Matt Weidner – Fighting For The American People

Posts Tagged ‘affidavit fraud’

A few months back I started looking closely at an allonge in on of my cases.  A sloppy, unprofessional, illegible mess that the Plaintiff asserted was all they needed to show ownership of a $500,000 asset.

Come on…all you need to show ownership of something worth $500,000 is some sloppy, squiggly line that is facially questionable?  Reading the deposition of Angela Nolan who describes a process where allonges (including alleged signatures) are computer generated then affixed to the note sometime later.

The fact of the matter is transfer of notes should only be done via endorsement, not allonge.  There are increasingly appellate and bankruptcy court opinions that recognize this, but it’s up to us practicing in the circuit courts to challenge these things every time we come across them.  Use Florida Statutes 673.3081 as the basis for the challenge and I have a great memo posted which details all the reported case law nationwide on allonges.  But here is a fantastic Arizona decision hot off the presses.  Thanks to MortgageFrauds for Sharing With The Class!

In re: BARRY WEISBAND, Chapter 13, Debtor. Case No. 4:09-bk-05175-EWH. United States Bankruptcy Court, D. Arizona. March 29, 2010.

Barry Weisband, Tucson, AZ, Ronald Ryan, Ronald Ryan, P.C., Tucson, AZ, Attorney for Debtor.

MEMORANDUM DECISION

EILEEN W. HOLLOWELL, Bankruptcy Judge

I. INTRODUCTION

The debtor, Barry Weisband (“Debtor”), has challenged the standing of creditor, GMAC Mortgage, LLC (“GMAC”), to seek stay relief on his residence. After reviewing the documents provided by GMAC and conducting an evidentiary hearing, the court concludes that GMAC, the alleged servicer of the Debtor’s home loan, lacks standing to seek stay relief. The reasons for this conclusion are explained in the balance of this decision.

II. FACTUAL AND PROCEDURAL HISTORY

A. Creation of Debtor’s Note And Asserted Subsequent Transfers

On or about October 6, 2006, the Debtor executed and delivered to GreenPoint Mortgage Funding, Inc. (“GreenPoint”) an adjustable rate promissory note in the principal sum of $540,000 (“Note”) secured by a Deed of Trust (“DOT”) on real property located at 5424 East Placita Apan, Tucson, Arizona 85718 (“Property”). On a separate piece of paper, GreenPoint endorsed the Note to GMAC (“Endorsement”). The Endorsement is undated. The DOT was signed by the Debtor on October 9, 2006, and recorded on October 13, 2006. The DOT lists GreenPoint as the lender, and Mortgage Electronic Registration Systems, Inc. (“MERS”) as the beneficiary of the DOT “solely as nominee for [GreenPoint], its successors and assigns.”

Approximately five months before the creation of the Note and DOT, on April 10, 2006, GreenPoint entered into a Flow Interim Servicing Agreement (“FISA”) (Exhibit D)¹ with Lehman Capital, a division of Lehman Brothers Holdings, Inc. (collectively “Lehman”), pursuant to which Lehman agreed to purchase conventional, residential, fixed and adjustable rate first and second lien mortgage loans from GreenPoint. Under the FISA, GreenPoint agreed to service the mortgage loans it sold to Lehman. According to GMAC, GreenPoint transferred the Note and DOT to Lehman under the FISA. On November 1, 2006, Lehman entered into a Mortgage Loan Sale and Assignment Agreement (“MLSAA”) with Structured Asset Securities Corporation (“SASC”) (Exhibit E). Under that agreement, Lehman transferred a number of the mortgage loans it acquired under the FISA to SASC. GMAC claims that the Note was one of the mortgage loans transferred to SASC. SASC created a trust to hold the transferred mortgages — GreenPoint Mortgage Funding Trust (“Trust”). The MLSAAalso transferred the right to receive principal and interest payments under the transferred mortgage loans from Lehman to the Trust. Also, on November 1, 2006, SASC entered into a Trust Agreement (Exhibit F) with Aurora Loan Services (“Aurora”) as the master servicer, and U.S. Bank National Association (“U.S. Bank”) as the trustee. A Reconstituted Servicing Agreement (Exhibit G) was executed the same day, which provided that GreenPoint would continue to service the mortgages transferred to the Trust under the MLSAA, but that the Trust could change servicers at any time. Also, according to GMAC, on November 1, 2006, GMAC, Lehman, and Aurora entered into a Securitization Servicing Agreement (“SSA”) (Exhibit H), pursuant to which GMAC would service the loans transferred to the Trust. GMAC claims that under the SSA it is the current servicer of the Note and DOT.

Thus, according to GMAC, as of November 1, 2006, the Note and DOT had been transferred to the Trust, with SASC as the Trustor, U.S. Bank as the Trustee, Aurora as the master servicer, and GMAC as the sub-servicer. GreenPoint went out of business in 2007. According to GMAC, it remains the sub-servicer of the Note, and that is its only financial interest in the Note and DOT. (Transcript Nov. 10, 2009, pp. 44, 47, 75.)

