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

Banks Use Modifications Against Homeowners

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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.
——————————-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.


Federal Judge Slams Wells Fargo for Violation of Debt Collector’s Act in Florida


EDITOR’S NOTE: this is why I am encouraging attorneys to take cases involving foreclosure, even if the foreclosure itself is problematic. The FDCPA federal counterpart essentially states the same rules. These cases allow for damages and recovery of attorney fees that might aid in the cost of protracted litigation by a pretender lender. Most of my clients are receiving these contacts even after they have expressly told the caller that they are represented by counsel and even that there is a lawsuit pending. I would add that there is clearly a question as to whether the offer of modification is an admission against interest that the loan is in default and that therefore the current “default” is waived.

Danielle Kelley of our firm Garfield, Kelley and White has been writing about this for some time. She firmly believes, and I agree with her, that the time has come to file these actions. I would suggest that a debt validation letter be sent under the FDCPA and that the “borrower” obtain a title and securitization report as well, in order to shore up the potential setoffs and counterclaims against the pretender lender. But the good part of this law is that even if the caller is in fact the true lender or creditor, they must follow the rules — or pay the penalty.

2013 U.S. Dist. LEXIS 172716, *

ANDREW CONKLIN, Plaintiff, v. WELLS FARGO BANK, N.A., Defendant.

Case No. 6:13-cv-1246-Orl-37KRS


2013 U.S. Dist. LEXIS 172716

December 8, 2013, Decided
December 9, 2013, Filed 

CORE TERMS: collection, mortgage, debt-collection, phone, cell, collect a debt, telephone, solicitations, exemption, consumer, foreclosure, landline, factual allegations, security interest, express consent, prerecorded, foreclose, servicer, exempt, foreclosure action, emergency calls, business relationship, cellular phones, telephone-solicitation, categorically, communicate, pre-suit, exempted, notice

COUNSEL:  [*1] For Andrew Conklin, Plaintiff: Richard S. Shuster, LEAD ATTORNEY, Shuster & Saben, LLC, Satellite Beach, FL.

For Wells Fargo Bank, N.A., a foreign corporation, Defendant: Aaron S. Weiss, LEAD ATTORNEY, Carlton Fields, PA, Miami, FL; April Y. Walker, LEAD ATTORNEY, Carlton Fields, PA, Orlando, FL; Michael Keith Winston, LEAD ATTORNEY, Carlton Fields, PA – West Palm Beach, West Palm Beach, FL.

JUDGES: ROY B. DALTON, JR., United States District Judge.




This cause is before the Court on the following:

1. Plaintiff’s Complaint (Doc. 2), filed August 15, 2013;

2. Defendant Wells Fargo’s  Click for Enhanced Coverage Linking SearchesMotion to Dismiss Plaintiff Andrew Conklin’s Complaint and Supporting Legal Memorandum (Doc. 12), filed August 28, 2013; and

3. Plaintiff Andrew Conklin’s Response to Motion to Dismiss (Doc. 18), filed September 23, 2013.

Upon consideration, the Court finds that Defendant’s motion is due to be denied.


Defendant is the loan servicer on Plaintiff’s mortgage. (Doc. 2, ¶ 4.) In 2010, Defendant sued Plaintiff to foreclose on his house. (Doc. 18, p. 1.) Defendant allegedly continued to communicate about the foreclosure directly to Plaintiff after he was represented by counsel; this led Plaintiff  [*2] to file a previous Florida Consumer Collection Practices Act (“FCCPA”) claim against Defendant. (Id. at 1-2.) That case later settled. (Id. at 2.)

Then, earlier this year, Defendant allegedly resumed calling Plaintiff’s cell phone. (Doc. 2, ¶¶ 16-18.) After one of the calls, Defendant left a voicemail stating: “This is . . . your mortgage servicer, calling in regards to your mortgage. . . . This is an attempt to collect a debt . . . .” (Id. ¶ 16.) Plaintiff accordingly filed this suit in state court, alleging that Defendant has violated the FCCPA and the Telephone Consumer Protection Act (“TCPA”). (Id. ¶¶ 10-26.) Defendant removed the case to this Court on the basis of federal-question jurisdiction. (Doc. 1.)

Defendant now moves to dismiss the Complaint, arguing that it fails to state either an FCCPA or a TCPA claim. 1 (Doc. 12.) Plaintiff opposes. (Doc. 18.) This matter is ripe for the Court’s adjudication.


1 Defendant also argues that Plaintiff failed to give pre-suit notice, which was allegedly required by Plaintiff’s mortgage. (Doc. 12, pp. 2-4.) First, this suit is about the calls, not the mortgage; thus, the mortgage is not “central” to the Complaint, and the Court declines to consider  [*3] it at the motion-to-dismiss stage. See Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005). Second, the Court is skeptical that a contractual requirement of pre-suit notice to allow the other party an opportunity to cure a breach is applicable to this action, which is not on the contract itself. Nevertheless, because the Court declines to consider this argument now, it will not preclude Defendant from raising it at a later point.


A plaintiff must plead “a short and plain statement of the claim.” Fed. R. Civ. P. 8(a)(2). On a motion to dismiss, the Court limits its consideration to “the well-pleaded factual allegations.” La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004). The factual allegations in the complaint must “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). In making this plausibility determination, the Court must accept the factual allegations as true; however, this “tenet . . . is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009). A pleading that offers mere “labels and conclusions” is therefore insufficient. Twombly, 550 U.S. at 555.



The  [*4] FCCPA provides that “[i]n collecting consumer debts, no person shall . . . [c]ommunicate with a debtor if the person knows that the debtor is represented by an attorney with respect to such debt . . . .” Fla. Stat. § 559.72(18). Defendant argues that Plaintiff has failed to state an FCCPA claim because: (1) enforcing a security instrument does not amount to debt collection within the meaning of the FCCPA; (2) Plaintiff has not alleged that Defendant was attempting to collect a debt; and (3) Plaintiff has not alleged that Defendant “communicated” with him within the meaning of the FCCPA. (Doc. 12, pp. 4-6.) The Court disagrees.

It is true that “a mortgage foreclosure action itself” does not qualify as debt collection under the FCCPA. Trent v. Mortg. Elec. Registration Sys., Inc., 618 F. Supp. 2d 1356, 1360-61 (M.D. Fla. 2007) (Corrigan, J.) (noting that Fair Debt Collection Practices Act (“FDCPA”) case law applies to FCCPA cases); see also Warren v. Countrywide Home Loans, Inc., 342 F. App’x 458, 460 (11th Cir. 2009) (“[F]oreclosing on a security interest is not debt collection activity [for the purposes of § 1692g of the FDCPA].”). However, the action at issue here is not the invocation  [*5] of “legal process to foreclose,” see Trent, 618 F. Supp. 2d at 1361, but rather debt collection calls made outside that judicial process. It is not as if these calls were made to notify Plaintiff of the foreclosure action or to attempt to comply with the statute. Cf. Diaz v. Fla. Default Law Grp., P.L., No. 3:09-cv-524-J-32MCR, 2011 U.S. Dist. LEXIS 68541, 2011 WL 2456049, at *4 (M.D. Fla. Jan. 3, 2011) (Corrigan, J.) (“The timing of the filing of the foreclosure complaints [just weeks before the communications] confirms that defendant was not using the [alleged debt collection] letters in an attempt to collect the debt outside the foreclosure process.”). Rather, the calls were made years into the underlying foreclosure action, and after Plaintiff previously filed an FCCPA claim for this very same behavior, in an explicit attempt to collect a debt. (Doc. 2, ¶ 16 (“This is . . . your mortgage servicer, calling in regards to your mortgage. . . . This is an attempt to collect a debt . . . .”).) To try to claim now that these calls were made in an attempt to foreclose the security interest rather than to collect a debt is simply disingenuous. See Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1217 (11th Cir. 2012)  [*6] (holding that a letter explicitly stating that the defendant was attempting to collect a debt plainly constituted debt-collection activity, and noting that “[t]he fact that the letter and documents relate to the enforcement of a security interest does not prevent them from also relating to the collection of a debt”). To give credence to that argument would be to give carte blanche to any holder of secured debts to harass consumers in the process of foreclosure, and as the U.S. Court of Appeals for the Eleventh Circuit aptly noted, “That can’t be right. It isn’t.” Id. at 1218.

Plaintiff has alleged that Defendant bypassed his lawyer and called him directly to discuss payment on his mortgage and to attempt to collect a debt. (Doc. 2, ¶¶ 16-18.) This is precisely the kind of behavior that the FCCPA was designed to prevent. The Court therefore finds that Plaintiff has sufficiently stated an FCCPA claim, and Defendant’s motion is due to be denied on that ground.


The TCPA prohibits making any call using an autodialer to any cell phone, except for emergency calls or calls where the called party has given prior consent. 47 U.S.C. § 227(b)(1)(A)(iii). Defendant argues that all debt-collection  [*7] calls, including those made to cell phones, are categorically exempt from the TCPA. (Doc. 12, p. 7.) However, the case on which Defendant relies for that proposition, Meadows v. Franklin Collection Serv., Inc., 414 F. App’x 230 (11th Cir. 2011), is distinguishable from the one at bar.

In Meadows, the plaintiff was suing under two provisions of the TCPA which are inapplicable here: § 227(b)(1)(B), regarding landlines, 2 and § 227(c)(5), regarding telephone solicitations. 3 Id. at 235-36. Neither of those provisions apply in this case, as Plaintiff is suing under § 227(b)(1)(A)(iii), regarding cell phones. (See Doc. 2, ¶ 21.) Though Meadows does broadly state that “the FCC has determined that all debt-collection circumstances are excluded from the TCPA’s coverage,” that statement is dicta and is also qualified by the narrow holding of the case, which was specifically based on the landline and telephone-solicitation provisions. 414 F. App’x at 235.


2 The court held that the defendant did not violate the landline provision because it had an existing business relationship with the intended recipient of the call and the call was made for a commercial, non-solicitation purpose—both explicit  [*8] exemptions from that provision of the TCPA. Meadows, 414 F. App’x at 235 (citing In re Rules & Regulations Implementing Tel. Consumer Prot. Act of 1991, 7 FCC Rcd. 8752, 8773 (Oct. 16, 1992) (“[P]rerecorded debt collection calls would be exempt from the prohibitions on such calls to residences as: (1) calls from a party with whom the consumer has an established business relationship, and (2) commercial calls which do not adversely affect privacy rights and which do not transmit an unsolicited advertisement.” (emphasis added)).

3 The court held that the defendant did not violate the telephone-solicitation provision because the calls made were debt collections, not telephone solicitations. Meadows, 414 F. App’x at 236. The court rightly noted that the FCC has determined that debt-collection calls are “not subject to the TCPA’s separate restrictions on telephone solicitations.Id. (citation and internal quotation marks omitted) (emphasis added).

Further, this Court must read that statement in Meadows in conjunction with the FCC ruling on which it relies, which provides that “prior express consent [in debt-collection calls made to cell phones] is deemed to be granted only if the wireless  [*9] number was provided by the consumer to the creditor, and that such number was provided during the transaction that resulted in the debt owed.” In re Rules & Regulations Implementing Tel. Consumer Prot. Act of 1991, Request of ACA Int’l for Clarification & Declaratory Ruling, 23 FCC Rcd. 559, 564-65 (Dec. 28, 2007) (FCC Ruling). This ruling clarifies that not all debt-collection calls to cell phones are categorically exempted from the TCPA—unlike the broad exemptions for landline debt-collection calls and telephone solicitations, which are based on the content of the call itself. See id. at 561-62 (“[P]rerecorded debt collection calls are exempted from Section 227(b)(1)(B) of the TCPA which prohibits prerecorded or artificial voice messages to residences.”), 565 (“[C]alls solely for the purpose of debt collection are not telephone solicitations . . . . Therefore, calls regarding debt collection . . . are not subject to the TCPA’s separate restrictions on ‘telephone solicitations.'”). Rather, with regard to cell phones, a debt collector must show that the debtor provided the number during the debt transaction; only then will a debt-collection call fall under the consent exception in  [*10] the cell-phone provision. See Gager v. Dell Fin. Servs., LLC, 727 F.3d 265, 273 (3d Cir. 2013) (“The only exemptions in the TCPA that apply to cellular phones are for emergency calls and calls made with prior express consent. Unlike the exemptions that apply exclusively to residential lines, there is no . . . debt collection exemption that applies to autodialed calls made to cellular phones. Thus, the content-based exemptions invoked by [the defendant] are inapposite.”).

