Tag Archives: MERS

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.

Minnesota Court Rejects Tweaked Version of Show-Me-the-Note Claim

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The court in deciding Mutua v. Deutsche Bank Nat’l Trust Co., 2013 Minn. Dist. 65 (Minn. Dist. Ct. 2013) found that since the defendant had a valid legal title to plaintiffs’ mortgage. Plaintiffs had failed to state a claim against either defendant and their respective motions to dismiss are granted.

This Court reasoned that there was a valid assignment of plaintiffs’ mortgages to defendant which gave defendant legal title to the mortgages and allowed Defendant to foreclose on plaintiffs’ properties.

The court noted that both the Minnesota Supreme Court and the United States Court of Appeals for the Eighth Circuit had rejected the legal theory, which has become known as “show-me-the-note,” advanced by plaintiffs.

In the present action, the court noted that plaintiffs merely tweaked this legal theory and argued that based on the language of the plaintiffs’ mortgage and note, an entity different from defendant Deutsche Bank National Trust Company had the legal right to foreclose on plaintiffs’ homes. This argument was rejected.

Open Season on Homeowners

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A case coming out of California, Peng v. Chase Home Finance LLC et al., No. B245436 (California Courts of Appeal Second App. Dist., Div. 8, April 8th, 2014, has attracted a lot of attention in the blogosphere. This is particularly notable because this case is not to be published in the official reports and thus has no precedential value. Judge Rubin’s dissent has attracted much of the attention. It opens,

The promissory note signed by appellants Jeffry and Grace Peng obligated them to repay their home loan. In August 2007, Freddie Mac acquired the promissory note from Chase. Based on Freddie Mac owning the note, appellants seek to amend their complaint to allege Chase did not have authority to enforce the promissory note or to foreclose on their home, but the majority rejects appellants’ proposed amendment. Relying on case law rebuffing a homeowner’s challenge to a creditor-beneficiary’s authority to foreclose, the majority notes that courts have traditionally reasoned that the homeowner’s challenge is futile because, even if successful, the homeowner “merely substitute[s] one creditor for another, without changing [the homeowner’s] obligations under the note.” (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 271.) The only party prejudiced by an illegitimate creditor-beneficiary’s enforcement of the homeowner’s debt, courts have reasoned, is the bona fide creditor-beneficiary, not the homeowner.

Such reasoning troubles me. I wonder whether the law would apply the same reasoning if we were dealing with debtors other than homeowners. I wonder how most of us would react if, for example, a third-party purporting to act for one’s credit card company knocked on one’s door, demanding we pay our credit card’s monthly statement to the third party. Could we insist that the third party prove it owned our credit card debt? By the reasoning of Fontenot and similar cases, we could not because, after all, we owe the debt to someone, and the only truly aggrieved party if we paid the wrong party would, according to those cases, be our credit card company. I doubt anyone would stand for such a thing. (Dissent, 1)

The dissent’s concern is justified. As Professor Whitman has recently noted on the Dirt Listserv and elsewhere, it is a “bizarre notion that anyone can foreclose a mortgage without showing that they have the right to enforce the note.” He also notes that the majority (and even the dissent) in Peng confuse ownership of the note with the right to enforce it. Until courts fully understand how the UCC governs the enforcement of notes, one should worry that some state court judges might declare an open season on homeowners as the majority does here in Peng.

Hawaiian Court Finds That Foreclosure was Permissible on 1250 Oceanside

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The court in deciding In re 1250 Oceanside Partners, (Bankr. D. Haw., 2013) ultimately came to the conclusion that Oceanside was entitled to foreclose.

The debtor in possession, 1250 Oceanside (Oceanside), sought to enforce a promissory note and foreclose a mortgage made by defendants Lawrence Shaw and Lisa Shaw (the Shaws). The other defendants claimed interests in the mortgaged property. Oceanside now sought summary judgment. The Shaws argued that the court lacked jurisdiction, that Oceanside was not entitled to foreclose, and that if it was entitled to foreclose, it was not entitled to a deficiency judgment.

The court decided that there was no dispute as to any material fact. Oceanside was entitled to foreclose on the property, but it was not entitled to a deficiency judgment against the Shaws at this stage in the litigation.

Tennessee Court Dismisses TILA, RICO, and RESPA Claims

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The Tennessee court in deciding Mhoon v. United States Bank Home Mortg., 2013 U.S. Dist. (W.D. Tenn., 2013) dismissed the complaint of the plaintiff pursuant to 28 U.S.C. § 1915(e)(2)(B)(ii).

Plaintiff [Mhoon] filed a complaint against defendant U.S. Bank. This case was an action to prohibit a non-judicial foreclosure of real property. The complaint alleged that U.S. Bank was engaged in efforts to illegally foreclosure on Mhoon’s home. The complaint also alleged that U.S. Bank acted with gross negligence and violated its duty of good faith.

In addition, the complaint alleged breach of contract because U.S. Bank failed to send any and all acceleration, default, and foreclosure notices to Mhoon in the manner required by the deed of trust.

The complaint further alleged U.S. Bank violated Truth in Lending Act (“TILA”); violated Real Estate Settlement Procedures Act (“RESPA”) by failing to provide a good faith estimate; violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”) statute and engaged in fraud; and lacked standing to initiate foreclosure proceedings on the Property.

The court ultimately held (1) plaintiff has not sufficiently plead a breach of contract claim; (2) plaintiff’s claims for gross negligence and violation of the duty of good faith fail as a matter of law; (3) plaintiff’s allegations based on violations of the TILA and the RESPA were barred by the applicable statute of limitations and failed to state a claim because U.S. Bank was not the originating lender; and (4) plaintiff’s claims for fraud violations of the RICO, and lack of standing all failed as a matter of law.

For those reasons, this court dismissed the plaintiff’s complaint pursuant to 28 U.S.C. § 1915(e)(2)(B)(ii).

Ohio Court Held That the Promissory Note was a Negotiable Instrument Subject to Relevant Provisions of R.C. Chapter 1303

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The court in deciding Bank of Am., N.A. v. Pasqualone, 2013-Ohio-5795 (Ohio Ct. App., Franklin County, 2013) ultimately decided that the motion to strike moot, thus this court affirmed judgment of the lower court.

This court held that the promissory note was a negotiable instrument subject to relevant provisions of R.C. Chapter 1303 because it contained a promise to pay the lender the amount of $100,000, plus interest, and did not require any other undertakings that would render the note nonnegotiable. Moreover, because Bank of America was the holder of the note it was a person entitled to enforce the note pursuant to R.C. 1303.31(A)(1).

The court noted that based on the authorization, the note became payable to the bank as an identified person and, because the bank was the identified person in possession of the note, it was the holder of the note. Further, as the property owner’s defenses to the mortgage foreclosure did not fit the criteria of a denial, defense, or claim in recoupment under R.C. 1303.36 or R.C. 1303.35, the bank’s right to payment and to enforce the obligation was not subject to the owner’s alleged meritorious defenses.

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.