B. Bankruptcy Events

As of March 1, 2009, the Debtor was in default of his obligations under the Note. Debtor filed his petition for relief under Chapter 13 of the Bankruptcy Code on March 19, 2009. On May 16, 2009, GMAC filed a proof of claim (“POC”), which attached the Note and DOT. The Endorsement from GreenPoint to GMAC was not attached to GMAC’s proof of claim. On May 12, 2009, MERS, as nominee for GreenPoint, assigned its interest in the DOT to GMAC (“MERS Assignment”). The MERS Assignment was recorded on July 16, 2009.  GMAC filed a Motion for Relief from Stay (“Motion”) on May 29, 2009, on the grounds that the Debtor had no equity in the Property and the Property was not necessary for an effective reorganization. The Motion also requested adequate protection payments to protect GMAC’s alleged interest in the Property. GMAC attached the Note with the Endorsement and DOT as exhibits to the Motion. The Debtor filed a response challenging GMAC’s standing to seek relief from stay. After various discovery disputes, GMAC sent a letter dated September 17, 2009, to the Debtor which purported to explain the various transfers of the Note and the DOT. (Docket #90). The letter explained that GreenPoint transferred the “subject loan” to Lehman under the FISA, that Lehman sold the “subject loan” to SASC under the MLSAA, that SASC, Aurora Loan Services, and U.S. National Bank entered into a trust agreement, which created the Trust and made Aurora the master servicer for the “subject loan,” and, that GMAC was the servicer of the “subject loan” under the SSA. According to GMAC, its status as servicer, along with the Endorsement of the Note to GMAC and the assignment of the DOT from MERS to GMAC, demonstrated that it had standing to bring the Motion. On November 10, 2009, the Court conducted an evidentiary hearing on the Motion. GMAC offered the original Note at the hearing and admitted into evidence a copy of the Note, DOT, copies of the FISA, MLSAA, Trust Agreement, the Reconstituted Servicing Agreement and the SSA. However, GMAC did not offer any documents demonstrating how the Note and DOT were conveyed by GreenPoint to the FISA. No document was offered demonstrating how the Note and DOT were conveyed from the FISA to the MLSAA or from the MLSAA into the Trust. Schedule A-1 of the MLSAA, where the transferred mortgages presumably would have been listed, only has the words “Intentionally Omitted” on it, and Schedule A-2 has the word “None.” (Exhibit F, pp. 19-20). Similarly, there is no evidence that the Note and DOT are subject to the SSA. Exhibit A to the SSA, titled “Mortgage Loan Schedule,” is blank. At the conclusion of the hearing, this Court ordered the Debtor to begin making adequate protection payments commencing on December 1, 2009 to the Chapter 13 Trustee. The Court further ordered GMAC and the Debtor to negotiate the amount of the adequate protection payments. When the parties were unable to reach agreement, the Court set the amount of the monthly payments at $1,000.

III. ISSUE

Does GMAC have standing to bring the Motion?

IV. JURISDICTIONAL STATEMENT

Jurisdiction is proper under 28 U.S.C. §§ 1334(a) and 157(b)(2)(G).

V. DISCUSSION

A. Introduction

Section 362(a) of the Bankruptcy Code provides that the filing of a bankruptcy petition operates as a stay of collection and enforcement actions. 11 U.S.C. § 362(a). The purpose of the automatic stay is to provide debtors with “protection against hungry creditors” and to assure creditors that the debtor’s other creditors are not “racing to various courthouses to pursue independent remedies to drain the debtor’s assets.” In re Tippett, 54,2 F.3d 684 (9th Cir. 2008) (citing Dean v. Trans World Airlines,

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Inc., 72 F.3d 754, 755-56 (9th Cir. 1995)); see also In re Johnston, 32,1 B.R. 262 (D. Ariz. 2005). Despite the broad protection the stay affords, it is not without limits. Section 362(d) allows the court, upon request of a “party in interest,” to grant relief from the stay, “such as terminating, annulling, modifying, or conditioning such stay.” 11 U.S.C. § 362(d)(1). The court may grant relief “for cause, including the lack of adequate protection.” Id. The court may also grant relief from the stay with respect to specific property of the estate if the debtor lacks equity in the property and the property is not necessary to an effective reorganization. 11 U.S.C. § 362(d)(2).

Any party affected by the stay should be entitled to seek relief. 3 COLLIER’S ON BANKRUPTCY ¶ 362.07[2] (Henry Somers & Alan Resnick, eds. 15th ed., rev. 2009); Matter of Brown Transp. Truckload, Inc., 118 B.R. 889, 893 (Bankr. N.D. Ga. 1990); In re Vieland, 4,1 B.R. 134 (Bankr. N.D. Ohio 1984)). Relief from stay hearings are limited in scope — the validity of underlying claims is not litigated. In re Johnson, 75,6 F.2d 738 (9th Cir. 1985). As one court has noted, “[s]tay relief hearings do not involve a full adjudication on the merits of claims, defenses or counterclaims, but simply a determination as to whether a creditor has a colorable claim.” In re Emrich, 200,9 WL 3816174, at *1 (Bankr. N.D. Cal. 2009).

