Legislation

Lynne Huxtable and Jeffrey Agnew, v. Timothy F. Geithner, et al.,

Posted on December 29, 2009. Filed under: Case Law, Foreclosure Defense, Legislation, Loan Modification, Mortgage Law, Uncategorized | Tags: , , , , , |

Lender’s refusal to modify loan may have violated borrowers’ Fifth Amendment rights to due process.

____________________________________________________________________________________________

LYNNE HUXTABLE and JEFFREY A. AGNEW, Plaintiffs, v. TIMOTHY F. GEITHNER, et al., Defendants.

Case No. 09cv1846 BTM(NLS)

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF CALIFORNIA


December 23, 2009, Decided

December 23, 2009, Filed


CORE TERMS: lender, public function, joint action, mortgage, factual allegations, private entities, modification, state action, state actors, quotations, guaranty, notice, home mortgage, mortgage loan, mere fact, federal program, summary judgment, fully developed, fact-bound, foreclosed, defaulted, federally, veteran’s, nexus, government officials, discovery, recorded

COUNSEL: [*1] For Lynne Huxtable, Jeffrey A Agnew, Plaintiffs: Jeffrey Alan Agnew, LEAD ATTORNEY, Jeffrey A Agnew, Attorney at Law, Ramona, CA.

For Timothy F. Geithner, as United States Secretary of the Treasury, United States Department of the Treasury, Defendants: Thomas C Stahl, LEAD ATTORNEY, U S Attorneys Office Southern District of California, San Diego, CA.

For The Federal Housing Finance Agency, as conservator for the Federal National Mortgage Association and for the Federal Home Loan Mortgage Corporation, doing business as Freddie Mac, doing business as Fannie Mae, Defendant: Christopher S Tarbell, LEAD ATTORNEY, Arnold & Porter LLP, Los Angeles, CA.

For National City Corporation, a Delaware corporation, PNC Financial Services Group, Inc, a Pennsylvania corporation, National City Mortgage, a division of National City Bank, National City Bank, a nationally chartered bank, Defendants: Cathy Lynn Granger, LEAD ATTORNEY, Wolfe & Wyman LLP, Irvine, CA.

For Cal-Western Reconveyance Corporation, a California corporation, Defendant: Thomas N Abbott, LEAD ATTORNEY, Pite Duncan LLP, San Diego, CA.

JUDGES: Honorable Barry Ted Moskowitz, United States District Judge.

OPINION BY: Barry Ted Moskowitz

OPINION

ORDER DENYING MOTION TO DISMISS

On  [*2] September 21, 2009, Defendants National City Bank and PNC Financial Services Group, Inc. (“Moving Defendants”) filed a motion to dismiss the Complaint for failure to state a claim. For the following reasons, the motion is DENIED.

I. BACKGROUND

Plaintiffs’ Complaint arises out of non-judicial foreclosure proceedings related to their home in Ramona, California. The following are factual allegations in the Complaint and are not the Court’s findings.

Plaintiffs defaulted on their home mortgage in November 2007. (Compl. P 26.) In February 2008, a notice of default was recorded and served. (Compl. P 27.) And in December 2008, a notice of sale was recorded and served, setting a date for the public auction of Plaintiffs’ home. (Compl. P 29.) Pursuant to a joint motion, the Court has enjoined the sale of Plaintiffs’ home during the pendency of this action. (September 29, 2009 Order, Doc. 25.)

Plaintiffs allege that they are eligible for a loan modification under the Home Affordable Modification Program (“HAMP”). (Compl. P 95.) HAMP is a federally funded program that allows mortgagors to refinance their mortgages and reduce their monthly payments. (Compl. P 66.) Despite their eligibility for HAMP,  [*3] the loan servicer, Defendant National City Mortgage Company, twice denied their application for a loan modification. (Compl. PP 90, 93.) Plaintiffs did not receive a reason for the denial or an opportunity to appeal. (Compl. P 100.)

Plaintiffs’ Complaint contains two counts. Both are for violation of due process under the Fifth Amendment for failing to create rules implementing HAMP that comport with due process. (Compl. PP 114-27.)

Defendants National City Bank and PNC Financial Services Group, Inc. have moved to dismiss the Complaint on the grounds that Plaintiffs have failed to plead that they are state actors.

II. LEGAL STANDARD

Under Federal Rule of Civil Procedure 8(a)(2), the plaintiff is required only to set forth a “short and plain statement of the claim showing that the pleader is entitled to relief,” and “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). When reviewing a motion to dismiss, the allegations of material fact in plaintiff’s complaint are taken as true and construed in the light most favorable to the plaintiff. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995).  [*4] But only factual allegations must be accepted as true–not legal conclusions. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. Although detailed factual allegations are not required, the factual allegations “must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. Furthermore, “only a complaint that states a plausible claim for relief survives a motion to dismiss.” Iqbal, 129 S.Ct. at 1949.

III. DISCUSSION

Plaintiffs have alleged that Defendants have violated their Fifth Amendment procedural due process rights. The Fifth Amendment, however, only applies to governmental actions, Bingue v. Prunchak, 512 F.3d 1169, 1174 (9th Cir. 2008), and the Moving Defendants are private entities. Therefore, the Moving Defendants argue, the Complaint fails to state a claim against them.

