TITLE UNDERWRITERS ISSUING RESTRICTIONS TO AGENTS ON SECURITIZED MORTGAGES (via Foreclosureblues)

TITLE UNDERWRITERS ISSUING RESTRICTIONS TO AGENTS ON SECURITIZED MORTGAGES Today, December 28, 2010, 3 hours ago | Neil Garfield COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary see MD Foreclosure INDEMNITY AGREEMENT EDITOR’S NOTE: WHETHER IT IS IN WRITING OR NOT, VIRTUALLY ALL TITLE INSURANCE UNDERWRITERS THAT ARE INDEPENDENT FROM THE MEGA-BANKS ARE ISSUING DIRECTIONS AND RESTRICTIONS REGARDING INSURING TITLE O … Read More

via Foreclosureblues

SPECIAL GUEST POST: Bob Cratchit Speaks Out on Christmas Foreclosure Freezes, Rated ‘PG-13’ (via Foreclosureblues)

SPECIAL GUEST POST: Bob Cratchit Speaks Out on Christmas Foreclosure Freezes, Rated ‘PG-13’ Today, December 23, 2010, 4 hours ago | Mandelman Cratchit here… Well, it’s ‘that’ time of the year once again… the Christmas holidays. For most people, in addition to being the celebration of the birth of our Lord and Savior, Jesus Christ, it’s also a time to spend with loved ones… our family members and close friends… a time to share in the spirit of gi … Read More

via Foreclosureblues

Fraud Ruling Against Wells Fargo in Minnesota Points to Widespread Abuses in Securities Lending Program (via Foreclosureblues)

Fraud Ruling Against Wells Fargo in Minnesota Points to Widespread Abuses in Securities Lending Program Yesterday, December 23, 2010, 11:44:55 PM | Yves Smith A fraud and breach of fiduciary duty ruling against Wells Fargo in a major scandal in Minnesota may have much broader ramifications for this sanctimonious bank. The facts are not pretty. Wells Fargo, in its investment management operation, used securities lending to boost returns. But the r … Read More

via Foreclosureblues

Christmas Stories (via Foreclosureblues)

Christmas Stories Yesterday, December 23, 2010, 7:32:34 PM | Michael If you and your family are blessed and prosperous this holiday season, you should consider yourself to be very fortunate, because there are tens of millions of other Americans that are desperately hanging on by their fingernails. The Christmas stories that you are going to read below aren't going to give you any warm fuzzies. They aren't about "Santa Claus" sliding down the ch … Read More

via Foreclosureblues

Accelerated mortgage defaults likely choice to deleverage household debt (via Foreclosureblues)

Accelerated mortgage defaults likely choice to deleverage household debt Today, December 24, 2010, 3 hours ago Most economists agree that households will continue to deleverage. Bank of America believes over $1,000,000,000 will come from strategic default. Irvine Home Address … 65 GRANDVIEW Irvine, CA 92603 Resale Home Price …… $2,320,000 In the town where I was born, Lived a man who sailed to sea, And he told us of his life, In the land of … Read More

via Foreclosureblues

ROBO SIGNING – LENDERS DELAYING FORECLOSURES INTO FEBRUARY 2011? (via Foreclosureblues)

ROBO SIGNING – LENDERS DELAYING FORECLOSURES INTO FEBRUARY 2011? Today, December 24, 2010, 5 hours ago | Richard Zaretsky, Florida Real Estate Attorney (Richard P. Zaretsky P.A. – Bd Certified Real Estate Attorney) Robo sigining foreclosure affidavits and other documents has been in the news for months – forcing lenders to suspend foreclosures in process. Recently many banks reported that their self imposed moratorium on foreclosure prosecution … Read More

via Foreclosureblues

State Pension Problems Are Billions Worse Than Advertised (via Foreclosureblues)

State Pension Problems Are Billions Worse Than Advertised Today, December 24, 2010, 7 hours ago | Mike "Mish" Shedlock The Wall Street Journal reports New Jersey Pension Gap Hits $54 Billion. New Jersey’s pension gap grew to $53.9 billion in the last fiscal year, up from $45.8 billion, thanks to market losses and a lack of state funding, according to figures released Thursday. Gov. Chris Christie’s administration said the gap, which reflected the … Read More

via Foreclosureblues

Geithner on Foreclosure Fraud: What’s the Problem? | MyFDL (via Foreclosureblues)

Geithner on Foreclosure Fraud: What’s the Problem? | MyFDL Today, December 24, 2010, 13 hours ago | Alrady40@yahoo.com (Alrady) Geithner on Foreclosure Fraud: What’s the Problem? | MyFDL: "Comments with regard to the Congressional Oversight Panel hearing Dec. 16, 2010, with Treasury Secretary Timothy Geithner: Mr. Geithner disingenuously blamed the American public for borrowing too much credit without acknowledging that homeowners relied upon (al … Read More

via Foreclosureblues

FORECLOSUREBLUES MOST READ THIS WEEK 12.25.2010 (via Foreclosureblues)

2010-12-18 to Today Title Views Home page 2,381 The Sum Of All Eviction Fears…"Families Exchange Homes to Stop Foreclosure." 1,622 Meredith Whitney, Chris Christie On 60 Minutes: Illinois & California Are Bankrupt, States Face Reckoning Day 356 Arizona Attorney General Charges BANK of AMERICA with Mortgage and foreclosure fraud…Complaint Here… 172 State of Nevada vs Bank of America – Nevada Attorney General Sues Bank of America for Dece … Read More

via Foreclosureblues

Foreclosure Fraud | Bank Of America’s Christmas Present: Foreclose Even Though Not A Payment Missed (via Foreclosureblues)

Foreclosure Fraud | Bank Of America’s Christmas Present: Foreclose Even Though Not A Payment Missed Today, December 25, 2010, 46 minutes ago | Foreclosure Fraud The moral to the story below is if you are put into a “loan modification” your regular payments will not be applied, late fees will occur, your credit will be ruined because you are reported as NOT making your payments when in a modification, and once you sent in your trail payments, they … Read More

via Foreclosureblues

7 Things I Refuse to Worry About In 2011 (via Foreclosureblues)

7 Things I Refuse to Worry About In 2011 Today, December 25, 2010, 1 hour ago | James Altucher I began worrying in 1995. I had two jobs: my fulltime job at HBO during the day and by night I was starting a company which built websites for other companies. In the summer of 1995 I would work all day at HBO and then at night was building americanexpress.com and Toshiba.com. I had deadlines everywhere and on the other side of those deadlines were very … Read More

via Foreclosureblues

Mortgage Lending and Foreclosure: ‘There Should be Compensation For People Who Have Been Harmed (via Foreclosureblues)

Mortgage Lending and Foreclosure: ‘There Should be Compensation For People Who Have Been Harmed Share | Charlene Crowell NNPA Columnist December 25, 2010 As temperatures plummet across much of the country, multiple developments related to foreclosure and fair lending are heating up. From yet another multi-million dollar settlement to attorneys general investigations and potential actions against mortgage servicers, it is clear that consumers have … Read More

via Foreclosureblues

SEIU's "Where's The Note" Campaign Meeting With Hostility By Note-Lacking Lenders? (via Foreclosureblues)

Sunday, December 26, 2010 SEIU's "Where's The Note" Campaign Meeting With Hostility By Note-Lacking Lenders? A recent campaign by the Service Employees International Union ("SEIU") encouraging its homeowning members, whether facing foreclosure, having an underwater mortgage, or who are simply concerned over home lenders' rampant inability to account for the whereabouts of the original promissory notes, to contact their bank and demand to see the … Read More

via Foreclosureblues

New Lawyers Face Probes, Pop Up at Other Firms (via Foreclosureblues)

Foreclosure Fraud – New Lawyers Face Probes, Pop Up at Other Firms Today, December 26, 2010, 33 minutes ago | Foreclosure Fraud New lawyers face probes, pop up at other firms By Christine Stapleton and Kimberly Miller Palm Beach Post Staff Writer Recently out of law school and looking for work, scores of young Florida attorneys found steady paychecks in burgeoning firms whose business is based on repossessing the American dream. Today, more than … Read More

via Foreclosureblues

ST. PETERSBURG TIMES SAYS- YOUR FIGHT IS TOP 10 STORY OF 2010 (via Foreclosureblues)

ST. PETERSBURG TIMES SAYS- YOUR FIGHT IS TOP 10 STORY OF 2010! Today, December 26, 2010, 2 hours ago | Matthew D. Weidner, Esq. Today’s edition of the St. Petersburg Times recognized the top ten people who made a difference in 2010, and make no mistake about it… if you’re reading this blog…you are one of those who made a difference! In 2010, Florida’s economy struggled with a growing housing crisis and historically high unemployment. • Locally, t … Read More

via Foreclosureblues

Virginia puts homeowners on fast track to foreclosure (via Foreclosureblues)

Virginia puts homeowners on fast track to foreclosure Today, December 26, 2010, 3 hours ago | Neil Garfield COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary Message from sender… Garfield’s Note: The sender is from Harvard University. Here is a clear example of Wall Street money at work on the state level getting legislators to trash their state in exchange for money, gifts and other promises. Virginia has now … Read More

via Foreclosureblues

Judge's decision set aside, canceled, voided, avoided, discharged, nullified… (via Foreclosureblues)

Judge's decision set aside, canceled, voided, avoided, discharged, nullified… by Slade Smith | 2010/12/09 | You may not remember the court case IndyMac v. Yano-Horoski by name, but there's probably a good chance that you remember the story. This was the case where a judge wiped out a mortgage and gave the defaulted homeowners their home free and clear because IndyMac (now part of OneWest) had acted in such bad faith in dealing with the homeown … Read More

via Foreclosureblues

Banks Don’t Have to Follow the Rules in Lee County, Says Judge Starnes (via Foreclosureblues)

Banks Don’t Have to Follow the Rules in Lee County, Says Judge Starnes by Mike on December 11, 2010 This ruling is a disgrace: Lee County Judge Hugh Starnes has ruled that banks in foreclosure cases don’t have to follow court rules. At a recent foreclosure hearing, the defense attorney (Conrad Willkomm) argued that the bank had violated an important evidentiary rule: the bank was relying on its business records, but no one swore that those record … Read More

via Foreclosureblues

New Tactic of Suing Lawyers Defending Homeowners Not Brilliant Strategy (via Foreclosureblues)

New Tactic of Suing Lawyers Defending Homeowners Not Brilliant Strategy Today, December 11, 2010, 9 hours ago | findsenlaw Nationwide Title Clearing, the company that brought us three widely publicized depositions of employees describing an assembly line process of signing assignments and affidavits, is now suing Matt Weidner, Florida foreclosure defense attorney, claiming they were defamed by his characterization of the signers as being robotic. … Read More

via Foreclosureblues

ACLU – Foreclosure “Robo-signers” Under Scrutiny | Foreclosure Fraud Fighters Under Attack (via Foreclosureblues)

ACLU – Foreclosure “Robo-signers” Under Scrutiny | Foreclosure Fraud Fighters Under Attack Today, December 11, 2010, 3 hours ago | Foreclosure Fraud ACLU Appeals Gag Order on Homeowner’s Attorney FOR IMMEDIATE RELEASE December 9, 2010 CONTACT: (786) 363-2737 or media@aclufl.org SARASOTA, Fla. – The ACLU of Florida, on behalf of attorney Christopher Forrest and The Forrest Law Firm, today asked Florida’s Second District Court of Appeal to reverse … Read More

via Foreclosureblues

The Economy Cannot Recover Until the Big Banks Are Broken Up (via Foreclosureblues)

The Economy Cannot Recover Until the Big Banks Are Broken Up Today, December 11, 2010, 27 minutes ago | noreply@blogger.com (George Washington) A lot of people still haven't heard that the economy cannot recover until the big banks are broken up. But as everyone from Paul Krugman to Simon Johnson has noted, the banks are so big and politically powerful that they have bought the politicians and captured the regulators. In addition, as Fortu … Read More

via Foreclosureblues

WEIDNER: BIGGEST RICO CASE ON EARTH (via Foreclosureblues)

WEIDNER: BIGGEST RICO CASE ON EARTH Posted on October 19, 2010 by Neil Garfield by Matt Weidner on IRS Form 938 Sometimes this all becomes a bit too overwhelming, trying to unravel this whole foreclosure cataclysm. This is so far beyond the simple situation where a borrower borrows money from a bank and doesn’t pay….that bank is clearly entitled to their money back. I’m a fairly bright guy with a good education and a fair to ‘middlin grasp on co … Read More

via Foreclosureblues

The Cause of the Foreclosure Crisis (via Foreclosureblues)

The Cause of the Foreclosure Crisis Today, December 12, 2010, 2 hours ago | Mark Stopa David Bornstein of the New York Times penned a nice article today called When Lenders Won’t Listen. Here’s the part that really jumped off the page at me… After describing the injustices experienced by several homeowners in their experiences with lenders, a competing view was presented: There are those of us who were raised with the idea that if you make a bar … Read More

via Foreclosureblues

Legal Aid for Homeowners: Perhaps the only thing on the planet for which TARP funds CANNOT be used. (via Foreclosureblues)

Legal Aid for Homeowners: Perhaps the only thing on the planet for which TARP funds CANNOT be used. Yesterday, December 11, 2010, 9:32:56 PM | Mandelman The Nation is reporting a story about Treasury Secretary Tim “Transparency” Geithner that proves that he actually is a “by-the-books” guy who is very concerned about protecting the taxpayer’s money from being spent in unauthorized ways. I’m not kidding about that… that’s what the story shows. W … Read More

via Foreclosureblues

Debt settlement: A costly escape not always the best solution

Negotiating away your bills is legal, but it may not be your best solution. And sometimes, hiring a professional to help you isn’t as good an idea as doing it yourself.

If you’re drowning in unpaid bills and desperately looking for a way out, chances are you’ve come across an offer that sounds something like this: For a fee, a professional debt-settlement company will help rid you of your debt for as little as half the amount you owe.

Sounds like a scam? Or like you’re finally getting the break you deserve?

The answer may surprise you. Debt settlement is, in fact, a perfectly legal solution for consumers who are in deep and seeking an alternative to bankruptcy. But having a debt-settlement company do the legwork for you is fraught with risk, not to mention outrageous fees.

Here’s what you need to know about debt settlement and the companies that claim to do it for you:

The basics

It’s a little-known fact that when you fall further and further behind on your payments, creditors would much rather agree to settle your debts than have you file bankruptcy and not get paid at all, says debt expert Gerri Detweiler, author of “The Ultimate Credit Handbook”.

In exchange for an agreed-upon one-time payment — typically, between 20% and 75% of what you owe — the creditor forgives the rest of your debt and starts reporting it to the credit bureaus as settled. Meanwhile, you’ll need to put money aside toward the settlement and stop making payments to your creditors. On your credit reports, the balances of settled debts will show $0. However, any previous history of delinquent payments or charge-offs will remain on your report.

Not surprisingly, creditors don’t like to advertise debt settlement. They also make it an extremely difficult solution to pursue. As a rule, creditors won’t negotiate with consumers who are current on their bills, often refusing to discuss settlements unless you’re at least three to six months behind, explains Detweiler. That means dodging collections calls while trying to save up the cash for a settlement.

If you’re working with several creditors — you’d typically tackle the debts one at a time as you collect the money to pay them off — it’s hard, if not impossible to know which creditor might agree to settle earlier than others. “There’s an art to it,” Detweiler notes.

The problem with debt-settlement companies

With that in mind, it would be great to have an experienced, knowledgeable debt-settlement company hold your hand through the process, right? Not really.

Once you sign up with a company, chances are you’ll pay dearly for its services, says Deanne Loonin, a staff attorney with the National Consumer Law Center (NCLC) who has investigated the practices of debt-settlement companies.

Outrageous fees

Just how much will you pay? Good luck finding that out.

“I’ve never seen a company that’s given a straight answer,” says Loonin. The industry’s fees and fee structures are all over the place. Some companies charge a percentage of the total debt — typically 15% or 18% — that’s paid before you start accumulating savings. Others charge a percentage of the debt savings — usually 25% — once you settle, plus an initial sign-up fee and monthly service charges. Then there are those that charge a flat monthly fee throughout the length of the program.

Even the industry admits figuring out the costs is a challenge. “I have seen every kind of (fee) model you can think of,” says Jenna Keehnen, the executive director of the U.S. Organizations for Bankruptcy Alternatives (USOBA), an industry trade group. “It’s very confusing.”

Worse than confusing, it’s prohibitively expensive, says Katie Porter, a professor of bankruptcy law at the University of Iowa. She recently came across an offer to settle $33,551 in debt that projected a $5,032 service fee that was to be paid in monthly installments. Only after the service fee was paid off, two years later, did the client actually start saving for the settlement.

“That $5,000 buys a substantial amount of attorney time,” she says. “You can get a consumer (or bankruptcy) attorney to represent you and help with your debt problems for a lot less than that.”

Questionable services

What does a debt-settlement company do for you? In theory, it’s supposed to help you negotiate your debts. In practice though, that doesn’t really happen, says Porter. During the two or more years that you’re saving money — typically in an escrow account that the debt-settlement company has access to — the company does nothing but withdraw fees.

“A lot of consumers think they’ve taken care of the problem after contacting a company, but the reality is the debt-settlement company hasn’t settled anything in the beginning,” Porter says.
The companies also claim that they’ll help you dodge collections calls. But referring collections calls to your debt-settlement company often backfires, says Leslie Linfield, the executive director at the Institute for Financial Literacy, an organization that provides pre-bankruptcy counseling.

“Many creditors, once they know a client is working with a debt-settlement company, will escalate the account,” she notes. That means sending it to a collections agency sooner or even suing you. And when a creditor takes legal action, the debt-settlement companies drop the account: They don’t have the right to give legal advice or represent you in court.

High dropout rates

While there’s no independent research on the average success rate of debt-settlement programs, anecdotal evidence shows many consumers drop out before the company reaches a settlement with their creditors, Linfield says. “As you talk to bankruptcy attorneys you’ll hear horror stories of clients who paid thousands of dollars to a company and they’re still in the exact same place,” she says.

Consider what happened at National Consumer Council, which was shut down by the Federal Trade Commission in 2004 on accusations of falsely claiming nonprofit status. The company’s court records show that only 1.4% of the consumers who signed up for the program ever completed it. Nearly half — 42.9% — dropped out, paying an average of $1,780 in fees and saving $966 in their escrow accounts.

Secrets of the trade

Here’s what debt-settlement companies might not tell you:

Debt settlement may not be right for you. Debt settlement is a niche solution that’s right only for a small segment of the population. You could be a good candidate for debt settlement if you’re heading toward bankruptcy but don’t qualify for filing Chapter 7, Phelan explains. (Under Chapter 7, most of your unsecured debts are written off, but you’ll most likely have to sell some property including your home). “Most people who can qualify for Chapter 7 in all likelihood lack the cash flow to make debt settlement work for them,” he says. Debt settlement, in other words, might be a viable alternative to Chapter 13, which sets up a three- to five-year schedule with your creditors to repay your debts.

Likewise, if you can scrape up the cash to pay off your debts in a debt-management program where you work with a debt-management company to pay off your balances in full but with lower interest rates, then debt settlement isn’t the best solution.

Your credit will suffer. Creditors don’t settle unless you’re severely behind on your payments. That means one thing: Debt settlement is damaging to your credit. Just how damaging it is depends on your track record. If you’re already behind on payments, your credit will suffer less than if you’ve managed to avoid delinquencies and credit charge-offs.

You could get sued. With bankruptcy, creditors have to stop collections efforts as soon as you file. That’s not the case with debt settlement. Even if you inform your creditors of your efforts to settle, they won’t stop trying to collect, Phelan says. Worst-case scenario, they could sue you for the amounts you owe. Should that occur the only way to avoid a black mark on your credit record would be to pay off the debt in full.

There are tax consequences. Debt settlement is a taxable event. Any forgiven balance that exceeds $600 is taxable income, says Linfield. “Sometimes that tax event can put people in worse shape than they were in to begin with,” she says. Consider this: If your tax rate is 15%, $5,000 of forgiven debt will carry a $750 tax liability. That’s a debt that the Internal Revenue Service won’t forgive. One exception: If you’re insolvent — namely your assets are less than your liabilities — you can petition the IRS to waive that tax liability by filing Form 982.

Their services might be illegal. Though the laws regulating debt-settlement companies vary greatly by state, it’s worth noting that 12 states prohibit for-profit debt management. Since debt-settlement companies are for-profit entities, they’re not allowed to practice there. Those states are Arizona, Georgia, Hawaii, Louisiana, Maine, Mississippi, New Jersey, New Mexico, New York, North Dakota, West Virginia and Wyoming.

If you live in one of those states, remember: It is illegal for for-profit debt-settlement companies to contact you and work with you, even if they’re based in another state. “Many companies do it anyway,” Linfield says. “And that’s a big red flag.”

Securitization Workshop in Sacramento, December 11, 2010… for Attorneys & Other Interested Parties (via Foreclosureblues)

Securitization Workshop in Sacramento, December 11, 2010… for Attorneys & Other Interested Parties Today, December 06, 2010, 4 hours ago | Mandelman On December 11th, 2010, in Sacramento, California, DTC Systems, Inc. and Secure Document Research is holding a Securitization Workshop designed to help attorneys get quickly up-tp-speed on the topic of mortgage securitization as related to the financial and resulting foreclosure crises that conti … Read More

via Foreclosureblues

A question we get alot – can my house be saved after the foreclosure sale? Answer – Maybe, and it is expensive. (via Foreclosureblues)

A question we get alot – can my house be saved after the foreclosure sale? Answer – Maybe, and it is expensive. Today, December 06, 2010, 7 hours ago | Foreclosure Defense Attorney Steve Vondran If your house sells, you are in a tough spot in California and Arizona. Normally, we would need to see if there was any fraud/robosigner in the sub of trustee. It is tough to reverse a sale where the notice of default and notice of sale and other document … Read More

via Foreclosureblues

California to join multi-state investigation into foreclosures

By Dale Kasler
dkasler@sacbee.com

Published: Tuesday, Oct. 12, 2010 – 10:56 am

Last Modified: Tuesday, Oct. 12, 2010 – 1:17 pm

California officials are joining a multi-state effort to investigate mortgage “robo-signers” – employees of lending institutions who’ve approved foreclosures without reading the documents.

Jim Finefrock, a spokesman for California Attorney General Jerry Brown, said today his office will participate in the investigation. The effort is to be led by Iowa Attorney General Tom Miller.

Brown has previously called on all lenders to halt foreclosures in California temporarily. He also issued demands to two lenders – Ally and JP Morgan Chase – to stop California foreclosures until they can show they’re following state law.

Finefrock said Brown’s lawyers are in talks with Ally and Chase. California law prohibits lenders from issuing default notices – the first step toward foreclosure – until they’ve made serious efforts to contact homeowners to see if their loans can be modified. The law applies to mortgages issued from 2003 to 2007.

Now that he is Governor he probably will not do anything. He has to “work” with the banks to help get California out of it fiscal mess. When running for office you must criticize the status quo and vow to change it if elected. Once elected you must preserve the status quo. Its right out of the election play book.

Saving your home

I. GENERAL CONSIDERATIONS

A. WHETHER TO REINSTATE, DEFEND OR GIVE-UP

By far the most important decision that must be initially made is whether the property is worth saving. This is often ignored and wasted effort is expended when there is no “equity” (realistic fair market value minus all debt, liens, property taxes, anticipated foreclosure costs, late fees, and selling costs) in the property.

The options are as follows:

1. Reinstatement. Pay the costs and late charges and stop the process. In most non-judicial foreclosures this is permitted up until the date of sale. In Washington the lender must allow reinstatement 10 days prior to the sale date. See RCW 61.24. Often a lender or relative will loan necessary funds and take a subordinate lien on the property to do so. The makes sense only if the new payments are within the means of the debtor.

2. Sell the Property. If there is equity, but no ability to reinstate, then immediately list and sell the property to recoup equity.

3. Obtain Foreclosure Relief. Most government insured loans (if, VA, FHA) have programs allowing (or requiring) lenders to assist defaulting borrowers. See discussion under §V infra. Check into these options immediately.

4. Give Up. This is actually an option as most state laws permit the debtor to remain in possession during the foreclosure process and redemption period rent-free. Most laws, especially in non-judicial foreclosure states – do not allow (or at least limit) deficiencies. Debtors contemplating bankruptcy should take advantage of homestead rights and redemption rights. If there is no equity or negative equity and no ability to make payments, there is no economic reason to try to avoid foreclosure.

5. Defend the Foreclosure. After all of the above have been considered, defense of the foreclosure may be warranted. This outline discusses some defenses that may result in re-instatement of the mortgage or recovery of equity.

B. OFFENSIVE STRATEGY

In addition to defenses that may be raised, there may be affirmative claims that can be brought against the lender which should be immediately determined and raised in a counterclaim or set-off or, in the case of non-judicial foreclosure, brought by separate suit and coupled with an injunction against continuing the non-judicial foreclosure. These claims can also be brought in bankruptcy. See, e.g. In re Perkins, 106 BR 863 (1989).

A few examples of affirmative claims:

1. Truth-in-Lending Act Violations. Often lenders will hand the debtor a claim, which can turn a debt into an asset. If the Truth-in-Lending disclosure statement is less than one year old, there may be damage claims for improper disclosure. See, 15 U.S.C. 1635. More importantly, there may be a right of rescission, which can be exercised up to three years after the closing resulting in a tremendous advantage to the borrower. See, e.g., Beach v. Ocwen Fed Bank, 118 S. Ct. 1408 (1998).

2. Usury. If a state usury law applies (usually on seller financed real estate), this can parlay a debt into an asset. Federal pre-emption generally prevents this, but there are exceptions. See, RCW 19.52.

3. Mortgage Broker Liability, Lender Liability, Unfair or Deceptive Acts or Practices. Numerous claims that arise in the mortgage financing context give rise to set-offs that can allow negotiation out of the foreclosure. See e.g. Mason v. Mortgage America, 114 Wn. 2d 842 (1990). Intentional breach of contract gives rise to emotional stress damages. See, Cooperstein v. Van Natter, 26 Wn. App. 91 (1980); Theis v. Federal Finance Co., 4 Wn. App. 146 (1971).

Under a new federal statute to regulate high interest, predatory loans, Congress enacted in 1994 the Home Ownership and Equity Protection Act (effective on loans after October 1, 1995). This amendment to the Truth-In-Lending Act requires greater disclosures in loans where a number of factors exist such as, points exceeding 8% and other excessive costs. Penalties include enhanced damages and rescission. See 15 U.S.C. 1602(u) and 15 U.S.C. 1640(a).

The Mortgage Broker Practices Act, RCW 31.04 and the Consumer Protection Act also have enhanced damages and attorney fees.

II. DEFENDING NONJUDICIAL DEED OF TRUST FORECLOSURES

A. INTRODUCTION

The deed of trust is currently one of the most common devices for securing conventional and government insured or guaranteed real estate loans. The deed of trust may be typically foreclosed either judicially as a mortgage or non-judicially. Set forth below are the jurisdictional variations in security agreements and the most common foreclosure procedures^{^[1]}. Nonjudicial foreclosure is allowed in approximately one-half of the states. Also listed are the states that permit nonjudicial foreclosure and their relevant statutes^{^[2]}. With nonjudicial foreclosure, it is not necessary to utilize the court for the foreclosure sale unless a deficiency judgment is sought. Nonjudicial foreclosure is often the preferred method of foreclosure because it is more efficient than judicial foreclosure and quicker. The nonjudicial foreclosure procedure has been found constitutional between private parties on the basis that there is no state action^{^[3]}, but there is a serious question as to whether the government can direct a lender to use a nonjudicial procedure^{^[4]}.

B. PROCEDURE FOR RESTRAINING TRUSTEE’S SALE

Anyone having an interest in the real property security, including the borrower, may restrain the non-judicial foreclosure of a deed of trust on any proper ground^{^[5]}. Proper grounds for enjoining a trustee’s sale include: (1) there is no default on the obligation, Salot v. Wershow, 157 CA.2d 352, 320 P.2d 926 (1958), (2) the deed of trust has been reinstated, (3) the notice of default, notice of sale, or proposed conduct of the sale is defective, Crummer v. Whitehead, 230 CA.2d 264, 40 CR 826 (1964), (4) the lender has waived the right to foreclose, (5) a workout/settlement has been agreed to, (6) equitable reasons that would entitle a debtor to close a sale of the property or complete a refinance, (7) to enforce government relief programs, and trustee misconduct. Finally, there may be defenses to the debt (i.e. usury, truth in lending violations, misrepresentation of the seller, breach of warranty by the seller, etc.) or set-offs, which substantially reduce the debt.

1. Time for Filing Action

The action can presumably be filed any time before the scheduled trustee’s sale, but the sooner the better. Under Washington law, if one seeks to restrain the sale, five days notice must be given to the trustee and the beneficiary. See the Revised Code of Washington (hereinafter “RCW”) 61.24.130(2); Note, supra, footnote 4. A trustor in California has at least one hundred and ten days (after the recording of the notice of default) to seek to enjoin the sale. In California, fifteen days are required for noticing a motion for a preliminary injunction. See CCP section 1005.

2. Effect of Lis Pendens

Filing a lis pendens at the time the lawsuit is commenced constitutes constructive notice to purchasers and others dealing with the property of the claims and defenses asserted by the plaintiff^{^[6]}. Even if the plaintiff does not seek an order restraining the trustee’s sale or a restraining order is denied, purchasers at the sale acquire the property subject to the pending litigation^{^[7]}.

3. Notice of Application for Restraining Order

In Washington, a person seeking to restrain a trustee’s sale must give five days notice to the trustee setting forth when, where and before whom the application for the restraining order or injunction will be made. See RCW 61.24.130(2). See also Civil Rules 6 and 81 of the Civil Rules for Superior Court regarding computation of time.

4. Payment Obligation

When a preliminary injunction is sought, many states require the petitioner to post an injunction bond to protect the lender from injury because of the injunction^{^[8]}. Some courts require the party seeking the injunctive relief to pay to the court the amount due on the obligation^{^[9]}. If the amount due on the obligation is in dispute, most courts will require the borrower to tender at least what he/she acknowledges is due^{^[10]}.

Under Washington law, if the default is in making the monthly payment of principal, interest and reserves, the court requires such sum to be paid into the court every thirty days. See RCW 61.24.130(1)(a). A practice tip: even if local law does not require this, it would advantageous to offer to make ongoing payments. Then the creditor loses nothing during the pendency of the suit. In the case of default on a balloon payment, the statute requires that payment of the amount of the monthly interest at the new default rate shall be made to the court clerk every thirty days. See RCW 61.24.130 (1)(b). If the property secured by the deed of trust is an owner occupied single family dwelling, then the court must require the party seeking to restrain the trustee’s sale to make the monthly payment of principal interest and reserves to the clerk of the court every 30 days. See RCW 61.24.130(1).

Although the amount that the party seeking to restrain the trustee’s sale must pay as a condition of continuing the restraining order would ordinarily be the regular monthly payment on the obligation, RCW 61.24.130(1)(a), when there is a balloon payment past due, RCW 61.24.130(1)(b) provides:

In the case of default in making payments of an obligation then fully payment by its terms, such sum shall be the amount of interest accruing monthly on said obligation at the non-default rate, paid to the clerk of the court every thirty days.

This is consistent with the intent to preserve the status quo while the lawsuit is pending and provide security only for prospective harm.

Failure to seek a restraint may constitute a waiver of all rights to challenge a sale for defects whenever the party who received notice of the right to enjoin the trustees sale, had actual or constructive knowledge of a defense to foreclosure prior to the sale, and failed to bring an action to enjoin the sale. The doctrine of waiver would thus preclude an action by a party to set aside a completed trustee’s sale^{^[11]}. Finally, RCW 61.24.130 allows the court to consider the grantor’s equity in determining the amount of security. This would significantly help a borrower avoid a costly bond. An appraisal showing equity should persuade a court that the lender is protected while the underlying dispute is resolved in court.

When a party knew or should have known that they might have a cause of action to set aside the sale but unreasonably delayed commencing the action, causing damage to the defendant, the doctrine of laches may bar the action^{^[12]}.

C. DEFENSES BASED ON TRUSTEE MISCONDUCT

Most defenses that are available in judicial foreclosures are also available in nonjudicial foreclosures of deeds of trust. Defenses may include violation of Truth-in-Lending, usury statutes, other consumer protection legislation, or special requirements when the government is the lender, insurer, or guarantor, infra. Other defenses are unique to nonjudicial foreclosure of deeds of trust because they relate to the particular obligations imposed upon trustees who conduct the sale of the real property.