Nevertheless, in order to establish a colorable claim, a movant for relief from stay bears the burden of proof that it has standing to bring the motion. In re Wilhelm, 40,7 B.R. 392 (Bankr. D. Idaho 2009). The issue of standing involves both “constitutional limitations on federal court jurisdiction and prudential limitations on its exercise.” Warth v. Seldin, 422 U.S. 490, 498 (1975). Constitutional standing concerns whether the plaintiff’s personal stake in the lawsuit is sufficient to have a “case or

controversy” to which the federal judicial power may extend under Article III. Id.; see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-60 (1992); Pershing Park Villas Homeowners Ass’n v. United Pac. Ins. Co., 219 F.3d 895, 899 (9th Cir. 2000).

Additionally, the “prudential doctrine of standing has come to encompass several judicially self-imposed limits on the exercise of federal jurisdiction.’” Pershing Park Villas, 219 F.3d at 899. Such limits are the prohibition on third-party standing and the requirement that suits be maintained by the real party in interest. See Warth v. Seldin, 422 U.S. at 498-99; Gilmartin v. City of Tucson, 2006 WL 5917165, at *4 (D. Ariz. 2006). Thus, prudential standing requires the plaintiff to assert its own claims rather than the claims of another. The requirements of Fed. R. Civ. P. 17, made applicable in stay relief motions by Rule 9014, “generally falls within the prudential standing doctrine.” In re Wilhelm, 40,7 B.R. at 398.

B. GMAC’s Standing

GMAC advances three different arguments in support of its claim to be a “party in interest” with standing to seek relief from stay. First, GMAC asserts it has standing because the Note was endorsed to GMAC and GMAC has physical possession of the Note. Second, GMAC asserts that by virtue of the MERS Assignment, it is a beneficiary of the DOT and entitled to enforce and foreclose the DOT under Arizona law. Third, GMAC asserts it has standing because it is the servicer of theNote. The court addresses each of GMAC’s claims in turn.

1. GMAC Has Not Demonstrated That It Is A Holder Of The Note

If GMAC is the holder of the Note, GMAC would be a party injured by the Debtor’s failure to pay it, thereby satisfying the constitutional standing requirement. GMAC would also be the real party in interest under Fed. R. Civ. P. 17 because under ARIZ. REV. STAT. (“A.R.S.’) § 47-3301, the holder of a note has the right to enforce it.² However, as discussed below, GMAC did not prove it is the holder of the Note.

Under Arizona law, a holder is defined as “the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.” A.R.S. § 47-1201(B)(21)(a).³ GMAC has failed to demonstrate that it is the holder of the Note because, while it was in possession of the Note at the evidentiary hearing, it failed to demonstrate that the Note is properly payable to GMAC. A special endorsement to GMAC was admitted into evidence with the Note. However, for the Endorsement to constitute part of the Note, it must be on “a paper affixed to the instrument.” A.R.S. § 47-3204; see also In re Nash, 4,9 B.R. 254 (Bankr. D. Ariz. 1985). Here, the evidence did not demonstrate that the Endorsement was affixed to the Note. The Endorsement is on a separate sheet of paper; there was no evidence that it was stapled or otherwise attached to the rest of the Note. Furthermore, when GMAC filed its proof of claim, the Endorsement was not included, which is a further indication that the allonge containing the Endorsement was not affixed to the Note.⁴ In Adams v. Madison Realty & Dev., Inc., 853 F.2d 163 (3d Cir. 1988), the plaintiffs executed promissory notes which, after a series of transfers, came into the defendant’s possession. At issue was whether the defendant was the rightful owner of the notes. The court held that the defendant was not entitled to holder in due course status because the endorsements failed to meet the UCC’s fixation requirement. Id. at 168-69. The court relied on UCC section 3-202(2) [A.R.S. § 47-3204]: “An indorsement must be written by or on behalf of the holder and on the instrument or on a paper so firmly affixed thereto as to become a part thereof.” Id. at 165. Since the endorsement page, indicating that the defendant was the holder of the note, was not attached to the note, the court found that the note had not been properly negotiated. Id. at 166-67. Thus, ownership of the note never transferred to the defendant. Applying that principle to the facts here, GMAC did not become a holder of the Note due to the improperly affixed special endorsement.

While the bankruptcy court in In re Nash, 4,9 B.R. 254 (Bankr. D. Ariz. 1985) found that holder in due course status existed even though an allonge was not properly affixed to an instrument, the court based its determination on the clear intention that the

note assignment be physically attached because: (1) the assignment was signed and notarized the same day as the trust deed; (2) the assignment specifically referenced the escrow number; (3) the assignment identified the original note holder; and (4) the assignment recited that the note was to be attached to the assignment. Id. at 261. In this case, however, there is no proof that the allonge containing the special endorsement from GreenPoint to GMAC was executed at or near the time the Notewas executed. Furthermore, the Endorsement does not have any identifying numbers on it, such as an account number or an escrow number, nor does it reference theNote in any way. There is simply no indication that the allonge was appropriately affixed to the Note, in contradiction with the mandates of A.R.S. § 47-3204. Thus, there is no basis in this case to depart from the general rule that an endorsement on an allonge must be affixed to the instrument to be valid.

GMAC cannot overcome the problems with the unaffixed Endorsement by its physical possession of the Note because the Note was not endorsed in blank and, even if it was, the problem of the unaffixed endorsement would remain.⁵ As a result, because GMAC failed to meet its burden of demonstrating that the Endorsement was proper, it has failed to demonstrate that it is the holder of the Note.

