God does not have tenure

In law school they told us that they were going to train us to think like lawyers.  While in law school they reminded us of many great philosophers who had stated that you could never have too many people trained in the law.  Once we left law school and joined private practice ethical considerations told us that we should  not take advantage of those untrained in the law.  When Courts interact with lay persons the Court will often describe the language of lawyers as legalese.   To recap;we are being trained to think in a noble profession but once we are educated we are apparently too well educated to speak in plain English for the common person to understand it.

As a result we end up in highly academic discussions regarding void versus voidable; jurisdiction over the person, subject matter jurisdiction, and original jurisdiction.  Combining these concepts we end up with academic discusions relating to whether a void judgment, which is a nullity and "of no force and effect", but cannot be challenged after an appeal  as the trial court has been divested of jurisdiction.

Scholarly trained professionals with contempt for common persons having intellectual discussions about complex issues without any regard for the everyday lives that foreclosures rip apart.  This is what it feels like we have become.  Then you start asking how did we become this.

 At a continuing legal education seminar the answer was given.  A panel of four highly esteemed professors were discussing the value of understanding the original intent of those who wrote the Constitution.   They all agreed that whatever value derived from the original intent given by the interpretor, the original intent could be derived from other contemporary writings.  Those who wrote the Declaration of Independence also wrote the Constitution, as well as, letters and speeches and sermons for and against the ratification of the Constitution.   The esteemed professors had various opininions as to the manner of determining the original intent and the importance to place on the original intent. After giving their presentations on the way to practice Constitutional Law, the emphasis to be placed on the original intent,  and how to determine the original intent, they opened the floor for questions.  I asked: are you are of the concept that the Declaration of Independence was a prayer, and did you consider the concept in your analysis of original intent.  Two of the esteemed professors ignored me like I was an an uneducated lay person who had no concept of what we were discussing being that of legalese and such.  One professor  stated that he has aware of the concept but had rejected it in his analysis.   The remaining professor asked me what I meant by prayer.  Without a great deal of thought I neverously stated a solemn personal discussion with the Creator of the Universe, God.  He responded that the founding fathers were certainly not speaking to a single all powerful being.  At most the use of the word creator would refer to nature or the spirit of the trees..  NO THEY WERE NOT PRAYING TO GOD!!
We have entrusted these four men with the training of our future lawyers.  Future lawyers are being told that the Declaration of Independence and the Constitution were in no way interested in God.  Not only is this shameful, but it also explains how plainly understood concepts are contorted  to reach intended results for specific clients without any thought of what is right, fair or required.  Instead we have legally trained advocates attempting to win each issue at all costs regardless of what might happen to the greater good.

The Assault on Homeowners Continues

     Many Homeowners facing foreclosure sit in silence waiting for the Sheriff to someday knock on their door. Others leave their home when the foreclosure complaint is served upon them. These individuals think that there is no hope; they blame themselves, and assume there is nothing that can be done.

     Other Homeowners facing foreclosure contact the various help lines that are plastered on billboards throughout the State. Every now and then I will call the telephone number. I usually get an automated answering service which after a number of prompts disconnects the telephone call. Many of these individuals eventually end up with an agency willing to help the Homeowner complete a loan modification application. These Homeowners are usually asked to complete or update the application so many times that they eventually give up, or the process takes so long that it is impossible to modify the loan.

     Another group of Homeowners Facing Foreclosure turn to the internet. There are a number of helpful websites, all of which warn the Homeowner to hire competent counsel. Unfortunately, for every helpful website, there are numerous other websites that are simply not helpful. These websites direct the Homeowner to contact out of State Attorneys; tell the Homeowner how they can obtain free and clear title to their home in six easy steps using a Qualified Written Request (QWR); explain numerous defenses to the Homeowner related to the securization process, the credit swap payments, table funding, or a host of other issues surrounding the loan. These less than helpful websites arm the Homeowner with just enough information to allow the Homeowner to confidently walk into Court; lose the case and their house on a procedural or evidencial issue, and then declare that the system is a fraud.