But in some circumstances the Fifth Amendment does apply to private entities. “In order to apply the proscriptions of the Fifth Amendment to private actors, there must exist a sufficiently close nexus between the (government) and the challenged action of the .  [*5] . . (private) entity so that the action of the latter may be fairly treated as that of the (government) itself.” Rank v. Nimmo, 677 F.2d 692, 701 (9th Cir. 1982) (internal quotations omitted). There are four different tests used to determine whether private action can be attributed to the state: “(1) public function; (2) joint action; (3) governmental compulsion or coercion; and (4) governmental nexus. Satisfaction of any one test is sufficient to find state action, so long as no countervailing factor exists.” Kirtley v. Rainey, 326 F.3d 1088, 1092 (9th Cir. 2003). The application of these tests is a “necessarily fact-bound inquiry.” Lugar v. Edmondson Oil Co., Inc., 457 U.S. 922, 939, 102 S. Ct. 2744, 73 L. Ed. 2d 482 (1982).

Plaintiffs argue that two tests apply here: public function and joint action.

1. Public Function

“Under the public function test, when private individuals or groups are endowed by the State with powers or functions governmental in nature, they become agencies or instrumentalities of the State and subject to its constitutional limitations. The public function test is satisfied only on a showing that the function at issue is both traditionally and exclusively governmental.” Kirtley, 326 F.3d at 1093 [*6] (internal quotations and citations omitted). Mortgage loan servicing is neither traditionally nor exclusively governmental, and Plaintiffs cannot show government action under this test.

2. Joint Action

Under the joint action test, the Court considers “whether the state has so far insinuated itself into a position of interdependence with the private entity that it must be recognized as a joint participant in the challenged activity. This occurs when the state knowingly accepts the benefits derived from unconstitutional behavior.” Kirtley, 326 F.3d at 1093 (internal quotations omitted). “A private party is liable under this theory, however, only if its particular actions are ‘inextricably intertwined’ with those of the government.” Brunette v. Humane Soc’y of Ventura County, 294 F.3d 1205, 1211 (9th Cir. 2002). “The mere fact that a business is subject to state regulation does not itself convert its action into that of the State . . . . Nor does the fact that the regulation is extensive and detailed . . . .” Jackson v. Metropolitan Edison Co., 419 U.S. 345, 350, 95 S. Ct. 449, 42 L. Ed. 2d 477 (addressing equivalent provision in Fourteenth Amendment).

The Court does not have sufficient facts before it to determine whether  [*7] state action exists here. As the Supreme Court has stated, this is a “necessarily fact-bound inquiry.” Lugar, 457 U.S. at 939. Although the mere fact that a business is subject to extensive regulation is not sufficient to find joint action, here there may be more than just extensive regulation. Plaintiffs have pled that the HAMP program imposes affirmative duties on lenders, like the Moving Defendants, who participate in the program. If an applicant meets certain federally created criteria, then the lender has no discretion and must grant a loan modification. The federal program is completely administered by the Moving Defendants, and they are essentially acting as the government’s agents in executing HAMP. Making all reasonable inference in Plaintiff’s favor, the Court find that Plaintiff has stated a claim upon which relief can be granted.

Of course, facts developed through discovery may ultimately show that Plaintiff cannot establish state action. But at this stage in the litigation, the Court does not have the answers to several relevant issues, including (1) whether government officials were involved in the decision to deny Plaintiff’s request; (2) whether government officials  [*8] provide guidance to the Moving Defendants regarding the administration of HAMP; (3) the extent of ongoing communication between the government and the Moving Defendants regarding HAMP; (4) and the financial arrangements between the government and the Moving Defendants regarding HAMP. This is not an exhaustive list and the course of discovery may yield other relevant facts not listed here.

Defendant’s best case–which it does not cite–in support of its motion to dismiss is Rank v. Nimmo, 677 F.2d 692 (9th Cir. 1982). In Nimmo, the Ninth Circuit held that a private mortgage lender who foreclosed on a plaintiff’s property was not a state actor. The plaintiff had obtained a mortgage loan through the VA Home Mortgage Guarantee Program, which was a federal program that guaranteed a portion of a qualifying veteran’s mortgage, enabling veterans to obtain mortgage loans without a substantial down payment. 677 F.2d at 693-94. A private commercial lender made a loan to the plaintiff under the program. Id. at 693. When the plaintiff defaulted, the lender foreclosed on the plaintiff’s property. Id. at 695-96. The Plaintiff sued the lender for depriving him of his entitlement to a federal-home-loan  [*9] program without affording him due process under the Fifth Amendment. Id. at 696. The Ninth Circuit held that even though the private lender was subject to extensive federal regulation under the federal home loan guaranty program, the private lender was not a state actor. Id. at 702.

This case is different from Nimmo for at least two reasons. First, and most importantly, the Ninth Circuit decided Nimmo on cross motions for summary judgment and had the benefit of a more fully developed factual record. And second, the guaranty program at issue in Nimmo was very different from HAMP. Under the guaranty program, private lenders applied to the government for participation in the program and the government could deny their participation if the private lender failed to meet certain criteria. 677 F.2d 692, 694. But in this case, Plaintiffs contend that the government required private lenders to participate if they have received federal money, and the private lenders must administer HAMP on the government’s behalf. Whether this is correct or not is not an issue that can be determined on the record before the Court.

