Justice Minardo vacates a default judgment and dismisses Bank’s foreclosure action

By:  Kate Cavallaro

       Law Offices of Robert E. Brown, P.C.

Justice Minardo of the Supreme Court, Richmond County, granted a defendant homeowner’s order to show cause to vacate a default judgment of foreclosure and dismissing the entire action without prejudice due to plaintiff bank’s lack of standing. The defendant was represented by the Law Offices of Robert E. Brown, P.C. This action to foreclose a mortgage was commenced by the filing of a summons and complaint in December of 2006. Defendant homeowner was never personally served and defendants did not receive any acceleration notice as required. Unbeknownst to the defendant, the Court granted Plaintiff’s unopposed default judgment in June of 2009. Remarkably, at the same time the default judgment was entered, the parties were involved in settlement discussion. This unilateral action of moving forward without defendants knowledge indicates plaintiffs breach of its duty of good faith. Additionally, an audit of the loan documents revealed numerous other violations on both the State and Federal level, including Truth in Lending Act violations. Furthermore, the audit indicated that the plaintiff bank lacked the necessary standing and capacity to prosecute the foreclosure action. Defendants through their counsel, the Law Offices of Robert E. Brown, P.C., also argued that plaintiff failed to elect its remedies by pursuing simultaneous actions for both a judgment on a note and a judgment of foreclosure under the mortgage should be dismissed. Defendant’s counsel argues that “New York law has long been clear that a plaintiff with rights on a note and a mortgage must elect between the remedy of an action on the note or the remedy in foreclosure…. A plaintiff may not have causes of action for both remedies in a single action.” Citing President and Directors, Etc. Co. v. Callister Bros., 526 A.D. 1097, 11 N.Y.S.2d 593 (2d Dep’t 1939), aff’ed 282 N.Y. 629 (1940); see also White v. Wielandt, 259 A.D. 676, 678, 20 N.Y.S.2d 560, 561-563 92d Dep’t 1940. The rule that a plaintiff cannot simultaneously seek a judgment on the note and a judgment of foreclosure is echoed in New York RPAPL § 1301(a,) which states that without prior leave of the Court, simultaneous actions of this kind are barred.

With regard to vacating the default judgment, Defendants further argue that pursuant to CPLR 317, the Court has discretion to grant relief from judgment where defendant was served with a summons other than by personal delivery and has a meritorious defense to the underlying foreclosure action, Larman v. Russel, 240 A.D.2d 473 (2d Dep’t 1997). Defendant was not personally served and submitted to the Court, an affidavit of merit. Pursuant to CPLR 317 “the movant may apply to the court for relief only if he or she was served other than by personal service under CPLR 308(1).” Wells Fargo Bank v. Mondesir, 13 Misc. 3d 1210A; 824 N.Y.A. 2d 759 (Sup. Ct. 2006). If service is effected other than by personal delivery a court may still vacate a default judgment under CPLR 317, if it it is shown that the defendant did not have an opportunity to make its meritorious defense to the court due to the lack of knowledge of the action because of failure to be personally served.

For the foregoing reasons, Justice Minardo found that Plaintiff LaSalle Bank failed to properly serve defendant homeowner and that defendant homeowner had therefore been unable to bring forth its meritorious defenses. Plaintiff’s default judgment was vacated pursuant to CPLR 317 and the foreclosure action was dismissed in its entirety without prejudice.

Justice Minardo currently holds the position of Administrative Judge in the Thirteen Judicial District (Appointed by Chief Administrative Judge Ann Pfau). Previously Justice Mianrdo was the Administrative Judge to the Supreme Court of Richmond Country from 2005 to 2009 and was elected as a Supreme Court Justice for Richmond County from 1996 to 2009 and has been recently re-elected for 2010 through 2023. Justice Minardo also served as Special Counsel to State Senator John Marchi, 1988 to 1995 and Richmond County Assistant District Attorney from 1969 to 1976. Justice Minardo was also in private practice from 1976 to 1995. Minardo received his Bachelor of Arts from Manhattan College and his juris doctor from St. John’s University School of Law. He is admitted to the New York State Bar, the Appellate Division and Second Department.

“Government’s Push for Participants in Loan Modification Program Causes More Homeowners to Face Foreclosure”

By:  Kate Cavallaro
       Law Offices of Robert E. Brown, P.C.

An article from the Washington Post’s Associated Press cites that more than a third of the 1.24 million borrowers who have enrolled in the $75 billion mortgage modification program have dropped out. The article claims that the effort by the Obama administration to help people from losing their homes is falling short.  According to the article 150,000 homeowners have left the program.  Spokespersons for the program claim that despite the drop in participants in the program, those homeowners who are no longer part of the program will still find assistance from other places.  Perhaps these homeowners will find loan modifications or loan assistance from non governmental agencies.  “A major reason so many have fallen out of the program is the Obama administration initially pressured banks to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.”  Apparently the initial pressure to  have participants in the program caused some to fail to thoroughly determine if the homeowner is actually eligible for assistance via the government’s program.

NY Post “ Homeowners’ Hero Judge Slaps US Bank”

By Kate Cavallaro
     Law Offices of Robert E. Brown, P.C.

Brooklyn Judge, Arthur M. Schack, dismisses yet another foreclosure case brought by the offices of Steven Baum. Schack dismissed this particular foreclosure action “because the lawyer on the case, ... represented the mortgage broker, the bank that brought the loan and the industry registration service serving as the nominee of the loan.” Apparently the conflict of interest issues were not the only problems with this action. Additionally, Judge Schack “found that the bank, US Bank, never should have filed the foreclosure action because of an ‘ineffective assignment of the subject mortgage and note to it.” Also at issue in this case was the role of Baum lawyer, Elpiniki Bechhakas, who, according to the Post article “singed paper claiming to be an executive of Mortgage Electronic registration System (MERS),… while simultaneously representing Fremont and US Bank, which filed the foreclosure in July 2009.” The NY Post also reported the Baum’s “Buffalo based foreclosure mill” had filed 12,551 foreclosure actions in the New York area just last year.

“Access to Justice in Lending Act”

By:          Kate Cavallaro and Nicholas M. Moccia, Esq.

                Law Offices of Robert E. Brown P.C.

Just over a year ago, Section 282 was added to an act amending the Real Property Law.  This amendment is also known as enacting the “access to justice in lending act.”  Section 282 gives borrowers the right to recover attorney’s fees in actions or proceedings arising out of foreclosure of residential property.  The purpose of this bill is to allow borrowers in a foreclosure proceeding access to legal representation by providing that mortgage agreements which allow a prevailing lender to recover attorneys fees in a foreclosure proceeding shall be read to allow prevailing borrowers to recover attorneys fees as well, thereby enabling borrowers with meritorious defenses to foreclosure to obtain the legal representation necessary to assert those defenses, similar to the reciprocal attorneys fees rights given tenants by Real Property Law Section 234.

The notes on this section of the act provide that “any waiver of this section shall be void as against public policy.  For the purposes of the act, “residential real property” is real property improved by a one to four family residence, a condominium that is occupied b the mortgagor or a cooperative unit that is occupied by the mortgagor. 

Federal Natl. Mtge. Assn. v. Rogers Realty & Mgt. Corp., 2010 NY Slip Op 51072(U)(Kings County 2010)

By Kate Cavallaro
     Law Offices of Robert E. Brown, P.C.

