How and Why to File Motion for Reconsideration or Rehearing

Once a trial has been conducted, there can never be another trial with the same parties disputing the same facts and issues. The only exception is a court order vacating the judgment AND ordering further proceedings to determine all or some of the facts.

The bottom line is that the rules permitting the filing of a motion for rehearing or motion for reconsideration — or even a motion to vacate — are not intended to allow a party to redo their closing argument. The fact that you disagree with the ruling is irrelevant. Case law strongly suggests a standard that is close to the rules used on appeal — clear error.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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see Hinrichsen wins on FDCPA Claim

The above link will take you to a Southern California case in Federal District Court. The issue was whether a party was a debt collector and thus subject to regulation or private suits as debt collector. In this case the trial court used the wrong standard thus entering summary judgment for the debt collector. On motion for reconsideration the same judge found he had made an error, probably created by poor presentation by the borrower. The Judge reversed himself and ordered the case to trial.

The fact that the borrower had not presented the issue well enough in the trial court at the hearing on Defendant ‘s Motion for Summary Judgment was insufficient for “finality” to bar further argument about it. Note that courts are much more likely to reverse themselves on motions for summary judgment than they are to reverse a final judgment after a trial on the merits.

Wilmington-Christiana Fail in Back-door Attempt to Have “Trust” Identified as the Owner of Debt, Note and Mortgage

If they had been successful the entire question of whether the Trustee could be named as the foreclosing party would have been off the table — if other courts followed suit. And the entire question of “debt purchasing” could never have been raised despite obvious flaws and defects in fabricated paperwork.

Get a consult! 202-838-6345
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Hat tip to Bill Paatalo and others
see below for case opinion Blackstone v Sharma v Marvastian, Maryland Special Appeals Court
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In their never ending quest to validate illegal acts, misrepresentation and fraud, the banks are throwing as much legal theory against the wall in hopes that some of it will stick. This one starts with the fact that “debt purchasers” are still “debt collectors” regardless of how they self-describe themselves.
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There has been a trend in which “debt purchasers” step in front of the pile off fabricated documents and then make the claim for foreclosure or enforcement of the debt. By calling themselves “debt purchasers” they once again are using self-serving descriptions that are designed to confuse homeowners, lawyers and the courts. The truth is that no debt, note or mortgage was purchased by anyone. If there had been a purchase the  foreclosing party would merely refer to EVIDENCE that they paid money for a “loan” that was “owned” by the preceding party. Instead they rely upon legal presumptions carried in fabricated documents.
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Despite there having been no movement of the debt by virtue of an actual purchase and sale they continue to call themselves “debt purchasers.” They are not and the implication that the debt was purchase thus morphs into we MUST have purchased it because we now “hold” the note and mortgage.
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This case highlights the issues with “substitution of trustees,” and fabricated transfer documents. It also provides guidance on the “substitution of plaintiffs” in non-judicial states. There is no difference.
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The Trustee on a deed of trust cannot be fired and replaced by anyone other than the ACTUAL beneficiary.
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The Plaintiff in a judicial foreclosure case cannot change unless the attorneys are wiling to amend their pleading to show how the fabricated documents were transferred from the old Plaintiff (which never owned the debt, note or mortgage) to the newly designated Plaintiff.
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Both reveal that the actual party in interest in the foreclosure is the subservicer and Master Servicer for a trust that doesn’t really exist and which does not own any assets, have any liabilities nor conduct any business.
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====================

KYLE BLACKSTONE, ET AL.,
v.
DINESH SHARMA, ET AL.
TERRANCE SHANAHAN, SUBSTITUTE. TRUSTEE, ET AL.,
v.
SEYED MARVASTIAN, ET AL.

Nos. 1524, 1525 Consolidated Case, September Term, 2015.

Court of Special Appeals of Maryland.

Filed: June 6, 2017.

Wright, Shaw Geter, Salmon, James P., (Senior Judge, Specially Assigned), JJ.

Opinion by SALMON, J.

This consolidated appeal originates from two foreclosure cases filed in the Circuit Court for Montgomery County. In both cases, substitute trustees (collectively, “appellants”) acting on behalf of Ventures Trust 2013-I-H-R (“Ventures Trust”), a statutory trust formed under the laws of the State of Delaware, filed orders to docket foreclosure suits against homeowners in the State of Maryland. The circuit court judges who considered the cases dismissed the actions, determining that pursuant to the Maryland Collection Agency Licensing Act (“MCALA”), codified at Maryland Code (1992, 2015 Repl. Vol.), Business Regulation Article (“B.R.”) § 7-101, et seq., Ventures Trust was required to be licensed as a collection agency and, because Ventures Trust had not obtained such a license, any judgment entered as a result of the foreclosure actions would be void. The dismissal of these foreclosure actions, without prejudice, presents us with two questions:

1. Under the MCALA, does a party who authorizes a trustee to initiate a foreclosure action need to be licensed as a collection agency before filing suit?

2. If the answer to question one is in the affirmative, does the licensing requirement apply to foreign statutory trusts such as Ventures Trust?

We shall answer “yes” to both questions and affirm the judgments entered by the Circuit Court for Montgomery County.

BACKGROUND

Appeal No. 1524

On August 4, 2006, Dinesh Sharma, Santosh Sharma, and Ruchi Sharma[1](collectively “the Sharmas”) executed a deed of trust that encumbered real property in Potomac, Maryland, in order to secure a $1,920,000 loan. Washington Mutual Bank, FA was the lender. The Sharmas, in December 2007, defaulted on the loan by failing to make payments when due.

