Miami Judge Orders Foot-Dragging Lender To Foreclose & Take Title To Condo Or Start Paying Maintenance Fees

In Miami, Florida, the Miami Daily Business Review reports:

• As bills mounted and revenue shrank, the board of Miami Beach's luxury Bentley Bay condo knew it had to take drastic action. [...] In one instance, the condo association took legal action against a lender that it said was dragging out the foreclosure process to avoid paying maintenance fees.

***

• Unit 212 at the Bentley was mired in a drawn-out foreclosure process, and fees were mounting. The cash-strapped condo association finally asked Miami-Dade Circuit Judge Daryl Trawick, who was overseeing the foreclosure case, to force U.S. Bank to take title to the unit or immediately start paying maintenance fees.

• In his June 1 order, Trawick gave U.S. Bank, the trustee for Citigroup Mortgage Loan, two choices: Don't foreclose and start paying maintenance fees on a unit it doesn't actually own, or foreclose and pay thousands of dollars in past-due fees.

For more, including links to the condo association's court filing requesting that the bank be compelled to foreclose, and Judge Trawick's order directing the lender to do so, see Desperate times call for desperate measures for condo associations.

For Attorneys:

In the condo association's court filing (at paragraph 12 of the motion to compel), the Florida court case F.D.I.C. v. Ventura Corp. of Sarasota, Inc., 622 So. 2nd 581, 582 (5th DCA 1993) is cited as precedent in support of the proposition that a trial court, exercising its equitable powers, can compel a mortgage holder to either proceed with a foreclosure sale or to pay the condominium association's monthly assessments.

The Piling On Continues As City Of San Diego Civil Suit Charges Countrywide With Predatory Lending Practices; WaMu, Wells Fargo, Wachovia May Be Next

In San Diego, California, the San Diego Union Tribune reports:

• San Diego City Attorney Mike Aguirre is taking on the lending industry, filing suit Wednesday against Countrywide Financial, which he accuses of engaging in unlawful and fraudulent predatory lending that victimized numerous San Diego home buyers.

• His suit, which follows similar litigation filed against Calabasas-based Countrywide last month by State Attorney General Jerry Brown, seeks to halt foreclosures that are tied to risky, adjustable-rate loans made by the lender. It also seeks civil penalties of $2,500 per violation against each of the named defendants. Also targeted in the suit is Bank of America, which recently purchased Countrywide.

• In a press conference held in front of a vacant, partially burnt Skyline home that has recently been taken over by Countrywide, Aguirre said he hopes his suit will be a way to bring other lenders together to work out settlements with borrowers who are about to lose their homes or who already have been foreclosed on.

***

• While Aguirre said he also plans litigation against other lenders, including Washington Mutual, Wells Fargo and Wachovia Corp., he said his main goal is to resolve the issue of growing foreclosures “in an orderly way.”

For more, see Aguirre sets his sights on Countrywide.

To view the lawsuit brought by the City Attorney for the City of San Diego, see People v. Countrywide Financial Corp., et al.
.

For links to recent lawsuits filed by states targeting Countrywide, see Recap Of Recent State Actions Against Countrywide Financial.

Go here and go here for more on Countrywide's problems. countrywide consumer problems

Judge Stalls Foreclosure As Homeowner, Allegedly Duped Into Signing Away House In Equity Stripping Deal, Claims Violations Of NY Home Equity Theft Law

In Nassau County, Long Island, the New York Law Journal (appearing at Law.com) reports:

• Applying a recently passed New York state law to a "questionable" transaction, a Nassau County judge has halted a foreclosure to give the homeowners a chance to prove they were tricked into selling their house. In Washington Mutual Bank v. Sholomov, [...] Supreme Court Justice Daniel R. Palmieri denied a motion by Washington Mutual to foreclose and sell the Glen Cove, N.Y., residence of Frank and Vincenza Dizazzo.

***

• Here, the decision required Palmieri to apply New York's Home Equity Theft Prevention Act, which went into effect on Feb. 1, 2007. In doing so, the judge weighed "the rights of both homeowners claiming to have been duped out of their home and the lending institution now seeking to foreclose on a mortgage made to the party the homeowners claim was part of the scheme."

***

• Frank Mitchell Corso of Jericho, N.Y., represented the Dizzazos. In an interview, Corso characterized the decision as important to banks that lend money to purchasers who may be involved in mortgage fraud schemes, as delineated in the state act. "The banks now have to be extremely careful as far as following procedure because they may become a party to the fraud," Corso said.

