TILA RESCISSION: Who Pays the Money?

The menu of items that are due to the borrower as a condition precedent to making a claim for repayment is expansive and frankly in many cases is equivalent or nearly equivalent to the total amount of the principal claimed as loan repayment. 

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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While everyone is resisting the idea of enforcing rescission, some are asking the right questions. Here is the answer.

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The rescission is effective on the date of mailing. The lender must comply within 20 days from date of notification. Compliance means (1) return of cancelled note (2) release of the encumbrance on record in tech county records and (3) return of all money paid by the borrower, directly or indirectly with certain minor exceptions.

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The answer to the question of how much is due is that there needs to be an accounting because the statute 15 USC §1635 requires the return of all money paid by the “borrower”, directly or indirectly.

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The fact that the fee or compensation or “profit” was not disclosed to the borrower does not remove it from the list of the charges paid by or on behalf of the borrower nor the liability to pay it to the borrower once rescission is effective (i.e., upon notice — mailing).

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This leads to some interesting issues that will need to be dragged out of the “lender”, including all the other “lenders” going back to the original transaction. Most of the money received as compensation by third parties was not disclosed to the borrower, hence the need for an accounting. Many of the charges were slipped in to the loan without the borrower’s knowledge or consent. This brings in possible violations of the FDCPA, the FTCA and the “little FTC” acts passed by individual states.

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The menu of items that are due to the borrower as a condition precedent to making a claim for repayment is expansive and frankly in many cases is equivalent or nearly equivalent to the total amount of the principal claimed as loan repayment. 

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And that in turn brings up the most interesting question of all: who is liable to return those fees, compensation and finance charges? You can be sure that once the accounting is ordered by a court there will be scrambling amongst the players in the “Securitization” market. The whole point of masking their scheme was to avoid liability for this sort of thing. Hence the obfuscation of the actual creditor or lender. And this is one of many break points where the securitization players will start sniping at each other rather than the borrower.

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Nobody wants to hand all that money that was “earned” through the hard work of chicanery. And nobody wants to assert that they are the actual creditor since that would be an admission against interest that they had been misrepresenting the true creditor all along. And it would be waiving the 5th Amendment right against self incrimination for criminal charges.

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In any event, here are the REG Z rules on what constitutes a finance charge, which by the way, means that they should ALL have been been disclosed without exception.

§226.4   Finance charge.

(a) Definition. The finance charge is the cost of consumer credit as a dollar amount. It includes any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit. It does not include any charge of a type payable in a comparable cash transaction.

(1) Charges by third parties. The finance charge includes fees and amounts charged by someone other than the creditor, unless otherwise excluded under this section, if the creditor:

(i) Requires the use of a third party as a condition of or an incident to the extension of credit, even if the consumer can choose the third party; or

(ii) Retains a portion of the third-party charge, to the extent of the portion retained.

(2) Special rule; closing agent charges. Fees charged by a third party that conducts the loan closing (such as a settlement agent, attorney, or escrow or title company) are finance charges only if the creditor—

(i) Requires the particular services for which the consumer is charged;

(ii) Requires the imposition of the charge; or

(iii) Retains a portion of the third-party charge, to the extent of the portion retained.

(3) Special rule; mortgage broker fees. Fees charged by a mortgage broker (including fees paid by the consumer directly to the broker or to the creditor for delivery to the broker) are finance charges even if the creditor does not require the consumer to use a mortgage broker and even if the creditor does not retain any portion of the charge.

(b) Examples of finance charges. The finance charge includes the following types of charges, except for charges specifically excluded by paragraphs (c) through (e) of this section:

(1) Interest, time price differential, and any amount payable under an add-on or discount system of additional charges.

(2) Service, transaction, activity, and carrying charges, including any charge imposed on a checking or other transaction account to the extent that the charge exceeds the charge for a similar account without a credit feature.

(3) Points, loan fees, assumption fees, finder’s fees, and similar charges.

(4) Appraisal, investigation, and credit report fees.

(5) Premiums or other charges for any guarantee or insurance protecting the creditor against the consumer’s default or other credit loss.

(6) Charges imposed on a creditor by another person for purchasing or accepting a consumer’s obligation, if the consumer is required to pay the charges in cash, as an addition to the obligation, or as a deduction from the proceeds of the obligation.

(7) Premiums or other charges for credit life, accident, health, or loss-of-income insurance, written in connection with a credit transaction.

(8) Premiums or other charges for insurance against loss of or damage to property, or against liability arising out of the ownership or use of property, written in connection with a credit transaction.

(9) Discounts for the purpose of inducing payment by a means other than the use of credit.

(10) Charges or premiums paid for debt cancellation or debt suspension coverage written in connection with a credit transaction, whether or not the coverage is insurance under applicable law.

Florida FCCPA Has Teeth

The FCCPA is one of those statutes that are often missed opportunities to hold the banks and servicers accountable for illegal conduct. It is like “Mail Fraud” which only applies to US Postal Services (the reason why servicers prefer to communicate through Fedex or other private mail carriers.

REMEMBER THE ONE YEAR STATUTE OF LIMITATIONS. THE TIME RUNS FROM EACH NEW ACT PROHIBITED BY THE STATUTES.

Some of the prohibited practices are self explanatory. But others deserve comment and guidance:

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

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§559.72(5): Disclosure of alleged debt. This could be one of the grounds for an FCCPA action. If you accept the premise that in most cases the disclosing party has neither ownership nor authorization over the alleged debt, then it would follow that reporting to third parties about the debt would illegal under this section. This is escalated in the event that the “debt” (i.e., a description of a liability owed by A to B) does not exist. B may not be the creditor. Neither B nor any successor or other third party would be acting appropriately if they communicated with each other if neither “successors” nor B had any ownership or authority over the liability of A.
§559.72(6): Failure to disclose to third party that debtor disputes the debt. The catch here is “reasonably disputed.” But as you look at an increasing number of case decisions Judges are finding an absence of evidence supporting the claims of banks and servicers. After a failed attempt t foreclosure, it might be reasonably presumed that the debtor/homeowner was reasonably disputing the debt. After all he/she won the case.
§559.72(9): Enforcing an illegitimate debt. This one is self evident and yet it forms the basic structure and strategy of the banks and servicers. Perhaps my labeling is too narrow. The facts are that (A) alleged REMIC Trusts are making completely false claims about the Mortgage Loan Schedule and (B) banks and servicers are directly making false claims without the charade of the alleged trusts. This one has traction.
§559.72(15): Improper identification of the debt collector. My reasoning is that when the debt collector calls and says they are the servicer for the creditor, this section is being violated and the breach interferes with the HAMP and other loan modification programs. It is a pretty serious breach designed to lure the homeowner into foreclosure. Continued correspondence with the false servicer and the  false or undisclosed creditor probably doesn’t waive anything but it does given them an argument that you never objected. So my suggestion is that homeowners and their attorneys object to all such communications until they provide adequate evidence that they can identify the creditor (with evidence that can be confirmed) and adequate evidence that the creditor has indeed selected the debt collector as the servicer. My thinking is that as soon as they refuse to identify the creditor(s) they are in potential violation of this section.
§559.72(18): Communication with person represented by counsel. This is meant to prevent the debt collector from making an end run around the the lawyer. But it does get in the way of efficient communications. The alleged “servicer” starts sending correspondence tot he lawyer thus delaying the response. And the debt collector will call the lawyer to disclose the loan and ask for details about the loan, the property or the alleged debtor that are known only by the homeowner.