Ventures Trust, by its trustee MCM Capital Partners, LLC (“MCM Capital”), acquired ownership and “all beneficial interest” of the loan on October 9, 2013. The substitute trustees[2] appointed by Ventures Trust filed an order to docket, initiating the foreclosure action, on November 25, 2014. The Sharmas owed $3,008,536.23 on the loan as of November 25, 2014.

The Sharmas responded to the foreclosure action by filing a counterclaim which was later severed by order of the circuit court. They also filed a motion to dismiss or enjoin the foreclosure sale pursuant to Md. Rule 14-211.[3] The substitute trustees moved to strike the Sharmas’ motion, which the court granted on May 7, 2015. The Sharmas filed a motion to alter or amend the May 7th order. On June 22, 2015 the court vacated its May 7th order, denied the substitute trustees’ motion to strike the Sharmas’ motion to dismiss, and set a hearing date for arguments concerning the motion to dismiss.

Following a hearing, the court, on August 28, 2015, issued an opinion and order granting the motion to dismiss the foreclosure action without prejudice. In its written opinion the circuit court determined that, pursuant to the MCALA, Ventures Trust was a collection agency and was therefore required to be licensed before attempting to collect on the deed of trust. The circuit court ruled that because Ventures Trust was not licensed as a collection agency, it had no right to file a foreclosure action. In its written opinion, the court also rejected Ventures Trust’s contention that it was a “trust company” and was therefore exempt from MCALA’s licensure requirements. The substitute trustees noted a timely appeal.

Appeal No. 1525

On June 23, 2006, Seyed and Sima Marvastian executed a deed of trust on property in Bethesda, Maryland in order to secure a $1,396,500 loan. Premier Mortgage Funding, Inc. was the lender. The Marvastians defaulted on the loan by failing to make payments when due in December 2012.

Ventures Trust by its trustee MCM Capital acquired the Marvastians’ loan in February 2014. On October 20, 2014, the substitute trustees filed an order to docket, initiating the foreclosure process. At the time of filing, the substitute trustees alleged that the Marvastians owed $1,632,303.26 on the loan.

The Marvastians responded by filing a counterclaim, which was severed by order of the circuit court. They also filed a motion to dismiss or stay the foreclosure sale pursuant to Md. Rule 14-211. Following extensive briefing and a hearing, the court granted the Marvastians’ motion to dismiss, albeit without prejudice. The judge’s reasons for dismissing the case were exactly the same as those given for dismissing the foreclosure case that is the subject of Appeal No. 1524.

I.

STANDARD OF REVIEW

[B]efore a foreclosure sale takes place, the defaulting borrower may file a motion to stay the sale of the property and dismiss the foreclosure action. In other words, the borrower, may petition the court for injunctive relief, challenging the validity of the lien or . . . the right of the [lender] to foreclose in the pending action. The grant or denial of injunctive relief in a property foreclosure action lies generally within the sound discretion of the trial court. Accordingly, we review the circuit court’s denial of a foreclosure injunction for an abuse of discretion. We review the trial court’s legal conclusions de novo.

Hobby v. Burson, 222 Md. App. 1, 8 (2015) (internal citations and quotation marks omitted). See also Svrcek v. Rosenberg, 203 Md. App. 705, 720 (2012). In the two cases that are the subject of this appeal, the trial judges based their rulings on their legal conclusions. Thus we review those conclusions de novo.

II.

In Finch v. LVNV Funding, LLC, 212 Md. App. 748, 758-64 (2013) we stated that without a license, a collection agency has no authority to file suit against the debtor. Accordingly, a “judgment entered in favor of an unlicensed debt collector constitutes a void judgment[.]” Id. at 764. See also Old Republic Insurance v. Gordon, 228 Md. App. 1, 12-13 (2016) (footnote omitted).

Maryland Code B.R. § 7-101(c) defines a collection agency as follows:

“Collection agency” means a person who engages directly or indirectly in the business of:

(1)(i) collecting for, or soliciting from another, a consumer claim; or

(ii) collecting a consumer claim the person owns, if the claim was in default when the person acquired it;

(2) collecting a consumer claim the person owns, using a name or other artifice that indicates that another party is attempting to collect the consumer claim;

(3) giving, selling, attempting to give or sell to another, or using, for collection of a consumer claim, a series or system of forms or letters that indicates directly or indirectly that a person other than the owner is asserting the consumer claim; or

(4) employing the services of an individual or business to solicit or sell a collection system to be used for collection of a consumer claim.

(Emphasis added.)

As used in the Business Regulations Article, “person” means “an individual . . . trustee . . . fiduciary, representative of any kind, partnership, firm, association, corporation, or other entity.” B.R. § 1-101(g). B.R. 7-101(e) defines a “consumer claim” as meaning a “claim that: 1) is for money owed or said to be owed by a resident of the State; and 2) arises from a transaction in which, for a family, household, or personal purpose, the resident sought or got credit, money, personal property, real property, or services.”

Before the law was amended in 2007, MCALA applied only to businesses that collected debts owed to another person. Old Republic, 228 Md. App. at 16. In 2007, the statute was broadened to include persons who engage in the business of “collecting a consumer claim the person owns, if the claim was in default when the person acquired it[.]” B.R. § 7-101(c)(1)(ii).

The legislative history of the 2007 amendment, insofar as here pertinent, was set forth in Old Republic as follows:

[T]he legislative history makes clear that the General Assembly enacted the 2007 amendments to regulate “debt purchasers,” who were exploiting a loophole in the law to bypass the MCALA’s licensing requirements.

The Senate Finance Committee Report on House Bill 1324 explained:

House Bill 1324 extends the purview of the State Collection Agency Licensing Board to include persons who collect consumer claims acquired when the claims were in default. These persons are known as “debt purchasers” since they purchase delinquent consumer debt resulting from credit card transactions and other bills; these persons then own the debt and seek to collect from consumers like other collection agencies who act on behalf of original creditors.