1. Breach of Fiduciary Duties

A trustee selling property at a nonjudicial foreclosure sale has strict obligations imposed by law. In most states, “a trustee is treated as a fiduciary for both the borrower and the lender.”^{^[13]}

In McPherson v. Purdue, 21 Wn. App. 450, 452-3, 585 P.2d 830 (1978), the court approved the following statement describing the duties of a trustee from California law:

Among those duties is that of bringing “the property to the hammer under every possible advantage to his cestui que trusts,” using all reasonable diligence to obtain the best price.

In Cox v. Helenius, 103 Wn.2d 383, 388, 693 P.2d 683 (1985), the Washington Supreme Court adopted the following view:

Because the deed of trust foreclosure process is conducted without review or confrontation by a court, the fiduciary duty imposed upon the trustee is “exceedingly high”.

The court went on to illuminate four duties of the trustee:

(1) The trustee is bound by his office to use diligence in presenting the sale under every possible advantage to the debtor as well as the creditor;

(2) The trustee must take reasonable and appropriate steps to avoid sacrifice of the debtor’s property and his interest;

(3) Once a course of conduct is undertaken that is reasonably calculated to instill a sense of reliance thereon by the grantor, that course of conduct can not be abandoned without notice to the grantor; and

(4) When an actual conflict of interest arises between the roles of attorney for the beneficiary and trustee, the attorney should withdraw from one position, thus preventing a breach of fiduciary duty.

In Blodgett v. Martsch, 590 P.2d 298 (UT 1978), it was stated that “the duty of the trustee under a trust deed is greater than the mere obligation to sell the pledged property, . . . it is a duty to treat the trustor fairly and in accordance with a high punctilio of honor.” The Supreme Court in Blodgett went even further and found that the breach of this confidential duty may be regarded as constructive fraud^{^[14]}.

The general rule is summarized in Nelson & Whitman, Real Estate Finance Law, (West Publishing Co., 3d Ed. 1994), §7.21:

. . . a trustee in a deed of trust is a fiduciary for both the mortgagor and mortgagee and must act impartially between them. As one leading decision has stated, “the trustee for sale is bound by his office to bring the estate to a sale under every possible advantage to the debtor as well as to the creditor, and he is bound to use not only good faith but also every requisite degree of diligence in conducting the sale and to attend equally to the interest of debtor and creditor alike, apprising both of the intention of selling, that each may take the means to procure an advantageous sale.”

Mills v. Mutual Building & Loan Association, 216 N.C. 664, 669, 6 S.E.2d 549, 554 (1940).

The fiduciary duty of a trustee to obtain the best possible price for trust property that it sells has been discussed in nonjudicial and other contexts^{^[15]}.

However, this “fiduciary” characterization of a trustee is not accepted in all jurisdictions. The California Supreme Court has stated,

“The similarities between a trustee of an express trust and a trustee under a deed of trust end with the name. ‘Just as a panda is not a true bear, a trustee of a deed of trust is not a true trustee.’ *** [T]he trustee under a deed of trust does not have a true trustee’s interest in, and control over, the trust property. Nor is it bound by the fiduciary duties that characterize a true trustee.”

Monterey S.P. Partnership v. W.L. Bangham, Inc. 49 Cal.3d 454, 462, 261 Cal.Rptr. 587,592 (1989).

In most jurisdictions, a trustee cannot, without the express consent of the trustor, purchase at the sale that he conducts^{^[16]}. A court may impose additional affirmative duties (beyond the statutory requirements) upon the trustee in certain circumstances. This could include a requirement that a trustee’s sale be continued, if necessary, to prevent a total loss of the debtor’s equity. West v. Axtell, 322 Mo. 401, 17 S.W.2d 328 (1929). RCW 61.24.040(6) authorizes a trustee to continue a trustee’s sale for a period or periods totaling 120 days for “any cause he deems advantageous.”

However, the Washington Court of Appeals has ruled that the trustee need not exercise “due diligence” in notifying interested parties of an impending sale. Morrell v. Arctic Trading Co., 21 Wn. App. 302, 584 P.2d 983 (1978). Further, the general rule is that a trustee is not obligated to disclose liens or other interests which the purchaser could or should have discovered through his or her own investigation. Ivrey v. Karr, 182 Md. 463, 34 A.2d 847, 852 (1943). The Washington courts have held that even when a trustee is aware of defects in title, the trustee only undertakes an affirmative duty of full and accurate disclosure if s/he has made any representations or answered any questions concerning the title. McPherson v. Purdue, 21 Wn. App. 450, 453, 585 P.2d 830 (1978). However, despite this general rule, there is authority behind the proposition that a trustee has a fiduciary duty to restrain the sale due to defects known to the trustee. In Cox v. Helenius, 103 Wn.2d 383,*,693 P.2d 683 (1985), in which the trustee knew that the right to foreclose was disputed and that the attorney for the trustor had failed to restrain the sale, the court held that the trustee should have either informed the attorney for the trustor that she had failed to properly restrain the sale or delayed foreclosure. As a result of the trustee’s failure to do so, the sale was held void.

Trustees are not permitted to “chill the bidding” by making statements which would discourage bidding, for example, a statement that it is unlikely that the sale will be held because the debtor intends to reinstate^{^[17]}. If a trustee does engage in “chilled bidding”, the sale is subject to being set aside^{^[18]}.

2. Strict Construction of the Deed of Trust Statute

The nonjudicial foreclosure process is intended to be inexpensive and efficient while providing an adequate opportunity for preventing wrongful foreclosures and promoting the stability of land titles^{^[19]}. However, statutes allowing foreclosure under a power of sale contained within the trust deed or mortgage are usually strictly construed. Id. at 509.

Recent decisions have moved away from the strict construction ruling, holding that some technical violations of statutes governing nonjudicial foreclosures will not serve as grounds for setting aside sale when the error was non-prejudicial and correctable. See Koegal, supra at 113. An example of a non-prejudicial and correctable error is noncompliance with the requirement that the trustee record the notice of sale 90-days prior to the actual sale when actual notice of the sale was given to the debtors 90-days prior to the sale and the lack of recording caused no harm. Steward, supra at 515. Further, inconsequential defects often involve minor discrepancies regarding the notice of sale. In Bailey v. Pioneer Federal Savings and Loan Association, 210 Va. 558, 172 S.E.2d 730 (1970), where the first of four published notices omitted the place of the sale, the court held that since there was “substantial compliance” with the requirements specified by the deed of trust and since the parties were not affected in a “material way,” the sale was valid^{^[20]}. In another case, where the notice of sale was sent by regular rather than by statutorily required certified or registered mail and the mortgagor had actual notice of the sale for more than the statutory period prior to the sale, the sale was deemed valid^{^[21]}. Clearly a grantor must show some prejudice.

D. POST-SALE REMEDIES

1. Statutory Presumptions

The Washington Deed of Trust Act contains statutory presumptions in connection with a trustee’s sale that are similar to those found in most other states.^{^[22]} RCW 61.24.040(7) provides, in part:

. . . the [trustee’s] deed shall recite the facts showing that the sale was conducted in compliance with all of the requirements of this chapter and of the deed of trust, which recital shall be prima facie evidence of such compliance and conclusive evidence thereof in favor of bona fide purchasers and encumbrancers for value.

Such provisions are designed to protect bona fide purchasers and to assure that the title passed through a trustee’s sale will be readily insurable. However, although the required recitals are described as “conclusive” in favor of bona fide purchasers and encumbrancers for value, there is extensive case law setting forth the basis for rebutting these presumptions. They also don’t apply to a dispute between the grantor and grantee. See, generally, Nelson & Whitman, Real Estate Finance Law, (2d ed. 1985) § 7.21 ff. Some states employ other means of stabilizing titles, such as title insurance. Yet another means of stabilizing titles is to include a provision in the deed of trust that in the event of a trustee’s sale, the recital will be conclusive proof of the facts. See, Johnson v. Johnson, 25 Wn. 2d 797 (1946); Glidden v. Municipal Authority, 111 Wn. 2d 341 (1988), modified By Glidden v. Municipal Authority, 764 P.2d 647 (1988).

2. The Bona Fide Purchaser

The law is well settled that a bona fide purchaser, in order to achieve that status, must have purchased the property “for value.” See RCW 61.24.040(7).

The general rule is set forth in Phillips v. Latham, 523 S.W.2d 19, 24 (Tex. 1975):

[The purchaser] cannot claim to be a good-faith purchaser for value because the jury found . . . that the sale price of $691.43 was grossly inadequate. These findings are not attacked for lack of evidence. Although good faith does not necessarily require payment of the full value of the property, a purchaser who pays a grossly inadequate price cannot be considered a good-faith purchaser for value.

Further, if a lis pendens has been recorded, it “will cause the purchaser to take subject to the plaintiff’s claims.” Bernhardt, California Mortgage & Deed of Trust Practice (2d Edition 1990). A purchaser will not then constitute a bona fide purchaser able to utilize the presumptions of regularity in recitals of the trustee’s deed. See CC § 2924. The beneficiary of a deed of trust is not a bona fide purchaser. See Johnson, supra.

E. SETTING ASIDE THE TRUSTEE’S SALE

Setting aside a trustee’s sale is largely a matter for the trial court’s discretion. Crummer v. Whitehead, 230 Cal. App. 2d 264, 40 Cal. Rptr. 826 (1964); Brown v. Busch, 152 Ca. App. 2d 200, 313 P.2d 19 (1957). After a trustee’s sale has taken place, a trustor or junior lienor may bring an action in equity to set aside the sale. See Crummer v. Whitehead, 230 Cal. App. 2d 264, 40 Cal. Rptr. 826 (1964); see also Note, “Court Actions Contesting The Nonjudicial Foreclosure of Deeds of Trust In Washington,” 59 Wash.L.Rev. 323 (1984)^{^[23]}.

An action may be brought to set aside a trustee’s sale under circumstances where the trustee’s sale is void. Cox v. Helenius, 103 Wn.2d 383, 693 P.2d 683 (1985). In those circumstances where the defect in the trustee’s sale procedure does not render the trustee’s sale void, the court will probably apply equitable principles in deciding what relief, if any, is available to the parties. A general discussion of equitable principles in contexts other than trustee’s sale can be found in Eastlake Community Council v. Roanoake Associates, 82 Wn.2d 475, 513 P.2d 36 (1973) and Arnold v. Melani, 75 Wn.2d 143, 437 P.2d 908 (1968). Although it is preferable to raise any defenses to the obligations secured by the deed of trust or other defects in the nonjudicial foreclosure process prior to the trustee’s sale, a trustee’s sale can presumably be set aside if there was a good reason for not restraining it. Possible reasons could include those described below.

1. Breach of the Trustee’s Duty

a. Inadequate Sale Price

The general rule on using inadequate sale price to set aside a deed of trust sale is stated in Nelson & Whitman, supra, § 7.21:

All jurisdictions adhere to the recognized rule that mere inadequacy of the foreclosure sale price will not invalidate a sale, absent fraud, unfairness, or other irregularity. Stating the rule in a slightly different manner, courts sometimes say that inadequacy of the sale price is an insufficient ground unless it is so gross as to shock the conscience of the court, warranting an inference of fraud or imposition^{^[24]}.

In Cox v. Helenius, supra, at p. 388, the court indicated that the inadequate sale price coupled with the trustee’s actions, would have resulted in a void sale, even if not restrained.

Generally, unless the sale price is grossly inadequate, other irregularities or unfairness must exist. However, considerable authority exists to support setting aside a sale when, coupled with an inadequate sale price, there is any other reason warranting equitable relief. Nelson & Whitman, Real Estate Finance Law, supra.

b. Hostility or Indifference to Rights of Debtor.

In Dingus, supra, at 289, it is stated:

In an action to set aside a foreclosure sale under a deed of trust, evidence showing that the trustee was hostile and wholly indifferent to any right of the mortgagor warrants setting aside the sale. Lunsford v. Davis, 254 S.W. 878 (Mo. 1923).

CF. Cox v. Helenius, supra.

c. Other Trustee Misconduct

Other trustee misconduct that would give rise to grounds for setting aside a trustees sale could include “chilled bidding” where the trustee acts in a manner that discourages other parties from bidding on the property^{^[25]}. Actions by the trustee which lull the debtor into inaction may also give rise to grounds for avoiding the sale^{^[26]}. Particular note should also be made of the discussion in Cox v. Helenius, supra, at p.390 in which trustees who serve a dual role as trustee and attorney for the beneficiary are directed to transfer one role to another person where an actual conflict of interest arises.

2. Absence of Other Foreclosure Requisites

RCW 61.24.030 sets forth the requisites to non-judicial foreclosure. Failure to meet these requisites may render the trustee’s sale void. In Cox v. Helenius, 103 Wn.2d 383, 693 P.2d 683 (1985), the court concluded that a trustee’s sale was void under circumstances where the borrower had filed an action contesting the obligation and that action was pending at the time of the trustee’s sale. The action was filed after service of the notice of default but before service of the notice of foreclosure and trustee’s sale.

The decision in Cox was based on language in the Deed of Trust Act that made it a requisite to foreclosure that “no action is pending on an obligation secured by the deed of trust.” That part of the Cox decision was legislative overruled by Chapter 193, Law of 1985, Reg. Sess., which amended RCW 61.24.030(4) to read as follows:

That no action commenced by the beneficiary of the deed of trust is now pending to seek satisfaction of an obligation secured by the deed of trust in any court by reason of the grantor’s default on the obligation secured;

As a result of the amendment, pendency of an action on the obligation brought by the grantor does not render a subsequent trustee’s sale void. Only pending actions commenced by the beneficiary to seek satisfaction of the obligation secured by the deed of trust operate as a bar to nonjudicial foreclosure. The trustee must be properly appointed and be appointed before the trustee has authority to act. When an eager trustee “jumps the gun” the actions are equally void.

F. ADDITIONAL STATUTORY REMEDIES

1. Confirmation of Sale Price.

Many states (but not Washington) require confirmation that the nonjudicial sale resulted in a fair value to the debtor. Below is listed the states that have adopted fair market value statutes^{^[27]}. Fair market value statutes are usually used to limit deficiency judgments to the difference between the fair market value and the debt. Failure to confirm the sale within the statutory period is usually a bar to a deficiency. For example, in Georgia the court must be petitioned for a confirmation of the sale if a deficiency judgment is sought.

2. Redemption in Nonjudicial Foreclosures.

Approximately one-half of the states allow for redemption after foreclosure, although not Washington. Some states allow redemption after a nonjudicial sale. See Minnesota Statutes Annotated § 580 et seq. Generally, the grantor can remain in possession during the redemption period, rent the property (retaining the rents) and/or sell the property (or sell the redemption rights).

G. RAISING DEFENSES IN THE UNLAWFUL DETAINER (EVICTION) ACTION

In Washington, RCW 61.24.060 specifies that the purchaser at a trustee’s sale is entitled to possession of the property on the 20th day following the sale. If the grantor or person claiming through the grantor refuses to vacate the property, the purchaser is entitled to bring an action to recover possession of the property pursuant to the unlawful detainer statute, RCW 59.12. Ordinarily, parties in possession will not be allowed to raise some defenses in the unlawful detainer action that could have been raised prior to the trustee’s sale^{^[28]}. In most states defenses in an eviction action are severely limited. Despite these early cases restricting defenses in unlawful detainer, e.g. Peoples National Bank v. Ostander, 6 Wn. App. 28 (1971), a more recent case, Cox v. Helenius, 103 Wash. 2d 208 (1985), allowed defenses to be raised that the sale was void because of defects in the foreclosure process itself. In fact, Cox v. Helenius was initially a unlawful detainer action in the King County Superior Court. In Savings Bank of Puget Sound v. Mink, 49 Wn. App. 204 (1987), Division One of the Court of Appeals, held that a number of defenses raised by the appellant (Truth-in-Lending violations, infliction of emotional distress, defamation, slander, etc.) were not properly assertable in an unlawful detainer action but ruled that:

However, in Cox v. Helenius, supra, the Supreme Court recognized that there may be circumstances surrounding the foreclosure process that will void the sale and thus destroy any right to possession in the purchaser at the sale.

In Cox, the Court recognized two bases for post sale relief: defects in the foreclosure process itself, i.e., failure to observe the statutory prescriptions and the existence of an actual conflict of interest on the part of the trustee…

B. The Deed of Trust Act must be construed strictly against lenders and in favor of borrowers.

Washington law is similarly clear that the Deed of Trust Act, being non-judicial in nature and without the scrutiny by courts until the unlawful detainer stage, is strictly construed against lenders and in favor of borrowers. Queen City Savings and Loan v. Mannhalt, 111

In order to avoid the jurisdictional and other problems that arise when trying to litigate claims in the unlawful detainer action, it is recommended that a separate action be filed to set aside the trustee’s sale and that the two actions be consolidated.

H. DAMAGES FOR WRONGFUL FORECLOSURE

There is a damage claim for the tort of wrongful foreclosure. The claim may also exist as a breach of contract claim. See, Theis v. Federal Finance Co., 4 Wn. App. 146 (1971); Cox v. Helenius, supra.

III. DEFENDING JUDICIAL FORECLOSURES

A. INTRODUCTION

The same range of defenses is generally available to the borrower in both nonjudicial and judicial foreclosures. Defenses may include fraud or misrepresentation, violations of Truth-in-Lending, violations of usury statutes, violations of other consumer protection acts, or failure to comply with applicable regulations when the government is the lender, insurer, or guarantor. Other defenses, however, are unique to judicial foreclosures and must be raised affirmatively. Most rights are set forth in statutes and they must be asserted in compliance with the particular requirements of the law. The judicial foreclosure statutes are set forth below^{^[29]}.

B. HOMESTEAD RIGHTS

If the plaintiff’s complaint seeks possession of the property at the sheriff’s sale and the homeowner wishes to remain on the premises during the redemption period, then the homeowner should plead the existence of homestead rights in the answer so as not to waive them. State, ex rel., O’Brien v. Superior Court, 173 Wash. 679, 24 P.2d 117 (1933); State, ex rel., White v. Douglas, 6 Wn.2d 356, 107 P.2d 593 (1940).

C. UPSET PRICE

Some states authorize the court to establish an upset price (or minimum bid amount) in a foreclosure sale. In Washington, RCW 61.12.060 authorizes the court where a deficiency is sought, in ordering a sheriff’s sale, to take judicial notice of economic conditions and, after a proper hearing, fix a minimum or upset price for which the mortgaged premises must be sold before the sale will be confirmed. If a depressed real estate market justifies seeking an upset price, then the mortgagor should request in the answer that one be set. See, McClure v. Delguzzi, 53 Wn. App. 404 (1989). Some states give this power to the courts with any sale without reference to any other valuation method. See e.g. Kan. Stat. §60-2415(b) (1988); Mich. Comp. Laws Ann. §600.3155 (1919). The court has great discretion in arriving at and setting an upset price if the statute fails to specify the method to be used in calculating the price. There is always the danger that in the absence of statutory standards, the power to set the upset price will be abused^{^[30]}.

D. DEFICIENCY JUDGMENTS

A deficiency judgment results when the amount for which the property is sold at the sheriff’s sale is less than the amount of the judgment entered in the foreclosure action. A deficiency judgment in connection with a foreclosure is enforceable like any other money judgment. If the mortgage or other instrument contains an express agreement for the payment of money, then the lender may seek a deficiency judgment. See RCW 61.12.070. In Thompson v. Smith, 58 Wn. App. 361 (1990), Division I, held the acceptance of a deed in lieu of foreclosure triggers the anti-deficiency provisions of the Deed of Trust Act, 61.24.100. The procedural requirements for obtaining a deficiency judgment vary, but must be strictly adhered to or the right will be lost. In general, an action must be brought within a statutorily set amount of time following the foreclosure sale. For example, California Civ. Proc. Code § 726 (Supp. 1984) (three months); N.Y. Real Prop. Acts. Law § 1371 (2) (McKinney 1979) (ninety days); and Pennsylvania Stat. Ann. tit. 12, section 2621.7 (1967) (six months). Many states also have time limits for the completion of the execution of a deficiency. Maryland Rules, Rule W75 (b)(3) (1984) (three years); and Ohio Rev. Code Ann. § 2329.08 (Anderson 1981) (two years on land with dwelling for two families or less or used as a farm dwelling). Some states have longer redemption periods when a deficiency is sought. e.g. Wisconsin (6-12 months); Washington (8-12 months).

E. REDEMPTION RIGHTS

Approximately one-half of the states have statutes that give a borrower the right to redeem the property after the foreclosure sale. This right has specific statutory time limits. The time period for redemption varies from thirty days to three years after the foreclosure sale. Strict compliance with the statutory requirements is mandatory.

Under Washington law, if the lender seeks a deficiency judgment or if the mortgage does not contain a clause that the property is not for agricultural purposes, then the redemption period is one year from the date of the sheriff’s sale. See RCW 6.23.020.

If the lender does not seek a deficiency judgment and the mortgage contains a clause that the property is not being used for agricultural purposes, than the redemption period is eight months. Id.

There is no statutory redemption period if there is a structure on the land and the court finds that the property has been abandoned for six months prior to the decree of foreclosure. See RCW 61.12.093. This section is not applicable to property that is used primarily for agricultural purposes. RCW 61.12.095.

The purchaser at the sheriff’s sale, or the purchaser’s assignee, must send notice to the judgment debtor every two months that the redemption period is expiring. Failure to give any of the notices in the manner and containing the information required by statute will operate to extend the redemption period. RCW 6.23.080.

Any party seeking to redeem must give the sheriff at least five days written notice of the intention to apply to the sheriff for that purpose. RCW 6.23.080(1). The amount necessary to redeem is the amount of the bid at the sheriff’s sale, interest thereon at the rate provided in the judgment to the time of redemption, any assessment or taxes which the purchaser has paid after circumstances, other sums that were paid on prior liens or obligations. RCW 6.23.020.

Redemption rights are freely alienable and a property owner can sell the homestead during the redemption period free of judgment liens. Great Northwest Federal Savings and Loan Association v. T.B. and R.F. Jones, Inc., 23 Wn. App. 55, 596 P.2d 1059 (1979). This is an important right and is often overlooked. For example, in VA loans the sale price is very low because the VA deducts its anticipated costs of holding and resale. Therefore, the property can be redeemed for that amount. There, lenders routinely advise debtors to move out at the beginning of the period, which they do not legally have to do.

The debtor can sometimes rent the property and the rents retained during the redemption period.

F. POSSESSION AFTER SALE

If the homeowner exercises his redemption rights and there is a purchaser in possession, then the homeowner can apply for a writ of assistance to secure possession of the property anytime before the expiration of the redemption period. If the homeowner has no right to claim a homestead or is not occupying the property as a homestead during redemption period, then the lender can apply for a writ of assistance at the time of the foreclosure decree to obtain possession of the property. A writ of assistance is similar to a writ of restitution and is executed by the sheriff. The purchaser at the sheriff’s sale normally has no right to possession until after receipt of a sheriff’s deed^{^[31]}.

G. POST FORECLOSURE RELIEF

A foreclosure can be vacated under rules allowing vacating judgments, e.g. F.R.Civ.P 60(b); See also Godsden & Farba, Under What Circumstances Can a Foreclosure Sale be Set Aside Under New York Law, New York State Bar Journal (May 1993).

IV. MISCELLANEOUS ISSUES

A. BANKRUPTCY

Bankruptcy has a significant impact on real estate foreclosures and is beyond the scope of this outline. Under section 362 (a) of the Bankruptcy Code, filing any of the three types of bankruptcy stays all foreclosure proceedings. See 11 U.S.C.A. § 362 (a)(4); Murphy, The Automatic Stay in Bankruptcy, 34 Clev.St.L.Rev. 597 (1986). A stay has been held to apply to a possessory interest after foreclosure to allow a challenge to the validity of the foreclosure in an adversary action in bankruptcy court. In re Campos, No. 93-04719 (W.D. WN-B.Ct, Order of July 9, 1993). The stay applies to both judicial and nonjudicial foreclosures and it also applies whether or not the foreclosure was begun before the bankruptcy. See 11 U.S.C.A. § 362 (a). The only notable exception to the automatic stay is for foreclosures brought by the Secretary of HUD on federally insured mortgages for real estate involving five or more units. See 11 U.S.C.A. § 362 (b)(8).

A trustee in a bankruptcy may also undo a foreclosure as a fraudulent transfer if a creditor gets a windfall. See II U.S.C. §547 and §548, within 90 days or within one year if an “insider” forecloses^{^[32]}.

A portion of the equity under state or federal law may be protected from creditors, although not from secured creditors.

B. WORKOUTS (DEED IN LIEU)

A deed is sometimes given by a mortgagor in lieu of foreclosure and in satisfaction of a mortgage debt. Such a workout “is subject to close scrutiny in an effort to determine whether it was voluntarily entered into on the part of the mortgagor under conditions free of undue influence, oppression, unfairness or unconscientious advantage. Further the burden of proving the fairness rests with the mortgagee.” Robar v. Ellingson, 301 N.W.2d 653, 657-658 (N.D.1981) (insufficient threshold evidence of oppression or unfairness to trigger mortgagee’s burden of proof). Courts also tend to find the deed in lieu of foreclosure to be another mortgage transaction in the form of an absolute deed. Peugh v. Davis, 96 U.S. (6 Otto) 332, 24 L.Ed. 775 (1877). See also, Noelker v. Wehmeyer, 392 S.W.2d 409 (Mo.App.1965). When a mortgagee takes a deed in lieu there is the possibility that the conveyance will be avoided under bankruptcy laws. It should be noted that if other liens have been created against a property after the time of the original mortgage, the deed in lieu will not cut off those liens. See Note, 31 Mo.L.Rev. 312, 314 (1966). A deed in lieu should contain a comprehensive agreement regarding any deficiency claims, etc.

C. LENDER LIABILITY

It is possible to use theories of lender liability to assist in successfully negotiating a workout, or an avoidance of foreclosure. This principally occurs in commercial foreclosures but there are some strategies that apply to the residential setting. This may involve persuading the lender that failing to reach a workout agreement may result in a claim against the lender, absolving the borrower from liability on the loan and/or granting an affirmative judgment against the lender. Some of the useful theories of lender liability are breach of agreement to lend, breach of loan agreement, failure to renew term note/wrongful termination, promissory estoppel, lender interference, and negligent loan management. Some of the common law defenses for a borrower are fraud, duress, usury and negligence. Further, because banks are so closely regulated, a borrower should also explore statutory violations. For a detailed treatment of workouts, see Dunaway, supra, (Vol. 1, Chapter 4B)^{^[33]}.

D. MOBILE HOME FORECLOSURES

Generally, mobile homes are repossessed under Article 9-503 of the Uniform Commercial Code, and are beyond the scope of this outline. Many states limit deficiencies in purchase money security agreements and/or allow reinstatement. There are many abuses in the sales of mobile homes and the various consumer protection laws (and usury laws) provide a fertile source of potential defenses. See generally, Unfair and Deceptive Practices, National Consumer Law Center (2nd ed.), paragraph 5.4.8.

E. TAX CONSEQUENCES OF FORECLOSURE

Although beyond the scope of this outline, there are tax consequences when property is foreclosed, particularly in commercial transactions.

First, a foreclosure or deed in lieu of foreclosure is treated as a sale or exchange. Treas. Rep. 1-001-2; Rev. Ruling 73-36, 1973-1 CB 372. The amount realized (gained) is the greater of the sales proceeds or the debt satisfied. Parker v. Delaney, 186 F.2d 455 (1st Cir. 1950). When debt is cancelled (such as by an anti-deficiency statute), a gain may be generated. IRS Code §61(a).

Second, when home equity debt plus purchase debts exceeds the value of the property, a taxable gain can be generated. Finally, if the debtor is “insolvent” when the foreclosure occurs, §108(a)(1)(A) of the IRS Code excludes income (gain) to the extent the debtor is insolvent. This is complicated and a tax expert should be consulted to analyze any potential tax bite upon foreclosure. See generally, Dunaway, supra, for a detailed analysis of the tax consequences of foreclosure.

V. THE GOVERNMENT AS INSURER, GUARANTOR OR LENDER

A. INTRODUCTION

There are a variety of federal home ownership programs that may provide special protections for homeowners who are faced with the prospect of foreclosure. These protections generally apply regardless of whether the security divide used is a mortgage or deed of trust. The programs range from home loans insured by the Department of Housing and Urban Development (HUD) or guaranteed by the Veteran’s Administration (VA) to programs such as the Farmer’s Home Administration (FmHA) home ownership program where the government acts as a direct lender. The procedures which must be followed by loan servicers and applicable governmental agencies are described below. Also, Fannie Mae published in 1997 a Foreclosure Manual for loan services, which outlines various workouts and other loss mitigation procedures.

When the government controls the loan (or the lender) its actions are subject to the protection of the due process provision of the Fifth Amendment to the U.S. Constitution^{^[34]}. This calls into question the use of nonjudicial foreclosure as there is no opportunity to be heard and notice is usually deficient or, at best, minimal.

B. HUD WORKOUT OPTIONS

1. Applicability

Homeowners who have a HUD insured mortgage or deed of trust may be eligible for relief through the HUD foreclosure prevention program. HUD regulations also require that lenders meet certain servicing responsibilities before proceeding with foreclosure. Regulations for loss mitigation are found at 24 C.F.R. Sec. 203.605.

2. Procedure when the Homeowner is in Default

a. Delinquency Required for Foreclosure.

The servicer shall not turn the action over for foreclosure until at least three full monthly payments are unpaid after application of any partial payments. 24 C.F.R. Sec. 203. The servicer is required to send a HUD brochure on avoiding foreclosure to the borrower informing them of their right to seek various alternatives to foreclosure.

The servicer must allow reinstatement even after foreclosure has been started if the homeowner tenders all amounts to bring the account current, including costs and attorney fees. 24 C.F.R. Sec. 203.

b. Forbearance Relief.

The homeowner may be eligible for special forbearance relief if it is found that the default was due to circumstances beyond the homeowners’ control. 24 C.F.R. Sec. 203. The homeowner and the lender are authorized to enter into a forbearance agreement providing for:

i. Increase, reduction, or suspension of regular payments for a specified period;

ii. Resumption of regular payments after expiration of the forbearance period;

iii. Arrangements for payment of the delinquent amount before the maturity date of the mortgage or at a subsequent date.

Suspension or reduction or payments shall not exceed 18 months under these special forbearance relief provisions.

c. Recasting of Mortgage.

HUD has the authority to approve a recasting agreement to extend the term of the mortgage and reduce the monthly payments. 24 C.F.R. Sec. 203.

HUD’s actions may be declared unlawful and set aside if the court finds it to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. See Federal National Mortgage Association v. Rathgens, 595 F. Supp. 552 (S.D. Ohio 1984); Butler v. Secretary of Housing and Urban Development, 595 F. Supp. 1041 (E.D. Pa. 1984). See, generally, Ferrell v. Pierce, 560 F. Supp. 1344 (N.D. Ill. 1983).

In Brown v. Kemp, 714 F. Supp. 445 (W.D. Wash. 1989) the court found HUD’s decision for an assignment program application to be informal agency action and thus reviewable under the “arbitrary” and “capricious” standard.

Failure to follow servicing requirements or comply with the HUD assignment regulations or handbook provisions may also constitute an equitable defense to foreclosure^{^[35]}.

C. THE VA HOME LOAN PROGRAM

1. Applicability

Homeowners who have a VA guaranteed mortgage or deed of trust may be eligible for relief through a VA recommended forbearance program or “refunding” of the loan. Regulations promulgated at 38 C.F.R. Sec. 36.4300, et seq., and VA servicing handbooks establish a policy of forbearance when a loan is in default. The VA is reluctant to enforce these regulations against lenders.

2. Forbearance Relief

Lenders are officially encouraged to grant forbearance relief for mortgagors who default on their loans due to circumstances beyond their control. Lender’s Handbook, VA Pamphlet No. 26-7 (Revised) and VA Manual 26-3. These rights should be pursued with the lender immediately.

3. Refunding Loans

The Veteran’s Administration is authorized to “refund” loans when borrowers meet certain criteria. Refunding the loan is when the VA pays the lender in full and takes an assignment of the loan and security in cases where the loan is in default. The VA then owns the loan and the veteran makes payments to the VA directly. Although 38 C.F.R. Sec. 36.4318 authorize refunding, the regulations are much more vague than those promulgated in connection with the HUD assignment program.

4. Judicial Review

The VA decision to deny assignment of a VA loan is committed to agency discretion within the meaning of the federal Administrative Procedures Act, 5 U.S.C. Sec. 701(a)(2), and is not reviewable. Rank v. Nimmo, 677 F.2d 692 (9th Cir. 1982).

