California Members of Congress Call for “Justice for Homeowners” in Settlement with Mortgage Servicers

California Members of Congress call for “justice for homeowners”
in settlement with mortgage servicers
Lawmakers object to “get-out-of-jail free card” for large Wall Street banks
WASHINGTON, DC – Citing reports that a settlement with Wall Street’s largest banks could mean only $25 billion in relief to homeowners, U.S. Rep. George Miller (D-Martinez) and more than two dozen of his Democratic colleagues from the California congressional delegation today urged Attorney General Kamala Harris not to give the Wall Street banks a “get-out-of-jail free card” while leaving homeowners out to dry.
The lawmakers wrote in support of Harris’ efforts to ensure that a settlement being negotiated between states and large banks over mortgage abuses provides substantial relief to California homeowners. Reports suggest that the settlement under discussion would provide just $20 billion to $25 billion in relief to homeowners, despite the fact that underwater homeowners nationwide owe $700 billion more on their mortgages than their homes are worth.
From the letter, “It is clear that thousands of Californians have been hurt by unfair and, in many cases, illegal practices in the foreclosure process. For this reason, we feel that it is critical that any settlement regarding these abuses must be fair to California homeowners. In particular, we believe that a deal must be structured to provide substantial financial relief for these homeowners…
“Additionally, we do not feel that it is responsible to grant a broad release of liability for abuses that have not been investigated by the attorneys general and are not remedied in the settlement. Our constituents need to know that our nation’s largest financial institutions have the same mandate to follow the law that they do—in other words, the simple fact of being an enormous Wall Street bank cannot mean getting a get-out-of-jail free card.”
Miller said his constituents are fed up. “Wall Street banks have chewed up homeowners all over the country, with no regard for the law or for what’s right. This is not an every once in a while story – it is an everyday story. Every day we hear how banks lose paperwork or charge ridiculous fees or give homeowners wrong information about a modification. This is abuse. Pure and simple. And it has been at every stage of the mortgage process. We need to provide justice to these homeowners.”
The lawmakers also asked that Harris conduct “a vigorous and wide-ranging investigation into the mortgage industry’s conduct during the foreclosure crisis” and that she robustly enforce California law against predatory and unscrupulous lenders. Last year, members of Congress from California wrote to U.S. Attorney General Eric Holder asking that he investigate foreclosure abuses against California homeowners.
The letter represents the latest of a number of actions taken by California Democrats in Congress to address the foreclosure crisis. Most recently, members wrote to President Obama asking him to take more aggressive action and conducted a series of meetings with Federal Housing Finance Agency Acting Director Ed DeMarco regarding the need to provide more assistance to underwater homeowners.
Approximately 30% of all California homeowners with mortgages are currently underwater on their homes, while many more families are struggling to pay their mortgages due to continued high unemployment in the state.
The full text of the letter with signatories is below
—
Dear Attorney General Harris:
We are writing to commend your leadership in ensuring that California homeowners get meaningful relief from any settlement with our nation’s largest financial institutions regarding mortgage and foreclosure fraud, and for your work to ensure that a legal settlement does not relieve those institutions of liability for abuses that have not been fully investigated and addressed.
As you know very well, California has been hit extremely hard by the housing crisis. One of every 226 housing units in our state received a foreclosure filing in August—a rate over twice the national average. According to CoreLogic, 30 percent of homeowners with mortgages in our state are underwater—again, one of the highest rates in the country. These problems do not just impact homeowners directly—they are devastating for realtors and construction workers who are losing work, for local governments losing property tax receipts, and for all sorts of small businesses who lose customers.
At the same time, California has also been home to myriad abuses throughout the mortgage process. Last year, in response to numerous concerns that we all heard from our constituents, we catalogued dozens of cases of abuses in the mortgage modification and foreclosure process. We wrote Attorney General Holder last October urging him to investigate these cases and similar abuses. It is clear that thousands of Californians have been hurt by unfair and, in many cases, illegal practices in the foreclosure process.
For this reason, we feel that it is critical that any settlement regarding these abuses must be fair to California homeowners. In particular, we believe that a deal must be structured to provide substantial financial relief for these homeowners. Far too few California homeowners—particularly homeowners who are underwater on their mortgages—have, to date, received the assistance that is necessary, and that must change with this deal. Additionally, we do not feel that it is responsible to grant a broad release of liability for abuses that have not been investigated by the attorneys general and are not remedied in the settlement. Our constituents need to know that our nation’s largest financial institutions have the same mandate to follow the law that they do—in other words, the simple fact of being an enormous Wall Street bank cannot mean getting a get-out-of-jail free card. We also look forward to a vigorous and wide-ranging investigation into the mortgage industry’s conduct during the foreclosure crisis, and to robust enforcement of California law against predatory and unscrupulous lenders. It is very important that we provide not only justice for the homeowners who were the victims of these abuses, but also accountability for those who committed them.
Therefore, we thank you for your work to ensure that any settlement is a strong one that is fair to California homeowners and urge you to hold strong to these principles. Thank you for your hard work and for keeping these views in mind.
Sincerely,
Baca
Berman
Capps
Cardoza
Chu
Costa
Davis
Eshoo
Farr
Filner
Garamendi
Hahn
Honda
Lee
Lofgren
Matsui
McNerney
Miller, George
Napolitano
Roybal-Allard
Sanchez, Linda
Sanchez, Loretta
Schiff
Speier
Stark
Thompson
Waters
Waxman
Woolsey

MERS subpoenaed by NY, sued by Delaware

The Law Offices of Robert E. Brown

New York Attorney General Eric Schneiderman has subpoenaed MERS, an electronic registry of mortgages used by the banking industry, seeking information about how it is used by major banks as part of a joint New York-Delaware mortgage probe.

"I supported Eric Schneiderman in his campaign and I am glad that I did. It wasn’t until I was recently part of the “SAVE YOUR HOME” mortgage foreclosure defense seminar in Sarasota, Florida (sponsored by the Mortgage Justice Group) that I realized how fortunate we are in New York to have elected officials and judges who understand the plight of our homeowners."
- Robert E. Brown, Esq.

Oct 27 (Reuters) - New York's attorney general has subpoenaed MERS, an electronic registry of mortgages used by the banking industry, seeking information about how it is used by major banks, a person familiar with the matter said on Thursday.

The subpoena comes amid widespread concern over the maintenance of mortgage documents, and banks' handling of foreclosures and is part of a joint New York-Delaware mortgage probe, the source said.

Delaware sued MERS on Thursday, alleging deceptive practices and seeking $10,000 per violation.

A Mers spokeswoman, Janis Smith, said there is "no merit" to Delaware's allegations. The company cooperated with the Delaware investigation and provide information it requested through a subpoena earlier this year, Smith said.

She declined to comment on New York.

New York Attorney General Eric Schneiderman is seeking information about how five major mortgage companies are using MERS, also known as Mortgage Electronic Registration Systems, the source said.

The lending institutions are Bank of America Corp, Citigroup Inc, JPMorgan Chase & Co, Wells Fargo & Co and Ally Financial Inc, this person said, requesting anonymity because they were not authorized to speak publicly.

In addition to the banks, the subpoena also seeks information on Amherst, New York, foreclosure law firm Steven J. Baum.

http://newsandinsight.thomsonreuters.com/Legal/News/2011/10_-_October/MERS_subpoenaed_by_NY,_sued_by_Delaware/

Home Closing Timelines Increase, Especially in Distressed Market

Refinance applications and appraisal complications are holding up home sale closings, according to the Campbell/Inside Mortgage Finance HousingPulse survey released Monday.

According to the report, the normal timeline for a closing is about 30 days. However, the recent HousingPulse survey found the timeline to be between 45 and 60 days.

The delay is exacerbated among short sales and sales of foreclosed homes – which according to HousingPulse made up 44.4 percent of the market in September, down from 45.9 percent in August.

The survey of 2,500 real estate agents found that one major source of delays among short sales is mortgage origination preapprovals, which sometimes expire before all interested parties agree.

