Foreclosure Defense Florida

Who The Hell Are All These Trusts and Trustees Filing Foreclosures And Can They Properly Do So?

I’m a dirt and death lawyer.   That means I practice in real estate and probate; the practice areas often merge.   A few basics:

  • If ever someone brings to my office a trust or purports to act on behalf of a trust (like suing my client or mortgaging a property or anything else), I demand to see the Original Trust Agreement that details the powers.
  • As a title attorney, I cannot rely on any actions taken by that alleged trustee unless I review the Original Trust and confirm that the trust actually grants the trustee the power to do what they seek.
  • How have we gotten to a situation that hundreds of thousands of foreclosure cases are filed when no one has verified that the trust allows the trustee to act?
  • Why is the state failing to enforce regulations and requirements on trusts?

A long, long time ago I started raising capacity and standing defenses, both generally and specifically citing Florida Statutes 609.01….I have yet to have a satisfactory response from the Plaintiffs.   I also raise Florida Statutes Chapter 658 and 660 Just for good measure.   Today one of the very bright attorneys who reads this blog shared with me both an excellent case and her thoughts.   In the spirit of “sharing with the class”, I post the case first, then her comments below.   I strongly encourage everyone to read and consider how this applies to your cases:

(As is the practice if this good attorney wants to claim credit for her work, please log in and leave a comment.   It’s great work, and the excellent attorney certainly deserves credit for providing some good information for us all to chew on, I just don’t want to reveal anyone’s identity that supplies information unless they specifically direct me to.   The best way is to log in and provide additional comments.)

Make sure to log in and review the case first:

o'hanlon trust florida

O’Hanlon v. Herndon

PLAINTIFF IS DOING BUSINESS IN FLORIDA AS AN UNREGISTERED TRUST IN VIOLATION OF FLORIDA LAW

Defendant requests the Court to dismiss the Plaintiff’s complaint pursuant to Rule 1.210(a), 1.130(a) and 1.140(b)(7) of the Florida Rules of Civil Procedure because the Plaintiff, HSBC Bank USA, National Association, As Indenture Trustee of the Fieldstone Mortgage Investment Trust, Series 2005-2 is doing business in Florida as an unregistered trust in violation of Florida law.   The Plaintiff claims to be acting on behalf of a mortgage trust. The mortgage trust has issued certificates to investors as public securities.   It has issued certificates to investors secured by a Florida mortgage.   It is not an express trust under the Florida Trust Code.   The Trust is a common law declaration of trust under Section 609 of the Florida Statutes.   The Trust is an association of two or more persons for the purpose of transacting business in Florida.   Section 609.01 of the Florida Statutes.   Section 609.02 of the Florida Statutes states:

” 609.02   Filing a declaration of trust.–Every such organization organized for the purpose of transacting business in this state, or organized in this state for the purpose of transacting business elsewhere, which intends to sell or offer for sale any units, shares, contracts, notes, bonds, mortgages, oil or mineral leases or other security of such association shall, prior to transacting any such business, file with the Department of State a true and correct copy of the declaration of trust under which the association proposes to conduct its business, which copy shall be sworn to, as being a true and correct copy, by the chair of the board of trustees named in such declaration of trust. When such copy shall have been filed with the Department of State it shall constitute public notice as to the purposes and manner of the business to be engaged in by such association. The Department of State, prior to the issuance of the certificate by it, shall collect from the said association a filing fee of $350, which fee shall be paid by it into the general fund of the state.”

Section 609.3 of the Florida Statutes states:

” Upon the filing of the copy of the declaration of trust and the payment of the filing fee, in compliance with s. 609.02, the Department of State shall issue to the trustees named in the said declaration of trust a certificate showing that such declaration of trust has been duly filed in its office; whereupon, such association shall be authorized to transact business in this state; provided that all other applicable laws have been complied with”.