In Federal Natl. Mtge. Assn. v. Rogers Realty & Mgt. Corp., 2010 NY Slip Op 51072(U)(Kings County 2010), the Supreme Court, Kings County, denied plaintiff’s motion for a default judgment insofar against defendants, Rogers Realty & Management Corp., in a foreclosure action. The defendants’ cross motions to dismiss plaintiff’s complaint pursuant to CPLR 3211(a)(8) and vacate their default pursuant to CPLR 317 or CPLR 5015 (a) (1) was granted to the extent that the complaint against individual defendant Abraham Hoffman is dismissed and denied. According to the plaintiff’s affidavits of service, service was purportedly made on Rogers Realty via the Secretary of State and upon individual defendant Hoffman by affixation and mailing. The Court notes that while CPLR 308(4) authorizes nail and mail service as to defendant Hoffman, it may only be utilized where personal service under CPLR 308(4) cannot be made with due diligence. The question in the instant matter revolves around the issue of what constituted due diligence, the existence of due diligence and whether the plaintiffs exercised it in attempting personal service. The court notes the “due diligence” is determined on a case by case basis, “focusing not on the quantity of the attempts at personal delivery, but on their quality.” Gurevitch v. Goodman, 269 AD2d 355 (2000). In the instant matter the affidavits cite six attempts to serve defendant Hoffman but that four of the six attempts were made at a time and date when it would be reasonable to assume that the defendant would be at work or traveling to and from work, and therefore not present at the residence where service was attempted. The Court further notes, (while there was discussion about the reporting of changes in business addresses were reported) that there “is no indication that the process server made any ‘effort to determine [Mr. Hoffman’s] business address in order to attempt personal service thereat pursuant to CPLR 308(2) before resorting to nail and mail service’.” Based on these affidavits of service and relevant case law the Court determined that Defendant Hoffman made a prima facie showing that there was a lack of “due diligence,” ineffective service, and a lack of jurisdiction over him. The Court found that “due diligence” on the part of the plaintiff to be insufficient as a matter of law, and therefore denied plaintiff’s request for a default judgment with respect to individual defendant Hoffman.

Judge Maltese denies Deustche Bank's motion for a judgment of foreclosure and sale in Richmond County

By Kate Cavallaro
     Law Offices of Robert E. Brown, P.C.

In Deutsche Bank National Trust v. Melancon, Index No. 102996/2008, Judge Maltese has ordered that plaintiff Deutsche Bank’s motion for judgment of foreclosure and sale be denied in its entirety, and with leave to renew upon the completion of discovery and granted Defendant homeowner extended time to serve an answer on the Plaintiff bank. Defendant homeowner is represented by the Law Office of Robert E. Brown. The order notes that the Plaintiff moved for a judgment of foreclosure and sale and that the Plaintiff failed to enter judgment within one year of the Defendant’s purported default pursuant to CPLR 3215(c). Accordingly, the Court notes that due to the failure to enter judgment within one year, the matter must be dismissed as abandoned. In this matter the Defendant opposed Plaintiff’s motion and cross-moved to dismiss the Plaintiff’s complaint and to deny the Plaintiff’s motion for a default judgment. The second branch of Defendant’s cross motion is designated as a motion to extend Defendant’s time to answer. In its decision, the Court states that it relied on the existence of a strong public policy to decide disputes based on the merits and further states that “given the fact that the Plaintiff waited nearly one year to move for a default against the Defendant, and has not demonstrated that it would suffer an prejudice if the Defendant is permitted to interpose a late answer, the Defendant shall be permitted to interpose an answer.”

Justice Maltese currently serves as a Supreme Court Justice for Richmond County, appointed in 1996. In 2002, he was appointed by Chief Administrative Judge, Jonathon Lipman, to serve as Associate Justice for the New York Litigation Coordinating Panel. Previous to these current positions, Justice Maltese served as a judge in the New York City Criminal Court, appointed by the Chief Administrative Judge from 1992 through 1995. He was also elected Judge for the New York City Civil Court for Richmond County from 1992 through 1996. Justice Maltese most recently received a Masters of Judicial Studies in 1995 from the University of Nevada. Justice Maltese also holds a Master of Arts and Master of Science, obtained from New York University in 1991 and Touro College in 2002, respectively. Justice Maltese earned a Bachelor of Arts degree in 1970 and a Juris Doctor in 1973 from New York Law School. In addition to holding several teaching and educational positions Justice Maltese is the author of Expert Testimony: Technical, Scientific & Other Specialized Evidence, NYS Bar Association, Torts, Insurance & Compensation Law Journal, Vol. 30, No. 2, Fall, 2001. Additionally, Joseph Maltese retired from the U.S. Army Reserve after more than 30 years of service in the active and reserve components where he served as an Armor Officer, an Intelligence Officer and as a member of the Judge Advocate General’s Corps. During his last seven years in JAG, he served as a military judge for the U.S. Army Trial Judiciary where he presided over active duty courts-martials in Germany, Panama and at several posts in the U.S. He is a graduate of the U.S. Air Force Air War College, the U.S. Army Command and General Staff College, as well as numerous courses at The Judge Advocate General’s School and The Armor School. After retiring from the U.S. Army Reserve he joined the New York Guard as a Colonel where he served as Staff Judge Advocate to the Commanding General. Joseph Maltese is currently a Brigadier General and the Commander of the 54th Civil Affairs Brigade, which has assisted with the mobilization of thousands of soldiers, sailors and marines who participated in Operation Enduring Freedom and Operation Iraqi Freedom.

The Lastest on New Financial Regulations in Congress

By Kate Cavallaro

                Congress is still negotiating over the terms and provisions of new financial regulations.  Lenders and the mortgage industry are making efforts to “soften a series of provisions that reshape how most Americans obtain home loans.”   As they are now, the proposed legislations would include new standards for underwriting, increasing lender responsibility, a change in the way loan originators are paid and new consumer rights to seek damages when mortgage payments become troublesome.  One way the bill induces the mortgage industry to take greater responsibility is by requiring lenders to retain a 5% stake in certain loans that are bundles with others. This required stake will increase the likelihood that the lenders will make sound loans.  Another example of a change in the industry standards is that the new legislation will require that lenders show that if a borrower refinances, the refinancing provides a “tangible benefit to the borrower.”  Lenders on the other hand are looking for ways to minimize the impact of this new proposed legislation.  For example, lenders want to limit the amount of time that borrowers can dispute a foreclosure actions if the borrower later discovers that their loan did not satisfy new standards.  As the bill stands now, it does not include a statue of limitations provision for those particular types of foreclosure claims.  Nick Timiraos writes that consumer advocate are noting that these legislative changes “will make it easier for borrowers to shop for loans and compare prices,” and that the “new provisions will shift the burden of proof from the consumers having to protect themselves from unreasonable fees to the providers of services justifying their costs.”

See Nick Timiraos’ article, “Mortgage Players Look to Soften Bill”, in today’s Wall Street Journal for more on this topic.

NY Foreclosure Jurisprudence, No. 1: Orders of Reference Denied for Failure to Comply with CPLR 3215(f)

By Nicholas M. Moccia, Esq., and Kate Cavallaro
     Law Offices of Robert E. Brown, P.C.

