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Mortgage Lawsuits News | Mortgage Litigation Index
Mortgage industry lawsuit news and mortgage litigation coverage. Stories about legal settlements, judgments and mortgage class actions.

Foreclosure Disputes Litigated from Sea to Shining Sea

Recent activity on disputed foreclosure cases

April 18, 2012

By SAM GARCIA Mortgage Daily

portrait of Sam Garcia

Mortgage servicers are battling disputed foreclosures from the West Coast to the East Coast. Several have been busy in the Buckeye State. A pair of negative decisions was handed down by Massachusetts courts.

HSBC Bank USA, N.A., filed an instant foreclosure action on May 11, 2009. The Medina, Ohio, property securing the loan was owned by borrower Martin J. Beirne. But HSBC failed to attach any evidence of an assignment from the originator, Fremont Investment & Loan, to its complaint, which also named as defendants Elizabeth C. Beirne, Timothy A. Urwin, Fifth Third Bank, the Ohio Department of Taxation and the Treasurer of Medina County.

An October 2011 summary judgment in favor of HSBC was reversed and remanded.

"The trial court erred when it granted summary judgment, since HSBC failed to establish, with evidence admissible under CIV.R.56, that it was the real party in interest, since it did not establish that it was the holder of the note and mortgage at the time it filed its complaint, or even that it is the current holder of the note and mortgage," the March 30 decision said.

A summary judgment in favor of PHH Mortgage Corp. against Andrew Ramsey and Precision Real Estate Group LLC was reversed on Feb. 21 by the Court of Appeals of Ohio, Tenth District, Franklin County. The decision said that the trial court committed error when it granted summary judgment because Ramsey presented evidence of genuine issues of material fact to be litigated which preclude granting summary judgment.

Aurora Loan Services LLC was granted a summary judgment by the Lucas County Court of Common Pleas against Dion T. Louis. So Louis appealed the decision with the Court of Appeals of Ohio, Sixth District, Lucas County.

The appeals court reversed the decision and remanded the case "because a genuine issue of material fact exists as to whether Aurora is a real party in interest." The decision said that Aurora submitted affidavits that fail to demonstrate that it is the holder of the note or mortgage.

Moving west, Michael Mitchell borrowed $315,000 in September 2006 from GreenPoint Mortgage Funding Inc. to finance a Lancaster, Calif. property. The financing included a $252,000 first deed of trust and a $63,000 second deed of trust. The loans were acquired by Bank of America, which foreclosed on the first mortgage in 2009 at a loss of $63,000. BofA pursued Mitchell for the damages by filing a lawsuit on Sept. 16, 2010, against him.

Mitchell concurrently demurred and sought judicial notice of several documents, including two deeds of trust, a notice of trustee's sale and a trustee's deed upon sale. The judge ruled in Mitchell's favor, noting that the second lien was at issue and that anti-deficiency statutes bars its deficiency recovery. The borrower was awarded $8,400 in attorney fees and costs of $535.

BofA appealed the decision with the Court of Appeals of California, Second District, Division Four, but the decision was affirmed.

U.S. District Court Judge John C. Coughenour ruled in favor of the Mortgage Electronic Registration Systems Inc. and on April 6 dismissed a multiple-count complaint of wrongful foreclosure in the state of Washington, MERS announced. The court was unable to find any merit to any of the wrongful foreclosure allegations, irregularities in the non-judicial foreclosure process or violations of Washington's Deed of Trust Act.

The 10th Circuit Court of Appeals ruled on Feb. 1 in Scarborough v. LaSalle Bank, N.A., that the securitization of a mortgage doesn't nullify the rights of the holder of the underlying trust deed or the rights of the holder's agents, according to a client letter from Ballard Spahr LLP. The 10th Circuit adopted the reasoning of a string of recent decisions from the Utah Court of Appeals.

JPMorgan Chase & Co. Inc. was unsuccessful in its appeal of an invalidated second mortgage with a lost note filed with the Massachusetts Court of Appeals. The land court's summary judgment invalidated the mortgage, a decision affirmed by the appeals court.

