Faulty Documents Continue to Hinder Foreclosures

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MORTGAGE EXPERT
11 · 09 · 11

Delinquent borrowers continue to challenge foreclosures not based on whether they were delinquent, but based on faulty foreclosure and title documentation. While some have had success stopping servicers from completing foreclosures, others have not.

A writ of certiorari was denied by the U.S. Supreme Court on Oct. 11 in Gomes v. Countrywide Home Loans Inc., MERSCORP announced. In a February decision, Judge Steven R. Denton ruled in favor of MERS, holding that there is no right under California’s non-judicial foreclosure process to allow a plaintiff to bring an action to determine if the note owner authorized the foreclosing party to initiate non-judicial foreclosure.

“Courts in California have ruled consistently that MERS’ legal standing as beneficiary gives MERS the authority under state law to take action on behalf of the owner of the note,” MERCORP spokeswoman Janis Smith stated in the announcement.

A lawsuit filed in 2009 by Nadia Youkelsone against the Federal Deposit Insurance Corp. as receiver of Washington Mutual Bank was dismissed by a federal judge. She claims that WaMu engaged in wrongful conduct in its foreclosure by delaying in providing closing documents and making misrepresentations to the bankruptcy court. So Youkelsone appealed the case to the U.S. Court of Appeals, District of Columbia Circuit, which reversed the decision and remanded the case.

A $320,000 first mortgage and a $60,000 second mortgage closed in 2006 and serviced by Aurora Loan Services LLC went into default in 2008, and Aurora obtained a summary judgment in August 2010. So the borrower, Bernice Toledo appealed the judgment with the Superior Court of New Jersey, Appellate Division. Because an affidavit was completed by an employee of the Mortgage Electronic Registration Systems Inc. without personal knowledge, the appeals court reversed the order grating summary judgment and remanded the case back to the trial court.

After Security Bank, N.A., foreclosed on a Florida condominium owned by Matthew Valencia, the homeowners association also filed a foreclosure and purchased the property. So 14 months after the foreclosure, the bank moved to set it aside, which the court granted. The association then appealed the order setting aside the motion, and the District Court of Appeal of Florida, Third District, reversed the decision and remanded the case. The court found that the motion to set aside was filed too late.

In Wisconsin, BAC Home Loan Servicing obtained a summary foreclosure judgment against Michael and Nicole Williams. The borrowers appealed the judgment with the Court of Appeals of Wisconsin, District IV, which reversed the decision and remanded the lawsuit.

“We conclude that the circuit court properly dismissed the counterclaims, but that the summary judgment materials were insufficient to establish that BAC was the holder of the note upon which the foreclosure was based,” the court stated in its decision.

Following U.S. Bank, N.A.’s, success in obtaining a summary judgment of foreclosure as trustee for the Structured Asset Investment Loan Trust 2005-10 against Ginnifer Gee, she filed an appeal with the District Court of Appeal of Florida, Fifth District. Gee claims that U.S. Bank lacked standing to bring the foreclosure action, and the summary judgment was entered on grounds that were not raised in the summary judgment motion.

The appeals court agreed with Gee, reversed the summary judgment and remanded the case.

The Massachusetts Supreme Judicial Court found that a real-estate-owned property in Boston acquired by Francis Bevilacqua from U.S. Bank, N.A., was sold even though the bank didn’t hold a valid mortgage, the Associated Press reported. But the court will still let Bevilacqua foreclose on the prior owner.

Wells Fargo has filed an appeal with the Nevada Supreme Court challenging the state’s foreclosure mediation program because it allegedly violates the state’s basic charter and the U.S. Constitution, according to the Nevada Journal. But the state supreme court, which administers the program, might have to recuse itself because of a possible conflict of interest — potentially leaving the U.S. Supreme Court to hear the case.

After loan modification payments were misapplied by Chase Home Finance LLC, the company foreclosed on Miriam Lord and she moved out of her California property, NEWS10 ABC reported. The lender recognized the error but sent the notice to the home where she no longer lived — leaving her unaware she should keep making payments, leading to another foreclosure and prompting Lord to sue Chase.

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