JUDGE MARGERET MANN (SO. CA BKR) PLUNGES INTO DETAILS AND COMES UP WITH WELL-REASONED DECISION

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AURORA LOAN SERVICES LLC, SCME MORTGAGE BANKERS INC, ING BANK FSB, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS ALL BITE THE DUST, SUBJECT TO LIABILITY AND NO ABILITY TO FORECLOSE WITHOUT COMPLYING WITH LAW.

Salient points of Judge Mann’s Decision:

  1. TRUTH IN LENDING  was dismissed because they were time-barred. LESSON: Don’t ignore TILA claims or TILA audits. Get a forensic Analysis as early as possible, assert them immediately, assert rescission as soon as possible. TILA has teeth, but if you assert it late in the game.
  2. YOU CAN’T FORECLOSE ON UNRECORDED INSTRUMENTS: Judge Mann came right out and said the California Supreme Court would not and could not decide otherwise. Any other holding would defeat the purpose of recording and create uncertainty in the marketplace. This will cause a lot of grief to pretenders. It is getting harder for them to come up with people who are willing to lie, forge or fabricate documents. Getting a notary to affix their signature and seal will soon be a thing of the past unless the signature, the person and the document is real.
  3. THE ASSUMPTION THAT THE LOAN IS IN DEFAULT IS STILL A PROBLEM: As long as lawyers and pro se litigants are willing to concede that the obligation was in default, they are giving up their largest chip — i.e., that the loan was not in default and the loan was not subject to a perfected lien for the same reason that the court cites in its opinion. Our loan level analysis shows repeatedly that in most cases the servicer is continuing to make payments and reporting to investors that the loan is performing even as they send delinquency letter’s notices of default and notices of sales. The Court missed this point because nobody brought it up. Don’t expect the Court to do your work for you. If you have reason to believe that the servicer is still paying on your loan you should be stating that the loan is not in de fault, denying any delinquency to the creditor and objecting to any action that is based upon the premise of “default.” Note that if the servicer is paying your bills, the servicer MIGHT have a right of action against you, but it certainly isn’t under the terms of the note or mortgage.
  4. THE ASSUMPTION THAT A VALID PERFECTED MORTGAGE LIEN EXISTS IS STILL A PROBLEM: Again, the problem is not with the Courts but with the lawyers and pro se litigants who simply assume that this is not an issue. Put yourself in the banks’ shoes. If all you had were nominees for undisclosed principals on the note and mortgage would you be OK with that? No? Then the lien was never perfected, which means for legal purposes it doesn’t exist. Just because it shows in black and white doesn’t make it true. LESSON: Deny the lien exists, deny it was perfected and make them prove how it was perfected. They can’t. In most cases neither the mortgage originator nor the nominee beneficiary (MERS) had a disclosed lender or beneficiary, nor did they incorporate the real terms of  the payment to the investor/lenders. If this was a law school exam and the student wrote that the loan was perfected, the grade would be “F”.
  5. THE ISSUE OF FEDERAL PREEMPTION AND THEREFORE JURISDICTION AND VENUE ARE STILL IN FLUX: This Judge found that federal preemption prevents the homeowner from alleging TILA as state claims. The courts are not decided on this and the issue of res judicata and Rooker -Feldman will come into play once the issue is really resolved with finality. Beware then how you assert a claim and that you don’t let the statute of limitations run out by failing to assert the right claim under TILA in the right court. better to get dismissed than to find out that you are time-barred.
  6. WRONGFUL FORECLOSURE IS A TITLE ISSUE NOT A FAIRNESS OR TECHNICAL ISSUE: Judge Mann, correctly in my opinion, states that an assignment from MERS must be allowed in order to clear up title. But, she states that without recording an interest within the chain of title, you have no right to foreclose under the states recording laws. I think this is right, and I think it applies in all 50 states. LESSON: Plead your wrongful foreclosure, slander of title and quiet title cases as title cases and stop adding extra things that you think may them juicier. Either the title is right or it is wrong. There is no middle ground.
  7. MERS ISSUE IS STILL OBSCURE: While the assignment from MERS, if recorded clears up one part it leaves another part undecided again because it wasn’t raised properly. There is a difference between “bare record title” and an “interest in the land.” The MERS assignment is like a quit-claim deed from someone without any interest in the land and used to clear up the chain of title on paper, but it does not convey any interest. MERS on its website and in the public domain specifically disclaims any interest in the obligation, note or mortgage. That is its selling point to members who use its “Service.” And that is why it can’t foreclose and it is subject to cease and desist orders from regulators. As with other affidavits or quit-claims to clear up apparent clouds on title, the recorded assignment or quitclaim does nothing to convey a larger interest than that possessed by the grantor. LESSON: If the pretenders want to foreclose they can’t rely on the MERS assignment. They must file a credible affidavit that states that the affiant was the undisclosed principal in the original transaction with the borrower and that it joins in or separately assigns the actual interest in the obligation, note or mortgage. In my opinion, this is the only way to perfect the original “lien.” Whether it will relate back to the original transaction is an issue the courts must decide.
  8. NO DIFFERENCE BETWEEN A DEED OF TRUST AND A MORTGAGE: Pretenders who try to elevate a deed of trust above a mortgage are headed for a brick wall. Courts never liked non-judicial foreclosure in the first place. They are not about to to reverse centuries of law and provide higher status to a non-judicial foreclosure or the instruments that allow it. ONLY the statutes that provide for extra care on the part of the trustee are constitutional, since due process is the only way anyone in this country can be deprived of life, liberty or property. LESSON: Pound on the issue that the pretender cannot prevail in a judicial foreclosure so they are trying to get away with it in a non-judicial foreclosure. If you want to see how this will eventually unfold, look at Florida and other states that had similar issues in their “Contracts for deed.” Despite clear contractual language the courts have universally held they are mortgages and that they must be foreclosed as mortgages.