Amicus briefs have been filed with the Supreme Judicial Court and Appeals Court of Massachusetts by several organizations including the American Land Title Association, the Federal Housing Finance Agency and the Mortgage Bankers Association in the Massachusetts foreclosure case Henrietta Eaton vs. Federal National Mortgage Association and another. Attorneys from both sides were asked to present briefings in the case, which one attorney warned could prove disastrous if the court determines that servicers need to possess both a promissory note and mortgage in order to foreclose.

Severe sanctions were taken by U.S. District Court Judge Patrick J. Schiltz for the District of Minnesota against attorney William B. Butler of the Butler Liberty Law LLC, MERSCORP Holdings Inc. announced on April 3. The sanctions resulted from Butler's filing one of a series of nearly 30 lawsuits based upon frivolous "show-me-the-note" defenses designed to thwart foreclosure proceedings in the state.

Several of Butler's lawsuits were dismissed, and he was ordered to personally pay $50,000 to the court and legal costs to MERS and its co-defendants.

After Doris Ruiz stopped making payments in September 2008, Fidelity Loan Servicing commenced foreclosure proceedings and completed the foreclosure on Nov. 30, 2010. But Ruiz challenged the district court's summary judgment, and the Court of Appeals of Minnesota, reversed the decision and remanded the case.

"Because Minnesota Supreme Court precedent requires strict compliance with statutory requirements in a foreclosure by advertisement and because there are genuine issues of material fact regarding appellant's unlawful-eviction claim, we reverse and remand," the unpublished opinion stated.

A continuance was approved by the judge in a case where Patricia Hill, a retired Chicago police officer, says she refused to pay a $500 increase in her payment for insurance, leading to the eviction of her tenants, WLS-TV reported. Hill claims she never heard back from Mellon Bank -- which usually serves as a trustee for loans included in securitized transactions.

A second criminal investigative subpoena was issued against DocX by Michigan Attorney General Bill Schuette, a March 13 statement said. The subpoena is part of an effort to investigate questionable mortgage documentation filed with Michigan's Register of Deeds offices during the current foreclosure crisis.

On Oct. 8, 2003, Wilemar and Denise Studtmann signed a mortgage to finance their St. Croix, Wis. property. The mortgage wasn't recorded, however, until April 2004. The loan was originated by Mercantile Mortgage Co. and sold to CitiFinancial Inc. in July 2004.

But between the signing date and the recording date, the Studtmanns executed a $108,000 promissory note in favor of Schanon Mortgage Inc. That note was recorded in December 2003, before the Citi note. Another loan was closed with Schanon in January 2005 for $200,000, and the Studtmanns paid off the $108,000 loan the following month -- though no release was ever given. The $200,000 note, another $51,000 loan closed in September 2005 and $160,000 note executed in January 2006 all indicated that they were secured by the mortgage that was recorded in 2003.

While the Studtmanns paid off the first three loans to Schanon, they defaulted on the fourth loan and the lender filed a foreclosure. Both Citi and the borrowers moved for a summary judgment, arguing that Schanon couldn't foreclose on the 2003 because it was paid off by the borrower, and the circuit court agreed to their motion. A Wisconsin appeals court affirmed the judgment in part and reversed it in part.

GMAC Mortgage LLC and Ronald Glenn Dyer reached an agreement to proceed with a deed in lieu of foreclosure on his Federal Housing Administration loan. But after the settlement conference, Dyer refused to sign the agreement. The settlement included language required by the Department of Housing and Urban Development indicating neither GMAC nor HUD would pursue a deficiency judgment against him, but Dyer wanted language that said he was released from all personal liability. The trial court granted Dyer's request.

But the Court of Appeals of Indiana reversed the decision because the standard language used by GMAC was sufficient to release Dyer from all personal liability under federal law and HUD regulations.