Florida Statutes §559.72 Prohibited practices generally.—In collecting consumer debts, no person shall:

(1) Simulate in any manner a law enforcement officer or a representative of any governmental agency.
(2) Use or threaten force or violence.
(3) Tell a debtor who disputes a consumer debt that she or he or any person employing her or him will disclose to another, orally or in writing, directly or indirectly, information affecting the debtor’s reputation for credit worthiness without also informing the debtor that the existence of the dispute will also be disclosed as required by subsection (6).
(4) Communicate or threaten to communicate with a debtor’s employer before obtaining final judgment against the debtor, unless the debtor gives her or his permission in writing to contact her or his employer or acknowledges in writing the existence of the debt after the debt has been placed for collection. However, this does not prohibit a person from telling the debtor that her or his employer will be contacted if a final judgment is obtained.
(5) Disclose to a person other than the debtor or her or his family information affecting the debtor’s reputation, whether or not for credit worthiness, with knowledge or reason to know that the other person does not have a legitimate business need for the information or that the information is false.
(6) Disclose information concerning the existence of a debt known to be reasonably disputed by the debtor without disclosing that fact. If a disclosure is made before such dispute has been asserted and written notice is received from the debtor that any part of the debt is disputed, and if such dispute is reasonable, the person who made the original disclosure must reveal upon the request of the debtor within 30 days the details of the dispute to each person to whom disclosure of the debt without notice of the dispute was made within the preceding 90 days.
(7) Willfully communicate with the debtor or any member of her or his family with such frequency as can reasonably be expected to harass the debtor or her or his family, or willfully engage in other conduct which can reasonably be expected to abuse or harass the debtor or any member of her or his family.
(8) Use profane, obscene, vulgar, or willfully abusive language in communicating with the debtor or any member of her or his family.

(9) Claim, attempt, or threaten to enforce a debt when such person knows that the debt is not legitimate, or assert the existence of some other legal right when such person knows that the right does not exist.

(10) Use a communication that simulates in any manner legal or judicial process or that gives the appearance of being authorized, issued, or approved by a government, governmental agency, or attorney at law, when it is not.
(11) Communicate with a debtor under the guise of an attorney by using the stationery of an attorney or forms or instruments that only attorneys are authorized to prepare.
(12) Orally communicate with a debtor in a manner that gives the false impression or appearance that such person is or is associated with an attorney.
(13) Advertise or threaten to advertise for sale any debt as a means to enforce payment except under court order or when acting as an assignee for the benefit of a creditor.
(14) Publish or post, threaten to publish or post, or cause to be published or posted before the general public individual names or any list of names of debtors, commonly known as a deadbeat list, for the purpose of enforcing or attempting to enforce collection of consumer debts.

(15) Refuse to provide adequate identification of herself or himself or her or his employer or other entity whom she or he represents if requested to do so by a debtor from whom she or he is collecting or attempting to collect a consumer debt.

(16) Mail any communication to a debtor in an envelope or postcard with words typed, written, or printed on the outside of the envelope or postcard calculated to embarrass the debtor. An example of this would be an envelope addressed to “Deadbeat, Jane Doe” or “Deadbeat, John Doe.”
(17) Communicate with the debtor between the hours of 9 p.m. and 8 a.m. in the debtor’s time zone without the prior consent of the debtor.

(a) The person may presume that the time a telephone call is received conforms to the local time zone assigned to the area code of the number called, unless the person reasonably believes that the debtor’s telephone is located in a different time zone.
(b) If, such as with toll-free numbers, an area code is not assigned to a specific geographic area, the person may presume that the time a telephone call is received conforms to the local time zone of the debtor’s last known place of residence, unless the person reasonably believes that the debtor’s telephone is located in a different time zone.
(18) Communicate with a debtor if the person knows that the debtor is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address, unless the debtor’s attorney fails to respond within 30 days to a communication from the person, unless the debtor’s attorney consents to a direct communication with the debtor, or unless the debtor initiates the communication.
(19) Cause a debtor to be charged for communications by concealing the true purpose of the communication, including collect telephone calls and telegram fees.
History.—s. 18, ch. 72-81; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 1, 6, ch. 81-314; ss. 2, 3, ch. 81-318; ss. 1, 3, ch. 83-265; ss. 7, 13, ch. 93-275; s. 819, ch. 97-103; s. 1, ch. 2001-206; s. 4, ch. 2010
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.

 

FDCPA and FCCPA: Temperatures rising

FDCPA and FCCPA (or similar state legislation) claims are getting traction across the country. Bank of America violated the federal Fair Debt Collection Practices Act (“FDCPA”) and the related Florida Consumer Collection Practices Act (“FCCPA”). (Doc. 26). The Goodin case is a fair representation of the experience of hundreds of thousands of homeowners who have tried to reconcile the numbers given to them by Bank of America and others.

In a carefully worded opinion from Federal District Court Judge Corrigan in Jacksonville, the Court laid out the right to damages under the FDCPA and FCCPA. The Court found that BOA acted with gross negligence because they continued their behavior long after being put on notice of a mistake on their part and awarded the 2 homeowners:

  • Statutory damages of $2,000
  • Actual damages for emotional distress of $100,000 ($50,000 per person)
  • Punitive damages of $100,000
  • Attorneys fees and costs

 

See http://www.leagle.com/decision/In%20FDCO%2020150623E16/GOODIN%20v.%20BANK%20OF%20AMERICA,%20N.A.

The story is the same as I have heard from thousands of other homeowners. The “servicer” or “bank” misapplies payments, negligently posts payments to the wrong place and refuses to make any correction despite multiple attempts by the homeowners to get their account straightened out. Then the bank refuses to take any more payments because the homeowners are “late, ” “delinquent”, or in “default”, following which they send a default notice, intent to accelerate and then file suit in foreclosure.