The courts have ruled that a borrower has no express or implied right of action in federal court to enforce duties, which VA or lenders might have under VA publications with respect to forbearance assistance. See, Rank v. Nimmo, supra; Gatter v. Nimmo, 672 P.2d 343 (3rd Cir. 1982); Simpson v. Clelend, 640 F.2d 1354 (D.C. Cir. 1981). But, see, Union National Bank v. Cobbs, 567 A.2d 719 (1989) (failure to follow VA Handbook an equitable defense).

Failure to follow VA publications, however, may be an equitable defense to foreclosure under state law. See, Simpson v. Cleland, supra.

5. Waiver of Debt/Release of Liability

Federal statutes, VA regulations and guidelines require the VA to waive a deficiency (or indemnity) debt, after a foreclosure, when equity and good conscience require it. 38 C.F.R. §1.965(a)(3). The VA is reluctant to follow its own regulations and must be pressed. The Court of Veterans Appeals (CVA) reverses over 50% of denial of waivers – an astonishing measure of the VA’s failure to follow clear federal law! See The Veterans Advocate, Vol. 5, No. 10, P. 93 (June 1994). The VA urged its regional offices to avoid CVA rulings until forced to retract this directive. See The Veterans Advocate, supra. The VA also ignores the six-year statute of limitations when demanding payment. 28 U.S.C. 2415.

Secondly, the VA can determine that the claimed debt is invalid, such as when the veteran is eligible for a retroactive release of liability. This occurs when the VA would have released the veterans when the property was sold to a qualifying purchaser who assumes the debt. 38 U.S.C. 3713(b); Travelstead v. Derwinski, 978 F.2d 1244 (Fed. Cir. 1992).

The VA has the burden to determine whether the veteran should be released.

6. Deficiency Judgments and VA Loans

It is the policy of VA to order an appraisal prior to a judicial or nonjudicial foreclosure sale and to instruct the lender to bid the amount of the appraisal at the sale. This “appraisal” is always below fair market value and includes the VA’s anticipated costs of holding and liquidating the property. 38 U.S.C. 3732(c); 38 C.F.R. §36.4320. Ordinarily, on pre-1989 laws, VA will not waive its right to seek a deficiency judgment in a judicial foreclosure and will reserve its right to seek a deficiency against a borrower, even in the case of a nonjudicial foreclosure of a deed of trust, notwithstanding the anti-deficiency language of RCW 61.24.100. On loans made after 1989 changes in the VA program, deficiencies are not sought.

Although, United States v. Shimer, 367 U.S. 374 (1960) appears to authorize this VA deficiency policy, the Washington non-judicial deed of trust foreclosure procedure which retains judicial foreclosure and preservation of the right to seek a deficiency judgment as an option, seems to make United States v. Shimer, distinguishable.

In United States v. Vallejo, 660 F. Supp. 535 (1987), the court held that the VA must follow Washington foreclosure law, including the anti-deficiency provisions of the Deed of Trust Act as the “federal common law”. This ruling was subsequently followed in a class action, Whitehead v. Derwinski, 904 F.2d 1362 (9th Cir. 1990), wherein the VA has been permanently enjoined from collecting $63 million in claims and ordered to repay millions in illegally collected deficiencies. This issue of the application of various state laws as to federally insured loans is not clear, as the Ninth Circuit overruled Whitehead in Carter v. Derwinski, 987 F.2d 611 (9th Cir. – en banc – 1993). Subsequent decisions still create doubt as to whether United States v. Shimer, supra, is still good law^{^[36]}.

At the very least, if the lender is instructed by the VA to preserve the right to seek a deficiency against the borrower, then the lender should be required to foreclose the deed of trust judicially as a mortgage.

D. RURAL HOUSING SECTION 502 LOANS

1. Applicability

The Rural Housing Service (RHS) formerly, the Farmer’s Home Administration, is authorized to grant interest credit and provide moratorium relief for homeowners who fall behind on their loan payments due to circumstances beyond their control. Regulations for moratorium relief and interest credit are found at 7 C.F.R. Sec. 3550 et seq and must be complied with prior to foreclosure. United States v. Rodriguez, 453 F. Supp. 21 (E.D. Wn. 1978). See, 42 U.S.C. §1472. All servicing of RHS loans is handled at the Centralized Servicing Center in St. Louis, MO (phone: 1-800-793-8861).

2. Interest Credit

If a homeowner falls behind on his RHS loan because of circumstances beyond his or her control, then RHS has the authority to accept principal only and waive the interest payments. Although RHS is supposed to use this remedy before considering moratorium relief, it rarely does.

3. Moratorium Relief

If a homeowner falls behind in loan payments because of circumstances beyond his or her control, RHS may suspend payments or reduce payments for six months. Moratorium relief may be extended for additional six-month segments up to a total of three years^{^[37]}.

Once a homeowner has been granted moratorium relief, RHS cannot grant it again for five years. If a homeowner cannot resume payments in three years from when moratorium relief began, then it will begin foreclosure proceedings.

After moratorium relief has been extended, the homeowner can make additional partial payments to catch up the delinquent amount or, the loan can be reamortized. RHS will restructure the loan, 7 U.S.C. 2001.

4. Waiver of Redemption and Homestead Rights

Form mortgages used by RHS purported to waive the homeowner’s redemption rights and homestead rights in the event of foreclosure. It is questionable whether such a waiver is enforceable^{^[38]}.

5. Homestead Protection

See, 7 U.S.C. 2000.

6. Lease/Buy-Back

See, 7 U.S.C. 1985 (e).

VI. RESOURCES

The following treatises are excellent sources of basic information about all aspects of the foreclosure process. Dunaway, The Law of Distressed Property (4 volumes – Clark Boardman Co. 1994 and suppls.; Nelson & Whitman, Real Estate Finance Law (West 3rd Ed. 1994); Bernhardt, California Mortgages and Deed of Trust Practice, (3^rd ed. 2000 University of Calif.), Repossessions and Foreclosures (4^th ed. 2000) National Consumer Law Center. See also, Fuchs, Defending Non-Judicial Residential Foreclosures, Texas Bar J (November 1984).

1	Jurisdiction	Customary Security Agreement	Customary Foreclosure Procedure
	Alabama	Mortgage	Nonjudicial
	Alaska	Deed of Trust	Nonjudicial
	Arizona	Deed of Trust	Nonjudicial
	Arkansas	Mortgage	Judicial
	California	Deed of Trust	Nonjudicial
	Colorado	Deed of Trust (Semi-judicial)	Public Trustee’s Sale
	Connecticut	Mortgage	Judicial-Strict Foreclosure
	Delaware	Mortgage	Judicial
	Dis. of Col.	Deed of Trust	Nonjudicial
	Florida	Mortgage	Judicial
	Georgia	Security Deed	Nonjudicial
	Hawaii	Mortgage	Judicial
	Idaho	Mortgage	Judicial & Nonjudicial
	Illinois	Mtg. & D.T.	Judicial
	Indiana	Mortgage	Judicial
	Iowa	Mortgage	Judicial
	Kansas	Mortgage	Judicial
	Kentucky	Mortgage	Judicial
	Louisiana	Mortgage	Judicial
	Maine	Mortgage	Judicial (Nonjudicial for Corporate Borrower)
	Maryland	Deed of Trust	Nonjudicial
	Massachusetts	Mortgage	Nonjudicial
	Michigan	Mortgage	Nonjudicial
	Minnesota	Mortgage	Nonjudicial
	Mississippi	Deed of Trust	Nonjudicial
	Missouri	Deed of Trust	Nonjudicial
	Montana	Instlmnt. Contract	Nonjudicial
	Nebraska	Deed of Trust Mortgage	Judicial & Nonjudicial
	Nevada	Deed of Trust	Nonjudicial
	New Hampshire	Mortgage	Nonjudicial
	New Jersey	Mortgage	Judicial
	New Mexico	Mortgage	Judicial
	New York	Mortgage	Judicial
	North Carolina	Deed of Trust	Judicial
	North Dakota	Mortgage	Judicial
	Ohio	Mortgage	Judicial
	Oklahoma	Mortgage	Judicial
	Oregon	Deed of Trust	Nonjudicial
	Pennsylvania	Mortgage	Judicial
	Puerto Rico	Mortgage	Judicial
	Rhode Island	Mortgage	Nonjudicial
	South Carolina	Mortgage	Judicial
	South Dakota	Mortgage	Judicial & Nonjudicial
	Tennessee	Deed of Trust	Nonjudicial
	Texas	Deed of Trust	Nonjudicial
	Utah	Deed of Trust	Nonjudicial
	Vermont	Mortgage	Strict Foreclosure
	Virgin Islands	Mortgage	Judicial
	Virginia	Deed of Trust	Nonjudicial
	Washington	Deed of Trust	Nonjudicial
	West Virginia	Deed of Trust	Nonjudicial
	Wisconsin	Mortgage	Judicial
	Wyoming	Mtg. & Installment Contracts	Judicial

[2] Alabama: Ala. Code §§35-10-1 to 35-10-10; [foreclosure after 12/1988 §§35-10-11 to 35-10-16]

(1991).

Alaska: Alaska Stat. §§34.20.090 to 34.20.100 (1991).

Arizona: Ariz. Rev. Stat. Ann. §§33-807 to 33-814 (West 1991).

Arkansas: Ark. Code Ann. §§18-50-108; 18-50-116 (1987).

California: Cal. Civ. Code §§2924 to 2924(h) West 1992).

D.C.: D.C. Code Ann. §§45-715 to 45-718 (1991).

Georgia: Ga. Code Ann. §§9-13-141; 44-14-162.4; 44-14-48; 44-14-180 to 187 (Harrison 1991).

Idaho: Idaho Code §§6-101; 104; 45-1502 to 45-1506 (1991).

Iowa: Iowa Code Ann. §654.18 (West 1992).

Maine: Me. Rev. Stat. Ann. tit. 14, §§7-105; 7-202 (1988).

Massachusetts: Mass. Gen. Laws Ann. ch. 183, §§19, 21; ch. 244, §§11-15 (West 1992).

Michigan: Mich. Comp. Laws Ann. §§451-401 et seq.; 600.2431; 600.3201 et seq.; 600.3170 (West 1992).

Minnesota: Minn. Stat. Ann. §§580.01 to 580.30; 582.01 et seq. (West 1992).

Mississippi: Miss. Code Ann. §§11-5-111; 15-1-23; 89-1-55 (1972).

Missouri: Mo. Ann. Stat. §§442.290to 443.325 (Vernon 1992).

Montana: Mont. Code Ann. §§25-13-802; 71-1-111; 71-1-223 to 232, 71-1-311 to 317 (1991).

Nebraska: Neb. Rev. Stat. §§76-1001 to 1018 (1981).

Nevada: Nev. Rev. Stat. §§107.020; 107.025; 107.080 to 107.100; 40.050; 40.453 (Michie 1991).

New Hampshire: N.H. Rev. Stat. Ann. §§479:22 to 479:27 (1991).

New York: N.Y. Real Prop. Acts §§1401 to 1461 (McKinney 1992).

North Dakota: N.D. Cent. Code §35-22-01 (1992).

Oklahoma: Okla. Stat. Ann. tit. 46, §§40 to 49 (West 1992).

Oregon: Or. Rev. Stat. §§86.705 to 86.795 (1989).

Rhode Island: R.I. Gen. Laws §§34-11-22; 34-20-4; 34-23-3; 34-27-1 (1984).

South Dakota: S.D. Codified Laws Ann. §§21-48-1 to 21-48-26; 21-48A-1 to 21-48A-5 (1992).

Tennessee: Tenn. Code Ann. §§35-5-101 to 35-5-112 (1991). See, Note, Power of Sale Foreclosures in

Tennessee, 8 Mem. St. U.L. Rev. 871 (1978).

Texas: Tex. Prop. Code Ann. §§51-002; 51.003; 51.005 (West 1992).

Utah: Utah Code Ann. §§57-1-23 to 57-1-34 (1986).

Vermont: Vt. Stat. Ann. tit. 12, §§4531a to 4533 (1991).

Virginia: Va. Code Ann. §§55-59.1 to 55-59.4; 55-61 to 55-66.7 (Michie 1991).

Washington: Wash. Rev. Code Ann. §§61.24.010 to 61.24.130 (West 1992).

West Virginia: W. Va. Code §§38-1-3 to 38-1-12 (1991).

Wyoming: Wyo. Stat. §§34-4-101 to 34-4-113 (1991).

[3] See Charmicor, Inc. v. Deaner, 572 F.2d 694 (9th Cir.1978); Northrip v. Federal National Mortgage Association, 527 F.2d 23 (6th Cir.1975); Barrera v. Security Building & Investment Corp., 519 F.2d 1166 (5th Cir. 1975); Bryant v. Jefferson Federal Savings & Loan Association, 509 F.2d 511 (D.C. Cir.1974); Lawson v. Smith, 402 F.Supp. 851 (N.D.Cal.1975); Global Industries, Inc. v. Harris, 376 F.Supp. 1379 (N.D.Ga.1974); Homestead Savings v. Darmiento, 230 Cal.App.3d 424, 281 Cal.Rptr. 367 (1991); Leininger v. Merchants & Farmers Bank, macon, 481 So.2d 1086 (Miss.1986); Wright v. Associates Financial Services Co. of Oregon, Inc., 59 Or.App.688, 651 P.2d 945 (1983), certiorari denied 464 U.S. 834, 104 S.Ct. 117, 78 L.Ed.2d 116 (1983); Kennebec Inc. v. Bank of the West, 88 Wash.2d 718, 565 P.2d 812 (1977); Dennison v. Jack, 172 W.Va. 147, 304 S.E.2d 300 (1983).

[4] Island Financial, Inc. v. Ballman, 92 Md.App. 125, 607 A.2d 76 (1992); Turner v. Blackburn, 389 F.Supp. 1250 (W.D.N.C.1975); Vail v. Derwinski, 946 F.2d 589 (8th Cir.1991), amended by 956 F.2d 812 (8th Cir.1992) and Boley v. Brown, 10 F.3d 218 (4th Cir.1993) which held that the VA’s control over the foreclosure process in VA guaranteed loan foreclosures constitutes sufficient governmental action to trigger due process protections. Accord, U.S. v. Whitney, 602 F. Supp. 722 (W.D. N.Y. 1985); U.S. v. Murdoch, 627 F. Supp. 272 (N.D. Ind. 1986). See Also Leen, Galbraith & Gant, Due Process and Deeds of Trust – Strange Bedfellows, 48 Wash.L.Rev. 763 (1973).

[5] See, e.g., Reiserer v. Foothill Thrift and Loan, 208 Cal.App.3d 1082, 256 Cal.Rptr. 508 (1989) (unpublished opinion); Metropolitan Life Insurance Company v. La Mansion Hotels & Resorts, Ltd., 762 S.W.2d 646 (Tex.App.1988); Bekins Bar V Ranch v. Huth, 664 P.2d 455 (Utah 1983); National Life Insurance Co. v. Cady, 227 Ga. 475, 181 S.E.2d 382 (1971); Peoples National Bank v. Ostrander, 6 Wn.App. 28, 491 P.2d 1058 (1971). See, generally, note, Court Actions Contesting The Nonjudicial Foreclosure of Deeds of Trust in Washington, 59 Wash.L.Rev. 323 (1984); Restraining Orders in Non-Judicial Deed of Trust Foreclosures, Property Law Reporter, June 1987 (Vol. 3 Nos. 4 & 5).

[6] Putnam Sand & Gravel Co. v. Albers, 14 CA3d 722, 92 CR 636 (1971).

[7] Avco Financial Services Loan, Inc. v. Hale, 36 Ohio App.3d 65, 520 N.E.2d 1378 (1987); Land Associates, Inc. v. Becker, 294 Or. 308, 656 P.2d 927 (1982), appeal after remand 74 Or.App. 444, 703 P.2d 1004 (1985).

[8] See Hummell v. Republic Federal Savings & Loan, 133 Cal.App.3d 49, 183 Cal.Rptr. 708 (4th Dist.1982); Broad & Locust Associates v. Locust-Broad Realty Co., 318 Pa.Super. 38, 464 A.2d 506 (1983); Strangis v. Metropolitan Bank, 385 N.W.2d 47 (Minn.App.1986); Franklin Savings Association v. Reese, 756 S.W.2d 14 (Tex.App.1988); Koegal v. Prudential Mutual Savings, Inc., 51 Wn.App. 108 (1988).

[9] See Ginther-Davis Center, Limited v. Houston National Bank, 600 S.W.2d 856 (Tex.Civ.App. 1980), error refused n.r.e.; see also Tiffany, Real Property, § 1549 (3d Ed. 1939) for a list of cases; Thompson, Real Property § 5179 (1957). Cf. Grella v. Berry, 647 S.W.2d 15 (Tex.App.1982).

[10] See Glines v. Theo R. Appel Realty Co., 201 Mo.App.596, 213 S.W. 498 (1919).

[11] Koegel v. Prudential Mutual Savings, Inc., 51 Wn. App. 108, 114 (1988); Steward v. Good, 51 Wn. App. 509, 515 (1988).

[12] Carlson v. Gibraltar Savings, 50 Wn. App. 424, 429 (1988).

[13] Baxter & Dunaway, The Law of Distressed Real Estate (Clark Boardman Company, Ltd., November 1990). See Spires v. Edgar, 513 S.W.2d 372 (Mo.1974).

[14] See also McHugh v. Church, 583 P.2d 210, 214 (Alaska 1978).

[15] See Cox v. Helenius, supra, at p. 389; Allard v. Pacific National Bank, 99 Wn. 2d 394, 405, 663 P.2d 104 (1983), modified by 99 Wn.2d 394, 773 P.2d 145 (1989). superseded by RCW 11.100.140 as stated in Conran v. Seafirst Bank, 1998 Wn.App. Lexis 156.. See also National Life Insurance Company v. Silverman, 454 F.2d 899, 915 (D.C. Cir. 1971), in which the court stated that the same good faith is required of trustees under a deed of trust of real estate as is required of other fiduciaries.

[16] See Smith v. Credico Industrial Loan Company, 234 Va. 514, 362 S.E.2d 735 (1987); Whitlow v. Mountain Trust Bank, 215 Va. 149, 207 S.E.2d 837 (1974).

[17] See, Nelson & Whitman, supra, Section 7.21; Dingus, Mortgages-Redemption After Foreclosure Sale in Missouri, 25 Mo.L.REV. 261, 284 (1960).

[18] Biddle v. National Old Line Ins. Co., 513 S.W.2d 135 (Tex.Civ.App.1974), error refused n.r.e.; Sullivan v. Federal Farm Mortgage Corp., 62 Ga.App.402, 8 S.E.2d 126 (1940).

[19] Queen City Savings v. Manhalt, 111 Wn.2d 503 (1988).

[20] See also Tarleton v. Griffin Federal Savings Bank, 202 Ga.App. 454, 415 S.E.2d 4 (1992); Concepts, Inc. v. First Security Realty Services, Inc., 743 P.2d 1158 (Utah 1987).

[21] Macon-Atlanta State Bank v. Gall, 666 S.W.2d 934 (Mo.App.1984). For a complete list of defects considered “insubstantial”, see Graham v. Oliver, 659 S.W.2d 601, 604 (Mo.App.1983).

[22] See also Cal. Civ. Code § 2924 (West 1981); Utah Code Ann.1953, 57-1-28; West’s Colo.Rev.Stat. Ann. §38-39-115; Or.Rev.Stat. 86.780; So.Dak.Compiled Laws 21-48-23.

[23] Attempting to Set Aside Deed of Trust Foreclosure Because of Trustee’s Fiduciary Breach, 53 Missouri L. Rev. 151 (1988).

[24] See also Dingus, Mortgages – Redemption After Foreclosure Sale in Missouri, 25 Mo.L.REV. 261, 262 (1960); California Mortgage and Deed of Trust Practice, Section 6.60 (University of California 1979).

[25] Nelson & Whitman, supra, Section 7.21. Dingus, supra, at p. 274; see also Biddle v. National Old Line Insurance Co., 513 S.W.2d 135 (Tex.Civ.App. 1974).

[26] Dingus, supra, at pp. 272-73; Cox v. Helenius, supra, at p. 389.

[27] Arizona: Ariz. Rev. Stat. Ann. §33-814(A) (1989).

California: Cal. Civ. Code §580a (1989); Id. §726 (1989); Kirkpatrick v. Stelling, 36 Cal. App.2d 658, 98

P.2d 566, appeal dismissed, 311 U.S. 607 (1940); Risenfeld, California Legislation Curbing Deficiency

Judgments, 48 Calif. L. rev. 705 (1960). See infra, California jurisdictional summary in Part 1.

Georgia: Ga. Code Ann. §§44-14-161, -162 (1989).

Idaho: Idaho Code §§6-108, 45-1512 (1988).

Michigan: Mich. Comp. Laws Ann. §§600.3170, .3280 (1989).

Nebraska: Neb. Rev. Stat. §76-1013 (1989).

Nevada: Nev. Rev. Stat. §40.457 (1988).

New Jersey: N.J. Stat. Ann. §2A:50-3 (1989).

New York: N.Y. Real Prop. Acts Law §1371 (McKinney 1979 and Supp. 1990).

North Carolina: N.C. Gen. Stat. §45-21.36 (1988).

North Dakota: N.D. Cent. Code §32-19-06 (Supp. 1989).

Oklahoma: Okla. Stat. tit. 12, §686 (1990).

Pennsylvania: Pa. Stat. Ann. tit. 12 §§2621.1, .6 (Purdon 1967).

South Dakota: S.D. Comp. Laws Ann. §§21-47-16, -48-14 (1989).

Utah: Utah Code Ann. §57-1-32 (1989).

Washington: Wash. Rev. Code Ann. §61.12.060 (1989).

Wisconsin: Wis. Stat. §846.165 (1988).

[28] People’s National Bank v. Ostrander, 6 Wn. App. 28, 491 P.2d 1058 (1970). See, however, Crummer v. Whitehead, 230 Cal. App. 2d 264 (1964) contra declined to follow by Eardley v. Greenberg, 160 Az.518, 774 P.2d 822 (Az.App. Div. 1 1989); MCA, Inc., v. Universal Diversified Enterprises Corp., 27 Cal. App. 3d 170 (1972). contra declined to follow by Eardley v. Greenberg, 160 Az.518, 774 P.2d 822 (Az.App. Div. 1 1989) But in a bankruptcy proceeding, defenses may be raised after the sale if the debtor is in possession.

[29] Alabama: Ala. Code §§6-9-140 to 150; 164; 35-10-2 to 35-10-12; (1977).

Alaska: Alaska Stat. §§90.45.170 to .220 (1991).

Arizona: Ariz. Rev. Stat. Ann. §§33-721 to 33-728 (1991).

Arkansas: Ark. Code Ann. §§18-49-103 to 106 (1987).

California: Cal. Civ. proc. §§725a to 730.5 (West 1991).

Colorado: Colo. Rev. Stat. Ann. §§38-38-101 to 38-38-111 (West 1991).

Connecticut: Conn. Gen. Stat. Ann. §§49-24 to 49-31 (West 1991).

Delaware: Del. Code Ann. tit. 10 §§5061 to 5067 (1991).

D.C.: D.C. Code Ann. §45-716 (1981).

Florida: Fla. Stat. Ann. §702.01 (West 1992).

Georgia: Ga. Code Ann. §§9-13-140; 44-14-48 to 44-14-49; 44-14-184; 187; 189 (1991).

Hawaii: Haw. Rev. Stat. §§667-1 to 667-7 (1991)

Idaho: Idaho Code §§6-101 to 6-103; 45-1502 to 45-1503 (1991).

Illinois: Ill. Ann. Stat. Ch. 10, para. 15-1404; 15-1501 to 15-1512 (Smith-Hurd 1987).

Indiana: Ind. Code Ann. §32-8-11-3 (Burns 1980)

Iowa: Iowa Code Ann. §654.18 (West 1992).

Kansas: Kan. Stat. Ann. §60-2410 (1990).

Kentucky: Ky. Rev. Stat. Ann. §§381.190; 426.525 (Michie 1991).

Louisiana: La. Code Civ. Proc. Ann. art. 2631 (West 1992).

Maine: Me. Rev. Stat. Ann. tit. 14, §§6321 to 6325 (West 1991).

Maryland: Md. Real Prop. Code Ann. §7-202 (1988).

Massachusetts: Mass. Gen. Laws Ann. ch. 244, §1 (West 1992).

Michigan: Mich. Comp. Laws Ann. §§600.3101 to 600.3130 (West 1992).

Minnesota: Minn. Stat. Ann. §§581.01 to 581.12 (1992).

Mississippi: Miss. Code Ann. §§89-1-53; 89-1-55 (1972).

Missouri: Mo. Ann. Stat. §§443.190 (Vernon 1992).

Montana: Mont. Code Ann. §§71-1-222; 232; 311; 25-13-802 (1991).

Nebraska: Neb. Rev. Stat. §§25-2137 to 25-2147 (1991).

Nevada: Nev. Rev. Ann. Stat. §§40.430; 40.435 (Michie 1991).

New Hampshire: N.H. Rev. Stat. Ann. §§479:19 to 479:27 (1991).

New Jersey: N.J. Stat. Ann. §2A:50-2 (West 1991).

New Mexico: N.M. Stat. Ann. §§39-5-1 to 39-5-23; 48-7-7 (1991).

New York: N.Y. Real Prop. Acts Law §§1321; 1325 to 1355 (McKinney 1992).

North Carolina: N.C. Gen. Stat. §§45-21.16; 45-21.17; 45-38 (1991).

North Dakota: N.D. Cent. Code §32-19-01 to 32-19-40 (1992).

Ohio: Ohio Rev. Code Ann. §2323.07 (Anderson 1984).

Oklahoma: Okla. Stat. Ann. tit. 12, §686 (West 1992).

Oregon: Or. Rev. Stat. §§88.010 et seq. (1989).

Pennsylvania: Pa. Stat. Ann. tit. 21, §§274; 715; Pa. Rules Civ. Proc. Rules 1141 to 1150; 3180 to 3183;

3232; 3244; 3256; 3257.

Rhode Island: R.I. Gen. Laws §34-27-1 (1984).

South Carolina: S.C. Code Ann. §§15-7-10; 29-3-650 (Law Co-op 1990).

South Dakota: S.D. Codified Laws Ann. §§21-47-1 to 25; 21-48A-4 (1991).

Tennessee: Tenn. Code Ann. §21-1-803 (1991).

Texas: Tex. Prop. Code Ann. §§51-002; 51.004; 51.005 (West 1992).

Utah: Utah Code Ann. §§78-37-1 to 78-37-9 (1986).

Vermont: Vt. Stat. Ann. tit. 12, §4528 (1991).

Virgin Islands: V.I. Code Ann. tit. 28, §531 to 535 (1991).

Virginia: Va. Code Ann. §§55-59.4; 55-61 (Michie 1981).

Washington: Wash. Rev. Code Ann. §§61.12.040; 61.12.060 (West 1992).

West Virginia: W. Va. Code §§55-12-1 to 55-12-8 (1991).

Wisconsin: Wis. Stat. Ann. §§846.01 to 846.25 (West 1991 (Repealed).

Wyoming: Wyo. Stat. §§1-18-101 to 1-18-112 (199).

[30] See Michigan Trust Co. v. Dutmers, 265 Mich. 651, 252 N.W. 478 (1933).

[31] Norlin v. Montgomery, 59 Wn.2d 268, 357 P.2d 621 (1961). The mortgagee’s right to possession of the property is not lost through default or abandonment. overruled on other grounds. Howard v. Edgren, 62 Wn.2d 884, 385 P.2d 41 (1963).

[32] See Durrett v. Washington National Ins., 621 F.2d 201 (5th Cir. 1980); cf. In re Madrid, 725 F.2d 1197 (9th Cir. 1984). Compare state fraudulent conveyances statutes, e.g, RCW 19.40.031.

[33] See also, Penthouse International v. Dominion Fed. S&L, 665 F. Supp. 301 (S.D. N.Y. 1987, rev. 855 F.2d 963 (2nd Cir. 1988); Joques v. First National, 515 A.2d 756 (Md. 1976); KMC v. Irving Trust, 757 F.2d 752 (6th Cir. 1985); Douglas-Hamilton, Creditor Libilities Resulting From Improper Interference with Financially Troubled Debtor, 31 Bus. Law J. 343 (1975).

[34] See Vail v. Brown, 946 F.2d 589 (8th Cir. 1991); Johnson v. U.S. Dept. of Agriculture, 734 F.2d 774 (11th Cir. 1984); United States v. Murdoch, 627 F. Supp. 272 (N.D. Ind. 1985); Boley v. Brown, 10 F.3d 218 (4th Cir. 1993).

[35] See, Bankers Life Company v. Denton, 120 Ill. App. 3d 676, 458 N.E.2d 203 (1983); Brown v. Lynn, 385 F. Supp. 986 (N.D. Ill. 1974); GNMA v. Screen, 379 N.Y.S.2d 327 (1976); Cross v. FNMA, 359 So.2d 464 (1978); FNMA v. Ricks, 372 N.Y.S.2d 485 (1975); contra, Robert v. Cameron Brown Co., 556 F.2d 356 (5th Cir. 1977); Hernandez v. Prudential Mortgage Corporation, 553 F.2d 241 (1st Cir. 1977).

[36] See, United States v. Yazell, 382 U.S. 341 (1966); United States v. Kimbell Foods, Inc., 440 U.S. 715 (1979); United States v. Ellis. 714 F.2d 953 (9th Cir. 1983); United States v. Haddon Haciendas Co., 541 F.2d 777 (9th Cir. 1976).

[37] See generally, Note, Agricultural Law: FmHA Farm Foreclosures, An Analysis of Deferral Relief, 23 Washburn L.J. 287 (Winter 1984); Newborne, Defenses to a FmHA Foreclosure, 15 NYU Review of Law and Social Change, 313 (1987).

[38] See, United States v. Kimbell Foods, Inc., 440 U.S. 715 (1979); United States v. Haddon Haciendas, 541 F.2d 777 (9th Cir. 1976); United States v. MacKenzie, 510 F.2d 39 (9th Cir. 1975); United States v. Stadium Apts., Inc., 425 F.2d 358 (9th Cir.), (1970), cert. den. 400 U.S. 926, 91 S. Ct. 187 (1970); Phillips v. Blaser, 13 Wn.2d 439, 125 P.2d 291 (1942).

Guest Post: Ireland, Please Do the World a Favor and Default

Posted on November 28, 2010 by Foreclosureblues

Guest Post: Ireland, Please Do the World a Favor and Default

Today, November 28, 2010, 3 hours ago | Tyler Durden

Submitted by Charles Hugh Smith from Of Two Minds

Ireland, Please Do the World a Favor and Default

Ireland would save the world from much misery by defaulting now and driving the vampire banks into liquidation.

The alternative title for today entry is: Ireland, please drive a stake through the heart of the vampire banks which have the world by the throat. The entire controlled demolition of the Eurozone’s finances can be summed up in one phrase: privatize leverage and profits, socialize losses and risk.

The basic deal is this: protect the bank’s managers, shareholders and bondholders from any losses, while heaping the socialized losses and risks on the taxpayers and citizens.

While there are murmurings of “forcing bondholders to share the pain,” any future haircut will undoubtedly be just for show, while the Irish pension funds are gutted to bail out the banks.

EU Outlines Bond Restructuring Plan (WSJ.com)

Europe Goes “Completely Mad” At Suggestion Of Irish Default Demanded By 57% Of Irish Population (Zero Hedge)

Here is a chart which illustrates the dynamic at play in Greece, Ireland and indeed, the rest of the world as well: leveraged speculation and mal-investment lead to asset deflation and collapse.

Here is a chart which illustrates how asset deflation leads to taxpayer-funded bank bailouts and then sovereign default. It’s fairly self-explanatory:

It’s rather straightforward: as asset bubbles rise, they enable vast leveraging of credit and debt. Once mal-invested assets collapse in value, then the debt remains, unsupported by equity or capital.

As the Financial/Political Elites transfer these catastrophic losses onto the citizenry, they set off a positive (runaway) feedback loop: the Central State austerity required to pay the borrowing costs of the bailout sends the economy into recession, which reduces borrowers’ incomes, triggering more defaults which further sink housing prices. As prices continue falling, bank capital declines, requiring ever-larger bailouts to provide the banks with a simulacrum of solvency.

Austerity measures must be tightened to channel more of the citizens’ incomes to the banks, which further suppresses the economy, lowering tax revenues and incomes, which leads to more austerity to fund more bailouts, and so on, until the haggard remnants of a once-wealthy citizenry finally rebel against their Financial/Political Overlords and topple the government which arranged the bailout.

A new populist government announces a sovereign default, to widespread huzzahs from the unyoked citizenry.