Sales of foreclosed homes are encountering delays when property damage complicates the appraisal process.

One Mississippi survey respondent estimated that 45 percent to 50 percent of transactions were delayed because of mortgage application timelines.

A California agent stated, “Approximately 70% of all distressed property closings (in our area) have been delayed because of loan conditions.”

A new California law is further aggravating the problem by forbidding forced deficiency notes on short sales, according to Campbell and Inside Mortgage Finance.

Under the new law, “seconds are not willing to settle,” stated one California agent, adding, “Mortgage application timelines run out for the buyers waiting to receive acceptance, counter or declination.”

The HousingPulse survey found that the gap between the supply of distressed homes and the absorption by first-time home buyers declined from 11 percent in August to 8.8 percent in September.

Administration Announces Refinance Program for Underwater Borrowers

It’s official. The Federal Housing Finance Agency (FHFA) unveiled a new, revamped government mortgage refinancing program Monday.

The initiative involves a series of rule changes to the Home Affordable Refinance Program (HARP) to allow more underwater homeowners to reduce their mortgage debt by taking advantage of today’s rock-bottom interest rates.

Mortgages backed by Fannie Mae and Freddie Mac, and originally sold to the GSEs on or before May 31, 2009 are eligible for the program.

Under the revised HARP guidelines, the 125 percent loan-to-value (LTV) ceiling has been eliminated. Previously, only borrowers who owed up to 25 percent more than their home was worth could participate in HARP. That limitation has now been removed. The program will continue to be available to borrowers with LTV ratios above 80 percent.

The new program enhancements address several other key aspects of HARP that industry participants say have restricted its impact, including eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers, as well as allowing mortgage insurers to automatically transfer coverage from the original loan to the new loan.

In addition, Fannie Mae and Freddie Mac have done away with the requirement for a new property appraisal where there is a reliable AVM (automated valuation model) estimate already provided by the GSEs, and they’ve agreed to waive certain representations and warranties on loans refinanced through the program.

Not only are loans eligible for HARP considered “seasoned loans,” but a refinance helps borrowers strengthen their household finances, reducing the risk they pose to the GSEs. Thus, FHFA feels reps and warranties are not necessary for some of these loans.

With Monday’s announcement, the end date for HARP has been extended from June 30, 2012 to December 31, 2013.

The GSEs will release program instructions to lenders by the middle of next month, and FHFA expects some lenders will be ready to accept applications by December 1.

Since HARP was rolled out in early 2009, approximately 1 million homeowners have refinanced their mortgage loans through the program. FHFA estimates that with the revised guidelines, another 1 million will be able to take advantage of the program.

To qualify, borrowers must be current on their mortgage payments, but government officials believe by opening HARP up to more homeowners with higher thresholds of negative equity, it will help to prevent foreclosures by erasing the primary motivation behind strategic defaults.

Economists at the University of Chicago Booth School of Business estimate that roughly 35 percent of mortgage defaults are strategic. Numerous industry studies have found that homeowners who owe significantly more than their home is worth are more likely to throw in the towel and walk away from their mortgage debt even if they have the ability to continue making their payments.

“We anticipate that the package of improvements being made to HARP will reduce the Enterprises credit risk, bring greater stability to mortgage markets, and reduce foreclosure risks,” FHFA stated in its announcement Monday.

Fannie Mae and Freddie Mac also released statements in response to the announcement.

Michael J. Williams, Fannie Mae’s president and CEO, called the program a “welcome development.”

“By removing some of the impediments to refinance, lenders can more easily participate in the program allowing more eligible homeowners to take advantage of the low interest rates,” Williams stated.

Charles E. Haldeman, Jr., CEO of Freddie Mac said, “These changes mark another step on the road to recovery for the nation’s housing market.”

BOMBSHELL - Massachusetts Supreme Court Rules That Most Foreclosure Sales From Previous 5 Years Are VOID

Let's hope NY follows Massachusetts' lead...

From Cheyenne:

The only thing surprising about this ruling is that it took so long to be made. This is black letter law, folks, the logical extension of the Court's Ibanez decision.

Without a promissory note, a foreclosing plaintiff cannot show a legal injury, i.e., does not have standing to sue. Without standing, the action before the court does not qualify as a "case or controversy" under Article III of the constitution. Courts can only make rulings on "cases or controversies;" advisory opinions are a legal nullity. Consequently, a court that purports to enter a "judgment" where it has no subject matter jurisdiction has in fact entered a legal nullity on its docket; that "judgment" is void as a matter of law.

As such, any such "judgment" entered where the plaintiff had no standing is open to collateral attack in any subsequent proceeding. What is more, subject matter jurisdiction cannot be waived; were that the case, parties could falsely induce courts to make binding rulings--obviously non-sensical.

The procedural posture of this particular case is unusually serpentine, no doubt. In any event, there is nothing controversial--as a legal proposition--about this case. I'm sure the banks, who are now shitting their pants over the implications of this case, see it differently, but they're just wrong.

---

Source - Amnova

On Oct. 18th, 2011 the Massachusetts Supreme Judicial Court handed down their decision in the FRANCIS J. BEVILACQUA, THIRD vs. PABLO RODRIGUEZ – and in a moment, essentially made foreclosure sales in the commonwealth over the last five years wholly void. However, some of the more polite headlines, undoubtedly in the interest of not causing wide spread panic simply put it "SJC puts foreclosure sales in doubt" or "Buyer Can't Sue After Bad Foreclosure Sale."

In essence, the ruling upheld that those who had purchased foreclosure properties that had been illegally foreclosed upon (which is virtually all foreclosure sales in the last five years), did not in fact have title to those properties. Given the fact that more than two-thirds of all real estate transactions in the last five years have also been foreclosed properties, this creates a small problem.

The Massachusetts SJC is one of the most respected high courts in the country, other supreme courts look to these decisions for guidance, and would find it difficult to rule any other way in their own states. It is a precedent. It's an important precedent.

Here are the key components of the Bevilacqua case:

1. In holding that Bevilacqua could not make "something from nothing" (bring an action or even have standing to bring an action, when he had a title worth nothing) the lower land court applied and upheld long-standing principles of conveyance.

2. A foreclosure conducted by a non-mortgagee (which includes basically all of them over the last five years, including the landmark Ibanez case) is wholly void and passes no title to a subsequent transferee (purchasers of foreclosures will be especially pleased to learn of this)

3. Where (as in Bevilacqua) a non-mortgagee records a post-foreclosure assignment, any subsequent transferee has record notice that the foreclosure is simply void.

4. A wholly void foreclosure deed passes no title even to a supposed "bona fide purchaser"

5. The Grantee of an invalid (wholly void) foreclosure deed does not have record title, nor does any person claiming under a wholly void deed, and the decision of the lower land court properly dismissed Bevilacqua's petition.

6. The land court correctly reasoned that the remedy available to Bevilacqua was not against the wrongly foreclosed homeowner but rather against the wrongly foreclosing bank and/or perhaps the servicer (depending on who actually conducted the foreclosure)

When thinking about the implications of Bevilacqua – the importance of point six cannot be overstated.

The re-foreclosure suggestion is not valid

Re-foreclosing on these properties in not likely as has been suggested by bank layers in light of the Bevilacqua ruling. We aren't talking about Donald Trump here and we have a funny feeling he won't be affected either. Mostly it's guys like Bevilacqua who bought single or multi units, in the "hundreds of thousands" range. It seem unlikely that the majority of these folks would have the capital to eat their existing loses, re-foreclose at great expense, and on top of all of that come out as the highest bidder on the very property they formerly thought was their own. In many cases, as was the case in Bevilacqua, the original purchaser of the foreclosure may have already resold the property and moved on, thus leaving in their wake an even more serious problem; the likelihood of a property owner, who had nothing directly to do with a foreclosure, but is left with all the fallout of a post-Bevilacqua world.

Re-bidding on these properties in a re-foreclosure scenario would be done in what is soon to be a new inflationary environment (most originally bid in a deflationary environment for housing), thus making the "re-foreclosure" blank threat all the more unconvincing and unlikely.