2. The MERS Assignment Of The DOT Did Not Provide GMAC With Standing

GMAC argues that it has standing to bring the Motion as the assignee of MERS.⁶ In this case, MERS is named in the DOT as a beneficiary, solely as the “nominee” of GreenPoint, holding only “legal title” to the interests granted to GreenPoint under the DOT. A number of cases have held that such language confers no economic benefit on MERS. See, e.g., In re Sheridan, 200,9 WL 631355, *4 (Bankr. D. Idaho 2009); In re Mitchell, 200,9 WL 1044368, *3-4 (Bankr. D. Nev. 2009); In re Jacobson, 40,2 B.R. 359 (Bankr. W.D. Wash. 2009). As noted by the Sheridan court, MERS “collect[s] no money from [d]ebtors under the [n]ote, nor will it realize the value of the [p]roperty through foreclosure of the [d]eed of [t]rust in the event the [n]ote is not paid.” 2009 WL 631355 at *4. Because MERS has no financial interest in the Note, it will suffer no injury if the Note is not paid and will realize no benefit if the DOT is foreclosed. Accordingly, MERS cannot satisfy the requirements of constitutional standing. GMAC, as MERS’ assignee of the DOT, “stands in the shoes” of the assignor, taking only those rights and remedies the assignor would have had. Hunnicutt Constr., Inc. v. Stewart Title & Trust of Tucson, Trust No. 3496, 187 Ariz. 301, 304 (Ct. App. 1996) citingVan Waters & Rogers v. Interchange Res., Inc., 14 Ariz. App. 414, 417 (1971); In re Boyajian, 36,7 B.R. 138(9th Cir. BAP 2007). Because GMAC is MERS’ assignee, it cannot satisfy the requirements of constitutional standing either.⁷

3. GMAC Does Not Have Standing As The Servicer Of The Note

(a) Servicer’s Right To Collect Fees For Securitized Mortgages

Securitization of residential mortgages is “the process of aggregating a large number of notes secured by deeds of trust in what is called a mortgage pool, and then selling security interests in that pool of mortgages.” Kurt Eggert, Held Up In Due Course: Predatory Lending, Securitization, and the Holder in Due Course Doctrine, 35 CREIGHTON L. REV. 503, 536 (2002). The process begins with a borrower negotiating with a mortgage broker for the terms of the loan. Then, the mortgage broker either originates the loan in its own name or in the name of another entity, which presumably provides the money for the loan. Almost immediately, the broker transfers the loan to the funding entit y. “This lender quickly sells the loan to a different financial entity, which pools the loan together with a host of other loans in a mortgage pool.” Id. at 538. The assignee then transfers the mortgages in the pool to another entity, which in turn transfers the loans to a special purpose vehicle (“SPV”,) whose sole role is to hold the pool of mortgages. Id. at 539. “The transfer to the special purpose trust must constitute a true sale, so that the party transferring the assets reduces its potential liability on the loans and exchanges the fairly illiquid loans for much more liquid cash.” Id. at 542. Next, the SPV issues securities which the assignee sells to investors. Id. at 539. Once the securities have been sold, the SPV is not actively involved. It “does not directly collect payments from the homeowners whose notes and deeds of trust are held by the SPV.” Id. at 544. Rather, servicers collect the principal and interest payments on behalf of the SPV. Id. Fees are associated with the servicing of loans in the pool. Therefore, GMAC would have constitutional standing if it is the servicer for the Note and DOT because it would suffer concrete injury by not being able to collect its servicing fees.⁸ In re O’Kelley, 420 B.R. 18, 23 (D. Haw. 2009). In this case, however, the evidence does not demonstrate that the Note and DOT were transferred to the Trust, and, without that evidence, there is no demonstration that GMAC is the servicer of the Note.

(b) There Is Insufficient Evidence That The Note Was Sold To Lehman And Became Part Of The Trust

When the Debtor executed the Note and DOT, GreenPoint was the original holder of the Note and the economic beneficiary of the DOT. GreenPoint, allegedly, transferred the Note to Lehman pursuant to the FISA. However, the term “mortgage loans” is not defined in the FISA and GMAC’s documents regarding the securitization of the Note and DOT provide no evidence of actual transfers of the Note and DOT to either the FISA or the Trust. Because such transfers must be “true sales,” they must be properly documented to be effective. Thus, to use an overused term, GMAC has failed “to connect the dots” to demonstrate that the Note and DOT were securitized. Accordingly, it is immaterial that GMAC is the servicer for the Trust.