The EU’s bailout of Greece and Ireland will only hasten this dynamic. The Power Elites are rapidly losing their credibility; just compare the market’s euphoric reaction to the Greek bailout in May and the openly negative response to the Irish bailout.

The money is lost, and Capitalism requires those who took on the risk to earn outsized returns must take the loss, come what may. When a nation such as Ireland is running a State deficit equal to 32% of GDP, austerity cannot generate the stupendous surpluses needed to make good the vast sums which are already lost.

And even if they could, why should the citizens save the banks and bondholders from the losses Capitalism requires? Mal-investments should be sold, for pennies on the dollar if need be, insolvent banks liquidated and bondholders handed 95% losses. Managers would be sacked, bonuses cancelled and shareholders wiped out.

It’s a little late to decide Capitalism is only fun when reaping gargantuan profits from highly leveraged mal-investment and fraud. Ireland, and indeed the world, will survive if all the vampire banks are liquidated. That is the end-state, and “buying time” just increases the misery of the citizens who have been yoked to save their “betters.”

Ireland, please drive a stake through the heart of the vampire banks which have the world by the throat. By defaulting, you would be doing the world (and your own nation) an immense favor.

Justice for Some

November 24th, 2010

BlogAdmin

Burden

NEW YORK – The mortgage debacle in the United States has raised deep questions about “the rule of law,” the universally accepted hallmark of an advanced, civilized society. The rule of law is supposed to protect the weak against the strong, and ensure that everyone is treated fairly. In America in the wake of the sub-prime mortgage crisis, it has done neither.

Part of the rule of law is security of property rights – if you owe money on your house, for example, the bank can’t simply take it away without following the prescribed legal process. But in recent weeks and months, Americans have seen several instances in which individuals have been dispossessed of their houses even when they have no debts.

To some banks, this is just collateral damage: millions of Americans – in addition to the estimated four million in 2008 and 2009 – still have to be thrown out of their homes. Indeed, the pace of foreclosures would be set to increase – were it not for government intervention. The procedural shortcuts, incomplete documentation, and rampant fraud that accompanied banks’ rush to generate millions of bad loans during the housing bubble has, however, complicated the process of cleaning up the ensuing mess.

To many bankers, these are just details to be overlooked. Most people evicted from their homes have not been paying their mortgages, and, in most cases, those who are throwing them out have rightful claims. But Americans are not supposed to believe in justice on average. We don’t say that most people imprisoned for life committed a crime worthy of that sentence. The US justice system demands more, and we have imposed procedural safeguards to meet these demands.

But banks want to short-circuit these procedural safeguards. They should not be allowed to do so.

To some, all of this is reminiscent of what happened in Russia, where the rule of law – bankruptcy legislation in particular – was used as a legal mechanism to replace one group of owners with another. Courts were bought, documents forged, and the process went smoothly.

In America, the venality is at a higher level. It is not particular judges that are bought, but the laws themselves, through campaign contributions and lobbying, in what has come to be called “corruption, American-style.”

It was widely known that banks and mortgage companies were engaged in predatory lending practices, taking advantage of the least educated and most financially uninformed to make loans that maximized fees and imposed enormous risks on the borrowers. (To be fair, the banks tried to take advantage of the more financially sophisticated as well, as with securities created by Goldman Sachs that were designed to fail.) But banks used all their political muscle to stop states from enacting laws to curtail predatory lending.

When it became clear that people could not pay back what was owed, the rules of the game changed. Bankruptcy laws were amended to introduce a system of “partial indentured servitude.” An individual with, say, debts equal to 100% of his income could be forced to hand over to the bank 25% of his gross, pre-tax income for the rest of his life, because, the bank could add on, say, 30% interest each year to what a person owed. In the end, a mortgage holder would owe far more than the bank ever received, even though the debtor had worked, in effect, one-quarter time for the bank.

When this new bankruptcy law was passed, no one complained that it interfered with the sanctity of contracts: at the time borrowers incurred their debt, a more humane – and economically rational – bankruptcy law gave them a chance for a fresh start if the burden of debt repayment became too onerous.

That knowledge should have given lenders incentives to make loans only to those who could repay. But lenders perhaps knew that, with the Republicans in control of government, they could make bad loans and then change the law to ensure that they could squeeze the poor.

With one out of four mortgages in the US under water – more owed than the house is worth – there is a growing consensus that the only way to deal with the mess is to write down the value of the principal (what is owed). America has a special procedure for corporate bankruptcy, called Chapter 11, which allows a speedy restructuring by writing down debt, and converting some of it to equity.

It is important to keep enterprises alive as going concerns, in order to preserve jobs and growth. But it is also important to keep families and communities intact. So America needs a “homeowners’ Chapter 11.”

Lenders complain that such a law would violate their property rights. But almost all changes in laws and regulations benefit some at the expense of others. When the 2005 bankruptcy law was passed, lenders were the beneficiaries; they didn’t worry about how the law affected the rights of debtors.

Growing inequality, combined with a flawed system of campaign finance, risks turning America’s legal system into a travesty of justice. Some may still call it the “rule of law,” but it would not be a rule of law that protects the weak against the powerful. Rather, it would enable the powerful to exploit the weak.

In today’s America, the proud claim of “justice for all” is being replaced by the more modest claim of “justice for those who can afford it.” And the number of people who can afford it is rapidly diminishing.

Foreclosure fraud on utube

Suggestions

Fox Business News Attacks Grayson, Sanctions Foreclosure Fraud

3:38 Added to queue Fox Business News Attacks Grayson, Sanctions Fo…by RepAlanGrayson9,686 views

Rep. Alan Grayson: Fox News is "Monty Python's Lying Circus"

4:05 Added to queue Rep. Alan Grayson: Fox News is “Monty Python’s …by RepAlanGrayson10,055 views

4:14 Added to queue Rep. Alan Grayson: I Just Tell the Truthby RepAlanGrayson6,643 views

Rep. Alan Grayson: "They couldn't buy me, and now they're trying to destroy me."

8:48 Added to queue Rep. Alan Grayson: “They couldn’t buy me, and n…by RepAlanGrayson6,329 views

9:59 Added to queue foreclosure fraud pt 2- read update infoby earthicastar4,903 views

MERS Mortgage Fraud Update - Foreclosure Proof MERS Loans!

4:43 Added to queue MERS Mortgage Fraud Update – Foreclosure Proof …by tnknoxrealtor2,351 views

If You're About To Lose Your Job, Your Car, Or Your House - Watch This 5 Minute Video!

5:12 Added to queue If You’re About To Lose Your Job, Your Car, Or …by carnegieja426 views

3:50 Added to queue Foreclosure fraud Hitler parodyby propanealex74,164 views

Beat Banking Thieves At Their Own Game. GET THEIR CASH: www.yourcashgroup.com

10:57 Added to queue Beat Banking Thieves At Their Own Game. GET TH…by thecashgroup2,269 views

BOB CHAPMAN: BOMBSHELL TRUTH ABOUT FRAUDCLOSURE 10-7-2010

5:17 Added to queue BOB CHAPMAN: BOMBSHELL TRUTH ABOUT FRAUDCLOSUR…by traynickel5,981 views

Rep. Alan Grayson: Politico Is Part of the Permanent Government Established Under Bush

3:19 Added to queue Rep. Alan Grayson: Politico Is Part of the Perm…by RepAlanGrayson2,724 views

8:17 Added to queue Rep. Alan Grayson on Rampant Foreclosure Fraudby TPOCS386 views

Rep. Alan Grayson: You Own the Red Roof Inn, Thanks to the Fed

11:32 Added to queue Rep. Alan Grayson: You Own the Red Roof Inn, Th…by RepAlanGrayson116,875 views

Fraud Factories, MERS, LPS, Forgeries: Rep. Alan Grayson Explains the Foreclosure Fraud Crisis

7:49 Added to queue Fraud Factories, MERS, LPS, Forgeries: Rep. Ala…by DinSFLA35,312 views

Rep. Alan Grayson Battles Against Home Foreclosures In Central Florida

5:02 Added to queue Rep. Alan Grayson Battles Against Home Foreclos…by RepAlanGrayson2,566 views

6:02 Added to queue Fed Lends Two Trillion Without Oversightby AmericanNewsProject52,949 views

Mortgage modifications may lead to foreclosure (via Foreclosureblues)

Mortgage modifications may lead to foreclosure Today, November 07, 2010, 5 hours ago | admin LOS ANGELES — Grocery store owners William and Esperanza Casco were making enough money to stay current on their mortgage, but when JPMorgan Chase & Co. offered a plan that reduced their payments, they figured they could use the extra cash and signed up. The Cascos say they never missed a subsequent payment, so they were horrified when the bank decide … Read More

via Foreclosureblues

One Law for the Rich, One Law for the Poor (via Foreclosureblues)

One Law for the Rich, One Law for the Poor Today, November 07, 2010, 13 hours ago | ceramic cat FROM: http://www.slate.com/id/2273916/ The new foreclosure crisis reveals the shocking unfairness in how the law treats struggling homeowners. By Joseph E. Stiglitz Posted Sunday, Nov. 7, 2010, at 8:24 AM ET The mortgage debacle in the United States has raised deep questions about "the rule of law," the universally accepted hallmark of an advanced, civ … Read More

via Foreclosureblues

FORECLOSURE FRAUD | by DinSFLA…VIDEO DEPOSITION OF NATIONWIDE TITLE CRYSTAL MOORE…VIDEO DEPOSITION OF NATIONWIDE TITLE CLEARING DHURATA DOKO…VIDEO DEPOSITION OF NATIONWIDE TITLE CLEARING BRYAN BLY

Posted on November 8, 2010 by Foreclosureblues

VIDEO DEPOSITION OF NATIONWIDE TITLE CLEARING BRYAN BLY

Today, November 07, 2010, 1 hour ago | dinsfla

Video deposition of alleged robo-signer Bryan Bly taken by attorney Christopher Forrest of The Forrest Law Firm in Pinellas County, FL on Nov. 4, 2010. http://www.foreclosuredefenseflorida.com © 2010 FORECLOSURE FRAUD | by DinSFLA. All rights reserved. http://www.StopForeclosureFraud.com Humpty Dumpty sat on a wall, Humpty Dumpty had a great fall. All the king’s horses and all the king’s men Couldn’t put […]

Comments (0)

VIDEO DEPOSITION OF NATIONWIDE TITLE CLEARING DHURATA DOKO

Today, November 07, 2010, 3 hours ago | dinsfla

Video deposition of alleged robosigner Dhurata Doko taken by attorney Christopher Forrest of The Forrest Law Firm in Pinellas County, Florida on Nov. 4, 2010. http://www.foreclosuredefenseflorida.com © 2010 FORECLOSURE FRAUD | by DinSFLA. All rights reserved. http://www.StopForeclosureFraud.com Humpty Dumpty sat on a wall, Humpty Dumpty had a great fall. All the king’s horses and all the king’s men Couldn’t put […]

Comments (0)

SFF EXCLUSIVE: VIDEO DEPOSITION OF NATIONWIDE TITLE CRYSTAL MOORE

Today, November 07, 2010, 4 hours ago | dinsfla

The videotaped depositions of alleged robosigners Crystal Moore, Bryan Bly, Vilma Castro and Dhurata Doko (Nationwide Title Clearing) were taken on Nov. 4, 2010 by Sarasota attorney Christopher Forrest. http://www.ForeclosureDefenseFlorida.com Citi Group (Citi Residential Lending) and American Home Mortgage Servicing, as well as other companies that utilize Nationwide Title Clearing for assignments including Deutsche Bank, One […]

Utah class action citing FDCPA (via Foreclosureblues)

Utah class action citing FDCPA Today, November 06, 2010, 1 hour ago | Rob Harrington Some action going on in non-judicial Utah…. Coleman, et al vs BoA, Mers, Wells Fargo, et al. http://stopforeclosurefraud.com/2010/11/05/utah-class-action-coleman-v-bofa-recontrust-mers-wells-fargo-hsbc-us-bank-keybank-bny-mellon/ … Read More

via Foreclosureblues

Why Are Banks Foreclosing? (via Foreclosureblues)

Why Are Banks Foreclosing? Yesterday, November 05, 2010, 12:12:18 PM | Kevin Drum Mike Konczal makes a familiar point today about the HAMP program, which was supposed to help reduce home foreclosures but, in fact, has accomplished close to nothing: Obama's Treasury team took a system that had a terrible design and doubled-down on it. Servicers aren't modifying mortgages. There's an active empirical debate we'll cover next week over whether or not … Read More

via Foreclosureblues

Forget About Homeowners and Pesky Defense Attorneys (via Foreclosureblues)

Forget About Homeowners and Pesky Defense Attorneys…. Today, November 06, 2010, 2 hours ago | Matthew D. Weidner, Esq. The real heat in this foreclosure war is going to come from the institutional investors. The real interesting in this dynamic is going to be the fact that that the issues raised by we pesky defense attorneys are going to be the very issues raised and pounced upon by the other parties who are really getting screwed in this whole … Read More

via Foreclosureblues

The tunnel people of Las Vegas: How 1,000 live in flooded labyrinth under Sin City's shimmering strip (via Foreclosureblues)

The tunnel people of Las Vegas: How 1,000 live in flooded labyrinth under Sin City's shimmering strip By Daily Mail Reporter Last updated at 11:18 AM on 4th November 2010 Comments (170) Add to My Stories Deep beneath Vegas’s glittering lights lies a sinister labyrinth inhabited by poisonous spiders and a man nicknamed The Troll who wields an iron bar. But astonishingly, the 200 miles of flood tunnels are also home to 1,000 people who eke out a li … Read More

via Foreclosureblues

The American Dream of Home Ownership has become a Nightmare (via Foreclosureblues)

The American Dream of Home Ownership has become a Nightmare Yesterday, November 06, 2010, 10:45:46 PM | moraloutrage Nothing symbolizes America’s dream more than home ownership. Former President Franklin D. Roosevelt once said that a country of homeowners would be “invincible.” More recently, former President George W. Bush said, “Owning a home lies at the heart of the American dream”. By the 1960s, two-thirds of Americans owned a home. Now, 11 m … Read More

via Foreclosureblues

Eliminating Foreclosure Fraud: Setting the Record Straight on Bank of America, Part 2: (via Foreclosureblues)

Eliminating Foreclosure Fraud: Setting the Record Straight on Bank of America, Part 2: Friday, November 05, 2010, 1:02:37 PM | Randall Wray William K. Black is an Associate Professor of Economics and Law at the University of Missouri-Kansas City. He is a white-collar criminologist and was a senior financial regulator. He is the author of The Best Way to Rob a Bank is to Own One. L. Randall Wray is a Professor of Economics at the University of Mis … Read More

via Foreclosureblues

talk to someone by the numbers

Property Preservation Servicer Contacts
Company Names Mailing Information Key Contacts Title/Department Phone
Amtrust Bank 1111 Chester Avenue
Cleveland, OH 44144 Jaques Hawkins
jhawkins@amtrust.com

Stephen Murphy
smurphy3@amtrust.com
Property Preservation Specialist, Foreclosure Dept.
Property Preservation Specialist, Foreclosure Dept. 216-588-5936

216-588-4541
American Home Mortgage 1525 S. Beltline Road
Coppell, TX 75067 Christine Morse
Christine.Morse@AHMSI3.com

Renena Summerfield
Renena.Summerfield@AHMSI3.com
Property Preservation Specialist

Property Preservation Specialist
469-645-3000, Ext 50229

469-645-3000, Ext. 50304
Aurora Loan Services 10350 Park Meadows Drive
Littleton, CO 80124 Brandon McGill AVP, Property Services 720-945-4775
Bank of America 400 National Way, Simi
Valley, CA 93065

301 E. Vanderbilt Way
San Bernardino, CA 92408

301 E. Vanderbilt Way
San Bernardino, CA 92408
Brian Zamani
brian.zamini@bankofamerica.com

Tiaquanda S. Turner
tiaquanda.turner@bankofamerica.com

Martha (Marta) Fulgham Sanchez
martha.fulgham@bankofamerica.com

Brendan Gail
brendan.gail@bankofamerica.com
AVP, FHA Conveyance/Claims

AVP, FHA Conveyance/Claims

VP, Control Tower/Field Services

VP, Operations/Field Services
805-306-8274

972-526-2353

972-526-6711

909-806-2525
BB&T 301 College Street
6th Floor
Greenville, SC 29601 PropertyPreservation@bbandt.com 800-827-3700
Carrington Mortgage Services, LLC 1610 E St. Andrew
Santa Ana, CA 92705 Sharif Touny
sharif.touny@carringtonms.com

Chris Castruita
chris.castruita@carringtonms.com

Victor Revis
victor.revis@carringtonms.com
Director of Default

Preservation

REO Manager
949-517-5162

949-517-5380

949-517-5598
Capital One P.O. Box 259330
Plano, TX 75025-9330 Jeremy Atkinson

Elaine Parker

Derrick Weber
dxweber@chevychasebank.net
Default Control

Default Control

Default Control
469-238-7041

469-238-7062

469-238-7062
Central Mortgage Company 801 John Barrow Road
Ste. 1
Little Rock, AR 72205 Shelia Roeling
Sroeling@Arvest.com

Chellie Stewart
MKStewart@Arvest.com

Jan Davis
JKDavis@Arvest.com
Asset Preservation Specialist-Default Asset Management Department
REO Supervisor-Default Asset Management Department
Default Asset Manager, Default Asset Management Department 501-716-4810

501-716-5758

501-716-5614
Chase 800 Brooksedge Blvd.
Westerville, OH 43081
Attn: MC OH1-8020 Michelle R. Stevens-Schultz
michelle.r.schultz@chase.com

Vicky Beever
vicky.beever@chase.com
Officer – Property Preservation & Hazard Claims
Officer – Property Preservation 614-776-8031

614-776-7010
Citi Mortgage 1000 Technology Drive
O’Fallon, MO 63368
MS 323 code.violation@citi.com

securing.needed@citi.com

David Mazanek
david.mazanek@safeguardproperties.com
Code Violations Department
Property Preservation Department
Field Service Contact 877-290-3997, Option 2

877-290-3997, Option 1

800-852-8306, Ext 1261
Dovenmuehle Mortgage, Inc. 1 Corporate Drive
Suite 360
Lake Zurich, IL 60047 Paula Borshell
borshep1@dmicorp.com

Rachel Deuser
deuserr1@dmicorp.com
Property Preservation Department Manager

Property Preservation Department Supervisor
847-550-7388

847-550-7514
Everhome Mortgage 8100 Nations Way
Jacksonville, FL 32256 Shannon Hudson
shannon.hudson@everhomemortgage.com Supervisor, Property Preservation 866-918-4507
Fannie Mae 14221 Dallas Parkway
Ste. 1000
Dallas, TX 75254 Elonda Crockett
property_preservation@fanniemae.com

Michael Lawler

Paul Hayes
Vice President, REO Fulfillment

Director, Loss Mitigation-Credit
Manager, REO Foreclsoure-Credit
972-773-4663

972-773-4663

972-773-4663
Fifth Third Bank 5001 Kingsley Drive
Cincinnati, OH 45227
MD 1MOB1o Jennifer Lewis
jennifer.leewis@53.com

Jill Cannon
jill.cannon@mcsnow.com
Supervisor. Property Preservation

Director, MCS
513-358-8575

214-451-0787
First Bank Mortgage 1 First Missouri Center
St. Louis, MO 63141 Karen Hanawinkel
karen.hanawinkel@fbol.com

Lou Sanders
lou.sanders@fbol.com

Autumn Kingsbury-Buck
kingsburybuck@fbol.com
Foreclosure Manager

Loss Mitigation Manager

Collection Manager
314-205-3118

314-205-3124

314-579-1659
First Niagara Bank 6950 S. Transit Rd.
PO Box 514
Lockport, NY 14095-0514 Trish Harris
trish.harris@fnfg.com

Christina Palmer
christina.palmer@fnfg.com
Collections

Recovery Services
716-932-3448

716-932-3463
Franklin Credit 101 Hudson Street
Jersey City, NJ 07302 Glenn Murphy
gmurphy@franklincredit.com Vice President 201-604-1800
Freddie Mac 8000 Jones Branch Drive
McLean, VA 22102 Joe Moschetto
joesph_moschetto@freddiemac.com

Deloise Browne-Miller
Deloise_E_Browne-Miller@freddiemac.com

Mahad Ali
mahad_ali@freddiemac.com
Senior Manager-FC/Bankruptcy Operations

Unit Mnaager-FC/Bankruptcy

FC/Bankruptcy Associate
703-388-7820

703-7624802

703-762-4055
GMAC Mortgage Corporation 3451 Hammond Ave.
Waterloo, IA 50702-5345 Patric F. McCool
pat.mccool@gmacm.com Key Partner Manager Analyst 319-236-4733
HSBC Mortgage Services, Inc. Mortgage Services
636 Grand Regency Blvd.
Brandon, FL 33510 Property Preservation Department Team
us.mortgage.property.preservation.team@us.hsbc.com Property Preservation Department 866-411-3810, Option 3
HSBC Mortgage Corporation Mortgage Corporation
2929 Walden ave., Depew
NY 14073 Code Violations Department
code.violations@safeguardproperties.com Safeguard Properties/Field Service Contact 800-852-8306, Ext 2173
HUD Prior To Conveyance: See MCB Below
http://www.hud.gov/offices/hsg/sfh/reo/mm/
mminfo.cfm

Post Conveyance: Follow Link For State Coverages & Contacts

Key Bank 4910 Tiedeman Road
Brooklyn, OH 44114 Lori Tierney
Liberty Bank 2251 Rombach Ave.
Wilmington, OH 45177 JB Stamper
Litton Loan Servicing 4828 Loop Cebtral Drive
Houston, TX 77081 Terrell Phearse
terrell.phearse@littonloan.com

Sharon Graham
Sharon.Graham@littonloan.com

Amy West
Amy.West@littonloan.com

Linda Milan
Linda.Milan@littioloan.com
Property Preservation Processor

Property Preservation Processor

Property Preservation Team Lead

Property Preservation Supervisor
713-218-4824

713-218-4666

713-218-4658

713-218-4669
M&T Bank One Fountain Plaza
6th Floor
Buffalo, NY 14203 Preservation Manager
propertypreservation@mtb.com

David Mazanek
david.mazanek@safeguardproperties.com
Preservation Department

Field Service Contact
800-724-1633

800-852-8306, Ext. 1261
Michaelson, Connor & Boul, Inc. (MCB) 4400 Will Rogers Parkway
Ste. 300
Oklahoma City, OK 73108 Ryan McDoulett
ryan.mcdoulett@mcbreo.com

Greg Nelson
greg.nelson@mcbreo.com

Sheree McClure
sheree.mcclure@mcbreo.com

Donna Telles
donna.telles@mcbreo.com

Kimberly Bell
kimberly.bell@mcbreo.com

Goeff Grafford
goeff.grafford@mcbreo.com

Damon Kornele
damon.kornele@mcbreo.com
Overallowables & Extensions

Occupied Conveyance Requests

Claims Department

Title Department

Appeals Department

Reconveyance Department
405-595-2000

405-595-2000

405-595-2000
Midland Mortgage/MidFirst Bank 999 NW Grand Blvd.
Oklahoma City, OK 73118 Midfirst Property Preservation
property.preservation@midfirst.com

Safeguard Code Violations
code.violations@safeguardproperties.com

MCS Code Violations
codeviolations@mcsnow.com

Mortgage Contracting Services One Urban Centre – Suite 950
4830 West Kennedy Blvd.
Tampa, FL 33609 Code.Compliance@mcsnow.com Field Service Provider 813-387-1100
Ocwen Financial Corporation 2300 M Street, NW, Suite 800
Washington, DC 20037 Tara Williams
tara.williams@altisource.com

Jasbir Chawdhary
jasbir.chawdhary@altisource.com
Vice President
Field Services

Senior Manager
Property Preservation and Inspection
(713) 647-8990
(800) 280-3863
Ex 296191
One West Bank 2900 Esperanza Crossing
Austin, TX 78758 Kim Magel
Kim.Magel@owb.com

Leah Collins
Leah.Collins@owb.com
Supervisor, Property Preservation (Pre-sale)

Supervisor, Property Preservation (REO)
512-506-6852

512-250-2859
PA Housing Finance Agency 211 North Front Street
PO Box8029
Harrisburg, PA 17105-8029 Tom Gouker
tgouker@phfa.org

Bonita Russell
brussell@phfa.org

Jennifer Smallwood
jsmallwood@phfa.org

Dave Mazanek
david.mazanek@safeguardproperties.com
Foreclosure Manager

Conventional REO Manager

FHA REO Manager

Field Services Provider
717-780-3869

717-780-1857

717-780-1844

800-852-8306, 1261
PHH Mortgage 2001 Bishops Gate Blvd
Mount Laurel, NJ 08002 Bieu T. Corl
bieu.corl@mortgagefamily.com

Dana Young
dana.young@mortgagefamily.com

Kelly Smyth
kelly.smyth@mortgagefamily.com

Safeguard Code Violations
code.violations@safeguardproperties.com

MCS Code Violations
codeviolations@mcsnow.com
P&P Rep II/Claims-REO

Claims Supervisor, REO Dept.

Claims Assistant Supervisor
856-917-8373

405-964-5676

856-917-8433

800-852-8306, Ext 2173

813-387-1100
PNC Mortgage (formally National City), dba Commonwealth United Mortgage, Accubank Mortgage and MidAmerica Bank 3232 Newmark Drive
Miamisburg, OH 45342 Property Preservation Team:
propertypreservation@pncmortgage.com

Gail Klein
gail.klein@pncmortgage.com

Julie Kick
Julie.Kick@pncmortgage.com

Dave Mazanek
david.mazanek@safeguardproperties.com
Process Leader

Process Manager

Field Services Contact/Safeguard Properties
937-910-4952

937-910-4563

937-910-3543

800-852-8306, Ext. 1261
Regions Mortgage 215 Forrest St.
PO Box 18001
Hattiesburg, MS 39401 Denise McLaurin
Denise.Mclaurin@regions.com

Paula Gilliland
paula.gilliland@regions.com
Legal Claims Processor 601-554-2386

601-554-2463
Residential Credit Solutions 4282 North Freeway
Ft. Worth, TX 76137 Susan Jorgensen
sjorgensen@residentialcredit.com

Jeff Gideon
jgideon@residentialcredit.com

Alicia Wood
awood@residentialcredit.com
Property Coordinator (REO)

VP, FC, BK & REO

VP, Loan Administration
817-321-6028

817-321-6015

817-321-6016
RRR 92 W 3900 South
Salt Lake City, UT 84107 Joe Arico
joe.arico@rrreview.com VP 801-293-2658
Safeguard Properties code.enforcement.violations@safeguard
properties.com Field Service Provider 800-852-8306, 2173
Saxon Mortgage Services 4708 Mercantile Drive, North, Fort Worth, TX 76137 Renee Tello
TelloR@saxonmsi.com

Peter Gilkey
GilkeyP@saxonmsi.com

Code Violations
CodeViolations@saxonmsi.com
Senior Manager, Property Preservation

Senior Manager, Property Preservation

Distribution Desk
817-665-7966

682-647-4993
SC State Housing 300C Outlet Pointe Blvd.
Columbia, SC 29210 Lisa E. Rivers
lisa.rivers@schousing.com Director, Mortgage Servicing 803-896-9384
Sovereign Bank Mail Code 10-6438-MD4
601 Penn Street
Reading, PA 19601 Connie Cocroft
Ccocroft@sovereignbank.comCcocroft@
sovereignbank.com

Shannon Lippert
Slippert@sovereignbank.com

Heather Solley
Hsolley@sovereignbank.com
Consumer Default VP

Consumer Default Manager

Consumer Default Manager
610-378-6313

610-378-6323

610-378-6879
Specialized 8742 Lucent Blvd.
Suite 300
Highland Ranch, CO 80129 Susan Beck
susan.beck@sls.net VP Consumer Support OP/DS 720-241-7385
Suntrust Mortgage, Inc. Foreclosure Dept. RVW3064
1001 Semmes Ave.
Fourth Florr
Richmond, VA 23224 Lorrie Pond
Lorrie.pond@suntrust.com

Tammi Stubbs
Tammi.stubbs@suntrust.com

Natish King
Natish.King@suntrust.com
AVP, Post Foreclosure & Property Preservation

Property Preservation Supervisor

Property Preservation Team Lead
804-319-4797

804-291-2515

804-319-1212
Wells Fargo Home Mortgage 1 Home Campus
Des Moines, IA 50328 Andrew Hohensee
andrew.d.hohensee@wellsfargo.com

Code Violations
codeviolations@wellsfargo.com

CoreLogic Field Services
wellsinquiries@corelogic.com

LPS Field Services
high.risk@lpsvcs.com

Mortgage Contracting Services
codeviolations@mcsnow.com
Violation Specialist

Field Service Provider

Field Service Provider
414-214-4383

440-633-4100, Option 3, Option 1

813-387-1100

* Spread the word
* StumbleUpon
* Digg
* Reddit
* Share
*

*
* Print
*
* Facebook
* Email
*
* Press This
*

Filed under: CDO, CORRUPTION, Eviction, GTC | Honor, Investor, Mortgage, bubble, currency, foreclosure, securities fraud
« Georgia Notary Fraud Revealed by TV Investigation Developer In the Shadows: Be Careful of What You Ask For »

Countrywide Financial Bankruptcy a Possibility for Bank of America (via Livinglies's Weblog)

Countrywide Financial Bankruptcy a Possibility for Bank of America Countrywide Financial, the distressed mortgage-lending arm of Bank of America, could file for bankruptcy, according to a leading stock analyst.Financial analyst Mike Mayo, who works for Credit Agricole, released a report this week saying the company might file for bankruptcy because it is still technically separate from Bank of America, according to a Wall Street Journal report. … Read More

via Livinglies's Weblog

LUCY VUKI et al., Petitioners, v. THE SUPERIOR COURT OF ORANGE COUNTY, Respondent; HSBC BANK USA, Real Party in Interest