However, it should be easy enough for investors similarly situated to Bevilacqua to simply hire fee contingent attorneys who can sue the banks and servicers for conveying fraudulent deeds – that seems like a much easier and logical proposition. When the potentially millions of lawsuits are added to the complaints filed by investors in MBS, we think the banks will finally be revealed as wholly insolvent. The only other way it could happen faster, is if the average American home owner, realizing he may never obtain clear title to his home (short of an indemnity from his bank), finally stops making his monthly payments on his invalid note (which completely lacks a valid security instrument). In this way, the existing insolvency of banks would be recognized in a matter of days rather than months or years.

The act of denial does not actually alter reality

Ostriches are said to have discovered this the hard way. On November 12th, 2010 in our article "Tattoos, Pyramid Schemes and Social Justice" we advocated that home owners, with securitized mortgages, regardless of their ability to pay, consider suspending their mortgage payments, and place those funds into a private escrow account instead. We wrote:

"Radical though it may seem, we believe the only way to stop the chaos of fraud and the breakdown of the rule of law in our courts, and most importantly to ensure that we ourselves are not participants in the fraud, is for homeowners who can afford their mortgage to stop paying it..."

The article goes on to say:

"For example, what is easier; to scorn those who are being foreclosed on because they can no longer afford their mortgage or to accept the possibility that our entire financial, and maybe justice system might be badly corrupted? Across all spectrums of crime, victims are often blamed, just ask attorneys who represent rape victims. This phenomenon is by no means unique to mortgage fraud, or those who have been raped by the institutions who carry out this trade. It has been made to appear as if those who have fallen on hard times are a matter of "incidental" inequalities in an otherwise procedurally just system. However, it is precisely the opposite which is true. Our financial institutions have created deliberate inequalities, through the use of procedurally unjust systems."

We pointed out that suspending such payment might be done for the following reasons, which in light of the recent Bevilacqua decision, and the pending Eaton Decision, are increasingly being proven correct:

"1. They are not sure where or if their payments are going to the true note holder.

2. They no longer know who the true note holder is.

3. They have a legitimate concern that they may not be able to ever obtain clear title and/or title insurance (in the event of a sale) given what we now know about improperly conveyed titles and the illegitimacy of "MERS".

4. They do not want to be an unwitting or passive participant in fraud.

5. They care about America, want our culture to be healed and recognize the dignity of every human being."

Long before the Ibanez decision was handed down we wrote the following (taken from the same article):

"If these legitimate reasons are the cause to suspend mortgage payments, then what attack on these "non-co-operators" character can be levelled? In these cases, Judge's will have to allow for proper civil procedure to take place in order for the legitimate inquiries of concerned Americans to come to light. Since banks virtually never produce adequate documentation (which appears to be by design), chances are things will escalate."

We went on to discuss the unique risks of apathy and denial in the following:

"...Americans have a duty to ask critical questions about the operations of their financial institutions, and if evidence has been presented that a deal was made, but not everyone was playing by the rules, than those deals need to be looked at again. It is not good enough any longer to say, if it doesn't affect "me" than, I'm not getting involved. We have a duty to one another as Americans, and more importantly as human beings, to care about truth and justice. What's more, apathy, so long as we are not affected, is a short lived consolation. Ultimately, this crisis will affect everyone sooner or later."

Certainly when the SJC handed down their opinion affirming Bevilacqua, perhaps hundreds of thousands, and ultimately millions of people who previously thought they were not affected, were suddenly well, affected. That is because there has been about six million foreclosures since the current economic crisis began, and those foreclosures may have resulted in many more interested parties, as was the case in Bevilacqua, who sold the subject property to four new owners, thus multiplying the number of parties involved, and ultimately the number of legal actions which could be brought. It is not hard to see where six million voided foreclosures might well result in new lawsuits in excess of that number – and if the courts advice is taken, these complaints would be directed, and properly so, at banks and servicers.

We expanded greatly on the themes of fraud, denial, and the likely economic consequences in our articles "Ibanez – Denying the Antecedent, Suppressing the Evidence and one big fat Red Herring" and "Eaton – Dividing the Mortgage Loan and Affirming the Consequent" which covered the other two recent landmark SJC cases - these may be worth reading in tandem with the present article in order to understand the full breadth of the problem.

In the Ibanez article, which was written in January of this year we wrote the following:

"If you live in Massachusetts and your mortgage has been securitized, or if you have purchased a foreclosure property, we think it would be wise to consider suspending your mortgage payments if you haven't already."

We believe these particular words have become incredibly relevant given the implications of Bevilacqua.

Finally, In our article "On the ethics of mortgage loan default" we tried to cover any outstanding inhibitions homeowners might have about the advice we were giving.

A few phone calls opens a whole new world

We decided to call a few title insurance companies to get their "take" on it all. We made the mistake of identifying ourselves as "bloggers" in the first phone call – that call may well have set a new land speed record for the fastest time from answering to hanging up. Thinking there might be a smarter approach, we decided to identify ourselves as homeowners (equally true) on the next call – the results were a little better, but only slightly.

The underwriters and title examiners we spoke to kept asking if we were attorneys, or if we represented the home owner as "council". We thought this was curious because we kept pointing out that we were ourselves just homeowners. Then it hit us, they have never actually spoken to a real, live, breathing customer on the policy origination side, they had only ever spoken to lawyer-brokers. We thought; what an interesting confluence of incentives this must create, and why is the buyer of the policy necessarily so far removed from the seller?

Menashe v. Baum, 10-CV-5155 (JS)(ARL)

In Menashe v. Baum, the U.S. District Court, Eastern District of New York allowed Plaintiff's individual Fair Debt Collection Practices Act claim to go forward against Defendant Steven J. Baum, Esq. based on Baum's alleged attempt to collect legal fees from a previously dismissed 2008 Foreclosure in a 2010 Foreclosure Action.

Cite as: Menashe v. Baum, 10-CV-5155 (JS)(ARL), NYLJ 1202517559128, at *1 (EDNY, Decided September 28, 2011)

District Judge Joanna Seybert

Decided: September 28, 2011

ATTORNEYS

For Plaintiff: Randall S. Newman, Esq., New York, NY

For Defendant: Brett A. Scher, Esq., Yale Pollack, Esq., Kaufman Dolowich Voluck & Gonzo LLP, Woodbury, NY

MEMORANDUM & ORDER

*1Plaintiff Jacob Menashe ("Plaintiff") brought this putative class action against Defendant Steven J. Baum, Esq. ("Defendant") under the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq. (the "FDCPA") and New York's General Business Law Section 349 ("GBL 349"). Pending before the Court is Defendant's motion to dismiss the Complaint for failure to state a claim. For the following reasons, this motion is GRANTED IN PART.

*2

BACKGROUND

Plaintiff defaulted on his home mortgage in 2008. His lender, LaSalle Bank National Association ("LaSalle"), initiated foreclosure proceedings in Nassau County Supreme Court (the "2008 Foreclosure"). (Compl. ¶17.) That action was dismissed in September 2009 because LaSalle failed to give Plaintiff proper notice prior to accelerating the outstanding debt. (Id. ¶18, Ex. A.) Shortly thereafter, Plaintiff defaulted again, and LaSalle initiated a second foreclosure action on January 5, 2010 (the "2010 Foreclosure"). (Id. ¶19.) A mandatory settlement conference was scheduled pursuant to N.Y. C.P.L.R. 3408 ("CPLR 3408") and the New York Uniform Civil Rules for the Supreme and County Courts 202.12-a ("Uniform Rule 202.12-a"). The conference was held on May 6, 2010, but Plaintiff did not attend. (Def. Opp. 2-3.)