The subtext here is that there is no “default” if the “borrower” tenders payment timely with good funds. The fact that the servicer/bank does not accept them or post them to the right ledger does not create a default on the part of the borrower, who has obviously done nothing wrong. There is no default and there is no delinquency. The wrongful act was clearly committed by the servicer/bank. Hence there is no default by the borrower in any sense by any standard. It might be said that if there is a default, it is a default by Bank of America or whoever the servicer/bank is in another case.

Using the logic and law of yesteryear, we frequently make the mistake of assuming that if there is no posting of a payment, no cashing of a check or no acceptance of the tender of payment, that the borrower is in default but it is refutable or excusable — putting the burden on the borrower to show that he/she/they tendered payment. In fact, it is none of those things. When you parse out the “default” none of the elements are present as to the borrower.

This case stands out as a good discussion of damages for emotional distress — including cases, like this one, where there is no evidence from medical experts nor medical bills resulting from the anguish of trying to sleep for years knowing that the bank or servicer is out to get your house. The feeling of being powerless is a huge factor. If an institution like BOA fails to act fairly and refuses to correct its own “errors,” it is not hard to see how the distress is real.

I of course believe that BOA had no procedures in place to deal with calls, visits, letters and emails from the homeowner because they want the foreclosure in all events — or at least as many as possible. The reason is simple: the foreclosure judgment is the first legally valid instrument in a long chain of misdeeds. It creates the presumption that all the events, documents, letters and claims were valid before the judgment was entered and makes all those misdeeds enforceable.

The Judge also details the requirements for punitive damages — i.e., aggravating circumstances involving gross negligence and intentional acts. The Judge doesn’t quite say that the acts of BOA were intentional. But he describes BOA’s actions as so grossly negligent that it must approach an intentional, malicious act for the sole benefit of the actor.

 

PRACTICE NOTE ON MERGER DOCTRINE AND EXISTENCE OF DEFAULT:

It has always been a basic rule of negotiable instruments law that once a promissory note is given for an underlying obligation (like the mortgage contract), the underlying obligation is merged into the note and is suspended while the note is still outstanding. Discharge on the note would (due to the rule that the two are merged) result in discharge discharge of the underlying obligation. Thus paying the note would also pay the obligation. Because of the merger rule, the underlying obligation is not available as a separate course of action until the note is dishonored.

 

The problem here is that most lawyers and most judges are not very familiar with the UCC even though it constitutes state law in whatever state they are in. They see the UCC as a problem when in fact it is a solution. it answers the hairy details without requiring any interpretation. It just needs to be applied. But just then the banks make their “free house” argument and the judge “interprets a statute that is only vaguely understood.

The banks know that judges are not accustomed to using the UCC and they come in with a presumed default simply because they show the judge that on their own books no payment was posted. And of course they have no record of tender and refusal by the bank. The court then usually erroneously shifts the burden of proof, as to whether tender of the payment was made, onto the homeowner who of course does not  have millions of dollars of computer equipment, IT platforms and access to the computer generated “accounts” on multiple platforms.

This merger rule, with its suspension of the underlying obligation until this honor of the note cut is codified in §3-310 of the UCC:

(b) unless otherwise agreed and except as provided in subsection (a), if a note or an uncertified check is taken for an obligation, the obligation is suspended to the same extent the obligation would be discharged if an amount of money equal to the amount of the instruments were taken, and the following rules apply:

(2) in the case of a note, suspension of the obligation continues until dishonor of the note or until it is paid. Payment of the note results in the discharge of the obligation to the extent of the payment.

thus until the note is dishonored there can be no default on the underlying obligation (the mortgage contract). All foreclosure statutes, whether permitting self-help or requiring the involvement of court, forbid foreclosure unless the underlying debt is in”Default.” That means that the maker of the promissory note must have failed to make the payments required by the note itself, and thus the node has been dishonored. Under UCC §3-502(a)(3) a hello promissory note is dishonored when the maker does not pay it when the footnote first becomes payable.

Bank of America Hit with FDCPA Damages PLUS PUNITIVE Damages $100,000

For more information please email us at gtchonors.llblog@gmail.com or call 954-495-9867 or 520-405-1688.

This is not a legal opinion on your case. It is general information only. Consult an attorney before you make any decisions.

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Hat tip to Ken McLeod

see Goodin v Bank of America NA

I think this case decision should be studied. While it is easy to be dismissive of emotional distress damages, this case clearly enunciates the basis for it. I think we tend to demote the claim because of the underlying bias that the borrower has been getting a “free ride.” This case states quite clearly that the ride was neither wanted nor free.Perhaps just as importantly, the Court finds that punitive damages are appropriate in order to get the attention of Bank of America — such that it will stop it’s malevolent behavior. It sets the bar at deterring the bank from this behavior and not just a “cost of doing business.”

For those who don’t think we have turned the corner, this case shows clearly that judges are not allowing themselves to be spoon-fed the diet of illusion, smoke and mirrors that has prevailed so long in the American court system. If these decisions were made 10 years ago we would not have had a foreclosure crisis.

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KM Writes:

This is an interesting new FDCPA decision.  The judge found that BANA violated the FDCPA and awarded 50k/each to husband and wife for compensatory damages, based mainly on emotional distress as proved by the consumers’ testimony of anxiety, frustration, and sleeplessness.  Also, he awarded $100,000 in punitives under the FDCPA, even given a very stringent Florida statute, because BANA’s negligence was gross, by a clear and convincing standard, primarily because the debtors tried to fix the discrepancy numerous times, but the bank did not fix it, and initiated foreclosure.  The “Bank employees were inattentive, unconcerned and haphazard,” but more importantly, in taking no action to prevent errors from continuing, despite repeated notice, “the Bank employees’ conduct was so wanting in care that it constituted a conscious disregard and indifference to the Goodins’ rightsIt was as if the Goodins did not exist.”  And it was “only stopped by the filing of this federal lawsuit.”  Moreover, in creating a system where one Bank department did not communicate with another, where there were inadequate internal controls to ensure statements provided correct information, and where there was no way for Bank customers to get the attention of the Bank to correct the Bank’s errors, the Bank engaged in grossly negligent conduct. As such, it should be held liable for punitive damages for its employees’ gross negligence.”

Other interesting snippets:

 

As we know, BANA is a debt collector if “acquired the loan at issue while the loan was in default.”

Bank of America contends, however, that it is not a debt collector. A mortgage servicing company is a debt collector under the FDCPA if it acquired the loan at issue while the loan was in default. Williams v. Edelman, 408 F.Supp.2d 1261, 1266 (S.D.Fla.2005). Under the terms of their note, the Goodins were in default if they missed two or more consecutive payments. (Doc. 75 at 15). When Bank of America took over their loan, the Goodins had previously missed two or more consecutive payments and remained behind by more than two payments. (Trial Tr. vol. I at 30). Nevertheless, Bank of America argues that the Goodins were not in default because their bankruptcy plan cured any pre-existing default and the Goodins never defaulted on any payment due under the bankruptcy plan.7 (Doc. 101 at 6).