In sum, debt-collection calls to cell phones are only exempt from the TCPA if the debtor had prior express consent, in the form of a number provided by the debtor during the transaction giving rise to that debt. See FCC Ruling, 23 FCC Rcd. at 564-65. As Plaintiff has pled that he did not give consent or alternatively revoked consent (Doc. 2, ¶¶ 22-23), he has adequately stated a TCPA claim, and Defendant’s motion is due to be denied on that ground. It will be Defendant’s task to prove consent at the summary-judgment stage. See FCC Ruling, 23 FCC Rcd. at 565 (putting the burden on the caller to show consent); see, e.g., Osorio v. State Farm Bank, F.S.B., 859 F. Supp. 2d 1326, 1330-31 (S.D. Fla. 2012) (reviewing the issue  [*11] of consent and revocation on summary judgment).


Accordingly, it is hereby ORDERED AND ADJUDGED that Defendant Wells Fargo’s  Click for Enhanced Coverage Linking SearchesMotion to Dismiss Plaintiff Andrew Conklin’s Complaint and Supporting Legal Memorandum (Doc. 12) is DENIED.

DONE AND ORDERED in Chambers in Orlando, Florida, on December 8, 2013.

/s/ Roy B. Dalton Jr.


United States District Judge


Paragraph 22: Not Exactly the Magic Bullet

Since we had our technical difficulties with the use of free conference last time I am going to answer certain questions that were sent in and never covered in the last members teleconference. Free conference assures me that the technical problems have been solved —  but the call-in number is going to be different.


Question regarding “paragraph 22”: I have enclosed a link below discussing the paragraph which is numbered 22 in the example used.

The first thing I want to say is that there are no magic bullets anywhere within the complexity and chaos of the false securitization scheme devised by Wall Street. Nothing will be a substitute for a thorough understanding of the scheme and no one element or theory is going to result in a “free house” for a homeowner except in those cases where the party pretending to be the lender as so angered the judge that the judge is looking for a way to punish them. Nonetheless the article below is written by an attorney who apparently has a fair understanding of several issues involving securitization of debt and is therefore worth reading.

The second thing I want to say is that the paragraph does not always bear the number  “22” since several different mortgage forms have been in use and evolving over the last 20 years. But the point raised by the article and by the question sent to me is entirely valid. In a case involving title to real property, and especially in a case where title is going to be forcibly taken from one party and given to another, the requirements of notice are usually going to be taken very seriously by a judge and applied very strictly. If not, and you have taken the trouble to properly prepare a good record, it is highly likely that exceed on appeal despite the fact that the odds on appeal generally favor the pretender lender by a wide margin.

The third thing I want to say is that notice is like a two edged sword.  It must come from a party that is empowered to give notice and that power should not be assumed based upon the self-serving proclamation by a pretender lender that arrogate unto itself the power to do anything with your loan. The other side is that once notice appears to be properly given, you must open your mail and react to it within the time limits prescribed by statute. Obviously if the pretender lender commences some sort of action against you before the notice period runs out you have an opportunity to reverse the procedure and force them to start all over again. On the other hand if the statute requires you to take some action once you have received notice and the notice period has run out, then it is likely that this will be held against you and in fact it may be fatal to your position.

W VA Court Says Directions to Stop Making Payments and Refusing to Apply Payments is Breach of Contract

If you are seeking legal representation or other services call our Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.
The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

Editor’s Note: We’ve all heard it a million times. “The bank told me to stop making payments in order to get modification or other relief.” It was a blatant lie and it was intended to get the borrower in so deep they couldn’t get out, leading inevitably to foreclosure.

Why would the “bank” want foreclosure? Because they took far more money from investors than they used to fund loans. If the deal fails and dissolves into foreclosure the investors are less likely to probe deeply into the transaction to find out what really happened. The fact is that the banks were all skimming off the top taking as much as 50% f the money from investors and sticking it in their own pockets, using it to gamble and keeping the proceeds of gambling.

If the banks really went the usual route of workouts, deed in lieu, modifications and other relief to borrowers, there would be an accounting night mare for them as eventually the auditing the firms would pick up on the fact that the investment banks were taking far more money than was actually intended to be used for investing in mortgages.

They covered it up by creating the illusion of a mortgage closing in which the named payee on the note and security instrument were neither lenders nor creditors and eventually they assigned the loan to a REMIC trust that had neither received the loan nor paid for it.

In this case the Court takes the bank to task for both lying to the borrower about how much better off they would be if they stopped making payments, thus creating a default or exacerbating it, and the refusal of the bank to accept payments from the borrower. It is a simple breach of contract action and the Court finds that there is merit to the claim, allowing the borrower to prove their case in court.

Another way of looking at this is that if everyone had paid off their mortgages in full, there would still be around $3 trillion owed to the investors representing the tier 2 yield spread premium that the banks skimmed off the top plus the unconscionable fees and costs charged to the accounts.  Where did that money go? See the previous post

This well-reasoned well written opinion discusses the case in depth and represents a treasure trove of potential causes of action and credibility to borrowers’ defenses to foreclosure claims.



JASON RANSON, Plaintiff, v. BANK OF AMERICA, N.A., Defendant.
CIVIL ACTION NO. 3:12-5616
2013 U.S. Dist. LEXIS 35320

March 14, 2013, Decided
March 14, 2013, Filed 

CORE TERMS:modification, foreclosure, borrower, citations omitted, mitigation, misrepresentation, servicer, consumer, lender, cause of action, contractual, guaranteed, mortgage, estoppel, contract claim, default, special relationship, reinstatement, collection, quotation, breached, notice, factual allegations, breach of contract, force and effect, indebtedness, thereunder, foreclose, veteran’s, manual

COUNSEL: [*1] For Jason Ranson, Plaintiff: Daniel F. Hedges 1, Jennifer S. Wagner, LEAD ATTORNEYS, MOUNTAIN STATE JUSTICE, INC., Charleston, WV.

For Bank of America, N.A., Defendant: Carrie Goodwin Fenwick, Victoria L. Wilson, LEAD ATTORNEYS, GOODWIN & GOODWIN, Charleston, WV.





Pending before the Court is a Motion to Dismiss by Defendant Bank of America, N.A. (BANA). ECF No. 4. Plaintiff Jason Ranson opposes the motion. For the following reasons, the Court DENIES, in part, and GRANTS, in part, Defendant’s motion.



On September 19, 2012, Defendant removed this action from the Circuit Court of Putnam County based upon diversity of jurisdiction. See 28 U.S.C. §§ 1332 and 1441. In his Complaint, Plaintiff asserts that he took out a mortgagewith Countrywide Home Loans, Inc. to purchase a house in 2007. The loan was originated pursuant to the Department of Veterans Affairs (VA) Home Loan Guaranty Program. Plaintiff alleges the loan “contained a contractual guarantee by the . . . (VA), which requires—as incorporated into the contract—that Defendant comply with regulations and [*2] laws governing VA guaranteed loans, including those regulations governing Defendant’s actions in the event of the borrower’s default” as he was, and continues to be, on active duty with the United States Army. Compl. at ¶5, in part. Defendant is the current servicer and holder of the loan.

In 2009, Plaintiff became two months behind on the loan. Plaintiff asserts that Defendant informed him he was eligible for a loan modification and requested he submit certain documentation to have the modification finalized. Plaintiff claims that Defendant also told him to stop making any payments as they would interfere with the finalization process. Plaintiff states he had the means to make the two delinquent payments at that time or he could have sought refinancing or taken other actions to save his house and credit. However, he relied upon Defendant’s statements and stopped making payments, pending its assurance that he was eligible for a modification. In fact, Plaintiff states that Defendant returned his last payment without applying it to his account.

Over the next several months, Plaintiff asserts he repeatedly submitted the documentation requested by Defendant for the modification process. [*3] Plaintiff also contacted Defendant on a weekly basis for updates. Plaintiff claims he was assured by Defendant it would not foreclose, and Defendant discouraged him from calling by stating it would delay finalization of the modification. Approximately eight months after the process began, Plaintiff contends that Defendant informed him the loan would not be modified because VA loans do not qualify for assistance. According to Plaintiff, Defendant nevertheless requested that he submit documentation for another modification. Plaintiff states he complied with the request but, approximately six months later, Defendant again told him the modification was denied because he had a VA loan. Defendant further told him he should vacate the property because it was going to foreclose. Plaintiff asserts he asked Defendant if he could short sell the house, but Defendant said no and stated the only way he could save his house would be by full reinstatement. As fourteen months had passed since he was told to stop making payments, Plaintiff states that he could not afford to pay the full amount owed.

As a result of these alleged activities, Plaintiff filed this action, alleging five counts of action. [*4] Count I is for breach of contract, Count II is for negligence, Count III is for fraud, Count IV is for estoppel, and Count V is for illegal debt collection. Defendant now moves to dismiss each of the counts.



In Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), the United States Supreme Court disavowed the “no set of facts” language found in Conley v. Gibson, 355 U.S. 41 (1957), which was long used to evaluate complaints subject to 12(b)(6) motions. 550 U.S. at 563. In its place, courts must now look for “plausibility” in the complaint. This standard requires a plaintiff to set forth the “grounds” for an “entitle[ment] to relief” that is more than mere “labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 555(internal quotation marks and citations omitted). Accepting the factual allegations in the complaint as true (even when doubtful), the allegations “must be enough to raise a right to relief above the speculative level . . . .” Id. (citations omitted). If the allegations in the complaint, assuming their truth, do “not raise a claim of entitlement to relief, this basic deficiency should . . .be exposed [*5] at the point of minimum expenditure of time and money by the parties and the court.” Id. at 558 (internal quotation marks and citations omitted).

In Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Supreme Court explained the requirements of Rule 8 and the “plausibility standard” in more detail. In Iqbal, the Supreme Court reiterated that Rule 8 does not demand “detailed factual allegations[.]” 556 U.S. at 678(internal quotation marks and citations omitted). However, a mere “unadorned, the-defendant-unlawfully-

harmed-me accusation” is insufficient. Id. “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. (quoting Twombly, 550 U.S. at 570). Facial plausibility exists when a claim contains “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citation omitted). The Supreme Court continued by explaining that, although factual allegations in a complaint must be accepted as true for purposes of a motion to dismiss, this tenet does not apply to legal conclusions. Id. “Threadbare recitals of the elements [*6] of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citation omitted). Whether a plausible claim is stated in a complaint requires a court to conduct a context-specific analysis, drawing upon the court’s own judicial experience and common sense. Id. at 679. If the court finds from its analysis that “the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]’-‘that the pleader is entitled to relief.'” Id. (quoting, in part, Fed. R. Civ. P. 8(a)(2)). The Supreme Court further articulated that “a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Id.




Breach of Contract

In Count I, Plaintiff alleges that the Deed of Trust and the VA Guaranteed Loan and Assumption Policy Rider provide that “Defendant’s rights upon the borrower’s default are limited by Title 38 of the United States Code and any regulations issued thereunder.” [*7] Compl., at ¶22. According to Plaintiff, the contract also provides that Defendant must apply all payments to his account. Plaintiff asserts Defendant breached the contract by (1) discouraging him from making payments, (2) returning his payments, (3) allowing the accumulation of arrears until it was impossible for him to reinstate the loan, (4) initiating foreclosure and failing to grant a modification after assuring him it would be granted, and (5) “failing to comply with VA regulations and guidance requiring, inter alia, that the Defendants [sic] consider Plaintiff for a variety [of] loss mitigation options, and provide notice of such rejection(s) in writing, prior to foreclosure.” Id. at ¶24(d).