Thus, the trust, before offering securities in the form of certificates to investors, was required to file with the Secretary of State a true and correct copy of the Declaration of Trust under which the trust proposes to conduct its business.   It does not appear that this has been done.   Moreover, the trust has failed to file   its declaration of trust, not paid the $350.00 fee and not obtained a certificate from the Department of State and has commenced to transact its business in Florida.   Accordingly, the Trust lacks standing to have this motion enforced in the courts of Florida and the persons operating the trust in violation of Chapter 609 have committed a third degree felony under Florida law.   Section 609.06 of the Florida Statutes.   Arguably if it registered the security with the Securities and Exchange Commission, the trust and its officials are exempted from the requirements of Section 609.05 of the Florida Statutes to obtain a permit to sell securities by the preemption created by Securities and Exchange Commission authorities and other related Federal authorities.   However, such an exemption does not exempt the trust from the other requirements of Chapter 609 of the Florida Statutes with which the trust has failed to comply.   Florida law requires the filing.   Accordingly, Plaintiff lacks standing to seek foreclosure on behalf of a trust doing business in Florida that has not complied with the registration requirements of Florida law.   O’Hanlon v. Herndon, 5 So.3d 723 (Fla.App. 2 Dist. 2009).   Consequently, Plaintiff, HSBC Bank USA, National Association, As Indenture Trustee Of The Fieldstone Mortgage Investment Trust, Series 2005-2’s Complaint must be dismissed with prejudice.

This Motion to Dismiss filed a year ago in the trial court still has not heard and Plaintiff has failed to respond to this issue.   In fact, they have tried to push for summary judgment without a hearing on Defendant’s  Motion to Quash Service that was filed with the Motion to Dismiss.   I have done more research since my original filing and could provide you more information and my thoughts of the few arguments I have found opposing a Florida Statutes Chapter 609 dismissal , but for now and purposes of getting some info to you I thought I would start with this.   Also, I did file with the Court a certified copy from the State of Florida Division of Corporations which reflects that in fact the Fieldstone Mortgage Investment Trust, Series 2005-2 had never registered in Florida as a trust or as any entity despite its foreclosure of hundreds of mortgages in Florida and its sales of securities relating to Florida mortgages/notes.   I am curious if you have used Florida Statutes Chapter 609 for a Motion to Dismiss a Foreclosure.

Another thing I have noticed in this case (and very likely in other foreclosure cases) is that the lender on the note and mortgage is Fieldstone Mortgage Company (” FMC”) which was wholly owned by Fieldstone Investment Corp.   Fieldstone Mortgage Company is in bankruptcy and Fieldstone Investment Corp was purchased by another entity to save it from filing for bankruptcy.     No assignment of Mortgage has been filed in this case and only a non-dated note endorsed in blank was filed after the original Complaint was filed that alleged ” lost note” ““ thus it is going to be interesting to see who will be signing an Assignment of Mortgage and can represent the date the note was endorsed in blank as FMC is in bankruptcy (which only the bankruptcy trustee of Fieldstone Mortgage Company would have authorization to approve an assignment of mortgage or sale of note depending on the date of those actions).   Also MERS is the nominee on the Mortgage; however, a search of the MERS system yesterday of my client’s loan reflects MINS Status as Inactive with servicer Chase Home Finance LLC.

16 Comments

  • avirani0203 says:

    Mr. Weidner,

    This is what I have been referring to for over a year. A common law trust is also known as a business or Massachusetts Trust. Recently, both Massachusetts and Delaware renamed these trust as statutory trusts. Under the Delaware Code, a statutory trust must be registered and a certificate of trust filed before the trust is allowed to conduct business.

    However, a search of the Delaware Division of Corporations will turn up nothing on any of the trusts. I have also searched New York Department of Corporatio since the majority of the PSAa are governed by New York law. Once again, nothing shows up.

    As you said, who are these trusts and can they properly sue?

    Alina

  • Lisa D says:

    I raised the capacity issue on my MTD. Plaintiff (US Bank NA as Trustee for the Registered Holders of Home Equity Asset Trust 2005-1) responded in his objection that as US Bank NA was a federally chartered bank they were exempt from State mandated trust registration. But … what about the Trust … What about CSFB Home Equity Asset Trust 2005-1??? If the Trustee is a National Association, is the “Trust” still required to be registered separately? Any comments or help would be greatly appreciated.

