Has Erica Johnson-Seck met her match in the person of Elpiniki Bechakas in the robo signer hall of shame?

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

During the course of drafting a reply affirmation in support of a motion to dismiss a foreclosure action, I encountered an unusual assignment of mortgage emanating from the Law Office of Steven J. Baum, P.C.  An assignment of mortgage is a crucial document for foreclosing banks and their attorneys because this document is usually the only way a bank can prove it owns a particular mortgage and, therefore, prove it has the legal right to foreclose—i.e. that the bank has standing.  An assignment memorializes an arms-length transfer of a mortgage from one bank to another.   A sizeable portion of mortgage assignments produced by Baum’s office are executed by a certain Elpiniki Bechakas, Esq., who is an attorney from Baum’s office.  In my motion papers, I regularly question Ms. Bechakas’ legal capacity to execute mortgage assignments because, as an attorney, she should not be representing multiple parties in an arms length transaction.  It’s like having the same attorney simultaneously representing the buyer and seller of a house while having permission to sign all legal documents on behalf of both the buyer and seller.  There is an obvious conflict of interest.  The response from Baum’s office is that she has authority to sign from the various financial institutions.  Some judges agree with Baum’s position, some agree with mine—it depends on the ideology of the judge and what else is going on with the case.

However, this time something was truly amiss with the latest Bechakas assignment that came my way.  Here, the signature seemed a little too bubbly, and not the angular scrawl that I have grown to know and love.  And then it occurred to me, could it be that Ms. Bechakas is a robo signer? or better yet, could it be she now has a team of ghost signers who robo sign on her behalf? For your reading pleasure--and for those pro se defendants who have taken to plagiarizing my blog posts--I have pasted below a new, that is to say, untested point heading wherein I question the authenticity of an assignment of mortgage executed by Ms. Bechakas.  Also, included is a link to the dubiously executed mortgage assignment, and other samples of Ms. Bechakas' signature should you be inclined to make the comparison yourself.

THE ASSIGNMENT OF MORTGAGE PROVIDED BY PLAINTIFF’S COUNSEL APPEARS TO BE FORGED OR IS THE PRODUCT OF A “ROBO SIGNER” AND IS THEREFORE DEFECTIVE ON ITS FACE

14.         Plaintiff, in support of its position that it does have standing to foreclose, provides an Assignment of Mortgage executed on May 11, 2010, and annexed as Exhibit C to the Plaintiff’s Aff. in Opp.

15.         The Assignment of Mortgage was purportedly executed by Elpiniki Bechakas, Esq., an attorney associated with Plaintiff’s counsel, Steven J. Baum, P.C.  Remarkably, the Assignment of Mortgage does not in any way reveal Ms. Bechakas’ association with Plaintiff’s counsel.

16.         Most curiously, the signature of Elpiniki Bechakas—a signature with which I have become well familiar—is notably different than the signature of Elpiniki Bechakas on other assignments of mortgage that I have encountered.  See seven assignments of mortgage pertaining to other matters handled by this firm executed by Elpiniki Bechakas annexed hereto as Exhibit “B”.

17.         A comparison of the signatures of Ms. Bechakas on the annexed assignments of mortgage reveal a pronounced difference in the shaping and curvature of the letters as compared to the signature found on the Assignment of Mortgage proffered by Plaintiff in its Aff. in Opp. at Ex. C.

18.         The difference in form of the signatures apparently suggests that the Assignment of Mortgage supplied by Plaintiff’s counsel was forged or the product of a “robo signer”.  Accordingly, the Assignment of Mortgage is suspect and should be disregarded by the Court for determining the Plaintiff’s standing to bring this action, unless and until Plaintiff’s counsel can prove its authenticity. 

19.         To be sure, the multitude of mortgage assignments executed by Ms. Bechakas for scores of different financial institutions bears all the tell-tale signs of the notorious robo signers, who have gotten so much attention of late.[1]

20.         In Onewest Bank, F.S.B. v. Drayton, 2010 N.Y. Slip Op 20429, 29 Misc.3d 857 (Sup. Ct. Kings County, October 21, 2010), a Kings County judge wrote with reference to Erica Johnson-Seck, a notorious robo signer alluded to in footnote 1 infra, as follows:

A "robo-signer" is a person who quickly signs hundreds or thousands of foreclosure documents in a month, despite swearing that he or she has personally reviewed the mortgage documents but has not done so. Ms. Johnson-Seck, in a July 9, 2010 deposition taken in a Palm Beach County, Florida foreclosure case, admitted that she: is a "robo-signer" who executes about 750 mortgage documents a week, without a notary public present; does not spend more than 30 seconds signing each document; does not read the documents before signing them; and did not provide me with affidavits about her employment in two prior cases. (See Stephanie Armour, Mistakes Widespread on Foreclosures, Lawyers Say, USA Today, Sept. 27, 2010; Ariana Eunjung Cha, OneWest Bank Employee: 'Not More Than 30 Seconds' to Sign Each Foreclosure Document, Washington Post, Sept. 30, 2010.)

21.         There is every reason to believe that Ms. Bechakas has likewise engaged in such practices.

---

[1] See “Robo Signer Update List for Feb. 28, 2011”, wherein Ms. Bechakas is conspicuously included in the list along with other known robo signers, such as the now legendary Erica Johnson-Seck: http://dell.beforeitsnews.com/story/447/809/Robo_Signer_Update_List_For_Feb.28,_2011.html

Spurious Elpiniki Bechakas Assignment

Elpiniki Bechakas signature sampler

Governor Cuomo! Are you taking our Judicial Hearing Officers away?

Nicholas M. Moccia, Esq.

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

Full disclosure:  I am a fiscal conservative and strongly supportive of our Governor’s strict budgetary measures.  “We need to make sacrifices.”  Indeed, I cheerfully applaud the sacrificial slaughter of our ponderous state bureaucracy; however, I strongly question the wisdom of discontinuing the Judicial Hearing Officer (“JHO”) program.  The JHOs are a group of retired judges who help the New York State Court system manage its heavy case load.  JHOs play an extremely important role in the foreclosure context as they facilitate the progress of cases in the foreclosure conference parts wherein homeowners are given an opportunity to settle with their banks via loan modifications.  JHOs also preside over traverse hearings and play an important role in the disposition of matrimonial matters.

I work closely with JHOs almost daily in each of the five boroughs of the  City of New York.  I find the JHOs to be essential to the efficient working of our court system.  To cut the JHO program would be catastrophic, and would probably make the system much more costly both to the State and to the people whom it serves.  Kings County in particular would fall apart without its JHOs.  Especial kudos to the Hon. Michael V. Ajello (JHO) of Richmond County and the Hon. Lewis Douglass (JHO), both of whom I find to be particularly helpful.

For more on the JHO issue, see article below.

Group of Hardworking Retired NY Judges Face Layoffs

Justice Anthony I. Giacobbe of the Supreme Court, Richmond County, opines that standing is a waivable defense

Nicholas M. Moccia, Esq.

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

In a remarkable decision, Justice Giacobbe of the Supreme Court, Richmond County, held that standing was a waivable defense in the mortgage foreclosure context.  See Flagstar Bank, FSB, v. Louis P. Bonaccolta et al., 2011 N.Y. Slip Op 30645(U)(Sup. Ct. Richmond County March 10, 2011).