*5 While a bankruptcy plan may “provide for the curing or waiving of any default,” this does not mean, as Bank of America argues, that the entry of a bankruptcy plan itself cures a default. See11 U.S.C. § 1322(b)(3) (2014). Indeed, the bankruptcy statute also provides that the plan may “provide for the curing of any default within a reasonable time and maintenance of payments while the case is pending on any unsecured claim or secured claim on which the last payment is due after the date on which the final payment under the plan is due ….“ § 1322(b)(5). This provision suggests what is common sense: that the curing of the default occurs upon the repayment of the back payments owed, not upon the mere institution of the bankruptcy plan. See In re Agustin, 451 B.R. 617, 619 (Bankr.S.D.Fla.2011) (“Using [§ ] 1322(b)(5), the Debtors are able to cure arrearages over a time period exceeding the life of the Chapter 13 Plan.”); see also In re Alexander, 06–30497–LMK, 2007 WL 2296741 (Bankr.N.D.Fla. Apr.25, 2007) (finding it reasonable to cure a default over the five-year life of the bankruptcy plan). Bank of America is a debt collector.

Goodin v. Bank of Am., N.A., No. 3:13-CV-102-J-32JRK, 2015 WL 3866872, at *4-5 (M.D. Fla. June 23, 2015)

Act “in connection with the collection of a debt” only must have “animating purpose” to induce payment:

To be “in connection with the collection of a debt,” a communication need not make an explicit demand for payment. Grden v. Leikin Ingber & Winters PC, 643 F.3d 169, 173 (6th Cir.2011). However, “an animating purpose of the communication must be to induce payment by the debtor.”Id.; see also McIvor v. Credit Control Servs., Inc., 773 F.3d 909, 914 (8th Cir.2014); cf. Caceres v. McCalla Raymer, LLC, 755 F.3d 1299, 1303 n. 2 (11th Cir.2014) (noting that an implicit demand for payment constituted an initial communication in connection with a debt). Where a communication is clearly informational and does not demand payment or discuss the specifics of an underlying debt, it does not violate the FDCPA. Parker v. Midland Credit Mgmt., Inc., 874 F.Supp.2d 1353, 1358 (M.D.Fla.2012).

*6 Some of the communications alleged to be FDCPA violations did not have the animating purpose of inducing the Goodins to pay a debt. Specifically, Bank of America’s October 8, 2010 notice that the Goodins may be charged fees while their loan is in default status (Pl.’s Ex. 5), the December 3, 2010 letter alerting the Goodins to the existence of a program to avoid foreclosure despite their “past due” home loan payment (Pl.’s Ex. 6),9 the refusal to accept an alleged partial payment (Pl.’s Ex. 17), and the notice that the Goodins’ loan had been referred to foreclosure (Pl.’s Ex. 27), did not ask for or encourage payment and were not intended to induce payment. Likewise, the Bank of America branch employee’s refusal to accept Mr. Goodin’s payment was not an act in connection with the collection of a debt.

A regular bank statement sent only for informational purposes is also not an action in connection with the collection of a debt. See Helman v. Udren Law Offices, P.C., No. 0:14–CV–60808, 2014 WL 7781199, at *6 (S.D.Fla. Dec.18, 2014). As such, the Goodins’ November 10, 2009 account statement, which did not have the purpose of inducing payment from the Goodins, was not an FDCPA violation. (See Pl.’s Ex. 4 at 5).

The letter Bank of America’s counsel sent to the Goodins on October 25, 2013 (Joint Ex. 11) was likewise not an FDCPA violation because it did not falsely represent the amount or status of the Goodins’ debt, did not threaten an action Bank of America could not or did not intend to take, and did not constitute the use of a false representation or deceptive means in an attempt to collect a debt.

Goodin v. Bank of Am., N.A., No. 3:13-CV-102-J-32JRK, 2015 WL 3866872, at *5-6 (M.D. Fla. June 23, 2015)

Foreclosure as debt collection activity, only if seeks deficiency judgment

 

The lone remaining alleged violation is Bank of America’s filing of a foreclosure complaint against the Goodins. (Pl.’s Ex. 28). Foreclosing on a home is the enforcement of a security interest, not debt collection. Warren v. Countrywide Home Loans, Inc., 342 F. App’x 458, 461 (11th Cir.2009). However, a deficiency action does constitute debt collection activity.Baggett v. Law Offices of Daniel C. Consuegra, P.L., No. 3:14–CV–1014–J–32PDB, 2015 WL 1707479, at *5 (M.D.Fla. Apr.15, 2015). Communication that attempts to enforce a security interest may also be an attempt to collect the underlying debt. Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1217–18 (11th Cir.2012).

When a foreclosure complaint seeks a deficiency judgment if applicable, it attempts to collect on the security interest and the note. Roban v. Marinosci Law Grp., No. 14–60296–CIV, 2014 WL 3738628 (S.D.Fla. July 29, 2014). As such, two cases have found that foreclosure complaints that ask for a deficiency judgment “if applicable” constitute debt collection activity under the FDCPA. See id.; Rotenberg v. MLG, P.A., No. 13–CV–22624–UU, 2013 WL 5664886, at *2 (S.D.Fla. Oct.17, 2013). Similarly, a foreclosure complaint constitutes debt collection activity where it requests “that the court retain jurisdiction to enter a deficiency decree, if necessary.”Freire v. Aldridge Connors, LLP, 994 F.Supp.2d 1284, 1288 (S.D.Fla.2014).

Goodin v. Bank of Am., N.A., No. 3:13-CV-102-J-32JRK, 2015 WL 3866872, at *7 (M.D. Fla. June 23, 2015)

What they knew and when they knew it

At least two people in the Bank, Duane Dumler and Leslie Hodkinson, knew long before Mr. Juarez’s error that the Bank needed to file a transfer of claim to obtain the missing funds. Either because of the Bank’s size, because its departments were compartmentalized and did not properly communicate with each other, or some other reason, this knowledge did not make its way to the foreclosure department or to the part of the Bank responsible for sending out the communications that violated the FDCPA. Then, after Mr. Juarez’s negligent audit, the Goodins’ attorney contacted Bank of America to fix the problem, but the Bank still proceeded to misrepresent the amount the Goodins owed and ultimately filed a foreclosure complaint, only dismissing the foreclosure action after the Goodins literally had to make a federal case out of it.