Charles T. Turnbaugh, Commissioner of Financial Regulation and Chairman of the Maryland Collection Agency Licensing Board offered the following testimony:

[T]he evolution of the debt collection industry has created a “loophole” used by some entities as a means to circumvent current State collection agency laws. Entities, such as “debt purchasers” who enter into purchase agreements to collect delinquent consumer debt rather than acting as an agent for the original creditor, currently collect consumer debt in the State without complying with any licensing or bonding requirement. The federal government has recognized and defined debt purchasers as collection agencies, and requires that these entities fully comply with the Federal Fair Debt Collection Practices Act.

This legislation would include debt purchases within the definition of “collection agency,” and require them to be licensed by the Board before they may collect consumer claims in this State. Other businesses that are collecting their own debt continue to be excluded from this law.

Susan Hayes, a member of the Maryland Collection Agency Licensing Board, submitted the following in support of the bill:

The traditional method of dealing with distressed accounts has been for creditors to assign these accounts to a collection agency. These agencies, operating under a contingency fee arrangement with the creditor, keep a portion of the amount recovered and return the balance to the creditor. Today, a different option is available — selling accounts receivables to a third party debt collector at a discount.

* * *

HB 1324 closes a loophole in licensing of debt collectors under Maryland law. Just because a professional collector of defaulted debt “purchases” the debt, frequently on a contingent fee basis, should not exclude them from the licensing requirements of Maryland law concerning debt collectors.

Id. at 19-20.

Ventures Trust is in the business of buying from banks, at a discount, mortgages and deeds of trust that are in default. In the cases here at issue, there is no dispute that: 1) when Ventures Trust purchased the loans in question, the loans were in default; and 2) Ventures Trust, by filing (through its agents — the trustees) the foreclosure actions it was attempting to collect “consumer debt.”

As we said in Old Republic, the legislative history of the 2007 amendments to the MCALA make it “clear that the General Assembly had a specific purpose in mind in adopting the 2007 amendments, i.e., including [under the Act] debt purchasers, people who purchased defaulted accounts receivable at a discount, within the purview of MCALA.” Id. at 21. Money owed on a note secured by a deed of trust or a mortgage certainly qualifies as an account receivable. And Ventures Trust is in the business of buying up defaulted mortgages or deeds of trust and instituting foreclosure actions to obtain payment.

Appellants contend that the MCALA does not require a party to be licensed as a collection agency in order to file a foreclosure action. They support that contention with the following argument:

Foreclosures are not mentioned [in B.R. § 7-101(c)], although the Legislature clearly knew how to do so if it had wished. There is no specific statement in the MCALA to the effect that “doing business” as a “collection agency” includes actions taken to enforce a security interest, such as foreclosing on a deed of trust, nor is there any specific statement that such actions would fall into the definition of “collecting” a consumer claim. Neither this Court nor the Court of Appeals has ever ruled that pursuing a foreclosure proceeding amounts to “doing business” in Maryland as a “collection agency” under the Act, and for good reason. As the Legislature has made clear in numerous statutes, a foreign entity — including a statutory trust such as Ventures Trust — pursuing foreclosure is not “doing business” in Maryland[.]

Appellants emphasize that Md. Code (2014 Repl. Vol.), Corporations and Associations Article § 12-902(a) requires any foreign statutory trust doing business in Maryland to register with the State Department of Assessments and Taxation (“SDAT”). Section 12-908(a)(5) provides, however, that “[f]oreclosing mortgages and deeds of trust on property in this State” is not considered “doing business.”

According to appellants, because of “the Legislature’s” express decision to make clear that a foreclosure proceeding brought by a foreign statutory trust is by definition, not doing business in Maryland, a foreign trust does not need to be licensed as a collection agency to file a Maryland foreclosure action. That argument would be strong were it not for the fact (relied upon by both circuit court judges who ruled against appellants below) that section 12-908(a) of the Corporations and Associations Article expressly states that the “doing business” exception granted to foreign trusts is “for the purposes of this subtitle[.]” In other words, the foreign trust exception does not apply to the MCALA.

It is true, as appellants point out, that no Maryland appellate court has ever held that a foreign trust needs a license under the MCALA to file a foreclosure action. But the matter has simply not been addressed by any Maryland appellate court.

Judge Ellen Hollander, in Ademiluyi v. PennyMac Mortgage Investment Trust Holdings I, LLC, et al., 929 F.Supp.2d 502, 520-24 (D. Md. 2013) did hold that a MCALA license was needed to bring a foreclosure action based on the allegations set forth in the complaint filed in that case. In Ademiluyi, the holder of the mortgage (PennyMac), filed a foreclosure action on a mortgage even though (it was alleged) that PennyMac purchased the mortgage after it was in default and did not have a debt collection license. Id. at 520. The issue in that case was whether, based on the allegations in the complaint, PennyMac needed a license prior to bringing a foreclosure action. Id.

After a lengthy discussion, Judge Hollander said:

I am persuaded that, even if actions pertinent to mortgage foreclosure are taken in connection with enforcement of a security interest in real property, such actions may constitute debt collection activity under the MCALA. Therefore, based on the facts alleged by plaintiff, PennyMac Holdings may qualify as a collection agency under the MCALA with respect to mortgage debt it seeks to collect, including through judicial foreclosure proceedings or other conduct pertinent to foreclosure.

Id. at 523.

Support for Judge Hollander’s conclusion can be found in a twenty-one page order, dated December 8, 2013, signed by Gordon M. Cooley, Chairperson of the Maryland State Collection Agency Licensing Board.[4] Mr. Cooley ordered several entities, including NPR Capital, LLC, to stop attempting to collect consumer debts by filing foreclosure actions. At page 17 of his order, the Acting Commissioner determined, inter alia, that NPR Capital violated the provisions of the MCALA (specifically B.R. § 7-401(a)) by attempting to collect a debt by filing a foreclosure action at a time when it was not licensed as a collection agency.