The following factual circumstances underlie this matter:   Flagstar Bank ("Plaintiff Bank") commences a foreclosure action against Louis P. Bonaccolta ("Defendant Borrower").  Plaintiff Bank obtains a judgment of foreclosure and sale, and schedules an foreclosure auction.  Defendant Borrower brings an Order to Show Cause to stay the foreclosure sale and requests that the Court give him more time to negotiate a short sale with the Plaintiff Bank.  Defendant Borrower argues that the foreclosure auction should be stayed by attacking the regularity of the notice of foreclosure sale of the premises, arguing that he received said notice by regular mail a mere two days before the foreclosure auction.  Defendant Borrower contends that such short notice was improper and unfair, placing the defendant "at such a disadvantage to protect his interest in 385 Ramona Avenue."  Nevertheless, the Defendant Borrower acknowledges receipt of the notice of foreclosure sale.  The Court also notes that the Defendant Borrower's attempt to sell the property via a short sale or to renegotiate the terms of the loan were fruitless.  Lastly, but most significantly, the Defendant Borrower argues in his Reply that the Plaintiff bank lacked standing to bring the foreclosure.

With regard to the Defendant Borrower's standing argument, Justice Giacobbe opines as follows:

Turning to the defendant's argument that "it may be that Flagstar Bank, FSB is not the proper mortgagor [sic]" such that plaintiff may lack sufficient standing to sue, such argument is improperly raised for the first time in his Reply, and therefore, will not be considered.  See, generally, Burlington Insurance Co. v. Guma Construction Corp., 66 A.D.3d 622 (2d Dep't 2009); Pinkston v. Weiss, 238 A.D.2d 393 (2d Dep't 1997).  Moreover, were the Court to consider it, such argument would be unavailing, particularly in light of the fact that defendant is not contesting service and that the affidavits of service appear regular on their face, because where, as here, a defendant has failed to raise the affirmative defense of a plaintiff's lack of standing in an answer or pre-answer motion to dismiss, the objection is deemed waived.  HSBC Bank, USA v. Dammond, 59 A.D.3d 679 (2d Dep't 2009); Wells Fargo Bank Minnesota, NA v. Mastropaolo, 42 A.D.3d 239 (2d Dep't 2007).

Justice Giacobbe's position is remarkable insofar as there is some disagreement among Staten Island judges regarding the waivability of the standing defense.  Justice Maltese quite explicitly holds that standing is never waivable and the defense can be raised at any time. See e.g. Deutsche Bank National Trust Company v Abbate, 25 Misc 3d 1216(A) 2009 NYSlipOp 52154(U) (Sup. Ct. Richmond County October 6, 2009). Justice McMahon, however, is in agreement with Justice Giacobbe and regularly holds that standing is a waivable defense. In my experience, Justice Fusco, Justice Aliotta and Justice Minardo, have not ruled one way or another on the standing issue; rather, they appear to avoid the issue in the foreclosure context and seem to make a point of rendering their decisions on some other basis.

For my part, I respectfully disagree with Justice Giacobbe and Justice McMahon on the standing issue, and agree with the Justice Maltese that standing cannot be waived.  I cite Aurora Loan Services, LLC, v. Thomas, 70 A.D.3d 986, 897 N.Y.S.2d 140 (2d Dep't 2010), wherein the Second Department held that a defendant borrower in a foreclosure action did not waive the defense of lack of standing--notwithstanding the Mastropaolo decision, notably cited as authority by J. Giacobbe--and further held that the defendant borrower should be granted leave to amend his pleadings to include lack of standing as an affirmative defense.  Indeed, the Second Department explicitly distinguished its position from that of Mastropaolo.  With regard to amending pleadings, leave to amend is to be freely given absent prejudice or surprise on the other party.  Essentially, the Second Department is saying that standing cannot be waived, since motion to amend pleadings are almost always granted.

The bottom line is that standing, according to the Second Department, isn't automatically waived even if the defense  happens to not be raised in an answer or pre-answer motion to dismiss.  The Court of Appeals held that “[s]tanding 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.”  See Saratoga County Chamber of Commerce, Inc. v Pataki, 100 N.Y.2d, 801, 812 (2003), cert denied 540 U.S. 1017, 124 S. Ct. 570, 157 L. Ed. 2d 430 (2003).

The ugly truth about Obama's HAMP loan modification program revealed in New Jersey class action complaint

Nicholas M. Moccia, Esq.

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

I had the opportunity to review a class action complaint recently filed in the U.S. District Court of New Jersey, wherein it is alleged that Citimortgage flagrantly disregards its obligations to offer loan modifications to New Jersey homeowners under Obama's Home Affordable Modifcation Program ("HAMP") notwithstanding the fact that Citimortgage received some $45 billion in TARP money on the condition that it participate in HAMP program.  See Juan Silva and Elizabeth Silva v. Citmortgage, Inc., 11-CV-01432 (D.C.N.J.).  The full text of the complaint may be accessed here:

  Silva v. Citimortgage complaint, 11-CV-01432


In light of the fact that I spend a good portion of my week working with banks to get my clients loan modifications under HAMP, I believe that I can say with some authority that the HAMP program is nothing less than an embarrassing failure for the Obama administration.  The allegations made in the Silva complaint are sadly all-too-familiar in my dealings, not only with Citimortgage, but with other lenders.

The plaintiff borrowers allege that Citimortgage intentionally set up its loan modification program to fail, and that Citimortgage instituted its HAMP program in order to feign compliance with TARP's conditions, although it never had any intention to allow widespread loan modifications for homeowners.  The complaint, in my opinion, correctly identifies a number of  financial factors that make it more profitable for a financial institution like Citimortgage to avoid modification and to continue to keep a mortgage in a state of default or distress and push loans to foreclosure.  The specifics factors may be found in ¶9 of the Silva complaint.  As a result, Citimortgage is incentivized to (1) maintain borrowers in default and delay decisions on modifications so that they can generate income through the imposition of late fees and inspection fees; (2) capitalize arrears to increase principal balances; and (3) create additional float income by putting borrowers in foreclosure.

In particular, the following allegation in ¶51 of the Silva complaint strongly resonated with me and was very reminiscent of a specific recent experience I myself had in my dealings with Citimortgage:

Throughout the HAMP application process, Citi also repeatedly and inappropriately demands that borrowers update their application materials, while warning homeowners that their modification is at risk and threatening to deny the modification if they fail to comply with requests.  Typically, Citi requests the same document(s) over and over. In other instance, it requests documentation that is irrational or impossible to obtain--such as W-2 forms for elderly individuals surviving on social security, or self-employment profit and loss statements for wage-earning employees. 

Citimortgage is not unique in its engagement in this paper shuffling charade.  This is standard operating procedure in the foreclosure conference parts throughout the City of New York--and, apparently, New Jersey as well.

In short, the Silva complaint alleges that Citimortgage has failed to comply with HAMP in a variety of ways and has essentially undermined the purpose of the program--namely, to help homeowners in foreclosure or facing the prospect of foreclosure make their loan payments more affordable during the current economic downturn.  For the past three years, the United States has been in a foreclosure crisis.  In late 2009, one in eight U.S. mortgages was in foreclosure or default, and 2.8 million homeowners received foreclosure notices in 2009.  New Jersey is among the top ten highest states for foreclosure filings.

Class Action Notice:

PHILADELPHIA, PA, March 16, 2011 (PRNEWSWIRE) -- The law firm of Berger & Montague, P.C. has filed a class action complaint in the United States District Court for the District of New Jersey on behalf of all New Jersey homeowners whose mortgage loans have been serviced by CitiMortgage, Inc., and who, since April 13, 2009, (1) have entered into a Trial Period Plan (“TPP”) contract with CitiMortgage and made all payments required by their TPP contract, but (2) have been denied a permanent loan modification agreement that complied with the U.S. Department of the Treasury’s Home Affordable Modification Program (“HAMP”) rules.