To avoid dismissal of a breach of contract claim under Rule 12(b)(6), West Virginia law requires: “the existence of a valid, enforceable contract; that the plaintiff has performed under the contract; that the defendant has breached or violated its duties or obligations under the contract; and that the plaintiff has been injured as a result.” Executive Risk Indem., Inc. v. Charleston Area Med. Ctr., Inc., 681 F. Supp.2d 694, 714 (S.D. W. Va. 2009) (citations omitted). For a claim of breach [*8] of contract to be sufficient, “a plaintiff must allege in his complaint ‘the breach on which the plaintiffs found their action . . . [and] the facts and circumstances which entitle them to damages.'” Id. In this case, Defendant argues Plaintiff has failed to sufficiently allege a breach of contract because he has not specified what specific VA regulations purportedly were violated and, in any event, the regulations only require the foreclosure be conducted in accordance to West Virginia law. As Defendant maintains it complied with the West Virginia law, Defendant asserts it has not breached the contract.

Plaintiff does not dispute that neither the contracts nor West Virginia law require a loan modification. However, Plaintiff argues that the VA has promulgated regulations to limit foreclosures of loans it has guaranteed and Defendant did not comply with those requirements. Plaintiff quotes from the VA Guaranteed Loan and Assumption Policy Rider, which provides, in part:

If the indebtedness secured hereby be guaranteed or insured under Title 38, United States Code, such Title and Regulations issued thereunder and in effect on the date hereof shall govern the rights, duties and liabilities [*9] of Borrower and Lender. Any provisions of the Security Instrument or other instruments executed in connection with said indebtedness which are inconsistent with said Title or Regulations, including, but not limited to, the provision for payment of any sum in connection with prepayment of the secured indebtedness and the provision that the Lender may accelerate payment of the secured indebtedness pursuant to Covenant 18 of the Security Instrument, are hereby amended or negated to the extent necessary to confirm such instruments to said Title or Regulations.

VA Guar. Loan and Assumption Policy Rider, at 2, ECF No. 4-1, at 15. Specifically, Plaintiff cites 38 U.S.C. § 36.4350(f), (g), and (h), which requires, inter alia, Defendant to send Plaintiff a letter outlining his loss mitigation options after he fell behind on his payments and, under certain circumstances, have a face-to-face meeting with Plaintiff. Likewise, 38 C.F.R. § 36.4319 provides incentives to servicers to engage in loss mitigation options in lieu of foreclosure, and 38 C.F.R. § 36.4315expressly allows a loan modification under certain circumstances if it is in veteran’s and the Government’s best interest. Plaintiff also [*10] cites a Servicer Guide for VA guaranteed loans, which contains similar loss mitigation considerations. 1 Plaintiff states that all these requirements are incorporated into the contract, and Defendant violated the contract by stating he could not receive a loan modification because he had a VA loan; by telling him to stop making payments rather than placing him on a repayment plan; by not timely evaluating the loan and considering him for loss mitigation and, instead, placing him in foreclosure; and by refusing to allow Plaintiff to apply for a compromise sale because Defendant had started foreclosure. Moreover, Plaintiff asserts Defendant violated his right to reinstate and failed to exercise its discretion in good faith by refusing his payment; telling him to stop making payments; informing he was qualified for loan modification, and then denying the modification; providing him conflicting, inconsistent, and inaccurate information about his account; refusing to consider a short sale; and never providing him a written explanation of why loss mitigation was denied.


1 U.S. Dept. of Veterans Affairs, VA Servicer Guide 6 (July 2009), available at

Defendant [*11] responds by asserting that the VA regulations and the handbook are permissive in nature, not mandatory, and the VA Servicer Guide is not binding. See VA Servicer Guide, at 4 (“This manual does not change or supersede any regulation or law affecting the VA Home Loan Program. If there appears to be a discrepancy, please refer to the related regulation or law.”); see also 38 C.F.R. § 36.4315(c)(stating “[t]his section does not create a right of a borrower to have a loan modified, but simply authorizes the loan holder to modify a loan in certain situations without the prior approval of the Secretary” 38 U.S.C. § 36.4315(c)). Thus, Defendant argues they establish no affirmative duty for it to act. In support of its position, Defendant cites several older cases which held certain regulations issued by the VA and other governmental agencies do not have the force and effect of law. 2


2 See First Family Mortg. Corp. of Fl. v. Earnest, 851 F.2d 843, 844-45 (6th Cir. 1988)(finding that mortgagors could not state a cause of action based on VA publications against the VA for allegedly failing to monitor lender servicing of VA-backed loans); Bright v. Nimmo, 756 F.2d 1513, 1516 (11th Cir. 1985) [*12] (rejecting the plaintiff’s argument that he has an implied cause of action against the VA or lender based upon the VA’s manual and guidelines); United States v. Harvey, 659 F.2d 62, 65 (5th Cir. 1981)(finding that the VA manual did not have the force and effect of law by itself and it was not incorporated into the promissory notes or deeds to support a contract claim); Gatter v. Cleland, 512 F. Supp. 207, 212 (E.D. Pa. 1981)(holding “that the decision to implement a formal refunding program is one that squarely falls within the committed to agency discretion exception [of the VA] and is not subject to judicial review” (footnote omitted)); and Pueblo Neighborhood Health Ctrs., Inc. v. U.S. Dep’t of Health and Human Serv., 720 F.2d 622, 625 (10th Cir. 1983)(finding a pamphlet issued by the Department of Health and Human Services, referred to as a Grant Application Manual, was not the product of formal rule-making and did not have the force and effect of law).

However, upon review of those cases, the Court finds that they generally involve situations in which the plaintiffs were attempting to assert a cause of action based upon the regulation itself, rather than as a breach of contract [*13] claim. An action based on a contract involves a much different legal theory than one based solely on enforcement of a regulation apart from a contractual duty. Indeed, Plaintiff cites a number of comparable mortgagecases in which courts permitted homeowners to pursue claims against lenders based upon regulations issued by the Federal Housing Authority (FHA) where it was alleged that the parties contractually agreed to comply with those regulations. As explained by the Court in Mullins v. GMAC Mortg., LLC, No. 1:09-cv-00704, 2011 WL 1298777, **2-3 (S.D. W. Va. Mar. 31, 2011), plaintiffs, who allege a straightforward breach of contact claim, “are not, as defendants would have the court believe, suing to enforce HUD regulations under some vague and likely non-existent cause of action allowing a member of the public to take upon himself the role of regulatory enforcer. These two theories of recovery are distinct and unrelated,” and the Court held the plaintiffs could proceed on their express breach of contract claim. 2011 WL 1298777, *3. 3Upon review, this Court is persuaded that the same reasoning controls here. Therefore, the Court will not dismiss Plaintiff’s contract claim based [*14] upon Defendant’s argument that the regulations and handbook do not have full force and effect of law because Plaintiff has alleged the contract incorporates the limitations set by the regulations. See Compl., at ¶22 (“The contract provides that Defendant’s rights upon the borrower’s default are limited by Title 38 of the United States Code and any regulations issued thereunder.”).


3 See also Kersey v. PHH Mortg. Corp., 682 F. Supp.2d 588, 596-97 (E.D. Va. 2010), vacated on other grounds, 2010 WL 3222262 (E.D. Va. Aug. 13, 2010) (finding, in part, that the plaintiff sufficiently alleged a claim that the defendant breached an FHA regulation which was incorporated in a Deed of Trust); Sinclair v. Donovan, Nos. 1:11-CV-00010, 1:11-CV-00079, 2011 WL 5326093, *8 (S.D. Ohio Nov. 4, 2011) (“find[ing] that the HUD-FHA regulations concerning loss mitigation are enforceable terms of the mortgagecontract between the parties and that Plaintiffs cannot be denied the benefit of these provisions by virtue of the fact of simple default”); and Baker v. Countrywide Home Loans, Inc., 3:08-CV-0916-B, 2009 WL 1810336, **5-6 (N.D. Tex. June 24, 2009) (stating that a “failure to comply with the [HUD] regulations [*15] made part of the parties’ agreement may give rise to liability on a contact theory because the parties incorporated the terms into their contact”).

Defendant further argues, however, that some of the regulations cited by Plaintiff are irrelevant to this case because, for instance, a face-to-face meeting with a borrower is required only under certain circumstances which do not exist in this case. See 38 C.F.R. § 36.4350(g)(iii). In addition, Defendant asserts that, in any event, it did not breach the contract because it had no duty to engage in loss mitigation and it otherwise complied with the contract’s terms. The Court finds, however, that whether or not Defendant violated any of the terms of the contract is a matter best resolved after discovery. Therefore, at this point, the Court finds that Plaintiff has sufficiently alleged a breach of contract claim and, accordingly, DENIES Defendant’s motion to dismiss the claim. 4


4Plaintiff obviously disagrees with Defendant’s argument and filed a “Notice of Additional Authority” disputing Defendant’s position that the VA regulations require holders to evaluate borrowers for loss mitigation. Plaintiff cites the Veterans Benefits Administration, [*16] Revised VA Making Home Affordable Program, Circular 26-10-6 (May 24, 2010), which states, in part: “Before considering HAMP-style modifications, servicers must first evaluate defaulted mortgages for traditional loss mitigation actions cited in Title 38, Code of Federal Regulations, section 36.4819 (38 CFR § 36.4819); i.e., repayment plans, special forbearances, and traditional loan modifications. . . . If none of the traditional home retention loss mitigation options provide an affordable payment, the servicer must evaluate the loan for a HAMP-style modification prior to deciding that the default is insoluble and exploring alternatives to foreclosure.” (Available at


Negligence and Fraud

Defendant next argues that Plaintiff’s claim for negligence and fraud in Counts II and III, respectively, are duplicative of his illegal debt collection claim in Count V under the West Virginia Consumer Credit Protection Act (WVCCPA) and cannot survive because Plaintiff fails to allege Defendant owed him a special duty beyond the normal borrower-servicer relationship. Therefore, Defendant asserts Counts II and III should be dismissed.

In Bailey [*17] v. Branch Banking & Trust Co., Civ. Act. No. 3:10-0969, 2011 WL 2517253 (S.D. W. Va. June 23, 2011), this Court held that the West Virginia Supreme Court in Casillas v. Tuscarora Land Co., 412 S.E.2d 792 (W. Va. 1991), made it clear a plaintiff can pursue claims under the WVCCPA and common law at the same time. 2011 WL 2517253, *3. The Court reasoned that “[i]t would be contrary to both the legislative intent of the WVCCPA and the whole crux of Casillas if the Court were to preclude consumers from bringing actions for violations of the WVCCPA and common law merely because the claims are based upon similar facts.” Id. The Court found that “[n]either the WVCCPA nor Casillasmakes a consumer choose between the two options. A consumer clearly can choose to pursue both avenues provided “separate” claims are set forth in a complaint.” Id.

However, under West Virginia law, a plaintiff “cannot maintain an action in tort for an alleged breach of a contractual duty.” Lockhart v. Airco Heating & Cooling, 567 S.E.2d 619, 624 (W. Va. 2002)(footnote omitted). Rather, “[t]ort liability of the parties to a contract arises from the breach of some positive legal duty imposed by law because of the relationship [*18] of the parties, rather than a mere omission to perform a contract obligation.” Id. (emphasis added). Whether a “special relationship” exists between the parties beyond their contractual obligations is “determined largely by the extent to which the particular plaintiff is affected differently from society in general.” Aikens v. Debow, 541 S.E.2d 576, 589 (W. Va. 2000). “In the lender-borrower context, courts consider whether the lender has created such a ‘special relationship’ by performing services not normally provided by lender to a borrower.” Warden v. PHH Mortgage Corp., No. 3:10-cv-00075, 2010 WL 3720128, at *9 (N.D. W. Va. Sept. 16. 2010 (citing Glascock v. City Nat’l Bank of W. Va., 576 S.E.2d 540, 545-56 (W. Va. 2002) (other citation omitted)).