Signors in Fabricated Documentation reported

This is an example of the information I am requesting that everyone send in so we can pool information. I am entering the names and parties in key words so you can search for them. My goal with HERS is to have an ever increasing database that will speed the research for forensic analysts and lawyers.

The following six orders by Judge Arthur M. SCHACK, of King, should be of interest:

American Brokers Conduit v ZAMALLOA, Judge Arthur M. SCHACK, Kings, Index No. 07206/2007 (11 Sep 2007)
In American Brokers Conduit v ZAMALLOA, on September 11, 2007, Judge SCHACK denied an application for a judgemnt of foreclosure and sale of a Kings County property without prejudice due to the plaintiff’s lack of standing.  The plaintiff American Brokers Conduit instituted suit on February 28, 2007, but did not receive an interest in the mortgage which is subject of the suit until a March 5, 2007 assignment (CFRN 2007000169450).  This case is a little bizarre in that American Brokers Conduit seems to have assigned the mortgage to ITSELF at a different address in Melville, New York.  The case does have a good discussion of the case authority requiring a plaintiff to have standing.
American Brokers Conduit v ZAMALLOA, Judge Arthur M. SCHACK, Kings, Index No. 07206/2007 (28 Jan 2008)
In American Brokers Conduit v ZAMALLOA, on January 28, 2008, Judge SCHACK denied an application for an order of reference due to the plaintiff’s failure to include an affidavit of merit by the party.  Rahter than having an officer of American Brokers Conduit execute the affidavit of merit, the plaintiff submitted an affidavit of merit excuted by a Robert HARDMAN, who identified himself as Vice President of Mortgage Electronic Registration Systems, Inc. (MERS).
Aurora Loan Services, LLC v SATTAR, Judge Arthur M. SCHACK, Kings, Index No. 15208/2007 (09 Oct 2007)
In Aurora Loan Services, LLC v SATTAR, Judge SHACK denied an application for an order for service by publication and dismissed the complaint by Aurora Loan Services, LLC, due to the plaintiff’s lack of standing.  The plaintiff pled a promissory note and mortgage iin which the promissory note was in favor of First Magnus Financial Corporation and the mortgage was recorded in favor of MERS.  Judge SCHACK notes that there is no evidence whatsoever within the record that the mortgage was assigned in favor of the plaintiff and notes that no such mortgage assignemnt was either pled or recorded.  Judge SCHACK goes on to note that First Magnus Financial Corporation had gone out of business in AUgust 2007 and filed for bankruptcy on August 21, 2007.  The opinion then contains a thorough discussion of the case authority requiring a plaintiff to have demonstrable standing in order to be eligible to maintian a suit.  In addition to dismissing the suit, Judge SCHACK also cancelled the notice of pendency.  Judge SCHACK also found the original complaint and suit to be frivolous, but declined to impose sanctions upon the law firm filing the suit because it was the first instance that the Court had noted such conduct.
Bank of NY NA v OROSCO, Judge Arthur M. SCHACK, Kings, Index No. 32052/2007 (19 Nov 2007)