If you believe that you have been improperly denied a permanent loan modification by CitiMortgage, Inc., after April 13, 2009, please contact plaintiff’s counsel, Eric Lechtzin of Berger & Montague , P.C. at 888-891-2289 or 215-875-3000, or by e-mail at elechtzin@bm.net. A copy of the Complaint can be viewed on Berger & Montague, P.C.’s website at www.bergermontague.com or may be requested from the Court. The docket number is 11-cv-1432.

The Complaint alleges that CitiMortgage accepted billions in government bailout money under the Troubled Asset Relief Program (“TARP”) earmarked to help struggling homeowners avoid foreclosure. CitiMortgage, like other TARP-funded financial institutions, is contractually obligated to modify mortgage loans it services for homeowners who qualify under HAMP, a federal program designed to abate the foreclosure crisis by providing mortgage loan modifications to eligible homeowners.

According to the lawsuit, CitiMortgage systematically slows or thwarts homeowners’ requests to modify mortgages, depriving borrowers of federal bailout funds that could save them from foreclosure. The bank ends up reaping the financial benefits provided by TARP-funds and also collects higher fees and interest rates associated with stressed home loans.

For more information about this case, please contact:

Sherrie R. Savett, Esq.
Russell D. Paul, Esq.
Eric Lechtzin, Esq.
Kimberly A. Walker
BERGER & MONTAGUE, P.C.
1622 Locust Street
Philadelphia, PA 19103
Telephone: 1-888-891-2289 or 215-875-3000

Berger & Montague, founded in 1970, is a pioneer in class action litigation. The firm’s approximately 70 attorneys concentrate their practice in complex litigation, including consumer protection, securities fraud, whistleblower and false claims actions, antitrust.

Straniere trounces the credit card companies again in American Express Bank, FSB v. Dalbis

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



Judge Straniere, a long time advocate of Staten Island consumers, renders a colorful and comprehensive decision whereby he dismisses a consumer credit case purportedly based on Utah law.  For those attorneys in the practice area or for those self-represented individuals interested in some insight on how to respond to a credit card summons in New York, here is the link to  Straniere's decision in full:

American Express Bank, FSB v Dalbis, 2011 NY Slip Op 50366(U)(Civ. Ct. Richmond County March 14, 2011)

I have included Judge Straniere's concluding remarks as a teaser:
 

Conclusion:

One of these days in your travels a guy is going to come to you and show you a nice brand-new deck of cards on which the seal is not yet broken, and this guy is going to offer to bet you that he can make the Jack of Spades jump out of the deck and squirt cider in your ear. But son, do not bet this man, for as sure as you stand there you are going to wind up with an earful of cider.^[FN11]

Credit card issuers and third party debt buyers have over the last few years been "squirting cider" in the ears of the court system...Plaintiffs should spend more time putting all fifty-two cards in the deck rather than just a Jack of Spades that can squirt cider in the court's ear.

Courts Overstepped in Requiring NY Attorneys to Sign Affirmations in Foreclosures

By Andrew Keshner | New York Law Journal

A state judge on Long Island has ruled that court administrators overstepped their rule-making powers when they required lenders' attorneys to attest to the accuracy of the documents they file in residential foreclosure actions.

Supreme Court Justice Thomas F. Whelan in Suffolk County concluded in LaSalle Bank v. Pace, 15822-2008, that no statute or legislative action gave Chief Judge Jonathan Lippman the power to require the attorney affirmations.

The judge granted summary judgment to LaSalle Bank in the action, approving an order of reference on the foreclosure of a Hampton Bays house. Among other defenses, the homeowners claimed the bank failed to supply the required affirmation.

According to court papers, the bank's attorneys later submitted the affirmation as part of papers in support of summary judgment. At any rate, Justice Whelan observed that the affirmation could be supplied at a later stage of the proceedings.

However, he went further, saying that he was "not convinced that the subject order constitutes a permissible exercise of the rule making authority vested in the chief administrator of the courts."

The judge noted that the Legislature had delegated to the courts the power to regulate the practice and procedure of settlement conferences it had mandated, but he said the administrators' rule-making authority did not give them "carte blanche" to "enlarge or abridge rights conferred by statute."

"This court can find no legislative delegation to the chief administrator by statute or otherwise which empowers the chief administrator to impose the substantive requirements that touch upon the nature and sufficiency of proof which the plaintiff must supply to the court in mortgage foreclosure actions," Justice Whelan wrote.

The affirmation requirement had "significantly" impaired lenders' "statutory remedy for foreclosure and sale," he said, pointing to a "vast reduction" in case filings and a "resounding halt" in the prosecution of foreclosure actions. And he said the requirement had had a "chilling" effect on the court's ability to exercise its own authority.

Christopher H. Thompson of Staten Island, the attorney for homeowners James F. and Linda Pace, said he planned to appeal.

"I am disappointed with the decision and although I respect Judge Whelan, I believe he misunderstands the law," he said. "I believe the court seized the opportunity to challenge the enforceability of the chief administrative judge's rules and directives."

James G. Ryan and Justin F. Capuano of Cullen & Dykman in Garden City represented LaSalle Bank. Mr. Ryan declined to comment.

David Bookstaver, a spokesman for the Office of Court Administration, said the affirmation requirement is still in force.

"We are aware of the decision," he said. "However, we are not a party to the case and we'll be watching to see if there's an appeal filed."

Judge Lippman announced the affirmation requirement last fall, as national concern grew over inaccurate court documents in residential foreclosures. Since then, the number of foreclosure filings has plummeted, with observers attributing that decline, at least in part, to the affirmation requirement.

Other judges are still enforcing the affirmation requirement.

Supreme Court Justice Peter H. Mayer in Suffolk Countyrecently denied a foreclosure action and ordered a sanction hearing. The decision was due, in part, because he faulted a submitted attorney affirmation that replaced the affirmation's official language of "diligent" inquiry with "reasonable" inquiry.

"[T]his Court requires counsel to submit an attorney affirmation in the specific form and with the specific language originally mandated by [Chief Administrative Judge Ann Pfau's] order of October 20, 2010," the judge said in Bayview Loan Servicing v. Bozymowski, 00296-2010.

A call for comment to Rosicki, Rosicki & Associates of Plainview, the firm representing the lender, was not returned.

Judge Thomas Whelan of Suffolk County, New York, defies directive of Chief Judge regarding foreclosures

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

In LaSalle Bank, N.A. v. Pace, 2011 N.Y. Slip Op 21070, Judge Thomas of Whelan, of the Supreme Court of the State of New York, County of Suffolk, allows a foreclosure action to proceed notwithstanding the fact that the foreclosing bank failed to comply with the October 20, 2010, Administrative Order [#548-10] issued by Chief Administrative Judge Ann Pfau.  The Administrative Order, which has gotten much attention by foreclosure practitioners, requires counsel for the foreclosing banks to verify the accuracy of documents filed in support of residential foreclosure actions.