IV. CONCLUSION

For the foregoing reasons, the Court DENIES the Motion to Dismiss (Doc.  [*10] 21.) The Moving Defendants may raise their argument again on a motion for summary judgment once the record has been more fully developed.

IT IS SO ORDERED.

DATED: December 23, 2009

/s/ Barry Ted Moskowitz

Honorable Barry Ted Moskowitz

United States District Judge

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FDIC Says Mortgages Retain Risk-Weight After HAMP

Posted on November 13, 2009. Filed under: Bailout, Legislation, Loan Modification | Tags: , , |

The federal bank and thrift regulatory agencies issued a final rule that mortgage loans modified under the Home Affordable Modification Program (HAMP) retain the risk weight appropriate to the loan before modification.

Under HAMP, the US Treasury Department allocates funds to participating servicers for the modification of loans on the verge of foreclosure.

The final rule (available to download here) clarifies loans currently in the HAMP three-month trial period before reaching permanency qualify for the risk-based capital treatment.

Under the agencies’ general risk-based capital rules, loans that are fully secured by first liens and meet certain criteria are risk-weighted at 50%, referring to how much a risk a bank takes on and ultimately how much it could get back if the loan defaults.

After comments from banking organizations, the agencies modified the rule to specify that a mortgage originally risk weighted at 50% and has either entered a HAMP trial or even reached a permanent modification will keep the 50% risk weight.

And past due and nonaccrual loans that receive a 100% risk weight can return to a 50% risk weight if the borrower demonstrates he or she can make the new payments over a “sustained period of time.” However, the agencies have not established the specific time frame because of varying borrower characteristics.

via FDIC Says Mortgages Retain Risk-Weight After HAMP : HousingWire || financial news for the mortgage market.

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New law denies homeowners access to legal representation

Posted on October 23, 2009. Filed under: Banking, Case Law, Foreclosure Defense, Housing, Legislation, Loan Modification, Mortgage Law, Politics | Tags: , , , , , , , , , , , , , , , , |

California has a new law on the books that bans collection of advance fees from firms that provide loan modification services to people struggling to avoid foreclosure.

Other real estate related bills signed into law this month by Gov. Arnold Schwarzenegger aim to crack down on abusive lending practices by mortgage brokers; provide more safeguards for seniors taking out reverse mortgages; and require lenders to provide a summary translation of loan papers to non-English speakers.

Effective Oct. 11, Senate Bill 94 made it illegal for anyone to collect advance fees from consumers seeking a loan modification. The legislation closed a loophole that previously allowed state- licensed real estate brokers and attorneys to collect advance payments for loan modification services provided a client signed off on forms approved by the state Department of Real Estate.

SB 94 was written by state Sen. Ron Calderon, D-Montebello.

“Over the past two years, unscrupulous attorneys and real estate brokers have abused their trusted roles and exploited desperate homeowners seeking to avoid foreclosure. The loophole that allowed this abusive practice has now been closed, and homeowners should avoid any person charging upfront fees for foreclosure relief services,” state Attorney General Jerry Brown said in a statement.

Advance payments previously collected before Oct. 11 are not impacted by the law but no additional fees can be collected going forward,


said Tom Pool, a Department spokesman.

About 1,000 real estate brokers had previously submitted the required paperwork to collect advance payments before the law became effective, he said. More than 1,300 consumers have contacted the department with complaints about foreclosure rescue firms, most of which involved paying advance fees and not getting the loan modification assistance that was promised, he said. In many cases, the fees were collected by people who were not even licensed to offer loan modifications.

SB 94 only allows fees to be collected after the promised services are provided. Consumers must also be told that similar services are available from nonprofit housing counseling agencies approved by the federal Department of Housing and Urban Development. Consumers must also be told they have the option of calling their lender directly to request a change in loan terms.

Effective Jan. 1, three other laws will kick in to provide more protections to consumer who take out home loans:

  • Assembly Bill 260, written by state Assemblyman Ted Lieu, D-Torrance, extends federal mortgage lending laws to state-regulated mortgage brokers. Among other things, mortgage brokers would be prohibited from steering borrowers into higher-priced, subprime loans in cases where they could qualify for a lower-interest, fixed-rate loan.AB 260 restricts the type of home loans that consumers have access to, said John Holmgren, an Oakland-based mortgage broker and spokesman for the California Association of Mortgage Brokers, which opposed the legislation.

    For now, subprime loans have pretty much gone away in response to tougher lending standards but Holmgren expects that demand for such products will eventually return when the economy improves.

    “It would be wonderful if every consumer had perfect credit” but that is not the case, Holmgren said. “It’s bad for those consumers (with poor credit scores) because it restricts their choice and that’s what this does … In this troubled economy, there is a number of people whose credit has suffered.”

    Mortgage brokers would also be banned from offering negative amortization loans, which results in a growing loan balance the longer the borrower holds the loan. Strict caps would also be placed on prepayment penalties.

  • Assembly Bill 329 adds existing consumer protections for reverse mortgages, which allow seniors to convert equity held in a home into tax-free income or a lump-sum payment while continuing to live in the home. Among other things, the law extends counseling requirements that apply to Federal Housing Administration-backed reverse mortgages to all lenders who offer reverse mortgages. The bill was written by state Assemblyman Mike Feuer, D-Los Angeles.n”‚Assembly Bill 1160 requires mortgage lenders to provide a translated summary document in the language in which it was originally verbally negotiated with a borrower whose primary language is not English. The translation requirement applies to Spanish, Chinese, Tagalog, Vietnamese and Korean languages. The law, written by state Assemblyman Paul Fong, D-Cupertino, extends translation requirements that already apply to mortgage brokers.