Defendant represented LaSalle in both foreclosure proceedings. (Compl. ¶¶17, 19.) On July 8, 2010, Defendant sent Plaintiff a letter stating the payoff amount necessary to reinstate Plaintiff's mortgage. (Id. ¶22.) Plaintiff's loan and mortgage agreement authorized LaSalle to recover the legal fees it reasonably expended in the event of Plaintiff's Default,¹ *3 and the payoff letter included an entry for $350 with the description "LEGAL FEES — SETTLEMENT CONFERENCE" (Compl. ¶23). The letter also included entries for $420 for "INDEX NUMBER FEE"; $3,050 for "LEGAL FEES — MOTION PRACTICE"; and $190 for "REQUEST FOR JUDICIAL INTERVENTION FEE." (Id. ¶25.) These items are related to the 2008 Foreclosure that was dismissed. (Id. ¶4.)

Defendant's attempt to recover its fees for the settlement conference is at the heart of this case. To put this dispute in context, the Court first discusses CPLR 3408 and Uniform Rule 202.12-a. CPLR 3408 was enacted in August 2008. In its original form, the provision required courts presiding over foreclosures involving subprime or nontraditional mortgages to hold a settlement conference. (See Brett A. Scher Declaration ("Scher Decl.") Ex. F.) Also in 2008, New York's Chief Administrative Judge enacted Uniform Rule 202.12-a to give effect to CPLR 3408. As with CPLR 3408, the original version of the Uniform Rule required courts to schedule settlement *4 conferences. The Uniform Rule also provided in part that "[t]his section shall be applicable to residential mortgage foreclosure action brought on or after September 1, 2008." Uniform Rule 202.12-a (2008 version).

New York State's Legislature later broadened CPLR 3408 to include actions involving "any residential foreclosure action involving a home loan." N.Y.C.P.L.R. 3408 (McKinney 2011). At the same time, the legislature added what the Court will refer to as the "Attorneys' Fees Provision": "A party to a foreclosure action may not charge, impose, or otherwise require payment from the other party for any cost, including but not limited to attorneys' fees, for appearance at or participation in the settlement conference." Id. In relevant part, the legislative history indicates that the amendments "shall take effect on the sixtieth day" after they are passed and "shall apply to legal actions filed on or after such date." Laws 2009, ch. 507, §25, sub e, eff. Feb 13, 2010; 2009 N.Y. ALS 507; 2009 N.Y. 507; 2009 N.Y.S.N. 7. The amendments were passed on December 15, 2009; thus, they took effect and apply to foreclosure actions commenced on or after February 13, 2010. See 2009 N.Y. A.L.S. 507, 2009 N.Y. LAWS 507, 2009 N.Y. S.N. 7.

Following the amendments to CPLR 3408, the Chief Administrative Judge amended Uniform Rule 202.12-a. Substantively, the changes largely tracked the amendments to *5 CPLR 3408, and the amended Uniform Rule also took effect on February 13, 2010. The amended Uniform Rule also changed its "applicability" section in the following manner (deletions are bracketed, additions are underlined):

(a) Applicability. This section shall be applicable to residential mortgage foreclosure actions [brought on or after September 1, 2008, involving one- to four-family dwellings owned and occupied by the defendant where the underlying loan is highcost, subprime or nontraditional, as defined in section 6-1 of the Banking Law and section 1304.5(c) and (e) of the Real Property Actions and Proceedings Law, and was entered into between January 1, 2003 and September 1, 2008] involving a home loan secured by a mortgage on a one- to four- family dwelling or condominium, in which the defendant is a resident of the property subject to foreclosure.

(Newman Decl. Ex. D.)

DISCUSSION

The thrust of Plaintiff's case is that the amended Uniform Rule 202.12-a prohibiting lenders from recovering attorneys' fees for the mandatory settlement conferences applies retroactively to the 2010 Foreclosure, which was filed on January 5, 2010. (See Compl. ¶29.) Following this logic, Defendant's payoff letter, which included settlement conference legal fees in the payoff total, arguably constituted a FDCPA violation. For the reasons that follow, the Court rejects *6 Plaintiff's strained attempt to apply the amended Uniform Rule 202.12-a to his 2010 Foreclosure. His individual claim that Defendant violated the FDCPA by attempting to collect legal fees related to the 2008 Foreclosure may go forward.

To survive a Rule 12(b)(6) motion, a plaintiff must plead sufficient factual allegations in the complaint to "state a claim [for] relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974, 167 L. Ed. 2d 929, 949 (2007). The complaint does not need "detailed factual allegations," but it demands "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555. In addition, the facts pleaded in the complaint "must be enough to raise a right to relief above the speculative level." Id. Determining whether a plaintiff has met his burden is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009). On a motion to dismiss, a plaintiff gets the benefit of all reasonable inferences, see, e.g., Litwin v. Blackstone Group, L.P., 634 F.3d 706, 711 n.5 (2d Cir. 2011), but "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, __ U.S. __, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009).

*7

I. The Amended Uniform Rule does not Apply Retroactively

Plaintiff alleges that Defendant violated the FDCPA by (1) attempting to collect amounts not permitted by law (15 U.S.C. §1692f(1)); (2) using unfair and unconscionable collection methods (15 U.S.C. §1692f); (3) giving false impression of the character, amount or legal status of the alleged debt (15 U.S.C. §1692e(2)); (4) using false or deceptive collection methods (15 U.S.C. §1692e(5)); and (5) making threats to take action which cannot legally be taken. (Compl. ¶29.) Plaintiff's case rests on the theory that, notwithstanding the New York State Legislature's clear edict that CPLR 3408's "Attorneys' Fee Provision" amendment applies only to foreclosures commenced on or after February 13, 2010, the amended Uniform Rule applies retroactively and covers his January 5, 2010 foreclosure action. In Plaintiff's view, the amended Uniform Rule, which does not specify an effective date, renders the legal fee included in the payoff letter an amount prohibited by law.

Plaintiff concedes, as he must, that the amended CPLR 3408 only applies to foreclosures brought on or after February 13, 2010 (see Def. Opp. 9), but he argues that the Chief Administrative Judge made the proscription on settlement conference legal fees retroactive when she amended the Uniform Rule after the legislature amended CPLR 3408. Plaintiff's two *8 main arguments are first, that by deleting the "brought on or after" language from the original Uniform Rule, the Chief Administrative Judge "obviously intended" the amended Uniform Rule to apply retroactively (Def. Opp. 9) and second, that the amended Uniform Rule is a type of remedial or procedural rule that is normally given retroactive effect (id.). The Court rejects both arguments. Statutes are generally presumed to apply prospectively, see, e.g., Majewski v. Broadalbin-Perth Cent. Sch. Dist., 91 N.Y.2d 577, 584, 696 N.E.2d 978, 673 N.Y.S.2d 966 (1998), and if the Chief Administrative Judge wanted to make the amended Uniform Rule retroactive in spite of the Legislature's clear contrary intent, she would have said so explicitly. This is particularly true where, as here, the Legislature postponed the effective date of amended CPLR 3408. See O'Connor v. Long Island R.R., 406 N.Y.S.2d 502, 503 (2d Dep't 1978) (explaining that the presumption against retroactivity is strongest where Legislature has postponed the effective date). More to the point, though, is that the Chief Administrative Judge lacked the authority to make the Attorneys' Fees Provision retroactive. "The sources of judicial rule making authority…do not afford carte blanche to courts in promulgating regulations and no court rule can enlarge or abridge rights conferred by statute." LaSalle Bank, NA v. Pace, 31 Misc. 3d 627, 633-34, 919 N.Y.S.2d 794, 801 (N.Y. Sup. Ct. *9 2011). In sum, there is no indication that the Chief Administrative Judge's silence as to the amended Uniform Rule's effective date was an attempt to override the Legislature's clear intent that the "Attorneys' Fee Provision" applies only to foreclosures filed on or before February 13, 2010.

For a related reason, the Court reject's Plaintiff's argument that the amended Uniform Rule should be given retroactive effect because it is remedial or procedural. Even if the amended Uniform Rule were a remedial or procedural provision, the Chief Administrative Judge lacked the authority to override the Legislature's clear intent and any contrary, judge-created rule would be invalid. See LaSalle, 919 N.Y.S.2d at 801 ("Since rule making authority cannot significantly affect the legal relationship between litigating parties, the imposition of additional matters that impair statutory remedies or enlarge or abridge rights conferred by statute are not the proper subjects of rules promulgated by court administrators.").