Here, Plaintiff’s negligence claim is quite simple. He alleges that, where “Defendant engaged in significant communications and activities with Plaintiff[] and the loan, Defendant owed a duty to Plaintiff to provide him with accurate information about his loan account and its obligations and rights thereunder.” Compl., at ¶27. Next, Plaintiff asserts “Defendant[] breached that duty by instructing Plaintiff not to make payments, advising [*19] Plaintiff that he would receive a loan modification, and then instead allowing arrears to accrue for months and ultimately denying Plaintiff[] assistance and pursuing foreclosure.” Id. at ¶28. Upon review of these allegations, the Court finds Plaintiff has failed to allege any positive legal duty beyond Defendant’s purported contractual obligations. There is nothing about these allegations that creates a “special relationship” between the parties. Indeed, a duty to provide accurate loan information is a normal service in a lender-borrower relationship.

In support of their claim Plaintiff relies, inter alia, on Glasock v. City National Bank of West Virginia, 576 S.E.540 (W. Va. 2002), where the West Virginia Supreme Court found that a special relationship existed between a lender and the borrowers. In Glascock, the bank maintained oversight and was significantly involved in the construction of the borrowers’ house. The bank possessed information that there were substantial problems with the house, but it failed to reveal those problems to the borrowers. 576 S.E.2d at 545. The West Virginia Supreme Court found that the bank’s significant involvement in the construction created a special [*20] relationship between the parties which carried “with it a duty to disclose any information that would be critical to the integrity of the construction project.” Id. at 546 (footnote omitted).

To the contrary, Plaintiff’s negligence claim in this case rests merely on the fact Defendant had a duty to provide him accurate information about the loan and failed to do so. Plaintiff has failed to sufficiently allege any facts which support a special relationship between the parties as existed in Glascock. Therefore, the Court GRANTS Defendant’s motion to dismiss Plaintiff’s negligence claim in Count II.

Turning next to Plaintiff’s fraud claim, Defendant argues the claim must be dismissed because it fails to meet the heightened pleading standard found in Rule 9(b) of the Federal Rules of Civil Procedure. Rule 9(b)provides that, “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b). Under this heightened pleading standard, a plaintiff is required to “at a minimum, describe the time, place, and contents of the false [*21] representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.” U.S. ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 379 (4th Cir. 2008) (quoting Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir. 1999))(internal quotation marks omitted). In other words, the plaintiffs must describe the “‘who, what, when, where, and how’ of the alleged fraud.” Id. (quoting U.S. ex rel. Willard v. Humana Health Plan of Texas Inc., 336 F.3d 375, 384 (5th Cir. 2003) (other citation omitted)).

In his Complaint, Plaintiff alleges that he had trouble making his mortgage payments around 2009. Compl, at ¶6. When he was approximately two months behind on his payments, Defendant informed him that he qualified for a loan modification, but he needed to complete the necessary paperwork to have it finalized. Id. at ¶7(a). “At this time,” Defendant also informed Plaintiff not to make any more payments until the modification was finalized. Id. at ¶7(b). About eight months later, Defendant told Plaintiff that he did not qualify for a modification, but Defendant instructed him to submit documentation for another modification. Id. at [*22] ¶13. After approximately six more months passed, Plaintiff was notified again that he was being denied assistance. Id. at ¶14. Plaintiff further alleges that, before May of 2012, Defendant never gave him “a written decision on his loan modification applications or any explanation for why he had denied him for assistance, other than its statements by telephone that he did not qualify for assistance because he had a VA loan.” Id. at ¶18.

In addition to these alleged facts, Plaintiff specifically states in his cause of action for fraud that “[i]n or around 2009,” Defendant told him to stop making payments and it would modify his loan rather than pursue foreclosure. Id. at ¶31. Plaintiff asserts these “representations were false and material,” and they were made knowingly, recklessly, and/or intentionally. Id. at ¶¶32-33. Plaintiff further claims he detrimentally relied upon these misrepresentations by stopping his payments and not attempting reinstatement, after which Defendant sought foreclosure. Id. at ¶¶34-35.

In considering these allegations, the Court is mindful of the fact it should be hesitant “to dismiss a complaint under Rule 9(b) if the court is satisfied (1) that the defendant [*23] has been made aware of the particular circumstances for which she will have to prepare a defense at trial, and (2) that plaintiff has substantial prediscovery evidence of those facts.” Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir. 1999). Here, the Court finds that Plaintiff adequately alerts Defendant as to “the time, place, and contents of the false representation[.]” U.S. ex rel. Wilson, 525 F.3d at 379(internal quotation marks and citation omitted). Plaintiff clearly alleges the fraudulent activity consisted of Defendant instructing him to stop making payments and assuring him he would receive a loan modification instead of foreclosure. He also asserts the representations were made over the telephone and occurred in 2009, when his payments were two months in arrears, and before Defendant returned his payment. In addition, Plaintiff states that he continued to call Defendant approximately once a week and was assured that it would not proceed with foreclosure. Compl., at ¶12(a), (b), and (c). Given this information, Defendant should be able to prepare its defense based upon the allegations made. In addition, the allegations provide enough information that [*24] Defendant also should be able to identify and review its customer service notes, call logs, account records, and any phone recordings it may have during the specified time period. Thus, the Court DENIES Defendant’s motion to dismiss Plaintiff’s claim for fraud.



Defendant further argues that Plaintiff’s claim in Count IV for estoppel must be dismissed. To maintain a claim for estoppel in West Virginia, a plaintiff must show:

[(1)] a false representation or a concealment of material facts; [(2)] it must have been made with knowledge, actual or constructive of the facts; [(3)] the party to whom it was made must have been without knowledge or the means of knowledge of the real facts; [(4)] it must have been made with the intention that it should be acted on; and [(5)] the party to whom it was made must have relied on or acted on it to his prejudice.

Syl. Pt. 3, Folio v. City of Clarksburg, 655 S.E.2d 143 (W. Va. 2007) (quoting Syl. Pt. 6, Stuart v. Lake Washington Realty Corp., 92 S.E.2d 891 (W. Va. 1956)). Defendant asserts Plaintiff had actual knowledge via correspondence it sent to Plaintiff that he was not guaranteed loan assistance and loan assistance would not impact Defendant’s [*25] right to foreclose. Defendant attached the correspondence to its Motion to Dismiss as Exhibit D. In addition, Defendant argues that Plaintiff admits to missing two payments before the alleged misrepresentations occurred so he cannot state he relied upon those alleged misrepresentations in failing to make his payments.

“[W]hen a defendant attaches a document to its motion to dismiss, ‘a court may consider it in determining whether to dismiss the complaint [if] it was integral to and explicitly relied on in the complaint and [if] the plaintiffs do not challenge its authenticity.’ ” Am. Chiropractic Ass’n v. Trigon Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004) (quoting Phillips v. LCI Int’l, Inc., 190 F.3d 609, 618 (4th Cir. 1999)). In this case, Plaintiff asserts that, “at this point there is no evidence that the letter was actually sent to or received by Plaintiff, nor has Plaintiff had the opportunity to present mailings, call logs, or testimony supporting his claim.” Pl.’s Res. in Opp. to Def.’s Mot. to Dis., ECF No. 7, at 16. 5Therefore, the Court will not consider the letter. Likewise, the Court finds no merit to the argument that Plaintiff’s admission that he was two months [*26] behind on his loan extinguishes his estoppel claim. It is clear from the Complaint that Plaintiff’s claim is that he relied upon the alleged misrepresentations after he was two months delinquent. Accordingly, the Court DENIES Defendant’s motion to dismiss the estoppel claim.


5In addition, the Court notes that the letter appears undated and Defendant sometimes refers to it as a 2009 letter and sometimes as a 2010 letter. At the top right-hand side of the letter, there is a statement providing: “Please complete, sign and return all the enclosed documents by December 5, 2009.” Exhibit D, ECF No. 4-4, at 1.



Finally, Defendant asserts Plaintiff’s claim under the WVCCPA in Count V must be dismissed because it fails to meet the requirements of Rules 8(a)(2) of the Federal Rules of Civil Procedure. Rule 8(a)(2)provides that “[a] pleading that states a claim for relief must contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief[.]” Fed. R. Civ. P. 8(a)(2). Defendant argues that Plaintiff fails to meet this requirement because he merely pled a legal conclusion that Defendant engaged in illegal debt collection and he does not plead sufficient [*27] factual content to support that conclusion. In addition, Defendant states it had a contractual right to return Plaintiff’s partial payment so returning the payment cannot support a WVCCPA claim.

Plaintiff, however, argues that his claims under the WVCCPA are based on three grounds. First, Plaintiff asserts Defendant used fraudulent, deceptive, or misleading representations to collect the debt or get information about him, in violation of West Virginia Code § 46A-2-127. 6 Second, he claims that Defendant used unfair or unconscionable means to collect the debt, in violation of West Virginia Code § 46A-2-128. 7 Third, Plaintiff contends that Defendant’s refusal to apply payments to his account violated West Virginia Code § 46A-2-115. Plaintiff then argues that the first two claims are sufficiently supported in opposition to a motion to dismiss based upon his allegations that (1) Defendant told him he qualified for loan modification and would receive one if he completed the requested financial information; (2) Defendant told him to stop making payments because it would interfere with the modification process, but in reality it increased the likelihood of foreclosure; (3) Defendant assured [*28] Plaintiff it would not foreclose on his home during the time the loan modification application was being processed; (4) Defendant ultimately represented it could not modify the loan because it was a VA loan; and (5) Defendant would not consider a short sale of the house and, instead, proceeded with foreclosure. Plaintiff argues that each of these misrepresentations made by Defendant were intended to collect financial information about him through the modification process or collect the debt via foreclosure. He also states the delay and improper refusal of payments greatly increased the amount he was in arrears, which allowed Defendant to attempt to collect the debt through foreclosure.


6Section 127 provides, in part: “No debt collector shall use any fraudulent, deceptive or misleading representation or means to collect or attempt to collect claims or to obtain information concerning consumers.” W. Va. Code § 46A-2-127, in part.

7Section 128 states, in part: “No debt collector shall use unfair or unconscionable means to collect or attempt to collect any claim.” W. Va. Code §46A-2-128, in part.

Upon consideration of these allegations, the Court finds they are sufficient to state a claim [*29] under the WVCCPA. As stated by the Honorable Thomas E. Johnston stated in Koontz v. Wells Fargo, N.A., Civ. Act. No. 2:10-cv-00864, 2011 WL 1297519 (S.D. W. Va. Mar. 31, 2011), West Virginia “§ 46A-2-127applies to both ‘misrepresentations made in collecting a debt’ and ‘misrepresentations . . . [made] when obtaining information on a customer.'” 2011 WL 1297519, at *6. Therefore, allegations that a financial institution misrepresented to the borrower that it would reconsider a loan modification and, thereby, obtained additional financial information from the borrower, are sufficient to state a claim. Id. Likewise, the Court finds the allegations are sufficient to state a claim that Defendant used “unfair or unconscionable means to collect or attempt to collect any claim” pursuant to West Virginia Code §46A-2-128, in part. Cf. Wilson v. Draper v. Goldberg, P.L.L.C., 443 F.3d 373, 376 (4th Cir. 2006)(stating “Defendants’ actions surrounding the foreclosure proceeding were attempts to collect that debt” under the Fair Debt Collection Practices Act (citations omitted)). 8


8 Defendant asserts that a debt collection does not give rise to a claim under the WVCCPA. Citing Spoor v. PHH Mortgage [*30] Corp., Civ. Act. No. 5:10CV42, 2011 WL 883666 (N.D. W. Va. Mar. 11, 2011). The Court has reviewed Spoorand finds that it primarily focused only on the plaintiff’s request for a loan modification with respect to her WVCCPA claims. The district court in Spoor stated that the defendant’s consideration of the request is not an attempt to collect a debt. 2011 WL 883666, at *7. In the present case, however, the allegations Plaintiff argues supports his claim extend beyond a mere “request” for a modification. Moreover, the Court finds that, to the extent Spoor is contrary to the reasoning in Wilson and Koontz, the Court declines to apply it to this case.