When interpreting the MCALA, the ruling by Commissioner Cooley is of consequence because, as the Court of Appeals recently said, it is well established that appellate courts “should ordinarily give `considerable weight’ to `an administrative agency’s interpretation and application of the statute'” it is charged with administering. Board of Liquor License Commissioners for Baltimore City v. Kougl, 451 Md. 507, 514 (2017), (quoting Maryland Aviation Administration v. Noland, 386 Md. 556, 572 (2005)). As can be seen, the Board that administers the MCALA statute is of the view that the MCALA covers persons who attempt to collect consumer debt by filing a foreclosure action.

In support of their position, appellants point out, accurately, that nowhere in the legislative history of the 2007 amendment to the MCALA, is there any mention of foreclosure actions. From this, appellants ask us to infer that the General Assembly did not intend that persons who purchase defaulted mortgages or deeds of trust and then file foreclosure actions needed to purchase a debt collection license. In our view, the absence of a specific reference in the legislative history is not dispositive because, insofar as the issue here presented is concerned, the MCALA is unambiguous.

With exceptions not here relevant except the one discussed in Part III, infra, “a person must have a license whenever the person does business as a collection agency in the State.” B.R. § 7-301(a). The definition of a “collection agency” has five elements. Old Republic, 228 Md. App. at 23 (Nazarian, J. dissenting). Those elements are:

“[a] a person who [b] engages directly or indirectly in the business of . . . collecting a [c] consumer claim the [d] person owns, [e] if the claim was in default when the person acquired it.” BR § 7-101(c)(ii).

Id.

Ventures Trust admits that it meets elements (a), (c), (d) and (e). It argues, however, that element (b) is not met because it does not “engage in the business of collecting” debt by filing foreclosure actions. Boiled down to its essence, appellants’ “not in the business” argument is based on the contention that the General Assembly intended to exempt from the MCALA persons who attempt to collect consumer debt by bringing foreclosure actions. We can find no such intent in the words of the statute or in anything in the Act’s legislative history. We therefore reject that contention and hold that unless some exception to the MCALA is applicable, the licensing requirements of the MCALA applies to persons who attempt to collect a consumer debt by bringing a foreclosure action.

III.

The MCALA states: “This title does not apply to . . . a trust company[.]” B.R. § 7-102(b)(8). The statute does not define “trust company.” See B.R. § 7-101. Appellants claim that even if the MCALA licensing requirement applies to a person who brings a foreclosure action in order to enforce a consumer debt, the MCALA does not apply to Ventures Trust because it is a “trust company.” Black’s Law Dictionary (10th ed. 2014) defines “trust company” as “[a] company that acts as a trustee for people and entities and that sometimes also operates as a commercial bank.” The appellants claim that Ventures Trust meets that definition because, purportedly, Ventures Trust “certainly holds and maintains trust property.”

We pause at this point to discuss what the record reveals about Ventures Trust. In appellants’ filing with the Montgomery County Circuit Court, appellants’ counsel stated that Ventures Trust is the holder of the notes at issue, and that it is a statutory trust formed in Delaware under 12 DEL. CODE § 3801(g). Ventures Trust has two trustees. They are MCM Capital and Wilmington Federal Savings Fund Society, FSB doing business as Christiana Trust. In Appeal No. 1525, counsel for the substitute trustees orally told the motions judge that Ventures Trust was “like an account at Christiana Bank” and that Christiana Trust was the trustee of Ventures Trust. That representation was also made by counsel for the substitute trustee in that case in a supplemental memorandum where it was said: “Ventures Trust. 2013-I-H-R…, is the holding of a Federal Savings Bank[,] which serves as its co-trustee….”

Using the Black’s Law Dictionary (10th edition) definition of “trust company” set forth above, Ventures Trust does not fit within that definition. It does not act as a bank. Moreover, other entities act as trustees for it. There is nothing in the record that shows that Ventures Trust acts as a trustee for anyone.

Appellants also suggest that we use the slightly different definition of “trust company” set forth in Black’s Law Dictionary (5th ed. 1979) because that edition of Black’s was published “around the time of the 1977 amendment” that exempted trust companies from the MCALA. Black’s 1979 definition of “trust company” was as follows: “a corporation formed for the purpose of taking, accepting, and executing all such trusts as may be lawfully committed to it, and acting as testamentary trustee, executor, guardian, etc.” There is no indication in the record that Ventures Trust is a corporation or, as already mentioned, that it acts as a trustee for anyone. Therefore, Ventures Trust does not meet that definition either.

The words “trust company” is defined in Md. Code (2011 Repl. Vol.), Financial Institutions Article (“Fin. Institutions”) § 3-101(g) as meaning “an institution that is incorporated under the laws of this State as a trust company.” But that definition only applies to matters set forth in the Fin. Institutions Article section 3-101(a). In Fin. Institutions §3-501(d), governing common trust funds, the term “trust companies” is defined as including a national banking association that has powers similar to those given to a trust company under the laws of “this State.” That definition, however, only applies to subtitle 5 of the Financial Institutions Article. Md. Code (2011 Repl. Vol.), Estates and Trusts Article§ 1-101(v) also contains a definition of “Trust Company” but it applies only to laws governing the “estates of decedents.” See Estates & Trusts Article § 1-101(a). Lastly, the term “statutory trust” is defined in Md. Code (2011 Repl. Vol.), Corporations and Associations Article § 12-101(h) as meaning: an unincorporated business, trust, or association:

(i) Formed by filing an initial certificate of trust under § 12-204 of this title; and

(ii) Governed by a governing instrument.