Accordingly, Plaintiff's FDCPA claim arising out of Defendant's attempt to collect legal fees for the settlement conference is dismissed. Similarly, Plaintiff's GBL 349 claim, which is premised on his argument that amended Uniform Rule 202.12-a applies retroactively, must also be dismissed, a point Plaintiff concedes. (Pl. Opp. 11.)

*10

II. Plaintiff's Remaining FDCPA Claim

Plaintiff also alleges that Defendant violated the FDCPA by including legal fees from the 2008 Foreclosure in the 2010 payoff letter. To state an FDCPA claim, Plaintiff must allege that "(1) [he] has been the object of collection activity arising from consumer debt, (2) the defendant is a debt collector as defined by the FDCPA, and (3) the defendant has engaged in an act or omission prohibited by the FDCPA." Ogbon v. Beneficial Credit Servs., Inc., 2011 WL 347222, at *4 (S.D.N.Y. Feb. 1, 2011) (quoting Carrington v. Chrysler Fin., No. 10-CV-1024, 2010 WL 1371664 (E.D.N.Y. Apr. 5, 2010)). The FDCP prohibits "false, deceptive, or misleading representation or means in connection with the collection of any debt" including, without limitation, the "false representation of…the character, amount, or legal status of any debt." 15 U.S.C. §1692e(2)(A). Here, Plaintiff claims that Defendant (1) is a debt collector within the meaning of the FDCPA (Compl. ¶7), (2) sent a payoff letter as an attempt to collect Plaintiff's mortgage debt (see id. ¶¶15, 22-25), and (3) falsely represented that Plaintiff owed certain legal fees in connection with the 2008 Foreclosure proceeding, which was dismissed in Plaintiff's favor after the lender could not establish Plaintiff's default (id.). These allegations are sufficient to state an FDCPA claim.

*11

CONCLUSION

For the foregoing reasons, Defendant's motion to dismiss is GRANTED IN PART AND DENIED IN PART. Specifically, Plaintiff's FDCPA and GBL 349 claims arising out of Defendant's attempt to collect legal fees for the mandatory settlement conference, including his class action allegations, are DISMISSED with prejudice. Plaintiff's individual FDCPA claim based on Defendant's alleged attempt to collect legal fees from the 2008 Foreclosure may go forward.

SO ORDERED.

1. Section 7(E) of the Adjustable Rate Note provides that, upon the borrower's default, the lender "will have the right to be paid back by [the borrower] for all of [the lender's] costs and expenses in enforcing th[e] Note to the extent not prohibited by applicable law. Those expenses include, for example, reasonable attorneys' fees." (Def. Ex. C.) Also, the Consolidated Mortgage includes two sections addressing the collection of fees in the instance of a default: Section 14 provides that the "Lender may charge [the borrower] fees for services performed in connection with [a] default…including, but not limited to, attorneys' fees," and Section 22 states that "[i]n any lawsuit for Foreclosure and Sale, Lender will have the right to collect all costs and disbursements and additional allowances allowed by Applicable Law, and will have the right to add all reasonable attorneys' fees to the amount [borrower] owe[s] to Lender." Id.

Bank of America Reports Q3 Net Income of $6.2 Billion

Bank of America reported Tuesday that it saw a profit of $6.2 billion, or 56 cents per share, during the third quarter of 2011. That compares to a loss of $7.3 billion, or 77 cents per share, in the year-ago period.

The third-quarter numbers= were impacted by what the back described as “significant items,” including a $4.5 billion pretax gain resulting from an accounting adjustment related to structured liabilities, similar to what was seen in Citi’s and JPMorgan’s latest earnings releases. The year-ago quarter included a $10.4 billion goodwill impairment charge.

Perhaps the biggest headline-grabber gleaned from BofA’s third-quarter numbers is the fact that the company lost its position as the largest U.S. bank by assets. BofA’s balance sheet shows $2.22 trillion in assets as of the end of September. That puts it in the No. 2 spot behind JPMorgan Chase, which reported $2.29 trillion in assets at the end of the third quarter.

“This quarter’s results reflect several actions we took that highlight our ongoing transformation toward becoming a leaner, more focused company,” said CEO Brian Moynihan.

On the mortgage side of the business, BofA funded $33 billion in residential first mortgages during the third quarter to over 151,000 homeowners. Approximately 47 percent of this money was for home purchases and 53 percent were refinances.

The company’s provision for credit losses declined 37 percent from the year-ago quarter. BofA says the reduction reflects “improved credit quality across most consumer and commercial portfolios and underwriting changes implemented over the last several years.”

During the third quarter of this year, Bank of America completed more than 52,000 loan modifications. That’s down from 69,000 in the second quarter of 2011, but up from 50,000 in the third quarter of 2010.

The company says it successfully implemented the rollout of a single point of contact (SPOC) for mortgage default servicing over the July-to-September period. More than 6,500 BofA employees have now been trained and deployed for SPOC positions.

The bank continues to grapple with legacy mortgage issues as they relate to repurchase claims by investors.

During the second-quarter of this year, the company put aside $14 billion to cover expected buyback demands — $8.6 billion for the private-label settlement proposed to trustee Bank of New York Mellon and another $5.4 billion in the event that other claims arose from the settlement. The BNY Mellon proposal has faced heavy opposition from some of the private investors involved and has yet to be approved.

At the same time, Bank of America told investors Tuesday that loan buybacks from Fannie Mae and Freddie Mac have become “increasingly inconsistent” with what the bank feels it is contractually obligated to cover. Outstanding claims from the two GSE’s currently stand at over $5 billion.

How about sharing some of those profits by giving homeowners reasonable loan modifications?

Complaint | Ohio v. MERSCORP, Inc | Recording FAIL – Prosecuting Attorney for Geauga County, Ohio Files Class Action against MERS and Its Members

A class action lawsuit has been filed in Ohio against MERSCORP, Inc., Mortgage Electronic Registration System, Inc. and MERS’s members which alleges violations of Ohio state law arising from MERS’ failure to record intermediate mortgage assignments in, and pay the county recording fees to, Ohio county recording offices. The suit alleges that in failing to record, Defendants systematically broke chains of title throughout Ohio counties’ public land records by creating “gaps” due to missing mortgage assignments they failed to record, or by recording patently false and/or misleading mortgage assignments. Defendants’ purposeful failure to record has eviscerated the accuracy of Ohio counties’ public land records, rendering them unreliable and unverifiable — damage to public land records that may never be entirely remedied.

In my opinion, if banks were forced to pay the county recording taxes on all of the mortgages that were transferred through MERS, we would close our budget deficit in no time.

Bernstein Liebhard LLP Announces Filing of a Class Action against MERS and Its Members

NEW YORK, Oct 13, 2011 (BUSINESS WIRE) — Bernstein Liebhard LLP, with David P. Joyce, Prosecuting Attorney for Geauga County, Ohio, announced today that a lawsuit has been filed in the Geauga County Court of Common Pleas by Plaintiff Geauga County, on behalf of itself and all other Ohio counties, (the “Class”) against MERSCORP, Inc., Mortgage Electronic Registration System, Inc. (“MERS”), and MERS’s members (collectively, “Defendants”).

In the class action complaint, Plaintiff Geauga County, on behalf of itself and all other Ohio counties, alleges violations of Ohio state law arising from Defendants’ failure to record intermediate mortgage assignments in, and pay the attendant county recording fees to, Ohio county recording offices. In failing to record, Defendants systematically broke chains of title throughout Ohio counties’ public land records by creating “gaps” due to missing mortgage assignments they failed to record, or by recording patently false and/or misleading mortgage assignments. Defendants’ purposeful failure to record has eviscerated the accuracy of Ohio counties’ public land records, rendering them unreliable and unverifiable — damage to public land records that may never be entirely remedied.