    • FIrst thing is did they even plead within the lawsuit waht us bank is, then you’re right the situs or “home” of the trust should be spelled out.

      • Lisa D says:

        Thank you … the Complaint states exactly as follows:
        “Plaintiff alleges:
        1. At all relevant times Plaintiff was a national association and trustee for the registered holders of Home Equity Asset Trust 2005-1, Home Equity Pass Through Certificates, Series 2005-1. Plaintiff is the holder of the beneficial interest in the Deed of Trust securing an obligation on the property that is the subject of this action.”
        That’s it … no “situs” or home of the Trust spelled out.
        I am pro se. Attorney friend says that issue should be conceded as they have made a presumptive case that Plaintiff is exempt from State Statutory Requirements by virtue of being a National Association. What is your opinion???
        I am drafting an Amended MTD before the hearing, any help with response to Plaintiff would be greatly appreciated.

        • avirani0203 says:

          A judge in Utah has ordered an injuction against BoA basically stopping all foreclosures by BoA because of this very issue. The attorney argued taht the bank has to be registered in the State of Utah, BoA argued that is preempted because it is a federally chartered bank. The judge ruled against BoA.

          Look at the Supreme Court case Cuomo v. Clearing House. Although the actual issue in the case is “visitorial” powers, the Supreme Court expands into the rights of the states and how federally chartered banks do not have blanket preemptive rights.

          Also, look at a recent 9th Circuit case, Rose v. Chase Bank.

        • avirani0203 says:

          Lisa D,

          Banks do not have blanket pre-emptive rights.

          Recently the U.S. District Court for the Eastern District of Pennsylvania defined a federally chartered bank’s preemption to state laws by citing recent Supreme Court decisions.

          From Mwantembe v. TD Bank, NA, (ED PA 2009)

          National banks are authorized by the NBA, 12 U.S.C. § 1, et seq., and are regulated by the OCC, § § 24, 93(a) and 371(a). The NBA grants national banks the authority to exercise certain enumerated powers and “all such incidental powers as shall be necessary to carry on the business of banking.” 12 U.S.C. § 24 Seventh. Congress has authorized the OCC to oversee the operations of national banks and to define these “incidental powers.” NationsBank of N.C., N.A. v. Variable Annuity Life Ins. Co., 513 U.S. 251, 258 n. 2 (1995); 12 U.S.C. § 93a.

          To curtail intrusive state regulation of national banks, these “incidental powers” have been deemed “grants of authority not normally limited by, but rather ordinarily pre-empting, contrary state law.” Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25, 32 (1996). See also Watters v. Wachovia Bank, N.A., 550 U.S. 1, 12 (2007) (“when state prescriptions significantly impair the exercise of authority, enumerated or incidental under the NBA, the State’s regulations must give way”). Nevertheless, states may regulate the activities of national banks so long as they do not prevent or significantly interfere with the exercise of the banks’ authority. Barnett Bank, 517 U.S. at 33.

          In its recent decision, Cuomo v. Clearing House Ass’n, L.L.C., 129 S. Ct. 2710 (2009), the Supreme Court caused a sea change in the perception of the preemptive effect of the NBA and the OCC regulations. Before this pronouncement, courts appeared to be expanding the scope of federal preemption for national banks. See, e.g., Adam J. Levitin, Hydraulic Regulation: Regulating Credit Markets, 26 Yale J. on Reg. 143, 157-58 (2009) (noting the strengthening trend in recent years of federal preemption of state laws regulating: late fees, various loan closing fees, disclosures in credit agreements, mortgage-broker subsidiaries of national banks, check-cashing fees, gift cards, tax refund anticipation loans, and credit card convenience checks); Rashmi Dyal-Chand, From Status to Contract: Evolving Paradigms for Regulating Consumer Credit, 73 Tenn. L. Rev. 303, 320-21 and n.107 (2006) (noting how federal courts have limited the effectiveness of state consumer protection laws to protect credit-card borrowers by expanding the preemptive effect of § 85 of the National Bank Act). Cuomo reverses this trend and has dispelled the popular notion that all state laws that affect national banks in any way or to any degree are preempted.