For the entire story and details, see Foreclosure Halted for Couple Who Say They Were Tricked Into Selling Home.

For the case, see Washington Mut. Bank v. Sholomov; 7/10/2008, 2008 NYSlipOp 28250.

Go here for the statute in question, the New York Home Equity Theft Prevention Act, or go here for consumer information on the law (both available online courtesy of the New York State Banking Department).

For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here and Go Here.

Editor's Note:

The issue of whether the straw buyer involved in the equity stripping arrangement (Sholomov) and the lender providing the financing in the transaction (Washington Mutual) were "bona fide purchasers for value" was raised in the case, according to this excerpt in the article:

• It is "certainly questionable" that Sholomov, who also was in default, was a "bona fide purchaser for value," wrote the judge, as the Dizzazos continue to reside in their Glen Cove home, and the transaction only required a down payment of $1,000 for a home worth roughly 600 times more.

• In turn, while Washington Mutual "is not directly implicated as 'equity purchaser'" because of its loan to Sholomov, Palmieri held the bank "still must be charged with knowledge, through its agent, of the possible application of the statute and of its violation."

I would point out that the New York Court of Appeals (the state's high court) decision in Phelan v. Brady, 119 N.Y. 587; 23 N.E. 1109; (NY 1890) supports the proposition that, because the homeowners (the Dizazzos) were in possession of the home at the time Washington Mutual acquired its mortgagee's interest in the property, it (WaMu) is deemed to be on notice of the homeowners rights, and therefore, is not a bona fide purchaser for value, without regard as to whether WaMu had an authorized agent involved in the deal from whom knowledge could be imputed to it.(1) Accordingly, its mortgagee's interest in the home is arguably inferior to any interest that the homeowners can establish.(2)

(1) Excerpt from Phelan v. Brady, 119 N.Y. 587; 23 N.E. 1109; (NY 1890):

• At the time of the execution and delivery of the mortgage to the plaintiff, the defendant Mrs. Brady was in the actual possession of the premises under a perfectly valid but unrecorded deed. Her title must, therefore, prevail as against the plaintiff. It matters not, so far as Mrs. Brady is concerned, that the plaintiff in good faith advanced his money upon an apparently perfect record title of the defendant John E. Murphy. Nor is it of any consequence, so far as this question is concerned, whether the plaintiff was in fact ignorant of any right or claim of Mrs. Brady to the premises. It is enough that she was in possession under her deed and the contract of purchase, as that fact operated in law as notice to the plaintiff of all her rights.
  .
  It may be true, as has been argued by the plaintiff's counsel, that when a party takes a conveyance of property situated as this was, occupied by numerous tenants, it would be inconvenient and difficult for him to ascertain the rights or interests that are claimed by all or any of them. But this circumstance cannot change the rule. Actual possession of real estate is sufficient notice to a person proposing to take a mortgage on the property, and to all the world of the existence of any right which the person in possession is able to establish. [my emphasis] Governeur v. Lynch, 2 Paige, 300; Bank of Orleans v. Flagg, 3 Barb. 318; Moyer v. Hinman, 14 N. Y. 184; Tuttle v. Jackson, 6 Wend. 213; Trustees of Union College v. Wheeler, 61 N. Y. 88, 98; Cavalli v. Allen, 57 id. 517.)

(2) For a dissenting view from one in the title insurance industry, see Rifkin, Bernard M., Chicago Title Insurance Company, "Possession as Constructive Notice of Rights of Tenants:Arcane, Possibly Archaic" - last visited July 24, 2008. NewYorkBonaFidePurchaser

Investigative Report Seeks Answers In Alleged "Land Patent" Foreclosure Rescue Scheme

In San Diego, California, the KGTV Channel 10 I-Team reports:

• The I-Team has been looking for Larry Smith for quite some time. When we found him, he refused to talk to us. But we know this confidence man has no problem talking to his victims. There are hundreds of them in Southern California. Victims like Mili Alto, who attended a Smith sales presentation in downtown San Diego. Mili said, "According to him and everybody this was the solution."

• Smith's solution is land patents; he claims these patents would prevent homeowners from losing their homes through foreclosure.

***

• Land patents cannot help distressed homeowners, experts said. "It is a false claim," said Steve Robinson from the Economic Crimes Division of the District Attorneys office. "... a fiction that has been made up by people to justify separating folks from their hard earned money," Robinson said. "The one thread you will see in all these scams is the promise to solve the foreclosure problem by taking money up front."