     Now, Homeowners are being told that Attorneys that represent Foreclosure Defendants are really just "Pretender Defenders". Homeowners are told that these attorneys merely delay the inevitable while bilking all the Homeowners' money in fees. Instead, the Homeowner should purchase a Securitization Audit or a Mortgage Calculation Audit/Review. Armed with these "weapons" the Homeowner should find a "personal injury attorney" who is prepared to negotiate a settlement on behalf of the Homeowners. These websites have gone as far as to disparage the name of Attorneys who have won significant cases for Homeowners Facing Foreclosure.

    There are many good attorneys in Ohio who are Defending Foreclosures and obtaining Good results for their clients. Homeowners need to retain a competent attorney early in the process, at or before the foreclosure complaint is served. Instead, Homeowners are doing everything but contacting a competent attorney. When the Notice of Sheriff Sale arrives, then Homowners seek counsel. By this time many of their rights have been severely damaged if not lost.

The Courts Handling of Schwartzwald Should be a Wake Up call to Homeowners

The manner in which the Courts of Ohio have applied and interpreted Schwartzwald should be a wake up call to Ohio Homeowners. On October 31, 2012, the Ohio Supreme Court examineed the constitutional grant of jurisdiction of the Common Pleas Courts in Article IV Section 4(B), and determined that if a party lacked standing at the time the complaiunt was filed then the Court of Common Pleas "lacked jurisdiction". In Schwartzwald, the Ohio Supreme Court then stated that this lack of "jurisdiction" could be raised at anytime. The use of terms such as "jurisidiction" and "raised at anytime" lead attorneys representing Homeowners facing foreclosure to assert that a judgment was void if the Plaintiff lacked standing at the time the complaint was filed. The Schwartzwald issue arises in three situations: on direct appeal, in a motion for relief from judgment, and in a motion to vacate. On direct appeal the issue is simply whether the Plaintiff had standing. In a motion for relief from judgment, the Courts have to determine that the lack of standing renders a judgment voidable, and then the Court has to determien whether the three pronged test of Civil Rule 60(B) was met. In a motion to vacate, the Court must determine if the judgment is void. On direct appeal, a homeowner has to have defended the action and raised the issue in the trial court. In addition, the homeowner had to file an appeal within 30 days from the date of judgment. It seems as though the the Courts are willing to apply Schwartzwald in those cases where the Homeowner has diligently defended the action. In a motion for relief from judgment, the Homeowner has to demonstrate that he has a meritorious defense (lack of standing); that he has grounds under Civil Rule 60(B) for relief, and that the motion was filed within a reasonable period of time (not to exceed one year in most instances). A motion for relief is usually filed after the time to appeal has expired and the argument is essentially that the matter was not or could not be raised prior to judgment. A review of the cases demonstrates that trial courts are more likely to find "excusable neglect" when the motion for relief from judgment is filed fairly quickly after the judgment was filed. In a motion to vacate, the Courts have to find that the judgment is void and can be raised at anytime. In these cases, the Courts of Ohio have often ignored the actual language of Schwartzwald and instead found that the Ohio Supreme Court did not mean :jurisdiction" or that there is an additional type of jurisdiction that does not result in a void judgment. In the context of a motion to vacate a void judgment the Homeowner is much more likely to have his lack of action to be held against him. Homeowners should take notice that the Courts are less likely to assist Homeowners the more time that elapses. In addition, I am of the opinion that the Plaintiffs know that Homeowners are more likely to seek legal advice immediately before the Sheriff's sale, and therefore Plaintiffs will wait until a year has almost elapsed before filing the paper work necessary to initiate a Sheriff's Sale. More than a year will have expired since the judgment was filed and now the Court must find that the judgment was void. At this point the Court will begin to discuss the effect that such a determination would open up the "floodgates" or otherwise disrupt the real estate markets. The Courts will also start to focus more of their attention to be critical of the Homeowner's lack of action. Ohio Homeowners have valid defenses based upon Schwartzwald, but the Courts will not suffer or reward the Homeowner's delay. There are many competent attorneys doing good work for Ohio Homeowners, but their efforts are being greatly hampered by the Homwoners' delay. Ohio Homeowners must immediately seek legal advice when facing a foreclosure complaint

WEBSITE AND CONTACT

I write this blog in an attempt to be helpful and to encourgae homeowners facing foreclosure to seek legal counsel.  I recently realized that this blog has not been very helpful in allowing homeowners to contact my office.  The website for the Law Office of Bruce M. Broyles has recently been updated to allow individuals to quickly and easily contact my office by submitting an e-mail. 