Filed 10/29/10
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
LUCY VUKI et al.,
Petitioners,
v.
THE SUPERIOR COURT OF ORANGE COUNTY,
Respondent;
HSBC BANK USA,
Real Party in Interest.
G043544
(Super. Ct. No. 30-2010-00360268)
O P I N I O N
Original proceedings; petition for a writ of mandate to challenge an order of the Superior Court of Orange County, David C. Velasquez, Judge. Petition denied.
Law Offices of Moses S. Hall and Moses S. Hall for Petitioners.
No appearance for Respondent.
Severson & Werson, Suzanne M. Hankins, Jarlath M. Curran II and Jan T. Chilton for Real Party in Interest.
* * *
2
Lucy and Manatu Vuki lost their Buena Park home to foreclosure. The sale took place October 7, 2009, with their erstwhile lender, HSBC Bank USA (HSBC), as the buyer at the foreclosure sale. In early January 2010 the Vukis stipulated to entry of judgment in an unlawful detainer action (denominated a “Limited Civil” action) brought against them by HSBC. The stipulation provided for an immediate writ of possession, but allowed the Vukis to remain in the house until January 26, 2010.
However, the day before January 26, the Vukis filed for Chapter 7 bankruptcy. It took HSBC just a little more than 60 days to obtain relief from the automatic stay, which it did on March 30, 2010. Six days after that, on April 6, 2010, the Vukis filed this state court action against HSBC for, among other things, statutory violation of Civil Code sections 2923.52 and 2923.53.
On April 9, three days later, they filed an application for a temporary restraining order seeking a stay of eviction. Three days after that, on April 12, the trial court denied the request for that restraining order. The eviction was thus free to proceed.
But then the Vukis filed this writ proceeding on April 16. On April 20 this court stayed the eviction pending further order. In particular, we wanted to consider the scope of Civil Code sections 2923.52 and 2923.53, a question of first impression. (All further undesignated statutory references will be to the Civil Code.)
We have now heard oral argument in this proceeding. Because of the importance of the statutory issues presented, we publish this opinion explaining the reasons we deny the requested writ. (See Hecht, Solberg, Robinson, Goldberg & Bagley LLP v. Superior Court (2006) 137 Cal.App.4th 579, 584 [denying petition but issuing opinion “in an effort to clarify” law on issue]; Greenlining Institute v. Public Utilities Com. (2002) 103 Cal.App.4th 1324, 1326, 1329 [same].)
In particular, we conclude that, unlike section 2923.5 as construed by this court in Mabry v. Superior Court (2010) 185 Cal.App.4th 208 (Mabry), neither section 2923.52 or section 2923.53 provides any private right of action, even a very limited one as this court found in Mabry.
3
We also address a related question of the operation of section 2923.54. Subdivision (b) of that statute is clear that: “Failure to comply with Section 2923.52 or 2923.53 shall not invalidate any sale that would otherwise be valid under Section 2924f.” The Vukis, however, claim that the statute does not apply to lenders who themselves buy the property at foreclosure, i.e., to lenders who cannot claim the status of bona fide purchasers. This argument fails since any claim which the Vukis might have to invalidate the foreclosure sale based on sections 2923.52 and 2923.53 necessarily entails a private right of action which the statutes do not give them.
DISCUSSION
1. The Operation of Sections 2923.52 and 2923.53
a. basic requirements for a loan modification program
Civil Code section 2923.52 imposes a 90-day delay in the normal foreclosure process. But Civil Code section 2923.53 allows for an exemption to that delay if lenders have loan modification programs that meet certain criteria. Before section 2923.52 was enacted, there was a minimum of three months from any notice of default until any foreclosure sale (§ 2924, subd. (a)(3)). After the enactment of section 2923.52, at least for certain loans, another 90 days must be included “in order to allow the parties to pursue a loan modification to prevent foreclosure.” However, if lenders meet the requirements of section 2923.53, they are exempted from the 90-day delay imposed by section 2923.52.
Those requirements are set forth in subdivision (a) of section 2923.53. Readers should note the theme that the requirements are a matter of a general program, evaluated by regulatory commissioners:
“(1) The loan modification program is intended to keep borrowers whose principal residences are homes located in California in those homes . . . .
“(2) The loan modification program targets a ratio of the borrower‟s housing-related debt to the borrower‟s gross income of 38 percent or less, on an aggregate basis in the program.
4
“(3) The loan modification program includes some combination of the following features:
“(A) An interest rate reduction, as needed, for a fixed term of at least five years.
“(B) An extension of the amortization period for the loan term, to no more than 40 years from the original date of the loan.
“(C) Deferral of some portion of the principal amount of the unpaid principal balance until maturity of the loan.
“(D) Reduction of principal.
“(E) Compliance with a federally mandated loan modification program.
“(F) Other factors that the commissioner determines are appropriate. In determining those factors, the commissioner may consider efforts implemented in other jurisdictions that have resulted in a reduction in foreclosures.
“(4) When determining a loan modification solution for a borrower under the loan modification program, the servicer seeks to achieve long-term sustainability for the borrower.” (Italics added.)
b. application for an exemption
Subdivision (b) of section 2923.53 sets forth the process by which a lender may obtain an exemption from an otherwise applicable 90-day delay. Everything in the exemption process, in short, is funneled through the relevant commissioner:
“(b)(1) A mortgage loan servicer may apply to the commissioner for an order exempting loans that it services from Section 2923.52. If the mortgage loan servicer elects to apply for an order, the application shall be in the form and manner determined by the commissioner.
“(2) Upon receipt of an initial application for exemption under this section, the commissioner shall immediately notify the applicant of the date of receipt of the application and shall issue a temporary order, effective from that date of receipt, exempting the mortgage loan servicer from the provisions of subdivision (a) of Section
5
2923.52. The temporary order shall remain in effect until a final order has been issued by the commissioner pursuant to paragraph (3). If the initial application for exemption is denied pursuant to paragraph (3), the temporary order shall remain in effect for 30 days after the date of denial.
“(3) Within 30 days of receipt of an initial or revised application, the commissioner shall make a final determination on whether the application meets the criteria of subdivision (a). If, after review of the application, the commissioner concludes that the mortgage loan servicer has a comprehensive loan modification program that meets the requirements of subdivision (a), the commissioner shall issue a final order exempting the mortgage loan servicer from the requirements of Section 2923.52. If the commissioner concludes that the loan modification program does not meet the requirements of subdivision (a), the application for exemption shall be denied and a final order shall not be issued.
“(4) A mortgage loan servicer may submit a revised application if its application for exemption is denied.” (Italics added.)
c. enforcement of the statute
Similar to subdivision (b), subdivisions (c) and (d) of section 2923.53 commit enforcement of the statute to the relevant commissioner. That particular commissioner is given legislative authority to issue regulations fleshing out the process set forth in sections 2923.52 and 2923.53:
“(c) The commissioner may revoke a final order, upon reasonable notice and an opportunity to be heard, if the mortgage loan servicer has submitted a materially false or misleading application or if the approved loan modification program has been materially altered from the loan modification program on which the exemption was based. A revocation by the commissioner shall not be retroactive.
“(d) The commissioner shall adopt, no later than 10 days after the date this section takes effect, emergency and final regulations to clarify the application of this section and Section 2923.52, including the creation of the application for mortgage loan
6
servicers and requirements regarding the reporting of loan modification data by mortgage loan servicers.” (Italics added.)
Along the same lines, section 2923.53, subdivision (h), makes enforcement a matter of losing a license:
“(h) Any person who violates any provision of this section or Section 2923.52 shall be deemed to have violated his or her license law as it relates to these provisions.”
d. public assessment
Subdivision (e) sets forth requirements making the relevant commissioner report back to the Legislature on how the whole process is going, generally and throughout the state. Readers should note that the operation contemplates a sample for purposes of a report that does not even necessarily include every loan servicer. That is, the scope of the assessment process is one which is within the discretion of the relevant commissioner:
“(e) Three months after the first exemption is issued pursuant to subdivision (b) by order of any commissioner specified in paragraph (1) of subdivision (j), the Secretary of Business, Transportation and Housing shall submit a report to the Legislature regarding the details of the actions taken to implement this section and the numbers of applications received and orders issued. The secretary shall submit an additional report six months from the date of the submission of the first report and every six months thereafter. Within existing resources, the commissioners shall collect, from some or all mortgage loan servicers, data regarding loan modifications accomplished pursuant to this section and shall make the data available on an Internet Web site at least quarterly.” (Italics added.)
By the same token, subdivision (f) of section 2923.53 sets up a public informational system to determine who has exemptions and who doesn‟t:
“(f) The Secretary of Business, Transportation and Housing shall maintain on an Internet Web site a publicly available list disclosing the final orders granting
7
exemptions, the date of each order, and a link to Internet Web sites describing the loan modification programs.”
e. the enforcing commissioners
The definitions section of the legislation comes at the end of the statute. The most significant language here is that “the commissioner” is defined to include any one of three separate heads of executive branch departments:
“(k) For purposes of this section and Sections 2923.52 and 2923.54:
“(1) „Commissioner‟ means any of the following:
“(A) The Commissioner of Corporations for licensed residential mortgage lenders and servicers and licensed finance lenders and brokers servicing mortgage loans and any other entities servicing mortgage loans that are not described in subparagraph (B) or (C).
“(B) The Commissioner of Financial Institutions for commercial and industrial banks and savings associations and credit unions organized in this state servicing mortgage loans.
“(C) The Real Estate Commissioner for licensed real estate brokers servicing mortgage loans.”
f. analysis of the text
The text of sections 2923.52 and 2923.53 stands in sharp contrast to that of section 2923.5, which was the subject of this court‟s decision in Mabry, supra, 185 Cal.App.4th 208. As the italicized language quoted above shows, sections 2923.52 and 2923.53, read together, create a structure much more resembling the regulatory structure over general insurance industry claims practices that the Supreme Court held to be without a private right of action in Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287. Enforcement of sections 2923.52 and 2923.53 is committed to regulatory agencies, which have implicit power to terminate the license of any company whose program is not in compliance. By contrast, in Mabry, nothing in the subject
8
statute (§ 2923.5) suggested that its enforcement was committed to a regulatory structure, and the individual, case-by-case approach of the statute indicated otherwise. (See Mabry, supra, 185 Cal.App.4th at p. 219 [“the enforcement mechanism at hand, in direct contrast to the one in Moradi-Shalal, is one that strongly implies individual enforcement of the statute”].) Not only is there no express unmistakable private right to sue (see Lu v. Hawaiian Gardens Casino, Inc. (2010) 50 Cal.4th 592, 597), there is a virtually unmistakable intent not to allow a private right to sue.
2. The Operation of Section 2923.54
Section 2923.54 first imposes a requirement that a notice of sale give information about whether the servicer has, or has not, obtained an exemption from the 90-day delay provisions of section 2923.52. But then section 2923.54 makes clear that whatever else is the case as regards actual compliance or noncompliance with sections 2923.52 and 2923.53, it will not invalidate any otherwise valid foreclosure sale:
“(b) Failure to comply with Section 2923.52 or 2923.53 shall not invalidate any sale that would otherwise be valid under Section 2924f.”
The Vukis argue that there is an implied exception in section 2923.54‟s used of the word “otherwise,” (as in “otherwise be valid under Section 2924f”). Their theory is that Section 2924f only protects bona fide purchasers for value (“BFP‟s”), and in this case HSBC cannot be a BFP because it would have purchased the Vukis‟ home knowing of its own noncompliance with section 2923.52 or 2923.53.
The argument fails because, as shown above, any noncompliance with sections 2923.52 and 2923.53 is entirely a regulatory matter, and cannot be remedied in a private action. The statutory scheme contains no express or implied exceptions for any lender who buys property knowing that it may not have complied with sections 2923.52 and 2923.53.
9
CONCLUSION
Because the Vukis claim for relief against the impending eviction rests entirely on alleged violations of statutes which afford them no private right of action, we need not address the additional argument made by HSBC that their stipulation for judgment in the unlawful detainer action is itself preclusive of their claim.
The stay of the eviction is hereby discharged. The petition for the requested writ is denied.
RYLAARSDAM, ACTING P. J.
WE CONCUR:
MOORE, J.
ARONSON, J.

recent cases on foreclosure law

California Cases – 2004 to Present
Including Federal cases interpreting California law
LISTED WITH MOST RECENT CASES FIRST
Go to cases 2000 – 2003

Vuki v. Superior Court Docket
Cal.App. 4th Dist., Div. 3 (G043544) 10/29/10TRUSTEE’S SALES: Unlike section 2923.5 as construed by this court in Mabry v. Superior Court (2010) 185 Cal.App.4th 208, neither Section 2923.52 or Section 2923.53 provides any private right of action, even a very limited one as this court found in Mabry. Civil Code section 2923.52 imposes a 90-day delay in the normal foreclosure process. But Civil Code section 2923.53 allows for an exemption to that delay if lenders have loan modification programs that meet certain criteria. The only enforcement mechanism is that a violation is deemed to be a violation of lenders license laws. Section 2923.54 provides that a violation of Sections 2923.52 or 2923.53 does not invalidate a trustee’s sale, and plaintiff also argued that a lender is not entitled to a bona fide purchaser protection. The court rejected that argument because any noncompliance is entirely a regulatory matter, and cannot be remedied in a private action.

Abers v. Rounsavell Docket
Cal.App. 4th Dist., Div. 3 (G040486) 10/18/10LEASES: Leases of residential condominium units required a re-calculation of rent after 30 years based on a percentage of the appraised value of the “leased land”. The term “leased land” was defined to consist of the condominium unit and an undivided interest in the common area of Parcel 1, and did not include the recreational area (Parcel 2), which was leased to the Homeowners Association. The Court held that the language of the leases was clear. The appraisals were to be based only on the value of the lessees’ interest in Parcel 1 and not on the value of the recreational parcel.

UNPUBLISHED: Residential Mortgage Capital v. Chicago Title Ins. Company Docket
Cal.App. 1st Dist. (A125695) 9/20/10ESCROW: An escrow holder released loan documents to a mortgage broker at the broker’s request in order to have the borrowers sign the documents at home. They were improperly backdated and the broker failed to provide duplicate copies of the notice of right to rescind. Due these discrepancies, the lender complied with the borrower’s demand for a rescission of the loan, and filed this action against the escrow holder for amounts reimbursed to the borrower for finance charges and attorney’s fees. The Court held that the escrow holder did not breach a duty to the lender because it properly followed the escrow instructions, and it is common for escrow to release documents to persons associated with the transaction in order for them to be signed elsewhere.

Starr v. Starr Docket
Cal.App. 2nd Dist. (B219539) 9/30/10COMMUNITY PROPERTY: In a divorce action the Court ordered the husband to convey title to himself and his former wife. Title had been taken in the husband’s name and the wife executed a quitclaim deed. But Family Code Section 721 creates a presumption that a transaction that benefits one spouse was the result of undue influence. The husband failed to overcome this presumption where the evidence showed that the wife executed the deed in reliance on the husband’s representation that he would subsequently add her to title. The husband was, nevertheless, entitled to reimbursement for his separate property contribution in purchasing the property.

Malkoskie v. Option One Mortgage Corp. Docket
Cal.App. 2nd Dist. (B221470) 9/23/10TRUSTEE’S SALES: After plaintiff stipulated to a judgment in an unlawful detainer action, she could not challenge the validity of the trustee’s sale in a subsequent action because the subsequent action is barred by collateral estoppel. Because the action was barred, the court did not reach the question of the validity of the trustee’s sale based on the substitution of trustee being recorded after trustee’s sale proceedings had commenced and based on assignments of the deed of trust into the foreclosing beneficiary being recorded after the trustee’s deed.

Lee v. Fidelity National Title Ins. Co. Docket
Cal.App. 1st Dist. (A124730) 9/16/10TITLE INSURANCE:
1. The insureds could have reasonably expected that they were buying a title insurance policy on APN 22, and not just APN 9, where both the preliminary report and policy included a reference to APN 22, listed exclusions from coverage that were specific to APN 22, and attached an assessor’s parcel map with an arrow pointing to both APN 9 and 22.
2. A preliminary report is merely an offer to issue a title policy, but an insured has the right to expect that the policy will be consistent with the terms of the offer.
3. There was a triable issue of fact as to whether a neighbor’s construction of improvements on APN 22 was sufficient to commence the running of the statute of limitations, where the insureds testified that they did not know the precise location of APN 22 and assumed that the neighbors constructed the improvements on their own property.
4. There was a triable issue of fact as to whether Fidelity National Title Insurance Company acted as escrow holder or whether the escrow was conducted by its affiliate, Fidelity National Title Company (only the insurance company was named as a defendant).

Vanderkous v. Conley Docket
Cal.App. 1st Dist (A125352) 9/2/10QUIET TITLE: 1) In a quiet title action the court has equitable powers to award compensation as necessary to do complete justice, even though neither party’s pleadings specifically requested compensation. 2) Realizing that the court was going to require plaintiff to compensate defendant in exchange for quieting title in plaintiff’s favor, plaintiff dismissed the lawsuit. However, the dismissal was invalid because it was filed following trial after the case had been submitted to the court.

Purdum v. Holmes Docket
Cal.App. 2nd Dist. (B216493) 7/29/10 Case complete 10/22/10NOTARIES: A notary was sued for notarizing a forged deed. He admitted that he knew the grantor had not signed the deed, but the lawsuit was filed more than six years after the deed was signed and notarized. The court held that the action was barred by the six-year limitation period in C.C.P. 338(f)(3) even though plaintiff did not discover the wrongful conduct until well within the six year period.

Perlas v. GMAC Mortgage Docket
Cal.App. 1st Dist. (A125212) 8/11/10 Case complete 10/10/10DEEDS OF TRUST: Borrowers filed an action against a lender to set aside a deed of trust, setting forth numerous causes of action. Borrowers’ loan application (apparently prepared by a loan broker) falsely inflated the borrowers’ income. In the published portion of the opinion. The court held in favor of the lender, explaining that a lender is not in a fiduciary relationship with borrowers and owes them no duty of care in approving their loan. A lender’s determination that the borrowers qualified for the loan is not a representation that they could afford the loan. One interesting issue in the unpublished portion of the opinion was the court’s rejection of the borrowers’ argument that naming MERS as nominee invalidated the deed of trust because, as borrower argued, the deed of trust was a contract with MERS and the note was a separate contract with the lender.

Soifer v. Chicago Title Company Modification Docket
Cal.App. 2nd Dist. (B217956) 8/10/10TITLE INSURANCE: A person cannot recover for errors in a title company’s informal communications regarding the condition of title to property in the absence of a policy of title insurance or the purchase of an abstract of title. There are two ways in which an interested party can obtain title information upon which reliance may be placed: an abstract of title or a policy of title insurance. Having purchased neither, plaintiff cannot recover for title company’s incorrect statement that a deed of trust in foreclosure was a first lien.

In re: Hastie (Weinkauf v. Florez) Docket Sup.Ct. Docket
Cal.App. 1st Dist. (A127069) 7/22/10 Petition for review by Cal Supreme Ct. filed late and DENIED 9/21/10DEEDS: An administrator of decedent’s estate sought to set aside two deeds on the basis that the grantees were the grandson and granddaughter of decedent’s caregiver. Defendant did not dispute that the transfers violated Probate Code Section 21350, which prohibits conveyances to a fiduciary, including a caregiver, or the fiduciary’s relatives, unless specified conditions are met. Instead, defendant asserted only that the 3-year statute of limitations had expired. The court held that the action was timely because there was no evidence indicating that the heirs had or should have had knowledge of the transfer, which would have commenced the running of the statute of limitations.

Bank of America v. Stonehaven Manor, LLC Docket Sup.Ct. Docket
Cal.App. 3rd Dist. (C060089) 7/12/10 Petition for review by Cal Supreme Ct. DENIED 10/20/10ATTACHMENT: The property of a guarantor of a debt–a debt which is secured by the real property of the principal debtor and also that of a joint and several co-guarantor–is subject to attachment where the guarantor has contractually waived the benefit of that security (i.e. waived the benefit of Civil Code Section 2849).

Luna v. Brownell Docket
Cal.App. 2nd Dist. (B212757) 6/11/10 Case complete 8/17/10DEEDS: A deed transferring property to the trustee of a trust is not void as between the grantor and grantee merely because the trust had not been created at the time the deed was executed, if (1) the deed was executed in anticipation of the creation of the trust and (2) the trust is in fact created thereafter. The deed was deemed legally delivered when the Trust was established.

Mabry v. Superior Court Docket Sup.Ct. Docket
Cal.App. 4th Dist., Div. 3 (G042911) 6/2/10 Petition for review by Cal Supreme Ct. DENIED 8/18/10TRUSTEE’S SALES: The court answered, and provided thorough explanations for, a laundry list of questions regarding Civil Code Section 2923.5, which requires a lender to explore options for modifying a loan with a borrower prior to commencing foreclosure proceedings.
1. May section 2923.5 be enforced by a private right of action? Yes.
2. Must a borrower tender the full amount of the mortgage indebtedness due as a prerequisite to bringing an action under section 2923.5? No.
3. Is section 2923.5 preempted by federal law? No.
4. What is the extent of a private right of action under section 2923.5? It is limited to obtaining a postponement of a foreclosure to permit the lender to comply with section 2923.5.
5. Must the declaration required of the lender by section 2923.5, subdivision (b) be under penalty of perjury? No.
6. Does a declaration in a notice of default that tracks the language of section 2923.5(b) comply with the statute, even though such language does not on its face delineate precisely which one of three categories applies to the particular case at hand? Yes.
7. If a lender forecloses without complying with section 2923.5, does that noncompliance affect the title acquired by a third party purchaser at the foreclosure sale? No.
8. Did the lender comply with section 2923.5? Remanded to the trial court to determine which of the two sides is telling the truth.
9. Can section 2923.5 be enforced in a class action in this case? Not under these facts, which are highly fact-specific.
10. Does section 2923.5 require a lender to rewrite or modify the loan? No.

612 South LLC v. Laconic Limited Partnership Docket
Cal.App. 4th Dist., Div. 1 (D056646) 5/25/10 Case complete 7/26/10ASSESSMENT BOND FORECLOSURE:
1. Recordation of a Notice of Assessment under the Improvement Act of 1911 imparted constructive notice even though the notice did not name the owner of the subject property and was not indexed under the owner’s name. There is no statutory requirement that the notice of assessment be indexed under the name of the property owner.
2. A Preliminary Report also gave constructive notice where it stated: “The lien of special tax for the following municipal improvement bond, which tax is collected with the county taxes. . .”
3. A property owner is not liable for a deficiency judgment after a bond foreclosure because a property owner does not have personal liability for either delinquent amounts due on the bond or for attorney fees incurred in prosecuting the action.

Tarlesson v. Broadway Foreclosure Investments Docket
Cal.App. 1st Dist. (A125445) 5/17/10 Case complete 7/20/10HOMESTEADS: A judgment debtor is entitled to a homestead exemption where she continuously resided in property, even though at one point she conveyed title to her cousin in order to obtain financing and the cousin subsequently conveyed title back to the debtor. The amount of the exemption was $150,000 (later statutorily changed to $175,000) based on debtor’s declaration that she was over 55 years old and earned less than $15,000 per year, because there was no conflicting evidence in the record.

UNPUBLISHED: MBK Celamonte v. Lawyers Title Insurance Corporation Docket Sup.Ct. Docket
Cal.App. 4th Dist., Div. 3 (G041605) 4/28/10 Petition for review by Cal Supreme Ct. DENIED 7/21/10TITLE INSURANCE / ENCUMBRANCES: A recorded authorization for a Mello Roos Assessment constitutes an “encumbrance” covered by a title policy, even where actual assessments are conditioned on the future development of the property.

Plaza Home Mortgage v. North American Title Company Docket Sup.Ct. Docket
Cal.App. 4th Dist., Div. 1 (D054685) 4/27/10 Depublication request DENIED 8/11/10ESCROW / LOAN FRAUD: The buyer obtained 100% financing and managed to walk away with cash ($54,000) at close of escrow. (Actually, the buyer’s attorney-in-fact received the money.) The lender sued the title company that acted as escrow holder, asserting that it should have notified the lender when it received the instruction to send the payment to the buyer’s attorney-in-fact after escrow had closed. The court reversed a grant of a motion for summary judgment in favor of the escrow, pointing out that its decision is narrow, and holding only that the trial court erred when it determined the escrow did not breach the closing instructions contract merely because escrow had closed. The case was remanded in order to determine whether the escrow breached the closing instructions contract and if so, whether that breach proximately caused the lender’s damages.

Garcia v. World Savings Docket Sup.Ct. Docket
Cal.App. 2nd (B214822) 4/9/10 Petition for review and depublication by Cal Supreme Ct. DENIED 6/23/10TRUSTEE’S SALES: A lender told plaintiffs/owners that it would postpone a trustee’s sale by a week to give plaintiffs time to obtain another loan secured by other property in order to bring the subject loan current. Plaintiffs obtained a loan the following week, but the lender had conducted the trustee’s sale on the scheduled date and the property was sold to a third party bidder. Plaintiffs dismissed causes of action pertaining to setting aside the sale and pursued causes of action for breach of contract, wrongful foreclosure and promissory estoppel. The court held that there was no consideration that would support the breach of contract claim because plaintiffs promised nothing more than was due under the original agreement. Plaintiffs also could not prove a cause of action for wrongful foreclosure because that cause of action requires that the borrower tender funds to pay off the loan prior to the trustee’s sale. However, plaintiffs could recover based on promissory estoppel because procuring a high cost, high interest loan by using other property as security is sufficient to constitute detrimental reliance.

LEG Investments v. Boxler Docket
Cal.App. 3rd Dist. (C058743) 4/1/10 Certified for Partial Publication Case complete 6/2/10PARTITION: A right of first refusal in a tenancy in common agreement does not absolutely waive the right of partition. Instead, the right of first refusal merely modifies the right of partition to require the selling cotenant to first offer to sell to the nonselling cotenant before seeking partition. [Ed. note: I expect that the result would have been different if the right of partition had been specifically waived in the tenancy in common agreement.]

Steiner v. Thexton Docket
Cal. Supreme Court (S164928) 3/18/10OPTIONS: A contract to sell real property where the buyer’s performance was entirely conditioned on the buyer obtaining regulatory approval to subdivide the property is an option. Although plaintiffs’ promise was initially illusory because no consideration was given at the outset, plaintiffs’ part performance of their bargained-for promise to seek a parcel split cured the initially illusory nature of the promise and thereby constituted sufficient consideration to render the option irrevocable.

Grotenhuis v. County of Santa Barbara Docket
Cal.App. 2nd Dist. (B212264) 3/15/10 Case complete 5/18/10PROPERTY TAXES: Subject to certain conditions, a homeowner over the age of 55 may sell a principle residence, purchase a replacement dwelling of equal or lesser value in the same county, and transfer the property tax basis of the principal residence to the replacement dwelling. The court held that this favorable tax treatment is not available where title to both properties was held by an individual’s wholly owned corporation. The court rejected plaintiffs’ argument that the corporation was their alter ego because that concept is used to pierce the corporate veil of an opponent, and not to enable a person “to weave in and out of corporate status when it suits the business objective of the day.”

Clear Lake Riviera Community Assn. v. Cramer Docket
Cal.App. 1st Dist. (A122205) 2/26/10 Case complete 4/29/10HOMEOWNER’S ASSOCIATIONS: Defendant homeowners were ordered to bring their newly built house into compliance with the homeowners association’s guidelines where the house exceed the guidelines’ height restriction by nine feet. Even though the cost to the defendants will be great, they built the house with knowledge of the restriction and their hardship will not be grossly disproportionate to the loss the neighbors would suffer if the violation were not abated, caused by loss in property values and loss of enjoyment of their properties caused by blocked views. The height restriction was contained in the associations guidelines and not in the CC&R’s, and the association did not have records proving the official adoption of the guidelines. Nevertheless, the court held that proper adoption was inferred from the circumstantial evidence of long enforcement of the guidelines by the association.

Forsgren Associates v. Pacific Golf Community Development Docket Sup. Ct. Docket
Cal.App. 4th Dist., Div. 2 (E045940) 2/23/10 Petition for review by Cal Supreme Ct. DENIED 6/17/10MECHANIC’S LIENS: 1. Owners of land are subject to mechanic’s liens where they were aware of the work being done by the lien claimant and where they failed to record a notice of non-responsibility.
2. Civil Code Section 3128 provides that a mechanic’s lien attaches to land on which the improvement is situated “together with a convenient space about the same or so much as may be required for the convenient use and occupation thereof”. Accordingly, defendant’s land adjacent to a golf course on which the lien claimant performed work is subject to a mechanic’s lien, but only as to the limited portions where a tee box was located and where an irrigation system was installed.
3. The fact that adjacent property incidentally benefits from being adjacent to a golf course does not support extending a mechanic’s lien to that property.
4. The owners of the adjacent property were liable for interest, but only as to their proportionate share of the amount of the entire mechanic’s lien.

Steinhart v. County of Los Angeles Docket
47 Cal.4th 1298 – Cal. Supreme Court (S158007) 2/4/10PROPERTY TAXES: A “change in ownership”, requiring a property tax reassessment, occurs upon the death of a trust settlor who transferred property to a revocable trust, and which became irrevocable upon the settlor’s death. The fact that one trust beneficiary was entitled to live in the property for her life, and the remaining beneficiaries received the property upon her death, did not alter the fact that a change in ownership of the entire title had occurred.

Kuish v. Smith Docket
181 Cal.App.4th 1419 – 4th Dist., Div. 3 (G040743) 2/3/10 Case complete 4/12/10CONTRACTS: 1. Defendants’ retention of a $600,000 deposit designated as “non-refundable” constituted an invalid forfeiture because a) the contract did not contain a valid liquidated damages clause, and b) plaintiff re-sold the property for a higher price, so there were no out-of-pocket damages. 2. The deposit did not constitute additional consideration for extending the escrow because it was labeled “non-refundable” in the original contract.

Kendall v. Walker (Modification attached) Docket
181 Cal.App.4th 584 – 1st Dist. (A105981) 12/30/09 Case complete 3/29/10WATER RIGHTS: An owner of land adjoining a navigable waterway has rights in the foreshore adjacent to his property separate from that of the general public. The court held that the boundary in the waterway between adjacent parcels of land is not fixed by extending the boundary lines into the water in the direction of the last course ending at the shore line. Instead, it is fixed by a line drawn into the water perpendicular to the shore line. Accordingly, the court enjoined defendants from allowing their houseboat from being moored in a manner that crossed onto plaintiffs’ side of that perpendicular boundary line.

Junkin v. Golden West Foreclosure Service Docket
180 Cal.App.4th 1150 – 1st Dist. (A124374) 1/5/10 Case complete 3/12/10USURY: The joint venture exception to the Usury Law, which has been developed by case law, provides that where the relationship between the parties is a bona fide joint venture or partnership, an advance by a joint venturer is an investment and not a loan, making the Usury Law inapplicable. The court applied the exception to a loan by one partner to the other because instead of looking at the loan in isolation, it looked at the entire transaction which it determined to be a joint venture. The case contains a good discussion of the various factors that should be weighed in determining whether the transaction is a bona fide joint venture. The presence or absence of any one factor is not, alone, determinative. The factors include whether or not: 1) there is an absolute obligation of repayment, 2) the investor may suffer a loss, 3) the investor has a right to participate in management, 4) the subject property was purchased from a third party and 5) the parties considered themselves to be partners.

Banc of America Leasing & Capital v. 3 Arch Trustee Services Docket
180 Cal.App.4th 1090 – 4th Dist., Div. 3 (G041480) 12/11/09 Case complete 3/8/10TRUSTEE’S SALES: A judgment lien creditor is not entitled to receive a notice of default, notice of trustee’s sale or notice of surplus sale proceeds unless the creditor records a statutory request for notice. The trustee is required to disburse surplus proceeds only to persons who have provided the trustee with a proof of claim. The burden rests with the judgment creditor to keep a careful watch over the debtor, make requests for notice of default and sales, and to submit claims in the event of surplus sale proceeds.

Park 100 Investment Group v. Ryan Docket
180 Cal.App.4th 795 – 2nd Dist. (B208189) 12/23/09 Case complete 2/26/10LIS PENDENS: 1. A lis pendens may be filed against a dominant tenement when the litigation involves an easement dispute. Although title to the dominant tenement would not be directly affected if an easement right was shown to exist, the owner’s right to possession clearly is affected

2.A recorded lis pendens is a privileged publication only if it identifies an action previously filed with a court of competent jurisdiction which affects the title or right of possession of real property. If the complaint does not allege a real property claim, or the alleged claim lacks evidentiary merit, the lis pendens, in addition to being subject to expungement, is not privileged.

Millennium Rock Mortgage v. T.D. Service Company Modification Docket
179 Cal.App.4th 804 – 3rd Dist. (C059875) 11/24/09 Case complete 1/26/10TRUSTEE’S SALES: A trustee’s sale auctioneer erroneously read from a script for a different foreclosure, although the correct street address was used. The auctioneer opened the bidding with the credit bid from the other foreclosure that was substantially less than the correct credit bid. The errors were discovered after the close of bidding but prior to the issuance of a trustee’s deed. The court held that the errors constituted an “irregularity” sufficient to give the trustee the right to rescind the sale.

The court distinguished 6 Angels v. Stuart-Wright Mortgage, in which the court held that a beneficiary’s negligent miscalculation of the amount of its credit bid was not sufficient to rescind the sale. In 6 Angels the error was totally extrinsic to the proper conduct of the sale itself. Here there was inherent inconsistency in the auctioneer’s description of the property being offered for sale, creating a fatal ambiguity in determining which property was being auctioned.

Fidelity National Title Insurance Company v. Schroeder Docket
179 Cal.App.4th 834 – 5th Dist. (F056339) 11/24/09 Case complete 1/25/10JUDGMENTS: A judgment debtor transferred his 1/2 interest in real property to the other cotenant prior to the judgment creditor recording an abstract of judgment. The court held that if the trial court on remand finds that the transfer was intended to shield the debtor’s property from creditors, then the transferee holds the debtor’s 1/2 interest as a resulting trust for the benefit of the debtor, and the creditor’s judgment lien will attach to that interest. The court also held that the transfer cannot be set aside under the Uniform Fraudulent Transfer Act because no recoverable value remained in the real property after deducting existing encumbrances and Gordon’s homestead exemption.

The case contains a good explanation of the difference between a resulting (“intention enforcing”) and constructive (“fraud-rectifying”) trust. A resulting trust carries out the inferred intent of the parties; a constructive trust defeats or prevents the wrongful act of one of them.

Zhang v. Superior Court Docket Sup.Ct. Docket
Cal.App. 4th Dist., Div. 2 (E047207) 10/29/09 Petition for review by Cal Supreme Ct. GRANTED 2/10/10INSURANCE / BAD FAITH: Fraudulent conduct by an insurer does not give rise to a private right of action under the Unfair Insurance Practices Act (Insurance Code section 790.03 et seq.), but it can give rise to a private cause of action under the Unfair Competition Law (Business and Professions Code section 17200 et seq.).

Presta v. Tepper Docket
179 Cal.App.4th 909 – 4th Dist., Div. 3 (G040427) 10/28/09 Case complete 1/25/10TRUSTS: An ordinary express trust is not an entity separate from its trustee, like a corporation is. Instead, a trust is merely a relationship by which one person or entity holds property for the benefit of some other person or entity. Consequently, where two men entered into partnership agreements as trustees of their trusts, the provision of the partnership agreement, which required that upon the death of a partner the partnership shall purchase his interest in the partnership, was triggered by the death of one of the two men.