Judge Whelan opines that the Administrative Order is not binding on him based on New York State constitutional grounds.  His Honor writes,

The Administrative Order at issue and the recent amendment of 22 NYCRR 202.12-a, by the addition of subparagraph (f), which purports to establish the continuing authority of the Chief Administrative Judge to require the affirmations and affidavits that are the subject of the October 20, 2010 Administrative Order, are not administrative in nature, as they are not aimed at supervising the administration and operation of the Unified Court System or at the efficient and orderly transaction of business in the trial courts (see Judiciary Law § 211; 212[1]; 22 NYCRR 80.1[b]). They are, instead, "legislative" in nature, as their provisions purport to regulate practice and procedure in the courts (see NY Const. Art. VI, § 30; Judiciary Law § 212[2][d]). The legislative nature of the Administrative Order and the amendment of 22 NYCRR 202.12-a(f) are apparent even upon a most cursory review of their terms, as they impose additional, substantive requirements upon a plaintiff seeking the remedy of foreclosure that is not contemplated by the statutes which now regulate foreclosure actions (see RPAPL Article 13, CPLR 3408 and the Laws of 2009 Ch. 507 §§ 1,3,5,6,9,10,10-a)(Emphasis supplied).

Accordingly, Judge Whelan holds:

[T]his court finds that Administrative Order numbered 548-10 and the newly added subparagraph (f) to court rule 202.12-a, exceed the rule making authority of the Chief Administrative Judge, in her capacity as chief administrator of the courts.  (Emphasis supplied).

Thankfully, Judge Whelan's decision is not binding authority on other judges.  In my opinion--and I don't foresee myself practicing in Suffolk any time soon, so I can be blunt--this is a poor decision and appears to be nothing more that an elaborate rationalization for a deep-seated ideological bias favoring banks.  His decision does a disservice to homeowners, and wholly ignores the rampant documentary irregularities that occur in so many foreclosures. Instead, Judge Whelan concerns himself with the "chilling effect upon [his] court's adjudicatory authority and powers to determine issues raised in pending mortgage foreclosure actions duly assigned to it."

I'd like to hear from the Little Judge from Brooklyn on this one.

Judge Schack threatens Baum with sanctions for apparently attempting to collect a debt...from him!

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

This is a classic Judge Schack moment in Wells Fargo Bank, N.A. v Zelouf, 2011 N.Y. Slip Op 50212[U].  To fully appreciate this, you have to deal with Baum's office on a regular basis.  Nearly every interaction or communication with his office is prefaced by the following mantra ad nauseam:

[t]he law firm of Steven J. Baum, P.C. and the attorneys whom it employs are debt collectors who are attempting to collect a debt. Any information obtained by them will be used for that purpose.

To be sure, Baum is required to give this warning to all his prospective judgment debtors in order to be in compliance with the Fair Debt Collection Practices Act.  However, in Zelouf, it appears an overzealous paralegal--I'll give the attorneys the benefit of the doubt on this one--had the misfortune to include the now-famous Fair Debt Collections mantra in a correspondence with Judge Schack.  You gotta love this guy's sense of humor.  The good Judge writes:

Further, plaintiff's counsel states in his notice of withdrawal, "[t]he Plaintiff will not be discontinuing the above referenced action." Moreover, in his cover letter to myself, plaintiff's counsel states that "[t]he law firm of Steven J. Baum, P.C. and the attorneys whom it employs are debt collectors who are attempting to collect a debt. Any information obtained by them will be used for that purpose." Since this statement was in a cover letter to me and does not appear to be preprinted on the letterhead of the Baum firm, the Court would like to know what debt it [*2]personally owes to the Baum firm or its clients? This statement borders upon frivolous conduct, in violation of 22 NYCRR § 130-1.1. Was it made to cause annoyance or alarm to the Court? Was it made to waste judicial resources? Rather than answer the above rhetorical questions, counsel for plaintiff is directed never to place such a foolish statement in a cover letter to this Court. If this occurs again, the firm of Steven J. Baum, P.C. is on notice that this Court will have the firm and the attorney who wrote this nonsensical statement appear to explain why the firm and the individual attorney should not be sanctioned for frivolous conduct.

Baum, there is no winning with the Little Judge from Brooklyn!

Joy Leopold does not quite get it right with regard to MERS

Nicholas M. Moccia, Esq.

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

Commentary:   The article below by Joy Leopold reports on a recent decision that came down in the Bankruptcy Court for the Eastern District of New York.  The caption of the case is In re: FERREL L. AGARD, Case No. 810-77338-reg.  This article misses the point in two respects with regard to MERS:   

First, a decision from the Bankruptcy Court, EDNY, is not binding on the Supreme Court of the State of New York.  It's perhaps persuasive authority, but it is not binding.  One gets the impression that Ms. Leopold overestimates the significance of this decision.

Second, Ms. Leopold fails to explain why MERS does not have the right to transfer mortgages or file foreclosures on behalf of lenders or its own behalf.  MERS is a "nominee" of banks and acts as a record keeper and clearing house for mortgages that are originated and sold by financial institutions.  MERS is an agent or middleman of sorts.  The most important fact about MERS is that it does not have an ownership interest in any mortgage and is never the holder of the note.  For this reason, it cannot on its own initiative transfer mortgages between banks, nor can it file foreclosure actions on its own behalf.  The problem with MERS is that it transfers mortgages and sometimes commences foreclosures without being able to demonstrate to the courts or to defaulting borrowers that it has the right to do so.  The mere title "nominee" does not give MERS carte blanche.  It needs to show a power of attorney or a corporate resolution from the financial institution that actually owns the mortgage [i.e. "the holder the note and mortgage"] in order to demonstrate that MERS has the capacity to make assignments or commence foreclosure actions.  MERS time and again has been unable to prove that it has such authority--for that reason its assignments of mortgage are defective; for that reason it does not have standing to commence foreclosure actions.  The bottom line is that courts and homeowners need to know that the correct financial institution is bringing the foreclosure action.  After all, this is not just about balance sheets and payment ledgers--it's about people's home.  

Banks, if you want to take someone's home, do it correctly and be able to show that you're doing it correctly.

 

By: Joy Leopold

February 16, 2011

A New York judge has ruled that Mortgage Electronic Registration Systems, Inc. (MERS) does not have the right to transfer mortgages on behalf of its members, meaning it does not have the right to file foreclosures on behalf of lenders. 

The company has recently been under fire for the practice, but the company defended its actions saying that borrowers are required to sign documents stating that MERS can assume rights and responsibilities on behalf of creditors. 

The company’s Web site says, “MERS was created by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper.”

In recent years, though, that role has evolved substantially, with MERS taking foreclosure actions on behalf of lenders and servicers all over the country, even becoming embroiled in the robo-signing scandal.

At present, the company has about half of all the mortgages in the United States in its electronic database.
But last week, Judge Robert Grossman ruled MERS does not have the authority to act on behalf of its members, and the actions of the company are actually illegal, no matter what papers MERS requires members sign.

“The court recognizes that an adverse ruling regarding MERS’s authority to assign mortgages or act on behalf of its members/lenders could have a significant impact on MERS and upon the lenders which do business with MERS throughout the United States,” said his statement.

He continued, “However, the court must resolve the instant matter by applying the laws as they exist today. MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage recording process. This court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.”

A New York judge has ruled that Mortgage Electronic Registration Systems, Inc. (MERS) does not have the right to transfer mortgages on behalf of its members, meaning it does not have the right to file foreclosures on behalf of lenders. 

The company has recently been under fire for the practice, but the company defended its actions saying that borrowers are required to sign documents stating that MERS can assume rights and responsibilities on behalf of creditors. 

The company’s Web site says, “MERS was created by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper.”

In recent years, though, that role has evolved substantially, with MERS taking foreclosure actions on behalf of lenders and servicers all over the country, even becoming embroiled in the robo-signing scandal. 

