October 9, 2013
Rhode Island Court Rules That under State law, Only Parties to a Contract May Seek to Have Rights Declared Under a Contract
The Rhode Island court in deciding Fryzel v. MERS, No. CA 10-352 (D.Ri., 2011) decided that under Rhode Island law, only parties to a contract may seek to have rights declared under a contract. The court found that the plaintiff lacked standing to challenge the transfer of the promissory note or assignment of mortgage granted by Plaintiff.
The plaintiff’s complaint disputed AHMSI’s ability to foreclose by challenging the validity of the assignments of their mortgage. The plaintiff further claimed that AHMSI was not entitled to foreclose under the terms of the ‘Pooling and Servicing Agreement’. However, the court found that it was undisputed that plaintiffs were not parties to the assignment agreements or to the PSA. Thus, plaintiffs did not have standing to assert legal rights based on the specified documents.
October 9, 2013 | Permalink | No Comments
October 7, 2013
Post-Bubble Foreclosure-Prevention and -Mitigation Options in Your Town?
Bob Hockett has posted Post-Bubble Foreclosure-Prevention and -Mitigation Options in Seattle. I recommend it to those interested in issues beyond Seattle’s borders because it actually covers foreclosure-prevention and mitigation options across the country, although it looks at them with a Seattle focus.
He argues that
There is a potentially bewildering array of means available to at least some underwater homeowners, and these programs are also noteworthy for failing to solve the fundamental problems affecting these mortgages. There are three vitiating weakness share by nearly all of these means . . ..
The first weakness among currently available options is that they do not concentrate upon mortgage principal-reduction, meaning that they do nothing about the underwater status of underwater mortgage loans – which is the principal predictor of default and foreclosure – at all. Instead they rely upon temporary forbearance, term-extension, or interest rate reduction. . . .
The second weakness of the currently available options is that they are voluntary from the creditor’s point of view. That is problematic not because creditors lack in appreciation of their own enlightened self-interest or in desire to do the right thing, but because where there are structural or contractual barriers to principal reduction, as we shall see there are here in abundance, even creditor-benefiting such changes cannot occur on an adequate scale. Creditors are very often unable to do what benefits themselves and homeowners alike, meaning that voluntary programs can be useless.
Finally, the third weakness that the options discussed here suffer is that they do not extend to underwater PLS loans, which, as seen above, constitute the great bulk of troubled mortgage loans; they are in general available only to GSE and bank portfolio loans . . .. (11)
I found the review of “publicly encouraged debt relief” programs useful. (14) They include
- HAMP (the federal Home Affordable Modification Program)
- HARP (the federal Home Affordable Refinance Program)
- Miscellaneous Specialized HAMP Analogues
- FHA Short Refinance Program
- HAFA(federal Home Affordable Foreclosure Alternative)
- “Hardest Hit” Fund & Program (Treasury)
- HOPE NOW Alliance
- The Attorney Generals’ Settlement
Hockett also proposes some innovative approaches that he suggests that Seattle should consider including the use of eminent domain as well as a land bank. Worth the read.
October 7, 2013 | Permalink | No Comments
October 4, 2013
A Welling of Judicial Discontent
Reuters ran a story that provides the next chapter to my post, Federal Judge Declares War on Wells Fargo. The Reuters story is Massachusetts Judge Challenges Wells Fargo, Sparks Legal Fight (behind a paywall) and it reads in part:
A legal battle is heating up over an unusual challenge by a Massachusetts federal judge to banking giant Wells Fargo to waive what the judge called a technical defense in a mortgage lawsuit and to argue its case at trial.
Calling the judge’s order “unauthorized and unprecedented,” Wells Fargo has asked a federal appeals court to overturn it before it sparks “copycat” demands across the country.
It seems to me that Wells Fargo is right to be concerned about “copycat” demands across the country. My sense from reading many of the upstream and downstream cases that I blog about is that many judges have internalized the populist critique of financial institutions that has crystallized during the financial crisis. This came about, no doubt, in large part because of the relentless headlines about actionable and non-actionable misconduct by these institutions.
That being said, judges must apply the law impartially, so the First Circuit’s review of this case, Henning v. Wachovia Mortgage, F.S.B., n/k/a Wells Fargo Bank, N.A., No. 11-11428 (Sept. 17, 2013), will be of particular interest. The transcript of yesterday’s District Court hearing on a motion to stay the Henning case during the pendency of the appeal can be found here. Judge Young makes clear that he is not budging on the requirement that Wells Fargo produce a corporate resolution, although that order is stayed until the First Circuit decides the appeal.
October 4, 2013 | Permalink | No Comments
Court Holds That Mortgagor Lacks Standing to Challenge the Propriety of Mortgage Assignments Under Rhode Island Law
The Rhode Island magistrate judge in Cosajay v. Mortgage Electronic Registration Systems, Inc., C.A. No. 10-442-M (D.R.I. June 23, 2011) issued “Reports and Recommendations,” holding that according to Rhode Island law a mortgagor “lacks standing to challenge the propriety of mortgage assignments and the effect those assignments, if any, could have on the underlying obligation.”
The Plaintiff challenged the validity of the assignments on multiple grounds, including MERS’ authority to execute the assignment. The magistrate however determined that under Rhode Island law, only parties to a contract may seek to have rights declared under a contract.
October 3, 2013 | Permalink | No Comments
Washington Court Rejects Plaintiff’s Claims That MERS’ Assignment was Fraudulent
The Washington court in Bain v. Metropolitan Mortgage Group, Inc., 2010WL891585 (W.D. Wash. Dist. Ct., March2010), rejected the plaintiff’s contentions that an assignment by MERS was executed fraudulently.
The plaintiff based his claims around the execution of a mortgage assignment by a person designated as an officer of MERS, but who was not also a MERS employee.
The court, in rejecting the plaintiff’s arguments that the assignment was executed fraudulently, noted that the non-employee signors did not commit an affirmative misrepresentation of fact, because of the fact that, for purposes of signing the papers, the non-employee signors misrepresented nothing: [the IndyMac signor] and [the MERS signor] did bear the titles that they used. The employees’ use of the titles was expressly authorized by contracts with IndyMac and MERS.
Thus there was nothing deceptive about using an agent to execute a document, and the court also noted that such practice is commonplace in deed of trust actions.
October 3, 2013 | Permalink | No Comments