Goodin v. Bank of Am., N.A., No. 3:13-CV-102-J-32JRK, 2015 WL 3866872, at *9 (M.D. Fla. June 23, 2015)

Factual Evidence of Emotional Damages; No Doctor Testimony Necessary

Since Bank of America began servicing the Goodins’ loan, Mrs. Goodin has felt anxious every day, worrying about the status of her loan. (Id. at 239–40). At times, she has lost sleep because of her concern about the loan. (Id. at 240). However, she never went to a doctor for treatment, in part because she did not have insurance to do so and in part because she did not believe a doctor would make a difference. (Id. at 241).

Mr. Goodin likewise suffered anxiety and sleeplessness as a result of Bank of America’s improper servicing. (Trial Tr. vol. II at 105). Mr. Goodin was immensely frustrated by Bank of America’s lack of responsiveness to his attempts to fix the problems with his loan. (Id. at 74). He sent letters, talked to a Bank of America employee face-to-face, and tried everything that he could think of, but could not find a way to get Bank of America to file the transfer of claim or correct its servicing of the Goodins’ loan. (Id. at 74). While Mr. Goodin’s description of his life as “a pure living hell” is perhaps hyperbolic, it is clear that Bank of America’s letters and Mr. Goodin’s inability to correct the problem made him feel powerless and caused him considerable anger and distress. (See id. at 74, 86).

Most of the Goodins’ testimony dealt generally with emotional distress they suffered throughout the Bank’s servicing of their loan. However, Mrs. Goodin was especially concerned when the Goodins’ bankruptcy was discharged because Bank of America was not getting their payments and she knew that, absent payment, Bank of America would take legal action against them. (Id. at 18). The Goodins noted that they also suffered particular stress upon being served with the foreclosure complaint. (Id. at 79). The possibility of losing their home to foreclosure upset Mr. Goodin and left Mrs. Goodin worried and scared. (Id. at 79).

Bank of America was not the only cause of stress in the Goodins’ lives. Mrs. Goodin was under stress before they filed for bankruptcy because the Goodins were having trouble paying their bills. (Id. at 13). She also suffered the loss of her mother around 2011. (Id. at 69). In June 2013, the Goodins sued TRS Recovery Services, Bennett Law, PLLC, and Wal–Mart (Id. at 22), alleging that they were the victims of check fraud in September 2011 (Id. at 24). Because of the wrongful debt incurred by the fraud, TRS sent the Goodins collection letters from October 2011 through November 2012 and called frequently from October 2011 until July 2012. (Id. at 24–25). As a result, the Goodins lost sleep, felt anxious, and suffered other symptoms of emotional distress. (Id. at 26). However, the Goodins testified credibly that the stress, anxiety, and sleeplessness caused by the events underlying the TRS lawsuit pale in comparison to the emotional distress the Goodins suffered as a result of Bank of America’s actions. (Id. at 64, 106).

*11 While not accepting every aspect of their testimony, overall, the Court found the Goodins’ testimony regarding the emotional distress caused by the Bank’s FDCPA and FCCPA violations to be believable. The tumult of receiving repeated erroneous communications from the Bank, their inability to get anybody at the Bank to listen to them, their feelings of loss of control and the very real fear of losing their home combined to create a very stressful situation.

Goodin v. Bank of Am., N.A., No. 3:13-CV-102-J-32JRK, 2015 WL 3866872, at *10-11 (M.D. Fla. June 23, 2015)

  1. THE COURT’S DECISION ON DAMAGES
  2. Statutory Damages

Under both the FDCPA and FCCPA, prevailing plaintiffs are entitled to statutory damages of up to $1,000. 15 U.S.C. § 1692k; Fla. Stat. § 559.77. In determining the appropriate amount, the Court must consider “the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional ….“ 15 U.S .C. § 1692k; see alsoFla. Stat. § 559.77(2). Upon consideration of the Bank’s repeated statutory violations and inability to correct the problems with the Goodins’ loans despite a plethora of chances to do so, the Court finds Mr. and Mrs. Goodin are each entitled to $1,000 under the FDCPA and $1,000 under the FCCPA.

  1. Actual Damages

The Goodins also each seek $500,000 in actual damages to compensate for their emotional distress. (Doc. 100–1 at 17). A plaintiff may recover actual damages for emotional distress under the FDCPA and FCCPA. Minnifield v. Johnson & Freedman, LLC, 448 F. App’x 914, 916 (11th Cir.2011) (finding that a plaintiff can recover for emotional distress under the FDCPA); Fini v. Dish Network L.L.C., 955 F.Supp.2d 1288, 1299 (M.D.Fla.2013) (finding the same under the FCCPA).

In determining what actual damages are appropriate in this case, the Court has only considered those damages caused by the Bank’s FDCPA and FCCPA violations, and not any distress caused by other aspects of the Bank’s improper servicing of the Goodins’ account. To recap, Bank of America violated the FDCPA when it (1) mailed ten statements from April 25, 2011 to March 29, 2012, indicating, amongst other misstatements, an overstated balance on the loan; (2) mailed statements in March and August 2011 misstating that the Goodins owed foreclosure fees; (3) sent the Goodins six letters between December 27, 2011 and March 16, 2012 requesting over $15,000 in payments and threatening to accelerate the debt or foreclose in the absence of payment; and (4) filed a foreclosure complaint on September 17, 2012. Any emotional distress the Goodins suffered as a result of the Bank’s violations therefore occurred between March 2011, the date of the first violation, and October 2013, when the Bank finally corrected its servicing errors.

“Emotional distress must have a severe impact on the sufferer to justify an award of actual damages.”Alecca v. AMG Managing Partners, LLC, No. 3:13–CV–163–J–39PDB, 2014 WL 2987702, at *2 (M.D.Fla. July 2, 2014). As such, a number of courts have declined to award damages for emotional distress where the plaintiff’s testimony was not supported by medical bills. See, e.g., Lane v. Accredited Collection Agency Inc., No. 6:13–CV–530–ORL–18, 2014 WL 1685677, at *8 (M.D.Fla. Apr.28, 2014) (adopting a report and recommendation recommending no actual damages despite testimony that the plaintiff suffered nervousness, anxiety, and sleeplessness); compare Marchman v. Credit Solutions Corp., No. 6:010–CV–226–ORL–31, 2011 WL 1560647, at *10 (M.D.Fla. Apr.5, 2011)report and recommendation adopted,No. 6:10–CV–226–ORL–31, 2011 WL 1557853 (M.D.Fla. Apr.25, 2011) (awarding no actual damages where the plaintiff testified that she spent nights awake with worry and was withdrawn and depressed but did not provide evidence she required medical or professional services) with Latimore v. Gateway Retrieval, LLC, No. 1:12–CV–00286–TWT, 2013 WL 791258, at *10–11 (N.D.Ga. Feb.1, 2013)report and recommendation adopted,No. 1:12–CV–286–TWT, 2013 WL 791308 (N.D.Ga. Mar.4, 2013) (awarding $10,000 in emotional distress damages where the plaintiff submitted medical bills to support her testimony). Indeed, both courts and juries have rejected claims for emotional distress in cases involving serious FDCPA violations. See Montgomery v. Florida First Fin. Grp., Inc., No. 6:06–CV–1639ORL31KR, 2008 WL 3540374, at *9 (M.D.Fla. Aug.12, 2008) (adopting a Report and Recommendation recommending no actual damages despite the defendant threatening six times, to plaintiff, plaintiff’s daughter, and plaintiff’s mother, that it would have plaintiff arrested, and despite plaintiff’s testimony she was scared and struggled to sleep for fear that she would be arrested); Jordan v. Collection Services, Inc., Case No. 97–600–CA–01, 2001 WL 959031 (Fla. 1st Cir. Ct. April 5, 2001) (jury awarded no damages despite defendant’s debt collection calls that threatened, amongst other consequences, that a hospital would refuse to admit plaintiffs’ ill child if they did not pay their debt).