Wells Fargo Bank v. Neilsen Modification Docket Sup.Ct. Docket
178 Cal.App.4th 602 – 1st Dist. (A122626) 10/22/09 (Mod. filed 11/10/09) Petition for review by Cal Supreme Ct. DENIED 2/10/10CIRCUITY OF PRIORITY: The Court follows the rule in Bratcher v. Buckner, even though Bratcher involved a judgment lien and two deeds of trust and this case involves three deeds of trust. The situation is that A, B & C have liens on the subject property, and A then subordinates his lien to C’s lien. The problem with this is that C appears to be senior to A, which is senior to B, which is senior to C, so that each lien is senior and junior to one of the other liens.

The Court held that the lien holders have the following priority: (1) C is paid up to the amount of A’s lien, (2) if the amount of A’s lien exceeds C’s lien, A is paid the amount of his lien, less the amount paid so far to C, (3) B is then paid in full, (4) C is then paid any balance still owing to C, (5) A is then paid any balance still owing to A.

This is entirely fair because A loses priority as to the amount of C’s lien, which conforms to the intent of the subordination agreement. B remains in the same position he would be in without the subordination agreement since his lien remains junior only to the amount of A’s lien. C steps into A’s shoes only up to the amount of A’s lien.

NOTE: The odd thing about circuity of priority cases is that they result in surplus proceeds after a foreclosure sale being paid to senior lienholders. Normally, only junior lienholders and the foreclosed out owner are entitled to share in surplus proceeds, and the purchaser takes title subject to the senior liens.

Schmidli v. Pearce Docket
178 Cal.App.4th 305 – 3rd Dist. (C058270) 10/13/09 Case complete 12/15/09MARKETABLE RECORD TITLE ACT: This case was decided under the pre-2007 version of Civil Code Section 882.020, which provided that a deed of trust expires after 10 years if the maturity date is “ascertainable from the record”. The court held that this provision was not triggered by a Notice of Default, which set forth the maturity date and which was recorded prior to expiration of the 10-year period. NOTE: In 2007, C.C. Section 882.020 was amended to make it clear that the 10-year period applies only where the maturity date is shown in the deed of trust itself.

Nielsen v. Gibson Docket
178 Cal.App.4th 318 – 3rd Dist. (C059291) 10/13/09 Case complete 12/15/09ADVERSE POSSESSION: 1. The “open and notorious” element of adverse possession was satisfied where plaintiff possessed the subject property by actual possession under such circumstances as to constitute reasonable notice to the owner. Defendant was charged with constructive knowledge of plaintiff’s possession, even though defendant was out of the country the entire time and did not have actual knowledge.

2. The 5-year adverse possession period is tolled under C.C.P. Section 328 for up to 20 years if the defendant is “under the age of majority or insane”. In the unpublished portion of the opinion the court held that although the defendant had been ruled incompetent by a court in Ireland, there was insufficient evidence that defendant’s condition met the legal definition of “insane”.

Ricketts v. McCormack Docket Sup.Ct. Docket
177 Cal.App.4th 1324 – 2nd Dist. (B210123) 9/27/09 Petition for review by Cal Supreme Ct. DENIED 12/17/09RECORDING LAW: Civil Code Section 2941(c) provides in part, “Within two business days from the day of receipt, if received in recordable form together with all required fees, the county recorder shall stamp and record the full reconveyance or certificate of discharge.” In this class action lawsuit against the County recorder, the court held that indexing is a distinct function, separate from recording a document, and is not part of section 2941(c)’s stamp-and-record requirement.

The court distinguished indexing, stamping and recording:
Stamping: The “stamping” requirement of Section 2941(c) is satisfied when the Recorder endorses on a reconveyance the order of receipt, the day and time of receipt and the amount of fees paid.
Recording: The reconveyance is “recorded” once the Recorder has confirmed the document meets all recording requirements, created an entry for the document in the “Enterprise Recording Archive” system, calculated the required fees and confirmed payment of the correct amount and, finally, generated a lead sheet containing, among other things, a bar code, a permanent recording number and the words “Recorded/Filed in Official Records.”
Indexing: Government Code Section 27324 requires all instruments “presented for recordation” to “have a title or titles indicating the kind or kinds of documents contained therein,” and the recorder is “required to index only that title or titles captioned on the first page of a document.

Starlight Ridge South Homeowner’s Assn. v. Hunter-Bloor Docket
177 Cal.App.4th 440 – 4th Dist., Div. 2 (E046457) 8/14/09 (Pub. Order 9/3/09) Case complete 10/19/09CC&R’s: Under Code Civ. Proc. Section 1859, where two provisions appear to cover the same matter, and are inconsistent, the more specific provision controls over the general provision. Here the provision of CC&R’s requiring each homeowner to maintain a drainage ditch where it crossed the homeowners’ properties was a specific provision that controlled over a general provision requiring the homeowner’s association to maintain landscape maintenance areas.

First American Title Insurance Co. v. XWarehouse Lending Corp. Docket
177 Cal.App.4th 106 – 1st Dist. (A119931) 8/28/09 Case complete 10/30/09TITLE INSURANCE: A loan policy provides that “the owner of the indebtedness secured by the insured mortgage” becomes an insured under the loan policy. Normally, this means that an assignee becomes an insured. However, where the insured lender failed to disburse loan proceeds for the benefit of the named borrower, an indebtedness never existed, and the warehouse lender/assignee who disbursed money to the lender did not become an insured. The court pointed out that the policy insures against defects in the mortgage itself, but not against problems related to the underlying debt.

NOTE: In Footnote 8 the court distinguishes cases upholding the right of a named insured or its assignee to recover from a title insurer for a loss due to a forged note or forged mortgage because in those cases, and unlike this case, moneys had been actually disbursed or credited to the named borrower by either the lender or its assignee.

Wells Fargo v. D & M Cabinets Docket
177 Cal.App.4th 59 – 3rd Dist. (C058486) 8/28/09 Case complete 10/28/09JUDGMENTS: A judgment creditor, seeking to sell an occupied dwelling to collect on a money judgment, may not bypass the stringent requirements of C.C.P. Section 704.740 et seq. when the sale is conducted by a receiver appointed under C.C.P Section 708.620. The judgment creditor must comply with Section 704.740, regardless of whether the property is to be sold by a sheriff or a receiver.

Sequoia Park Associates v. County of Sonoma Docket Sup.Ct. Docket
176 Cal.App.4th 1270 – 1st Dist. (A120049) 8/21/09 Petition for review by Cal Supreme Ct. DENIED 12/2/09PREEMPTION: A County ordinance professing to implement the state mobilehome conversion statutes was preempted for the following reasons: (1) Gov. Code Section 66427.5 expressly preempts the power of local authorities to inject other factors when considering an application to convert an existing mobilehome park from a rental to a resident-owner basis, (2) the ordinance is impliedly preempted because the Legislature has established a dominant role for the state in regulating mobilehomes, and has indicated its intent to forestall local intrusion into the particular terrain of mobilehome conversions and (3) the County’s ordinance duplicates several features of state law, a redundancy that is an established litmus test for preemption.

Citizens for Planning Responsibly v. County of San Luis Obispo Docket Sup.Ct. Docket
176 Cal.App.4th 357 – 2nd Dist (B206957) 8/4/09 Petition for review by Cal Supreme Ct. DENIED 10/14/09PREEMPTION: The court held that the State Aeronautics Act, which regulates the development and expansion of airports, did not preempt an initiative measure adopted by the voters because none of the following three factors necessary to establish preemption was present: (1) The Legislature may so completely occupy the field in a matter of statewide concern that all, or conflicting, local legislation is precluded, (2) the Legislature may delegate exclusive authority to a city council or board of supervisors to exercise a particular power over matters of statewide concern, or (3) the exercise of the initiative power would impermissibly interfere with an essential governmental function.

Delgado v. Interinsurance Exchange of the Auto Club of So. Cal. Docket
47 Cal.4th 302 – Cal. Supreme Court (S155129) 8/3/09INSURANCE / BAD FAITH: The case is not as relevant to title insurance as the lower court case, which held that an insurance company acted in bad faith as a matter of law where a potential for coverage was apparent from the face of the complaint. The Supreme Court reversed, basing its decision on the meaning of “accident” in a homeowner’s policy, and holding that an insured’s unreasonable belief in the need for self-defense does not turn the resulting intentional act of assault and battery into “an accident” within the policy’s coverage clause. Therefore, the insurance company had no duty to defend its insured in the lawsuit brought against him by the injured party.

1538 Cahuenga Partners v. Turmeko Properties Docket
176 Cal.App.4th 139 – 2nd Dist. (B209548) 7/31/09 Case complete 10/7/09RECONVEYANCE: [This is actually a civil procedure case that it not of much interest to title insurance business, but it is included here because the underlying action sought to cancel a reconveyance.] The court ordered that a reconveyance of a deed of trust be cancelled pursuant to a settlement agreement. The main holding was that a trial court may enforce a settlement agreement against a party to the settlement that has interest in the subject matter of the action even if the party is not named in the action, where the non-party appears in court and consents to the settlement.

Lee v. Lee Docket
175 Cal.App.4th 1553 – 5th Dist. (F056107) 7/29/09 Case complete 9/28/09DEEDS / STATUTE OF FRAUDS:
1. The Statute of Frauds does not apply to an executed contract, and a deed that is executed by the grantor and delivered to the grantee is an executed contract. The court rejected defendants’ argument that the deed did not reflect the terms of sale under a verbal agreement.
2. While the alteration of an undelivered deed renders the conveyance void, the alteration of a deed after it has been delivered to the grantee does not invalidate the instrument as to the grantee. The deed is void only as to the individuals who were added as grantees after delivery.

White v. Cridlebaugh Docket
178 Cal.App.4th 506 – 5th Dist. (F053843) 7/29/09 (Mod. 10/20/09) Case complete 12/21/09MECHANIC’S LIENS: Under Business and Professions Code Section 7031, a property owner may recover all compensation paid to an unlicensed contractor, in addition to not being liable for unpaid amounts. Furthermore, this recovery may not be offset or reduced by the unlicensed contractor’s claim for materials or other services.

Linthicum v. Butterfield Docket Sup.Ct. Docket
175 Cal.App.4th 259 – 2nd Dist. (B199645) 6/24/09 Petition for review by Cal Supreme Ct. DENIED 9/9/09NOTE: This is a new opinion following a rehearing. The only significant changes from the original opinion filed 4/2/09 (modified 4/8/09) involve the issue of a C.C.P. 998 offer, which is not a significant title insurance or escrow issue.
EASEMENTS: The court quieted title to an easement for access based on the doctrine of “balancing conveniences ” or “relative hardship”. Prohibiting the continued use of the roadway would cause catastrophic loss to the defendants and insignificant loss to the plaintiffs. However, the court remanded the case for the trial court to determine the width of the easement, which should be the minimal width necessary. The court reversed the judgment insofar as it awarded a utility easement to the defendants because they did not seek to quiet title to an easement for utilities, even though they denied the material allegations of that cause of action.

United Rentals Northwest v. United Lumber Products Docket
174 Cal.App.4th 1479 – 5th Dist. (F055855) 6/18/09 Case complete 8/18/09MECHANIC’S LIENS: Under Civil Code Section 3106, a “work of improvement” includes the demolition and/or removal of buildings. The court held that lumber drying kilns are “buildings” so the contractor who dismantled and removed them was entitled to a mechanic’s lien.

People v. Shetty Docket Sup.Ct. Docket
174 Cal.App.4th 1488 – 2nd Dist. (B205061) 6/18/09 Petition for review by Cal Supreme Ct. DENIED 9/30/09HOME EQUITY SALES: This case is not significant from a title insurance standpoint, but it is interesting because it is an example of a successful prosecution under the Home Equity Sales Contract Act (Civil Code Section 1695 et seq.).

In re Marriage of Lund Docket
174 Cal.App.4th 40 – 4th Dist., Div. 3 (G040863) 5/21/09 Case complete 7/27/09COMMUNITY PROPERTY: An agreement accomplished a transmutation of separate property to community property even though it stated that the transfer was “for estate planning purposes”. A transmutation either occurs for all purposes or it doesn’t occur at all.

St. Marie v. Riverside County Regional Park, etc. Docket
46 Cal.4th 282 – Cal. Supreme Court (S159319) 5/14/09OPEN SPACE DEDICATION: Property granted to a Regional Park District is not “actually dedicated” under Public Resources Code Section 5540 for open space purposes until the district’s Board of Directors adopts a resolution dedicating the property for park or open space purposes. Therefore, until the Board of Directors adopts such a resolution, the property may be sold by the District without voter or legislative approval.

Manhattan Loft v. Mercury Liquors Docket Sup.Ct. Docket
173 Cal.App.4th 1040 – 2nd Dist. (B211070) 5/6/09 Petition for review by Cal Supreme Ct. DENIED 8/12/09LIS PENDENS: An arbitration proceeding is not an “action” that supports the recordation of a notice of pendency of action. The proper procedure is for a party to an arbitration agreement to file an action in court to support the recording of a lis pendens, and simultaneously file an application to stay the litigation pending arbitration.

Murphy v. Burch Docket
46 Cal.4th 157 – Cal. Supreme Court (S159489) 4/27/09EASEMENT BY NECESSITY: This case contains a good discussion of the law of easements by necessity, which the court held did not apply in this case to provide access to plaintiff’s property. This means plaintiff’s property is completely landlocked because the parties had already stipulated that a prescriptive easement could not be established.

An easement by necessity arises by operation of law when 1) there is a strict necessity as when a property is landlocked and 2) the dominant and servient tenements were under the same ownership at the time of the conveyance giving rise to the necessity. The second requirement, while not categorically barred when the federal government is the common grantor, requires a high burden of proof to show 1) the intent of Congress to establish the easement under federal statutes authorizing the patent and 2) the government’s lack of power to condemn the easement. Normally, a reservation of an easement in favor of the government would not be necessary because the government can obtain the easement by condemnation.

The court pointed out that there is a distinction between an implied grant and implied reservation, and favorably quotes a treatise that observes: “an easement of necessity may be created against the government, but the government agency cannot establish an easement by necessity over land it has conveyed because its power of eminent domain removes the strict necessity required for the creation of an easement by necessity.”

Abernathy Valley, Inc. v. County of Solano Docket
173 Cal.App.4th 42 – 1st Dist. (A121817) 4/17/09 Case complete 6/22/09SUBDIVISION MAP ACT: This case contains a very good history of California’s Subdivision Map Act statutes. The court held that parcels shown on a 1909 map recorded pursuant to the 1907 subdivision map law are not entitled to recognition under the Subdivision Map Act’s grandfather clause (Government Code Section 66499.30) because the 1907 act did not regulate the “design and improvement of subdivisions”. The court also held that a local agency may deny an application for a certificate of compliance that seeks a determination that a particular subdivision lot complies with the Act, where the effect of issuing a certificate would be to effectively subdivide the property without complying with the Act.

Linthicum v. Butterfield Modification Docket Sup.Ct. Docket
172 Cal.App.4th 1112 – 2nd Dist. (B199645) 4/2/09
SEE NEW OPINION FILED 6/24/09
EASEMENTS: The court quieted title to an easement for access based on the doctrine of “balancing conveniences ” or “relative hardship”. Prohibiting the continued use of the roadway would cause catastrophic loss to the defendants and insignificant loss to the plaintiffs. However, the court remanded the case for the trial court to determine the width of the easement, which should be the minimal width necessary. The court reversed the judgment insofar as it awarded a utility easement to the defendants because they did not seek to quiet title to an easement for utilities, even though they denied the material allegations of that cause of action.

McAvoy v. Hilbert Docket
172 Cal.App.4th 707 – 4th Dist., Div 1 (D052802) 3/24/09 Case complete 5/27/09ARBITRATION: C.C.P. Section 1298 requires that an arbitration provision in a real estate contract be accompanied by a statutory notice and that the parties indicate their assent by placing their initials on an adjacent space or line. The court held that a listing agreement that is part of a larger transaction for the sale of both a business and real estate is still subject to Section 1298, and refused to enforce an arbitration clause that did not comply with that statute.

Peak-Las Positas Partners v. Bollag Modification Docket
172 Cal.App.4th 101 – 2nd Dist. (B205091) 3/16/09 Case complete 5/27/09ESCROW: Amended escrow instructions provided for extending the escrow upon mutual consent which “shall not be unreasonably withheld or delayed”. The court held that substantial evidence supported the trial court’s determination that the seller’s refusal to extend escrow was unreasonable. The court pointed out the rule that equity abhors a forfeiture and that plaintiff had paid a non-refundable deposit of $465,000 and spent $5 million in project costs to obtain a lot line adjustment that was necessary in order for the property to be sold.

Alfaro v. Community Housing Improvement System & Planning Assn Modification Docket Sup.Ct. Docket
171 Cal.App.4th 1356 6th Dist. (H031127) 2/19/09 Petition for review by Cal Supreme Ct. DENIED 5/13/09CC&R’s: The court upheld the validity of recorded CC&R’s containing an affordable housing restriction that required property to remain affordable to buyers with low to moderate income. The court reached several conclusions:
1. Constructive notice of recorded CC&R’s is imparted even if they are not referenced in a subsequent deed,
2. CC&R’s may describe an entire tract, and do not need to describe individual lots in the tract,
3. An affordable housing restriction is a reasonable restraint on alienation even if it is of indefinite duration,
4. Defendants had a duty as sellers to disclose the existence of the CC&R’s. Such disclosure was made if plaintiffs were given, prior to close of escrow, preliminary reports that disclosed the CC&R’s.
5. The fact that a victim had constructive notice of a matter from public records is no defense to fraud. The existence of such public records may be relevant to whether the victim’s reliance was justifiable, but it is not, by itself, conclusive.
6. In the absence of a claim that defendants somehow prevented plaintiffs from reading the preliminary reports or deeds, or misled them about their contents, plaintiffs cannot blame defendants for their own neglect in reading the reports or deeds. Therefore, the date of discovery of alleged fraud for failing to disclose the affordable housing restriction would be the date plaintiffs received their preliminary reports or if they did not receive a preliminary report, the date they received their deeds.

Kwok v. Transnation Title Insurance Company Docket Sup.Ct. Docket
170 Cal.App.4th 1562 – 2nd Dist. (B207421) 2/10/09 Petition for review by Cal Supreme Ct. DENIED 4/29/09TITLE INSURANCE: Plaintiffs did not succeed as insureds “by operation of law” under the terms of the title insurance policy after transfer of the property from a wholly owned limited liability company, of which appellants were the only members, to appellants as trustees of a revocable family trust. This case highlights the importance of obtaining a 107.9 endorsement, which adds the grantee as an additional insured under the policy.

Pro Value Properties v. Quality Loan Service Corp. Docket
170 Cal.App.4th 579 – 2nd Dist. (B204853) 1/23/09 Case complete 3/27/09TRUSTEE’S SALES: A Trustee’s Deed was void because the trustee failed to record a substitution of trustee. The purchaser at the sale was entitled to a return of the money paid plus interest. The interest rate is the prejudgment interest rate of seven percent set forth in Cal. Const., Art. XV, Section 1. A trustee’s obligations to a purchaser are based on statute and not on a contract. Therefore, Civil Code Section 3289 does not apply, since it only applies to a breach of a contract that does not stipulate an interest rate.

Sixells v. Cannery Business Park Docket Sup.Ct. Docket
170 Cal.App.4th 648 – 3rd Dist. (C056267) 12/29/08 Petition for review by Cal Supreme Ct. DENIED 3/25/09CONTRACTS: The Subdivision Map Act (Gov. Code, Section 66410 et seq.) prohibits the sale of a parcel of real property until a final subdivision map or parcel map has been filed unless the contract to sell the property is “expressly conditioned” upon the approval and filing of a final map (66499.30(e)). Here, the contract satisfied neither requirement because it allowed the purchaser to complete the purchase if, at its election, the subject property was made into a legal parcel by recording a final map or if the purchaser “waived” the recording of a final map. Therefore the contract was void.

Patel v. Liebermensch Docket
45 Cal.4th 344 – Cal. Supreme Court (S156797) 12/22/08SPECIFIC PERFORMANCE: The material factors required for a written contract are the seller, the buyer, the price to be paid, the time and manner of payment, and the property to be transferred, describing it so it may be identified. Here, specific performance of an option was granted even though it was not precise as to the time and manner of payment because where a contract for the sale of real property specifies no time of payment, a reasonable time is allowed. The manner of payment is also a term that may be supplied by implication.

In re Marriage of Brooks and Robinson Docket Sup.Ct. Docket
169 Cal.App.4th 176 – 4th Dist., Div. 2 (E043770) 12/16/08 Request for review and depublication by Cal Supreme Ct. DENIED 3/25/09COMMUNITY PROPERTY: The act of taking title to property in the name of one spouse during marriage with the consent of the other spouse effectively removes that property from the general presumption that the property is community property. Instead, there is a presumption that the parties intended title to be held as stated in the deed. This presumption can only be overcome by clear and convincing evidence of a contrary agreement, and not solely by tracing the funds used to purchase the property or by testimony of an intention not disclosed at the time of the execution of the conveyance. Because the court found that there was no agreement to hold title other than as the separate property of the spouse who acquired title in her own name, it did not reach the issue of whether a purchaser from that spouse was a BFP or would be charged with knowledge of that the seller’s spouse had a community property interest in the property.

The Formula, Inc. v. Superior Court Docket
168 Cal.App.4th 1455 – 3rd Dist. (C058894) 12/10/09 Case complete 2/10/09LIS PENDENS: A notice of litigation filed in another state is not authorized for recording under California’s lis pendens statutes. An improperly filed notice of an action in another state is subject to expungement by a California court, but not under the authority of C.C.P. Section 405.30, and an order of expungement is given effect by being recorded in the chain of title to overcome the effect of the earlier filing.

Ekstrom v. Marquesa at Monarch Beach HOA Docket Sup.Ct. Docket
168 Cal.App.4th 1111 – 4th Dist., Div. 3 (G038537) 12/1/08 Depublication request DENIED 3/11/09CC&R’s: A provision in CC&R’s requiring all trees on a lot to be trimmed so as to not exceed the roof of the house on the lot, unless the tree does not obstruct views from other lots, applies to palm trees even though topping a palm tree will kill it. All trees means “all trees”, so palm trees are not exempt from the requirement that offending trees be trimmed, topped, or removed.

Spencer v. Marshall Docket
168 Cal.App.4th 783 – 1st Dist. (A119437) 11/24/08 Case complete 1/26/09HOME EQUITY SALES: The Home Equity Sales Contract Act applies even where the seller is in bankruptcy and even where the seller’s Chapter 13 Bankruptcy Plan allows the seller to sell or refinance the subject property without further order of the court.

Kachlon v. Markowitz Docket
168 Cal.App.4th 316 – 2nd Dist. (B182816) 11/17/08 Case complete 1/27/09TRUSTEE’S SALES:
1. The statutorily required mailing, publication, and delivery of notices in nonjudicial foreclosure, and the performance of statutory nonjudicial foreclosure procedures, are privileged communications under the qualified, common-interest privilege, which means that the privilege applies as long as there is no malice. The absolute privilege for communications made in a judicial proceeding (the “litigation privilege”) does not apply.
2. Actions seeking to enjoin nonjudicial foreclosure and clear title based on the provisions of a deed of trust are actions on a contract, so an award of attorney fees under Civil Code Section 1717 and provisions in the deed of trust is proper.
3. An owner is entitled to attorney fees against the trustee who conducted trustee’s sale proceedings where the trustee did not merely act as a neutral stakeholder but rather aligned itself with the lender by denying that the trustor was entitled to relief.

Hines v. Lukes Docket
167 Cal.App.4th 1174 – 2nd Dist. (B199971) 10/27/08 Case complete 12/31/08EASEMENTS: [Not significant from a title insurance standpoint]. The underlying dispute concerns an easement but the case involves only civil procedure issues pertaining to the enforcement of a settlement agreement.

Satchmed Plaza Owners Association v. UWMC Hospital Corp. Docket
167 Cal.App.4th 1034 – 4th Dist., Div. 3 (G038119) 10/23/08 Case complete 12/23/08RIGHT OF FIRST REFUSAL: [Not significant from a title insurance standpoint]. The underlying dispute concerns a right of first refusal but the case involves only civil procedure issues pertaining to a party’s waiver of its right to appeal where it has accepted the benefits of the favorable portion of judgment.

Gray v. McCormick Docket Sup.Ct. Docket
167 Cal.App.4th 1019 – 4th Dist., Div. 3 (G039738) 10/23/08 Petition for review by Cal Supreme Ct. DENIED 1/14/09EASEMENTS: Exclusive easements are permitted under California law, but the use by the owner of the dominant tenement is limited to the purposes specified in the grant of easement, not all conceivable uses of the property.

In re Estate of Felder Docket
167 Cal.App.4th 518 – 2nd Dist. (B205027) 10/9/08 Case complete 12/11/08CONTRACTS: [Not significant from a title insurance standpoint]. The case held that an estate had the right to retain the entire deposit upon a purchaser’s breach of a sales contract even though the estate had only a 1/2 interest in the subject property.

Secrest v. Security National Mortgage Loan Trust Order Modifying Opinion Docket Sup.Ct. Docket
167 Cal.App.4th 544 – 4th Dist., Div. 3 (G039065) 10/9/08, Modified 11/3/08 Petition for review by Cal Supreme Ct. DENIED 12/17/08LOAN MODIFICATION: Because a note and deed of trust come within the statute of frauds, a Forbearance Agreement also comes within the statute of frauds pursuant to Civil Code section 1698. Making the downpayment required by the Forbearance Agreement was not sufficient part performance to estop Defendants from asserting the statute of frauds because payment of money alone is not enough as a matter of law to take an agreement out of the statute, and the Plaintiffs have legal means to recover the downpayment if they are entitled to its return. In addition to part performance, the party seeking to enforce the contract must have changed position in reliance on the oral contract to such an extent that application of the statute of frauds would result in an unjust or unconscionable loss, amounting in effect to a fraud.

FDIC v. Dintino Docket
167 Cal.App.4th 333 – 4th Dist., Div. 1 (D051447) 9/9/08 (Pub. Order 10/2/08) Case complete 12/2/08TRUST DEEDS: A lender who mistakenly reconveyed a deed of trust could not sue under the note because it would violate the one action rule. However, the lender prevailed on its unjust enrichment cause of action. The applicable statute of limitations was the 3-year statute for actions based on fraud or mistake, and not the 4-year statute for actions based on contract. Nevertheless, the action was timely because the statute did not begin to run until the lender reasonably discovered its mistake, and not from the date of recordation of the reconveyance. Finally, the court awarded defendant attorney’s fees attributable to defending the contract cause of action because defendant prevailed on that particular cause of action even though he lost the lawsuit.

California Coastal Commission v. Allen Docket Sup.Ct. Docket
167 Cal.App.4th 322 – 2nd Dist. (B197974) 10/1/08 Petition for review by Cal Supreme Ct. DENIED 1/14/09HOMESTEADS:
1. The assignees of a judgment properly established their rights as assignees by filing with the clerk of the court an acknowledgement of assignment of judgment.
2. The subject property was not subject to a homestead exemption because the debtor transferred the property to a corporation of which he was the sole shareholder. The homestead exemption only applies to the interest of a natural person in a dwelling.
3. The debtor could not claim that he was only temporarily absent from a dwelling in order to establish it as his homestead where he leased it for two years. This is true even though the debtor retained the right to occupy a single car section of the garage and the attic.

In re Marriage of Holtemann Docket Sup.Ct. Docket
162 Cal.App.4th 1175 – 2nd Dist. (B203089) 9/15/08 Petition for review by Cal Supreme Ct. DENIED 12/10/08COMMUNITY PROPERTY: Transmutation of separate property to community property requires language which expressly states that the characterization or ownership of the property is being changed. Here, an effective transmutation occurred because the transmutation agreement clearly specified that a transmutation was occurring and was not negated by arguably confusing language in a trust regarding the parties’ rights to terminate the trust. The court also stated that it was not aware of any authority for the proposition that a transmutation can be conditional or temporary. However, while questioning whether a transmutation can be conditional or temporary, the court did not specifically make that holding because the language used by the parties was not conditional.

Mission Shores Association v. Pheil Docket
166 Cal.App.4th 789 – 4th Dist., Div. 2 (E043932) 9/5/08 Case complete 11/7/08CC&R’s: Civil Code Section 1356 allows a court to reduce a super-majority voting requirement to amend CC&R’s where the court finds that the amendment is reasonable. Here the court reduced the 2/3 majority requirement to a simple majority for an amendment to limit rentals of homes to 30 days or more.

Zanelli v. McGrath Docket
166 Cal.App.4th 615 – 1st Dist. (A117111) 9/2/08 Case complete 11/4/08EASEMENTS:
1. The doctrine of merger codified in Civil Code Sections 805 and 811 applies when “the right to the servitude,” and “the right to the servient tenement” are not vested in a single individual, but in the same persons;

2. The doctrine of merger applies regardless of whether the owners held title as joint tenants or tenants in common. Also, the fact that one owner held his interest in one of the properties as trustee for his inter vivos revocable trust does not preclude merger because California law recognizes that when property is held in this type of trust the settlor has the equivalent of full ownership of the property. (If he had held title only in a representative capacity as a trustee for other beneficiaries under the terms of an irrevocable trust, then his ownership might not result in extinguishment by merger because he would only hold the legal title for the benefit of others.) The court cites Galdjie v. Darwish (2003) 113 Cal.App.4th 1331, stating that a revocable inter vivos trust is recognized as simply a probate avoidance device, but does not prevent creditors of the settlers from reaching trust property.

(3) After being extinguished by merger, an easement is not revived upon severance of the formerly dominant and servient parcels unless it is validly created once again.

Ritter & Ritter v. The Churchill Condominium Assn. Docket
166 Cal.App.4th 103 – 2nd Dist. (B187840) 7/22/08 (pub. order 8/21/08) Case complete 10/21/08HOMEOWNERS’ ASSOCIATIONS: A member of a condominium homeowners’ association can recover damages from the association which result from a dangerous condition negligently maintained by the association in the common area. However, the court found in favor of the individual directors because a greater degree of fault is necessary to hold unpaid individual board members liable, and such greater degree of fault was not present here.

Kempton v. City of Los Angeles Docket Sup.Ct. Docket
165 Cal.App.4th 1344 – 2nd Dist. (B201128) 8/13/08 Request for Depublication by Cal Supreme Ct. DENIED 11/12/08NUISANCE: A private individual may bring an action against a municipality to abate a public nuisance when the individual suffers harm that is specially injurious to himself, or where the nuisance is a public nuisance per se, such as blocking a public sidewalk or road. The court held that plaintiff’s assertions that neighbors’ fences were erected upon city property, prevent access to plaintiff’s sidewalk area, and block the sightlines upon entering and exiting their garage were sufficient to support both a public nuisance per se and specific injury.

Claudino v. Pereira Docket Sup.Ct. Docket
165 Cal.App.4th 1282 – 3rd Dist. (C054808) 8/12/08 Petition for review by Cal Supreme Ct. DENIED 11/12//08SURVEYS: Determining the location of a boundary line shown on a plat recorded pursuant to the 1867 Townsite Acts requires an examination of both the plat and the surveyor’s field notes. Here, the plat showed the boundary as a straight line, but the court held that the boundary followed the center line of a gulch because the field notes stated that the boundary was “down said gulch”.

Zack’s, Inc. v. City of Sausalito Docket
165 Cal.App.4th 1163 – 1st Dist. (A118244) 8/11/08 Case complete 10/14/08TIDELANDS / PUBLIC STREETS: A statute authorizing the City’s lease of tidelands does not supersede other state laws establishing procedures for the abandonment of public streets. Because the City failed to follow the normal procedure for abandonment of the portion of the street upon which it granted a lease, the leasehold was not authorized and can therefore be deemed a nuisance.

Gehr v. Baker Hughes Oil Field Operations Docket Sup.Ct. Docket
165 Cal.App.4th 660 – 2nd Dist. (B201195) 7/30/08 Petition for review by Cal Supreme Ct. DENIED 10/16/08NUISANCE: Plaintiff purchased from Defendant real property that was contaminated, and Defendant had begun the remediation process. The 3-year statute of limitations for suing under a permanent nuisance theory had expired. So Plaintiff sued for nuisance damages under a continuing nuisance theory, seeking interest rate differential damages based on the difference in the interest rate between an existing loan and a loan that plaintiff could have obtained if not for the contamination.