With respect to Plaintiff’s third claim that Defendant illegally returned his payment pursuant to West Virginia Code § 46A-2-115(c), this provision states:

All amounts paid to a creditor arising out of any consumer credit sale or consumer loan shall be credited upon receipt against payments due: Provided, That amounts received and applied during a cure period will not result in a duty to provide a new notice of right to cure; and provided further that partial amounts received during the reinstatement period set forth in subsection (b) of this [*31] section do not create an automatic duty to reinstate and may be returned by the creditor. Defaultcharges shall be accounted for separately; those set forth in subsection (b) arising during such a reinstatement period may be added to principal.

W. Va. Code § 46A-2-115(c). Plaintiff argues that § 46A-2-115(b)defines the reinstatement period as the time “beginning with the trustee notice of foreclosure and ending prior to foreclosure sale,” and he made clear it clear in his Complaint that Defendant returned his payment prior to the requesting a trustee notice of the foreclosure sale. See Compl., at ¶¶7 & 10. Defendant responds by stating that it was within its contractual right to refuse the payment. However, West Virginia Code § 46A-1-107makes it clear that, “[e]xcept as otherwise provided in this chapter, a consumer may not waive or agree to forego rights or benefits under this chapter or under article two-a, chapter forty-six of this code.” W. Va. Code 46A-1-107. Therefore, upon review, the Court finds that Plaintiff’s claim is sufficient to survive a motion to dismiss. Thus, for the foregoing reasons, the Court DENIES Defendant’s motion to dismiss Count V for alleged violations [*32] of the WVCCPA.



Accordingly, for the foregoing reasons, the Court DENIES Defendant’s Motion to Dismiss Plaintiff’s claims for breach of contract, fraud, estoppel, and violations of the WVCCPA. However, the Court GRANTS Defendant’s Motion to Dismiss Plaintiff’s negligence claim.

The Court DIRECTS the Clerk to send a copy of this Memorandum Opinion and Order to all counsel of record and any unrepresented parties.

ENTER: March 14, 2013

/s/ Robert C. Chambers


Missouri Indictment Gives Notice of Title Defects to All Buyers


COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary CLICK HERE TO GET COMBO TITLE AND SECURITIZATION REPORT

SERVICE 520-405-1688

See Full Indictment: Microsoft-Word-DOCXIndictment.docx_

“Defendant, acting knowingly in concert with its employees, with the purpose to defraud, used as genuine or transferred with the knowledge or belief that it would be used as genuine, a writing, namely Deed of Release number 2009020598, knowing that it had been made or authenticated so that it purported to have been made by another, or that it had been made so that it purported to have been made by authority of one who did not give such authority.”

“Defendant acting knowingly in concert with its employees, with the purpose to mislead the Boone County Recorder of Deeds, a public servant in the performance of her duty, submitted or invited reliance on a writing, namely Deed of Release number 2009020598, which Defendant knew to be lacking in authenticity, and which stated a fact material to the purposes for which the writing was offered.”

EDITOR’S ANALYSIS: The Missouri Indictment comes as a surprise to many who viewed AG Koster as just someone on the sidelines. It constitutes just one indictment from one County in the State of Missouri. Presumably, since Koster said the investigation was ongoing, there will be similar indictments from other Missouri counties and perhaps other states will be emboldened to do the right thing: set the record straight by establishing a pattern of fraudulent conduct by the Banks and servicers designed to cover up defective documentation arising from the origination of the mortgage loans all the way through eviction of homeowners by strangers (pretenders) to the transaction.

What strikes me as particularly interesting for the future of this ongoing saga, is the effect these indictments will have on title claims in warranty deeds, mortgage deeds, deeds of trust and satisfactions of mortgages. Specifically, anyone who buys or loans money on property needs to be very careful about what they are doing, because now they have actual notice of title defects. They are no longer a bona fide purchaser for value without notice.

The significance of this cannot be over-stated. Most of the recordings in county title registries relate to mortgages in which there was a claim (either on record or off-record through MERS) of some type of transfer, sale or securitization of the loan. It now appears as though most of those filings have at least some fabricated, forged or altered documentation that once upon a time had carried a presumption of validity.

That presumption is eviscerated, in my opinion, by the indictment and the various media reports, so much so that the burden is now on the banks and servicers to plead and prove their case that even if the documentation contains defects, the loan is still documented and the enforcement of the loan is permissible. Judges and lawyers would do well to reconsider the presumptions that are at work in the foreclosure arena and change their strategies accordingly — demanding that the the banks and servicers assume the burden of persuasion in all foreclosures — judicial and non-judicial.

Trustees on deeds of trust and the lawyers who represent pretender foreclosers have lost a key element of protection for their contributions to this mess. They have actual notice of the problem and while the indictments are not convictions, the combined total data that has emerged in media reports and civil and criminal actions by the chief law enforcement officers of each state puts NOTICE on the table, to wit: they know that there is a high probability that the documents upon which they rely in pursuing foreclosures are false declarations lacking in authority. 

Trustees on deeds of trust, who have never done the due diligence required under the statutes enabling their existence now have an added duty that they are ignoring — to demand proof of the veracity of the declarations, instructions and documentation they receive.

But the impact of the NOTICE factor is much broader. There are only a few million foreclosures. But there are tens of millions of transactions that were recorded in refinancing, sales, foreclosure sales, credit bids (from creditors who were not creditors), and other fatal flaws in the release, satisfaction or recording of new mortgages. All of those mortgage transaction need to be re-examined, which is why the regulatory agencies that told borrowers to pound salt just a year ago are now monitoring compliance with cease and desist orders against all the major banks and servicers.

The issue of title is one of notice and recordation. Even if the regulatory authorities miss something, or law enforcement misses something, the facts are now in the public domain that lead to a reasonable requirement of due diligence, which means insisting on proof of the truth of the declarations (and the authority to make those declarations) contained in the documents upon which the pretenders, the Courts and lawyers relied. In my opinion, that means there is a cloud on all titles for all residential transactions that were completed from 1996 through the present.

The enormity of that statement does not escape me. because it means that even innocent new buyers and lenders who loaned money on the purchase of a foreclosed home might have the security interest impaired, which is another way of saying they don’t have the collateral they thought they had. And the title companies, bracing for the onslaught of lawsuits for coverage that if, sustained, would bankrupt all of them, are not ready to lay down and die. The title companies have every intention of fighting liability, saying that they too were deceived by the fraud, and that they never intended to insure such a risk.

That pretty much leaves home buyers and lenders out in the cold. The buyers might not ever get clear title and the lender might not have a perfected lien securing the loan they made to the buyer — all through no fault of the buyer or the new lender (unless the lender is one of the securitization players in which case they knew, or had notice, of the actual defects in the chain of title.

The bottom line is that right now, many if not most properties in the country are under a cloud and, based upon the facts we know, are probably subject to breaks and defects in the chain of title that are not repairable without the signature of the homeowner(s) who were in the chain. That signature is getting very expensive to procure as more and more homeowners and prior homeowners realize that they might have a completely enforceable right to title and possession of properties long since foreclosed and from which they were long since evicted. This will leave the new ‘buyers’ without a house and with a debt and it will leave the new lenders with an unsecured debt from someone who must pay to live elsewhere.

The new brand of investors who are buying foreclosed properties together with the lenders who are financing these purchasers are relying upon taking title from someone who doesn’t have it and getting a satisfaction (release and reconveyance) from someone who never owned the loan. The dirty big secret here is that all the documents are tainted and most of them will be proven to be defective, most of which fatally defective.

That doesn’t mean that the obligation that the borrowers’ undertook is off the table. It just means that it is unsecured and not subject to foreclosure and that the asset (the home that was foreclosed or refinanced or re-sold) might still be an asset that belongs to them or in bankruptcy parlance, an asset of the bankruptcy estate.

On the other hand it doesn’t mean that the obligation is on the table either. If the investors, who are the only true lenders or creditors in those transactions, do not seek collection or enforcement against the homeowners because they have already been paid or because of any other reason, then as far as the mortgage obligation is concerned, there may be liability without enforcement.

That is where the fraud and  false declarations come in. Knowing that the investors would not even attempt to enforce the loans, the banks began this systematic fraudulent scheme to insert themselves into transactions in which they had no interest. They didn’t loan the money and they didn’t buy the loan, but they managed to persuade most of the American judiciary that being the “holder” of the note was sufficient. As the public records will attest, they were never acting for the investors. They were acting for themselves, because it was these interlopers (pretenders) who took title by submitting a “credit bid” to an auctioneer controlled by the banks.

The Missouri indictment and what follows will be a test of how much these banks and servicers have to pay the piper for their horrendous acts of fraud and chicanery that brought down world economies and our own economy in the name of naked greed.



COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE

EDITOR’S COMMENT: The Courts are bending toward the borrower. Here the homeowner alleged in an affirmative defense that they had not been giving proper notice of default and therefore the foreclosure was at the very least premature. But the Court, instead of leaving it at that, recites all the other possible problems with this foreclosure including lack of standing. By getting past the motion to dismiss or motion to strike the homeowner has achieved the goal: getting the court to hear actual evidence on the transfers of the obligation, note and mortgage, the validity of the mortgage and the right to enforce it.

Now the homeowner can aggressively pursue the pretender lender with discovery and undermine the would-be forecloser’s claim that it is the holder.


Case No. 2D10-1493.District Court of Appeal of Florida, Second District. Opinion filed November 9, 2011.Enrique Nieves III of Ice Legal, P.A., Royal Palm Beach, for Appellants.J. Joseph Givner, Esther S. Meisels, and Randon Loeb of Higer Lichter & Givner, LLP, Aventura, for Appellee.


Joyce and Lankford Taylor appeal a final judgment of foreclosure entered after the trial court granted a motion for summary judgment in favor of Bayview Loan Servicing, LLC. Because genuine issues of material fact remain regarding the Taylors’ affirmative defense of lack of notice, we reverse the final judgment and remand for further proceedings.

On January 4, 2006, the Taylors signed a mortgage securing an indebtedness in the principal amount of $194,350, evidenced by a note Joyce Taylor signed on the same date. The mortgage names the lender as USMoney Source, Inc., d/b/a Soluna First (USMoney) and the mortgagee as Mortgage Electronic Registration Systems, Inc. (MERS), acting as a nominee for USMoney. Attached to the note is an allonge signed by the president of USMoney and dated January 4, 2006, that endorses the note without recourse to Bayview.

On August 1, 2007, Bayview filed an unsworn two-count complaint against the Taylors. Count one sought to establish and enforce the note, and count two sought to foreclose the mortgage. Bayview alleged that it “owns and holds said note by virtue of the endorsement/allonge and said mortgage by virtue of the assignment of mortgage, copies of both of which are attached hereto.” No copy of the assignment of mortgage was attached to the complaint. Although Bayview alleged that it holds the note, Bayview further alleged that the original note was lost or destroyed after Bayview acquired it and that the exact time and manner of the loss or destruction was unknown to Bayview. Copies of the note, allonge, and mortgage were attached to the complaint. The complaint also contained the general allegation that “[a]ll conditions precedent to the filing of this action have been performed or have occurred.”

The Taylors filed an answer and affirmative defenses. Among their affirmative defenses the Taylors asserted that Bayview “is not the proper holder of the mortgage and therefore lacks standing to bring a foreclosure action.” The Taylors also asserted that Bayview “failed to give proper notice of the default in the payments on the note and mortgage” and thus was “estopped from accelerating said debt.”