    Contra Costa Times

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    No bar to attorneys’ fees under TILA

    Posted on September 15, 2009. Filed under: Case Law, Foreclosure Defense, Legislation, Mortgage Audit, right to rescind, Truth in Lending Act | Tags: , , , , , , , |

    A car buyer whose damages under the Truth in Lending Act were slashed by the Supreme Court is nevertheless entitled to attorneys’ fees for that portion of his otherwise “successful action,” the 4th U.S. Circuit Court of Appeals has held.

    The decision affirms a fee award of more than $80,000 to Bradley Nigh, who claimed Koons Buick Pontiac GM Inc. pressured him into signing multiple loan documents and purchasing an “alarm silencer” he hadn’t ordered.A federal jury in Alexandria, Va., awarded Nigh about $25,000, or twice the financing charges he had paid, in May 2001.

    Koons appealed to the 4th Circuit, which affirmed, and then to the Supreme Court, which likewise affirmed on liability but capped the TILA damages at $1,000.Koons appealed again after the U.S. District Court awarded Nigh fees on remand. Last week, the 4th Circuit affirmed. Despite the cap, the 4th Circuit said, Nigh brought a “successful action” under TILA, receiving the maximum amount allowed by the federal law.

    Congress, which set the $1,000 cap, likewise included the fee-shifting provisions because it believes it is in the best interest of society for big companies to act honestly, Judge Roger Gregory wrote for the appeals court; but unless the injured consumer has hope of having his costs covered by the guilty defendant, he will never bring the case.

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    U.S. partners in home loan modifications accused of broad abuses

    Posted on August 9, 2009. Filed under: Foreclosure Defense, Fraud, Housing, Legislation, Loan Modification, Mortgage Audit, Mortgage Fraud, Mortgage Law, Predatory Lending | Tags: , , , , , , , , , , , , , , , , , |

    WASHINGTON — Billions of dollars that the government is spending to help financially pressed homeowners avert foreclosure are passing through — and enriching — companies accused of preying on the people they are supposed to help, an Associated Press investigation has found.The companies, known as mortgage servicers, collect monthly payments from homeowners and funnel the money to the banks or investors who hold the loans. As the link between borrowers and lenders, they’re in the best position to rework the terms of loans under the government’s$50 billion mortgage-modification program.The servicers are paid by the government if the changes keep home-owners from falling behind on payments for at least three months.But the industry has a checkered history. At least 30 servicers have been accused in lawsuits of harassing borrowers, imposing illegal fees and charging for unnecessary insurance policies. More recently, the companies also have been criticized for not helping homeowners quickly enough.The biggest players in the servicing industry — Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. — all face litigation.But the industry’s smaller players, which specialize in riskier subprime loans and loans already in default, face harsher accusations that they systematically abused borrowers.

    More…

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    DEUTSCHE BANK NATIONAL TRUST COMPANY v. ROLANDO CAMPBELL, et al.

    Posted on July 8, 2009. Filed under: Banking, bankruptcy, Case Law, Foreclosure Defense, Legislation, Loan Modification, Mortgage Audit, Mortgage Law | Tags: , , , , , , , , , , , , , , , , , , |

    Deutsche Bank has some explaining to do.  Why would they buy a nonperforming loan from MERS 142 days after a payment default?

    The instant foreclosure application states that defendant CAMPBELL defaulted on his mortgage payments by failing to make his April 1, 2007 and subsequent monthly loan payments. Yet, on August 20, 2007, 142 days subsequent to defendant CAMPBELL’s alleged May 1, 2007 payment default, plaintiff DEUTSCHE BANK was willing to take an assignment of the instant nonperforming loan from MERS, as nominee for FIRST FRANKLIN. Thus, the Court requires, upon renewal of this motion for summary judgment and an order of reference, a satisfactory explanation from an officer of the FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11 as to why DEUTSCHE BANK purchased a nonperforming mortgage loan from MERS, as nominee for FIRST FRANKLIN.

    DEUTSCHE BANK NATIONAL TRUST COMPANY, as trustee for First Franklin Mortgage Loan Trust 2006-FF 11, 3476 Stateview Boulevard Fort Mill, SC 29715, Plaintiff,
    v.
    ROLANDO CAMPBELL, et al., Defendants.
    31764/07
    Supreme Court of the State of New York, Kings County.
    Decided December 16, 2008.
    Tracy M Fourtner, Esq., Steven Baum PC, Buffalo NY, Plaintiff.
    ARTHUR M. SCHACK, J.
    Plaintiff’s motion for summary judgment and an order of reference for the premises located at 780 New Jersey Avenue, Brooklyn, New York (Block 4299, Lot 43, County of Kings) is denied without prejudice, with leave to renew upon providing the Court with: a copy of a valid assignment of the instant mortgage to plaintiff DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11 (DEUTSCHE BANK); a satisfactory explanation of the conflict of interest by plaintiff’s counsel, Steven J. Baum, P.C., with respect to the August 20, 2007 assignment of the instant mortgage and note from MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (MERS), as nominee for FIRST FRANKLIN, A DIVISION OF NATIONAL CITY BANK OF IN (FIRST FRANKLIN), by Darleen Karaszewski, Esq., the assignor, an attorney employed by Steven J. Baum, P.C., plaintiff’s counsel, and the simultaneous representation by Steven J. Baum, P.C., of assignee plaintiff DEUTSCHE BANK; and, an affidavit by an officer of the FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11, explaining why plaintiff DEUTSCHE BANK purchased the instant nonperforming loan.