This post is the first of a series of many which will attempt to explore some of developments of in New York foreclosure jurisprudence in response to the foreclosure crisis. In this first post, we will attempt to make a modest start by reviewing the following three decision rendered by Justice Arthur Schack of Kings County in 2008.

Deutsche Bank National v. Auguste, NY Slip Op 31991(U)(Kings County 2008)

Deutsche Bank National v. Harris, NY Slip Op 30308(U)(Kings County 2008)

Countrywide Home Loans v. Persaud, NY Slip Op 30076(U)(Kings County 2008)

The common theme in these three cases is the Court’s denial, sua sponte, of the foreclosure plaintiff’s application for an order of reference on default. In brief, a foreclosure plaintiff’s application for an order of reference is a preliminary step to obtaining a judgment of foreclosure and sale. Specifically, the plaintiff asks the court to appoint a “referee” for the purpose of, among other things, computing the exact among owed by the foreclosure defendant/borrower.

In the above-listed cases, Justice Schack denied each of the plaintiffs’ applications for an order of reference due to the failure to comply with CPLR 3215(f). In each of these cases, the defendants neglected to answer or contest the foreclosure action, and so the plaintiffs were attempting to obtain judgments of foreclosure and sale on default pursuant to CPLR 3215. The proof need on an application for a default judgment is governed by CPLR 3215(f), whose requirements are three:

1. proof of summons service including a complaint;

2. proof of the claim, including the amount due;

3. proof of the defendant’s default in answering

Specifically, it is the foreclosure plaintiff’s failure to comply with the second requirement that is here at issue. The second requirement, proof of the claim itself, is usually satisfied by the submission of an “affidavit of merit” from the plaintiff or a representative of the plaintiff with first-hand knowledge of the relevant information underlying the claim. The foreclosure complaint itself may also satisfy this requirement if the complaint was verified by an individual with the requisite knowledge. An affidavit from an attorney, or a complaint verified by an attorney is generally unacceptable for this purpose. In the foreclosure context, an affidavit is usually supplied by a “vice president”, “authorized signatory”, “foreclosure technician” or some other dubiously titled “officer” of the foreclosing plaintiff.

Justice Schack has rightfully made practice of denying applications for orders of reference in situations where, to put it simply, he needs “more answers.” Justice Schack has been asking the tough questions that like, for instance, “Why, in the midst of the country’s mortgage crisis is Deutsche Bank purchasing non performing loans? And who’s been signing these affidavits of merit?” Justice Schack notes that the affidavits of merit are scarcely ever by an actually officer of the plaintiff or someone with a valid power of attorney from the plaintiff. See, e.g., Deutsche Bank National v. Auguste. In Deutsche Bank National v. Harris, Schack denied Deutsche Bank’s application for an order of reference due to his suspicions about particular employee, who has claimed at various times to be the Vice President of Deutsche Bank and Vice President of IndyMac. In cases where supporting affidavits were executed by persons who appear to have possible conflict of interest, even assuming arguendo their positions are legitimate, Justice Schack has ordered affidavits outlining the employment history of certain individuals for the proceeding three years. Again, in Deutsche Bank National v. Harris, Schack was perplexed to discover that IndyMac, MERs and plaintiff Deutsche bank all appeared to share the same office space. In Countrywide Home Loans v. Persaud, Schack ordered an explanation as to why Countrywide would purchase a nonperforming loan from MERS. To be sure, it is not at all uncommon to have nonperforming loan assigned inexplicably to different financial institutions on the eve of foreclosure.

While it is true that these cases were denied without prejudice, the plaintiffs were still required to cure these procedural defects to the satisfaction of the Court. Bottom line: foreclosure defendants, and the practitioners representing them, should carefully scrutinize affidavits of merit in order to ensure that they do indeed have merit.

“Lawmakers reach Consensus on Key Mortgage Reforms”

By Kate Cavallaro

The House and the Senate are working on legislation which attempts to reform certain mortgage industry practices. The final draft of the bill is expected to be complete in early July 2010.  The final bill will incorporate a number of changes and even outlaws certain industry practices.  For instance, the bill will require mortgage lenders to adhere to a “net tangible benefit underwriting standard” which is intended to ensure that lenders make loans that benefit consumer borrowers.  Moreover, the bill requires that all “mortgage originators, including brokers and loan officers, be appropriately registered when selling mortgages, and that they designate their home loans with unique mortgage registry identifiers.”  In addition, the bill imposes that “mortgage compensation can only be financed if all originator compensation is paid by the borrower, not third parties.”  This legislation will also give the Consumer Financial Protection Bureau the authority to define a “qualified mortgage”—i.e., loans that can be purchased by federal agencies.  Finally, the new legislation will also incorporate provisions that subject mortgage originators—both individual loan officers and brokers—to sanctions if these originators are “not properly registered, violate compensation restrictions, or steer borrower into unsustainable loans.”

Bank of New York v. Bestbuydigital, Inc.

By:   Kate Cavallaro

Defendant moves to vacate default due to excusable default/meritorious defense, lack of jurisdiction and meritorious defense and failure to receive notice in time to defend. The Court in this matter denied all motions and all stays were vacated and lifted. Additionally the defendant alleged that proof of service was not filed as required by CPLR § 308(2), but offered no proof in support of this contention. Defendant relied solely on his failure to receive process in order to argue his excusable default. The Court cites Maldonado v. County of Suffolk, 229 AD 2d 376 (2d Dept. 1996), stating that “an affidavit of service by a process server which specified the papers served, the person who was served, and the date, time, address and sets forth facts showing that service was made by an authorized person, and in an authorized manner, constituted prima facie evidence of proper service.” Further, the Court notes that “a conclusory denial of receipt … is insufficient to raise an issue of fact which would entitle defendant to a traverse hearing.” The Court states that the defendant did not meet his burden of showing a meritorious defense—i.e. some minimal showing of merit. Had the defendant offered any additional showing of proof or supplied his argument in the form of an affidavit, a sworn statement, then perhaps the Defendant would have rebutted the presumption created by the process server’s affidavit of service. Due to defendant’s failure to meet his burden of proof and his failure to supply any evidence beyond a conclusory denial, the Court denied defendant’s motion to vacate the foreclosure judgment and vacated all stays.

Flushing Sav. Bank v. Ataraxis Props. Ltd.