Please visit my website at brucebroyleslaw.com and see the new contact form.

Update on Failure to Comply with PSA

I previously posted an argument for a motion to vacate based upon the Plaintiff's failure to comply with the Pooling and servicing agreement.  Counsel for the Banks continue to cite the same cases asserting that the Homeowner lacks standing to challenge the Plaintiff's compliance with the Pooling and Servicing Agreements.  Some Ohio Trial Courts are beginning to agree with the argument.  In both Columbiana County and Perry County the trial court, in ruling on motions for relief from judgment, found that the failure to comply with the Pooling and Servicing Agreement was a meritorious defense.

Other Courts are starting to agree with the concept. 
 

Alexander vs. Deutsche Bank National Trust Co. (N.D. Ohio West Dis.)

Case No.: 3:12-CV-02704;

BAC Home Loan Serv. v. McFerren (Ohio App. 9^th Dist.), 2013-Ohio-3228;

Wells Fargo Bank, N.A. v. Erobobo, et al., 2013 WL 1831799

(N.Y. Sup. Ct. April 29, 2013); and

In Re Saldivar (June 5, 2013), United States District Court,

Southern District of Texas, case No. 11-10689.

The United States District Court, Bankruptcy Court for the Northern District of Ohio, decision in Alexander vs. Deutsche Bank National Trust Co. (N.D. Ohio West Dis.) Case No.: 3:12-CV-02704, stated:

A number of Ohio appellate courts have applied the general principal that a debtor may not

challenge an assignment between an assignor and an assignee and concluded that, under Ohio law, a mortgagor does not have standing to challenge an assignment of a mortgage.

***

            The Alexander Court then discusses the cases typically relied upon to challenge the Homeowners ability to raise the failure to comply with the PSA: Bank of New York Mellon Trust Co. v. Unger; LSF6 Mercury REO Invests. Trust Series 2008-1 v. Locke; and Deutsche Bank Nat’l Trust Co. v. Rudolph.  These cases are then discussed in light of Fed. Home Loan Mortg. Corp. v. Schwartzwald.

“It does not follow, however, that Alexander is wholly barred from challenging the assignment. The Supreme Court of Ohio acknowledged the general principle “that standing is a ‘jurisdictional requirement’” that, if not present, subjects the complaint to dismissal. Schwartzwald, 979 N.E.2d at 1219. The court also stated “[w]here [a] party does not rely on any specific statute authorizing invocation of the judicial process, the question of standing depends on whether the party has alleged . . . a ‘personal stake in the outcome of the controversy.’” Id. (quoting Cleveland v. Shaker Heights, 507 N.E.2d 323, 325 (Ohio 1987)). As the Sixth Circuit has noted, “[a]n obligor ‘may assert as a defense any matter which renders the assignment absolutely invalid or ineffective, or void.’ . . . Obligors have standing to raise these claims because they cannot otherwise protect themselves from having to pay the same debt twice.” Livonia Prop. Holdings, L.L.C. v. 12840-12976 Farmington Road Holdings, L.L.C., 399 F. App’x 97, 102 (6th Cir. 2010) (citing 6A C.J.S. Assignments § 132 (2010)).

 

BAC Home Loan Serv. v. McFerren (Ohio App. 9^th Dist.), 2013-Ohio-3228.  While the McFerren Court did not address the issue, at footnote 4, the Court stated:

We note that it is unclear why a foreclosure defendant would lack “standing” to raise issues concerning the legal effect of prior assignments or other transactions in defending the foreclosure action. In that context, the defendant may raise legally relevant defenses as such would relate to the character of the obligation (i.e. secured or not secured) and to whom the obligation is actually owed (in cases of multiple assignments, to avoid the risk that multiple parties claim the right to collect). Bank of America relies upon Livonia Props. Holdings, LLC v. 12840-12976 Farmington Rd. Holdings, LLC, 399 Fed.Appx. 97 (6th Cir.2010), and Bridge v. Aames Capital Corp., N.D.Ohio No. 1:09 CV 2947, 2010 WL 3834059 (Sept. 29, 2010), in support. However, the procedural posture and substantive issues addressed in those cases are distinct from the instant matter and those cases do not stand for the blanket proposition that in all contexts an obligor may not raise defenses concerning the assignment of the obligation. Bridge is readily distinguishable because the mortgagor was a plaintiff seeking a declaratory judgment and the court addressed standing in the context of Ohio’s declaratory judgment statute. Livonia addressed the question of the meaning of “record chain of title” under Michigan’s foreclosure by advertisement statute. See id. at 99.