C. Debtor’s Other Arguments

1. Securities Investors Are Not The Only Individuals Who Can Satisfy Standing Requirements When Dealing With A 362 Motion on a “Securitized” Mortgage

The Debtor argues that, in an asset securitization scheme, only the securities investors have standing to seek stay relief because they are the only parties with a financial interest in the securitized notes. However, because the Debtor executed the Note and received consideration (which he used to purchase the house), the contract is enforceable regardless of who provided the funding. In other words, the fact that the funds for a borrower’s loan are supplied by someone other than the loan originator, does not invalidate the loan or restrict enforcement of the loan contract to the parties who funded the loan. A number of cases and treatises recognize that consideration for a contract, including a promissory note, can be provided by a third party. See, e.g.,

DCM Ltd. P’ship v. Wang, 555 F. Supp. 2d 808, 817 (E.D. Mich. 2008); Buffalo County v. Richards, 212 Neb. 826, 828-29 (Neb. 1982); 3 WILLISTON ON CONTRACTS § 7:20 (Richard A. Lord, 4th ed. 2009); RESTATEMENT (SECOND) OF CONTRACTS § 71(4) (2009).

Notes are regularly assigned and the assignment does not change the nature of the contract. The assignee merely steps into the shoes of the assignor. In re Boyajian, 36,7 B.R. 138 (9th Cir. BAP 2007); In re Trejos, 37,4 B.R. 210 (9th Cir. BAP 2007). No additional consideration is required, as opposed to a novation which creates a new obligation. Id. at 216-17 citing RESTATEMENT (SECOND) OF CONTRACTS § 280, cmt. e. Therefore, the Debtor’s argument that the Note is unenforceable because the funder of the Note was not the payee fails. The Note is still valid and can be enforced by the party who has the right to enforce it under applicable Arizona law.

2. Proof Of A Note’s Entire Chain Of Ownership Is Not Necessary For Stay Relief

A movant for stay relief need only present evidence sufficient to present a colorable claim — not every piece of evidence that would be required to prove the right to foreclose under a state law judicial foreclosure proceeding is necessary. In re Emrich, 200,9 WL 3816174, at *1 (Bankr. N.D. Cal. 2009). Accordingly, not every movant for relief from stay has to provide a complete chain of a note’s assignment to obtain relief.

Arizona’s deed of trust statute does not require a beneficiary of a deed of trust to produce the underlying note (or its chain of assignment) in order to conduct a Trustee’s Sale. Blau v. Am.’s Serv. Co., 2009 WL 3174823, at *6 (D. Ariz. 2009);

Mansour v. Cal-W. Reconveyance Corp., 618 F. Supp. 2d 1178, 1181 (D. Ariz. 2009); Diessner v. Mortg. Elec. Registration Sys., 618 F. Supp. 2d 1184, 1187 (D. Ariz. 2009). It would make no sense to require a creditor to demonstrate more to obtain stay relief than it needs to demonstrate under state law to conduct a judicial or non-judicial foreclosure. Moreover, if a note is endorsed in blank, it is enforceable as a bearer instrument. See In re Hill, 200,9 WL 1956174, at *2 (Bankr. D. Ariz. 2009). Therefore, this Court declines to impose a blanket requirement that all movants must offer proof of a note’s entire chain of assignments to have standing to seek relief although there may be circumstances where, in order to establish standing, the movant will have to do so.

3. The Movant Has Not Violated Rule 9011

The Debtor argues that GMAC “violated Rule 7011″ by presenting insufficient and misleading evidence. Given that there is no Rule 7011, the Court assumes that the Debtor was actually referring to Bankruptcy Rule 9011. Rule 9011 allows a court to impose sanctions for filing a frivolous suit. FED. R. BANKR. P. 9011(c); see also FED. R. CIV. P. 11(c). As noted at the evidentiary hearing, the Court did not find that GMAC filed its motion for relief stay in bad faith, nor does this Court believe GMAC filed its motion thinking it did not have proper evidentiary support. There are numerous, often conflicting, decisions on the issues of “real party in interest” and constitutional standing, and what evidence must be presented by a servicer seeking stay relief. The record in this case does not support imposition of 9011 sanctions.

VI. CONCLUSION

GMAC has not demonstrated that it has constitutional or prudential standing or is the real party in interest entitled to prosecute a motion for relief from stay.

Accordingly, its motion is DENIED without prejudice.

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Notes:

1. Exhibits refer to the exhibits admitted into evidence at a November 10, 2009 evidentiary hearing.

2. Because there is no federal commercial law which defines who is a note holder, the court must look to Arizona law to determine if GMAC is a holder. In re Montagne, 42,1 B.R. 65 (Bankr. D. Vt. 2009)(“Bankruptcy law does not generally provide for the enforcement of promissory notes. As a result, the legal obligations of the parties are determined by applicable non-bankruptcy law, which is usually state law.”).

3. Arizona substantially adopted the 1972 revised version of the Uniform Commercial Code (“UCC”) in 1975. See Fin. Mgmt. Servs., Inc. v. Familian Corp., 183 Ariz. 497, 499 n.1 (Ct. App. 1995);Wollenberg v. Phoenix Leasing Inc., 182 Ariz. 4, 7 n. 2 (Ct. App. 1994). In 1993, Arizona adopted the 1990 revision of UCC Article 3. Fin. Mgmt. Servs., Inc., 183 Ariz. at 502 n.2.

4. The special endorsement to GMAC is also completely inconsistent with the securitization of the note into the Trust which GMAC asserts occurred shortly after it was executed by the Debtor. According to GMAC, the Note and DOT were conveyed by GreenPoint to Lehman and ultimately to a Trust. But if the Note was endorsed to GMAC, GreenPoint would not have been able to convey theNote — only GMAC as the holder of the note could have conveyed it.