By:  Kate Cavallaro

In Flushing Sav. Bank v. Ataraxis Props. Ltd., a foreclosure action was commenced on Oct. 5 2009 after Ataraxis defaulted on its loan payments due on May 1, 2009.  The principal balance of the loan was $600,000.00.  This opinion clearly articulates the plaintiff’s burden of proof and the burden shifting on the defendant that occurs in a motion for summary judgment in a foreclosure action.  In this matter, the plaintiff moved for summary judgment and an order of reference appointing a referee in addition to other procedural claims.  The court states that in order to establish prima facie entitlement to summary judgment in a foreclosure action, “ a plaintiff must submit the mortgage and unpaid note, along with evidence of default”, citing Capstone Business Credit, LLC v. Imperia Family Realty, LLC, 70 AD3d 882, 883, 895 NYS2d 199 [2d Dept 2010]).  Once the plaintiff has supplied such proof, the burden then shifts to the defendant.  At this juncture it is required that the defendant “demonstrate the existence of a triable issue of fact as to a bona fide defense to the action, such as waiver, estoppel, bad faith, fraud, or oppressive or unconscionable conduct n the part of the plaintiff” (id. quoting Mahopac Natl. Bank v. Bisley, 244 AD2d 466, 664 NS2d 345 [2d Dept 1997]).  In this particular matter, Flushing Savings Bank has met its initial burden by supplying the required documents proving its prima facie entitlement to summary judgment.  In attempting to meet its burden, the defendant argues that it is unable to fully and completely respond due to the plaintiff’s failure to comply with the defendant’s discovery demands. Defendant also cites the pendency of another action between itself and the real estate broker involved in the same transaction.  Defendant contends that the motion for summary judgment on behalf of plaintiff in premature in light of the forgoing arguments.  The Court states the plaintiffs motion for summary judgment is not premature “inasmuch as Atarxis and Biskup (Defendants) have failed to offer an evidentiary basis to suggest that discovery may lead to relevant evidence; their hope and speculation that evidence sufficient to defeat the motion might be uncovered during discovery is an insufficient basis for denying the motion.” Therefore, the court granted plaintiff’s motion for summary judgment.Bank of New York v. Bestbuydigital, Inc.

Defendant moves to vacate default due to excusable default/meritorious defense, lack of jurisdiction and meritorious defense and failure to receive notice in time to defend.  The Court in this matter denied all motions and all stays were vacated and lifted.  Additionally the defendant alleged that proof of service was not filed as required by CPLR § 308(2), but offered no proof in support of this contention.  Defendant relied solely on his failure to receive process in order to argue his excusable default.  The Court cites Maldonado v. County of Suffolk, 229 AD 2d 376 (2d Dept. 1996), stating that “an affidavit of service by a process server which specified the papers served, the person who was served, and the date, time, address and sets forth facts showing that service was made by an authorized person, and in an authorized manner, constituted prima facie evidence of proper service.”  Further, the Court notes that “a conclusory denial of receipt … is insufficient to raise an issue of fact which would entitle defendant to a traverse hearing.”  The Court states that the defendant did not meet his burden of showing a meritorious defense—i.e. some minimal showing of merit.  Had the defendant offered any additional showing of proof or supplied his argument in the form of an affidavit, a sworn statement, then perhaps the Defendant would have rebutted the presumption created by the process server’s affidavit of service.   Due to defendant’s failure to meet his burden of proof and his failure to supply any evidence beyond a conslusory denial, the Court denied defendant’s motion to vacate the foreclosure judgment and vacated all stays. 

Upstate judge puts condo common charge arrearage in first position

By:  Kate Cavallaro

In an Orange County, New York, action to foreclose a mortgage on an unoccupied residential condominium unit, Judge Bartlett granted interlocutory relief to the defendant Board of Mangers of the condominium boars (“Board”). The relief sought by the Board was the appointment of a receiver of the unit in question with directions that the receiver rent the unit and apply the proceeds of the rental first to the payment of current common charges and then to the reduction of the mortgage.    Plaintiff, U.S. Bank National Association (“Bank”) opposed the application claiming that the proceeds should first be applied to the mortgage and that any remaining funds should then be applied to common charges and junior liens.  The court notes that CPLR § 6401 permits the appointment of a receiver to an applicant when the applicant has an apparent interest in the property at issue and the property is in danger of being lost, destroyed or materially injured.  Further, the Court notes that as a junior lienor the Board, has an interest in the property and therefore has the necessary standing to apply for a receiver in a foreclosure action.  The point at issue in this matter is whether the cost of the condominium common charges that are accruing while a foreclosure action is pending can be paid without first applying the rents to the reduction of the first mortgage.  The Court states that in determining whether to provide for the payment of condominium common charges from rents while a mortgage foreclosure action is preceding it must consider two factors. First, the “prejudice, if any to be suffered by the holder of the first mortgage, and” secondly, “how to balance that against the harm being suffered by the Board which is being compelled to carry the cost of maintaining the unit during pendency of this action.”  In weighing these considerations the Court concluded that payment of common charges is “consistent with the receiver’s obligation to preserve the premises under RPAPL § 125(2).”  Due to the “inter-relationship a condominium unit has with the common areas of the building and the building structure as a whole” the payment of the common charges help sustain the individual unit and if these charges remain unpaid the market value of the unit would decline.  “By seeking the appointment of a receiver the Board is preserving the asset by maintaining the building in which the unit is located. The consequences of the bank’s position would work an injustice and sanction economic waste.” The Court states that “it is in the interests of all parties that unnecessary unpaid common charges not accrue.”  In granting the Boards application the Court did add that the Board is to settle on an order on notice that would specify the limitations on the receiver’s authority to collect rents and monies. 

Utah judge stays all foreclosure actions brought by Bank of America in Utah

By:  Kate Cavallaro

A Utah judge has ordered a preliminary injunction against all foreclosure sales in the State of Utah by Bank of America Corporation. The temporary injunction was granted based on claims that the bank is not properly registered to do business in the state. The order bars Bank of America and its subsidiaries, like Recon Trust, from engaging in foreclosure sales in Utah until it is determined if the institutions are legally registered with the Utah Division of Corporations. Bank of America has filed to have the injunction rescinded. An emergency motion has been filed in Federal court. A Bank of America spokesperson has said that since the companies are governed by federal law, not state law, the defendants in this action had no opportunity to make their argument before the Utah state order was issued. Bank of America has halted residential foreclosure sales in the Utah State in order to comply with the injunction. A local newspaper reported that the Utah Department of Commerce Corporation division has no record of Recon Trust being registered as a business entity in Utah.

Bank of America to Pay Homeowners $108 Million in FTC Countrywide Settlement - Denise Richardson

WASHINGTON — The Federal Trade Commission announced Monday that two Countrywide mortgage servicing companies had agreed to pay $108 million to settle charges that they collected excessive fees from financially troubled homeowners.

The $108 million payment is one of the largest overall judgments in the commission’s history and resolves its largest mortgage servicing case. The money will go to more than 200,000 homeowners whose loans were serviced by Countrywide before July 2008, when it was acquired by Bank of America.

Jon Leibowitz, the chairman of the Federal Trade Commission, said that Countrywide’s loan servicing operation charged excessive fees to homeowners who were behind on their mortgage payments, in some cases asserting that customers were in default when they were not.

The fees, which were billed as the cost of services like property inspections and lawn mowing, were grossly inflated after Countrywide created subsidiaries to hire vendors to supply the services, increasing the cost several-fold in the process, the commission said.

By EDWARD WYATT
Published: June 7, 2010

In addition, the commission said that Countrywide at times imposed a new round of fees on homeowners who had recently emerged from bankruptcy protection, sometimes threatening the consumers with a new foreclosure.

“Countrywide profited from making risky loans to homeowners during the boom years, and then profited again when the loans failed,” Mr. Leibowitz said.

The $108 million settlement represents the agency’s estimate of consumer losses, but does not include a penalty, which the commission is not allowed to impose.

Clifford J. White III, the director of the executive office for the United States Trustees Program, which enforces bankruptcy laws for the Department of Justice, said that the commission’s settlement “will help prevent future harm to homeowners in dire financial straits who legitimately seek bankruptcy protection.”