At present, the company has about half of all the mortgages in the United States in its electronic database.

But last week, Judge Robert Grossman ruled MERS does not have the authority to act on behalf of its members, and the actions of the company are actually illegal, no matter what papers MERS requires members sign.

“The court recognizes that an adverse ruling regarding MERS’s authority to assign mortgages or act on behalf of its members/lenders could have a significant impact on MERS and upon the lenders which do business with MERS throughout the United States,” said his statement.

He continued, “However, the court must resolve the instant matter by applying the laws as they exist today. MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage recording process. This court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.”

HSBC Halts All Foreclosures and Admits to "Robo-signing" in SEC filing

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

The following regarding HSBC was reported on 4closurefraud.org:

HSBC Bank USA and HSBC Finance Corp. have stopped all home foreclosures until further notice and may face unspecified regulatory actions or fines, after regulators found “certain deficiencies” in servicing and foreclosure procedures, HSBC said in government filings Monday.

The disclosure by HSBC, buried deep within its annual financial report to the Securities and Exchange Commission, marks the first time HSBC has admitted to a foreclosure moratorium in the wake of a legal and paperwork crisis that swept the industry.

That’s a dramatic reversal from its stance just a few months ago, when it said publicly that it would not suspend home seizures because it didn’t feel its procedures were compromised by so-called “robo-signers” and faulty court affidavits.

“Robo-signing” refers to bank or law firm employees signing off on foreclosures without actually being familiar with the cases or reading paperwork.

In the SEC document, known as a 10-K, HSBC said it has “suspended foreclosures until such time as we have substantially addressed the noted deficiencies in our processes.” That suspension took effect in December, said spokesman Neil Brazil.

The company said it is also “reviewing foreclosures where judgment has not yet been entered and will correct deficient documentation and refile affidavits where necessary.”

Link to original:   4closurefraud.org

John Brancato of the Law Offices of Robert E. Brown, P.C. featured in the Staten Island Advance

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

On February 20, 2011, the Staten Island Advance featured an article giving advice to homeowners who face the prospect of foreclosure.  The advice is simple:  If you find yourself in foreclosure, act quickly to seek help.   At the beginning of a foreclosure, there are procedural mechanisms that slow down the process for the benefit of homeowners to find an appropriate exit strategy.  In general, there are three exit strategies: 1.  settling via a loan modification by reinstating the loan at a lower monthly payment; 2.  selling your home outright or selling your home with the cooperation of the bank through a short sale; 3.  voluntarily giving up your home to the bank via a deed-in-lieu of foreclosure while minimizing any further liability you may otherwise have toward the bank.  Each of these exit strategies is preferable to losing your house at auction, and so it is to a homeowner's advantage to explore these exit strategies while they are still available.

John Brancato, who is the loss mitigator for the Law Offices of Robert E. Brown, P.C., observes, ""You have many more options in the beginning of the process than you do when you come to my firm two days before the [foreclosure] auction."

Bottom line for homeowners:   Do not put your head in the sand if you suspect you are in foreclosure.  Take action to mitigate your prospective loss, and seek expert advice.

See link below to Staten Island Advance article by Frank Donnelly featuring John Brancato.  The article contains one error--John Brancato is the loss mitigator for the Law Offices of Robert E. Brown, P.C., not Ronald E. Brown.  

If foreclosure is looming, act quickly

NYLJ Article on Steven J. Baum, P.C.

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

See noteworthy article on the Law Office of Steven J. Baum, P.C.   I believe it's a fair article, and allows Mr. Baum to speak in his own defense.   Admittedly, it is all-too-easy to criticize a law firm in the current economic climate that specializes in taking peoples' homes assembly-line style.  I will say that Baum's attorneys, whom I deal with almost every day, are in general professional and courteous, and do make a considerable effort to work out loan modifications in order to keep people in their homes.  That being said, a firm which files as many as 25,000 foreclosures a year, even with the best of intentions, is bound to make errors.  It is therefore crucial that homeowners who face foreclosure seek counsel to ensure that their rights are protected and they are given every opportunity to keep their homes off the auction block.

I would like to credit Rachel L. Arfa, Esq., for bringing this article to my attention.

NYLJ Firm Dominates Foreclosures but Faces Growing (00094141)

Dems: Obama Broke Pledge to Force Banks to Help Homeowners

by Paul Kiel and Olga Pierce ProPublica, Feb. 4, 2011

 

Before he took office, President Obama repeatedly promised voters and Democrats in Congress that he’d fight for changes to bankruptcy laws to help homeowners—a tough approach that would force banks to modify mortgages.
 

“I will change our bankruptcy laws to make it easier for families to stay in their homes,” Obama told supporters at a Colorado rally on September 16, 2008, the same day as the bailout of AIG.
 

Bankruptcy judges have long been barred from lowering mortgage payments on primary residences, though they could do it with nearly all other types of debt, even mortgages on vacation homes. Obama promised to change that, describing it as exactly “the kind of out-of-touch Washington loophole that makes no sense.”

But when it came time to fight for the measure, he didn’t show up. Some Democrats now say his administration actually undermined it behind the scenes.
 

“Their behavior did not well serve the country,” said Rep. Zoe Lofgren (D-CA), who led House negotiations to enact the change, known as “cramdown.” It was “extremely disappointing.”
 

Instead, the administration has relied on a voluntary program with few sticks, that simply offers banks incentives to modify mortgages. Known as Home Affordable Modification Program, or HAMP, the program was modeled after an industry plan. The administration also wrote it carefully to exclude millions of homeowners seen as undeserving.
 

The administration launched the program with a promise that it would help 3 million to 4 million homeowners avoid foreclosure, but it’s likely to fall far short of that goal. The Congressional Oversight Panel now estimates [1] fewer than 800,000 homeowners will ultimately get lasting mortgage modifications.
 

The number of modifications has remained dramatically low compared to the number of homeowners falling behind. (Source: LPS Applied Analytics and HOPE Now)
 

Over the past year, ProPublica has been exploring why the program has helped so few homeowners. Last week, we reported how the Treasury Department has allowed banks to break the program’s rules with few ramifications [2]. The series is based on newly released data, lobbying disclosures, and dozens of interviews with insiders, members of Congress and others.
 

As the foreclosure crisis grew through 2008, the large banks that handle most mortgages were slow to offer modifications to struggling homeowners. Homeowners were left to navigate an onerous process that usually did not actually lower their mortgage payment. More than half of modifications kept the homeowner’s payment the same or actually increased it.
 

Many in Congress and elsewhere thought that mortgage servicers, the largest of which are the four largest banks, would make modifications only if they were pressured to do so.
 

Servicers work as intermediaries, handling homeowners’ mortgage payments on behalf of investors who own the loans. Since servicers don’t own the vast majority of the loans they service, they don’t take the loss if a home goes to foreclosure, making them reluctant to make the investments necessary to fulfill their obligations to help homeowners.
 

To force those servicers to modify mortgages, advocates pushed for a change to bankruptcy law giving judges the power not just to change interest rates but to reduce the overall amount owed on the loan, something servicers are loath to do [3].
 

Congressional Democrats had long been pushing a bill to enact cramdown and were encouraged by the fact that Obama had supported it, both in the Senate and on the campaign trail.
 

They thought cramdowns would serve as a stick, pushing banks to make modifications on their own.

“That was always the thought,” said Rep. Brad Miller (D-NC), “that judicial modifications would make voluntary modifications work. There would be the consequence that if the lenders didn’t [modify the loan], it might be done to them.”
 