As a result, the Class seeks declaratory and injunctive relief, as well as damages, to remedy Defendants’ persistent, and purposeful, failure to comply with Ohio’s legal requirement to record mortgage assignments in the proper county recording office. In doing so, Defendants avoided paying the attendant county recording fees as required by Ohio state law. Ohio’s recording laws have been in place for nearly 200 years.

The case is captioned State of Ohio, ex rel. David P. Joyce Prosecuting Attorney of Geauga County, Ohio v. MERSCORP, Inc., et al., No. 11-M-001087. For more information, please contact either Stanley D. Bernstein at (212) 779-1414, bernstein@bernlieb.com or Christian Siebott at (212) 779-1414, siebott@bernlieb.com.

Bernstein Liebhard LLP has pursued hundreds of complex litigations and has recovered almost $3 billion for its clients. It has been named to The National Law Journal’s “Plaintiffs’ Hot List” in each of the last nine years.

Bernstein Liebhard LLP 10 East 40th Street New York, New York 10016 (212) 779-1414 (877) 779-1414 www.bernlieb.com

SOURCE: http://www.marketwatch.com/story/bernstein-liebhard-llp-announces-filing-of-a-class-action-against-mers-and-its-members-2011-10-13

Full complaint below…

Ohio v. Merscorp, Inc

$725,000 Judgment Against Wells Fargo for Misapplying $2,212 Mortgage Payment

725,000 judgment against Wells Fargo for Misapplying $2,212 Mortgage Payment

Below is a story of an attorney that has been battling the banks on behalf of many Northern Nevada homeowners for several years. His first experience with the banksters’ egregious conduct towards borrowers began in September 2004 and resulted in a $725K judgment against Wells Fargo Bank. The judgment was entered in April 2009 and is currently being appealed for the second time.

After almost 3 years of litigation, an internal electronic office memorandum dated on or about May 2005 contained an admission from Wells Fargo that it had mistakenly applied the mortgage payment to the wrong account and that it should correct its error. However, Wells Fargo refused to correct its admitted error and has began a campaign trying to wear down and outlast his client. A campaign that began in September 2004 when it first misapplied his client’s mortgage payment (”$2200″). The action was filed in the federal district Court of Northern Nevada in May 2005 and was finally agreed to submit the matter to binding arbitration in January 2009.

An arbitration award was issued in February 2009 and I moved for an award of attorney’s fees and costs in the amount of about $500,000. In Wells Fargo’s opposition to the fee application, it admitted that “plaintiff’s fees and costs pale in comparison to the fees it paid.” Regardless the arbitrator award all of my client’s fees and costs. Wells Fargo then moved to have the arb award vacated pursuant to the Federal Arbitration Act in the district court. The district court refused to rule on its motion because the parties’ stipulation to proceed to binding arbitration was with the understanding that the losing party would appeal the award directly to the 9th Circuit.

In August 2009, Wells Fargo appealed the arbitration award. In February, 2011, the 9th Circuit remanded the motion back to the district court with instructions to rule on the motion. On August 17, 2011, the district court issued its memorandum of decision and order denying Wells Fargo’s motion. And, despite the standard for vacating an arbitration award being next to impossible to meet, Wells Fargo filed another appeal to the 9th Circuit on or about September 10, 2011.

The following is a summary of the attached award and findings of fact by the arbitrator, retired California Appellate Court Justice Michael Nott.

This dispute arose out of Wells Fargo inadvertently applying Johnson’s $2,212.00 September 2004 mortgage payment to the wrong mortgage account. Despite Wells Fargo having discovered and admitting its mistake on or about May 2005, Wells Fargo refuses to this very day, October 11, 2011 (over 7 years later), to remedy its admitted wrong doing and continues to employ 2 expensive law firms to employ expensive delaying tactics to postpone the inevitable payment of the arbitration award.

Retired California Appellate Court Justice Michael Nott after 3 1/2 days of trial and reviewing all the evidence and testimony presented by the Parties concluded that despite Wells Fargo having eventually admitted that it had been wrong all along, Wells Fargo refused to correct its error. In an overview of all the evidence presented, he concluded that this matter should have never taken so long to resolve. It just wasn’t complicated and, more poignantly, the evidence is overwhelming that Johnson provided sufficient documentary proof to back his assertion from Day 1 that all appropriate payments had been made to Loans 55 and 56. Id. In his final analysis, Justice Nott concluded that there wasn’t any reason to rush to reporting any negative comments to the CRAs (after the first report) until the problem was finally resolved. Justice Nott noted that Wells Fargo was servicing 8 of Johnson’s other mortgage loans and did not have to report any of them delinquent.

Justice Nott’s ultimate conclusion was that on the face of the documents presented at trial by Johnson, the investigation by Wells Fargo was inadequate, unreasonable, and untimely under the rules of the FCRA. Further, the yoyo reporting and clearing of late payments from October through May, and the continued foreclosure proceedings on Loan 56 were unnecessary and improper.

Johnson was awarded $260,910 including the attorney’s fees and costs he incurred from September 2004 through the end of the arbitration on or about February 2009. Almost 4 1/2 years of litigation that included, but not limited to, trips to California, North Carolina, and Iowa. Attorney fees awarded were $427,739, and cost in the amount of $37,069.

4closureFraud.org

Judgment and Order Re Arb Award

Wells Fargo WJ Opinion

Order Motion Vacate

5 Reasons Banks Would Rather Foreclose

"Why won't the bank just reduce the amount of my loan instead of taking my home and then selling it to someone else for way less than I would have been happy to pay?" It's a question that gets asked repeatedly these days, especially by people who are facing foreclosure or are upside down on their mortgages.

For the answer, we turned to Jack Guttentag, the Mortgage Professor and Inman columnist.

Guttentag believes that lenders have been too stingy when it comes to reducing loan balances. Private lenders have offered loan reductions only sparingly, he says, and Fannie Mae and Freddie Mac not at all.

Here's the professor's take on why homeowners can't catch a break on loan reductions.

1. The buck stops there.

The decisions to reduce principal loan amounts are made by the firms that service mortgages -- the same folks who brought the country the robo-signing scandal. As servicing firms, anything they decide must be in the financial interest of their client -- that's your lender, not you. If they depart from customary practice -- and writing down loan balances is a departure from customary practice -- the buck stops with them, Guttentag says. In other words, who's going to take the risk of reducing Joe Homeowner's loan amount and then have to explain it to the boss? To take Nancy Reagan out of context: They just say no.

2. Banks are in the business of making money.

No lender is going to write down the balance of a loan in default just because you owe more than the home is worth. Truth is, there is no benefit to the lender to helping Joe Homeowner keep his house instead of selling it to the next guy. Plus, to help Joe would eliminate the possibility that the bank could also get a deficiency judgment against him. Banks are in this for the squeeze and think of Joe as just the orange. Nothing personal, of course.

3. In this economy, you will likely default anyway.

Sure, you want to believe that the economy is going to turn around and the value of your home will again rise to what you paid for it. After all, hasn't listening to a fairy tale been a surefire way to fall asleep?

From the lender's standpoint, the only reason to write down a loan balance is that it will reduce the chance that you will default. And evidence has shown that people who are heavily underwater -- that's deep in negative equity territory -- are more likely to default than those who aren't. Truth is, negative equity discourages people from making their mortgage payments. They figure: Why keep throwing good money after bad?

4. Banks are short-staffed and the staff they do have is untrained.

Most interactions between mortgage borrowers and servicers are handled by computers or relatively unskilled employees, says Guttentag. Borrowers in serious trouble are referred to a smaller number of more skilled and specialized employees, but until you enter the red zone, you are likely to encounter frustration.

Guttentag says that at the onset of the mortgage crisis, servicers were caught short-handed and the sheer volume of foreclosures in the pipeline hasn't allowed them to catch their breath.

5. Mortgage insurance works against you.

When mortgages carrying mortgage insurance go to foreclosure, banks are protected up to the maximum coverage of the policy, which generally is enough to cover all or most of the loss. This discourages modifications, says Guttentag. Why would a bank do a modification for $15,000 if the $40,000 foreclosure cost is going to be paid by the mortgage insurer? Even if the insurance coverage falls short of the foreclosure cost, the shortfall has to exceed the modification cost before modification becomes financially more attractive.