Both Wells Fargo Bank, N.A. v. Erobobo, et al., 2013 WL 1831799 (N.Y. Sup. Ct. April 29, 2013); and In Re Saldivar (June 5, 2013), United States District Court, Southern District of Texas, case No. 11-10689, find that the failure to comply with the Pooling and Servicing Agreement results in the transactions being void. 



Hopefully, the above information will be helpful.  Should any Homeowner or Attorney representing Homeowners need additional assistance, please contact my office. 

Simply Me Ranting

I do not post a great deal of the time because I try to give the homeowner facing foreclosure some guidance or helpful information.  However, I opened my usual browser and there was an article by Dan Caplinger for the Motley Fool. Of course I do not know Mr. Caplinger and I had to look up the Motley Fool to find out that it is a "multimedia financial-services company."  But his article is yet another example of how the National Media, even the internet browsers will take every opportunity to remind homeowners facing foreclosure that this is all their fault, that they are deadbeats who should pay their bills.

http://www.fool.com/how-to-invest/personal-finance/home/2013/07/18/new-homeowner-bailouts-again-send-the-wrong-messag.aspx

Nevermind that Homeowners facing foreclosure have tried to pay their bill, that the servicer will not accept their payment, returned their payment and added late fees for several months.  Now that the servicer is not accepting their payment, their Homeowners insurance has been cancelled and the Servicer will add on forced placed insurance, as well as paying their real estate taxes in advance and increase the escrow amount due. 

All of this happened because life happened.  A payment was a few days late.  This new round of modifications will be just as ineffective as the last several rounds.  The Lender will tell the Homeowner that he is eligible for the new streamlined modification, but will still file foreclosure.  The Lender will then tell the Homeowner not to worry about the foreclosure complaint or the Court hearing, you really do not need to worry about those minor issues.  Once the default judgment is granted and the Sheriff's sale is scheduled, the Homeowner will be told that they did not qualify for one or more reasons.  Do not worry though here is cash for keys, a couple hundred dollars, and we will take your home now.

Loan modifications are the way out, but you must hire an attorney to fight the foreclosure action.  Not just someone who will keep the matter pending through summary judgment.  Many of  the loan modifications that my clients have received have come only within the last week before trial or during the appellate process. 

Homeowners facing Foreclosure do not be discouraged, hire an attorney and demand a reasonable loan modification.

Failure to Comply with PSA Results in Void Judgment

I have raised the issue of the Plaintiff's failure to comply with the Pooling and Servicing Agreement in a number of different procedural settings.  In Ashtabula County, the trial court has allowed discovery to be conducted over Plaintiff's objection in order to inquire into the securitization process.  In Perry County, the trial court granted relief from judgment and required Plaintiff to demonstrate its interest in the note and mortgage or suffer dismissal.  In Columbiana County, the trial court found that failure to comply with the PSA was a meritorious defense, but denied relief from judgment based upon Defendants' failure to establish "excusable neglect".  (The Seventh District Court of Appeals reversed and remanded.).

In different cases, in various procedural settings, regardless of the law firm representing the foreclosure Plaintiffs, they all assert the same case against the use of the failure to comply with the PSA by the Mortgagor (Homeowner); Bank of New York Mellon vs. Unger (Ohio App. 8^th Dist.) 2012-Ohio-1950. 

 

The Ohio Supreme Court's decision in Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, would render a judgment void if the failure to comply with the PSA results in the Plaintiff not possessing an interest in the promissory note or mortgage.   Rather than write separately about the topic, I thought it would be helpful to post part of the argument that I have recently filed in support of such motions.