The court held that plaintiff’s claim for interest rate differential damages is actually a claim for diminution in value, which may not be recovered under a continuing nuisance theory. Damages for diminution in value may only be recovered for permanent, not continuing, nuisances. When suing for a continuing nuisance, future or prospective damages are not allowed, such as damages for diminution in the value of the subject property. A nuisance can only be considered “continuing” if it can be abated, and therefore a plaintiff suing under this theory may only recover the costs of abating the nuisance.

If the nuisance has inflicted a permanent injury on the land, the plaintiff generally must bring a single lawsuit for all past, present, and future damages within three years of the creation of the nuisance. But if the nuisance is one which may be discontinued at any time, it is considered continuing in character and persons harmed by it may bring successive actions for damages until the nuisance is abated. Recovery is limited, however, to actual injury suffered prior to commencement of each action.

Witt Home Ranch v. County of Sonoma Docket Sup.Ct. Docket
165 Cal.App.4th 543 – 1st Dist. (A118911) 7/29/08 Petition for review by Cal Supreme Ct. DENIED 5/28/08SUBDIVISION MAP ACT: This case contains a good history of California’s Subdivision Map Act statutes. The court held that the laws governing subdivision maps in 1915 did not regulate the “design and improvement of subdivisions,” as required by the grandfather clause of Government Code Section 66499.30. The subdivision map in this case was recorded in 1915 and no lots were subsequently conveyed, so the map does not create a valid subdivision.

T.O. IX v. Superior Court Docket Sup.Ct. Docket
165 Cal.App.4th 140 – 2nd Dist. (B203794) 7/24/08 Petition for review by Cal Supreme Ct. DENIED 9/10/08MECHANIC’S LIENS: A mechanic’s lien claimant recorded a mechanic’s lien against each of the nine parcels in a project, each lien for the full amount due under the contract. The court held that defendant could record a single release bond under Civil Code Section 3143 to release all of the liens.

Kassir v. Zahabi Docket
164 Cal.App.4th 1352 – 4th Dist., Div. 3 (G038449) 3/5/08 (Pub. Order 4/3/08, Received 7/16/08) Case complete 5/9/08SPECIFIC PERFORMANCE: The trial court ordered Defendant to specifically perform his contract to sell real property to Plaintiff, and further issued a judgment ordering Defendant to pay Plaintiff for rents accruing during the time Defendant was able to perform the agreement but refused to do so. The court held that because the property was overencumbered, Defendant would have received nothing under the agreement and no offset was required.

The court explained that because execution of the judgment in a specific performance action will occur later than the date of performance provided by the contract, financial adjustments must be made to relate their performance back to the contract date, namely: 1) when a buyer is deprived of possession of the property pending resolution of the dispute and the seller receives rents and profits, the buyer is entitled to a credit against the purchase price for the rents and profits from the time the property should have been conveyed to him, 2) a seller also must be treated as if he had performed in a timely fashion and is entitled to receive the value of his lost use of the purchase money during the period performance was delayed, 3) if any part of the purchase price has been set aside by the buyer with notice to the seller, the seller may not receive credit for his lost use of those funds and 4) any award to the seller representing the value of his lost use of the purchase money cannot exceed the rents and profits awarded to the buyer, for otherwise the breaching seller would profit from his wrong.

Grant v. Ratliff Docket Sup.Ct. Docket
164 Cal.App.4th 1304 – 2nd Dist. (B194368) 7/16/08 Request for depublication by Cal Supreme Ct. DENIED 10/1/08PRESCRIPTIVE EASEMENTS: The plaintiff/owner of Parcel A sought to establish a prescriptive easement to a road over Parcel B. In order to establish the requisite 5-year period of open and notorious possession, the plaintiff needed to include the time that the son of the owner of Parcel B spent living in a mobile home on Parcel A. The court held that the son’s use of Parcel A was not adverse but was instead a matter of “family accommodation” and, therefore, a prescriptive easement was not established. The court also discussed: 1) a party seeking to establish a prescriptive easement has the burden of proof by clear and convincing evidence and 2) once the owner of the dominant tenement shows that use of an easement has been continuous over a long period of time, the burden shifts to the owner of the servient tenement to show that the use was permissive, but the servient tenement owner’s burden is a burden of producing evidence, and not a burden of proof.

SBAM Partners v. Wang Docket
164 Cal.App.4th 903 – 2nd Dist. (B204191) 7/9/08 Case complete 9/10/08HOMESTEADS: Under C.C.P. Section 704.710, a homestead exemption is not allowed on property acquired by the debtor after the judgment has been recorded unless it was purchased with exempt proceeds from the sale, damage or destruction of a homestead within the six-month safe harbor period.

Christian v. Flora Docket
164 Cal.App.4th 539 – 3rd Dist. (C054523) 6/30/08 Case complete 9/2/08EASEMENTS: Where parcels in a subdivision are resubdivided by a subsequent parcel map, the new parcel map amends the provisions of any previously recorded parcel map made in compliance with the Map Act. Here, although the deeds to plaintiffs referred to the original parcel map, since the intent of the parties was that the easement shown on the amended parcel map would be conveyed, the grantees acquired title to the easement shown on the amended map.

Lange v. Schilling Docket
163 Cal.App.4th 1412 – 3rd Dist. (C055471) 5/28/08; pub. order 6/16/08 Case Complete 8/18/08REAL ESTATE AGENTS: The clear language of the standard California real estate purchase agreement precludes an award of attorney’s fees if a party does not attempt mediation before commencing litigation. Because plaintiff filed his lawsuit before offering mediation, there was no basis to award attorney’s fees.

Talbott v. Hustwit Docket Sup.Ct. Docket
164 Cal.App.4th 148 – 4th Dist., Div. 3 (G037424) 6/20/08 Petition for review and depublication DENIED by Cal Supreme Ct. 9/24/08GUARANTEES:
1. C.C.P. 580a, which requires an appraisal of the real property security before the court may issue a deficiency judgment, does not apply to an action against a guarantor.
2. A lender cannot recover under a guaranty where there the debtor and guarantor already have identical liability, such as with general partners or trustees of a revocable trust in which the debtor is the settlor, trustee and primary beneficiary. Here, however, a guarantee signed by the trustees of the debtors’ trust is enforceable as a “true guarantee” because, although the debtors were the settlors, they were a) secondary, not primary, beneficiaries and b) were not the trustees.

Mayer v. L & B Real Estate Sup.Ct. Docket
43 Cal.4th 1231 – Cal. Supreme Court (S142211) 6/16/08TAX SALES: The one-year statute of limitations for attacking a tax sale does not begin to run against a property owner who is in “undisturbed possession” of the subject property until that owner has actual notice of the tax sale. Ordinarily, a property owner who has failed to pay property taxes has sufficient knowledge to put him on notice that a tax sale might result. However, in this case the property owners did not have notice because they purchased a single piece of commercial property and received a single yearly tax bill. They had no reason to suspect that due to errors committed by the tax assessor, a small portion of their property was being assessed separately and the tax bills were being sent to a previous owner.

NOTE: This creates a hazard for title companies insuring after a tax sale in reliance on the one-year statute of limitations in Revenue and Taxation Code Section 3725.

California Golf v. Cooper Docket Sup.Ct. Docket
163 Cal.App.4th 1053 – 2nd Dist. (B195211) 6/9/08 Petition for review by Cal Supreme Ct. DENIED 9/17/08TRUSTEE’S SALES:
1. A bidder at a trustee’s sale may not challenge the sale on the basis that the lender previously obtained a decree of judicial foreclosure because the doctrine of election of remedies benefits only the trustor or debtor.
2. A lender’s remedies against a bidder who causes a bank to stop payment on cashier’s checks based on a false affidavit asserting that the checks were lost is not limited to the remedies set forth in CC Section 2924h, and may pursue a cause of action for fraud against the bidder.
(The case contains a good discussion (at pp. 25 – 26) of the procedure for stopping payment on a cashier’s check by submitting an affidavit to the issuing bank.)

Biagini v. Beckham Docket
163 Cal.App.4th 1000 – 3rd Dist. (C054915) 6/9/08 Case complete 8/11/08DEDICATION:
1. Acceptance of a dedication may be actual or implied. It is actual when formal acceptance is made by the proper authorities, and implied when a use has been made of the property by the public 1) of an intensity that is reasonable for the nature of the road and 2) for such a length of time as will evidence an intention to accept the dedication. BUT the use in this case was not sufficient because the use was by neighbors whose use did not exceed what was permitted pursuant to a private easement over the same area.
2. A statutory offer of dedication can be revoked as to the public at large by use of the area that is inconsistent with the dedication, but the offer remains open for formal acceptance by the public entity to which the offer was made.

Steiner v. Thexton Docket Sup.Ct. Docket
Cal.App. 3rd Dist. (C054605) 5/28/08 REVERSED by Cal. Supreme Ct.OPTIONS: A contract to sell real property where the buyer’s performance was entirely conditioned on the buyer obtaining regulatory approval to subdivide the property is an option. An option must be supported by consideration, but was not here, where the buyer could back out at any time. Buyer’s promise to deliver to seller copies “of all information, reports, tests, studies and other documentation” was not sufficient consideration to support the option.

In re Marriage Cases Docket
43 Cal.4th 757 – Cal. Supreme Court (S147999) 5/15/08MARRIAGE: The language of Family Code Section 300 limiting the designation of marriage to a union “between a man and a woman” is unconstitutional and must be stricken from the statute, and the remaining statutory language must be understood as making the designation of marriage available both to opposite-sex and same-sex couples.

Harvey v. The Landing Homeowners Association Docket
162 Cal.App.4th 809 – 4th Dist., Div. 1 (D050263) 4/4/08 (Cert. for Pub. 4/30/08) Case complete 6/30/08HOMEOWNERS ASSOCIATIONS: The Board of Directors of an HOA has the authority to allow owners to exclusively use common area accessible only to those owners where the following provision of the CC&R’s applied: “The Board shall have the right to allow an Owner to exclusively use portions of the otherwise nonexclusive Common Area, provided that such portions . . . are nominal in area and adjacent to the Owner’s Exclusive Use Area(s) or Living Unit, and, provided further, that such use does not unreasonably interfere with any other Owner’s use . . .” Also, this is allowed under Civil Code Section 1363.07(a)(3)(E).

Salma v. Capon Docket
161 Cal.App.4th 1275 – 1st Dist. (A115057) 4/9/08 Case complete 6/11/08HOME EQUITY SALES: A seller claimed he sold his house for far less than it was worth “due to the duress of an impending trustee’s sale and the deceit of the purchasers”. The case involves procedural issues that are not relevant to this web site. However, it is included here because it demonstrates the kind of mess that can occur when you are dealing with property that is in foreclosure. Be careful, folks.

Aviel v. Ng Docket
161 Cal.App.4th 809 – 1st Dist. (A114930) 2/28/08; pub. order 4/1/08 Case complete 5/6/08LEASES / SUBORDINATION: A lease provision subordinating the lease to “mortgages” also applied to deeds of trust because the two instruments are functionally and legally the same. Therefore a foreclosure of a deed of trust wiped out the lease.

People v. Martinez Docket
161 Cal.App.4th 754 – 4th Dist., Div. 2 (E042427) 4/1/08 Case complete 6/2/08FORGERY: This criminal case involves a conviction for forgery of a deed of trust. [NOTE: The crime of forgery can occur even if the owner actually signed the deed of trust. The court pointed out that “forgery is committed when a defendant, by fraud or trickery, causes another to execute a document where the signer is unaware, by reason of such trickery, that he is executing a document of that nature.”

Pacific Hills Homeowners Association v. Prun Docket
160 Cal.App.4th 1557 – 4th Dist., Div. 3 (G038244) 3/20/08 Case complete 5/27/08CC&R’s: Defendants built a gate and fence within the setback required by the CC&R’s. 1) The court held that the 5-year statute of limitations of C.C.P. 336(b) applies to unrecorded as well as recorded restrictions, so that the shorter 4-year statute of limitations of C.C.P. 337 is inapplicable. 2) The court upheld the trial court’s equitable remedy of requiring the HOA to pay 2/3 of the cost of relocation defendant’s gate based upon the HOA’s sloppiness in not pursuing its case more promptly.

Nicoll v. Rudnick Docket
160 Cal.App.4th 550 – 5th Dist. (F052948) 2/27/08 Case complete 4/28/08WATER RIGHTS: An appropriative water right established in a 1902 judgment applied to the entire 300 acre parcel so that when part of the parcel was foreclosed and subsequently re-sold, the water rights must be apportioned according to the acreage of each parcel, not according to the prior actual water usage attributable to each parcel. NOTE: This case contains a good explanation of California water rights law.

Real Estate Analytics v. Vallas Docket
160 Cal.App.4th 463 – 4th Dist., Div. 1 (D049161) 2/26/08 Case complete 5/29/08SPECIFIC PERFORMANCE: Specific performance is appropriate even where the buyer’s sole purpose and entire intent in buying the property was to earn money for its investors and turn a profit as quickly as possible. The fact that plaintiff was motivated solely to make a profit from the purchase of the property does not overcome the strong statutory presumption that all land is unique and therefore damages were inadequate to make plaintiff whole for the defendant’s breach.

Fourth La Costa Condominium Owners Assn. v. Seith Docket
159 Cal.App.4th 563 – 4th Dist., Div. 1 (D049276) 1/30/08 Case complete 4/1/08CC&R’s/HOMEOWNER’S ASSOCIATIONS: The court applied CC 1356(c)(2) and Corp. Code 7515, which allow a court to reduce the supermajority vote requirement for amending CC&R’s and bylaw because the amendments were reasonable and the balloting requirements of the statutes were met.

02 Development, LLC v. 607 South Park, LLC Docket
159 Cal.App.4th 609 – 2nd Dist. (B200226) 1/30/08 Case complete 4/3/08SPECIFIC PERFORMANCE: 1) An assignment of a purchaser’s rights under a purchase agreement prior to creation of the assignee as an LLC is valid because an organization can enforce pre-organization contracts if the organization adopts or ratifies them. 2) A purchaser does not need to prove that it already had the necessary funds, or already had binding commitments from third parties to provide the funds, when the other party anticipatorily repudiates the contract. All that plaintiff needed to prove was that it would have been able to obtain the necessary funding (or funding commitments) in order to close the transaction on time.

Richeson v. Helal Docket Sup.Ct. Docket
158 Cal.App.4th 268 – 2nd Dist. (B187273) 11/29/07; Pub. & mod. order 12/21/07 (see end of opinion) Petition for review by Cal Supreme Ct. DENIED 2/20/08CC&R’s / MUNICIPALITIES: An Agreement Imposing Restrictions (“AIR”) and CC&R’s did not properly lend themselves to an interpretation that would prohibit the City from changing the permitted use or zoning and, were they so construed, the AIR and CC&R’s would be invalid as an attempt by the City to surrender its future right to exercise its police power respecting the property. Here, the AIR and CC&R’s did not prohibit the City from issuing a new conditional use permit allowing the continued use of the subject property as a neighborhood market.

Bill Signs Trucking v. Signs Family Ltd. Partnership Docket Sup.Ct. Docket
157 Cal.App.4th 1515 – 4th Dist., Div. 1 (D047861) 12/18/07 Petition for review by Cal Supreme Ct. DENIED 4/9/08LEASES / RIGHT OF FIRST REFUSAL: A tenant’s right of first refusal under a commercial lease is not triggered by the conveyance of an interest in the property between co-partners in a family limited partnership that owns the property and is the landlord.

Schweitzer v. Westminster Investments Docket Sup.Ct. Docket
157 Cal.App.4th 1195 – 4th Dist., Div. 1 (D049589) 12/13/07 Petition for review by Cal Supreme Ct. DENIED 3/26/08EQUITY PURCHASERS:
1) The bonding requirement of the Home Equity Sales Contracts Act (Civil Code Section 1695.17) is void for vagueness under the due process clause and may not be enforced. Section 1695.17 is vague because it provides no guidance on the amount, the obligee, the beneficiaries, the terms or conditions of the bond, the delivery and acceptance requirements, or the enforcement mechanisms of the required bond.
2) Although the bond requirement may not be enforced, the remainder of the statutory scheme remains valid because the bond provisions are severable from the balance of the enactment.
3) The court refused to set aside the deed in favor of the equity purchaser because, first, the notice requirements of Civil Code Section 1695.5 appear to have been met and, second, the seller’s right to rescind applies before the deed is recorded but the statute “does not specify that a violation of section 1695.5 provides grounds for rescinding a transaction after recordation of the deed”.

Crestmar Owners Association v. Stapakis Docket
157 Cal.App.4th 1223 – 2nd Dist. (B191049) 12/13/07 Case complete 2/15/07CC&R’s: Where a developer failed to convey title to two parking spaces as required by the CC&R’s, the homeowner’s association was able to quiet title even though more than 20 years had passed since the parking spaces should have been conveyed. The statute of limitations does not run against someone, such as the homeowner’s association here, who is in exclusive and undisputed possession of the property.

Washington Mutual Bank v. Blechman Docket Sup.Ct. Docket
157 Cal.App.4th 662 – 2nd Dist. (B191125) 12/4/07 Petition for review by Cal Supreme Ct. DENIED 3/19/08TRUSTEE’S SALES: The foreclosing lender and trustee are indispensable parties to a lawsuit which seeks to set aside a trustee’s sale. Therefore, a default judgment against only the purchaser at the trustee’s sale is subject to collateral attack.

Garretson v. Post Docket Sup.Ct. Docket
156 Cal.App.4th 1508 – 4th Dist., Div.2 (E041858) 11/20/07 Petition for review by Cal Supreme Ct. DENIED 2/27/08TRUSTEE’S SALES: A cause of action for wrongful foreclosure does not fall within the protection of Code of Civil Procedure section 425.16, commonly referred to as the anti-SLAPP statute (strategic lawsuit against public participation).

Murphy v. Burch Docket Sup.Ct. Docket
Cal.App. 1st Dist. (A117051) 11/19/07
AFFIRMED by Cal Supreme Ct. 4/27/09EASEMENT BY NECESSITY: An easement by necessity arises by operation of law when 1) there is a strict necessity as when a property is landlocked and 2) the dominant and servient tenements were under the same ownership at the time of the conveyance giving rise to the necessity. However, the second requirement is not met when the properties were owned by the federal government because the Government has the power of eminent domain, rendering it unnecessary to resort to the easement by necessity doctrine in order to acquire easements.

The court attempts to distinguish Kellogg v. Garcia, 102 Cal.App.4th 796, by pointing out that in that case the issue of eminent domain did not arise because the dominant tenement was owned by a private party and the servient tenements by the federal government. [Ed. Note: the court does not adequately address the fact that the government does not always have the power of eminent domain. It only has that power if a public purpose is involved. Also, I do not think the court adequately distinguishes Kellogg, which seems to hold that common ownership by the federal government satisfies the requirement of common ownership.]

Elias Real Estate v. Tseng Docket Sup.Ct. Docket
156 Cal.App.4th 425 – 2nd Dist. (B192857) 10/25/07 Petition for review by Cal Supreme Ct. DENIED 2/13/08SPECIFIC PERFORMANCE: Acts of a partner falling within Corp. Code 16301(1) (acts in ordinary course of business) are not subject to the statute of frauds. Acts of a partner falling within Corp. Code 16301(2) (acts not in the ordinary course of business) are subject to the statute of frauds. In this case, a sale of the partnership’s real property was not in the ordinary course of business, so it fell within Corp. Code 16301(2) and plaintiff could not enforce a contract of sale signed by only one partner.

Strong v. State Board of Equalization Docket Sup.Ct. Docket
155 Cal.App.4th 1182 – 3rd Dist. (C052818) 10/2/07 Petition for review by Cal Supreme Ct. DENIED 1/3/08CHANGE OF OWNERSHIP: The statute that excludes transfers between domestic partners from property tax reassessment is constitutional.