The settlement bars Countrywide from making false representations about amounts owed by homeowners, from charging fees for services that are not authorized by loan agreements, and from charging unreasonable amounts for work.

In addition, the settlement requires Countrywide to establish internal procedures and an independent third party to verify that bills and claims filed in bankruptcy court are valid.

“Now more than ever, companies that service consumers’ mortgages need to do so in an honest and fair way,” Mr. Leibowitz said.

The F.T.C. has not yet established how much will be paid to each consumer, in part, Mr. Leibowitz said, because Countrywide’s record keeping was “abysmal.” About $35 million of the $108 million total was charged to homeowners already in bankruptcy proceedings, with the remainder charged to customers whom Countrywide said were in default on their mortgages.

Justice Schack: You have just crossed over into the Twilight Zone

In HSBC Bank USA, N.A. v. Yeasmin, 2010 NY Slip Op 50927(U), Justice Schack dismisses a motion for an order of reference brought by Steven J. Baum, P.C., on behalf of HSBC on the grounds that it is was untimely by 204 days.  By more importantly, Justice Schack writes, “[E]ven if the instant motion were timely, the explanations offered by plaintiff’s counsel…are so incredible, outrageous, ludicrous and disingenuous that they should have been authored by the late Rod Serling, creator of the famous science-fiction television series, The Twilight Zone.  Plaintiff’s counsel, Steven J. Baum, P.C., appears to be operating in a parallel mortgage universe, unrelated to the real universe.”

Drawing upon his Twilight Zone theme, Justice Schack humorously proceeds to excoriate the attorneys of Steven J. Baum, P.C., and notes, among other things, the ongoing conflict of interest that apparently exists due to Baum’s simultaneous representation of foreclosing banks and their assignor, MERS.  In addition, Justice Schack wonders why plaintiff HSBC would purchase a mortgage such as the one here at issue after it had already gone into default.  He writes, “The Court can only wonder if this journey through the mortgage twilight zone and the dissemination of this decision will result in Mr. Westmoreland’s affidavit used as evidence in a future stockholder derivative action against plaintiff HSBC.  It can’t be comforting to investors to know that an officer of a financial behemoth such as plaintiff HSBC admits that ‘[a]n investigation of each and every loan included in a particular mortgage pool, however, is not conducted, nor is it feasible’ and that ‘the fact that a particular mortgage pool may include loans that are already in default is an ordinary risk of participating in the secondary market.’”  In an extraordinarily frank admission, Mr. Westmoreland provided sworn testimony that HSBC regularly assumes the risk of buying mortgages in bulk without examining whether the mortgages in question are in default or in good standing.

This concludes today’s tale of greed in Baum’s parallel mortgage universe on the Twilight Zone.

Judge Schack Locks Up Attorney for Civil Contempt

By the Staff of the New York Law Journal

A lawyer was sentenced up to six months in jail for contempt in Brooklyn Supreme Court yesterday for disobeying court orders requiring him to surrender $100,000 that he had been holding in escrow. 

Justice Arthur M. Schack ordered Samuel Racer jailed for failing to turn over the $100,000 that the Manhattan-based attorney had been holding in a failed real estate deal that was the subject of litigation before the judge, said Kali Holloway, a spokeswoman for the Office of Court Administration. In April, Justice Schack found Mr. Racer in contempt for failing to turn over the money and issued an order for his arrest. Yesterday, a sheriff apprehended Mr. Racer and brought him before the judge. 

When Mr. Racer informed Justice Schack that he needed several days to get the money, the judge sentenced him to jail for civil contempt for six months unless he produced the funds before then, Ms. Holloway said. 

Mr. Racer was remanded to the custody of the sheriff, and another court date was set for tomorrow at which Mr. Racer will have another opportunity to purge himself of the contempt, Ms. Holloway said.

Deutsche Bank Lacks Standing in a Kings County Forclosure Action

Deutsche Bank Natl. Trust Co. v. Stevens, 2010 NY Slip Op 50909(U).  This decision was rendered by J. Yvonne Lewis in the Supreme Court, Kings County, and was published on May 24, 2010.  This is a foreclosure action brought by Deutsche Bank which moved for an order of reference among other things.  The originating lender was Fremont Investment & Loan, and Deutsche Bank purportedly became the holder of the note and mortgage by assignment from MERS as nominee of Fremont on June 11, 2008.  Deutsche Bank commenced the foreclosure action June 2, 2008, before the assignment actually took place. For this reason J. Lewis denied Deutsche Bank's motion and dismissed the case without prejudice for lack of standing, and quotes the following well-trodden authority in support of her holding:

"Where the plaintiff is the assignee of the mortgage and the underlying note at the time the foreclosure action was commenced, the plaintiff has standing to maintain the action" (Federal Natl. Mtge. Assn. v Youkelsone, 303 AD2d 546, 546-547 [2003]; see Natl. Mtge. Consultants v Elizaitis, 23 AD3d 630, 631 [2005]). On the other hand, "foreclosure of a mortgage may not be brought by one who has no title to it" (Kluge v Fugazy, 145 AD2d 537, 538 [1988]) and an assignee of such a mortgage does not have standing to foreclose unless the assignment is complete at the time the action is commenced (see Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204 [2009]; Lasalle Bank Nat. Assn. v Ahearn, 59 AD3d 911 [2009]).

Interestingly, J. Lewis notes that if Deutsche Bank were able to demonstrate that it took physical delivery of the mortgage prior to the commencement of the forelcosure on June 2, 2010, things might have turned out differently.   In fact, I do recall encountering authority indicating that physical delivery of the note and mortgage is the functional equivalent of an assignment; however, that would be true only if the note was a negotiable instrument.

It should also be noted that J. Lewis' decision is somewhat lacking in precision--she appears to be employing a sort of legal short hand--when she refers to "the mortgage", she is presumably referring to the note and the mortgage.  As noted in a previous post, a mortgage cannot have a separate existence from the note.  If the note is assigned, the mortgage automatically follows.  However, if the mortgage is assigned without the accompanying note, the assignment is defective.

Tennessee Attorney General Obtains More Than $1 Million for Soldiers

Tennessee Attorney General Obtains More Than $1 Million for Soldiers

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Loan Modification Seekers Beware!

Home loan modification telemarketers charged with stealing $2.3 million from desperate homeowners

A casino-style telemarketing operation run by nine men out of a Canoga-Park, Calif. boiler room is charged with stealing $2.3 million from desperate homeowners seeking home loan modifications to prevent foreclosure.

Four of nine men being accused of running the illegal business are in custody, while police are seeking another five.

See full article from WalletPop: http://www.walletpop.com/blog/2010/05/20/home-loan-modification-telemarketers-charged-with-stealing-2-3/?sms_ss=blogger&icid=sphere_copyright

Justice Martin Schneier grants Eastern Sav. Bank's motion for summary judgment

In Eastern Sav. Bank, FSB v Belches, 2010 NY Slip Op 50850(U) (Sup. Ct. Kings County 2010), Justice Martin Schneier grants Eastern Sav. Bank's motion for summary judgment on the grounds that the defendant's opposition papers were "wholly conclusory and not responsive to the [Plaintiff's] moving papers."