So there you have it. A five-point plan for keeping homeowners on the hook for that hefty loan balance.

Foreclosure Sale Voided - Another Victory for Robert E. Brown, P.C.

On November 15, 2006, the defendant, Defendant (F.C) executed a mortgage and note with Amerifund Home Mortgage, LLC in the amount of $250,000. According to the Plaintiff, EMC Mortgage Corporation, Defendant failed to pay the installment due on April1, 2008. The Plaintiff failed to attach a notice of acceleration of the note, Defendant denies ever receiving a notice to accelerate the note.

It is known that foreclosure auctions in Richmond County (Staten Island) are conducted at 18 Richmond Terrace, Room 106, Staten Island, New York. The former Homeport Courthouse located at 355 Front Street, Staten Island, NY never hosted such auctions. In this case, the differential in distance between 18 Richmond terrace and 355 Front Street is approximately 1.3 miles. Therefore, the foreclosure sale that took place on May 4, 2010 must be set aside.

The court concluded that the Plaintiff had failed to submit evidence demonstrating that it had title to both the mortgage and note at the time it commenced this foreclosure action.

In a decision rendered on September 13, 2011, Justice Joseph J. Maltese of the Supreme Court of the State of New York, Richmond County, vacated a foreclosure sale and dismissed the entire complaint.

FC v. EMC

Ocwen to Buy Saxon for $59.3 Million

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

Morgan Stanley has announced the sale of Saxon Mortgage Services to Ocwen Financial Corporation.

Ocwen has agreed to acquire Saxon for the base purchase price of $59.3 million. The deal also includes an estimated $1.4 billion for servicing advance receivables outstanding.

The transaction is expected to close in the first quarter of 2012. According to Reuters, Morgan Stanley bought Saxon in August 2006 for $706 million.

This will mark Georgia-based Ocwen’s second major acquisition of a residential mortgage servicer in less than a year’s time. In both cases, Ocwen took the servicing businesses off the hands of investment banks.

In June, Ocwen agreed to purchase Litton Loan Servicing from Goldman Sachs.

Ocwen completed an earlier acquisition of HomEq Servicing, the U.S. mortgage servicing business of Barclays Bank, in September of 2010.

Citigroup Paying $285 Million To Settle Charges Of Misleading Buyers Of Mortgage Securities

WASHINGTON — Citigroup has agreed to pay $285 million to settle civil fraud charges that it misled buyers of a complex mortgage investment just as the housing market was starting to collapse.

The Securities and Exchange Commission said Wednesday that the big Wall Street bank bet against the investment in 2007 and made $160 million in fees and profits. Investors lost millions.
Citigroup neither admitted nor denied the SEC's allegations in the settlement.

"We are pleased to put this matter behind us and are focused on contributing to the economic recovery, serving our clients and growing responsibly," Citigroup said in a statement.

The penalty is the biggest involving a Wall Street firm accused of misleading investors before the financial crisis since Goldman Sachs & Co. paid $550 million to settle similar charges last year. JPMorgan Chase & Co. resolved similar charges in June and paid $153.6 million.

All the cases have involved complex investments called collateralized debt obligations. Those are securities that are backed by pools of other assets, such as mortgages.

Citigroup's payment includes the fees and profit it earned, plus $30 million in interest and a $95 million penalty. The money will be returned to the investors, the SEC said.

In the July-September quarter, Citigroup earned $3.8 billion. CEO Vikram Pandit this year was awarded a multi-year bonus package that could be worth nearly $23.4 million if performance goals are met.

At the height of the financial crisis in 2008, regulators worried that Citigroup was on the brink of failure. It received $45 billion as part of the $700 billion government bailout.

In the civil lawsuit filed Wednesday, the SEC said Citigroup traders discussed in late 2006 the possibility of buying financial instruments to essentially bet on the failure of the mortgage assets being assembled in the deal.

Rating agencies downgraded most of the investments that Citigroup had bundled together just as many troubled homeowners stopped paying their mortgages in late 2007. That pushed the investment into default and cost its buyers' – hedge funds and investment managers – several hundred million dollars in losses.

Among the biggest losers were Ambac, a bond insurer, and BNP Paribas, a European bank. Ambac had sold Citigroup protection against losses on the investment, allowing Citigroup to bet against it.

Hedge funds had asked Citigroup to sell them investments that would decline if the housing market crashed. Citigroup did so, and wanted to get in on the action, the SEC said.

Citigroup bet that the investments would fail, but never told investors it had done so, SEC enforcement chief Robert Khuzami said in a conference call.

"Key facts regarding how the structure was put together were not made available to (investors), and they suffered losses as a result," he said.

Even though Citigroup designed the investment to fail, it told investors it had been designed by an independent manager, the SEC said. Citigroup's marketing materials said the investments were picked by Credit Suisse. In an email about the deal, one Citigroup banker asked another not to tell Credit Suisse that it was designed for Citigroup to profit.

Credit Suisse "agreed to the terms even though they don't get to pick the assets," the email said, according to the SEC's complaint.

Credit Suisse also reached a settlement with the SEC. Two divisions of the bank agreed to pay a $1.25 million civil fine. It will also return $1 million in fees and pay $250,000 in interest. They didn't admit or deny the charges.

Credit Suisse declined to comment on the settlement.

The SEC also filed charges against Brian Stoker, a Citigroup employee it said was mainly responsible for putting together the deal. Stoker will contest the charges, according to a statement released by his lawyer.


http://www.huffingtonpost.com/2011/10/19/citigroup-settlement-mortgage-securities_n_1019729.html?ref=email_share

Baum required to pay $2 million as a part of a settlement with U.S. Attorney's Office of the Southern District of New York

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

Steven J. Baum, P.C., has entered into a settlement with the U.S. Attorney's Office for the Southern District of New York whereby it is required to pay $2 million and make significant reforms to its foreclosure filing practices. Strangely, the settlement agreement at ¶4 reads: “This Agreement does not constitute a finding by any Court or Agency that Baum has engaged in any unlawful practice or wrongdoing of any kind.”

$2 million is a lot of money for a law firm that has not engaged in any unlawful practices or wrongdoing of any kind.

Also noteworthy for foreclosure defense practitioners is ¶15(a):

“Baum shall provide the following notification:

a. In any pending foreclosure action where an application for a judgment of foreclosure has not been submitted to a court, if Baum has filed an assignment of mortgage as a corporate officer of MERS, Baum shall disclose that fact to the court in the application for the judgment of foreclosure, or earlier. Such disclosure shall not be required if the Baum firm does not file a proposed judgment of foreclosure (e.g. because another law firm has been substituted as counsel for the matter prior to the filing of a proposed judgment of foreclosure, because the action is dismissed, etc.)” (Emphasis supplied).

Full agreement:

Settlement Between the United States of America and Steven J. Baum

Bank of America sees a 200% surge in foreclosures

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

Interesting article regarding increased foreclosure filings:

http://www.cnbc.com/id/44503938

Rubin Martinez, client of the Law Offices of Robert E. Brown, P.C., featured in AARP Bulletin for September 2011

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

Ruben Martinez, a foreclosure client of the Law Offices of Robert E. Brown, P.C., is featured in AARP's Bulletin for September 2011.  Mr. Martinez has been living in his house for six years without paying his mortgage.  See "Living in Limbo", by Carole Fleck, for details.

