the bill appears to be an effort to establish actual integrated communities, said Brooklyn Law School professor David Reiss.
“Mandatory inclusionary zoning is not just about affordable housing; to a large extent it’s about socioeconomic integration,” Reiss said. “I think this bill about double standards is really not about protecting affordable housing as much as it is about respecting socioeconomic diversity.”
* * *
Requiring Two Years of Experience for a Crane Operation License
In April, Manhattan Councilman Benjamin Kallos introduced a bill that would require crane operators to have at least two years of experience working in New York City in order to obtain licenses.
Industry insiders note that the licensing process is effectively controlled by a local union, and many are concerned that this new bill would give the union even more power, essentially blocking the use of any crane contractors that are not affiliated with it.
“There’s a spat between developers and unions, and the bill is firmly taking the side of the unions,” Reiss said. But he added that the real question is what is actually in the public interest. “What is the level of safety that we need?”
The Bloomberg administration had a more developer-friendly approach, creating a plan to allow operators to get licenses if they had worked in a similarly dense city before. But the crane operators’ union sued over those rules, and the litigation remains pending.
May 27, 2014 | Permalink | No Comments
Georgia Court Dismisses Federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq Claim
The court in deciding Morrison v. Bank of Am., N.A., 2013 U.S. Dist. (N.D. Ga. Dec. 16, 2013) eventually granted Bank of America, N.A.’s motion to dismiss.
Plaintiff defaulted on her loan obligations after taking a loan from bank of America. Plaintiff asserted that she “suspended” payments because the defendant failed to properly identify the person that was the holder in due course of legal title or the ability to enforce the note under O.C.G.A. § 11-3-309.
Plaintiff asserted that foreclosure would be wrongful because the defendant lacked standing to foreclose on the property, also that the defendant violated the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq (“FDCPA“), and Georgia law by failing to validate the debt and provide an accounting of plaintiff’s mortgage. Lastly, plaintiff asserted that the defendant failed to obtain Secretary of U.S. Department of Housing and Urban Development approval to be designated as Foreclosure Commissioner, in violation of 12 U.S.C. § 3754.
Plaintiff also sought to have the security deed and note declared fully satisfied, to enjoin foreclosure of the property, to compel production of the plaintiff’s note and any assignments, and to require the defendant to validate the alleged debt. Bank of America moved to dismiss Plaintiff’s Complaint for failure to state a claim.
The court considered the plaintiff’s assertions, and categorically dismissed them in granting the defendant’s motion to dismiss.
May 27, 2014 | Permalink | No Comments
May 27, 2014
California Court Rejects Improper Pooling and Servicing Agreement Argument Brought by Plaintiffs
By Ebube Okoli
The court in deciding Sollenne v. United States Bank Nat’l Ass’n, 2013 U.S. Dist., (S.D. Cal., 2013) dismissed the plaintiffs’ claims.
Plaintiffs alleged three causes of action: 1) quiet title; 2) declaratory relief to determine the validity of the deed of trust on the date the note was assigned and to determine if any defendant has authority to foreclose; and 3) injunctive relief to stop further collection activity, including the sale of the property.
Plaintiffs’ desired remedies also include a request for an order compelling the defendants to transfer or release legal title and any alleged encumbrances, and possession of the property to plaintiffs.
The plaintiffs listed the following deficiencies which they contended rendered invalid any security interest in the deed of trust: 1) the separation of title, ownership and interest in the note and deed of trust; 2) the lack of assignments to or from the intervening entities when the loan was sold; 3) the failure to assign and transfer the beneficial interest in the DOT to Defendants in accordance with the PSA; 4) the failure to endorse, assign, and transfer the note to USBNA in accordance with the PSA and California law; 5) that there were no assignments of beneficiary or endorsements of the note to each intervening entity; and 6) Defendants violated terms of the PSA.
After considering the plaintiffs’ arguments, this court dismissed the claims premised upon the securitization of the loan and violations of the PSA as well as the plaintiffs’ remaining claims.
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May 27, 2014 | Permalink | No Comments