(2) “Statutory trust” includes a trust formed under this title on or before May 31, 2010, as a business trust, as the term business trust was then defined in this title.

Ventures Trust admits that it does not fit within any of the above definitions of “trust company” or “statutory trust.” Moreover, even if it did meet one or more of those definitions, there is no indication that the legislature, in 1977, when it exempted “trust companies” from the MCALA, intended those definitions to be used. As appellants concede, we are thus left with the general definition of “trust company” as set forth in Black’s Law Dictionary. See Ishola v. State, 404 Md. 155, 161 (2008)(Dictionary definitions help clarify the plain meaning of a statute.).

The circuit court judge who dismissed the foreclosure action that is the subject of Appeal 1524 reached the following legal conclusion with which we are in complete accord:

MCALA expressly limits the scope of its license requirement exemptions to those “… provided in this title….” Md. Code Ann., Bus. Reg. § 7-301(a) (emphasis added). MCALA does not explicitly exempt “foreign statutory trusts” that bring foreclosure actions from its licensing requirements. See Bus. Reg. § 7-102(b). In fact, the term “foreign statutory trust” never appears in MCALA. See Bus. Reg. § 7-101, et seq. Thus, the General Assembly expressed a clear intent to subject foreign statutory trusts that bring foreclosure actions in Maryland, like Ventures Trust, to MCALA’s licensing requirements.

CONCLUSION

A debt purchaser that attempts to collect a consumer debt by bringing a foreclosure action is required to have a license unless some statutory exemption applies. Contrary to appellants’ contention, Ventures Trust is not a “trust company” within the meaning of the MCALA and must therefore obtain a debt collection license in accordance with the provisions of the MCALA before bringing a foreclosure action. Because Ventures Trust had no such license, it was barred from filing, through its agents, the two foreclosure actions here at issue.

JUDGMENTS AFFIRMED; COSTS TO BE PAID BY APPELLANTS.

David Dayen: Gorsuch’s First Opinion: Let Debt Collectors Run Amok

Editor’s Note: Thanks to poster C. Anderson who says,
“This is a technically correct but bad decision, as Dayen shows. The statutory language desperately needs to be updated. Until then, consumers should be taught how to exercise proof of claim demands. A consumer has no contract with a debt buyer; an assigned debt for consideration is not a negotiable instrument (like a promissory note) for which a consumer is liable and on which a debt buyer can make a UCC claim (it’s just a piece of paper); the debt buyer should be made to prove injury through the consideration for any assignment (pennies on the dollar); and if the debt has been charged off by the original creditor who has received a tax benefit and insurance payoff, the debt is dead. Debt buyers should be threatened with fraud suit for attempted unjust enrichment and theft by deception.”

And poster Anonymous who reminds readers that, ”

Selling of a debt is an actionable claim. It is a settled position in law that buyer of an actionable claim cannot recover from the debtor more than what the buyer has paid, for acquisition of the debt as it otherwise lead to unjust enrichment.

Debt buyers are not entitled to recover anything more than what the debt buyer had paid to the original creditor. This is logic and meet to commonsense which is basis of law.”

Olivier Douliery/picture-alliance/dpa/AP Images

Associate Justice Neil Gorsuch

Justice Neil Gorsuch’s first Supreme Court opinion won’t earn much notice in his biographies. The unanimous decision reads more like a grammatical lesson, scrutinizing one line of text in a decades-old statute. But if you have ever been harassed in the middle of the night by a debt collector, or been threatened with tax liens or court summonses or even bodily harm, you should understand what Gorsuch and his fellow justices did on Monday: They gave some of the worst bottom-feeders in the economy a free pass to break the law.

The case, Henson v. Santander, looks pretty innocuous at first reading. But the Roberts Court’s deference to big business, and lack of experience about the real-world legislative implications of their legal debating club, turned this decision into a huge win for financial predators. It’s now up to Congress to fix what Gorsuch and friends broke. But with the current group in charge, don’t hold your breath.

Here’s what the case is about. Citi Financial Auto made a series of car loans, and then sold the defaulted debts to the Spanish bank Santander, which subsequently tried to collect. The plaintiffs allege that Santander violated the Fair Debt Collection Practices Act (FDCPA) of 1977 by harassing and intimidating the debtors. The FDCPA protects debtors from such practices, enabling them to file suit against the debt collector, with hefty fines for misconduct.

Santander argued that it bought the debts outright and wasn’t attempting to collect them on someone else’s behalf, as debt collectors regularly do. Therefore, it was exempt from the FDCPA. Two courts agreed with Santander, but the appeal went to the Supreme Court.

At this point we have to perform the drudgery of examining the FDCPA statutory text for how it defines “debt collector.” It’s a fairly targeted definition, with exemptions for government officials, process servers, nonprofit credit counselors, and originators of the debt. A “debt collector,” under the statute, means any business whose principal purpose is collecting debts, or a business that regularly collects “debts owed … another.”

This definition, written in 1977, predates the rise of the debt buyer. Since then, however, debt buying has become a multibillion-dollar industry whose participants purchase defaulted debt for pennies and harangue the debtors for the money.

The question raised by Gorsuch’s opinion is whether a debt buyer should be exempt from the main rule preventing abhorrent misconduct in this industry, just because it bought the debt outright instead of trying to collect as a third party.

According to the Supreme Court, yes. Gorsuch weirdly throws out the first part of the definition—about a business with the principal purpose of collecting debts—writing that “the parties haven’t much litigated that alternative definition” and the Court didn’t agree to address it. So the only dispute here is over the “debts owed … another” clause.

