Foreclosure Cases Get Crazy

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MORTGAGE EXPERT
6 · 14 · 11

A lawsuit by a mortgage servicer against a securitization trustee has one lawyer baffled, while another case that was a victory for lenders has the plaintiff’s counsel promising to seek help from the U.S. Supreme Court. An erroneous foreclosure in Florida had the property owners foreclosing on the bank.

Mortgage servicer One West Bank filed a lawsuit against HSBC, the trustee in a mortgage securitization, to stop the foreclosure on borrower Pamela Jeter, the Law Offices of Kramer and Kaslow announced last month.

“In all my years of practicing law, I have never seen anything like this,” Kramer and Kaslow Senior Partner Philip Kramer said in the statement. “I have seen lenders deny people before. I have seen paperwork get lost. I have seen all kinds of things, but what happened next was a first — even for me.

“For a servicer to sue the noteholder — that is unheard of.”

A petition for review of a 4th Appellate District Court decision was denied by the California Supreme Court, Gersten Foreclosure Law said in a news release. The decision upheld the right of the Mortgage Electronic Registration Systems to the deed of trust on the home, reportedly giving MERS the right to foreclose.

Ehud Gersten, the attorney who petitioned the court, had some harsh words to say about mortgage firms and warned that the decision paves the way for borrowers to lose their homes without any right to question those actions in a court of law. Gersten claims that major banks, lenders and servicers “have defrauded, lied, manipulated and cheated the American homeowner of both their homes, their money and their tax dollars.”

“We will take this cause to the U.S. Supreme Court in hopes that they will correct this error in order to protect the property and due process rights of the citizens of California and to uphold the language and spirit of California foreclosure laws,” Gersten proclaimed.

Last week, a judge in Michigan overturned a First Franklin foreclosure after he concluded that the company couldn’t have owned the mortgage after it failed to comply with certain mortgage securitization rules, the Wall Street Journal reported. The attorney for plaintiff James Hendricks reportedly said that U.S. Bank, the trustee for the securitization, didn’t have the right to foreclose, in part because it hadn’t been assigned ownership of the loan in accordance with rules required to ensure the tax-exempt status of mortgage-bond investments.

Bank of America was ordered by a Collier County, Fla., judge to pay $2,534 in attorney fees to Warren and Maureen Nyerges because it mistakenly foreclosed on their property without actually having a loan against it, Fox News reported. So the couple reportedly took two sheriff’s deputies and movers to a local bank branch to take possession of furniture then relented once given a check in the amount of $5,773.

One West Bank, FSB vs HSBC Bank Association, as trustee of the Deutsche Alt-A Securities Mortgage Loan Trust, Series 2006-AR5.

Case 1:10-cv-04855-SHS (U.S. District Court, Southern District of New York).

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