*12 Still, other courts have awarded actual damages for emotional distress for FDCPA and FCCPA violations, albeit usually in relatively small amounts. For example, in Barker v. Tomlinson, No. 8:05–CV–1390–T–27EAJ, 2006 WL 1679645 (M.D.Fla. June 7, 2006), the plaintiff received $10,000 in actual damages where the defendant called her at work to demand payment for an illegitimate debt, threatened her with arrest if she did not pay, and faxed a request for an arrest warrant to her workplace. Barker, at *3. Similarly, where the plaintiff suffered three panic attacks after the defendant threatened that she could go to jail, threatened to send a deputy to her house, and told her daughter that her mom would be arrested, the court awarded $1,000 in actual damages.Rodriguez v. Florida First Fin. Grp., Inc., No. 606CV–1678–ORL–28DAB, 2009 WL 535980, at *6 (M.D.Fla. Mar.3, 2009).

There are two notable exceptions to the small damages awards usually given in FDCPA cases. In Mesa v. Insta–Service Air Conditioning Corp., Case No. 03–20421 CA 11, 2011 WL 5395524 (Fla. 11th Cir.Ct. Aug. 2, 2011), a jury awarded $150,000 in compensatory damages where an air conditioning company defrauded the plaintiff into buying a defective air conditioner and, unbeknownst to the plaintiff, took out a line of credit in his name. However, it is unclear what amount of those compensatory damages were based on emotional distress and what amount were economic damages. In Beasley v. Anderson, Randolf, Price LLC, Case No. 16–2007–CA–005308, 2010 WL 6708036 (Fla. 4th Cir. Ct. April 19, 2010), a jury awarded $75,000 for mental anguish, inconvenience, or loss of capacity for the enjoyment of life after the defendant repeatedly called the plaintiff’s cell phone to collect a debt, even after being told that it was a work phone number, after receiving a cease and desist letter, and after learning the plaintiff was represented by an attorney.

While not precisely on point, there are two FDCPA cases that represent somewhat similar facts to this case.13In Campbell v. Bradley Fin. Grp., No. CIV.A. 13–604–CG–N, 2014 WL 3350054 (S.D.Ala. July 9, 2014), the defendant repeatedly called the plaintiff, wrongfully alleging that she owed a debt, that she would be sued, and that her wages would be garnished if she did not pay. Campbell, at *4. The plaintiff tried to explain that she had already paid the debt but, because the defendant insisted, she paid the illegitimate debt. Id. Based on the plaintiff’s testimony of her fear of legal action being taken against her, the threatening nature of the phone calls, and the fact that the plaintiff paid the illegitimate debt, the court awarded $15,000 in emotional distress damages. Id.

Similarly, in Gibson v. Rosenthal, Stein, & Associates, LLC, No. 1:12–CV–2990–WSD, 2014 WL 2738611 (N.D.Ga. June 17, 2014), the defendant called the plaintiff and alleged that she owed a debt that she did not owe. Gibson, at *2. The defendant threatened to call the sheriff and have the plaintiff arrested if she did not make a payment. Id. Afraid of going to jail, the plaintiff paid the illegitimate debt using money she needed for living expenses, causing her to go without electricity for two weeks and without water. Id. The court therefore awarded her $15,000. Id.

*13 While these cases are useful as guidance, ultimately, the Court as fact-finder must determine the appropriate amount of damages based on the evidence in this case. Emotional distress damages are particularly difficult to quantify. For example, the Eleventh Circuit pattern jury instructions for emotional distress damages in employment actions contain this language: “You will determine what amount fairly compensates [him/her] for [his/her] claim. There is no exact standard to apply, but the award should be fair in light of the evidence.”Eleventh Circuit Pattern Jury Instructions (Civil) Adverse Employment Action Claims Instructions 4.1, 4.2, 4.3, 4.4, 4.5, 4.9 (2013 Edition).

The Goodins suffered prolonged (over two and a half years) stress, anxiety, and sleeplessness as a result of Bank of America’s misrepresentations regarding the amount of the debt the Goodins owed. This emotional distress reached its peak when the Bank repeatedly threatened the Goodins that, if they did not pay in excess of $15,000, the Goodins’ debt would be accelerated and the Goodins could face foreclosure. The Bank then filed the foreclosure action, and did not dismiss it until six months later (and only after the Goodins were forced to file this lawsuit). While the Goodins did not present evidence from an expert or doctor and in fact did not seek medical attention for their emotional distress, the Court found credible their testimony that they suffered real and severe emotional distress. See supra Part III. Mr. Goodin had worked all his life (Trial Tr. vol. II at 72), but the family was forced into bankruptcy by a poor business investment (Id. at 119). Nevertheless, the Goodins remained ready to continue paying on their mortgage, even while in bankruptcy, but for Bank of America’s gross negligence. While they had other causes of stress as well, their fear of losing their home and feeling of helplessness in the face of Bank of America’s indifference was far and away the primary cause of stress in their lives. Given the facts of this case and the duration of the Goodins’ emotional distress, the Court finds the Goodins are entitled to a larger award than in the mine-run FDCPA case (but nowhere near their request of $500,000 each). Accordingly, the Court, as fact-finder, finds that Mr. and Mrs. Goodin have proven entitlement to $50,000 each for their emotional distress.