Law and Argument Portion of Motion to Vacate

The New York Law of Estates, Powers and Trusts, N.Y. EPT. LAW § 7-2.4, states:

If the trust is expressed in the instrument creating the estate of the trustee, every sale, conveyance or other act of the trustee in contravention of the trust, except as authorized by this article and by any other provision of law, is void.

            New York law provides that any transfers beyond the stated powers of the trust are void. “If the trust is expressed in the instrument creating the estate of the trustee, every sale, conveyance, or other act of the trustee in contravention of the trust, except as authorized by this article and by any other provision of law, is void.” McKinney's Consolidated Law of New York Annotated, Estates Powers and Trust Laws, section 7-2.4 (2003); see Allison & Ver Valen Co. v. McNee, 9 N.Y.S. 2D 708 (N.Y. Sur. 1939); see also Dye v. Lewis (New York, Sup. Crt., 1971) 67 Misc.2d 426, 324 N.Y.S.2d 172. (The authority of the trustee is subject to any limitations imposed by the trust instrument [EPTL, s 11—1.1, subd. (b)(8)], and every act in contravention of the Trust is void. [EPT, s 7—2.4]).  As the promissory note and the mortgage were not properly transferred to the Trust, the assignment was void.  Plaintiff did not have an interest in the mortgage at the time Plaintiff filed the complaint.  Plaintiff’s lack of standing renders the resulting judgment void.

            In Hendricks vs. US Bank National Association, State of Michigan, Washtenaw County Trial Court Case No. 10-849-CH, the trial court granted injunctive relief preventing and precluding Defendant acting as a purported Trustee from foreclosing upon a mortgage, based upon the failure to transfer the promissory note and mortgage pursuant to the Pooling and Servicing Agreement.  See, also, Horace vs. LaSalle Bank National Association Alabama Circuit Court of Russell County Case No.: 57-CV-2008-000362.00.

            In addition, the US District Court for the District of Hawaii in Deutsche Bank National Trust Co. vs. Williams (March 29, 2012), Case No.: 1:11-cv-00682, states:

In this action, the proverbial shoe is on the other foot -- Deutsche Bank asserts affirmative claims against the Williamses seeking to enforce the Mortgage and Note, and therefore must establish its legal right (i.e., standing) to do so. See, e.g., IndyMac Bank v. Miguel, 117 Haw. 506, 513, 184 P.3d 821, 828 (Haw. App. 2008) (explaining that for standing, a mortgagee must have “a

sufficient interest in the Mortgage to have suffered an injury from [the mortgagor’s] default”). As explained above, Deutsche Bank has failed to do so. The court therefore GRANTS the Williamses’ Motion to Dismiss.

Deutsche Bank National Trust Co. vs. Williams, at p. 12 of the opinion.

            Culhane, V. Aurora Loan Services of Nebraska, (C.A. 1^st Cir., 2013), 708 F.3d 282, recently held:

Whether a mortgagor has standing to challenge the assignment of her mortgage—an assignment to which she is not a party and of which she is not a third-party beneficiary—is a matter of first impression for this court. The nisi prius courts within the circuit have expressed divergent views. Compare, e.g., Butler v. Deutsche Bank Trust Co., No. 12–10337, 2012 WL 3518560, at *6–7 (D.Mass. Aug. 14, 2012) (holding that mortgagor has limited standing), with, e.g., Oum v. Wells Fargo, 842 F.Supp.2d 407, 415 (D.Mass.2012) (holding that mortgagor lacks standing), with, e.g., Rosa v. Mortg. Elec. Sys., Inc., 821 F.Supp.2d 423, 429 n. 5 (D.Mass.2011) (holding that mortgagors “appear to have standing”). We conclude that a nonparty mortgagor, like the plaintiff, has standing to raise certain challenges to the assignment of her mortgage.

            Additional support for the proposition that Plaintiff lacks standing based upon its failure to comply with the Pooling and Servicing Agreement can be found in  HSBC Bank USA, NA as Trustee vs. Young (October 16, 2012), Michigan, Washtenaw County Circuit Court Case No. 11-693 AV, (Homeowner demonstrated violation of PSA, complaint dismissed); and Jua´rez vs. Select Portfolio Servicing, Inc. (February 12, 2013), United States Court of Appeals for the First Circuit, Case No. 11-2431 (Homeowner may have standing to bring wrongful foreclosure claim raising issue of whether assignment under PSA took place prior to foreclosure action was filed.)