When Obama unveiled his proposal to stem foreclosures a month after taking office, cramdown was a part of the package [4]. But proponents say he’d already damaged cramdown’s chances of becoming law.
 

In the fall of 2008, Democrats saw a good opportunity to pass cramdown. The $700 billion TARP legislation was being considered, and lawmakers thought that with banks getting bailed out, the bill would be an ideal vehicle for also helping homeowners. But Obama, weeks away from his coming election, opposed that approach and instead pushed for a delay. He promised congressional Democrats that down the line he would “push hard to get cramdown into the law,” recalled Rep. Miller.
 

Four months later, the stimulus bill presented another potential vehicle for cramdown. But lawmakers say the White House again asked them to hold off, promising to push it later.
 

An attempt to include cramdown in a continuing resolution got the same response from the president.

“We would propose that this stuff be included and they kept punting,” said former Rep. Jim Marshall, a moderate Democrat from Georgia who had worked to sway other members of the moderate Blue Dog caucus [5] on the issue.
 

“We got the impression this was an issue [the White House] would not go to the mat for as they did with health care reform,” said Bill Hampel, chief economist for the Credit Union National Association, which opposed cramdown and participated in Senate negotiations on the issue.
 

Privately, administration officials were ambivalent about the idea. At a Democratic caucus meeting weeks before the House voted on a bill that included cramdown, Treasury Secretary Tim Geithner “was really dismissive as to the utility of it,” said Rep. Lofgren.
 

Larry Summers, then the president’s chief economic adviser, also expressed doubts in private meetings, she said. “He was not supportive of this.”
 

The White House and Summers did not respond to requests for comment.
 

Treasury staffers began conversations with congressional aides by saying the administration supported cramdown and would then “follow up with a whole bunch of reasons” why it wasn’t a good idea, said an aide to a senior Democratic senator.
 

Homeowners, Treasury staffers argued, would take advantage of bankruptcy to get help they didn’t need. Treasury also stressed the effects of cramdown on the nation’s biggest banks, which were still fragile. The banks’ books could take a beating if too many consumers lured into bankruptcy by cramdown also had their home equity loans and credit card debt written down.
 

While the Obama administration was silent, the banking industry had long been mobilizing massive opposition to the measure.
 

"Every now and again an issue comes along that we believe would so fundamentally undermine the nature of the financial system that we have to take major efforts to oppose, and this is one of them," Floyd Stoner, the head lobbyist for the American Bankers Association, told an industry magazine.
 

With big banks hugely unpopular, the key opponents of cramdown were the nation’s community bankers, who argued that the law would force them to raise mortgage rates to cover the potential losses. Democratic leaders offered to exempt the politically popular smaller banks from the cramdown law, but no deal was reached.
 

“When you’re dealing with something like the bankruptcy issue, where all lenders stand pretty much in the same shoes, it shouldn’t be a surprise when the smaller and larger banks find common cause,” said Steve Verdier, a lobbyist for the Independent Community Bankers Association.
 

The lobbying by the community banks and credit unions proved fatal to the measure, lawmakers say. “The community banks went bonkers on this issue,” said former Sen. Chris Dodd (D-CT). With their opposition, he said, “you don’t win much.”
 

“It was a pitched battle to get it out of the House,” said Rep. Miller, with “all the effort coming from the Democratic leadership, not the Obama administration.”
 

The measure faced stark conservative opposition. It was opposed by Republicans in Congress and earlier by the Bush administration, who argued that government interference to change mortgage contracts would reduce the security of all kinds of future contracts.
 

“It undermines the foundation of the capitalist economy,” said Phillip Swagel, a Bush Treasury official. “What separates us from [Russian Prime Minister Vladimir] Putin is not retroactively changing contracts.”

After narrowly passing the House, cramdown was defeated when 12 Democrats joined Republicans [6] to vote against it.
 

Many Democrats in Congress said they saw this as the death knell for the modification program, which would now have to rely on the cooperation of banks and other mortgage servicers to help homeowners.

“I never thought that it would work on a voluntary basis,” said Rep. Lofgren.
 

At the time that the new administration was frustrating proponents of cramdown, the administration was putting its energies into creating a voluntary program, turning to a plan already endorsed by the banking industry. Crafted in late 2008, the industry plan gave banks almost complete freedom in deciding which mortgages to modify and how.
 

The proposal was drafted by the Hope Now Alliance, a group billed as a broad coalition of the players affected by the mortgage crisis, including consumer groups, housing counselors, and banks. In fact, the Hope Now Alliance was headquartered in the offices of the Financial Services Roundtable, a powerful banking industry trade group. Hope Now’s lobbying disclosures were filed jointly with the Roundtable, and they show efforts to defeat cramdown and other mortgage bills supported by consumer groups.
 

The Hope Now plan aimed to boost the number of modifications by streamlining the process for calculating the new homeowner payments. In practice, because it was voluntary, it permitted servicers to continue offering few or unaffordable modifications.
 

The plan was replaced by the administration’s program after just a few months, but it proved influential. “The groundwork was already laid,” said Christine Eldarrat, an executive adviser at the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac. “Servicers were onboard, and we knew their feelings about certain guidelines.”
 

As an official Treasury Department account of its housing programs later put it, “The Obama Administration recognized the momentum in the private sector reflected in Hope Now’s efforts and sought to build upon it.” It makes no mention of cramdown as being needed to compel compliance.
 

Ultimately, HAMP kept the streamlined evaluation process of the Hope Now plan but made changes that would, in theory, push servicers to make more affordable modifications. If servicers chose to participate, they would receive incentive payments, up to $4,000, for each modification, and the private investors and lenders who owned the loans would also receive subsidies. In exchange, servicers would agree to follow rules for handling homeowner applications and make deeper cuts in mortgage payments. Servicers who chose not to participate could handle delinquent homeowners however they chose.
 

The program had to be voluntary, Treasury officials say, because the bailout bill did not contain the authority to compel banks to modify loans or follow any rules. A mandatory program requires congressional approval. The prospects for that were, and remain, dim, said Dodd. “Not even close.”
 

“The ideal would have been both [cramdown and HAMP],” said Rep. Barney Frank (D-MA), then the chairman of the House Financial Services Committee. But given the political constraints, HAMP on its own was “better than nothing.”
 

“We designed elegant programs that seemed to get all the incentives right to solve the problem,” said Karen Dynan, a former senior economist at the Federal Reserve. “What we learned is that the world is a really complicated place.”
 

The program was further limited by the administration’s concerns about using taxpayer dollars to help the wrong homeowners. The now-famous “rant” by a CNBC reporter [7], which fueled the creation of the Tea Party movement, was prompted by the idea that homeowners who had borrowed too much money might get help.
 

Candidate Obama had portrayed homeowners in a sympathetic light. But the president struck a cautious note when he unveiled the plan in February 2009 [8]. The program will “not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans,” said Obama. “It will not reward folks who bought homes they knew from the beginning they would never be able to afford.”
 

While the government had been relatively undiscriminating in its bank bailout [9], it would carefully vet homeowners seeking help. HAMP was written to exclude homeowners seen as undeserving, limiting the program’s reach to between 3 million and 4 million homes.
 

In order to prove their income was neither too high nor too low for the program, homeowners were asked to send in more documents than servicers had required previously, further taxing servicers’ limited capacity. As a result, some servicers say eligible homeowners have been kept out. According to one industry estimate [10], as many as 30 percent more homeowners would have received modifications without the additional demands for documentation.