On November 21, 2007, Bayview filed its motion for summary judgment and affidavit of indebtedness. Later, amended affidavits of indebtedness were filed. None of the affidavits mentioned an assignment of mortgage, and no documents were attached to the affidavits.

Bayview did not file its reply to the Taylors’ affirmative defenses until June 17, 2008. In its reply, Bayview alleged that it met the notice requirements. Bayview also alleged that it was entitled to maintain the foreclosure action without a written assignment of mortgage because the transfer of the note was sufficient. Bayview subsequently filed the original note, allonge, and mortgage.

The trial court held a hearing on the motion for summary judgment on February 22, 2010. The record contains a notice of filing copy of assignment of mortgage dated February 10, 2010, but the notice was not filed until February 23, 2010. The assignment of mortgage reflects that it was executed on August 7, 2007, after the complaint was filed. The trial court granted summary judgment and rendered the final judgment of foreclosure.

The standard of review on a summary judgment is de novo. Estate of Githens ex rel. Seaman v. Bon Secours-Maria Manor Nursing Care Ctr., 928 So. 2d 1272, 1274 (Fla. 2d DCA 2006). “A movant is entitled to summary judgment `if the pleadings, depositions, answers to interrogatories, admissions, affidavits, and other materials as would be admissible in evidence on file show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’” Id. (quoting Fla. R. Civ. P. 1.510(c)). The movant has the burden to prove the absence of a genuine issue of material fact, and “this court must view `every possible inference in favor of the party against whom summary judgment has been entered.’” Id. (quoting Maynard v. Household Fin. Corp. III, 861 So. 2d 1204, 1206 (Fla. 2d DCA 2003)). And, “if the record raises even the slightest doubt that an issue might exist, that doubt must be resolved against the moving party and summary judgment must be denied.” Nard, Inc. v. DeVito Contracting & Supply, Inc., 769 So. 2d 1138, 1140 (Fla. 2d DCA 2000). Furthermore, to be entitled to summary judgment, the movant must not only establish that there are no genuine issues of material fact regarding the parties’ claims, but also the movant “must either factually refute the affirmative defenses or establish that they are legally insufficient.” Konsulian v. Busey Bank, N.A., 61 So. 3d 1283, 1285 (Fla. 2d DCA 2011).

We reject the Taylors’ argument that Bayview lacked standing to foreclose the mortgage. The Taylors’ affirmative defense asserted, and they argue on appeal, that the assignment of mortgage did not occur until after the complaint was filed. See Country Place Cmty. Ass’n v. J.P. Morgan Mortg. Acquisition Corp., 51 So. 3d 1176, 1179 (Fla. 2d DCA 2010) (stating that the plaintiff lacked standing to bring the foreclosure action when it did not own or possess the note and mortgage when it filed the lawsuit); Jeff-Ray Corp. v. Jacobson, 566 So. 2d 885, 886 (Fla. 4th DCA 1990) (determining that a complaint to foreclose a mortgage did not state a cause of action when it was filed because the assignment of mortgage to the plaintiff was dated four months after the lawsuit was filed).

But Bayview contends that its standing to foreclose derives from the allonge to the note because the mortgage follows the note. Bayview argues that when USMoney transferred to Bayview the note which the mortgage secured, Bayview received equitable standing to foreclose the mortgage, even without a written assignment. We agree.

Bayview alleged in its complaint that it “owns and holds said note by virtue of the endorsement/allonge.” Bayview attached copies of the note and allonge to its complaint. The note and the allonge reflect that on the same day that Joyce Taylor executed the note in favor of USMoney, USMoney in turn endorsed the note without recourse to Bayview. Before the summary judgment hearing, Bayview filed the original note and the allonge. Thus Bayview established its status as holder of the note and its right to enforce the note. See § 671.201(20), Fla. Stat. (2005) (“`Holder,’ with respect to a negotiable instrument, means the person in possession if the instrument is payable to bearer or, in the case of an instrument payable to an identified person, if the identified person is in possession.”); Mortg. Elec. Registration Sys., Inc. v. Azize, 965 So. 2d 151, 153 (Fla. 2d DCA 2007) (“The holder of a note has standing to seek enforcement of the note.”); Kaminik v. Countrywide Home Loans, Inc., 64 So. 3d 195, 196 (Fla. 4th DCA 2011) (affirming in part a summary final judgment of foreclosure where the plaintiff “tendered the original promissory note to the trial court, which contained a special indorsement in its favor”); Riggs v. Aurora Loan Servs., LLC, 36 So. 3d 932, 933 (Fla. 4th DCA 2010) (“Aurora’s possession of the original note, indorsed in blank, was sufficient under Florida’s Uniform Commercial Code to establish that it was the lawful holder of the note, entitled to enforce its terms.”), review denied, 53 So. 3d 1022 (Fla. 2011).

Bayview also became the equitable owner of the mortgage when USMoney endorsed the note to Bayview because the ownership of the mortgage followed the note. In Johns v. Gillian, 184 So. 140, 143 (Fla. 1938), the Supreme Court of Florida summarized the law pertinent to the issue under review as follows:

[I]t has frequently been held that a mortgage is but an incident to the debt, the payment of which it secures, and its ownership follows the assignment of the debt. If the note or other debt secured by a mortgage be transferred without any formal assignment of the mortgage, or even a delivery of it, the mortgage in equity passes as an incident to the debt, unless there be some plain and clear agreement to the contrary, if that be the intention of the parties.

Johns stands for the proposition that a mortgage—as a mere incident to the debt it secures—follows the note unless the parties have clearly expressed a contrary intent. The First District Court of Appeal has cited Johns and other cases in support of the following proposition: “Because the lien follows the debt, there was no requirement of attachment of a written and recorded assignment of the mortgage in order for the appellant to maintain the foreclosure action.” Chem. Residential Mortg. v. Rector, 742 So. 2d 300, 300-01 (Fla. 1st DCA 1998) (footnote omitted). Because ownership of the mortgage followed the note in the absence of a contrary intention and Bayview owned and held the note when it filed its lawsuit, Bayview has standing to maintain the underlying foreclosure action. See Mazine v. M & I Bank, 67 So. 3d 1129, 1131 (Fla. 1st DCA 2011) (“The party seeking foreclosure must present evidence that it owns and holds the note and mortgage to establish standing to proceed with a foreclosure action.”).

Notably, the Taylors did not assert that the parties did not intend for the mortgage to follow the note, and they did not present any evidence in support of that proposition after Bayview filed with the trial court the original note, allonge, and mortgage. The mortgage itself reflects the parties’ intent that the mortgage would follow the note in the event of a sale. In addressing the subject of a sale or partial sale of the note in paragraph 20, the mortgage contemplates a sale of the note “together with this Security Instrument.” The note and the allonge reflect that USMoney sold the note to Bayview on the same day that the note and the mortgage were executed. The allonge also lists the “secured property address.” Thus the attachments to the complaint establish that Bayview acquired all of USMoney’s rights under both the note and the mortgage on January 4, 2006, before it filed the underlying action. Therefore, we conclude that Bayview refuted the Taylors’ affirmative defense and established its standing to foreclose the note and mortgage.

With respect to the affirmative defense of lack of notice, Bayview failed to refute this affirmative defense; it therefore prevents summary judgment in this case. Bayview made a general allegation that all conditions precedent had been performed, but the motion for summary judgment and affidavits do not negate the affirmative defense that Bayview failed to give proper notice of the default in the payments on the note and mortgage. Paragraph 22 of the mortgage, attached to the complaint, requires the lender to give the borrower notice prior to acceleration of the debt. In fact, the notice provision is the same as the one in Konsulian. See Konsulian, 61 So. 3d at 1284. There, the lender failed to establish that it met the condition precedent of providing the requisite notice when the borrower raised the issue as an affirmative defense; therefore, the lender was not entitled to summary judgment. Id. at 1285; see also Goncharuk v. HSBC Mortg. Servs., Inc., 62 So. 3d 680, 682 (Fla. 2d DCA 2011) (reversing summary judgment for plaintiff’s failure to address in its motion for summary judgment and affidavits the affirmative defense of lack of notice); Lazuran v. Citimortgage, Inc., 35 So. 3d 189, 189-90 (Fla. 4th DCA 2010) (reversing summary judgment where the plaintiff failed to refute the affirmative defense of lack of notice). For this reason, summary judgment was premature. Therefore, we reverse the final judgment of foreclosure and remand for further proceedings.

Reversed and remanded.



AFTER THE SALE: PART III On the Courthouse Steps

Submitted by Charles Koppa

The auctioneer represents the “beneficiary” in the sale.. If there is a “reserve amount minimum” (see below) the auctioneer actually bids up as agent for the unnamed beneficiary! The recipient “beneficial trust” is finally publically identified and documented by the Foreclosing Trustee in the recorded Trustees Deed Upon Sale.  Try to find a human officer for that trust!

Beneficiary makes no personal bid, delivers no cash, and is allowed a credit bid!  PROBLEM: a beneficiary (if known) would be a “party in interest” and could not be a bonafide buyer.  An est. 80% of the Courthouse sales go “Back to Beneficiary” (publicly unknown) and therefore are unlawful.  Lack of Notice and availability of Due Process to meet your accuser are historically common.

Predatory devaluations, plus untitled transfer of foreclosed mortgage notes systematically confiscated by “investment trusts” that were structured by Bank Holding Companies with no skin in the game, plus processing by shadow intermediaries “against the borrower”, equals “Tyranny on the Courthouse Steps!”

Sellers have the option of setting a hidden Reserve Price that is above the minimum starting bid.  If a reserve price is in effect, then the seller does not have sell the item unless the high bid meets or exceeds his reserve.  Auctions with a reserve price will be noted in their listing, describing whether the reserve has been met or not.  The actual amount of the reserve price is not revealed to bidders, until it has been met.

When you submit a bid on a reserve price auction, one of three things might happen:
(1) If the reserve has already been met, then your bid will be submitted at one increment above the next highest competitor, in the same manner as an auction without a reserve price.
(2) If the reserve has not been met, and your maximum bid is also less than the reserve, then your bid will be entered at one increment above the next highest competitor.
(3) If the reserve has not been met, but your maximum bid is enough to meet the reserve, then your bid will be entered at exactly the seller’s reserve price.  If your maximum was above the seller’s reserve, then your proxy will defend your bid, up to your maximum.If you are the highest bidder at auction close but the reserve was not met, then neither you nor the seller are obligated to the transaction.  However, you may wish to negotiate further via email, to see if a mutually satisfactory price can be reached.


No sale:
Item #9999 had a minimum starting bid of $100.00
The seller set a reserve price in his listing of $200.00.
At the end of the auction, the highest bid is $175.00.
In this case, the seller is not obligated to sell for $175.00, but may choose to do so anyway.

Item #8888 had a minimum starting bid of $900.00.
The seller set a reserve price in his listing of $1,200.00.
At the end of the auction, the highest bid is $1,225.00.
In this case, the seller is obligated to sell for $1,225.00 to the highest bidder.

Rally in Tally: Homeowner Relief and Housing Recovery Act is a Sham and Shame

Editor’s Note: Due process requires that nobody be deprived of life, liberty or property without a judicial determination on the merits of claims against them. Non-judicial procedure runs a thin line that has not actually been tested constitutionally. Assuming it is valid by virtue of the “freedom of contract” doctrine, it still cannot be used to abuse and trick people into losing their homes when in fact the trickster has no interest in the loan, the property or the originating transaction. The attempt in Florida to increase the number of states using non-judicial procedure is abhorrent to anybody who conceives this country as a nation of laws. Non-judicial procedure is in my opinion, inapplicable to most, if not all, securitized loans.

