December 1, 2013
Texas Court Finds Plaintiff’s “Split-the-Note” Theory Without Merit
The court in deciding Morlock, L.L.C. v. JPMorgan Chase Bank, N.A., 2013 U.S. Dist. LEXIS 153386 (S.D. Tex. Oct. 25, 2013) ultimately dismissed plaintiff’s bifurcation theory based complaint.
Plaintiff alleged that the deed of trust had been “executed and delivered . . . to secure MERS” and that it “was allegedly assigned to defendant Chase by MERS.” Plaintiff further alleged, the deed of trust and assignment, although appearing valid on its face, was invalid and of no force or effect because, MERS was not the holder of the original note that was secured by the deed of trust.
Accordingly, the plaintiff argued, the assignment by MERS was not valid and defendant Chase was not the owner and holder of the note. Therefore, Chase had no right or authority to post the property for a trustee’s Sale.
Chase alleged that the plaintiff’s argument against the validity of the assignment came from the theory that the ‘bifurcation’ of the note and deed of trust renders the deed of trust invalid. Chase argued that Texas courts have rejected the “bifurcation theory” and that plaintiff had therefore failed to state a claim.
The court ultimately granted Chase’s Rule 12(b)(6) motion to dismiss and dismissed the action with prejudice.
December 1, 2013 | Permalink | No Comments
California Court Denies Petition for Preliminary Injunction on Foreclosure Proceeding
The court in deciding Vazquez v. Select Portfolio Servicing, 2013 U.S. Dist. LEXIS 152454 (N.D. Cal. Oct. 23, 2013) denied the plaintiff’s petition for a preliminary injunction prohibiting defendants from proceeding with the foreclosure sale of his home.
Plaintiff alleged that MERS claimed to have a legal and effective lien on the property, and that it owned the note and mortgage without providing the plaintiff proof of those claims. Plaintiff asserted that he had the right to inspect the original note and deed of trust, pursuant to the Truth in Lending Act, 15 U.S.C. §§ 1601–1667f, and U.C.C. § 3-501.
The plaintiff further alleged that he had proof that the foreclosing entities did not have standing to foreclose. Id. Plaintiff asserted that defendants did not hold any instrument, note, or deed that would entitle them to foreclose.
The court denied the plaintiff’s verified petition for injunction, concluding that plaintiff failed to establish a likelihood of success on the merits of any of his potential claims.
December 1, 2013 | Permalink | No Comments
November 30, 2013
California Court Dismisses Plaintiff’s Claims of Federal and State Law Violation
The court in deciding Brashears v. Bank of Am. Home Loans, 2013 U.S. Dist. LEXIS 152478 (C.D. Cal. Oct. 22, 2013) dismissed the plaintiff’s complaint, which alleged violations of federal and state law in connection with the issuance of a mortgage loan.
Plaintiff filed a complaint against defendants Bank of America, Countrywide Home Loans, The Bank of New York Mellon, ReconTrust Company, CWALT, Inc., and MERS alleging violations of federal and state law in connection with the issuance of a mortgage loan and the subsequent foreclosure of plaintiff’s property.
Plaintiff’s complaint alleged: (1) slander of title; (2) violation of California Penal Code § 470(b), (d); (3) violation of the California Civil Code §§ 2923.55, 2924.12 and 2924.17; (4) intentional and negligent misrepresentation; (5) fraud, deceit and concealment; (6) violation of California Civil Code § 1572; (7) violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692g; (10) quiet title; (11) violation of California Business and Professions Code § 17200; (12) violation of the Unruh Civil Rights Act, California Civil Code § 51; and (13) declaratory relief.
After considering the arguments alleged by the plaintiff, the court ultimately granted the defendants’ motion to dismiss.
November 30, 2013 | Permalink | No Comments
November 29, 2013
Dirty REMICs: A Debate
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.
November 29, 2013 | Permalink | No Comments
November 27, 2013
Court Decides That Alleged Defects in Assignments Did not Give Rise to Claims Under the Washington Consumer Protection Act
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.
November 27, 2013 | Permalink | No Comments
Court Dismisses Plaintiff’s Wrongful Foreclosure, Fraud, Quiet Title and Declaratory Relief Claims
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.
November 27, 2013 | Permalink | No Comments
California Court Finds That the Plaintiff’s Complaint Should be Dismissed as Defendant Owed no Fiduciary Duty
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.
November 27, 2013 | Permalink | No Comments