In Bank of NY NA v OROSCO, Judge SCHACK denied an application for an order of reference due to the plaintiff’s failure to demonstrate ownership of the mortgage for the subject property.  The plaintiff pled an assignment from MERS to Bank of New York dated August 21, 2007, but Judge SCHACK noted that this assignment had never been recorded.  But Judge SCHACK went on to note that Bank of New York also pled an affidavit executed by a person who is identified as Keri SELMAN.  Judge SCHACK notes that while in her affidavit in the OROSCO case she identified herself as an Assistant Vice President for Bank of New York, in another case before Judge SCHACK Keri SELMAN had signed an affidavit identifying herself as a Vice President of “Countrywide Home Loans, Attorney in Fact for Bank of New York”.  Judge SCHACK ordered that Ms. Keri SCHACK furnish an affidavit describing her employment history for the previous three years. [In point of fact, this would seem to be Keri or Kerri L. SELMAN (b 26 Aug 1969 – Los Angeles, CA), formerly Keri Lynn ATWOOD, of McKinney, Texas.  She seems likely to be an employee of Countrywide, which has a large servicing facility near where Ms. SELMAN lives.]
Deutsche Bank v CASTELLANOS, Judge Arthur M. SCHACK, Kings, Index No. 22375/2006 (11 May 2007)
In Deutsche Bank v CASTELLANOS, on May 11, 2007, Judge SCHACK denied an application for a judgment of foreclosure and sale due to the plaintiff’s lack of standing.  Judge SCHACK noted that the foreclosure was commenced in July 2006 by Deutsche Bank.  After obtaining an order of reference (November 16, 2006) and after preparing an affirmation of regularity (January 10, 2007) and during the pendency of the action, Deutsche Bank seems to have assigned the mortgage to MTGLQ Investors, L.P. on January 19, 2007 (recorded February 7, 2007). Judge SCHACK therefore denied the plaintiff’s application for a judgment of foreclosure and sale without prejudice expressly inviting the Plaintiff to amend its pleadings to appropriately to correct the identity of the plaintiff. Judge SCHACK cites Gretchen Morgenson’s April 6, 2007, New York Times article “Fair Game; Home Loans: A Nightmare Grows Darker” in his opinion.
Deutsche Bank v CASTELLANOS, Judge Arthur M. SCHACK, Kings, Index No. 22375/2006 (14 Jan 2008)
In Deutsche Bank v CASTELLANOS, on May 11, 2007, Judge SCHACK denied a renewed application for a judgment of foreclosure and sale due to the plaintiff’s lack of standing (see case above).  He noted that the defects identified within his May 11, 2007, order remained unaddressed.  In addition, he noted the presence of a affidavit of merit executed by a Mr. Jeff RIVAS, who was identified as Deutsche Bank’s “Vice President Default Timeline Management”.  He then notes the presence of mortgage assignment within the files executed the same date which identifies Mr. Jeff RIVAS as the “Vice President Default Timeline Management” for Argent Mortgage Company, LLC, the assignor of a the mortgage to Deutsche Bank.  Judge SCHACK points out that if Mr. RIVAS was acting as an officer of both the grantor and the grantee of the assignment that this would create a conflict rendering the conveyance VOID.  Judge SCHACK then directs that Mr. RIVAS’ employment history be clarified in any future application for a foreclosure order.  Judge SCHACK then goes on to note that Deutsche Bank and MTGLQ Investors, L.P. are also shown to share the same address at 1661 Worthington lioad, Suite 100, West Palm Beach, where suspicious transactions executed by one Scott ANDERSON seem to be occuring.  Judge SCHACK then also demands an explanation as to WHY so many corporations seem to be sharing the SAME suite in West Palm Beach.

Judge Arthur M. SCHACK is a Justice of the Supreme Court of New York for King County. [See http://www.nycourtsystem.com/Applications/JudicialDirectory/Bio.php?ID=7029077 ]
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