The party moving for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law, offering sufficient evidence to demonstrate the absence of a triable issue of fact (CPLR Section 3212 (b); Alverez v Prospect Hosp., 68 N.Y.2d 320 (1986); Zuckerman v City of New York, 49 N.Y.2d 557 (1980); Frances Megafu v Tower Insurance Company of New York, 2010 Slip Op. 03883 (2d Dept.)). However, once the moving party has satisfied this obligation, the burden then shifts; "the party opposing the motion must demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action" (Zuckerman v. City of New York, supra) "Mere conclusory assertions, devoid of evidentiary facts, are insufficient for this purpose, as is reliance upon surmise, conjecture, or speculation" (Morgan v. New York Telephone, 220 A.D.2d 728, 729 (2d Dep't1995)). 

In a mortgage foreclosure action in order to establish its prima facie entitlement to summary judgment as a matter of law the plaintiff must submit the mortgage and unpaid note, along with evidence of default.  (U.S. Bank Nat. Assn. TR U/S 6/01/98 (Home Equity Loan Trust 1998-2) v. Alvarez, 49 AD3d 711 (2d Dept. 2008); Marculescu v Ovanez, 27 A.D.3d 701 (2d Dept. 2006)).

Detroit Shrinks Itself, Historic Homes and All

By ALEX P. KELLOGG

DETROIT—Wrecking crews are preparing to tear down a landmark 5,000-square-foot house in the posh neighborhood of Palmer Woods in the coming weeks, a sign that Detroit is finally getting serious about razing thousands of vacant and abandoned structures across the city.
In leveling 1860 Balmoral Drive, the boyhood home of one-time presidential candidate and former Massachusetts Gov. Mitt Romney, Detroit is losing a small piece of its history. But the project is part of a demolition effort that is just now gaining momentum and could help define the city's future.
Detroit is finally chipping away at a glut of abandoned homes that has been piling up for decades, and intends to take advantage of warm weather and new federal funding to demolish some 3,000 buildings by the end of September.

Krishnan Anantharaman/The Wall Street Journal

Mitt Romney's boyhood home is among 3,000 derelict structures Detroit plans to demolish by the end of September as it attacks blight and crime.

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Mayor Dave Bing has pledged to knock down 10,000 structures in his first term as part of a nascent plan to "right-size" Detroit, or reconfigure the city to reflect its shrinking population.

When it's all over, said Karla Henderson, director of the Detroit Building Department, "There's going to be a lot of empty space."

Mr. Bing hasn't yet fully articulated his ultimate vision for what comes after demolition, but he has said entire areas will have to be rebuilt from the ground up. For now, his plan calls for the tracts to be converted to other uses, such as parks or farms.

Even when the demolitions are complete, Detroit will still have a huge problem on its hands. The city has roughly 90,000 abandoned or vacant homes and residential lots, according to Data Driven Detroit, a nonprofit that tracks demographic data for the city.

After a stuttering start, caused by a dispute over the disposal of asbestos from demolished homes, the program is just now gaining pace.

City officials say they aren't sure how many structures ultimately need to be torn down. The mortgage crisis compounded Detroit's economic decline, leaving nearly 30% of the city's housing stock vacant, according to Data Driven Detroit.

"Neighborhoods that are considered stable are now at 20% vacancy," said Deborah Younger, a development consultant involved in the demolition effort.

Until recently, the city didn't have the funds to tackle its growing list of houses slated for demolition. But $20 million in federal funds, primarily stimulus dollars has helped to kick-start the effort.

Demolition, particularly of historic buildings, is a sensitive issue in Detroit, often leading to wrenching battles between developers, residents, city officials and preservationists. But many residents are now pleading with the city to tear down decaying structures that are attracting crime and repelling home buyers. However, some still worry that the sort of large-scale bulldozing that the city is now talking about will forcibly dislocate longtime homeowners and preclude any chance of a comeback for Detroit.

"The city has never done this before," says Ms. Henderson, the Building Department chief. "We had to make a culture change."

The demolition of the Romney family home is the first of its kind in Palmer Woods, a high-end enclave in northwest Detroit that was developed at the dawn of the U.S. auto industry and housed many of its pioneers. Palmer Woods has just a handful of vacant properties among its 292 homes, according to residents. It's one of the anchor neighborhoods that is critical to the success of Mayor Bing's right-sizing effort.

The house was owned by Mr. Romney's parents, George and Lenore Romney, from 1941 until 1953, when the family moved to the northern suburbs. The elder Mr. Romney would go on to become head of American Motors Corp., then governor of Michigan and U.S. secretary of Housing and Urban Development.
As recently as 2002, the house sold for $645,000. But it has had a troubled history since then, lapsing into foreclosure more than once, bouncing between lenders and falling into disrepair. Last year, following years of complaints from neighbors, Wayne County declared it "a public nuisance and blight" and ordered it demolished.

The younger Mr. Romney, who is considered a leading GOP presidential candidate for 2012, said "it's sad" that his childhood home is being razed, "but sadder still to consider what has happened to the city of Detroit, which has been left hollow by fleeing jobs and liberal social policies."

Residents of Palmer Woods take pride in their tradition of historic preservation. But they're happy to see this house go. "This is an eyesore, and it makes no economic sense to fix it," said Joel Pitcoff, a retiree who lives around the block. "Who wants to spend $1 million on a house so it will be worth $400,000?"

Justice Schack strikes again in U.S. Bank v. Emmanuel

Justice Schack seems to have his attention fixed on his favorite whipping boy again. The Law Offices of Steven J. Baum, P.C. take yet another beating in U.S. Bank v. Emmanuel, 2010 NY Slip Op 50819(U)(Sup. Ct. Kings County 2010). Here, Justice Schack denied with prejudice a motion for a judgment of foreclosure and sale brought by Baum’s office on behalf of U.S. Bank, N.A. In addition, Justice Schack dismissed U.S. Bank’s summons and complaint and cancelled its notice of pendency.

The grounds for Justice Schack’s decision appears to be an ineffective assignment of mortgage from the originating lender, Fremont Investment and Loan, to U.S. Bank. Once again, MERS as nominee of Fremont purportly made the transfer. Justice Schack also noted a recurrent conflict of interest issue pertaining to Baum’s simultaneous representation of MERS and the foreclosing bank—however, this does not appear to have been the basis of Justice Schack’s holding.

With regard to the conflict of interest, the culpable attorney is Elpiniki Bechakas, whom Justice Schack has already admonished for her involvement in a similar conflict just a month ago—see LaSalle Bank, N.A. v. Smith, 2010 NY Slip Op 50470(U), 26 Misc 3d 1239(A) (Sup. Ct. Kings County 2010).