Justice Thomas Whelan of Suffolk County defies the Second Department and again advocates for financial institutions in the foreclosure context

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

Justice Thomas Whelan of Suffolk County is now well-known by foreclosure practitioners to be a "bank friendly" judge.  This was particularly apparent in his recent decision, namely Deutsche Bank Natl. Trust Co. v. Pietra, 2011 NY Slip Op 21261 (Suffolk County July 27, 2011), wherein Justice Whelan critically and, at times, sarcastically disregards the Second Department's recent pronouncement in Bank of New York v. Silverberg, 2011 WL 2279723 (2d Dep't 2011), regarding the incapacity of MERS to transfer notes and mortgages on behalf of financial institutions.  In this vein Justice Whelan writes:

Recently, in Bank of New York v Silverberg, _AD3d_, 2011 WL 2279723 (2d Dept 2011), the Second Department, in explaining and examining the role of MERS, referenced a MERS website, About Us-Overview, MERS, http://www.mersinc.org/about/index.aspx, a particularly intemperate law review article(see Peterson, Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System, 78 U Cin L Rev 1359 [2010], newspaper articles, and the holding in a Bankruptcy Court case, In re Agard, 444 BR 231 (2011). [footnote omitted]. 

In an apparent attempt to cite presumptively more disinterested sources regarding the role of MERS,  Justice Whelan sees fit to ignore, among things, the "intemperance" of Christopher Peterson (a professor of law at the University of Utah), and instead cites R.K. Arnold, the former President and CEO of MERS for a "clearer" and undoubtedly more objective understanding.  Justice Whelan proceeds to discredit the authorities cited in  or consistent with Silverberg, and off-handedly distinguishes the matter before him from Silverberg purportedly because the note and mortgage in Silverberg were the product of a mortgage consolidation and extension agreement (i.e., a CEMA). 

Bottom line:  Justice Whelan is ripe for a Second Department reversal.

MERS out of the foreclosure business? It needs to get out of the assignment of mortgage business as well...

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


John Brancato of the Law Offices of Robert E. Brown, P.C., has brought an interesting article to my attention.  MERS is officially out of the foreclosure business.  This means that financial institutions who are members of the MERS system may not hide behind MERS' name and commence foreclosure actions with MERS named as the Plaintiff.  This was common several years ago, but, at least in New York, I have not seen MERS as a plaintiff in a foreclosure action for a long time--certainly not in recently filed foreclosures.  NY judges have been throwing out MERS foreclosures for several years now.

In the State of New York, MERS does not merely have problems with commencing foreclosures, but now the real issue is whether MERS is allowed to transfer ownership interests in mortgages, which is one of the very purposes for MERS to exist.  The NY Appellate Division, Second Department, has ruled that MERS does not, in general, have the requisite ownership interest to transfer mortgages between financial institutions unless MERS happens to be the holder of both the note and the mortgage.  MERS rarely, if ever, is the holder of the note and the mortgage, but is given the title "nominee" on behalf of some other financial institution.  As nominee, MERS is nothing more than an agent of some other entity, but is not the actual holder of the note and the mortgage.  In New York (at least in the Second Department) any mortgage that has passed through the MERS system is now tainted in the eyes of the courts, and so this may make it difficult, if not impossible, for banks to foreclose.

Link to MERS article:  http://www.dsnews.com/articles/mers-bows-out-of-foreclosure-and-bankruptcy-proceedings-2011-07-27

Banks quietly reducing principle balances for favored few while homeowners in foreclosure are denied loan modifications

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

On July 3, 2011, the New York Times reported that banks such as JP Morgan Chase and Bank of America were quietly modifying loans for tens of thousands of borrowers who were not even in foreclosure, going so far as to reduce reduce principle balances by 50%.  This is unheard of for borrowers actually in foreclosure who are purportedly given the opportunity to apply for loan modifications.  In particular, the kind of loan that seems to be getting this special attention is the so-called pay option adjustable rate loans, which were popular in the wild late stages of the housing boom but which banks now view as troublesome.  Most troubling of all is observation of Adam J. Levitin, a professor of law at Georgetown University who observes:

Loan modifications that should be happening aren't happening, while loan modifications that shouldn't be happening are.  Homeowners of any sort, whether current or in default, would rightly be confused and angered by this.

I would like to credit Paula Odellas for bringing this article to my attention.

See original article below.  There is a zoom in option at the bottom of the frame. 


NY Time Article reporting on banks reducing principle balances for at risk loans

Judge Arthur Schack identifies three robo-signers in HSBC Bank USA, N.A. v. Taher and threatens to sanction HSBC CEO Irene M. Dorner!

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

Judge Arthur Schack of the Supreme Court of the State of New York, County of Kings, has identified three individuals as robo signers in a recent foreclosure commenced by HSBC Bank and its counsel, Shapiro Dicaro & Barack, LLP.  See HSBC Bank USA NA v. Taher, 2011 NY Slip Op 51208(U)(Sup. Ct. Kings County July 1, 2011).


The three individuals identified by Judge Schack as robo signers are Scott W. Anderson, Margery Rotundo and Christina Carter.

With regard to Scott Anderson, Judge Schack notes that he is aware of at least five distinct signatures on the various documents purportedly signed by Mr. Anderson in the furtherance of foreclosures.  Judge Schack cites an article in Palm Beach Post, "State details foreclosure crisis," by Kimberly Miller, dated January 5, 2011,  wherein she reports:

As foreclosures mounted, the banks appointed people to create assignments, "thousands and thousands and thousands" of which were signed weekly by people who may not have known what they were signing . . .In another example, the signature of Scott Anderson, an employee of West Palm Beach-based Ocwen Financial Corp., appears in four styles on mortgage assignments . . .

 In addition to the signature variations, Judge Schack notes Mr. Anderson's frequent, apparent conflicts of interest by signing off on transfer documents in what appear to be arms length transactions between various financial institutions.  One day Anderson signs for MERS in an assignment to HSBC, another day he signs for HSBC in an affidavit of merit, then he signs for Ocwen which services loans for HSBC, all the while posing as a corporate officer for each of these respective entities etc.  According to HSBC, Mr. Anderson has authority to sign for all of these entities, but all too often HSBC is unable to produce the requisite power-of-attorney to demonstrate Mr. Anderson's signing authority.

Similar irregularities were noted by the Court with regard to Margery Rotundo and Christina Carter as well.

Judge Schack ultimately dismisses this action for lack of standing.  Referring to the new Second Department decision Bank of New York v Silverberg, (___ AD3d ___, 2011 NY Slip Op 05002 (2d Dep't 2011)), Judge Schack notes that MERS cannot effect a valid assignment of mortgage unless it is the holder of both the note and the mortgage.  It has become well established that, as a matter of industry practice, MERS hardly ever is the holder of the note, and is given no authority with regard to the note.  For this reason, MERS assignments are not valid for the purpose transferring the requisite ownership interest and authority to commence a mortgage foreclosure.  In the instant matter, HSBC was the purported assignee in a MERS assignment.  For this reason, Judge Schack held that HSBC did not have standing to commence this foreclosure due to MERS inability to effect a valid mortgage assignment.

Most extraordinary of all, Judge Schack issued a court order  pursuant to 22 NYCRR § 130-1.1 requiring Plaintiff's counsel, Shapiro and DiCaro, as well as the CEO of HSBC, Irene M. Dorner, to show cause why the Court should not sanction the Plaintiff's CEO and its counsel.  With regard to Irene Dorner, Judge Schack notes:

[Irene M. Dorner] should not only take credit for the fruits of HSBC's victories but must bear some responsibility for its defeats and mistakes. According to HSBC's 2010 Form 10-K, dated December 31, 2010, and filed with the U.S. Securities and Exchange Commission on February 28, 2011, at p. 255, "Ms. Dorner's insight and particular knowledge of HSBC USA's operations are critical to an effective Board of Directors" and Ms. Dorner "has many years of experience in leadership positions with HSBC and extensive global experience with HSBC, which is highly relevant as we seek to operate our core businesses in support of HSBC's global strategy." HSBC needs to have a "global strategy" of filing truthful documents and not wasting the very limited resources of the Courts. For her responsibility she earns a handsome compensation package. According to the 2010 Form 10-k, at pp. 276-277, she earned in 2010 total compensation of $2,306,723. This included, among other things: a base salary of $566,346; a discretionary bonus of $760,417; and, other compensation such as $560 for financial planning and executive tax services; $40,637 for executive travel allowance, $24,195 for housing and furniture allowance, $39,399 for relocation expenses and $3,754 for executive physical and medical expenses.