Tag Archives: foreclosure

Ohio Court Decides Bank’s Possession of Note was Properly Shown

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The court in deciding M & T Bank v. Strawn, 2013-Ohio-5845 (Ohio Ct. App., Trumbull County, 2013) ultimately affirmed the lower court’s decision.

The court decided that the bank’s possession of the note was shown by the affidavit, along with attached copies of the note endorsed to the bank, and the court found that one in possession of a note endorsed to that party was a holder, for purposes of R.C. 1301.201(B)(21)(a). As such the court decided that the bank was thus entitled to enforce the instrument under R.C. 1303.31.

The court found that the affidavit for the bank clearly stated that the bank had been in possession of the original promissory note, and the affidavit was sufficient for the lower court to have held that the affiant had personal knowledge. The court further noted that nothing suggested that voided endorsements affected the bank’s status as a holder, and thus it did not create an issue of fact.

Lastly the court found that the bank acquired an equitable interest in the mortgage when it became a holder of the note, regardless of whether the mortgage was actually or validly assigned or delivered. Based on these conclusions this court affirmed the lower court’s judgment.

Ohio Court Decided There Was no Basis to Challenge Standing Through a Civ.R. 60(B) Motion

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The court in deciding Deutsche Bank Nat’l Trust Co. v. Santisi, 2013-Ohio-5848 (Ohio Ct. App., Trumbull County, 2013) ultimately denied the motion to vacate and affirmed the lower court’s decision.

Santisi appealed the lower court’s decision and raised the following assignments of error:

1) plaintiff (appellee) failed to present an affidavit or any other record evidence sufficient to meet its burden to establish it had standing to pursue a foreclosure action.

2) Plaintiff (appellee) failed to establish standing as there was no admissible evidence to explain material inconsistencies regarding the promissory note.

The bank asserted its standing to foreclose the mortgage by alleging that it was the holder and owner of a note in its complaint, and that allegation was legally sufficient to establish the bank’s standing to foreclose. The bank also provided evidence of standing by virtue of holding the note. The also bank established its interest in both the note and the mortgage, which was not disputed by the mortgagor prior to judgment and, thus, properly invoked the trial court’s jurisdiction. Based on these facts this court upheld the lower court’s decision.

 

Georgia Court Denies Plaintiffs’ Motion for Reconsideration

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The court in deciding White v. Bank of Am., N.A., 2013 U.S. Dist. (N.D. Ga., 2013) ultimately denied the plaintiff’s motion for reconsideration, therein upholding the decision of the lower court.

Plaintiffs alleged that because BANA did not hold the note and it was not the assignee of the security deed it lacked the authority to foreclose. Plaintiffs alleged further that defendants falsely represented that BANA was the plaintiffs’ secured creditor. Plaintiffs sought injunctive relief and compensatory and punitive damages.

On May 10, 2013, the lower court granted the defendants’ motions to dismiss plaintiffs’ complaint. The lower court found that the plaintiffs executed the security deed with the power of sale in favor of MERS, and that MERS assigned its rights under the security deed to BACHLS; that BACHLS merged into BANA; and that, as a result of the merger, BANA acquired the rights and interests of BACHLS, including the security deed.

The lower court concluded that BANA, as holder of the Note and Security Deed, was entitled to foreclose on the property and that the plaintiffs had not, and could not, state a claim for relief under any legal theory based on BANA’s alleged lack of authority to foreclose on the Property.

On appeal, the plaintiffs reassert their argument that BANA lacked standing to foreclose on the property because it did not also hold the note. Plaintiffs argued that the note was “unauthenticated” and thus the endorsement from First Option to Countrywide is not valid.

After considering the plaintiff’s contentions, this court found that the plaintiffs’ motion for reconsideration on this basis should be denied.

Appeals of Michigan Dismisses Fraud and Improper Assignment Claims

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The court in deciding Bank of N.Y. Mellon Trust Co. Nat’l Ass’n v. Robinson, 2013 Mich. App. (Mich. Ct. App. 2013) ultimately dismissed the Robinson’s claims, therein affirming the decision from the lower court.

The Robinsons raised two issues. First, the Robinsons argued that MERS, through its predecessor, committed fraud in the execution of the mortgage. Second, the Robinsons allege that plaintiff did not have the right to foreclose because there is no evidence of record that the Robinsons’ note was assigned to plaintiff. After considering the Robinson’s arguments, the court dismissed them.

 

United States District Court Dismisses RICO and FDCPA Claims

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The court in deciding Koenig v. Bank of Am., N.A., 2013 U.S. Dist. (E.D. Cal., 2013) ultimately granted the defendant’s motion to dismiss.