5. If the Note was endorsed in blank (and the Endorsement was properly affixed to the Note), it would be a bearer instrument and, therefore, enforceable by the party in physical possession. See In re Hill, 200,9 WL 1956174, *2 (Bankr. D. Ariz. 2009).

6. MERS’ primary function is to act as a document custodian. Major players in the mortgage lending industry created MERS to simplify the process of transferring mortgages by avoiding the need to re-record liens — and pay court recorder filing fees — each time it is assigned. Christopher L. Peterson, Predatory Structured Finance, 28 CARDOZO L. REV. 2185, 2266-67 (2007).

7. The Arizona District Court has recently held that MERS, as a named beneficiary under a deed of trust, could appoint a trustee under Arizona’s non-judicial foreclosure statute to conduct a foreclosure sale. Contreras v. U.S. Bank as Trustee for CSMC Mortg. Backed Pass-Through Certificates, Series 2006-5, 2009 WL 4827016 (D. Ariz. 2009); Blau v. Am.’s Serv. Co., 2009 WL 3174823 (D. Ariz. 2009). Those cases, however, focused on whether a non-judicial foreclosure sale can be conducted under Arizona’s non-judicial foreclosure statute without presentation of the original note. This court agrees that non-judicial foreclosures may be conducted under Arizona’s deed of trust statute without presentation of the original note; however, that does not resolve the issue of standing in a motion for relief from stay. Furthermore, while Arizona’s non-judicial foreclosure statute does not require presentation of the note, a deed of trust secures the performance of a contract under A.R.S. § 33-801(8). Therefore, a non-judicial foreclosure is conducted to enforce the rights of the contract holder and, the party conducting such a sale is presumably either the holder of the contract or the holder’s agent.

8. Even if a servicer has constitutional standing, it may still not be the “real party in interest” under Fed. R. Civ. P. 17 and may not, therefore, be able to satisfy the requirements for prudential standing. See, e.g., In re Jacobson, 40,2 B.R. 359 (Bankr. W.D. Wash. 2009); In re Hwang, 39,6 B.R. 757 (Bankr. C.D. Cal. 2008).

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When a forged document has been submitted to the court…..have a look at the latest blog posting from our friends and fellow foreclosure fraud fighters at 4closurefraud.com

I hate to keep using inflammatory words to catch attention like “BOMBSHELL” or “SUBSTANTIATED ALLEGATIONS OF FRAUD”, but I continue to hear allegations that lenders and attorneys are passing off computer generated copies of original notes and passing them off to judges as “original” or “wet ink” notes.

I have yet to see one myself, but this latest post appears to be a “live” one.  Remember all foreclosure cases filed with the courts are available for inspection.  Make sure you examine all the documents carefully and make objections when issues of authenticity are real.

I’ve been at this practice of law thing for a very long time now.  One thing that was made very clear to me from the moment I ever thought of stepping foot in the courtroom was that you never…ever lie.  Now that’s not a problem for me or most attorneys because not lying to the court is wrapped right up there tightly with the respect I and most attorneys have for judges and the court.

Foreclosure Fraud- Total Disregard For Courts, Judges And The Rule of Law

The lack of respect for the court and for our system of laws is one of the things that makes me just furious about the Foreclosure Fraud Fight many of us are currently engaged in.  So our system of laws and respect for judges and the courts has broken down so badly that the Supreme Court has to pass a rule, requiring parties to specifically swear to the truthfulness of what they’re filing….oh and even after the rule is passed, the lying wrongdoers just ignore the Rule…and there apparently aren’t any consequences…..anyway, I digress…it’s just that I’m blown away that the fraud and lying has become so widespread.

An Average Joe With a Bombshell Set of Documents

So with that as the backstory, let me get to the heart of this stinking story. Into my office today walks a regular Joe.  Not an attorney or someone with any legal training, but a bright guy with a head on his shoulders who just happened to be getting foreclosed on by HSBC.  He thought that was strange because he never borrowed any money from HSBC and didn’t know who they were.  He didn’t just roll over when they sued him, he demanded they show him proof that they were entitled to sue him, so they filed an Assignment of Mortgage. Hang with me here because now’s when the story gets good.  The Assignment of Mortgage that allegedly gave HSBC the legal right to sue him looked suspicious to Joe so he started calling around….he called HSBC.

Turns out the woman who signed the Assignment of Mortgage which purported to give HSBC the right to sue him was signed by…….an employee of HSBC, Michelle Ragland.  Not only that, but the witnesses and Notary Public…all of them are employees of HSBC.  So just so we’re clear here…HSBC executed the document they later submitted to the court which they claim gives them the right to sue my client. Now this would be bad enough if it happened just once, but as he started digging around in courthouses across the country he started finding more and more such questionable assignments.

I’ve attached a sampling of these questionable assignments here…look closely at each of them.  Michele Ragland, Jamie Giglio, Christopher Ribbeck.  Scroll through each of the Assignments and look at the names, look how they switch from witnesses to Vice President. Compare each of the alleged signatures against one another….don’t they appear different?  Next look at the names these questionable assignments are being executed on behalf of….Wilmington Finance, Accredited Home Lenders, Decision One Mortgage, Ameritrust Mortgage…..who knows who actually holds the note in each of these cases, my guess is they just pulled the name off the mortgage and just popped that into the old word processor.