    Background
    Defendant ROLANDO CAMPBELL borrowed $420,000.00 from FIRST FRANKLIN on May 1, 2006. The note and mortgage were recorded in the Office of the City Register, New York City Department of Finance on June 2, 2006, at City Register File Number (CRFN) 2006000308921. MERS, the nominee of FIRST FRANKLIN for the purpose of recording the mortgage, purportedly assigned the mortgage and note to plaintiff DEUTSCHE BANK on August 20, 2007, effective August 10, 2007, with the assignment recorded on September 11, 2007, at CRFN 2007000467191. The assignment was executed by “Darleen Karaszewski, Esq. On [sic] behalf of MERS, by Corporate Resolution dated 7/19/07.” Neither a corporate resolution nor a power of attorney to Ms. Karaszewski were recorded with the assignment. Thus, the assignment is invalid and plaintiff DEUTSCHE BANK lacks standing to bring the instant foreclosure action.

    Further, the assignor, Ms. Karaszewski, according to the Office of Court Administration’s Attorney Registration, has as her business address, “Steven Baum, P.C., 220 Northpointe Parkway, Suite G, Amherst, NY 14228-1894.” Two days after Ms. Karaszweski executed the invalid MERS assignment, August 22, 2007, plaintiff’s counsel, Steven J. Baum, P.C., commenced the instant action on behalf of purported assignee DEUTSCHE BANK, with the filing of a notice of pendency, and the summons and complaint in the Kings County Clerk’s Office. The Court is concerned that the simultaneous representation by Steven J. Baum, P.C. of both MERS and DEUTSCHE BANK is a conflict of interest in violation of 22 NYCRR § 1200.24, the Disciplinary Rule of the Code of Professional Responsibility, entitled “Conflict of Interest; Simultaneous Representation.”

    The instant foreclosure application states that defendant CAMPBELL defaulted on his mortgage payments by failing to make his April 1, 2007 and subsequent monthly loan payments. Yet, on August 20, 2007, 142 days subsequent to defendant CAMPBELL’s alleged May 1, 2007 payment default, plaintiff DEUTSCHE BANK was willing to take an assignment of the instant nonperforming loan from MERS, as nominee for FIRST FRANKLIN. Thus, the Court requires, upon renewal of this motion for summary judgment and an order of reference, a satisfactory explanation from an officer of the FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11 as to why DEUTSCHE BANK purchased a nonperforming mortgage loan from MERS, as nominee for FIRST FRANKLIN.

    Discussion
    The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case. (Alvarez v Prospect Hospital, 68 NY2d 320, 324 [1986]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395, 404 [1957]). Failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers. (Matter of Redemption Church of Christ v Williams, 84 AD2d 648, 649 [3d Dept 1981]; Greenberg v Manlon Realty, 43 AD2d 968, 969 [2d Dept 1974];Winegrad v New York University Medical Center, 64 NY2d 851 [1985]).

    CPLR 3212 (b) requires that for a court to grant summary judgment the court must determine if the movant’s papers justify holding as a matter of law “that there is no defense to the cause of action or that the cause of action or defense has no merit.” The evidence submitted in support of the movant must be viewed in the light most favorable to the non-movant. (Marine Midland Bank, N.A. v Dino & Artie’s Automatic Transmission Co., 168 AD2d 610 [2d Dept 1990]). Once the movant has established his or her prima facie case, the party opposing a motion for summary judgment bears the burden of “produc[ing] evidentiary proof in admissible form sufficient to require a trial of material questions of fact . . . mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient” (Zuckerman v City of New York, supra at 562; see also Romano v St. Vincent’s Medical Center of Richmond, 178 AD2d 467, 470 [2d Dept 1991]; Tessier v New York City Health & Hospitals Corp., 177 AD2d 626 [2d Dept 1991]).

    Summary judgment shall be granted only when there are no issues of material fact and the evidence requires the court to direct judgment in favor of the movant as a matter of law. (Friends of Animals, Inc., v Associated Fur Mfrs., 46 NY2d 1065 [1979]).

    Plaintiff, in the instant action, moved for summary judgment and an order of reference on July 9, 2008. Defendant CAMPBELL appeared pro se, with opposition papers, in the Foreclosure Motion Part on August 7, 2008. The motion was adjourned to October 3, 2008 for oral argument before me. On October 3, 2008 the matter was adjourned to December 12, 2008.

    Plaintiff appeared on December 12, 2008 for oral argument, but defendant CAMPBELL defaulted. However, the Court is required to review, as noted above, the motion papers to determine if plaintiff made a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case. (Alvarez v Prospect Hospital, supra; Zuckerman v City of New York, supra; Sillman v Twentieth Century-Fox Film Corp., supra). The Court’s review of plaintiff’s moving papers demonstrates that plaintiff DEUTSCHE BANK fails to make such a showing. Therefore, the Court denies the instant motion.