The reason is simple: non-judicial foreclosure sales are meant to achieve judicial economy without prejudice to anyone. In securitized loans there are so many potential stakeholders that non-judicial sale prevents notice and due process and even encourages tricksters to use it against the interests of those who might have an interest. It not only increases moral hazard, it assures a growing cloud on the title of all properties that have been or will be the subject of foreclosure sales.

The pandemic effect on an already unstable marketplace is being amplified by these legislative attempts to legalize unjust enrichment of intermediaries who have no financial interest and who who are not subject to any financial loss for a loan, with it is performing or non-performing.

Posted by Malcolm Doney

The following letter was sent to all 14 members of the House Criminal & Civil Justice Council the day before the Bill was killed. We have reason to believe that it was instrumental in causing the death of that Bill and of the Senate Bill. It was authored by me assisted by three other founding members of Mortgage Justice an activist and educational not for profit. It is now widely circulated to many of the people going to the Rally in Tally. Any of your readers is free to use it as a tool to fight the fraudsters.
1. The Florida Bankers Association is attempting to use the power of the Florida State Legislature as an instrument to commit fraud upon its citizens and House Bill 1523 is inappropriately named The Homeowner Relief and Housing Recovery Act.
2. This Bill and its sister Bill in the Senate SB 2270 will not relieve any Homeowners and neither will it aid any Housing Recovery. On the contrary these Bills, if enacted, will add to the personal burdens of this States’ citizens, deepen the recession, add to the destabilization of communities, the breakup of families, an increase in blue collar crime and hundreds of millions of Dollars in lost Court revenue to the State.
3. HB 1523 adds to the deception in its introduction by adding to the ‘deadbeat borrowers myths’ [whereas it was deliberately planned and executed by Wall Street Investment Banks, Main Street Banks, mortgage lenders and their cohorts], falsely suggests that the cure is to expedite foreclosures to bottom out the market and that somehow this unsupportable economic theory will revitalize the economy, allow citizens to pay their taxes and Housing Associations to maintain communities.
4. If enacted, the passage of these Bills would shift the burden of proof to foreclose from the foreclosing parties to the homeowner, thus denying those homeowners their existing rights of due process and simultaneously, circumvent the recently imposed Supreme Court of Florida’s requirement placed upon foreclosing parties to substantiate under penalty of perjury that they have the legal authority to foreclose on real property given as security in a Mortgage to the true Owner of a Promissory Note and to engage in mandatory mediation. These requirements are the real reason for these proposed laws, because they can no longer hide their crimes from our Courts.
5. Because all members of the legislature are unaware of the fraudulent intent behind the Florida Bankers lobbyists who proposed this draft legislation we have concentrated most of our detailed efforts upon exposing the frauds rather than pointing out the serious deficiencies of the Bills as we know that other groups and individuals are adequately bringing such reviews to the attention of the legislature.
6. However, of paramount importance is the fact that lines 216 to 225 of the original draft clearly backdates the effect of these proposed laws to time immemorial. By the clever use of the words “agreed in substance in the security instrument” the drafters are seeking to remove the requirement contained in Florida Mortgages in clause 22 that all foreclosures must be conducted through the Judicial system by obliquely [but not specifically] referring to clause 16 in which the signor has acknowledged that the whole document is subject to Federal and State Law. The intent of the signing parties of all such Mortgages was that clause 22 of that unilateral contract would apply for the life of that instrument and that imprecise words such as “agreed in substance” would not be used in future laws to imply that they had agreed to a major change in the terms of those Mortgages and if enacted it will negatively impact basic human, property and contractual rights guaranteed under the Federal and State constitutions.
7. Mortgage Justice wishes to reveal that the truth behind the mortgage meltdown is:-
(a) The Housing Bubble was deliberately planned and implemented by Wall Street entities and the Main Street Banks.
(b) Mortgage and other loans were deliberately set up to fail.
(c) The lenders shown on Promissory Notes and Mortgages were not the Lenders, but were misappropriating the use of their licenses to transact mortgage business in the various states and were funded by Wall Street Brokers from the proceeds of the sale of Derivatives in wrongly described AAA rated Mortgage Backed Securities, for which they were paid excessive ‘yield spread premiums’ as a commission.
(d) Notes and Mortgages were not sold in the secondary market, neither were they transferred into securitized mortgage pools. It was impossible for pretend lenders to sell what they did not own.
(e) Contrived sales in the secondary market were documented in the Securities and Exchange Commission’s public records to entitle these pretend lenders to avoid paying federal taxes upon their profits by appearing to comply with IRC 860 and ‘selling’ loans into Real Estate Mortgage Investment Conduits (REMIC). Documents filed in the SEC provide proof that all these mortgages failed to comply with IRC 860.
(f) SEC documents establish that none of the mortgage loans that they say were put into REMIC Trusts, ever reached those Trusts and that the majority of the ‘so-called’ Trusts were not Trusts but a form of perpetual LLC with zero reporting requirements filed in the State of Delaware for the benefit of those major Banks and/or GSEs, as the true beneficiaries of all the frauds. These ‘Trusts’ are named Delaware Statutory Trusts, they are neither Statutory, nor are they Trusts.
(g) The true beneficiaries of the frauds also sold undisclosed and unregulated multiple default insurances and credit default swaps sold through the International Swaps and Derivatives Association on every new mortgage created to guarantee receipt of multiples of sums they had pretended to lend as and when the planned defaults occurred.
(h) It is therefore a fact that in almost every mortgage foreclosure action the foreclosing entity is not the owner of the Note or the Mortgage, never lent any money, is an integral part of a criminally motivated group has already reaped criminal profits, will share in multiple proceeds from insurances, all the Notes have been deliberately eliminated as admitted to the Supreme Court of Florida by the Florida Bankers Association and all Notes are already paid in full.
8. Mortgage Justice understands that the above text contains major allegations of fraud levied against some of the biggest and most powerful institutions in the land and does not make these accusations lightly. We are fully prepared upon request given adequate notice to furnish irrefutable documentary evidence supporting those accusations and if required to justify them with documentary evidence are willing so to do in order to demonstrate why this proposed legislation must be unanimously rejected by the Florida Legislature for the benefit of its present and future citizens.
9. We also request Public Hearings be scheduled prior to any passage of these proposals and we suggest inviting all interested parties, including representatives of finance and banking who are apparently promoting these Bills, consumers and their advocates.
10. Finally, we refer you to informative videos that can be accessed via the Internet. In our opinion the most reliably informative and professional presentations of the truth behind the housing bubble are those involving the eminent Academic, Criminologist, Economist, Lawyer, Accountant, author of the book entitled ‘The Best Way to Rob a Bank is to Own One’ and a former lead regulator during the savings and loans crisis. Professor William [Bill] Black. To authenticate what we have revealed, please watch Bill Moyers’ PBS interview of Bill. WE BELIEVE this interview OFFERS AN EXCEPTIONAL OVERVIEW OF THE CAUSE OF THE ECONOMIC MELTDOWN AND FRAUD PERPETRATED BY THE BANKING INDUSTRY ON THE AMERICAN CITIZEN AND WE BELIEVE IT IS IMPERATIVE THAT YOU WATCH AND HEAR THIS VIDEO.
11. Bill Black submitted himself to further questioning in a recent five-part interview on an Internet news channel, Real News. Please watch and listen to these questions and answers also. Political rhetoric, spin and sound bites are no answer to the serious crimes exposed in these interviews. He speaks openly, with a sincere honesty and integrity, almost extinct in our country today. His interview makes us starkly aware that the Banks are striking at the heart of our Republic and government, in all of its branches, but especially the judicial branch. Now that Courts are more closely examining foreclosure cases filed against homeowners in Florida and other jurisdictions the truth is beginning to emerge. Courts in Florida and in many states are finding that the banks lack standing, are filing frivolous lawsuits and are unable to prevail when a homeowner enters a properly pled defense. Mortgage justice strongly believes that the preservation of citizen rights to defend these actions is as vital to the Citizens of Florida as it is to the banks to destroy it. Preserving those rights will establish the truth, disclose extensive violations of state and federal laws by the banking industry, put an end to the power of the banking industry in our state legislature and the resultant backlash of public opinion will reverberate throughout our nation and the world. After nearly destroying the Global Economy, after lowering by twenty percent the net worth of our citizens, and after borrowing billions from them and reaping record profits without any legislative reform or inquiry they now attempt to make it even easier to take the homes of the citizens and deprive them of their legal rights. We urge you to carefully consider, investigate and reject this proposed legislation on behalf of the homeowners and citizens of Florida.

for our members and the Citizens of the United States, April 12, 2010.

P.S. Internet links – Please copy and paste the following links into your browser:-

Then listen to – To rob a country, own a bank Pt5 – put this into Google and follow the links to 5 part video of Black on Real News.

Also essential viewing and listening to the latest on MSNBC,


Seminars for Layman (Pro Se Litigants) and For Lawyers





I have been inundated with TILA questions. So I went out hunting to see if anyone had already written about it in terms that a lay person might be able to understand. What I found is shown below. I believe it to be generally correct and the citations are good citations of law. See this site for the entire write-up. It should give most lay people an idea on how to handle this and it will be valuable to your lawyer if he/she is not totally familiar with the TILA context. As always, we are available to answer questions and direct you to the proper people to get expert help and advice.


  1. TILA Rescission is self enforcing. It automatically extinguishes the lien and the liability. The time for rescission does not run until you actually knew the full scope of the violation. That is tantamount to it never running out.
  3. Judge is required to look for authority himself if you are representing yourself without a lawyer (pro se). This provision in effect makes the Judge your lawyer and your Judge. Pretty good combination for you.
  4. Judge has no discretion to deny damages, refunds etc to Borrower once a violation of TILA, no matter how small, is discovered.
  5. TILA Rescission is NOT barred before during or after other proceedings unless those other proceedings specifically mention rescission as an issue to be tried.
  6. Federal Action for injunction against the players to require them to file documents canceling the documents of record and providing judgment for damages and refunds is probably the best action since that is what is contemplated.
  7. If in bankruptcy, it should be pled in an adversary proceeding. But if the bankruptcy is  primarily related to the foreclosure the better practice would be to file in the same Federal Court, Civil Division, a complaint for violation of TILA rescission.
  8. A Quiet TItle Action in State Court would probably also be a good idea before, during or after the Federal action. It clears up any doubt whatsoever about the status of title or the lender’s lien or encumbrances.
  10. Suggestion: If you are in Court and you have opted or are ordered to settlement, try to get a paragraph in the mediation order that requires all decision-makers to be present, whether they are parties or not. This would include the holders of securities who are the ultimate owners of the mortgage. (You may get a pleasant surprise. We have reports that the lenders sometimes can’t trace them down, in which case, the foreclosure action or sale is dismissed and you have no mortgage).

TILA & Res Judicata

(Analogous to Mr. Pierre R. Augustin, Pro Se’s situation since he had never litigated fully or raised any TILA claims affirmatively or defensively) –

A rescission action may not be barred by prior or subsequent TIL litigation which did not involve rescission (Smith v. Wells Fargo Credit Corp., 713 F. Supp.  354 (D. Ariz. 1989) (state court action involving, inter alia TIL disclosure violations did not bar a subsequent action based on rescission notice violations in conjunction with same transaction which were not alleged or litigated in prior action) (See also In re Laubach, 77 B.R. 483 (Bankr. E.D. Pa. 1987) (doctrine of merger bars raising state and federal law claims arising from a transaction on which a previous successful federal TILA action was based; merger does not bar, however, rescission-based on the same transaction)).

IX.  Timely Notified Lenders/Attorneys of TILA Right of Rescission

Mr. Pierre R. Augustin, Pro Se filed a copy of the notice of rescission letter (See Exhibit 5) in the bankruptcy court notifying the attorneys representing DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance as well as having certified receipt return of proof of delivery to the Lawyers including are proof of notification according to the Official Staff Commentary, 226.2(a)(22)-2 as authorizing service on attorney.