There then follows a long passage about the meaning of those three words—if you are interested in questions of past participles, give it a read—concluding that “a debt purchaser like Santander may indeed collect debts for its own account without triggering the statutory definition in dispute.”

Maybe that’s a reasonable position. But you should understand the consequences. Debt buyers, who to this point had at least some legal exposure to the FDCPA, are now exempt from it, under one definition of “debt collector.” That makes potential litigants reliant on the other definition—a business whose principal purpose is collecting debts. And some experts in this field believe this presents an opportunity for the buyer industry.

“It’s almost a road map to me on how you can avoid the FDCPA,” says noted consumer bankruptcy attorney Max Gardner, who runs a boot camp for lawyers fighting predatory lenders. As an international bank, for example, Santander could easily argue that its principal purpose is not debt collection, but originating loans. Other debt buyers could follow the “Santander defense.”

“The biggest debt buyer in the country is called Sherman Acquisitions,” Gardner says. “They own all sorts of subsidiaries. They also own two national banks. You can put two and two together.” Sherman could merely claim that the national banks it owns are the debt collectors, and that’s not their primary purpose. And if the courts agree, the nation’s largest debt buyer would be freed from following the FDCPA, and allowed to call and yell at you at three in the morning.

Sherman could have done that switcheroo before, but they still had to fear running afoul of the “debts owed … another” clause, which other courts had ruled as applicable to debt buyers. With Gorsuch and the Supremes waving that away, debt buyers are free to play all kinds of games to evade regulation. Debt buyers could acquire a community lender and assign it the task of debt collection. Or larger banks could bring a debt buying operation under their roof, as Santander has.

Bankruptcy attorneys seem more exercised by this decision than consumer attorneys, but everyone sees the potential for mischief. “Certain debt buyers by their corporate structure are going to be able to avoid this law,” says April Kuehnhoff, an attorney with the National Consumer Law Center. “Now consumers are not going to know whether this person calling them is covered or isn’t covered [by the act]. I think it raises a lot of difficulty in private enforcement.”

Kuehnhoff adds that Congress needs to get involved right away to fix this newly created hole, rather than wait and see how the industry adapts. Indeed, that was Justice Gorsuch’s conclusion as well, that Congress could merely update the statute by applying it to debt buyers to reflect the changing times. Max Gardner believes that’s a pipe dream with the current Congress. “That’s going to happen as soon as Trump reveals his tax returns,” he says.

Gorsuch’s was the second Supreme Court ruling benefiting debt buyers handed down in the last two weeks.

Gorsuch’s was the second Supreme Court ruling benefiting debt buyers handed down in the last two weeks. The other, Midland v. Johnson, allows a debt buyer to file a proof of claim in a bankruptcy case beyond the statute of limitations without violating the FDCPA. This creates an incentive for debt buyers to toss expired claims into any bankruptcy case without sanction. “You’re buying debt for five (hundredths of one percent), you don’t have to hit too many doubles to come up with a pretty good batting average,” says Gardner.

Decisions like those in these two cases happen when you have nine cloistered, Ivy League-educated career jurists on the Court, instead of someone with actual experience in the legislative arena or defending vulnerable people. A 2014 report found that 77 million Americans—more than one in three—have an outstanding debt in collections. Enormous numbers of people are going to have their lives worsened because of this unanimous ruling based on a narrow word construction.

The justices certainly could have clarified the status of debt buyers under the FDCPA using the statute’s entire definition. The Court has no problem expanding rulings when it comes to letting states opt out of expanded Medicaid or enabling unrestricted money in our elections. Only when it comes to people hounded by debts do they adhere so narrowly to the question before them. But businesses almost always get the benefit of the doubt at the Supreme Court in ways that ordinary Americans don’t.

Millions of people will be awakened in the night by an angry telemarketer screaming at them to pay up. I wish the first person to get such a call would be Neil Gorsuch.

Are Foreclosure Trustees Debt Collectors?

Such rulings from appellate courts undermine confidence in the judicial system for those who are victims of wrongdoing and reinforce the confidence and arrogance of those committing the wrongs that they will get away with it.

Get a consult! 202-838-6345
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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see 9th Circuit Foreclosure Trustee not a debt collector 10-56884

The entire “Substitution of Trustee” scheme is performed with two purposes only — (1) to record a self servicing document that will be considered facially valid establishing a “new” beneficiary and (2) the selection of an entity whose sole purpose is to facilitate foreclosure.

As a Trustee on a deed of trust it has obligations set forth in state statutes allowing the use of non-judicial foreclosure proceedings. The old beneficiary, frequently a title company, would follow the requirements of the statutes and common sense. The “new” one is “appointed” by a self-proclaimed beneficiary with instructions to foreclose. Hence the new trustee is obviously selected because of the likelihood that it will follow instructions from the self-proclaimed “successor” beneficiary and thus “establish” the validity of the new beneficiary and the data from the new beneficiary indicating the existence of a default. That is why it is described as “the foreclosure trustee.” The old one might require more information and documentation to establish the authenticity of the successor beneficiary.

The 9th Circuit here amending its prior opinion, rules out the foreclosure trustee as a debt collector because it is only selling collateral and not seeking recovery of money. Never mind the default letter that gives the amounts required for reinstatement or the redemption rights of any borrower. Playing right into the hands of the banks, the 9th Circuit has simply failed to deal with realities and instead has arrived at a result that this is as remote from the realities of today’s foreclosures as any Dickensian portrayal of the courts (see “Bleakhouse“).