    Plaintiff DEUTSCHE BANK must have “standing” to bring this action. The Court of Appeals (Saratoga County Chamber of Commerce, Inc. v Pataki, 100 NY2d, 901, 812 [2003]), cert denied 540 US 1017 [2003]) held that “[s]tanding to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress.” In Carper v Nussbaum, 36 AD3d 176, 181 (2d Dept 2006), the Court held that “[s]tanding to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request.

    ” If a plaintiff lacks standing to sue, the plaintiff may not proceed in the action. (Stark v Goldberg, 297 AD2d 203 [1d Dept 2002]). “Since standing is jurisdictional and goes to a court’s authority to resolve litigation [the court] can raise this matter sua sponte.” (Axelrod v New York State Teachers’ Retirement System, 154 AD2D 827, 828 [3d Dept 1989]).

    In the instant action, the August 20, 2007 assignment from MERS to DEUTSCHE BANK is defective. Therefore, DEUTSCHE BANK has no standing to bring this action. The recorded assignment by “Darleen Karaszewski, Esq. On [sic] behalf of MERS, by Corporate Resolution dated 7/19/07,” has neither the corporate resolution nor a power of attorney attached and recorded.

    Real Property Law (RPL) § 254 (9) states: Power of attorney to assignee. The word “assign” or other words of assignment, when contained in an assignment of a mortgage and bond or mortgage and note, must be construed as having included in their meaning that the assignor does thereby make, constitute and appoint the assignee the true and lawful attorney, irrevocable, of the assignor, in the name of the assignor, or otherwise, but at the proper costs and charges of the assignee, to have, use and take all lawful ways and means for the recovery of the money and interest secured by the said mortgage and bond or mortgage and note, and in case of payment to discharge the same as fully as the assignor might or could do if the assignment were not made. [Emphasis added]

    To have a proper assignment of a mortgage by an authorized agent, a power of attorney is necessary to demonstrate how the agent is vested with the authority to assign the mortgage. “No special form or language is necessary to effect an assignment as long as the language shows the intention of the owner of a right to transfer it [Emphasis added].” (Tawil v Finkelstein Bruckman Wohl Most & Rothman, 223 AD2d 52, 55 [1d Dept 1996]; see Suraleb, Inc. v International Trade Club, Inc., 13 AD3d 612 [2d Dept 2004]).

    To foreclose on a mortgage, a party must have title to the mortgage. The instant assignment is a nullity. The Appellate Division, Second Department (Kluge v Fugazy, 145 AD2d 537, 538 [2d Dept 1988]), held that a “foreclosure of a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity.” The Appellate Division, First Department, citing Kluge v Fugazy, (Katz v East-Ville Realty Co., 249 AD2d 243 [1st Dept 1998]), instructed that “[p]laintiff’s attempt to foreclose upon a mortgage in which he had no legal or equitable interest was without foundation in law or fact.”

    It is clear that plaintiff DEUTSCHE BANK, with the invalid assignment of the instant mortgage and note from MERS, lacks standing to foreclose on the instant mortgage. The Court, in Campaign v Barba (23 AD3d 327 [2d Dept 2005]), held that “[t]o establish a prima facie case in an action to foreclose a mortgage, the plaintiff must establish the existence of the mortgage and the mortgage note, ownership of the mortgage, and the defendant’s default in payment [Emphasis added].” (See Household Finance Realty Corp. of New York v Wynn, 19 AD3d 545 [2d Dept 2005]; Sears Mortgage Corp. v Yahhobi, 19 AD3d 402 [2d Dept 2005]; Ocwen Federal Bank FSB v Miller, 18 AD3d 527 [2d Dept 2005]; U.S. Bank Trust Nat. Ass’n v Butti, 16 AD3d 408 [2d Dept 2005]; First Union Mortgage Corp. v Fern, 298 AD2d 490 [2d Dept 2002]; Village Bank v Wild Oaks Holding, Inc., 196 AD2d 812 [2d Dept 1993]).

    Even if plaintiff can cure the assignment defect, plaintiff’s counsel then has to address the conflict of interest in the representation of both the assignor of the instant mortgage, MERS, and the assignee of the instant mortgage, DEUTSCHE BANK. 22 NYCRR § 1200.24, of the Disciplinary Rules of the Code of Professional Responsibility, entitled “Conflict of Interest; Simultaneous Representation,” states in relevant part:
    (a) A lawyer shall decline proffered employment if the exercise of independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, or if it would be likely to involve the lawyer in representing differing interests, except to the extent permitted under subdivision (c) of this section. (b) A lawyer shall not continue multiple employment if the exercise of independent professional judgment in behalf of a client will be or is likely to be adversely affected by the lawyer’s representation of another client, or if it would be likely to involve the lawyer in representing differing interests, except to the extent permitted under subdivision (c) of this section.(c) in the situations covered by subdivisions (a) and (b) of this section, a lawyer may represent multiple clients if a disinterested lawyer would believe that the lawyer can competently represent the interest of each and if each consents to the representation after full disclosure of the implications of the simultaneous representation and the advantages and risks involved. [Emphasis added]
    The Court needs to know if both MERS and DEUTSCHE BANK were aware of the simultaneous representation by plaintiff’s counsel, Steven J. Baum, P.C., and whether both consented. If plaintiff moves to renew its motion for summary judgment and an order of reference, the Court needs an affirmation by Steven J. Baum, Esq., the principal of Steven J. Baum, P.C., explaining if both MERS and DEUTSCHE BANK consented to simultaneous representation in the instant action with “full disclosure of the implications of the simultaneous representation and the advantages and risks involved.