The Truth-in-Lending law empower Mr. Pierre R. Augustin, Pro Se to exercise his right in writing by notifying creditors of his cancellation by mail to rescind the mortgage loan transactions per (Reg. Z §§ 226.15(a)(2), 226.23(a)(2), Official Staff Commentary § 226.23(a)(2)-1) and 15 U.S.C. § 1635(b).

Equitable Tolling
The filing of Bankruptcy tolls or extends the rescission time as Mr. Pierre R. Augustin, Pro Se had filed for bankruptcy on September 26, 2005 and obtained a discharge on September 26, 2006.

Also, the principle of equitable tolling does apply to TILA 3 years period of rescission since despite due diligence, Mr. Pierre R. Augustin, Pro Se could not have reasonably discovered the concealed fact of TILA violations in-depth and explicitly until September 17, 2006 at about 5 a.m. in reading the Truth-in-Lending book by the National Consumer Law Center.

The equitable tolling principles are to be read into every federal statute of limitations unless Congress expressly provides to the contrary in clear and ambiguous language, (See Rotella v. Wood, 528 U.S. 549, 560-61, 120 S. Ct. 1075, 145 L. Ed. 2d 1047 (2000)). Since TILA does not evidence a contrary Congressional intent, its statute of limitations must be read to be subject to equitable tolling, particularly since the act is to be construed liberally in favor of consumers.

Security Interest is Void
The statute and regulation specify that the security interest, promissory note or lien arising by operation of law on the property becomes automatically void. (15 U.S.C. § 1635(b); Reg. Z §§ 226.15(d)(1), 226.23(d)(1).

As noted by the Official Staff Commentary, the creditor’s interest in the property is “automatically negated regardless of its status and whether or not it was recorded or perfected.” (Official Staff Commentary §§ 226.15(d)(1)-1, 226.23(d)(1)-1.).

Also, the security interest is void and of no legal effect irrespective of whether the creditor makes any affirmative response to the notice. Also, strict construction of Regulation Z would dictate that the voiding be considered absolute and not subject to judicial modification.

This requires DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance to submit canceling documents creating the security interest and filing release or termination statements in the public record. (Official Staff Commentary §§ 226.15(d)(2)-3, 226.23(d)(2)-3.)

Extended Right of Rescission
The statute and Regulation Z make it clear that, if Mr. Pierre R. Augustin, Pro Se has the extended right and chooses to exercise it, the security interest and obligation to pay charges are automatically voided. (Cf. Semar v. Platte Valley Fed. Sav. & Loan Ass’n, 791 F.2d 699, 704-05 (9th Cir. 1986) (courts do not have equitable discretion to alter substantive provisions of TILA, so cases on equitable modification are irrelevant).

The statute, section 1635(b) states: “When an obligor exercises his right to cancel…, any security interest given by the obligor… becomes void upon such rescission”. Also, it is clear from the statutory language that the court’s modification authority extends only to the procedures specified by section 1625(b).

The voiding of the security interest is not a procedure, in the sense of a step to be followed or an action to be taken.

The statute makes no distinction between the right to rescind in three day or extended in three years for federal and four years under Mass. TILA, as neither cases nor statute give courts equitable discretion to alter TILA’s substantive provisions.

Since the rescission process was intended to be self-enforcing, failure to comply with the rescission obligations subjects DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance to potential liability.

XIII.  Non-Compliance

Non-compliance is a violation of the act which gives rise to a claim for actual and statutory damages under 15 USC 1640. TIL rescission does not only cancel a security interest in the property but it also cancels any liability for the Mr. Pierre R. Augustin, Pro Se to pay finance and other charges, including accrued interest, points, broker fees, closing costs and that the lender must refund to Mr. Pierre R. Augustin, Pro Se all finance charges and fees paid.

In case DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance do not respond to this default letter, Mr. Pierre R. Augustin, Pro Se has the option of enforcing the rescission right in the federal, bankruptcy or state court (See S. Rep. No. 368, 96th Cong. 2 Sess. 28 at 32 reprinted in 1980 U.S.C.A.N. 236, 268 (“The bill also makes explicit that a consumer may institute suit under section 130 [15 U.S.C., 1640] to enforce the right of rescission and recover costs and attorney fees”).

TIL rescission does not only cancel a security interest in the property but it also cancels any liability for Mr. Pierre R. Augustin, Pro Se to pay finance and other charges, including accrued interest, points, broker fees, closing costs and the lender must refund to Mr. Pierre R. Augustin, Pro Se all finance charges and fees paid.

Thus, DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance are obligated to return those charges to Mr. Pierre R. Augustin, Pro Se (Pulphus v. Sullivan, 2003 WL 1964333, at *17 (N.D. Apr. 28, 2003) (citing lender’s duty to return consumer’s money as reason for allowing rescission of refinanced loan); McIntosh v. Irwing Union Bank & Trust Co., 215 F.R.D. 26 (D. Mass. 2003) (citing borrower’s right to be reimbursed for prepayment penalty as reason for allowing rescission of paid-off loan).

XIV.  Sources of Law in Truth in Lending Cases

“These include TILA itself, the Federal Reserve Board’s Regulation Z which implements the Act, the Official Staff Commentary on Regulation Z, and case law.  Except where Congress has explicitly relieved lenders of liability for noncompliance, it is a strict liability statute.  (Truth-In-Lending, 5th Edition, National Consumer Law Center,, page 11)

XV.  Synopsis of How Rescission Works

The process starts with the consumer’s notice to the creditor that he or she is rescinding the transaction.  As the bare bones nature of the FRB model notice demonstrates, it is not necessary to explain why the consumer is canceling.  The FRB Model Notice simply says: “I WISH TO CANCEL,” followed by a signature and date line (Arnold v. W.D.L. Invs., Inc., 703 F.2d 848, 850 (5th cir. 1983) (clear intention of TILA and Reg. Z is to make sure that the creditor gets notice of the consumer’s intention to rescind)).

The statute and Regulation Z states that if creditor disputes the consumer’s right to rescind, it should file a declaratory judgment action within the twenty days after receiving the rescission notice, before its deadline to return the consumer’s money or property and record the termination of its security interest (15 USC 1625(b)).  Once the lender receives the notice, the statute and Regulation Z mandate 3 steps to be followed.

XVI. Step One of Rescission

First, by operation of law, the security interest and promissory note automatically becomes void and the consumer is relieved of any obligation to pay any finance or other charges (15 USC 1635(b); Reg. Z-226.15(d)(1),226.23(d)(1).  .  See Official Staff Commentary § 226.23(d)(2)-1. (See Willis v. Friedman, Clearinghouse No. 54,564 (Md. Ct. Spec. App. May 2, 2002) (Once the right to rescind is exercised, the security interest in the Mr. Pierre R. Augustin’s property becomes void ab initio).

Thus, the security interest is void and of no legal effect irrespective of whether the creditor makes any affirmative response to the notice. (See Family Financial Services v. Spencer, 677 A.2d 479 (Conn. App. 1996) (all that is required is notification of the intent to rescind, and the agreement is automatically rescinded).

It is clear from the statutory language that the court’s modification authority extends only to the procedures specified by section 1635(b).  The voiding of the security interest is not a procedure, in the sense of a step to be followed or an action to be taken.

The statute makes no distinction between the right to rescind in 3-day or extended as neither cases nor statute give courts equitable discretion to alter TILA’s substantive provisions. Also, after the security interest is voided, secured creditor becomes unsecured. (See Exhibit #6)

XVII. Step Two of Rescission

Second, since Mr. Pierre R. Augustin has legally rescinded the loans transaction, the mortgage holders (DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance) must return any money, including that which may have been passed on to a third party, such as a broker or an appraiser and to take any action necessary to reflect the termination of the security interest within 20 calendar days of receiving the rescission notice which has expired.

The creditor’s other task is to take any necessary or appropriate action to reflect the fact that the security interest was automatically terminated by the rescission within 20 days of the creditor’s receipt of the rescission notice (15 USC 1635(b); Reg. Z-226.15(d)(2),226.23(d)(2).

XIII. Step Three of Rescission

Mr. Pierre R. Augustin is prepared to discuss a tender obligation, should it arise, and satisfactory ways in which to meet this obligation.  The termination of the security interest is required before tendering and step 1 and 2 have to be respected by DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance

XIV. Conclusion

I am requesting an itemized statement of my payment record to DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance.    When Mr. Pierre R. Augustin rescinds within the context of a bankruptcy, courts have held that the rescission effectively voids the security interest, rendering the debt, if any, unsecured (See Exhibit #6).  (See in re Perkins, 106 B.R. 863, 874 (Bankr. E.D.Pa. 1989); In re Brown, 134 B.R. 134 (Bankr. E.D.Pa. 1991); In re Moore, 117 B.R. 135 (Bankr.E.D. Pa. 1990)).

Once the court finds a violation such as not responding to the TILA rescission letter, no matter how technical, it has no discretion with respect to liability (in re Wright, supra. At 708; In re Porter v. Mid-Penn Consumer Discount Co., 961 F,2d 1066, 1078 (3d. Cir. 1992); Smith v. Fidelity Consumer Discount Co., Supra. At 898.  Any misgivings creditors may have about the technical nature of the requirements should be addressed to Congress or the Federal Reserve Board, not the courts.

Since DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance have not cancelled the security interest and return all monies paid by Mr. Pierre R. Augustin within the 20 days of receipt of the letter of rescission of September 21, 2006, the lenders named above are responsible for actual and statutory damages pursuant to 15 U.S.C. § 1640(a).

Once again, please send me a copy of my payment history and other document showing the loan disbursements, loan charges and payment made.  Also, DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance are to take any necessary or appropriate action to reflect the fact that the security interest was automatically terminated by the rescission (15 USC 1635(b); Reg. Z-226.15(d)(2),226.23(d)(2).  This requires canceling documents creating the security interest and filing release or termination statements in the public record of FREE and CLEAR TITLE to Mr. Pierre R. Augustin.  Thank you (TTTLMG).

May GOD Bless America,

Pierre Richard Augustin, Pro Se, MPA, MBA

28 Cedar Street, Lowell, MA 01852

Tel: 617-202-8069

TILA Pleading

Under the Federal Rules of Civil Procedures, it may be sufficient to plead that the TILA has been violated. (Fed.R. Civ. P. 8(a)).

Specific violations do not necessarily have to be alleged with particularity (Brown v. Mortgagestar, 194 F. Supp. 2d 473 (S.D. W. Va. 2002) (notice pleading is all that is required in TILA case);

Herrara v. North & Kimball Group, Inc., 2002 WL 253019 (N.D. Ill. Feb.. 20, 2002) (notice pleading sufficient; response to motion to dismiss can supplement complaint by alleging facts re specific documents assigned);

Staley v. Americorp. Credit Corp., 164 F. Supp. 2d 578 (D. Md. 2001) (Mr. Pierre R. Augustin,

Pro Se need not specify specific statute or regulations that entitle him to relief; court will examine complaint for relief on any possible legal theory);

Hill v. GFC Loan Co., 2000 U.S. Dist. Lexis 4345 (N.D. Ill. Feb. 15, 2000).

The consumer’s complaint need not plead an error exceeded the applicable tolerance, since this is an affirmative defense (Inge v. Rock Fin. Corp., 281 F.3d 613 (6th cir. 2002)).

In page 2 (See Exhibit 1) of Mr. Pierre R. Augustin, Pro Se’s civil complaint, he stated that TILA was in of the Jurisdiction of all the claims against the creditors or defendants in that civil action.

At #6 of page 14 (See Exhibit 2) of civil complaint, Mr. Pierre R. Augustin, Pro Se explicitly stated that the New Century Mortgage Note which is now assigned to Chase is in violation of TILA and Regulation Z claims.

In page 17 of the civil complaint, Mr. Pierre R. Augustin, Pro Se did mention rescission and statutory damages (See Exhibit 3).

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