In Oklahoma, Deutsche Bank National Trust Co., as trustee for the note holder, initiated a foreclosure action against Cory L. Richardson. A blank "indorsement" was filed in the summary judgment, though the document wasn't referenced in the original petition. The court determined that Deutsche didn't show that it was the "holder of the instrument or a nonholder in possession of the instrument who has the rights of a holder, or a person not in possession of the instrument who is entitled to enforce the instrument." The court reversed the decision and remanded the case.

Emmett Jackson and his wife Debra appealed a foreclosure judgment in favor of Wells Fargo Bank, N.A., with the Supreme Court of Alabama, and the decision was reversed. The court reversed a breach-of-contract claim disposed of by the trial court and remanded.

The Supreme Judicial Court of Maine found that Wells Fargo Bank, N.A., failed to offer evidence that it owns the mortgage and note in its foreclosure action against David E. and Lee Anne deBree. The problem was that the original owner of the note, Residential Mortgage Services Inc., assigned the loan to Wells Fargo Home Mortgage Inc., and Wells Fargo Bank was processing the action. The bank claimed that it was "successor by merger" to the mortgage unit. But the court vacated a summary judgment and remanded the matter for further proceedings.

BANK OF AMERICA, N.A., Plaintiff and Appellant, v. MICHAEL MITCHELL, Defendant and Respondent.
Case No. B233924, Sept. 16, 2010, decision filed on April 10, 2012 (Court of Appeals of California, Second District, Division Four).

Schanon Mortgage Inc., Plaintiff-Appellant, Wilemar W. Studtmann, Denise Studtmann, Citifinancial Mortgage Co. and Citifinancial Inc., Defendants-Respondents.
No. 2011AP2483-FT, opinion filed April 10, 2012 (Court of Appeals of Wisconsin, District III).

GMAC MORTGAGE, LLC, Appellant-Plaintiff, v. RONALD GLENN DYER, Appellee-Defendant.
No. 28A04-1107-MF-404, decision filed April 5, 2012 (Court of Appeals of Indiana).

HSBC BANK USA v. BEIRNE 2012 Ohio 1386 HSBC BANK USA, Appellee, v. MARTIN J. BEIRNE, JR., et al., Appellants.
C.A. No. 10CA0113-M, decision March 30, 2012. (Court of Appeals of Ohio, Ninth District, Medina County).

PHH Mortgage Corporation fka Cendent Mortgage Corporation dba Coldwell Banker Mortgage, Plaintiff-Appellee, v. Andrew Ramsey et al., Defendants-Appellants.
Case No. 11AP-559, rendered on Feb. 21, 2012 (Court of Appeals of Ohio, Tenth District, Franklin County).

Aurora Loan Services, LLC, Appellee, v. Dion T. Louis, et al., Appellant.
C.A. No. L-10-1289, decided Feb. 3, 2012 (Court of Appeals of Ohio, Sixth District, Lucas County).

Case 2:11-cv-01939-JCC (U.S. District Court for the Western District of Washington).

Doris Ruiz, Appellant, v. 1st Fidelity Loan Servicing, LLC, Respondent.
Case No. A11-1081, Filed March 12, 2012 (Court of Appeals of Minnesota).

JPMORGAN CHASE & CO., INC., & another v. Carlo CASARANO, trustee.
Case No. 11-P-622, appeal filed on Dec. 6, 2011, decision dated Feb. 28, 2012 (Appeals Court of Massachusetts).

Henrietta Eaton vs. Federal National Mortgage Association and another.
Case No. SJC-11041, (Supreme Judicial Court and Appeals Court of Massachusetts).

Case No. 109999, Feb. 28, 2012 (Supreme Court of Oklahoma).

Emmett Jackson and Debra Jackson, v. Wells Fargo Bank, N.A., and U.S. Bank, National Association, as trustee for Structured Asset Securities Corporation Trust 2005-WF-3.
Case No. 1100594, decided Feb. 17, 2012 (Supreme Court of Alabama).

Sam Garcia founded Mortgage Daily in 1998 and became its full-time publisher in 2000. Prior to his news career he worked in mortgage lending for two decades.

[email protected]

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