  1. Punitive Damages

In addition to statutory and actual damages, the Goodins request ten million dollars in punitive damages under the FCCPA.14(Doc. 100–1 at 21). The Court may award punitive damages under the FCCPA. Fla. Stat. § 559.77. The Goodins argue that punitive damages are appropriate where the defendant acted with malicious intent, meaning that it did a wrongful act “to inflict injury or without a reasonable cause or excuse.”(Doc. 100–1 at 18) (quoting Story v. J.M. Fields, Inc., 343 So.2d 675, 677 (Fla.Dist.Ct.App.1977). Bank of America likewise cites this standard (Doc. 101 at 16), as have a number of courts that considered punitive damages under the FCCPA, see, e.g., Crespo v. Brachfeld Law Grp., No. 11–60569–CIV, 2011 WL 4527804, at *6 (S.D.Fla. Sept.28, 2011); but see Alecca, 2014 WL 2987702, at *1 (finding unpersuasive the plaintiff’s argument that behavior that had no excuse was equated with malicious intent).

*14 As Bank of America points out, however, Fla. Stat. § 768.72 was amended in 1999, subsequent to the decision in Story, to provide a new standard for punitive damages. Now, “[a] defendant may be held liable for punitive damages only if the trier of fact, based on clear and convincing evidence, finds that the defendant was personally guilty of intentional misconduct or gross negligence.”Fla. Stat. § 768.72(2). Punitive damages may be imposed on a corporation for conduct of an employee only if an employee was personally guilty of intentional misconduct or gross negligence and (1) the corporation actively and knowingly participated in that conduct; (2) the officers, directors, or managers of the corporation knowingly condoned, ratified, or consented to the conduct; or (3) the corporation engaged in conduct that constituted gross negligence and that contributed to the loss suffered by the claimant. § 768.72(3).“ ‘Intentional misconduct’ means that the defendant had actual knowledge of the wrongfulness of the conduct and the high probability that injury or damage to the claimant would result and, despite that knowledge, intentionally pursued that course of conduct, resulting in injury or damage.”§ 768.72(2)(a).“ ‘Gross negligence’ means that the defendant’s conduct was so reckless or wanting in care that it constituted a conscious disregard or indifference to the life, safety, or rights of persons exposed to such conduct.”§ 768.72(2)(b). Barring the application of certain exceptions not present here, any punitive damages award is limited to the greater of: “Three times the amount of compensatory damages awarded to each claimant entitled thereto” or $500,000. § 768.73(1).

Those cases that have applied the Story standard subsequent to the amendment to § 768.72 have not addressed § 768.72. See, e.g., Montgomery, 2008 WL 3540374, at *10. The Goodins contend that the punitive damages provisions of § 768.72 et seq. do not apply to this case because those provisions are in the “Torts” section of the Florida code rather than the “Consumer Collection Practices” section where the FCCPA is. However, the punitive damages section applies to “any action for damages, whether in tort or in contract.”Fla. Stat. § 768.71. Thus, the Eleventh Circuit has assumed that the punitive damages cap in Fla. Stat. § 768.73(1)(a) applies to FCCPA cases. McDaniel v. Fifth Third Bank, 568 F. App’x 729, 732 (11th Cir.2014). A number of other courts have also assumed that the procedural requirements in § 768.72 would apply to FCCPA actions if they did not conflict with the Federal Rules of Civil Procedure. See, e.g., Brook v. Suncoast Sch., FCU, No. 8:12–CV–01428–T–33, 2012 WL 6059199, at *5 (M.D.Fla. Dec.6, 2012).15 As such, the Court will apply the punitive damages standard dictated by the statute. Cf. City of St. Petersburg v. Total Containment, Inc., No. 06–20953–CIV, 2008 WL 5428179, at *25–26 (S.D.Fla. Oct.10, 2008)report and recommendation adopted in part, overruled in part sub nom. City of St. Petersburg v. Dayco Products, Inc., No. 06–20953, 2008 WL 5428172 (S.D.Fla. Dec.30, 2008) (applying § 768.72’s provisions instead of the common law standard laid out in White Const. Co. v. Dupont, 455 So.2d 1026, 1028–29 (Fla.1984)).

*15 As well documented in earlier sections of these findings, the Bank employees were inattentive, unconcerned, and haphazard in their repeated and prolonged mishandling of the Goodins’ loan. Then, the auditor whose very job it is to correct errors, was himself negligent in his review of the Goodins’ file. If that was the sum of Bank of America’s actions, it would be guilty of negligence many times over, but perhaps not gross negligence.

It is the Bank’s employees’ failure to respond to the Goodins’ many efforts to correct the Bank’s errors that sets this case apart. Bank of America received numerous communications from the Goodins and their attorney explaining the problems with the Bank’s servicing. (Joint Ex. 5 at 2; Joint Ex. 6 at 37, 39, 40; Pl.’s Ex. 23). Yet, beyond noting that the communications were received, the Bank employees did nothing to correct the servicing errors. With their home at stake, the Goodins might as well have been talking to a brick wall.

In taking no action to prevent the errors from continuing, even after being repeatedly notified of them, the Bank employees’ conduct was so wanting in care that it constituted a conscious disregard and indifference to the Goodins’ rights. It was as if the Goodins did not exist. Because the Bank’s employees disregarded the Goodins’ complaints, the servicing errors continued unabated, the Bank continued to send the Goodins false information about the amount of their debt, and then the Bank filed a misbegotten foreclosure action. The Bank employees’ continued gross negligence was only stopped by the filing of this federal lawsuit.

Moreover, in creating a system where one Bank department did not communicate with another, where there were inadequate internal controls to ensure statements provided correct information, and where there was no way for Bank customers to get the attention of the Bank to correct the Bank’s errors, the Bank engaged in grossly negligent conduct. As such, it should be held liable for punitive damages for its employees’ gross negligence.

In justifying their request for $10 million in punitive damages, the Goodins cite to only one case they believe to be similar, Toddie v. GMAC Mortgage LLC, No. 4:08–cv–00002, 2009 WL 3842352 (M.D.Ga. March 26, 2009), where the Court awarded $2,000,0001 in punitive damages and $570,000 in compensatory damages. (Doc. 100–1 at 19–20).Toddie, however, was a wrongful foreclosure and breach of contract case, not an FCCPA case, and involved much more egregious facts, as the defendant actually foreclosed on the plaintiff’s home.

Where courts have awarded punitive damages in FCCPA cases, the amounts have typically been small. See Rodriguez, 2009 WL 535980, at *6 (awarding $2,500 in punitive damages); Montgomery, 2008 WL 3540374, at *11 (awarding $1,000 in punitive damages); Barker, 2006 WL 1679645, at *3 (awarding $10,000 in punitive damages).16 However, this case presents a different situation, one of a very large corporation’s institutional gross negligence.

