Tag Archives: foreclosure

California Court Rejects Improper Pooling and Servicing Agreement Argument Brought by Plaintiffs

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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.

Vermont Court Rejects Homeowners’ Request to Dismiss Complaint for Lack of Standing

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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.

Georgia Court Dismisses Federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq Claim

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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.

New York Court Denies Defendant’s Cross-Move to Dismiss Plaintiff’s Complaint Pursuant to CPLR 3211(a)(3)

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The court in deciding Waterfall Victoria Master Fund, Ltd. v Hayle, 2013 N.Y. Misc. (N.Y. Sup. Ct. Dec. 11, 2013) denied the defendants’ cross-motion to dismiss the complaint based upon the plaintiff’s lack of standing is denied. The court granted the motion proffered by the plaintiff.

Plaintiffs brought an action to foreclose on the defendant’s property, and sought summary judgment in its favor against the defendant’s affirmative defenses and counter claims. Defendants, Parkers, opposed the plaintiff’s motion and cross-moved to dismiss the complaint pursuant to CPLR 3211(a)(3), asserting that plaintiff lacked standing to maintain the action.

The court found that the plaintiff’s well documented motion which included a copy of the note endorsed in blank, the written assignment of the mortgage by MERS, the subsequent assignments of the mortgage and note to Waterfall Victoria Master Fund, and the assignment of the mortgage and note Waterfall Victoria Master Fund, established its entitlement to summary judgment, including its standing. As such the court granted the plaintiff’s motion.

California Court Holds that the Securitization of Mortgage Loan did not Nullify Rights Granted Under Deed, Including the Right to Foreclose

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The court in deciding Rivac v. Ndex West LLC, 2013 U.S. Dist. (N.D. Cal. Dec. 17, 2013) granted the motion to dismiss tendered by the defendant.

Plaintiffs filed a complaint that alleged eight causes of action including; (1) breach of contract, (2) breach of implied agreement, (3) slander of title, (4) wrongful foreclosure, (5) violation of § 17200, (6) violation of 15 U.S.C. § 1601, et seq. (TILA) (7) violation of 12 U.S.C. § 2605 (RESPA), and (8) violation of 15 U.S.C. § 1692, et seq. (FDCPA).

After considering the plaintiff’s contentions, the court granted the defendant’s motion to dismiss. The court then held that the securitization of borrowers’ mortgage loan did not nullify any rights granted under a deed of trust, including the right to foreclose against the borrowers’ real property upon the borrowers’ default.

Further, the absence of the original promissory note in the nonjudicial foreclosure did not render the foreclosure invalid. Moreover, the court held that mere allegations that documents related to the deed of trust were robo-signed by persons who had no authority to execute the documents had no effect on the validity of the foreclosure process.

Lastly, the court held that there was no breach of the deed of trust since the beneficiary was expressly authorized to sell the underlying note, and the borrowers themselves did not perform under the deed of trust.

Illinois Court Rejects “Show Me the Note” Argument

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The court in Parkway Bank & Trust Co. v. Korzen, 2013 IL App (1st) 130380 (Ill. App. Ct. 1st Dist. 2013) rejected show-me-the-note argument proffered by the defendant.

Defendants claimed that Parkway did not demonstrate proper standing to foreclose because it did not establish the fact that it was the true holder of its own loan. The basis of this argument was the contention that the defendants requested Parkway to produce the “original title” or original notes on numerous occasions but Parkway failed to do so.

The court easily resolved the first part of this argument by finding that the defendants did not explain what an “original title” was. Even so, the court found that the defendants also failed to cite any authority as to why such a document would be a necessary element of proof in a foreclosure case, or why it might be relevant.

The court found that the mortgagors were personally served and that was all that was necessary in this case. With regard to the mortgagors’ claim that the mortgagee did not establish that it was the true holder of the loan, the court held that production of the original note in open court was not a required element of proof in a foreclosure case under 735 ILCS 5/15-1506(b) (2010).

Mortgage Servicer Accountability

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Joseph A. Smith, Jr, the Monitor of the National Mortgage Settlement, issued his third set of compliance reports (I blogged about the second here). For those needing a recap,

As required by the National Mortgage Settlement (Settlement or NMS), I have filed compliance reports with the United States District Court for the District of Columbia (the Court) for each servicer that is a party to the Settlement. The servicers include four of the original parties – Bank of America, Chase, Citi and Wells Fargo. Essentially all of the servicing assets of the fifth original servicer party, ResCap, were sold to and divided between Ocwen and Green Tree pursuant to a February 5, 2013, bankruptcy court order. Accordingly, Ocwen and Green Tree are now subject to the NMS for the portions of their portfolios they acquired from ResCap.1 These reports provide the results of my testing regarding compliance with the NMS servicing standards during the third and fourth calendar quarters of 2013, or test periods five and six. They are the third set of reports for the original four bank servicers, the second report for Ocwen and the first report assessing Green Tree. (3)

The Monitor concludes that Bank of America, Citi, Chase, Ocwen and Wells Fargo “did not fail any metrics during the most recent testing periods.” (2) The Monitor also reports on “fourth-quarter compliance testing results for the loans Green Tree acquired from the ResCap Parties. Green Tree implemented the Settlement’s servicing standards after such acquisition. Green Tree failed a total of eight metrics during this time period.” (2) The metrics that Green Tree failed include a number of practices that have made the lives of borrowers miserable during the foreclosure crisis. They are,

  • whether the servicer accurately stated amounts due from borrowers in proofs of claims filed in bankruptcy proceedings
  • whether the servicer accurately stated amounts due from borrowers in affidavits filed in support for relief from stay in bankruptcy proceedings
  • whether loans were delinquent at the time foreclosure was initiated and whether the servicer provided borrower with accurate information in a pre-foreclosure letter
  • whether the servicer provided borrower with required notifications no later than 14 days prior to referral to foreclosure and whether required notification statements were accurate
  • whether the servicer waived post-petition fees, charges or expenses when required by the Settlement
  • whether the servicer has documented policies and procedures in place to oversee third party vendors
  • whether the servicer responded to government submitted complaints and inquiries from borrowers within 10 business days and provided an update within 30 days
  • whether the servicer notified the borrower of any missing documents in a loan modification application within five days of receipt (9, emphasis added)

These metrics seem pretty reasonable — one might even say they are a low bar for sophisticated financial institutions to exceed. Until the servicing industry can do such things as a matter of course, close government regulation seems appropriate. The monitor notes that “work still remains to ensure that the servicers treat their customers fairly.” (2) Amen to that, Monitor.