    ” The Appellate Division, Fourth Department, the Department in which both Ms. Karaszewski and Mr. Baum are registered, (In re Rogoff, 31 AD3d 111 [2006]) censured an attorney, for inter alia, violating 22 NYCRR § 1200.24, by representing both a buyer and sellers in the sale of a motel.

    The Court, at 112, found that the attorney, “failed to make appropriate disclosures to either the sellers or the buyer concerning dual representation.” Further, the Court, at 113, censured the attorney, after it considered the matters submitted by respondent in mitigation, including: that respondent undertook the dual representation at the insistence of the buyer, had no financial interest in the transaction and charged the sellers and the buyer one half of his usual fee. Additionally, we note that respondent cooperated with the Grievance Committee and has expressed remorse for his misconduct.

    Next, 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 § 2105. CPLR § 2105 states that “an attorney admitted to practice in the court of the state may certify that it has been compared by him with the original and found to be a true and complete copy.” (See Security Pacific Nat. Trust Co. v Cuevas, 176 Misc 2d 846 [Civ Ct, Kings County 1998]).

    Last, the Court requires a satisfactory explanation from an officer of the FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF 11 as to why in the middle of our national subprime mortgage financial crisis, plaintiff DEUTSCHE BANK purchased from MERS, as nominee of FIRST FRANKLIN, the instant nonperforming loan. The Court wonders if DEUTSCHE BANK violated a corporate fiduciary duty to the noteholders of the FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11with the purchase of a loan that defaulted 142 days prior to its assignment from MERS to FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11, rather than keep the mortgage loan on FIRST FRANKLIN’s books.

    The Court is not sure that the noteholders of the FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11 are aware that DEUTSCHE BANK purchased the instant “toxic” nonperforming mortgage loan for the Trust. It could well be that MERS, as nominee for FIRST FRANKLIN, with the acquiescence of DEUTSCHE BANK, transferred the instant nonperforming loan, as well as others, to the FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11, as part of what former Federal Reserve Board Chairman Alan Greenspan referred to in his October 23, 2008 testimony, before the House Oversight Committee, as “a once in a century credit tsunami.”

    Conclusion
    Accordingly, it is
    ORDERED that the motion of plaintiff DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11, for summary judgment and an order of reference for the premises located at 780 New Jersey Avenue, Brooklyn, New York (Block 4299, Lot 43, County of Kings) is denied without prejudice, and it is further

    ORDERED that leave is granted to plaintiff DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11, to renew its motion for summary judgment and an order of reference for the premises located at 780 New Jersey Avenue, Brooklyn, New York (Block 4299, Lot 43, County of Kings), upon presentation to the Court, within sixty (60) days of this decision and order of: (1) a valid assignment of the instant mortgage and note to plaintiff,
    DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11; (2) an affirmation from Steven J. Baum, Esq., the principal of Steven J. Baum, P.C., explaining if both MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., the assignor of the instant mortgage and note, and DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11, the assignee of the instant mortgage and note, pursuant to 22 NYCRR § 1200.24, consented to simultaneous representation in the instant action, with “full disclosure of the implications of the simultaneous representation and the advantages and risks involved” explained to them; and, (3) an affidavit from an officer of the FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11, explaining why plaintiff DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11 purchased a nonperforming loan from MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., as nominee for FIRST FRANKLIN, A DIVISION OF NATIONAL CITY BANK OF IN.
    This constitutes the Decision and Order of the Court.

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    Why banks want you all alone when negotiating a loan modification

    Posted on July 5, 2009. Filed under: Banking, bankruptcy, Case Law, Foreclosure Defense, Housing, Legislation, Loan Modification, Mortgage Audit, Mortgage Law, Politics, Predatory Lending, Refinance | Tags: , , , , , , , , , , , , , , , |

    They are telling you to run away from loan modification companies who charge a fee. They are paying the politicians to introduce laws making it difficult for you to hire an attorney when negotiating a loan workout. They want you to contact them directly and without the assistance of an advocate. They are scaring you to think that anyone who charges a fee for helping you negotiate a loan modification must be a crook. They claim all mortgage professionals, lawyers and forensic loan examiners who charge a fee are scam artists. They say it should all be free because theoretically you can do all of it yourself.

    Just like you can file your own taxes and represent yourself in court, you can also spend the time and effort to learn the ins and outs and nuances of negotiating a favorable loan modification with the same predatory bank that put you in the mess you are in. You can stay up all night and study law so you can go up against their high priced lawyers. You can take time off work and stay on the phone four hours a day trying to get through to their loss mitigation departments. You can re-send the same documents over and over again because mysteriously they keep losing your entire file more than once. That is right you can certainly do this all yourself.

    And the reason why you should go to the negotiating table all alone and without any backup is because they want to protect you from the big bad lawyers, mortgage auditors and loan modification companies who have the nerve to charge a fee for helping you! Imagine that. People actually want to make a living while providing a valuable service. What a crime.