*16 The goal of punitive damages is to punish gross negligence and to deter such future misconduct. Thus, the award must be large enough to get Bank of America’s attention, otherwise these cases become an acceptable “cost of doing business.” Bank of America is a huge company with tremendous resources, a factor that the Court may and has considered in determining an appropriate award. See Myers v. Cent. Florida Investments, Inc., 592 F.3d 1201, 1216 (11th Cir.2010).17 Also, this is a serious FCCPA case, in which there were a large number of violations that occurred over a long period of time, and in which the Bank ignored the Goodins’ repeated attempts to fix its many errors. The Court, as fact-finder, finds that the Goodins have proven by clear and convincing evidence that a punitive damages award of $100,000 is appropriate.18

Goodin v. Bank of Am., N.A., No. 3:13-C

Banks Use Trial Modifications as a Pathway to Foreclosure — Neil Garfield Show 6 P.M. EDT Thursdays

Banks Use Modifications Against Homeowners

Click in or phone in at The Neil Garfield Show

Or call in at (347) 850-1260, 6pm EDT Thursdays

It is bad enough that they outright lie to homeowners and tell them they MUST be 90 days behind in payments to get a modification. That isn’t true and it is a ruse to get the homeowner to stop paying and get into a default situation. But the reports from across the country show that the banks are using a variety of tricks and scams to dishonor modification agreements. First they say that just because they did the underwriting and approved the trial modification doesn’t mean that they are bound to make the modification permanent. Most courts disagree. If you make a deal with offer, acceptance and consideration, and one side performs (the homeowner made the trial payments) then the other side must perform (the Bank).

What is really happening is that the bank is converting the loan from a loan funded by investors to a loan NOT funded by the bank. They are steering people into “in house” loans. The hubris of these people is incredible. Why are the investors sitting on their hands? Do they STILL not get it?
Regardless of whether the modification is enforced or forced into foreclosure or converted to an in house loan, the investor loses with the stamp of approval from the court. And the borrower is now paying a party that already collected his loan principal several times over while the real lender is getting birdseed. The investors lose no matter how the case is decided. And the Courts are failing to realize that the fate of the money from a Pension Fund is being decided without any opportunity for the investors to have notice, much less be heard.
Why is this important? Because the banks converted one debt from the borrower into many debts — all secured by the same mortgage. It doesn’t work that way in real life — except now, when courts still refuse to educate themselves on the theory and reality of securitization of debt.
http://www.occupy.com/article/when-fighting-your-home-becomes-biggest-fight-your-life
——————————-FROM RECENTSHOWHOW DO YOU KNOW THAT? — Introducing two upcomingCLE Seminars from the Garfield Continuum onVoir Dire of corporate representatives in foreclosure litigation. The first is atwo hour telephone conference devoted exclusively tovoir dire examination and the second is a full day on onlyvoir dire pluscross examination. The show is free. Topreregister for the mini seminar onvoir dire or the full seminar onvoir dire andcross examination (at a discount) call 954-495-9867.

  • Overview of Foreclosure Litigation in Florida and Other States
  • The need for copies of actual case law and even memoranda supporting your line of questioning
  • The Three Rules for Questioning
  • —– (1) Know why you want to inquire
  • —– (2) Listen to the Answer
  • —– (3) Follow up and comment
  • What to ask, and when to ask it
  • The difference between voir dire and cross examination
  • Getting traction with the presiding Judge
  • Developing your goals and strategies
  • Developing a narrative
  • Impeaching the witness before he or she gets started
  • Preparing your own witnesses for voir dire questions

 

IF YOU MISSED IT: Go to blog radio link and click on the Neil Garfield Show — past shows include—-

News abounds as we hear of purchases of loans and bonds. Some of these are repurchases. Some are in litigation, like $1.1 Billion worth in suit brought by Trustees against the broker dealer Merrill Lynch, which was purchased by Bank of America. What do these purchases mean for people in litigation. If the loan was repurchased or all the loan claims were settled, does the trust still exist? Did it ever exist? Was it ever funded? Did it ever own the loans? Why are lawyers unwilling to make representations that the Trust is a holder in due course? Wouldn’t that settle everything? And what is the significance of the $3 trillion in bonds purchased by the Federal Reserve, mostly mortgage backed bonds? This and more tonight with questions and answers:

Adding the list of questions I posted last week (see below), I put these questions ahead of all others:

  1. If the party on the note and mortgage is NOT REALLY the lender, why should they be allowed to have their name on the note or mortgage, why are those documents distributed instead of returned to the borrower because he signed in anticipation of receiving a loan from the party disclosed, as per Federal and state law. Hint: think of your loan as a used car. Where is the contract (offer, acceptance and consideration).
  2. If the party receiving an assignment from the false payee on the note does NOT pay for it, why are we treating the assignment as a cure for documents that were worthless in the first place. Hint: Paper Chase — the more paper you throw at a worthless transaction the more real it appears in the eyes of others.
  3. If the party receiving the assignment from the false payee has no relationship with the real lender, and neither does the false payee on the note, why are we allowing their successors to force people out of their homes on a debt the “bank” never owned? Hint: POLITICS: What is the position of the Federal reserve that has now purchased trillions of dollars of the “mortgage bonds” from banks who never owned the bonds that were issued by REMIC trusts that never received the proceeds of sale of the bonds.
  4. If the lenders (investors) are receiving payments from settlements with the institutions that created this mess, why is the balance owed by the borrower the same after the settlement, when the lender’s balance has been reduced? Hint: Arithmetic. John owes Sally 5 bananas. Hank gives Sally 3 bananas and says this is for John. How many bananas does John owe Sally now?
  5. And for extra credit: are the broker dealers who said they were brokering and underwriting the issuance of mortgage bonds from REMIC trusts guilty of anything when they don’t give the proceeds from the sale of the bonds to the Trusts that issued those bonds? What is the effect on the contractual relationship between the lenders and the borrowers? Hint: VANISHING MONEY replaced by volumes of paper — the same at both ends of the transaction, to wit: the borrower and the investor/lender.

1. What is a holder in due course? When can an HDC enforce a note even when there are problems with the original loan? What does it mean to be a purchaser for value, in good faith, without notice of borrower’s defenses?

2. What is a holder and how is that different from a holder with rights to enforce? What does it mean to be a holder subject to all the maker’s defenses including lack of consideration (i.e. no loan from the Payee).

3. What is a possessor of a note?

4. What is a bailee of a note?

5. If the note cannot be enforced, can the mortgage still be foreclosed? It seems that many people don’t know the answer to this question.

6. The question confronting us is FORECLOSURE (ENFORCEMENT) OF A MORTGAGE. If the status of a holder of a note is in Article III of the UCC, why are we even discussing “holder” when enforcement of mortgages is governed by Article IV of the UCC?

7. Does the question of “holder” or holder in due course or any of that even apply in the original loan transaction? Hint: NO.

8. Homework assignment: Google “Infinite rehypothecation”

For more information call 954-495-9867 or 520-405-1688.

 

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