            Ohio Courts have also begun to allow Mortgagors to challenge foreclosures based upon non-compliance with Pooling and Servicing Agreements.  Wells Fargo Bank, NA, vs. Freed, 2012-Ohio-5941 (Homeowner allowed to argue violation of PSA); The Bank of New York Mellon vs. Baird, 2012-Ohio-4975 (Homeowner allowed to argue violation of PSA, but Court found no violation); The Bank of New York vs. Blanton, 2012-Ohio-1597 (Homeowner’s allegation of violation of PSA might be meritorious defense, but prongs 2 and 3 under GTE fail).

            Plaintiff will undoubtedly rely upon Bank of New York Mellon vs. Unger (Ohio App. 8^th Dist.) 2012-Ohio-1950; Chase Home Fin., LLC vs. Heft (Ohio App. Dist. 3^rd.), 2012-Ohio-876, and Deutsche Bank National Trust Company vs. Randolph (Ohio App. 8^th Dist) 2012-Ohio-6141, for the proposition that Defendants lack standing to challenge the validity of any transfer, assignment, or securitization of the promissory note and mortgage.  However, these cases only reject a mortgagor’s cause of action based upon an invalid assignment, or a mortgagor’s right to use an invalid assignment offensively.  Bank of New York Mellon vs. Unger (Ohio App. 8^th Dist.) 2012-Ohio-1950, the complaint had been dismissed and the only issue that remained pending was the Homeowner’s offensive claim which attempted to void the mortgage due to the assignment being executed after the Lander was dissolved.   The Unger Court, at ¶21, stated:

The second count is to quiet title and to void both the mortgage assignment and the mortgage. The Ungers are not parties to the assignment of mortgage. They are also not parties to the Pooling and Servicing Agreement (PSA). They do not have the ability to assert the rights of the actual parties to a contract. Bridge v. AAMES Capital Corp. (2010) No. 1:09 CV 29473834059.

            The Bridge Court cited by Bank of New York Mellon vs. Unger, stated at page 4 of the opinion, the following:

In this litigation, Plaintiffs do not request that the Court adjudicate their default or the amount

they owe. Instead, they seek to challenge the transfer of ownership of the Loan from the loan

originator to Deutsche Bank. In other words, Plaintiffs seek to set aside the assignment of the

Loan from Aames to Deutsche Bank.  The Sixth Circuit recently considered this sort of claim in the bankruptcy context, and determined that the bankruptcy trustee—who, under bankruptcy law, stands in the shoes of the debtor and can have no greater right than a debtor himself—lacked standing to challenge a transfer and assignment of mortgage.

            The Bridge Court relied upon In Re Cook 457 F.3d 561(CA 6, 2006).  In Bridge, the plaintiff sought to void the mortgage and declare it unenforceable due to an assignment of mortgage not conforming to Ohio law.  In In Re Cook, the Bankruptcy Trustee was attempting to void the mortgage lien pursuant to 11U.S.C. §544. These cases do not support the position that mortgagors can not raise the failure to comply with the PSA or any other defect in transfer as a defense.

            Further, the procedural posture of Chase Home Fin., LLC vs. Heft renders this case virtually useless as authority.  Defendant Heft conducted the litigation pro se and alleged that there was some indication of “robo-signing” which was not raised until Heft’s second motion for relief from judgment.  Heft asserted that the “robo-signing” may have affected Plaintiff’s standing and the trial court’s “jurisdiction”.  Finally, the trial court found that “robo-signing” was not alleged to have occurred in Heft’s case, and that the only evidence supporting Heft’s claim was a newspaper article discussing the practice of “robo-signing”.  In setting forth all of the above, the Heft Court added Heft lacked standing to challenge the validity of the assignment.

            In Deutsche Bank National Trust Company vs. Randolph (Ohio App. 8^th Dist) 2012-Ohio-6141, the Court of Appeals states that the identical argument was previously rejected by the Eighth District and rotely cites its previous decision in Bank of New York Mellon vs. Unger.

Hopefully, you found this helpful.