Plaintiff Philip A. Koenig commenced this action against defendant Bank of America. Plaintiff alleged causes of action for violations of the Fair Debt Collections Practices Act (“FDCPA”) and the Racketeer Influenced and Corrupt Organizations Act (“RICO”). Plaintiff also brought claim requesting declaratory relief against the defendant. Defendant filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). After considering the arguments, the court granted the defendant’s motion to dismiss.

The theory underlying the totality of plaintiff’s complaint was that defendant had no right to affect foreclosure on the property. The second cause of action was a request for declaratory relief. Plaintiff sought a declaration from the court indicating that the defendant did not have and had never had any interest in the property.

Plaintiff alleged that the entity that intended to foreclose on the property was not the lender that originated any mortgage and was not an assignee of any mortgagee or a duly appointed trustee, thus the entity lacked the legal authority to foreclose.

After consider the plaintiff’s arguments, the court rejected them and granted the defendant’s motion to dismiss.

Whitman on Servicer Lies

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Professor Dale Whitman posted a commentary on Quintana v. Bank of America, No. CV 11–2301–PHX, 2014 WL 690906 (D.Ariz. Feb. 24, 2014) (not reported in F.Supp.2d) on the Dirt listserv:

Synopsis: A borrowers who is “jerked around” by a mortgage servicer may have claims in fraud or on other theories.

Karoly Quintana’s home mortgage loan was serviced by Bank of America, When she began having difficulty making her payments in 2009, she was told by B of A that she would have to miss three payments to be considered for a loan modification, and that the servicer would forbear foreclosure while it did so. She missed the payments and applied for a modification, but (she alleged) B of A did not consider it, and instead accelerated her loan and commenced foreclosure.

Quintana filed a suit in federal court to stop the foreclosure. In March 2012 the suit was dismissed voluntarily on the assurance that B of A would again consider a loan modification, but again it did not do so. (Oddly, B of A’s counsel conceded these facts.)

The court held that the allegations of both the 2009 and 2012 conduct of B of A stated claims of fraud, sufficient to withstand a motion to dismiss. The statements that she would be considered for a modification were false, she relied upon them, and was damaged. Her damages were the expenditure of additional attorney’s fees, and the court found this sufficient, even though in general attorneys’ fees are not recoverable in a fraud action.

The court also held that the plaintiff’s count for breach of the implied covenant of good faith and fair dealing survived a motion to dismiss. While the loan documents did not require the servicer to consider the mortgage modification or to forbear foreclosure, when it promised to do so and then did not, it breached the implied covenant. The promise was only oral, and B of A asserted it was inadmissible under the Statute of Frauds, but the court found that Quintana’s detrimental reliance (in missing the payments) provided a basis for promissory estoppel, overcoming the Statute of Frauds defense.

However, the court dismissed Quintana’s claim under the Arizona Consumer Fraud Act (on the ground that it was barred by the 1-year statute of limitations). There’s a convoluted argument about whether B of A can be liable under the FDCPA, but the court ultimately refused to dismiss that claim.

Comment: Borrowers have often tried to claim that they should have received loan modifications, but have not in fact received them. In general, of course, there’s no legal right to a modification. But this court holds that a false promise to consider a modification is enough to make out a claim of fraud.

California Court Denies Dismissal of Wrongful Foreclosure Claim

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The California court in Engler v. ReconTrust Co., 2013 U.S. Dist. 179950 (C.D. Cal. 2013) dismissed all but one of the plaintiff’s complaint.

Plaintiff originally filed suit against defendants BAC and MERS on June 6, 2012. On March 1, 2013, the lower court dismissed plaintiff’s complaint with leave to amend.

The plaintiff’s current complaint alleged thirteen causes of action: (1) Declaratory Relief; (2) Violation of RICO; (3) “Common Law Conspiracy;” (4) “Filing of Invalid Lien;” (5) “Fraudulent Conveyance Deceptive Practices Code of Federal Regulations 17 CFR Parts 204-249;” (6) Fraudulent Concealment; (7) Fraudulent Inducement; (8) Wrongful Foreclosure; (9) Violation of the Real Estate Settlement Procedures Act; (10) Violation of the Fair Credit Reporting Act; (11) Violation of the Federal Fair Debt Collection Practices; (12) Violation of the Truth in Lending Act; and (13) Constructive Fraud.

After considering the plaintiff’s contentions the court found that the plaintiff’s first, second, third, fourth, fifth, sixth, seventh, ninth, tenth, eleventh, twelfth, and thirteenth causes of action were rightfully dismissed with prejudice. However, defendants’ motion to dismiss plaintiff’s eighth cause of action was denied. Accordingly, the only cause of action remaining in Plaintiff’s claim was the Eighth Cause of Action.