And look who else is part of this whole questionable party…..our old friend MERS.

1. I wonder whether any of the lenders on whose behalf these mortgages were allegedly assigned actually granted the signers the power to assign these mortgages?
2. I wonder whether MERS granted these signers the authority to sign these documents?
3. I wonder whether the Federal Bankruptcy Trustee granted authority for these signers to transfer bankruptcy estate property for those lenders that were in bankruptcy when these alleged transfers occurred?
4. I wonder just how many more assignments there are like this out there floating around?
5. I wonder how many families have already lost their homes or who will lose their homes based on Assignments that are so questionable on their face? (I mean, the documents say, “Prepared by HSBC” on their face…isn’t that enough to make anyone say…..HOLD IT!”)

Anyway, for all you out there who are being sued by HSBC….take a close look at your assignments….for all you attorneys out there….pull through your files and have a close look.  For all you pro se advocates out there…let this be an example of the game changing, bombshell work that you can do and the massive contributions you can make to the fight against Foreclosure Fraud. Keep digging, Keep Fighting.

And for you Average Joe….please respond to this post so that others can do the same work you did and forward these questionable assignments to you.  Great work…maybe the ball you’ve started rolling will end up like the federal investigation of the Lender Processing Services!

Courts across the country are starting to really beat back the lenders on standing grounds….read on good people.  They’re New York Cases, but the judicial groundswell is bubbling.

Mortgage Foreclosure/Standing   – Plaintiff commenced an action on September 4,
2007  to  foreclose a mortgage  that was assigned  to  it on September 17, 2007 by an
instrument  which  recited  that  its  effective  date  was  July  29,  2007.  The  Supreme   6
Court,  Kings  County,  denied  the  Plaintiff’s  motion  for  an  Order  of  Reference,
without prejudice to file a renewed motion within ninety days accompanied by proof
that  the Plaintiff owned  the mortgage and note prior  to  the commencement of  the
foreclosure.  Otherwise,  the  action  would  be  dismissed  for  lack  of  standing.
According  to  the  Court,  “[w]]here  there  is  no  evidence  that  plaintiff,  prior  to
commencing  the  foreclosure action, was  the holder of  the mortgage and note,  took
physical delivery of the mortgage and note, or was conveyed the mortgage and note
by written  assignment,  an  assignment’s  language  purporting  to  give  it  retroactive
effect prior to the date of the commencement of the action is insufficient to establish
the plaintiff’s  requisite  standing”. Washington Mutual Bank  v. Patterson, decided
December 15, 2008, is reported at 21 Misc. 3d 1145 and 2008 WL 5233195.

Mortgage  Foreclosure/Standing  – The  Supreme Court, Kings County,  denied  the
foreclosing Plaintiff’s motion for summary judgment and for an Order of Reference,
holding that the Plaintiff  lacked standing. It held that the purported assignment of
the note and mortgage by MERS, as nominee for First Franklin, to the Plaintiff was
invalid. It recited that  it was executed by an attorney on behalf of MERS pursuant
to a corporate resolution. However, neither a corporate resolution nor a power-of-
attorney  was  recorded.  The  Court  granted  the  Plaintiff  leave  to  renew  upon
providing  the Court within  sixty days with  (i) a valid assignment of  the mortgage,
(ii)  an  affirmation  that  the  assignor  and  the  assignee  consented  to  simultaneous
representation  in  connection with  the  assignment,  and  (iii)  an  affidavit  explaining
why  the  Plaintiff  purchased  a  nonperforming  loan.  In  addition,  “if  a  power  of
attorney is used for an agent to act as MERS’ assignor of the instant mortgage and
loan  to Deutsche Bank,  the  power  of  attorney  presented  to  the Court must  be  an
original  or  a  copy  certified  by  an  attorney,  pursuant  to  CPLR  Section  2105″
(“Certification by attorney”). Deutsche Bank National Trust Company, as Trustee,
v. Campbell, decided December 16, 2008, is reported at 2008 WL 5220543.

Mortgage  Foreclosure/Standing  –  A  mortgage  foreclosure  commenced  by  New
Century Mortgage Corporation (“New Century”) on March 7, 2007 was dismissed
by  the  Supreme  Court,  Kings  County,  for  lack  of  standing.    On May  11,  2007,
MERS, the record holder of the mortgage (which appears to have been intended to
have  held  the mortgage  as  nominee  for  New  Century),  purportedly  assigned  the
mortgage  to New Century by Assignment of Mortgage which  included  the phrase:
“Date of Transfer: March 5, 2007″. According  to  the Court, “[w]here  there  is no
evidence  that plaintiff, prior  to commencing  the  foreclosure action, was  the holder
of  the mortgage and note,  took physical delivery of  the mortgage and note, or was
conveyed  the mortgage and note by written assignment, an assignment’s  language
purporting to give it retroactive effect prior to the date of the commencement of the
action  is  insufficient  to establish  the plaintiff’s requisite  standing”.  In addition, on
April 30, 2007 MERS had assigned the mortgage to a different lender. New Century
Mortgage Corporation v. Durden, decided February 2, 2009, is reported at 22 Misc.
3d 1118 and at 2009 WL 264134.