For more, see I-Team Pursues Man Suspected In Land Patent Scheme (read story) (watch video).

California Class Action Alleges City Intimidation, Harassment Of Section 8 Minorities

In Antioch, California, The National Law Journal reports:

• The mortgage crisis has spawned an unusual federal class action by African-Americans in Antioch, Calif., a San Francisco suburb, alleging city intimidation and harassment of minorities who rent homes using federally subsidized Section 8 housing vouchers in an effort to force them out of the area.

***

• The real estate foreclosure crisis hit Antioch hard. In response, landlords and homeowners turned to renting homes to pay mortgages, often renting to tenants using federal rent subsidy vouchers, known as Section 8, according to [Brad] Seligman, [of The Impact Fund, a public interest law firm in Emeryville, Calif.].

• By 2006, the inability of homeowners to sell homes allowed Section 8 participants to use their benefits to move out of urban centers to the suburb 40 miles west of San Francisco and to larger homes that might otherwise sit vacant, according to the suit.

***

• The suit, brought by five African-American women who rent homes using Section 8 vouchers, alleges that the city and police focused attention on people renting homes using the vouchers. The women say police looking for Section 8 violations subjected residents to warrantless searches of their homes. Police allegedly made threats to landlords who continued to accept the vouchers and they also allegedly intimidated renters with potential loss of benefits.

For more, see Mortgage Crisis Spawns Class Action Alleging Harassment of Minorities.

To view the lawsuit, see Williams v. City of Antioch, No. C08-2301BZ (N.D. Calif.).

See also:

• San Francisco Chronicle: Blacks' suit accuses Antioch of discrimination,
• The Impact Fund: Press Release.

Go here for other posts on alleged race bias in real estate transactions. race bias predatory lending

Another Brooklyn Trial Judge & His Aversion To Sloppy Paperwork From Foreclosing Mortgage Lenders

In a recent article in the National Law Journal, Brooklyn Supreme Court Justice Jack Battaglia, in connection with his approach to the apparent sloppy paperwork being filed by foreclosing lenders and their attorneys (and not unlike the approach taken by his colleague on the Brooklyn bench, Justice Arthur Schack), was described as expressing concerns over shortcuts being taken by them in their filings with the court. A review of three of his cases in which he denied foreclosure (with leave to renew in conformity with his decision) reveals a number of the problems Justice Battaglia found and that is apparently the cause for his concern:

1. resorting to the improper use of "nail & mail" method of service of process without first exercising due diligence in determining Defendants' whereabouts; no indication that the process server made any “effort to determine defendants' business address in order to attempt personal service there at pursuant to CPLR 308(2) before resorting to ‘nail and mail’ service - mortgagee would be expected to have a business address for its mortgagor;
2. Affirmation of Merit and Amount Due was executed and notarized in outside New York State and not accompanied by a certificate of conformity;
3. the submission to the court included numerous documents that purportedly support the relief sought, but many of the documents are not identified by anyone with personal knowledge, and are not authenticated or otherwise rendered admissible as evidence - they are not incorporated in any affidavit or affirmation;
4. no proof of service of the notice of default;
5. non-military affidavits were based upon information obtained from an underage person,
6. affidavit executed by a person who is not an officer or employee of either Plaintiff or the original mortgagee, and who was, therefore, not qualified to testify as to the material facts upon which the action must proceed, particularly since the assignment purportedly giving
   Plaintiff ownership of the note and mortgage was not executed until after commencement of the action;
7. court noted that a Limited Power of Attorney held by the alleged plaintiff did not confer testimonial competence;
8. no explanation for attempted service of Defendants at one location when the default letter was addressed to a different location,
9. notice of default from company who is neither the lender or mortgagee;
10. notice of default failed to identify the lender, the date of the note and mortgage, or even the property;
11. non-military affidavit executed as part of the affidavit of service of the summons and complaint was premature;
12. no evidence of compliance with the additional-mailing requirement of CPLR 3215(g)(3)(i);
13. in one case, the assignor under the Assignment of Mortgage was Mortgage Electronic Registration Systems, Inc., but there is no evidence of the assignor's ownership of the
    note and mortgage, or its right or power to make the assignment;
14. Affidavit of Merit made by an “attorney in fact” who does not assert personal knowledge or facts from which personal knowledge might be inferred.