 

A lot of the program is focused on “weeding out bad apples,” said Steven Horne, former Director of Servicing Risk Strategy at Fannie Mae. “Ninety percent is not focused on keeping more borrowers in their homes.”

Law Offices of Robert E. Brown, P.C. prevails against Samserv process server

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

In a consumer credit action, Nicholas M. Moccia, Esq., of counsel for the Law Offices of Robert E. Brown, P.C., prevailed against Samserv process server, Michael Mosquera, during a traverse hearing in the Supreme Court, Kings County.  The judicial hearing officer in attendance found that service of process had not been properly effectuated in an action brought by Plaintiff Household Finance Corporation III.  

Of particular note was an apparently false affidavit of service documenting an attempt at service on an unidentified female whose physical description was inconsistent with that of any member of the Defendant's household.  Specifically, the affidavit of service indicated that a female 14-20 years old with brown hair was served at the Defendant's household at 8:40 a.m. on Saturday morning.  The Defendant resides with his 40 year old wife who has black hair, his 8 year old son and 5 year old daughter.  The Samserv process server admitted to having his license revoked by the Department of Consumer Affairs and was unable to demonstrated that he was licensed, as required, at the time he purportedly  served the Defendant.    Interestingly, Samserv and Michael Mosquera are named defendants in a federal class action RICO suit wherein it is alleged that they engaged in unfair debt collection practices and "sewer service" at the expense of thousands of unwitting consumers.  See Sykes v. Mel Harris and Associates, 09 Civ. 8486; see also previous post with NYLJ article dated January 4, 2011, regarding the same.

Mel Harris and Associates and Samserv

January 4, 2011

NYLJ

Consumers charging a law firm and two other entities with a scheme to fraudulently obtain more than 100,000 default judgments in state court have prevailed in their bid to overcome a motion to dismiss in federal court.

Second Circuit Judge Denny Chin, a former Southern District judge sitting by designation, refused to dismiss claims alleging the use of "sewer service," a process involving the intentional failure to serve a summons and complaint followed by the filing of a phony affidavit attesting to service. The debtor, who has no knowledge of the process, fails to appear and defaults.

The term "sewer service" is named after the practice of throwing the summons and complaint into the sewer outside of a defendant's home and claiming to have effectuated service.

Plaintiffs charged the "massive scheme" was perpetrated by a debt-buying company, Leucadia National Corp.; law firm Mel S. Harris and Associates of 5 Hanover Square, which engaged in debt-collection litigation on behalf of Leucadia and its subsidiaries; and Samserv Inc., a Brooklyn-based process serving agency.

In Sykes v. Mel Harris and Associates, 09 Civ. 8486, consumers allege violations of the Fair Debt Collection Practices Act, 15 U.S.C. §1692, the Racketeer Influenced and Corrupt Practices Act, 18 U.S.C. §1961, New York General Business Law §349, and New York Judiciary Law §487.

The plaintiffs claim that the Harris law firm and Leucadia joined to purchase debt portfolios and begin debt collection en masse, filing 104,341 debt collection actions in New York City Civil Court between 2006 and 2008, and hiring Samserv to serve process. In all, the plaintiffs allege, more than 90 percent of the targets defaulted because they were not actually served.

Once a consumer fails to appear, Leucadia and Mel Harris provide proof of service, proof of additional mailed notice and an "affidavit of merit" swearing to their personal knowledge of facts substantiating their claims.

"Leucadia had limited proof to substantiate its claims because it typically did not purchase documentation of the consumers' indebtedness to the original creditors," Judge Chin said. "Nonetheless, the Mel Harris defendants' 'designated custodian of records,' Todd Fabacher, signed the vast majority of the approximately 40,000 affidavits of merit they filed each year."

Mr. Fabacher had to aver to personal knowledge that the debt was due and owing, Judge Chin said, and that means he would have had to issue 20 affidavits per hour or "one every three minutes," during the course of an eight-hour work day.

Judge Chin said that two of the eight named plaintiffs had statute of limitations problems, but the statute in their case was "equitably tolled" because the "defendants deprived them of notice of their debt collection actions."

The Mel Harris defendants, which included the law firm, its principals and affiliated individuals, had argued that the Fair Debt Collection Practices Act does not prohibit the filing of debt collection actions and affidavits of merit.

False Affidavits Claimed

But Judge Chin said the plaintiffs alleged far more than simply the claim that the law firm defendants lacked "physical evidence of the debt."

They also allege, he said, "that they knowingly authorized defendant Fabacher to file false affidavits of merit—misleading both the Civil Court and consumer-defendants—to secure default judgments that enabled them to freeze bank accounts, threaten to garnish wages, or pressure individuals into settlements."

Judge Chin dismissed racketeering claims against five individual process servers, Mel Harris manager David Waldman and two officers of Leucadia or its subsidiaries.

He also rejected the plaintiffs' claim that there were three distinct racketeering enterprises. Nonetheless, Judge Chin found that the complaint properly alleged a single racketeering enterprise.

The defendants had argued that the plaintiffs' pleadings fell short on the racketeering conspiracy claim, and moved for dismissal.

But Judge Chin said "the pleadings sufficiently allege substantive RICO violations and plausibly establish an agreement among the defendants."

He denied the Samserv defendants' motion to dismiss racketeering conspiracy claims with respect to all Samserv defendants, including five individual process servers, and all other defendants. The lone exception here was his dismissal of racketeering conspiracy claims against Mr. Waldman and the two Leucadia officers.

Judiciary Law Claim

Judge Chin then ruled that, under General Business Law §349, which governs deceptive acts or practices, the plaintiffs' claims were not moot even though the default judgments have been vacated by state courts or by agreement with the defendants.

Finally, he refused to dismiss the claim against the Mel Harris defendants under Judiciary Law §487, under which an attorney can be charged with a misdemeanor and be liable for damages when he engages in "any deceit, or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party."

A status conference is scheduled for Jan. 11.

The plaintiffs are represented by Matthew D. Brinckerhoff and Elisha Jain of Emery Celli Brinckerhoff & Abady; Susan Shin, Claudia Wilner and Josh Zinner of the Neighborhood Economic Development Advocacy Project; and Carolyn E. Coffey, Andrew Goldberg and Anamaria Segura of MFY Legal Services Inc.

The Mel Harris defendants are represented by Brett A. Scher of Kaufman Dolowich Voluck & Gonzo.

The Leucadia defendants are represented by Lewis Goldfarb of McElroy, Deutsch, Mulvaney & Carpenter.

The Samserv defendants are represented by Jordan Sklar of Babchik & Young.

Massachusetts Court Voids Foreclosures, Citing Note Transfer Errors

The Massachusetts Supreme Court ruled Friday that U.S. Bank and Wells Fargo did not have the legal right to foreclose on two homes in the state, invalidating the lenders’ seizure of the properties and raising further questions about foreclosure documentation – this time related to the proper transfer of ownership on mortgages packaged as securities

 

Analysts warn that the decision could have far-reaching implications on loans that have already been liquidated, those in the process of foreclosure, and sales of foreclosed bank-owned homes.

In a unanimous 6-0 ruling, the Massachusetts Supreme Court upheld a lower court’s decision that U.S. Bank and Wells Fargo did not have the proper documentation to prove that they owned the mortgages at the time of foreclosure.

U.S. Bank and Wells Fargo were not the originators of the mortgages, but served as trustees of the two separate securitization trusts holding the loans. Interestingly enough, both foreclosures – U.S Bank’s on the mortgage of Antonio Ibanez, and Wells Fargo’s on the mortgage of Mark and Tammy LaRace – occurred on the same day, July 5, 2007. The lenders then turned around and bought each of the respective homes themselves at the foreclosure auction.