Mortgage Foreclosure/Standing –The Defendant in a mortgage foreclosure asserted
that the Plaintiff did not have standing to commence the action on October 11, 2007
since the mortgage being foreclosed and the note it secured were assigned to it by an
assignment dated October 15, 2007 which recited that it was effective on October 8,
2007. The note, endorsed in blank, was delivered to the Plaintiff on October 8, 2007.
According  to  the Supreme Court, Suffolk County, “an  indorsement of a mortgage
note  in blank together with  its delivery by the owner or  its agent to a transferee  is
sufficient  to  transfer  ownership  of  said  note  and  of  a  mortgage  given  to  secure
it….Said  assignment  [on October  15,  2007]  accurately  reflected  that  the  plaintiff
acquired ownership of the note and mortgage on October 8, 2007, by  its receipt of
delivery of the note  indorsed  in blank. The mortgage followed as an  incident to the
transfer of  the note. The plaintiff was  thus  the owner of  the note and mortgage at
the  time  of  the  commencement  of  this  action”.  Deutsche  Bank  National  Trust
Company v. Gillio, dated February 26, 2009,  is reported at 22 Misc.3d 1131 and at
2009 WL 595560.

An issue I’ve been fighting in court long before the foreclosure crisis began is the issue of “Capacity”, which in layman’s terms means, tell me who this Plaintiff that is suing my client is so that I can first determine if they have the legal ability to sue my client. Then we’ll get to work on determining whether they in fact have the right to collect anything from my client. (Despite what the paperhangers and robosigners have produced, these plaintiffs have no clear right to foreclose.)

It’s an amazing thing that in the vast majority of foreclosure cases, no-one has any idea who the plaintiff suing the homeowner is.  Not the Plaintiff’s attorney, not the homeowner, not the defense attorney and unfortunately, not even the judge.  I say no one has any idea because capacity is not even plead or alleged in the complaint…it’s just not part of their word processor program it they apparently don’t want to go through the effort to plead it.  You see, basic rules of legal pleading require the parties in a lawsuit to be properly identified so we know exactly who is before the court.  Correct pleading would look something like this:

“Plaintiff XYZ Bank is a Federal Bank Chartered under the National Banking Act with it’s principal place of business in Des Moines, Iowa.”

Problem is you’ll never see this proper pleading in the typical foreclosure mill complaint….as a result it is not at all clear who the Plaintiff is in the litigation…and therefore it is not clear that the Plaintiff has even properly invoked the jurisdiction of the court.  There are a whole range of other issues that flow from this…such as the cases where the Plaintiff makes an ex-parte motion to substitute party plaintiff, or when the certificate of title is assigned or substituted for another party.  All of this is totally improper but it goes on all the time.. Some judges get it, (see my published case from Pinellas County Judge Anthony Rondolino, Wachovia v. Matacherro) where the judge required that the plaintiff properly identify themselves as a condition of proceeding with the case.

The unregulated, unregistered, unknown shadow entities that are filing foreclosures across the country (i.e. Deutsche Bank as Trustee for the IXIS trust) raise real questions that must be answered….who are they?  Where are the registered?  Who are the real parties in interest?  Other questions that flow from these questions is why the judges, Florida Attorney General, Florida’s Chief Financial Officer and Florida Governor (and their counterparts in every state) are allowing unregistered, unregulated, unknown entities take title to bajillions of dollars worth of property in this state without even bothering to give us an address to send their checks to….think about it…we don’t even have a proper address to mail them a thank you letter.

If we’ve learned anything about the collapse of the economy and issues like the Bernie Madoff scandal, the power players play by an entirely different set of rules and our government institutions and leaders lack the will to challenge their power. There is something terribly amiss when judges are taking their neighbors homes and with a stroke of a judicial pen granting it to some shadow entity that no-one can identify and who were not sure plays by any sort of rules.  Another practical consideration is, as a title attorney, the properties that are taken back through foreclosure cannot be properly conveyed without proper identification of the trust that purported to own it….at the time of filing the complaint.

There are two recent Supreme Court cases that address some of the issues surrounding capacity, (Watters v. Wachovia and Cuomo v. Clearinghouse) but the following links take you to sites that offers a complex explanation of why these cases and why capacity is so important….read on and here

A few days ago I asked for examples of questionable affidavits and assignments.    Attorneys and activists are often screaming about notary and filing fraud, but quantifying the fraud and presenting it is very difficult.

Attached here is an amazing powerpoint presentation that asks some important questions about affidavits and assignments that are of record across the country.  Now I was only able to attach abou2 20 pages here, but the presentation is more than 161 pages long.  I will be posting more of the slides later, but I encourage everyone to take a close look at the presentation.  It should provoke some important questions for every party involved in foreclosure in any way.

The most important question I ask is how our courts are continuing to allow such improper filing and recording activities to continue?  Keep in mind that all that is required in the vast majority of cases for a foreclosure to proceed is an assignment of mortgage and an affidavit of amounts due and owing….as you will see from the slides on the presentation, these documents are easily (and often are) created in a questionable manner.