Ultimately, Justice Schack holding turns on a defective assignment. Here, MERS as nominee of Fremont only assigned the mortgage, but failed to assign the note. It is well established that the transfer of a note secured by a mortgage carries with it the mortgage as an incident. However, the converse does not bring about the same result—i.e. a transfer of the mortgage will not result in an automatic transfer of the note. Justice Schack cites the following case law in this regard:

The Appellate Division, Second Department in Kluge v Fugazy (145 AD2d 537, 538 [2d Dept 1988]), held that a "foreclosure of a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity [Emphasis added]." Moreover, "a mortgage is but an incident to the debt which it is intended to secure . . . the logical conclusion is that a transfer of the mortgage without the debt is a nullity, and no interest is assigned by it. The security cannot be separated from the debt, and exist independently of it. This is the necessary legal conclusion." (Merritt v Bartholick, 36 NY 44, 45 [1867]. The Appellate Division, First Department, citing Kluge v Fugazy in Katz v East-Ville Realty Co. (249 AD2d 243 [1d Dept 1998]), instructed that "[p]laintiff's attempt to foreclose upon a mortgage in which he had no legal or equitable interest was without foundation in law or fact." Last December, the Appellate Division, Second Department, instructed that "[w]here a mortgage is represented by a bond or other instrument, an assignment of the mortgage without assignment of the underlying note or bond is a nullity (see Merritt v Bartholick, 36 NY 44, 45 [1867]; Kluge v Fugazy, 145 AD2d 537, 538)." (U.S. Bank, N.A. v Collymore, 68 AD3d 752, 754 [2d Dept 2009]).

Since, MERS only “assigned” the mortgage to U.S. Bank, and failed to assign the note, MERS essentially assigned nothing to U.S. Bank. Therefore, U.S. Bank was foreclosing a mortgage it is did not own, and thus lacked standing.

Justice Wayne Saitta defines role of "nominee" in the mortgage foreclosure context

Justice Saitta of the Supreme Court, Kings County has rendered a crisp decision pertaining to the controversial issue (at least for mortgage foreclosure practitioners) of defining the role of a "nominee".  The case is Bank of New York v. Alderazi, 2010 NY Slip Op 20167, and the procedural posture from which this decision arises pertains to an application of the Bank of New York for an order of reference—i.e. a preliminary step toward a judgment of foreclosure and sale whereby an independent referee computes the total amount owed by the defaulting borrower.  Justice Saitta denied the Bank of New York’s application without prejudice, with leave to renew upon providing the Court with proof that MERS had the right to assign and transfer the mortgage from the originating lender, America’s Wholesale Lender, to the Bank of New York.

Of particular interest in this decision is Justice Saitta’s discussion pertaining to MERS’ role as “nominee” of many, if not most, mortgage lenders.  As noted in a previous post, MERS has its hand in virtually every mortgage foreclosure action, although its actual role is little understood and met with increasing suspicion among judiciary.  Justice Saitta opines:

[I]n Schuh Trading Co. v. Commisioner [sic] of Internal Revenue, 95 F.2d 404, 411 (7^th Cir. 1938), [the Court] defined a nominee as follows:  “The word nominee ordinarily indicates on designated to act for another as his representative in a rather limited sense.  It is sometimes used to signify an agent or trustee.  It has no connotation, however, other than that of acting for another, or as grantee of another…Id. Emphasis added.

Black’s Law dictionary defines a nominee as “[a] person designated to act in place of another, usually in a very limited way”.  Agency is a fiduciary relationship which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act. Hatton v. Quad Realty Corp., 100 AD2d 609, 473 NYS2d 827, (2nd Dept 1984). "[A]n agent constituted for a particular purpose, and under a limited and circumscribed power, cannot bind his principal by an act beyond his authority." Andrews v. Kneeland, 6 Cow. 354 N.Y.Sup. 1826.

Justice Saitta’s pronouncement on the role of a "nominee" is welcome, since very little legal authority has been recently published in this regard.  The significance of Justice Saitta’s clarification is that any foreclosing bank, who was assigned a mortgage and note by MERS as nominee, must provide proof that MERS was authorized to make the assignment.  Such authorization is not implied, nor is reference to the boilerplate language of the mortgage sufficient to grant MERS, as nominee, authority to alienate or assign a mortgage.  MERS must have received explicit authority to do so from the entity in whose name MERS purports to act.  Such authority is typical embodied in a power of attorney or some other resolution.

The bottom line is that MERS’ status as “nominee”, without more, is not sufficient to vest MERS with the authority to effect a proper assignment of a note and mortgage.

Another “HOME RUN” in Nassau, NY! Judge awards FREE home to woman after mortgage records lost: NEWSDAY

Originally published: May 6, 2010 8:47 PM
By SID CASSESE sid.cassese@newsday.com

A Lakeview woman got an early birthday present when a Nassau County State Supreme Court Justice awarded her the house she lives in, free and clear of any liens and mortgages because nobody opposed the action.

Tuesday, Corliss Gittens, who turned 48 Friday, received the award of her six-room ranch-style house at 517 Pinebrook Ct. from Justice John Galasso.

Gittens bought the house from her parents in late 2000. But when she mailed monthly checks to the mortgage company, Homeside Lending, the checks were never cashed, said Hempstead lawyer Fred Brewington, who represents Gittens. In 2001, Gittens was told by Homeside Lending officials that it could not locate evidence of the mortgage in its records.

“She had a mortgage and a deed. She went to a closing and purchased the house,” said Brewington. “She never stopped trying to find out to whom she should pay the mortgage because the uncertainty was making her distraught.”

Eventually, Gittens learned Homeside ceased to exist, and its parent company, SR Investments, was sold to Washington Mutual in 2002. Washington Mutual was in turn acquired by JPMorgan Chase in 2008. All of the companies, as well as the Federal Deposit Insurance Corporation, were named as respondents.

None opposed Gittens’ suit.

Brewington said he reached out to Chase on the issue, only to be told the bank knew nothing about it.

Michael Fusco, a spokesman for Chase in Manhattan, said the bank “has no comment at this time.”

Gittens did not want to be interviewed for the story, but Brewington quoted her as saying: “After so many years of existing in limbo, I am happy that I will have the resources of my property available to me.”

He said Gittens once sought a second mortgage, but failed to get it because no one could get any information on the existing one. He added that her case was filed to wipe out that mortgage.

County records show the 2009 property tax on the house as $7,667.44.

In his decision Galasso said: “The Court directs the Clerk of the County of Nassau in whose office the mortgage and note were presumably recorded on or about March 6, 2001, to mark the record of the debt secured by the mortgage canceled and discharged.”

County Clerk Maureen O’Connell said Thursday she got the order Thursday and will execute it immediately.

Is HAMP On Last Leg? Administration Pressures Loan Servicers for More

by Adam Quinones

Treasury Secretary Geithner today appeared before the Senate Financial Services and General Govt. Subcommittee.

On the agenda was....

Holding Banks Accountable: Are Treasury and Banks Doing Enough To Help Families Save Their Homes?

Below are a few comments from Geithner's prepared text that lead you into the story.

From the release....

"The damage from housing crisis has affected millions of Americans. "

"It's affecting those who were taken advantage of by predatory lenders, seeing their interest rates suddenly and unexpectedly skyrocket. It's affecting those who took out traditional mortgages only to see their home's value plummet, leaving them owing more to the bank than their house is worth. And it's affecting those who, as a result of the broader crisis, have lost their jobs and are facing foreclosure."

"As you have recognized, Mr. Chairman, solving these problems is crucial to our economic recovery. For most Americans, their house is their most important financial asset, and as the financial crisis wreaked havoc on household wealth, the Administration moved to protect this critical component of stability."

"Together, Treasury and the Fed have purchased more than $1.4 trillion in agency mortgage backed securities. We also acted to stabilize the GSEs. These actions returned mortgage rates to historic lows."