At the core of the issue is that the lenders both failed to ensure the assignment of the mortgage notes were executed and recorded in the registry of deeds before the dates of the foreclosure sales.

Justice Robert J. Cordy wrote in a court opinion, “…what is surprising about these cases is not the statement of principles…regarding title law and the law of foreclosure in Massachusetts, but rather the utter carelessness with which the plaintiff banks documented the titles to their assets.”

He went on to say, “There is no dispute that the mortgagors of the properties in question had defaulted on their obligations, and that the mortgaged properties were subject to foreclosure. Before commencing such an action, however, the holder of an assigned mortgage needs to take care to ensure that his legal paperwork is in order.”

The Supreme Court rejected the two banks’ requests to apply the ruling only to future cases, which could have implications for thousands of foreclosures in the state that have already been completed.

Wells Fargo said in a statement, “Wells Fargo believes the court’s ruling does not prevent foreclosures on loans in securitizations. The court simply set forth a standard legal process that mortgage servicers must follow in Massachusetts.”

The analysts at Barclays Capital described the case as “problematic for banks and non-agency investors, since it overturns completed foreclosure sales.”

They say the ruling could raise title issues in the minds of the potential buyers of REO properties, could further reduce prices on distressed sales, and slow foreclosure to REO rolls and liquidations.

File bankruptcy without a social security number?

By David Leibowitz, Esq.

Clients frequently ask whether they need a social security number to file bankruptcy.

The answer is no.

Let’s explain this.  Nothing in the bankruptcy code requires that you have a social security number to file bankruptcy. Yet, the official bankruptcy forms ask for your social security number. Don’t use somebody else’s number.  Don’t use a number you have made up.  Don’t use a number unless it was issued by the Social Security Administration.

If you don’t have a social security number, you still want your taxes addressed properly, so use an individual tax identification number or ITIN.  You get this from the Internal Revenue Service at www.irs.gov

When you file a bankruptcy petition, you’ll be asked to sign a declaration about your social security number. 

 You can indicate one of the following choices:

• You have one – so provide it
• You have an individual tax identification number – so provide that
• You don’t have one – if you don’t just say so.

The worst choice is to make a false statement about your social security number in your bankruptcy petition.  Never, under any circumstances, do that.

People worry that their immigration status will be harmed by bankruptcy.  That’s almost never the case.  On the other hand, a false statement about a social security number is a crime. That can only hurt your immigration status.

Robert Brown, Esq., featured in Staten Island Advance

Foreclosure expert Robert Brown, Esq., of the Law Offices of Robert E. Brown, P.C., opines that the apparent dip in foreclosure filings in the New York metro area for 2010 was more a function of stricter legal and procedural requirements rather than sign of economic improvement.  "I think in 2011 there's going to be a huge spike once [banks and their lawyers] get their arms around what they're going to do," said Robert E. Brown, a Staten Island and Manhattan-based foreclosure defense attorney. [read more]

Was last year's drop in Staten Island foreclosures just the calm before the storm?

By Frank Donnelly 

STATEN ISLAND, N.Y. -- Foreclosure filings on Staten Island last year dropped sharply from 2009, but defense lawyers and others say the numbers represent a misleading lull, as banks, under fire over the integrity of the foreclosure process, regroup.

 Staten Island Advance/ Bill LyonsNilda Martinez and Ruben Martinez stand in front of their home on Coursen Place in Clifton with their attorney Robert Brown, right. Brown was able to stop foreclosure and is countersuing the bank.

Many expect an avalanche of new filings this year to negate the 22 percent dip from the 2,361 foreclosure filings in 2009 to the 1,846 filings in 2010 recorded in the Richmond County Clerk's office.

"I think in 2011 there's going to be a huge spike once [banks and their lawyers] get their arms around what they're going to do," said Robert E. Brown, a New Dorp-based foreclosure defense attorney.

"People aren't paying their mortgages. There's just as many people going into default as did six months ago. It's just that the banks are being more careful in filing suit."

Valerie Wonica of Wonica Realtors & Appraisers agreed.

"I don't think it's a trend," she said of last year's decrease in filings. "I think a lot of it's in the pipeline. [Banks are] making sure all of their paperwork is being done correctly."

Brown said some banks stopped new foreclosure filings late last summer in response to probes by attorneys general around the country.

In numerous cases, there were questions about the actual ownership of the mortgage being foreclosed on, said Margaret Becker, lead attorney with the Homeowner Defense Project of Staten Island Legal Services in St. George.

"A huge, huge issue is who owns the mortgage, and can they prove who owns it," she said, noting that mortgage securities were often improperly bundled and passed from one bank and servicing company to another.

In other instances, affidavits attesting to the foreclosure documents' accuracy were signed by bank representatives who never looked at them, she said.

Brown said employees of some banks signed hundreds of affidavits each day without checking records, a process called "robo-signing."

STRICTER FILING PROCESS

In October, Jonathan Lippman, New York state's chief judge, put the onus on banks' lawyers to ensure proper foreclosure filings.

He required that attorneys sign an affidavit verifying the documents' accuracy. The lawyer must also name the person at the lending institution who supplied the information and certify his own examination of the papers.

"I think a lot of lawyers are skittish to do it," said Brown, adding that Staten Island judges are vigorously enforcing the mandate.

Foreclosure filings in the borough dipped to 78 in December, compared to 224 in December 2009. That represented a 65 percent decline. There were 81 foreclosure filings in November, down 61 percent from the 209 filings in November 2009.

According to published reports, foreclosure filings in mid-December also dropped sharply in counties that have high filing volumes, including Brooklyn, Queens and Suffolk County.

Brown believes that's just the calm before the storm.

"All they're doing is deferring the filings they'd normally be doing now," he said, adding that some discontinued foreclosures will be re-started.

While Brown expects foreclosure filings to jump this year, Ms. Becker said it's hard to say for sure.

Many foreclosures are the result of predatory lending practices, and those types of mortgages declined heavily in 2007 and 2008 with collapses in real-estate and financial markets, she said.

As a result, new mortgage applications slowed, and more current foreclosure filings are primarily due to homeowners' unemployment, said Ms. Becker.

The economy has shown some signs of life, yet the national unemployment rate remains at more than 9 percent -- up from about 5 percent in 2008.

Some experts, like Jonathan Peters, professor of finance at the College of Staten Island, say the country needs to create 8 million jobs just to match the ones it lost in the latest recession. That's not likely to happen soon, they say.

In the meantime, bankruptcy filings are up significantly on Staten Island.

HELP FOR HOMEOWNERS

Still, the news isn't all bad for beleaguered homeowners.

Eligible residents can obtain mortgage modifications through the federal Home Affordable Modification Program (HAMP). Ms. Becker said the process has "gotten better" and likely accounts for some of the dip in foreclosure filings, although some cases still drag on for months.

"It's positive any time foreclosures go down," said Sandy Krueger, chief executive officer of the Staten Island Board of Realtors (SIBOR). "Certainly, there's a lot of re-financing going on, so people had an opportunity to lower their payments and stay in their homes."

Brown, however, maintains HAMP isn't working as well as it should.

"I think in a lot of ways it's a terrible failure," he said. "I don't think the banks are efficiently set up to deal with the problem."

And if cash-strapped borough residents can't modify their mortgages, there's going to be even more pain in store this year, he said.