The dissenting opinion from which I quote below sums up the weakness of this decision:

The suggestion in Hulse that a foreclosure proceeding is one in which “the lender is foreclosing its interest in the property” is flatly wrong. A foreclosure proceeding is one in which the interest of the debtor (and not the creditor) is foreclosed in a proceeding conducted by a trustee who holds title to the property and who then uses the proceeds to retire all or part of the debt owed by the borrower. See Cal. Civ. Code § 2931; Yvanova v. New Century Mortg. Corp., 365 P.3d 845, 850 (Cal. 2016). Any excess funds raised over the amount owed by the borrower (and costs associated with the foreclosure) are paid to the borrower. See Cal. Civ. Code § 2924k; see also Jesse Dukeminier & James E. Krier, Property 590 (2d ed. 1988). Thus, contrary to the holding in Hulse, “[t]here can be no serious doubt that the ultimate purpose of foreclosure is the payment of money.” Glazer, 704 F.3d at 463. Nor, because the FDCPA defines a “debt collector” as one who collects or attempts to collect, “directly or indirectly,” debts owed to another, 15 U.S.C. § 1692a(6), does it matter that the money collected at a foreclosure sale does not come directly from the debtor.

But even this fairly clear rendition of foreclosures recites “facts” that are in an alternate universe, to wit: that “the money collected at a foreclosure sale does not come directly from the debtor.” Where else did it come from? It came from the sale of the alleged debtor’s homestead which is property owned by the debtor and which can only be stopped by payment of the amount demanded or a lawsuit challenging the Substitution of Trustee, the status of the supposed successor beneficiary and the presence of a default between the homeowner, on the one hand, and the new beneficiary on the other hand. Either way the money comes from the debtor.

Add to that the obvious fact that Recontrust and other entities similarly situated are simply controlled entities of the large banks. In a word, they are appointing themselves as beneficiary and as successor trustee through the use of a sham entity that has no interest nor any power to act like a true trustee. The analytical issue appears to be that taken collectively, the Foreclosure Trustee, the self proclaimed successor beneficiary and the self proclaimed or appointed “servicer” are aiming for foreclosure under the guise of a quest for money.

Rescission Redo: 9th Circuit AGAIN Rules that Tender is Not Necessary

Judicial Arrogance and Intolerance Keeps leading back to the same point — that TILA Rescission is not common law rescission. Yet Judges continue to rule on TILA rescission as though it were common law rescission. Here again the 9th Circuit confirms what the Supreme Court of the United States has already said — neither tender nor lawsuit is required for rescission to be effective. Any other holding is directly contrary tot eh wording of the statute, which as a matter of law is clear and NOT subject to interpretation.

The second important part of this decision is that the Court may not lay down conditions or advice concerning the filing of an amended complaint. The corollary is that the fact that an amended complaint was filed without the rescission count does not prevent the homeowner from preserving the issue on appeal — if the lower court said don’t file it unless you plead and prove tender of money.

And the third implied issue is what Congress intended when they passed TILA and the rescission statute, to wit: The whole notion of “tender” is ridiculous in the face of the legal conclusion that the note and mortgage no longer exist (void) and the factual basis that the whole issue of identification fo the creditor may not subverted. Hence the question “Tender to whom?”

Lastly the issue of whether a Trustee is a debt collector appears to be answered in the affirmative. Yes they are and not just because of the reasons set forth in the decision (see concurring opinion). Creditors are not normally regarded as debt collectors. But there is a growing awareness that the REMIC trusts are empty; hence the trustee of the REMIC Trust cannot be anything but a debt a collector unless they can prove that they are indeed the creditor — i.e., the party to whom the debt is owed. Likewise the Trustee on a Deed of Trust MUST be a debt collector because by definition it is an intermediary seeking to collect money.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Hat tip to stopforeclosurefraud.com, whose article is republished in part.

The ruling upholds the ability to rescind despite ability to repay- Split court ruling of FDCPA applying to Trustee- dissenting judge vigorously argues that the FDCPA should apply to Trustee’s for all the right reasons. See below……

http://stopforeclosurefraud.com/2016/11/03/vien-phuong-ho-v-recontrust-company-n-a-et-a-9th-cir-holds-foreclosure-trustee-not-fdcpa-debt-collector/ 

Vien-Phuong Ho v. ReconTrust Company, N.A., et a | 9th Cir. Holds Foreclosure Trustee Not FDCPA ‘Debt Collector’

stopforeclosurefraud.com

Seeking damages under the FDCPA, the plaintiff alleged that the trustee of the deed of trust on her property sent her a notice of default and a notice of sale

I

The district court twice dismissed Ho’s TILA rescission claim without prejudice, and Ho didn’t replead it in her third complaint. We have held that claims dismissed without prejudice and not repleaded are not preserved for appeal; they are instead considered “voluntarily dismissed.” See Lacey v. Maricopa Cty., 693 F.3d 896, 928 (9th Cir. 2012). Here, however, the district court didn’t give Ho a free choice in whether to keep repleading the TILA rescission claim.

Rather, the court said that if Ho wished to replead the claim she “would be required to allege that she is prepared and able to pay back the amount of her purchase price less any downpayment

she contributed and any payments made since the time of her purchase.” The judge concluded that if Ho “is not able to make that allegation in good faith, she should not continue to maintain a TILA rescission claim.” It’s unclear whether the judge meant this as benevolent advice or a stern

command. But a reasonable litigant, particularly one proceeding pro se, could have construed this as a strict condition, one that might have precipitated the judge’s ire or even invited a sanction if disobeyed. Ho could not or would not commit to pay back the loan, and dropped the claim in her third complaint.

The district court based its condition on Yamamoto v. Bank of N.Y., which gave courts equitable discretion to “impose conditions on rescission that assure that the borrower meets her obligations once the creditor has performed its obligations.” 329 F.3d 1167, 1173 (9th Cir. 2003). But, after

the district court dismissed Ho’s claims, we held that a mortgagor need not allege the ability to repay the loan in order to state a rescission claim under TILA that can survive a motion to dismiss. Merritt v. Countrywide Fin. Corp., 759 F.3d 1023, 1032–33 (9th Cir. 2014). Ho argues that her rescission claims were properly preserved for appeal and should be reinstated.

