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Lenders Lose in Many Recent Foreclosure Decisions

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Courts across the country have been busy ruling in favor of delinquent borrowers who are attempting to forestall foreclosure. But not all of the judges’ decisions have been bad for mortgage servicers.

Jonas Z. Lona refinanced his home for $1.5 million in January 2007. Although the monthly payment was $12,381, Lona made only $3,333 a month. So it was no surprise when he became delinquent and his home was foreclosed on in August 2008. Lona filed an action against the lender and the mortgage servicer to set aside the trustees sale because, he claims, he was victimized by predatory lending when the mortgage broker on his refinance disregarded his ability to repay the loan and took advantage of his limited English.

The trial court granted summary judgment to the lender and servicer. But the Court of Appeals of California, Sixth District, reversed the decision, holding that “summary judgment was improper because: the homeowner presented sufficient evidence of triable issues of material fact with regard to the alleged unconscionability of the transaction; and the motion did not address a pertinent exception to the tender requirement, which the homeowner had raised in his complaint.”

Wells Fargo Bank, N.A., obtained a summary judgment in December 2009 in the foreclosure of an Ohio property owned by Martin J. Beirne Jr. But the judgment was overturned by the Court of Appeals of Ohio, Ninth District, Medina County, on Tuesday. The appeals court agreed with Beirne that Wells Fargo failed to present evidence that it had provided a notice of default.

In Florida, the Fourth District Court of Appeal reversed a foreclosure judgment in favor of Wells Fargo Mortgage Bank, N.A., against Faythe P., Timothy P. and Dawn M. Woodrum. The bank argued that where an answer is overdue, affirmative defenses raised in an affidavit opposing the motion for summary judgment cannot be considered by the trial court. But the court said Wells Fargo offers no case law supporting its position.

The Superior Court of New Jersey, Appellate Division, overturned a March 18 decision to deny a motion to vacate default judgment that was filed by Linda and Peter Halas. The lender in the case is Countrywide Home Loans Inc.

“We agree with defendants’ assertion that the judge mistakenly evaluated their motion under a subsection of Rule 4:50-1 that they had not advanced as a basis for relief, and in so doing, failed to address the grounds upon which they relied,” the decision stated. “We reverse and remand for further proceedings.”

The District Court of Appeal of Florida, Fourth District, overturned a foreclosure by JP Morgan Chase Bank, N.A., against Robert McLean. When the trial court ruled in favor of Chase in April 2010, it ordered the lender to provide a copy of the assignment that empowered the company to foreclose. But the assignment provided was dated three days after the foreclosure was filed. McLean successfully argued that the record lacked any evidence that Chase had standing to foreclose at the time the lawsuit was filed.

A judgment by the Jefferson Circuit Court in favor of Ocwen Loan Servicing LLC was vacated by the Court of Appeals of Kentucky and the case was remanded. Among the issues left to be ironed out is Ocwen’s standing.

The Connecticut Supreme Court ruled this month that RMS Residential Properties LLC, using an assignment from the Mortgage Electronic Registration Systems Inc., had standing to foreclose on Anna M. Miller, MERS announced. The borrower alleged that MERS could not be named as mortgagee since it wasn’t the original lender or the party secured by the mortgage and asked the court to declare the MERS mortgage to be void.

“The Connecticut Supreme Court’s decision affirms that under state law MERS may serve as a mortgagee, and as the mortgagee as the nominee or agent for the lender,” MERSCORP Vice President for Corporate Communications Janis Smith said in the news release. “The Supreme Court also makes clear that naming MERS as mortgagee is not a basis for voiding a mortgage, and acknowledges that MERS’ role is plainly disclosed to borrowers in the mortgage documents they sign at closing.”

The U.S. District Court for the Eastern District of Texas affirmed MERS’ role as mortgagee in a Nov. 18 decision to dismiss the case Malikyar v. BAC Home Loans with prejudice, Reston, Va.-based MERS said last month. BAC received the power of sale under a deed of trust assigned from MERS.

“As a mortgagee, MERS could authorize BAC to service the loan and foreclose, regardless of whether MERS was the true owner of the note,” Magistrate Judge Amos Mazzant reportedly wrote in an Oct. 28 report and recommendation — which was adopted by U.S. District Judge Michael Schneider in his dismissal.

A summary foreclosure judgment against James D. Bryson in favor of Branch Banking and Trust Co. was reversed by the District Court of Appeal of Florida, Second District, and remanded back to the trial court. The appeals court noted that BB&T did not meet its burden of conclusively showing that there was no genuine issue of material fact.

The Michigan Supreme Court recently confirmed MERS’ ability to perform non-judicial foreclosures by advertisement versus a court-supervised foreclosure, according to a client alert from Dickinson Wright. The decision reverses the contrary holding of the Michigan Court of Appeals.

Rodger and Lina Duke appealed a final summary judgment of foreclosure in favor of HSBC Mortgage Services Inc. The Dukes argued that at the time the foreclosure complaint was filed, the mortgage was held by First NLC, not HSBC — which didn’t include proof it owned the loan with its complaint. The District Court of Appeal of Florida, Fourth District, reversed the summary judgment because genuine issues of material fact remain in dispute about who the owner and holder of the note and mortgage was when the complaint was filed.

The trial court abused its discretion in its decision to grant a summary foreclosure judgment in July 2010 to Beal Bank, S.S.B., on a $60,456 mortgage to Phyllix Means and Ray Stovall, the Ohio Court of Appeals said in its decision to reverse the judgment and remand the case. The foreclosure was started in December 2008. The loan was originally made by Ameriquest Mortgage Co. in January 2003.

Ramon Solorin’s motion to dismiss U.S. Bank, N.A.’s, foreclosure action was granted on Nov. 10 by the Supreme Court, Queens County, N.Y. Solorin has been in default since April 2010. U.S. Bank delayed the foreclosure by 16 months and was unable to comply with a requirement that “an attorney for plaintiff in a residential foreclosure action certify the accuracy of the papers filed in support of the action by submitting an affirmation from the attorney that he or she communicated with a representative of the plaintiff and was informed that the representative personally reviewed plaintiff’s documents and records relating to the case, reviewed the summons and complaint and all other papers filed in support of the foreclosure, and confirmed the accuracy of the court filings and the notarizations contained therein.”

A foreclosure judgment in favor of Bayview Loan Servicing LLC against Joyce and Lankford Taylor was reversed on Nov. 9 by the District Court of Appeal of Florida, Second District. The case was remanded for further proceedings. The decision was made because genuine issues of material fact remain regarding the Taylors’ affirmative defense of lack of notice.

In January 2008, the city of Cleveland filed a lawsuit in the Court of Common Pleas, Cuyahoga County, Ohio, against 21 lenders including Bank of America Corp., GMAC-RFC and J.P. Morgan Chase Co. The city claims that the defendants caused the current foreclosure crisis in Cleveland by routinely making loans to borrowers who had no ability to pay them back.

But Cuyahoga County Common Pleas Judge Brian J. Corrigan dismissed the lawsuit on Nov. 22, The Plain Dealer reported. Corrigan reportedly wrote that too many other factors like urban decline, proper foreclosure actions and increased crime rate also contributed to the city’s lost tax revenues and increased expenditures.

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