          The Supreme Court held that the OCC’s regulation preempting states from prosecuting enforcement actions against national banks is not a reasonable interpretation of the NBA; and, accordingly, it is not entitled to Chevron deference.[12] Cuomo, 129 S. Ct. at 2715, 2721. In reaching its decision, the Court distinguished between a sovereign’s visitorial powers and its enforcement power. It clarified that only visitorial powers are preempted, leaving the states free to enforce their laws so long as they are not contrary to and not preempted by federal law. Id. It cleared the way for state attorneys general to file suit against national banks for violating state consumer protection laws.

          Noting that “[n]o one denies that the National Bank Act leaves in place some state substantive laws affecting banks,” the Court underscored that Congress has declined to exempt national banks from all state banking laws or state enforcement of those laws. Id. at 2717-18, 2720. The Court reaffirmed the holding of First Nat’l Bank in St. Louis v. Missouri, 263 U.S. 640, 660 (1924), that where a state statute of general applicability is not substantively preempted, the power of enforcement must rest with the state and not with the national government. Cuomo, 129 S. Ct. at 2717. The Court also emphasized that Watters was limited to the narrow question before it, that is, whether a national bank’s subsidiary is entitled to the same immunity from state visitorial powers as its parent. It stated that Watters “is fully in accord with the well established distinction between supervision and law enforcement.” Id. at 2717. Thus, against this backdrop, the Court concluded that the OCC’s regulation went too far because it prohibits states from enforcing “valid, non-preempted laws against national banks.” Id. at 2718.

          *********************************
          As you can see, the Supreme Court overturned a trend favoring blanket preemptive rights to banks. The Supreme Court basically said, whoa there, banksters cannot get away with breaking state laws just because you are a federally chartered bank.

          Mr. Weidner, since I am not an attorney but have been researching this issue for some time now, will you please comment on this? I believe that Cuomo decision is extremely relevant.
          Thanks.

      • cloneal says:

        I am in GA. This is the same thing I am fighting right now. There is nothing about these trust things in the paperwork anywhere but yet they can just slap their name on a piece of paper and take your home. I have a written letter from US Bank stating they don’t even know who we are and yet they have taken us all the way to federal court. I just filed bankruptcy last week to stop the 3rd foreclosure and get it out of that court because the judge just did not “get it”. I suppose they think I will just give up one day??? NOT!!!! I want justice!!!! for everybody.

  • stopGOVTwaste says:

    And there you have it… walk into any Title & Escrow company (other than those owned by MILL law firms) and tell them you would like to conduct a transaction on behalf of a trust; you will undoubtedly have to provide documents to PROVE the trust exists, that it is in good standing, that the person representing the trust has authority to conduct business on behalf of the trust etc.

    Why should the judicial branch be any different? There are standards – we need not degrade them any further! If the judiciary as a whole is not cognizant of land title, conducting business as a trust in the state of Florida and are not willing to learn then they need to resign.

    It’s one thing to be ignorant about a subject & quite another to know about it, turn your head, hold your nose and rubber stamp the heck out of these things to the tune of thousands per month.

    It amazes me that in this day & age a judge can zip through in 5 minutes what would typically take an hour or more at a reputable LICENSED TITLE COMPANY.

    WHAT A MESS!!!

  • indio007 says:

    I was under the impression that the trustee couldn’t purchase the home . I pulled this from the Columbia Law Review
    Ordinarily, where a trustee becomes the purchaser of the trust estate, such purchase, although there be no unfair dealing, will be set aside, on the ground that the personal interest of the trustee would interfere with the carrying out of his duties. Davue v. Faunning, 2 Johns. Ch. 252 (1816) ; ‘Fulton v. Whitney, 66 N. Y. 548 (1876). In Ischolle v. Scholle, 101 N. Y. 167 (1886)
    I know it’s old but the law don’t I’ve learned principles of law don’t change much.