Where, as here, the district court dismisses a claim and instructs the plaintiff not to refile the claim unless he includes certain additional allegations that the plaintiff is unable or unwilling to make, the dismissed claim is preserved for appeal even if not repleaded. A plaintiff is the master of his claim and shouldn’t have to choose between defying the district court and making allegations that he is unable or unwilling to bring into court.

This rule is a natural extension of our holding in Lacey. The Lacey rule—which displaced our circuit’s longstanding and notably harsh rule that all claims not repleaded in an amended complaint were considered waived—was motivated by two principal concerns: judicial economy and fairness to the parties. 693 F.3d at 925–28. Those concerns apply here. We see no point in forcing a plaintiff into a drawn-out contest of wills with the district court when, for whatever reason, the plaintiff chooses not to comply with a court-imposed condition for repleading. We remand to the district court for consideration of Ho’s TILA rescission claim in light of Merritt v. Countrywide Fin. Corp., 759 F.3d at 1032–33.

AFFIRMED in part, VACATED and REMANDED in

part. No costs.

KORMAN, District Judge, dissenting in part and concurring

in part:

The majority opinion opens with the principal question presented by this case: “[W]hether the trustee of a California deed of trust is a ‘debt collector’ under the Fair Debt Collection Practices Act (FDCPA).” Maj. Op. at 6. After a discussion of the issue, the majority concludes by observing that the phrase “debt collector” is “notoriously ambiguous” and that, given this ambiguity, we should refuse to construe it in a manner that interferes with California’s arrangements for conducting nonjudicial foreclosures. Maj. Op. at 18–19. My reading of the Fair Debt Collection Practices Act (“FDCPA”), consistent with the manner in which it has been construed by every other circuit that has addressed whether foreclosure procedures are debt collection subject to the FDCPA, suggests that the only reasonable reading is that a trustee pursuing a nonjudicial foreclosure proceeding is a debt collector. See Kaymark v. Bank of Am., N.A., 783 F.3d 168, 179 (3d Cir. 2015), cert. denied, 136 S.Ct. 794 (2016); Glazer v. Chase Home Fin. LLC, 704 F.3 453, 461–63 (6th Cir. 2013); Wilson v. Draper & Goldberg, P.L.L.C., 443 F.3d 373, 376–77 (4th Cir. 2006); see also Alaska Tr., LLC v. Ambridge, 372 P.3d 207, 213–216 (Alaska 2016); Shapiro & Meinhold v. Zartman, 823 P.2d 120, 123–24 (Colo. 1992) (en banc). The same is true of a judicial foreclosure proceeding—an alternative available in California. See Coker v. JPMorgan Chase Bank, N.A., 364 P.3d 176, 178 (Cal. 2016). Both are intended to obtain money by forcing the sale of the property being foreclosed upon.

FORECLOSURE OFFENSE AND DEFENSE — GO DIRECTLY AFTER LENDER ATTORNEY: TEXAS LAW ON COLLECTION OF DEBT PROBABLY HAS TEETH IN OTHER STATES

GOOD COMMENT FROM AngellaMorning@aol.com

THIS IS SIMILAR TO THE NOTICE TO TRUSTEE AND NOTICE OF NON-COMPLIANCE FOUND ON THE BLOG. THE ATTORNEY IS SUPPOSED TO PERFORM DUE DILIGENCE. IF HE/SHE DID, THEN HE/SHE WOULD KNOW THAT THE FACTS ARE NOT QUITE AS SIMPLE AS THE DEMAND LETTERS, NOTICES OF DELINQUENCY, NOTICES OF DEFAULT AND FORECLOSURE PROCEEDINGS WOULD HAVE OTHERS BELIEVE.

COMMENT: FROM ANGELLA: I found something interesting in the Texas Finance Code for Texans in foreclosure. (Texas Finance Code Chapter 392 Section 306). This area of the finance code states:

Ҥ 392.306. USE OF INDEPENDENT DEBT COLLECTOR.
A creditor may not use an independent debt collector if the creditor
has actual knowledge that the independent debt collector repeatedly
or continuously engages in acts or practices that are prohibited by
this chapter.”

The attorney firm that is foreclosing on my home has been sanctioned multiple times in Texas for failing to verify defaults before initiating foreclosures.

To make sure that my mortgage servicer (posing as my “lender”) had ACTUAL KNOWLEDGE that they were using the services of a debt collector that is known to violate Texas debt collection laws, I sent them a certified letter to give them ACTUAL KNOWLEDGE of this fact.

Here is my letter:

First Horizon Home Loans
4000 Horizon Way
Irving, TX 75063 October 17, 2008

To Whom It May Concern,

It is a violation of Texas law (Texas Finance Code Chapter 392 Section 306) to knowingly employ an independent debt collector that continually or repeatedly engages in acts or practices that are prohibited under Texas debt collection laws.

AngellaMorning@aol.com: The attorney firm of Barrett Daffin Frappier Turner & Engle, L.L.P. (also known as Barrett Burke Wilson Castle Daffin & Frappier, L.L.P.) located at 15000 Surveyor Boulevard Suite 100 Addison, Texas 75001 has been sanctioned multiple times in the state of Texas for its violation of debt collection practices.

This letter is official notice of this information.

Your subsequent continued employment of this attorney firm for your debt collection purposes is a violation of Texas law.

Angella Soileau
9195 Gross Street
Beaumont, TX 77707

(When pushed into a corner, we are sometimes forced to swing a punch…)

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