The U.S. Foreclosure Fiasco

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MORTGAGE EXPERT
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Sloppy foreclosure documentation prevented two servicers from completing foreclosures on delinquent loans in Florida and Mississippi. In a Nevada case, the court forced the servicer to mediate with a borrower who didn’t even sign the note.

In 2007, Michael C. Ramos quitclaimed a Las Vegas property to Moises Leyva — who did not assume the note which was originally made to MortgageIT Inc. and sold to Wells Fargo. The loan defaulted after 25 payments, and Ramos signed a form along with Leyva that indicated a desire to utilize mediation. Following the mediation, Leyva filed a petition for judicial review in district court, claiming that Wells Fargo mediated in bad faith and that it should be sanctioned. The trial court disagreed and ruled in favor of Wells.

The Supreme Court of Nevada then ruled that protections afforded to borrowers under the state’s Foreclosure Mediation statute, NRS 107.086, applies even if the current borrower isn’t the original borrower. The legislation includes the Foreclosure Mediation Rules that provide the borrower the opportunity of mediation after a notice of default has been filed.

In addition, the court found that respondents Wells Fargo, America’s Servicing Co. and National Default Servicing Corp. did not strictly comply with the statute’s “essential documents” requirement. Wells reportedly submitted a defective assignment and a note that was not endorsed.

The supreme court reversed the district court’s decision and remanded the case back for sanctions against the respondents.

In California, the Court of Appeals of California, Fifth District, reversed a lower court decision in favor Wells Fargo Home Mortgage Inc. in an appeal by borrowers Mark and Cheryl DeMucha, according to a copy of the decision. DeMucha claims that allegations of their pleading were sufficient to survive demurrer.

“We reverse the judgment, remand the matter to the trial court, and direct that court to overrule respondent’s demurrer as to all causes of action except the second and fourth,” the appellate court wrote.

Jenny and Galo Valencia convinced the District Court of Appeal of Florida, Fourth District, to reverse a foreclosure filed by Deutsche Bank National Trust Co. The mortgage, which became delinquent on Dec. 1, 2003, included a requirement that the lender notify the borrowers of default at least 30 days before foreclosing.

But Deutsche was unable to present a copy of the default letter and instead presented a copy of a sample letter dated Oct. 3, 2003. After the summary judgment, a default letter was found — but it had a different date. The appeals court considered the discrepancy “a genuine issue of a material fact” and reversed the lower court’s decision.

The Court of Appeals of Mississippi reversed a judgment in favor of Deutsche because it did not meet requirements for the service process. Deutsche unsuccessfully tried to serve the borrower, Angela Turner, through the sheriff’s department, then posted a notice in the Vicksburg Post for three consecutive weeks.

Turner originally financed a $58,840 mortgage with Argent Mortgage Company LLC, which then sold it to Deutsch.

Problem was, Deutsche “neither filed a sworn statement that Turner was a nonresident or that it had made a diligent inquiry to find her.” So the appeals court reversed the decision and remanded it back to the trial court.

Phil Duncan of Hartley Mortgage Co. brokered a $127,181 refinance transaction to Homecomings Financial Network Inc. on behalf of borrowers Tiffany Brown and Mr. James McCray. The loan paid off a mortgage to NovaStar Home Mortgage Inc. The borrowers believed that the new payment would be less.

Turns out, however, that Homecomings had to make payments for taxes and insurance on behalf of the borrowers, while the borrowers believed that their lower payment was due to the refinance and not the lack of escrow payments. When eventually faced with foreclosure, the borrowers contested. But the trial court ruled in favor of Homecomings, awarding the defunct Ally Financial subsidiary $143,031 and granting it power to foreclose.

But the appeals court disagreed with the decision.

“We reverse the trial court’s judgment as to the equitable subrogation claim and the right to foreclose on the equitable lien,” the decision from the Court of Appeals of Missouri, Western District, stated. “We affirm the trial court’s liability determination as to the unjust enrichment claim but reverse the damages award, and remand the case to the trial court for further proceedings consistent with this opinion.”

Jorge Rodriguez filed a lawsuit in U.S. District Court, Southern District of New York against CitiMortgage Inc. over alleged violations of the Servicemembers Civil Relief Act, according to Bloomberg. The U.S. Army sergeant claims that the Citigroup Inc. subsidiary filed a foreclosure against his Texas home while he was training in preparation for deployment to Iraq in 2006.

Stacy Hill claims in a lawsuit filed in U.S. District Court for the Northern District of Illinois that Fisher and Shapiro LLC’s alteration of the foreclosure affidavit used in her foreclosure was a violation of the Fair Debt Collections Practices Act and the Illinois Consumer Fraud and Deceptive Business Practices Act, WGN reported. Lawyers in the case seek class action certification.

MOISES LEYVA, Appellant, v. NATIONAL DEFAULT SERVICING CORP.; AMERICAS SERVICING COMPANY; AND WELLS FARGO, Respondents.
Case No. 55216, Decision dated July 7, 2011 (Supreme Court of Nevada).

MARK DEMUCHA et al., Plaintiffs and Appellants, v. WELLS FARGO HOME MORTGAGE INC., Defendant and Respondent.
Case No. F059476, appeal decided July 5, 2011 (
Court of Appeals of California, Fifth District).

JENNY VALENCIA and GALO VALENCIA, Appellants, v. DEUTSCHE BANK NATIONAL TRUST COMPANY, Appellee.
Case No. 4D09-3297, appeals decision on June 22, 2011 (
District Court of Appeal of Florida, Fourth District).

ANGELA L. TURNER, APPELLANT, v. DEUTSCHE BANK NATIONAL TRUST COMPANY, APPELLEE.
Case No. 2009-CA-01601-COA, decided on June 14, 2011 (
Court of Appeals of Mississippi).

HOMECOMINGS FINANCIAL NETWORK, INC., Respondent, v. TIFFANY BROWN AND JAMES McCRAY, Appellants.
Case No. WD 71415, Opinion Filed: June 21, 2011 (
Court of Appeals of Missouri, Western District).

Rodriguez v. CitiMortgage Inc.
Case No. 11-cv-04718 July 8, 2011 (U.S. District Court, Southern District of New York).

Stacy Hill v. Fisher and Shapiro LLC.
(U.S. District Court for the Northern District of Illinois).

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