    Secondly it seems like no one is using
    Scire Facias as a remedy to dissolve/abolition/annul or vacate these trusts when they become a nullity by separation of the note from the deed of trust OR because the trust was created on a false inducement by the original lender.
    It seems like this would be a quick way sever the threat of eviction from the enforcement of the note . That can be litigated in a separate action. The incentive to break the rules is greatly decreased because a money judgment on a personal debt is a lot less valuable than a piece of real property that actually has a physical existence somewhere. There fraud risk/reward isn’t as enticing.

  • avirani0203 says:

    Lisa D,

    Florida Statue 660 does not exempt federally chartered banks –

    660.27 Deposit of securities with Chief Financial Officer.–

    (1) Before transacting any trust business in this state, every trust company and every state or national bank or state or federal association having trust powers shall give satisfactory security by the deposit or pledge of security of the kind or type provided in this section having at all times a market value in an amount equal to 25 percent of the issued and outstanding capital stock of such trust company, bank, or state or federal stock association or, in the case of a federal mutual association, an equivalent amount determined by the office, or the sum of $25,000, whichever is greater. However, the value of the security deposited or pledged pursuant to the provisions of this section shall not be required to exceed $500,000. Any notes, mortgages, bonds, or other securities, other than shares of stock, eligible for investment by a state bank, state association, or state trust company, or eligible for investment by fiduciaries, shall be accepted as satisfactory security for the purposes of this section.

    As you can see, federal banks are not exempted.

  • avirani0203 says:

    Lisa D,

    Here is a link to Cuomo v. Clearing House regarding the question of federal chartered exemptions to state laws.

    https://scholar.google.com/scholar_case?case=7477790889998140716&q=cuomo+v.+clearing+house&hl=en&as_sdt=10000000000002

  • avirani0203 says:

    From Cuomo v . Clearing House:

    Evidently realizing that exclusion of state enforcement of all state laws against national banks is too extreme to be contemplated, the Comptroller sought to limit the sweep of its regulation by the following passage set forth in the agency’s statement of basis and purpose in the Federal Register:

    “What the case law does recognize is that `states retain some power to regulate national banks in areas such as contracts, debt collection, acquisition and transfer of property, and taxation, zoning, criminal, and tort law.’ [citing a Ninth Circuit case.] Application of these laws to national banks and their implementation by state authorities typically does not affect the content or extent of the Federally-authorized business of banking . . . but rather establishes the legal infrastructure that surrounds and supports the ability of national banks . . . to do business.” 69 Fed.Reg. 1896 (2004) (footnote omitted).

  • J.R. Homeowner says:

    Perhaps a helpful hint re: the ability or inability of a Trustee to bring an action in the State of Florida on behalf of a securitized trust:

    Governor Bush signed Florida=s enactment of the UTC on 6/14/06 (SB 1170, 2006 Fla. Session Laws Ch. 217). The Florida UTC is effective 7/1/2007.

    PRINCIPAL PLACE OF ADMINISTRATION.

    (Fla. Stat. Sec. 736.0108
    Principal Place of Administration (Fla. Stat. Sec. 736.0108)

  • Lisa D says:

    Thank you all for your responses. They were very helpful.

    New Question:
    Our complaint reads:
    “At all relevant times Plaintiff was a national association and trustee for the registered holders of Home Equity Asset Trust 2005-1 Home Equity Pass-Through Certificates, Series 2005-1. Plaintiff is the holder of the beneficial interest in the Deed of Trust securing an obligation on the property that is the subject of this action.”
    So … Plaintiff claims to be both a Trustee and a “beneficial Holder” of the Note.
    Is this a problem for the plaintiff?
    Can you be both a trustee and a beneficial holder?

    Thanks again.

  • chuck12283 says:

    I have a case in Tampa next week where I have raised 660.27 in my motion to dismiss. The Plaintiff’s position is that a private litigant has no standing to raise this issue. Is anyone aware of any cases where this issue has been decided?

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