"We recently made important enhancements to HAMP to help responsible borrowers, enhancements that will give us increased flexibility to reach our goal of reaching up to 3 to 4 million homeowners at risk of foreclosure over three years"

NOTHING NEW YET...BUT THIS IS WHERE THINGS GET TENSE:

"I want to be clear that we do not believe servicers are doing enough to help homeowners – not doing enough to help them navigate the difficult and often frightening process of avoiding foreclosure."

"We are concerned by the wide variation in performance we see across servicers and by the countless frustrated phone calls we receive from borrowers. We are troubled by reports that servicers have foreclosed on potentially eligible homeowners, or that they have steered these borrowers away from HAMP and into the bank's own modification program. That they have lost documentation, or claimed to. That they are not responding to the needs of responsible and increasingly desperate homeowners."

"None of this is acceptable. We are committed to making sure that servicers hold up their end of the bargain. We are conducting targeted, in-depth compliance reviews. We are compelling servicers to re-review groups of mortgages – or their entire book – for eligibility. And in circumstances where servicers are not compliant we will withhold incentives or demand their repayment"

"And we will soon publish much more detailed data on the performance of servicers to hold them accountable to the public – so that both members of Congress and the homeowners in your communities can assess for themselves the performance of these servicers."

Law Offices of Steven J. Baum loses another of JPMorgan Chase for lack of standing

By:  Nicholas M. Moccia
       Law Offices of Robert E. Brown, P.C.

It appears the attorneys at the Law Offices of Steven J. Baum have developed an exquisite expertise in commencing foreclosure actions for Plaintiffs who lack standing to foreclose.   It appears, moreover, that Baum's attorneys are developing a masochistic tendency to find themselves in front of Justice Arthur M. Schack whenever this is the case.

In JP Morgan Chase Bank, N.A. v George 2010 NY Slip Op 50786(U), Justice Schack once again vacated a judgment of foreclosure and sale and dismissed a foreclosure action for lack of standing.  Perhaps not surprisingly, Baum's attorneys did not even bother to oppose the Defendant’s order to show cause from which Justice Schack’s decision arose.

Justice Schack notes that in order to have standing to commence a foreclosure action, the Plaintiff must demonstrate (1) the existence of the mortgage and the mortgage note, (2) ownership of the mortgage, and (3) the defendant's default in payment.  Schack humorously observes that the Plaintiff's complaint reveals an utter lack of awareness as to where the mortgage and note were even recorded, let alone whether the Plaintiff was the holder of the note at the time the foreclosure action was commenced.  Justice Schack writes:

Then, plaintiff CHASE commenced the instant foreclosure action by filing the summons, complaint and notice of pendency with the Office of the Kings County Clerk on April 7, 2006. Plaintiff CHASE, in ¶ 1 of the instant complaint, alleges that it "is the holder of a mortgage bearing date the 17th day of September 2004 executed by GERTRUDE GEORGE to secure the sum of $381,500.00 and recorded at Instrument No. 2005000206826 in the Office of the Clerk of the County of KINGS, on the 11th day of April 2005; said mortgage is to be duly assigned by an Assignment to be recorded in the Office of the Clerk of KINGS County [sic] [Emphasis added]." Plaintiff's counsel, who has commenced thousands of foreclosures in Kings County, should be aware that mortgages in Kings County are recorded in the City Register of the City of New York, not the Office of the Kings County Clerk.

Worse still, Justice Schack points out that the foreclosure action was commenced before the note and mortgage were actually assigned to Chase—this means Chase did not in fact own the note and mortgagewhen they started the foreclosure.  As Justice Schack notes, "Standing to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress." (Saratoga County Chamber of Commerce, Inc. v Pataki, 100 NY2d 801 812 [2003], cert denied 540 US 1017 [2003]). Without standing, a case is dead on arrival.

Nevertheless, it seems Baum's attorneys have a mental block on the standing issue, and trip up with surprising regularity in this regard.   See Option One Mortg. Corp. v. Duke, 2009 WL 2505751 (Sup. Ct. Kings County 2009)(dismissed for lack of standing)(brought by Steven J. Baum, PC, Buffalo, NY, for Plaintiff); HSBC Bank USA, N.A. v. Vasquez,  2009 WL 2581672 (Sup. Ct.  Kings County 2009)(dismissed for lack of standing)(brought by Steven J. Baum, PC, Buffalo, for Plaintiff); Citigroup Global Markets Realty Corp. v. Randolph Bowling, 2009 WL 4893940 (Sup. Ct. 2009)(dismissed for lack of standing)(brought by Steven J. Baum, PC, Amherst, for Plaintiff); U.S. Bank Nat. Ass'n v. White, 2009 WL 159588, 1 (Sup. Ct. Kings County 2009)(dismissed for lack of standing)(brought by Steven J. Baum, PC, Amherst, for Plaintiff); U.S. Bank Nat. Ass'n v. Bernard, 2008 WL 383814 (Sup. Ct. Kings County 2008)(dismissed for lack of standing)(brought by Steven J. Baum, PC, Amherst, for Plaintiff); Wells Fargo Bank, N.A. v. Farmer, 2008 WL 2309006 (Sup. Ct. Kings County 2008)(dismissed for lack of standing)(brought by Steven J. Baum, PC, Buffalo, for Plaintiff); Ameriquest Mortg. Co. v. Basevich, 2007 WL 1815992, 1 (Sup. Ct. Kings County 2007)(dismissed for lack of standing)(brought by Steven J. Baum, PC, Amherst, NY, for Plaintiff).

Mr. Baum, you might consider making your team of attorneys take a field trip to the Brooklyn City Register—the address is 210 Joralemon Street, Brooklyn, New York.  Mapquest is a beautiful thing.

Justice Schack, After Being Denied a Pay Raise, Recuses Himself from Foreclosure Matter

Justice Schack published a volumnious decision explaining his rationale for recusing himself from a foreclosure matter.  See U.S. Bank Natl. Assn. v 1163 Prospect Realty Corp., 2010 NY Slip Op 50765(U) (Sup. Ct. Kings County May 3, 2010).  Justice Schack explains: 

To avoid any potential appearance of impropriety in the instant case, since both Senator Craig M. Johnson and Assembly Member Marc S. Alessi are both of counsel to Jaspan Schelsinger LLP, plaintiff's counsel, I must recuse myself from this matter. If I were to deny the instant motion for an order of reference it could be construed as retaliation against the Legislature by an aggrieved judge. Conversely, if I were to grant the instant application for an order of reference, it could be perceived as an attempt to curry favor with Mr. Johnson, Mr. Alessi, and their 210 colleagues in the New York State Assembly and Senate. I know I can be fair and impartial in deciding the instant motion for an order of reference. However, in the exercise of discretion and good conscience, and to avoid any speculation as to the rationale for my ruling, I must recuse myself from this case.

I hope that Mr. Johnson and Mr. Alessi would allow the judges of this state to receive their first pay raise in the twenty-first century. Thanks to our legislators, including both Senator Johnson and Assemblyman Alessi, our New York State judges are the "Rodney Dangerfields" of government. A pay raise would help to give us a little respect, instead of, as said by former Chief Judge Kaye in January 2008, "the disdain with which we are treated."