For more on the three cases, see:

1. New Century Mortgage Corporation v Trench, 03/28/2007, 2007 NYSlipOp 30653(U);
2. US Bank National Association v Lockridge, 11/27/2007, 2007 NYSlipOp 33886(U);
3. Wall Street Mortgage v Lorence, 03/19/2007, 2007 NYSlipOp 30224(U).

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here, and Go Here. missing mortgage foreclosure docs gamma

Brooklyn Trial Judge Nixes "Rubber Stamp Method" Of Adjudicating Foreclosures

In a recent article in the National Law Journal, Brooklyn Supreme Court Justice Arthur M. Schack, in connection with his approach to the apparent sloppy paperwork being filed by foreclosing lenders and their attorneys, was quoted as follows:

• "I deny more foreclosures than I approve," [...]. "I want to see the servicing agent's power of attorney, I want to see all the paperwork before I approve it. If the paperwork is garbage, I deny it. If you're going to take away someone's home, it should be done properly."

After a review of some of his foreclosure cases, it appears that he wasn't kidding. Certainly, he has opted against using the ever-popular "rubber stamp method" of adjudicating foreclosures that many of his judicial colleagues around the country have found so handy when in a hurry to clear their respective caseloads. Further, in most of the cases listed below, the homeowner facing foreclosure either was not represented by an attorney, or didn't bother to show up to court at all. Inspite of this, Justice Schack took out his fine tooth comb anyway, went through all the documents, and asked a lot of questions that the lenders were going to have a tough time answering.

Among the issues Justice Schack points to in some of his decisions when denying a foreclosure because the alleged plaintiff did not have legal standing to file the action are:

• Defective powers of attorney, faulty affidavits, failure to file pooling and servicing agreements with the court, conflicts of interest of individuals signing assignments, affidavits, etc. as officers for various mortgage companies, defective verified complaint, assignments of the mortgages being foreclosed subsequent to the commencement of the foreclosure action, and no evidence of alleged assignments.

He has also shown no reluctance in admonishing lenders' attorneys by giving terse warnings of sanctions for filing actions that may be frivolous, in that, by filing foreclosure actions for companies that lacked standing to sue, the actions appear to be a waste of judicial resources, typically discussing the Part 130 Rules of New York law, which give the courts a remedy to deal with frivolous conduct.

In rendering these decisions, he gives this reminder to the lenders and their attorneys of the requirement that if they don't have legal standing to sue, they have no business bringing the foreclosure actions:

• The Court of Appeals, in Saratoga County Chamber of Commerce, Inc. v Pataki, 100 NY2d 801, 812 (2003), cert denied 540 US 1017 (2003), declared 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. The plaintiff who has standing, however, may cross the threshold and seek judicial redress." Professor David Siegel, in NY Prac, § 136, at 232 [4th ed] instructs that:


• [i]t is the law's policy to allow only an aggrieved person to bring a lawsuit . . . A want of "standing to sue," in other words, is just another way of saying that this particular plaintiff is not involved in a genuine controversy, and a simple syllogism takes us from there to a "jurisdictional" dismissal: (1) the courts have jurisdiction only over controversies; (2) a plaintiff found to lack "standing" is not involved in a controversy; and (3) the courts therefore have no jurisdiction of the case when such a plaintiff purports to bring it."(1)

Ameriquest Mtge. Co. v Basevich, 6/26/2007, 16 Misc 3d 1104(A), 2007 NYSlipOp 51262(U), among other cases.

The following is a compilation of links of some of Justice Schack's decisions over the last year and a half or so in which he has denied foreclosure because of the questionable and/or faulty paperwork submitted in a foreclosure action that led him to the conclusion that the alleged plaintiffs in the following foreclosure actions did not have legal standing to bring suit:

1. American Brokers Conduit v Zamalloa, 9/11/2007, 2007 NYSlipOp 32806(U);


2. Ameriquest Mtge. Co. v Basevich, 6/26/2007, 16 Misc 3d 1104(A), 2007 NYSlipOp 51262(U);


3. Aurora Loan Servs., LLC v Sattar, 10/09/2007, 17 Misc 3d 1109(A),
   2007 NYSlipOp 51895(U);


4. Bank of New York v Mulligan, 6/03/2008, 2008 NYSlipOp 31501(U);


5. Bank of New York v Orosco, 11/19/2007, 2007 NYSlipOp 33818(U);


6. Countywide Home Loans, Inc. for the Benefit of DB Structured Products, Inc. v Persaud, 01/15/2008, 2008 NYSlipOp 30076(U);