    Is anyone with an IQ above 10 buying this nonsense? If you had a choice would you go to an IRS audit without a skilled CPA? Would you defend yourself in a criminal trial without the best lawyer money could buy? So why should negotiating with a bank be any different than negotiating with the IRS? Because bankers are more ethical than IRS agents? That must be it.

    More….

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    States gain more power over banks

    Posted on June 30, 2009. Filed under: Case Law, Legislation, Mortgage Fraud, Predatory Lending, Truth in Lending Act | Tags: , , , , , , , , , , , , , , , , |

    Reporting from Washington — The Supreme Court ruled Monday that states could enforce some of their consumer protection laws against national banks, a move that could lead to tougher oversight than federal regulators have provided in recent years.

    The 5-4 decision in a case involving attempts by New York’s attorney general to enforce fair-lending laws was praised by consumer and civil rights groups, who have accused federal regulators of being lax in policing banks chartered by the federal government.

    “This puts more consumer cops on the consumer crime beat,” said Edmund Mierzwinski, consumer program director at the U.S. Public Interest Research Group. “The federal regulators have demonstrated they’re just having doughnuts in the coffee shop.”

    Banking trade groups, however, warned that the ruling could lead to a confusing patchwork of enforcement levels in states that could cause national banks to offer fewer products, such as credit cards.

    “This will make it difficult to serve consumers in today’s high-tech, mobile society where people and bank services move constantly across state lines,” said Edward L. Yingling, president of the American Bankers Assn.

    The ruling has limited effect because it applies only to a small number of state laws, such as those dealing with discrimination in lending practices, including predatory lending. Most other state laws affecting national banks are enforced by federal officials.

    And it only affects the approximately 1,600 national banks, not the larger number of state banks that are subject to the laws of the states in which they’re chartered.

    But it is significant because it reverses a trend of states losing legal battles with federal officials over banking regulatory oversight.

    The case’s importance also could be amplified by President Obama’s recent proposal to create a Consumer Financial Protection Agency that would allow states to enact and enforce tougher consumer protection laws than the federal government.

    via States gain more power over banks – Los Angeles Times.

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    FTC halts mortgage operation for misrepresentation of loss mitigation

    Posted on June 29, 2009. Filed under: Foreclosure Defense, Fraud, Legislation, Loan Modification, Mortgage Audit, Mortgage Fraud, Mortgage Law | Tags: , , , , , , , , , , , , , , |

    At the request of the Federal Trade Commission, a federal court has halted a bogus mortgage foreclosure prevention operation that misrepresented both the “loss mitigation” services it offered and the earnings potential of the business opportunity it sold. The FTC seeks to end this deceptive scheme and make the defendants give up their ill-gotten gains.

    According to the FTC’s complaint, the defendants sold “loss mitigation” services to homeowners at risk of foreclosure, falsely claiming they could prevent foreclosure in 97 percent of cases and misrepresenting that they would make a full refund if they failed. Before performing any loss mitigation services, the defendants required homeowners to pay the equivalent of one month’s mortgage payment. Their contracts instructed homeowners not to contact lenders or their contract and its money-back guarantee would be voided. In some cases the defendants’ consultants told homeowners to stop making their mortgage payments while the defendants were working on their cases.

    The FTC alleged that, contrary to the defendants’ claims, they completed loan modification in only about 6 percent of cases and routinely failed to return consumers’ repeated telephone calls. In numerous instances, the defendants had not contacted the consumers’ lenders or had made only non-substantive contacts with them, resulting in late fees, penalties, and other costs for the homeowners. After failing to secure loan modifications, the defendants also failed to honor their refund policies.

    The FTC’s complaint also alleges that the defendants sold a “loss mitigation consultant” business opportunity for up to $1,500, falsely claiming that purchasers (consultants) could earn various amounts, including up to $6,000 per week, by referring homeowners to them and by recruiting new consultants. In fact, throughout the defendants’ entire operation, no consultant has earned that much money.

    via FTC halts mortgage operation for misrepresentation of loss mitigation | NationalMortgageProfessional.com.

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    Why Did a NYT Economics Reporter Take On $805,700 In Subprime Debt?

    Posted on May 16, 2009. Filed under: Legislation, Mortgage Fraud, Mortgage Law, Predatory Lending | Tags: , , , , , , |

    That’s the question that New York Times economics reporter Edmund L. Andrews tries to answer about himself in a new piece for the Times Magazine, which is being previewed on the website this week. And it must be some species of triumph that Andrews manages to make a story about refinancing a complicated mortgage a gripping read. Really!

    And while I kept thinking he couldn’t have done a good job covering the mortgage crisis while being spanked by it, I read back through some of his old pieces and was surprised to find items like this:

    For years, Ray and Shahrazad Daneshi sought to buy a home, only to be told that they did not earn enough to qualify for a mortgage. But they recently managed to buy a small house in the shadow of Disneyland for $360,000 — six times their annual income — thanks to a lender who allowed them to borrow the entire value of the home, with no down payment.

    ”We will not be going to any movies or eating out at restaurants,” said Mr. Daneshi, a self-employed wedding photographer who came here from Iran in 1988. ”But in two years, the house will be worth a lot more and we will have something to show for it.”

    That’s from a 2004 piece — prescient — and we know how it ended.

    via Why Did a NYT Economics Reporter Take On $805,700 In Subprime Debt? – The Atlantic Business Channel.

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