Foreclosure Litigation Ledger

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As the attorney general in the Buckeye State aggressively tackles poor documentation on foreclosure actions, cases in California, New Jersey and Vermont also challenge servicers’ attempts to foreclose.

In Anilech and Parma Sharma v. Provident Funding Associates LP, Preferred Mortgage and Mortgage Electronic Registration Systems Inc., a federal court in California issued a preliminary injunction against foreclosing on a Castro Valley home because of the plaintiffs’ uncontested assertion that no one from Provident contacted them to discuss payment options or to explore their financial situation.

California state law requires a lender to attempt to contact a defaulted borrower prior to the foreclosure so as to explore options for the borrower to avoid foreclosure. Defendants said they sent a letter but the court pointed out that such communication must occur in person or by telephone.

Observing that a preliminary injunction is an “extraordinary remedy” and that the plaintiffs’ potential injury — the seizing of their home — was “essentially irreparable and imminent,” the court granted the temporary stay.

Chase Home Finance LLC V. Charles involves an appeal over the validity of a foreclosure decree obtained for an Arkansas home when the priority of a first lien holder was eliminated. The appellate court threw out the decree because the secondary lien holder, Arkansas Federal Credit Union, was given more than it requested. After the homeowner defaulted on a home improvement loan with a balance of little more than $7,000 held by Arkansas Federal Credit Union, AFCU asked that it be granted a judgment on the property subject to the mortgage held by Chase Home Finance LLC.

Chase was served by certified mail as a named defendant, but it did not answer or respond to AFCU’s motion for default judgment. A foreclosure decree was entered granting judgment against Chase by default and giving AFCU a first lien.

Chase moved to set aside the foreclosure decree arguing that it granted relief in excess of what had been requested. Citing state law that “a judgment by default shall not be different in kind from or exceed in amount that prayed for in the demand for judgment,” the appellate court agreed with Chase.

Vermont and New Jersey enacted emergency amendments to foreclosure rules in December aimed at imposing more rigorous standards on foreclosure plaintiffs. Ohio’s Attorney General sent out a letter to the state’s judges asking them to continue to pay close attention to foreclosure cases that could have faulty affidavits. And New Jersey’s Chief Justice has hauled six of the nation’s top lenders into court asking them to explain why it shouldn’t immediately suspend all foreclosures.

Under Vermont’s Dec. 21, 2010, emergency amendment to Rule 80.1(g) of its Rules of Civil Procedure, and New Jersey’s Dec. 20, 2010, emergency amendment to Rule 4:64 of its Court Rules, a foreclosing plaintiff’s counsel must submit a sworn certification confirming that the attorney personally communicated with a representative of plaintiff, that the representative advised counsel of a personal review of the plaintiff’s records relevant to the case and the filings in support of foreclosure, and that the representative confirmed to counsel both the factual accuracy of those court filings and the technical accuracy of any notarizations. The attorney must also confirm his or her own diligent inquiry and inspection of the papers, and certify that the pleadings and other papers in support of foreclosure are complete and accurate.

While Vermont’s Rule applies to all residential foreclosure cases, New Jersey’s applies only to uncontested foreclosures.

Meanwhile, a New Jersey state court has asked six of the nation’s biggest lenders to explain why the court should not issue an order suspending all their foreclosures in the state.

Supreme Court Chief Justice Stuart Rabner announced Dec. 20 that six lenders suspected of irregularities would have to present a case or face having their foreclosure actions suspended. Rabner writes that the court “has become increasingly concerned about the accuracy and reliability of documents submitted to the Office of Foreclosure.”

In response, Bank of America Corp., GMAC, JPMorgan Chase & Co., Wells Fargo and Citibank told a New Jersey court on Jan. 5 that defects in their processes for seizing homes in the state can be remedied without halting foreclosures.

The banks said in court documents that they have taken steps to improve their procedures and argued that the state court doesn’t have the power to impose a foreclosure moratorium or appoint a special master to review foreclosure filings because the banks are regulated by federal, not state, authorities.

And the Ohio courts — who have been aggressive about throwing out foreclosures for faulty documentation since 2006 — continue to take strong action.

In a December 28 letter to Ohio judges, Attorney General Richard Cordray requested that the state courts continue to pay close attention to foreclosure cases that may have affidavits signed by “robo-signers.” Noting that his office is reviewing cases where Ohio courts had forwarded affidavits signed by suspected “robo-signers” as well as motions by foreclosure counsel asking for permission to submit new or corrected affidavits, Cordray said several courts in Ohio’s Common Pleas system had taken action on their own in dealing with questions about the accuracy of affidavits in foreclosures.

In Butler County, Judge Charles Pater issued an order denying GMAC’s motion to ratify a judgment because “neither the Ohio Civil Rules nor the local rules of this court provide a procedure for or authorize a court to ‘ratify’ a final appeal-able order” and stating that “the proper course of action would be for GMAC to first file a motion to set aside its judgment and then, once the court grants that motion, to re-file its motion for summary judgment with a correctly executed affidavit in support.”

Ohio’s Cuyahoga County Court of Common Pleas issued a policy on foreclosure affidavits, recommending that its judges issue an order requiring a lender who submitted a “robo-signed affidavit,” pre or post-judgment, to show cause why the case should not be dismissed without prejudice. In addition, counsel for a lender in a foreclosure proceeding must sign an affidavit attesting that counsel has reviewed the file and confirmed with his or her client that the client reviewed the file.

Judge Nancy Russo of the Cuyahoga County Court of Common Pleas scheduled a hearing requiring a foreclosure plaintiff “to provide the court with proof of integrity of all documents submitted.”

In Franklin County, Ohio, Judge John Bender issued an order in a foreclosure case requiring that foreclosure counsel “personally certify the authenticity and accuracy of all documents submitted in support of judgment.”

In Trumbull County, Ohio, Judge Andrew Logan sent a letter to foreclosure counsel requiring that affidavits state that the signatory “has personal knowledge of the file and has personally reviewed the documents.”

Cordray suggested that the courts consider legal sanctions.

Anilech Sharma And Parma Sharma v. Provident Funding Associates, L.P., Preferred Mortgage, Mortgage Electronic Registration Systems, Inc, Max Default Services Corporation, a DOES 1-100.
Case No: 3:2009cv05968 VRW, filed Dec. 21, 2009 (In The United States District Court For The Northern District Of California).

Chase Home Finance, LLC v. Wilmington O. Charles, Jr., Lloyd A. & Marsha G. Freedman Living Trust, Arkansas Department Of Finance & Administration, Gary Moran and Arkansas Federal Credit Union.
Case No.: CA 10-367, 2010 Ark. App. 815, filed December 8, 2010 (Court of Appeals of Arkansas, Division III).

US Bank, NA v. Renfro.
Case No. CV-10-716322 (Cuyahoga County Court of Common Pleas Case).

In the Matter of Residential Mortgage Foreclosure Pleading and Document Irregularities.
Docket No. F-59553-10, filed Dec. 20 (Superior Court of New Jersey, Chancery Division-General Equity Part, Mercer County).

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Mortgage Daily Staff

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