7. Deutsche Bank Natl. Trust Co. v Castellanos, 5/11/2007, 15 Misc 3d 1134 (A), 2007 NYSlipOp 50978(U);


8. Deutsche Bank Natl. Trust Co. v Castellanos, 1/14/2008, 18 Misc 3d 1115(A), 2008 NYSlipOp 50033(U);


9. Deutsche Bank Natl. Trust Co. v Clouden, 9/18/2007, 16 Misc 3d 1140(A), 2007 NYSlipOp 51767(U);


10. Deutsche Bank Natl. Trust Co. v Maraj, 1/31/2008, 18 Misc 3d 1123(A), 2008 NYSlipOp 50176(U);


11. EMC Mtge. Corp. v Batista, 6/05/2007, 15 Misc 3d 1143(A), 2007 NYSlipOp 51133(U);


12. Fremont Inv. & Loan v McBean, 11/26/2007, 17 Misc 3d 1132(A), 2007 NYSlipOp 52229(U);


13. GE Capital Mtge. Servs., Inc. v Powell, 11/13/2007, 18 Misc 3d 228, 2007 NYSlipOp 27463;


14. HSBC Bank USA v Perboo, 7/11/2008, 2008 NYSlipOp 51385(U);


15. HSBC Bank USA, N.A. v Betts, 4/23/2008, 2008 NYSlipOp 31170(U);


16. HSBC Bank USA, N.A. v Charlevagne, 11/15/2007, 2007 NYSlipOp 33673(U);


17. HSBC Bank USA, N.A. v Cherry, 12/17/2007, 18 Misc 3d 1102(A), 2007 NYSlipOp 52378(U);


18. HSBC Bank USA, N.A. v Valentin, 1/30/2008, 18 Misc 3d 1123(A), 2008 NYSlipOp 50164(U);


19. HSBC Bank USA, N.A. v Yeasmin, 5/02/2008, 2008 NYSlipOp 50924(U);


20. NYCTL 2006-A Trust v Kin Kan Wong, 1/09/2008, 2008 NYSlipOp 30037(U);


21. NYCTL-1 Trust v Cruz, 6/07/2007, 15 Misc 3d 1144(A), 2007 NYSlipOp 51144(U);


22. NetBank v Vaughan, 6/13/2007, 15 Misc 3d 1147(A), 2007 NYSlipOp 51197(U);


23. Nomura Credit & Capital, Inc. v Washington, 4/30/2008, 2008 NYSlipOp 50883(U);


24. Perla v Real Prop. Solutions Corp., 4/28/2008, 2008 NYSlipOp 50846(U);


25. U.S. Bank National Association v Maynard, 11/26/2007, 2007 NYSlipOp 33766(U);


26. U.S. Bank National Association, Trustee v Grant, 11/09/2007, 2007 NYSlipOp 33631(U);


27. U.S. Bank Natl. Assn. v Bernard, 2/14/2008, 18 Misc 3d 1130(A), 2008 NYSlipOp 50247(U);


28. U.S. Bank v Videjus, 4/29/2008, 2008 NYSlipOp 50851(U);


29. Wells Fargo Bank, N.A. v Farmer, 2/04/2008, 18 Misc 3d 1124(A); 2008 NYSlipOp 50199(U);


30. Wells Fargo Bank, N.A. v Farmer, 6/05/2008, 2008 NYSlipOp 51133(U);


31. Wells Fargo Bank, N.A. v Guy, 5/01/2008, 2008 NYSlipOp 50916(U);


32. Wells Fargo Bank, Natl. Assn. v Reyes, 6/19/2008, 2008 NYSlipOp 51211(U).

(1) If a court grants a foreclosure judgment in a case where it is subsequently determined that the plaintiff mortgage lender lacked standing (and accordingly, the court lacked jurisdiction over the case), does this mean that the foreclosure judgment is void? If so, does this mean that everything devolving from that judgment (ie. the subsequent foreclosure sale) is also void? Can anyone imagine the mess that may currently exist with real estate titles around the country that have a recent foreclosure in its chain of title where the mortgage lenders and their attorneys were as sloppy as those described in the list of cases? I can only imagine that this is an issue that title insurance underwriters and agents don't want anyone thinking about.