insider mers memo foreclosure procedures all states

State-by-State
MERS Recommended
Foreclosure Procedures
Updated 2002
Corporate Offices
1818 Library Street, Suite 300
Reston, VA 20190
tel (800) 646-6377
fax (703) 748-0183
http://www.mersinc.org
TABLE OF CONTENTS
INTRODUCTION__________________________________________________________3
RECOMMENDED FORECLOSURE PROCEDURES:
Alabama___________________________________________________________________________8
Alaska____________________________________________________________________________10
Arizona___________________________________________________________________________12
Arkansas__________________________________________________________________________14
California__________________________________________________________________________16
Colorado__________________________________________________________________________18
Connecticut________________________________________________________________________20
Delaware__________________________________________________________________________22
District of Columbia_________________________________________________________________24
Florida____________________________________________________________________________26
Georgia___________________________________________________________________________28
Hawaii____________________________________________________________________________30
Idaho_____________________________________________________________________________32
Illinois____________________________________________________________________________34
Indiana____________________________________________________________________________36
Iowa______________________________________________________________________________38
Kansas____________________________________________________________________________40
Kentucky__________________________________________________________________________42
Louisiana__________________________________________________________________________44
Maine_____________________________________________________________________________46
Maryland__________________________________________________________________________48
Massachusetts______________________________________________________________________50
Michigan__________________________________________________________________________52
Minnesota_________________________________________________________________________54
Mississippi_________________________________________________________________________56
Missouri___________________________________________________________________________58
Montana___________________________________________________________________________60
Nebraska__________________________________________________________________________62
Nevada___________________________________________________________________________64
New Hampshire_____________________________________________________________________66
New Jersey________________________________________________________________________68
New Mexico_______________________________________________________________________70
New York_________________________________________________________________________72
North Carolina______________________________________________________________________74
North Dakota_______________________________________________________________________76
Ohio______________________________________________________________________________78
Oklahoma_________________________________________________________________________80
Oregon____________________________________________________________________________83
Pennsylvania_______________________________________________________________________85
Rhode Island_______________________________________________________________________87
South Carolina______________________________________________________________________89
South Dakota_______________________________________________________________________91
Tennessee_________________________________________________________________________93
Texas_____________________________________________________________________________95
Utah______________________________________________________________________________97
Vermont___________________________________________________________________________99
Virginia__________________________________________________________________________102
Washington_______________________________________________________________________104
West Virginia_____________________________________________________________________106
Wisconsin________________________________________________________________________108
Wyoming_________________________________________________________________________110
Introduction
MERS has put together this Foreclosure Manual to provide a state by state guideline for our Members to follow when foreclosing a mortgage loan in the name of MERS. Each state’s procedure was developed jointly with local counsel in that respective state. There may be future versions of this Manual if needed. If you have any questions about this Foreclosure Manual, please contact MERS.
Sharon McGann Horstkamp
Corporate Counsel
3
What is MERS?
MERS serves two purposes. First, it is a national electronic registry for tracking servicing rights and beneficial ownership interests in mortgage loans. Second, MERS acts as nominee (a form of agent) for the servicer and beneficial owner of a mortgage loan in the public land records. MERS is designed to operate within the existing legal framework in all U.S. jurisdictions and did not require any changes to existing laws.
How is this made possible? Its members appoint MERS as the mortgagee of record on all loans that they register on the MERS System. This appointment eliminates the need for any future assignments when servicing rights are sold from one MERS Member to another. Instead of preparing a paper assignment to track the change in the county land records, all subsequent transfers are tracked electronically on the MERS System.
MERS does not create or transfer beneficial interests in mortgage loans or create electronic assignments of the mortgage. What MERS does do is eliminate the need for subsequent recorded assignments altogether. The transfer process of the beneficial ownership of mortgage loans does not change with the arrival of MERS. Promissory notes still require an endorsement and delivery from the current owner to the next owner in order to change the beneficial ownership of a mortgage loan.
MERS is a Delaware corporation with a broad base of ownership from the mortgage industry. American Land Title Association is among our owners and has a seat on the MERS Board of Directors. Other owners with substantial investments in MERS include the Mortgage Bankers Association of America (MBA), Fannie Mae, and Freddie Mac. These parties, along with Ginnie Mae, decided several years ago that MERS would be a major benefit to the mortgage industry and worked together to create the MERS of today.
How does MERS become the Mortgagee of Record?
MERS is put in this position in one of two ways: the first is by an assignment from a lender or servicer to MERS. This method is usually associated with bulk transfers of servicing. The second way is with the lender naming MERS as the mortgagee of record as nominee for itself (and its successors and assigns) in the original security instrument at the time the loan is closed. We call this second option “MOM”, which stands for MERS as Original Mortgagee.
4
“MOM” was a significant milestone for MERS and the mortgage industry. Fannie Mae, Freddie Mac, and Ginnie Mae have each approved the use of MERS as original mortgagee as nominee for a lender on the security instrument for loans sold to them and registered on the MERS System.
In order to make MOM work, changes were made by Fannie Mae and Freddie Mac to their uniform security instruments allowing MERS to be named as the mortgagee in a nominee capacity for the lender. First, to reflect the interrelationship of the promissory note and mortgage and to ensure these two instruments are tied together properly, the recital paragraph names MERS, solely as nominee for Lender, as beneficiary. Second, it is made clear that the originating lender rather than MERS is defined as the “Lender”. This change was made so that everyone understands that MERS is not involved in the loan administration process. Third, as mortgagee of record, MERS needs to have the authority to release the lien of security instrument, or if necessary, foreclose on the collateral on behalf of the lender. Such authority is provided by adding a paragraph to the security instrument informing the borrower that MERS holds only legal title to the interests granted by the borrower. It also informs the borrower that, if necessary to comply with law or custom, MERS may exercise the right to foreclose and sell the property and may take any action required of the Lender to release or cancel the security instrument.
Once MERS is named in the original security instrument or by way of an assignment, the document is then recorded in the appropriate public land records. From this point on, no subsequent assignments of the mortgage to a MERS member needs to be recorded. MERS remains in the land records, as mortgagee, throughout the life of the loan so long as servicing is not sold to a non-MERS member. All subsequent transfers of ownership in mortgage loans and servicing rights for that loan are tracked electronically between MERS members through the MERS System. This process eliminates the opportunity for a break in the chain of title.
Moreover, unless a MERS member transfers servicing rights to a loan registered on the MERS System to a non-MERS member, the loan stays on the system until it is paid off. The process to transfer servicing rights between MERS members requires an electronic confirmation from the buyer. It begins with the seller entering loan transfer information into the system, including the Mortgage Identification Number (explained below), the new servicer organizational identification number, the sale date, and the transfer effective date. The buyer then must submit a confirmation acknowledgment to the system. The old servicer and the new servicer are still required to notify the homeowner in writing when loan servicing is traded as required under the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601 et seq. A loan is de-registered from the system only if its servicing rights to a loan are transferred to a non-MERS member.
With every new loan that is registered on the MERS System, it becomes more likely that you will come in contact with a mortgage loan having MERS as the mortgage holder in the chain of title. MERS is put in this position in one of two ways: the first is by an assignment from a lender or servicer to MERS. This method is usually associated with bulk transfers of servicing. The second way is with the lender naming MERS as the mortgagee of record as
5
nominee for itself (and its successors and assigns) in the original security instrument at the time the loan is closed. We call this second option “MOM”, which stands for MERS as Original Mortgagee.
“MOM” was a significant milestone for MERS and the mortgage industry. Fannie Mae, Freddie Mac, and Ginnie Mae have each approved the use of MERS as original mortgagee as nominee for a lender on the security instrument for loans sold to them and registered on the MERS System.
In order to make MOM work, changes were made by Fannie Mae and Freddie Mac to their uniform security instruments allowing MERS to be named as the mortgagee in a nominee capacity for the lender. First, to reflect the interrelationship of the promissory note and mortgage and to ensure these two instruments are tied together properly, the recital paragraph names MERS, solely as nominee for Lender, as beneficiary. Second, it is made clear that the originating lender rather than MERS is defined as the “Lender”. This change was made so that everyone understands that MERS is not involved in the loan administration process. Third, as mortgagee of record, MERS needs to have the authority to release the lien of security instrument, or if necessary, foreclose on the collateral on behalf of the lender. Such authority is provided by adding a paragraph to the security instrument informing the borrower that MERS holds only legal title to the interests granted by the borrower. It also informs the borrower that, if necessary to comply with law or custom, MERS may exercise the right to foreclose and sell the property and may take any action required of the Lender to release or cancel the security instrument.
Once MERS is named in the original security instrument or by way of an assignment, the document is then recorded in the appropriate public land records. From this point on, no subsequent assignments of the mortgage to a MERS member needs to be recorded. MERS remains in the land records, as mortgagee, throughout the life of the loan so long as servicing is not sold to a non-MERS member. All subsequent transfers of ownership in mortgage loans and servicing rights for that loan are tracked electronically between MERS members through the MERS System. This process eliminates the opportunity for a break in the chain of title.
Moreover, unless a MERS member transfers servicing rights to a loan registered on the MERS System to a non-MERS member, the loan stays on the system until it is paid off. The process to transfer servicing rights between MERS members requires an electronic confirmation from the buyer. It begins with the seller entering loan transfer information into the system, including the Mortgage Identification Number (explained below), the new servicer organizational identification number, the sale date, and the transfer effective date. The buyer then must submit a confirmation acknowledgment to the system. The old servicer and the new servicer are still required to notify the homeowner in writing when loan servicing is traded as required under the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601 et seq. A loan is de-registered from the system only if its servicing rights to a loan are transferred to a non-MERS member.
6
Why Foreclose in the Name of MERS
The mortgage establishes the remedy to foreclose and sell the property if the borrower does not pay back the amount loaned to the borrower according to schedule. Typically, the loan servicer, as the mortgagee of record, is the party that initiates the foreclosure proceedings on behalf of the investor. When MERS is the mortgagee of record, the foreclosure can be commenced in the name of MERS in place of the loan servicer. For another entity to foreclose, an assignment is required from MERS to the other entity.
Establishing MERS as mortgagee of record will not cause any significant changes to current foreclosure practices in any state when the beneficial owner wants to proceed with foreclosures in the name of MERS. Just take a look at the recommended procedures.
7
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR ALABAMA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are foreclosed non-judicially under power of sale. Local counsel advises that a foreclosure can be brought in the name of MERS. Notice of the foreclosure sale is published with Mortgage Electronic Registration Systems, Inc. (MERS) named as the foreclosing entity instead of the servicer.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require the promissory note be endorsed in blank when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. However, we have been advised that sometimes there is an endorsement of the promissory note to the servicer prior to foreclosure. We recommend that the agencies’ policies be followed.
At the foreclosure sale, the certifying officer will instruct the foreclosing attorney regarding the bid to be entered on behalf of MERS. If the bid is the highest bid, then the auctioneer will be instructed to deed the property directly to the investor. We have been advised that this is the same procedure followed when foreclosing in the name of the servicer. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Version 1.1
November 1999
8
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the auctioneer deed can be issued to the servicer. This way, the eviction can be brought in the name of the servicer. Once the eviction is completed, then the servicer can issue a deed to HUD. Again, you should follow the same procedures you follow when foreclosing in the name of the servicer.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
9
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR ALASKA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are typically used and are foreclosed non-judicially by the power of sale contained therein. MERS local counsel advises that a foreclosure can be done in the name of MERS. Local counsel confirmed with First American Title Insurance Company that with a few minor caveats, foreclosing in the name of MERS should not present any problems.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the substitution of trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies’ policy is that the promissory note is endorsed in blank when the seller/servicer sells the loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. We have been advised that sometimes the Note is endorsed to the servicer prior to the foreclosure, but unless it is legally required, the Note should remain endorsed in blank. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.
The trustee, who is typically a title company, commences the foreclosure by executing and recording the Notice of Default. The Notice of Default is filed and published the same way with the same required information except that Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing
Version 1.1
November 1999
10
entity. At the foreclosure sale, an “offset bid” is entered on behalf of MERS who is acting in the capacity as “agent” for the servicer. Local counsel advises that the Beneficiary’s Declaration of Default can be modified to describe the relationship of MERS and the Servicer. This should enable the servicer, instead of MERS, to be the named grantee of the Trustee’s Deed. The servicer can then issue a deed to the investor. This procedure is consistent with the current two-deed foreclosure practice.
While initially there may be some hesitation to accept an “offset bid” by the servicer, MERS local counsel states that usually a title company is willing to recognize the substance of who actually owns the loan rather than the form of the record ownership.1 In that instance, if the servicer is successful at the foreclosure sale, the trustee’s deed will be issued directly to the servicer.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the servicer, by being the grantee of the trustee’s deed, is able to commence the eviction. This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
1 If the “offset bid” is not accepted, then the trustee’s deed may need to be granted to MERS. If MERS takes title to the property, a subsequent deed should be executed to the investor as soon as possible.
Version 1.1
November 1999
11
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR ARIZONA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is the deed of trust that gives the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are used and are generally foreclosed non-judicially under a power of sale in the security instrument. Local counsel advises that a foreclosure can be brought in the name of MERS. The Notice of Trustee’s Sale is filed and published the same way it is when foreclosing in the name of the servicer except that Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing entity. It is important to note that the same procedures and state requirements that are required when foreclosing in the servicer’s name still must be followed when foreclosing in the name of MERS.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the Substitution of Trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS. The substituted trustee is typically the foreclosing attorney.
The agencies (Fannie Mae, Freddie Mae and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells the loan to them. The note is to remain endorsed in the blank when a servicer commences foreclosure. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.
At the trustee sale, the certifying officer will instruct the trustee regarding the bid to be entered on behalf of MERS for the investor. This is the same process that is used today when foreclosing in the servicer’s name. We have been advised that the
Version 1.1
November 1999
12
current foreclosure procedure is a one-deed process with the investor directly taking title from the Trustee’s Deed. Therefore, the MERS recommended procedure is the same as when foreclosing in the name of the servicer. The bid is made on behalf of the investor so that the Trustee’s deed will be issued directly to the investor. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional recording or taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan, then the trustee’s deed is not recorded to the investor until after the eviction is completed. The eviction is conducted the same way it would be conducted if the servicer foreclosures.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
13
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR ARKANSAS
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like a servicer , will be the record mortgage holder. It is the mortgage or deed of trust that gives MERS the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are used and are generally foreclosed non-judicially under a power of sale in the security instrument. Local counsel advises that a foreclosure can be brought in the name of MERS. The Notice of Default is filed and published the same way it is when foreclosing in the name of the servicer except that Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing entity.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the Substitution of Trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS. The substituted trustee is typically the foreclosing attorney.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.
At the trustee sale, the certifying officer will instruct the trustee regarding the bid to be entered on behalf of MERS. The Trustee’s deed will be issued directly to the assignee of the bid. We have been advised that the current foreclosure procedure is a two-deed process with the servicer taking title and then executing a subsequent deed to the investor. Therefore, the MERS recommended procedure is the same as the current practice of assigning the bid to the servicer. Because the MERS recommended procedure follows the same procedure that is used when the servicer
Version 1.1
November 1999
14
forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the servicer, by being the grantee of the trustee’s deed, can commence the eviction. This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
15
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR CALIFORNIA
A deed of trust in which the Mortgage Electronic Registration Systems, Inc. (MERS) is named as beneficiary requires special non-judicial foreclosure procedures. MERS was created to avoid the cost and delays caused by assignments of mortgages and deeds of trust. To avoid the need to prepare and record an assignment with the County Recorder’s office, MERS holds title as nominee for the true mortgagee/beneficiary of the mortgage/deed of trust and as transfers occur, they are recorded on the MERS computer in a book entry systems similar to the transfer of stocks.
The MERS procedure for tracking the ownership of mortgages has a direct effect on the foreclosure process. On MERS loans, MERS is shown as the record beneficiary and therefore a MERS foreclosure is brought in the name of MERS. However, at the time of sale the true beneficiary is determined by MERS and the Trustee’s Deed Upon Sale is recorded in the name of that true beneficiary. There are no assignments, additional taxes or costs when foreclosing under the MERS’ foreclosure procedures.
To achieve this result, the following non-judicial foreclosure guidelines are recommended:
On MERS loans, MERS will show as the beneficiary of record. Foreclosures should be commenced in the name of MERS. To effectuate this process, MERS has allowed each servicer to choose a select number of its own employees to act as officers for MERS. Through this process, appropriate documents may be executed at the servicer’s site on behalf of MERS by the same servicing employee that signs foreclosure documents for non-MERS loans.
Until the time of sale, the foreclosure is handled in same manner as non-MERS foreclosures. At the time of sale, if the property reverts, the Trustee’s Deed Upon Sale will follow a different procedure. Since MERS acts as nominee for the true beneficiary, it is important that the Trustee’s Deed Upon Sale be made in the name of the true beneficiary and not MERS. Your title company or MERS officer can easily determine the true beneficiary. Title companies have indicated that they will insure subsequent title when these procedures are followed.
Normally, where the name of the grantee under the Trustee’s Deed Upon Sale is different than the name of the foreclosing entity, the Trustee’s Deed Upon Sale states that the “Grantee was not the foreclosing beneficiary.” This designation triggers the imposition of transfer taxes on the sale. It is important to note that in a MERS foreclosure sale, even where the property reverts, the name of the grantee will be different than the name of the entity foreclosing. Nonetheless, the Trustee’s
Version 1.1
November 1999
16
Deed Upon Sale should state that “The Grantee was the foreclosing beneficiary.” This is because MERS merely holds title as nominee for the true beneficiary; it is the true beneficiary that has actually foreclosed and acquired title.
Finally, should a bankruptcy be filed, servicers should use the same procedures they use for other investor loans. Motions for Relief from Stay should be brought by the real party in interest, namely “Mortgage Electronic Registration Systems, Inc. as record holder and nominee for the true beneficiary _________.” On Proofs of Claim, both the servicer and Mortgage Electronic Registration Systems, Inc. should be jointly named. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer.
Version 1.1
November 1999
17
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR COLORADO
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc.
(MERS) has been around since 1998. The reason why it works is because when the role
of MERS is examined, it becomes clear that MERS stands in the same position to
foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It
is the Deed of Trust that gives MERS the authority to foreclose. However, because
Colorado differs from other states in that the Promissory Note controls, and MERS is not
the beneficial note holder, we recommend foreclosing in the servicer’s name by
endorsing the Note to the servicer.
We are amending our prior recommended Procedure to foreclose in MERS name due to
recent changes in the Colorado Foreclosure Statute. This revision was developed in
conjunction with experienced foreclosure counsel. The goal of the recommended
procedures is to avoid adding any extra steps or incurring any additional taxes or costs.
MERS will continually review the guidelines and, if necessary, will issue revisions.
The recommended guidelines to follow in your state are as follows:
Deeds of Trust are used and are generally foreclosed non-judicially pursuant to a power
of sale. In Colorado, the deed of trust names a Colorado public trustee rather than a
private trustee. Local counsel advises that a foreclosure can be brought in the name of
MERS. However, because the endorsement on the Note controls, and MERS holds the
mortgage lien on behalf of the Note Holder, it is a better practice to foreclose in the Note
Holder’s name. That may be the servicer of the loan.. This does not impact MERS
position as the mortgagee and no assignment from MERS to the servicer is necessary to initiate the foreclosure and the mortgage loan should remain registered on the MERS® System.
Keep in mind that the agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a
blank endorsement of the promissory note when the seller/servicer sells a mortgage
loan to them. However, in Colorado, the requirement is that the promissory note
needs to be endorsed to the foreclosing entity, which is usually the servicer. Therefore, the note should be endorsed to servicer.
This switch in our recommendation is also predicated on the change in the Colorado Foreclosure Statute that now allows for a copy of the Note rather than the original
Note to be produced together with a Certificate that can be filed by certain entities of which MERS does not fit into in its current corporate structure. The certificate states
that the foreclosing entity is the owner of the Note/debt and is a qualified entity
under the Statute to use a copy of the Note. Please consult with your own counselon
how this change impacts your current foreclose procedure.
Version 2.0 18
December 2002
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the
name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of
MERS and the servicer. The address to be used is the servicer’s address so that all
trustee payments go directly to the servicer, not to MERS. The Motion for Relief
from Stay may be filed either solely in the name of MERS or jointly with the
servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
MERS Local Counsel:
Caren Castle, Esq.
Castle & Castle, P.C.
Denver Place Plaza Tower
1099 18th Street, Suite 2300
Denver, CO 80202
Tel: (303) 299-1800
Fax: (303) 299-1808
Version 2.0 19
December 2002
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR CONNECTICUT
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. When the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that the authority is given to MERS to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially either by strict foreclosure or by a power of sale. MERS local counsel advises that a loan can be foreclosed in the name of MERS. It up to the judge to decide which method will be used. The caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff.
The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS unless it is legally required to be endorsed to the foreclosing entity, and not just the preferred method.3 If it is required to endorse the promissory note to the foreclosing entity, then the note may need to be endorsed to MERS.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the
Version 1.1
November 1999
20
3 Local Counsel advises us that certain judges take the position that the note and mortgage must be held by the same entity. This is typically considered to be the servicer because if the promissory note is endorsed in blank and the servicer has physical custody of the note, the servicer will technically be the note holder as well as the record mortgage holder. By virtue of having the servicer’s employees be certifying officers of MERS, there can be an in-house transfer of possession of the note so that MERS is considered the note holder for purposes of foreclosing the loan.
same individual that signs the documents today for the servicer will continue to sign the documents, but now as an officer of MERS.
In a strict foreclosure, once the Judgement of Strict Foreclosure is entered, and the applicable redemption period has expired, a certificate of Foreclosure is filed on the land records that will reflect MERS as the property owner. MERS should remain in the land records for as short a time as possible. A subsequent deed should be prepared from MERS to the investor.4 Alternatively, at the time of the entering of the judgment, if an assignment of judgment is executed by MERS, judgment could automatically be entered into the investor’s name.
In a foreclosure by sale, a motion should be submitted to the judge requesting the judge that the servicer be allowed to bid at the auction. If it is the highest bid, then after approval of the sale by the Court, a closing will be scheduled whereby title should vest in the servicer.5
Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name for the investor, no additional taxes or recording fees are incurred.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the title holder. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the name of the title holder. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
4 Some Connecticut Revenue Officers have taken the position that a state conveyance tax is due on the subsequent deed from the servicer to the investor. MERS local counsel is currently appealing this issue.
5 If a judge will not allow the servicer to “credit” bid, then a bid may be entered on behalf of MERS. Title will then vest with MERS momentarily until the deed to the investor is executed and recorded.
Version 1.1
November 1999
21
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR DELAWARE
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is the mortgage that gives MERS the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS. The same procedures and requirements that are followed when foreclosing in the name of the servicer are still followed when foreclosing in the name of Mortgage Electronic Registration Systems, Inc. The major difference is that the caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff.
The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.6
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS unless it is legally required to be endorsed to the foreclosing entity and not just the preferred method.7
6 Even though the servicer has physical custody of the note, custom in the mortgage industry is that the investor (Fannie Mae, Freddie Mac, Ginnie Mae or a private investor) owns the beneficial rights to the promissory note.
7 If the promissory note is endorsed in blank and the servicer has physical custody of the note, the servicer will technically be the note holder as well as the record mortgage holder. By virtue of having the servicer’s employees be certifying officers of MERS, there can be an in-house transfer of possession of the note so that MERS is considered the note holder for purposes of foreclosing the loan.
Version 1.1
November 1999
22
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
After a judgment to MERS is entered, a sheriff’s sale is held. The certifying officer will instruct the foreclosing attorney regarding the bid to be entered on behalf of MERS. If it is the successful bid, the sheriff will be instructed to execute a deed directly to the investor. This is the same method that is used when the servicer forecloses in its name. The sheriff then issues a sheriff’s deed directly to the investor. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional recording or taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the bid assignment is given to the servicer instead of to HUD. This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
23
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR DISTRICT OF COLUMBIA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is the deed of trust that gives MERS the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are foreclosed non-judicially. Local counsel advises that a foreclosure can be brought in the name of MERS. The Notice of Sale is sent, filed and published the same way it is when foreclosing in the name of the servicer with the same required information except that Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing entity.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as Substitution of Trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. This is the same requirement when foreclosing a loan in the name of the servicer. We have found that it is not legally required to have the note endorsed to MERS prior to the foreclosure.
At the trustee sale, the certifying officer will instruct the trustee regarding the bid to be entered on behalf of MERS. If the bid is the highest bid, then an unrecorded assignment of the deed of trust to the investor is given to the trustee prior to the sale. This assignment allows the Trustee’s Deed to be issued directly to the investor. We have been advised that this is the procedure used when foreclosing in the name of the servicer. Because the MERS recommended procedure follows the same Version 1.1
November 1999
24
procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the eviction can be brought in the name of MERS. At this point, MERS holds only equitable title. Once the eviction is completed, then the investor can be substituted in as the party to receive the Trustee’s Deed. Again, the same procedures should be followed as you do when foreclosing in the name of the servicer.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
25
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR FLORIDA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the mortgagee of record. It is the mortgage that gives MERS the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS. When MERS has been assigned the mortgage, the caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. However, this changes slightly if MERS is the original mortgagee of record, meaning that MERS is named on the mortgage in a nominee capacity for the originating lender. The caption should then state Mortgage Electronic Registration Systems, Inc. as nominee for [insert name of the current servicer]. The key is how MERS is named as the mortgagee of record.
The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will be the ultimate owner of the note.8
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced unless it is legally required to be endorsed to the foreclosing entity and not just the preferred method. If it is required to endorse the promissory note to the foreclosing entity, then the note may need to be endorsed to MERS. However, we have not found it a requirement in Florida that the Note needs to be endorsed to the foreclosing entity.9
8 Even though the servicer has physical custody of the note, custom in the mortgage industry is that the investor (Fannie Mae, Freddie Mac, Ginnie Mae or a private investor) owns the beneficial rights to the promissory note.
9 If the promissory note is endorsed in blank and the servicer has physical custody of the note, the servicer will technically be the note holder as well as the record mortgage holder. By virtue of Version 1.1
November 1999
26
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution from MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
After a foreclosure judgment to MERS is entered, a public sale is held. The Plaintiff (MERS) has the option of assigning the foreclosure bid either prior to the foreclosure sale or in the ten (10) day period between the sale and the issuance of the Certificate of Title. The assignment is done with a motion filed with the court, and a court order is entered. If the bid is assigned, the certificate of title is issued directly to the assignee. This is the same method that is used when the servicer forecloses in its own name. Because the MERS recommended procedure follows the same procedure that is used when the servicer foreclosures in its name, no additional recording or transfer taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the bid assignment is given to the servicer instead of to HUD. This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, then proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
having the servicer’s employees be certifying officers of MERS, there can be an in-house transfer of possession of the note so that MERS is considered the note holder for purposes of foreclosing the loan.
Version 1.1
November 1999
27
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR GEORGIA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Security Deeds are used and are generally foreclosed non-judicially pursuant to a power of sale. Local counsel advises that a foreclosure can be brought in the name of MERS. It is important to note that the same procedures and state requirements that are required to be followed when foreclosing in the servicer’s name still must be followed when foreclosing in the name of MERS. The foreclosure proceeding is commenced by advertising the foreclosure in the official county newspaper once a week for four consecutive weeks prior to the date of the foreclosure sale. A notice is mailed to the debtor’s residence at least 15 days prior to the sale date. You will continue to do everything that you normally do when foreclosing a mortgage in the servicer’s name. The only difference is that the foreclosing entity is Mortgage Electronic Registration Systems, Inc.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution from MERS. In other words, the same individual that signs the documents today for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.
At the sale, the certifying officer will instruct the foreclosing attorney to enter a bid on behalf of the servicer. This is the same process that is used today when
Version 1.1
November 1999
28
foreclosing in the servicer’s name. If it is the successful bid, then the attorney will be instructed to execute the deed under power directly to the servicer. We have been advised that the current foreclosure procedure is a two-deed process with the servicer taking title and then executing a special warranty deed to the investor. Therefore, the MERS recommended procedure would conform to the current practice. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional recording or transfer taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. The servicer is issued the deed under power and therefore commences the eviction in the servicer’s name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of Mortgage Electronic Registration Systems, Inc. or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
29
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR HAWAII
Foreclosing a loan in the name of MERS is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially10. MERS local counsel advises that a loan can be foreclosed in the name of MERS. The same procedures and state requirements that are followed when foreclosing in the name of the servicer are still followed when foreclosing in the name of Mortgage Electronic Registration Systems, Inc. The major difference is that the caption of the complaint will state Mortgage Electronic Registration Systems, Inc. in place of the servicer’s name.
The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. A secondary market investor will still be the ultimate owner of the promissory note.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution from MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
10 Freddie Mac has initiated a non-judicial program in Hawaii effective January 1, 1998.
Version 1.1
November 1999
30
After a foreclosure judgment to MERS is entered, a public auction is held. A bid is entered on behalf of MERS, and if the successful bid, then the Commissioner will be instructed that MERS has selected a nominee to be the ultimate purchaser of the property. (The nominee can be the servicer or the investor).
After the hearing to confirm the sale and the confirmation order, a deed is executed directly to the nominee. This is the same method that is used today when the servicer forecloses in its name. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional recording fees or taxes are incurred by foreclosing in the name of MERS. A conveyance tax and recording fee is paid on the transfer of the property from the commissioner to the nominee of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the bid assignment is given to the servicer instead of to HUD. This way, the servicer will proceed with the eviction the same way it would if the foreclosure had been filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of MERS and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
31
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR IDAHO
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Trust Deeds are used and are generally foreclosed non-judicially pursuant to a power of sale. Local counsel advises that a foreclosure can be brought in the name of MERS. It is important to note that the same procedures and requirements that are followed when foreclosing in the servicer’s name must still be followed when foreclosing in the name of MERS. The Trustee must still file and record the Notice of Default and provide the grantor with a Notice of Sale. The Notice of Sale is published the same way is it when foreclosing in the name of the servicer except that Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing entity.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the Substitution of Trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. The note should remain endorsed in blank when the servicer commences foreclosure. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. We have not found that it is legally required that the note be endorsed to the foreclosing entity.
At the trustee sale, the certifying officer will instruct the trustee regarding the bid to be entered on behalf of MERS. If it is the highest bid, then the trustee will be instructed by an instruction letter to execute the Trustee’s Deed directly to the
Version 1.1
November 1999
32
investor. We have been advised that the current foreclosure procedure is a one-deed process with the trustee executing the Trustee’s Deed directly to the investor. The MERS recommended procedure is the same procedure followed when foreclosing in the name of the servicer. Therefore, no additional recording or transfer taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan, then the Trustee’s Deed may be issued to the servicer in order for the servicer to commence the eviction. Another option may be that the trustee’s deed is not recorded to the investor until after the eviction is completed. The eviction should be conducted the same way it would be conducted if the servicer commenced the foreclosure.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
33
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR ILLINOIS
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS. The caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. The body of the complaint should be the same as when foreclosing in the name of the servicer.
MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.11
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS unless it is legally required to be endorsed to the foreclosing entity and not just the preferred method. We have been advised that sometimes there is an endorsement of the note to the servicer prior to foreclosure. However, we recommend the agencies’ policies be followed.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying
11 If the promissory note is endorsed in blank and the servicer has physical custody of the note, the servicer will technically be the note holder as well as the record mortgage holder. By virtue of having its employees become certifying officers of MERS, there can be an in-house transfer of possession of the note so that MERS is considered the note holder for purposes of foreclosing the loan.
Version 1.1
November 1999
34
officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
After a judgment to MERS is entered and the applicable redemption period expires, a foreclosure sale is held. A bid is entered on behalf of MERS, and if the successful bid, then the Certificate of Sale would be assigned to the investor. This assignment is not normally recorded. A confirmation hearing will be held confirming the sale. This is the same method that is used when the servicer forecloses in its name for the investor. After the entry of the Order of Confirmation, the holder of the Certificate of Sale is entitled to a deed. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the deed is not recorded until after the eviction is completed. This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of MERS and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
35
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR INDIANA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is the mortgage or deed of trust that gives MERS the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS. When MERS has been assigned the mortgage, the caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. However, this changes slightly if MERS is the original mortgagee of record, meaning that MERS is named on the mortgage in a nominee capacity for the originating lender. The caption should then state Mortgage Electronic Registration Systems, Inc. as nominee for [insert name of the current servicer]. The key is how MERS is named as the mortgagee of record.
The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note.12 An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. We have been advised that sometimes there is an endorsement of the note to the servicer prior to foreclosure. However, we recommend that the agencies’ policies be followed.
12 If the promissory note is endorsed in blank and the servicer has physical custody of the note, the servicer will technically be the note holder as well as the record mortgage holder. By virtue of having its employees become certifying officers of MERS, there can be an in-house transfer of possession of the note so that MERS is considered the note holder for purposes of foreclosing the loan.
Version 1.1
November 1999
36
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution from MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
After a foreclosure judgment to MERS is entered, MERS will assign the judgment and the right to bid to the servicer. This assignment of the judgment is filed with the Clerk of the Court in which the judgment is pending. A sheriff’s sale is scheduled as a result of the filing of a praecipe for sale. The servicer will enter a bid as the bid assignee and if the highest bidder, the Return of Sale will reflect this. The assignment of the judgment allows the servicer to bid so that title can be taken directly by the servicer. The servicer can then convey a subsequent deed to the investor. Because the MERS recommended procedure closely follows the same procedure that is used when the servicer forecloses in its name, no additional transfer taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. Because the foreclosure judgment is assigned to the servicer, the eviction can be brought in the name of the servicer.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of MERS and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
37
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR IOWA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is the mortgage or deed of trust that gives MERS the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Generally, mortgages are used and are foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS. The caption of the petition of foreclosure should name Mortgage Electronic Registration Systems, Inc. (MERS) as the plaintiff. The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement when a seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. We have been advised that sometimes there is an endorsement of the note to the servicer prior to foreclosure. However, we recommend that the agencies’ policies be followed.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the substitution of trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
After the foreclosure judgment to MERS is entered, there is a sheriff’s foreclosure sale. At the sale, a bid would be entered on behalf of MERS, and if the bid is successful, MERS will receive a certificate of purchase which it will assign to the
Version 1.1
November 1999
38
servicer or the investor.13 The sheriff’s deed is then issued directly to the servicer or investor. Because the MERS recommended procedure follows the procedures used when foreclosing in the name of the servicer, no additional transfer taxes are incurred.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
13 On a foreclosure without the right of redemption, there is no Certificate of Purchase issued. Instead, the foreclosure judgment should be assigned to the servicer or investor. To whom the judgment is issued will depend upon the instructions given from the servicer or investor. If the judgment is not assigned from MERS, this may cause title to be issued directly to MERS if a bid is entered on the behalf of MERS at the sheriff’s sale. If title is then subsequently passed to a private investor, revenue stamps may be incurred.
Version 1.1
November 1999
39
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR KANSAS
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS. The caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require that the promissory note be endorsed in blank when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS unless it is legally required to be endorsed to the foreclosing entity and not just the preferred method. We have been advised that sometimes there is an endorsement of the note to the servicer prior to the foreclosure. However, we recommend that the agencies’ requirements be followed.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
After a judgment to MERS is entered, and the district court issues an order of sale, a notice of the sheriff’s sale is published and a sale is then held. The certifying officer will instruct the foreclosing attorney as to the bid to be entered on behalf of MERS. Version 1.1
November 1999
40
If the successful bid, the sheriff will issue a certificate of purchase to MERS. This certificate will then be assigned from MERS to the investor. This is the same method that is used when the servicer forecloses in its name. After the applicable redemption period, a deed will be issued directly to the investor. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the bid assignment is given to the servicer instead of to HUD. This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
41
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR KENTUCKY
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS. The caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. We have been advised that sometimes there is an endorsement of the note to the servicer prior to foreclosure. However, we recommend that the agencies’ policies be followed.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
After a judgment to MERS is entered, a foreclosure sale is held. The certifying officer will instruct the foreclosing attorney regarding the bid to be entered on behalf of MERS. If it is the successful bid, it will be assigned to the investor by simple documentation that is signed by the foreclosing attorney. The bid assignment does
Version 1.1
November 1999
42
not need to be recorded. This is the same method that is used today when the servicer forecloses in its name.
The Motion to Confirm the sale is filed, and after the sale is confirmed, a deed will be prepared by the Master Commissioner to the investor. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional recording fees or transfer taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the bid assignment is given to the servicer instead of to HUD. This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
43
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR LOUISIANA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are employed in Louisiana in real estate transactions and must be foreclosed judicially, usually by a proceeding known as “Executory Process.” MERS local counsel advises that Louisiana law does not prohibit a loan from being foreclosed in the name of MERS.14 When MERS has been assigned the mortgage, the caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. However, this changes slightly if MERS is the original mortgagee of record, meaning that MERS is named on the mortgage in a nominee capacity for the originating lender, its successors and assigns. The caption should then state Mortgage Electronic Registration Systems, Inc. as nominee for [insert name of the current servicer]. The key is how MERS becomes the mortgage holder.
The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.15
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them.16 Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. However, it seems to be the standard practice that the blank endorsement is cancelled and the note is endorsed to the servicer to
14 Please Note: Fannie Mae’s foreclosure regulations require an assignment from MERS to Fannie Mae in the Parish of Orleans. This means that Fannie Mae will be the foreclosing entity. This is the same requirement that exists when the servicer is the record mortgage holder.
15 Even though the servicer has physical custody of the note, custom in the mortgage industry is that the investor (Fannie Mae, Freddie Mac, Ginnie Mae or a private investor) owns the beneficial rights to the promissory note.
Version 1.1
November 1999
44
possession of the note so that MERS is considered the note holder for purposes of foreclosing the loan.
foreclose. If it is required to endorse the promissory note to the foreclosing entity, then the note may need to be endorsed to MERS.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
After the Petition is filed and the judge signs an order of executory process, the writ of seizure and sale is issued by the clerk and is served by the sheriff upon the mortgagor. After the foreclosure is published for the required amount of time, a sheriff’s sale is held. The certifying officer will instruct the foreclosing attorney as to the bid to be entered on behalf of MERS. If it is the successful bid, then the sheriff will issue a deed to MERS. MERS will then issue a subsequent deed to the investor.17 This is the same method that is used when the servicer forecloses in its name. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
17 If the promissory note is endorsed in blank and the servicer has physical custody of the note, the servicer will technically be the note holder as well as the record mortgage holder. By virtue of having the servicer’s employees be certifying officers of MERS, there can be an in-house transfer of
17 MERS should remain as the titleholder for as short of time as possible.
Version 1.1
November 1999
45
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR MAINE
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS.18 The caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff.
The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.19
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. We have been advised that sometimes there is an endorsement of the note to the servicer prior to the foreclosure. However, we recommend adhering to the agencies’ policies.
18 We have been advised that the named plaintiff in the foreclosure action should be both the record holder of the mortgage and the holder of the promissory note. This is typically considered to be the servicer because if the promissory note is endorsed in blank and the servicer has physical custody of the note, the servicer will technically be the note holder as well as the record mortgage holder. By virtue of having the servicer’s employees be certifying officers of MERS, there can be an in-house transfer of possession of the note so that MERS is considered the note holder for purposes of foreclosing the loan.
19 Even though the servicer has physical custody of the note, custom in the mortgage industry is that the investor (Fannie Mae, Freddie Mac, Ginnie Mae or a private investor) owns the beneficial rights to the promissory note.
Version 1.1
November 1999
46
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
After a judgment to MERS is entered and the redemption period has expired, a public auction is held. The certifying officer will instruct the foreclosing attorney as to the bid to be entered on behalf of MERS. If the successful bid, then MERS will assign its bid and any deficiency judgment to the investor. This is the same method that is used when the servicer forecloses in its name. The foreclosure deed will issue directly to the investor. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the bid assignment is given to the servicer instead of to HUD. This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
47
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR MARYLAND
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the mortgagee of record. It is through the deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are foreclosed non-judicially. Local counsel advises that a foreclosure can be brought in the name of MERS. The foreclosure is filed and placed on the docket of the applicable circuit court with the same required information except that Mortgage Electronic Registration Systems, Inc. (MERS) will be the named as the foreclosing entity instead of the servicer.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the Substitution of Trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. However, we have been advised that there is sometimes an endorsement to the servicer in order to foreclose. We have not found this to be a legal requirement, and therefore, the agencies’ policies should be followed.
At the trustee sale, the certifying officer will instruct the trustee regarding the bid to be entered on behalf of MERS. If the bid is the highest bid, then before ratification, a motion to substitute interests will be filed so that the deed is issued directly to the investor. We have been advised that this is the procedure used when foreclosing in the name of the servicer. Because the MERS recommended procedure follows the
Version 1.1
November 1999
48
same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the servicer can be substituted as the interested party. This way, the eviction can be brought in the name of the servicer. Once the eviction is completed, then the servicer can issue a deed to HUD. Again, you should follow the same procedures you follow when foreclosing in the name of the servicer.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
49
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR MASSACHUSETTS
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is the mortgage or deed of trust that gives MERS the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are used and are foreclosed using the mortgage power of sale together with a Land Court Judgment. MERS local counsel advises that a loan can be foreclosed in the name of Mortgage Electronic Registration Systems, Inc. Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents on behalf of the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. We have been advised that sometimes the Note is endorsed to the servicer prior to the foreclosure. However, we recommend that the agencies’ policies be followed.
MERS stands in the same position as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.20
At the foreclosure auction, MERS can waive the requirement of a deposit as to the investor. This way, the servicer can enter a bid on behalf of the investor without the
20 Even though the servicer has physical custody of the note, custom in the mortgage industry is that the investor (Fannie Mae, Freddie Mac, Ginnie Mae or a private investor) owns the beneficial rights of the promissory note.
Version 1.1
November 1999
50
investor needing to produce any funds. If it is the highest bid, the foreclosure deed can be issued directly to the investor. We have been advised that this procedure is the same procedure used when Freddie Mac or Ginnie Mae are the investors. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
51
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR MICHIGAN
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are foreclosed non-judicially usually by a power of sale contained in the mortgage. Local counsel advises that a foreclosure can be brought in the name of MERS. The foreclosure is advertised by publishing the notice for four (4) consecutive weeks. The attorney should follow the same procedure followed when foreclosing in the name of the servicer except that the foreclosing entity is Mortgage Electronic Registration Systems, Inc. (MERS).
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. The endorsement is to remain in blank even if the servicer commences foreclosure. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. However, we have been advised that sometimes there is an endorsement of the promissory notes to the servicer to foreclose. However, we recommend that the agencies’ policies be followed. We have not found an endorsement to the foreclosure entity to be a legal requirement, and therefore, the note should not be endorsed to MERS prior to the foreclosure.
At the auction, the certifying officer will instruct the foreclosing attorney regarding the bid to be entered on behalf of MERS. If the bid is the highest bid, then a deed may be issued to MERS. However, when the role of MERS, the servicer and the
Version 1.1
November 1999
52
investor is explained and understood, the servicer may be allowed to bid on its own behalf without having to produce any funds at the sale. This would be the preferred method to use if at all possible. This way, the deed is executed directly to the servicer. If this is not possible, and MERS must take title, then title should be held by MERS for as short of time as possible. A subsequent deed from MERS to the investor should be executed immediately so that MERS remains in the chain of title only for an instant. We have been advised that the current practice used when foreclosing in the name of the servicer, is for the servicer to take title and then execute a subsequent deed to the investor. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
53
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR MINNESOTA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is the mortgage or deed of trust that gives MERS the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are used and are typically foreclosed non-judicially. MERS local counsel advises that a loan can be foreclosed in the name of Mortgage Electronic Registration Systems, Inc. Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the power of attorney to foreclose the mortgage, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that currently sign the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. We have been advised that sometimes there is an endorsement of the note to the servicer prior to foreclosure. However, we recommend that the agencies’ policies be followed.
At the foreclosure sale, the certifying officer will instruct the foreclosing attorney to enter a bid on behalf of MERS. A sheriff’s certificate is issued to the highest bidder. If MERS is the highest bidder, then the Sheriff’s certificate will be issued to MERS. The sheriff’s certificate operates as the conveyance of title. The certificate is executed and recorded during the redemption period. At the end of the redemption period, a deed will be issued from MERS to the investor.21 However, not every
21 During the redemption period, MERS will be considered to be titleholder. However, at the end of the redemption period, a deed to the investor should be executed as soon as possible so that MERS remains in the chain of title for as short a time as possible.
Version 1.1
November 1999
54
foreclosure counsel follows this procedure currently when foreclosing mortgage loans in the name of the servicer. If your current practice is to assign the sheriff’s certificate to the investor, then this is also an acceptable option.22
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the eviction can be brought in the name of MERS if MERS is the sheriff’s certificate holder. However, if you use the option of assigning the sheriff’s certificate, then the certificate is assigned to the servicer instead of to HUD. This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
22 The difference between the two options is that some counsels prefer a one-deed process implementing an assignment of the sheriff’s certificate to the investor. Other counsels use a two-deed process with the servicer first taking title, and then executing a subsequent deed to the investor. Counsel should continue to follow the instructions given to them by the servicer of the mortgage loan.
Version 1.1
November 1999
55
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR MISSISSIPPI
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are foreclosed non-judicially. Local counsel advises that a foreclosure can be brought in the name of MERS. The foreclosure is advertised with the same required information except that Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing entity instead of the servicer.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the Deed of Appointment substituting Trustees, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents on behalf of the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. We have been advised that sometimes there is a blank note endorsement to the servicer prior to foreclosure. We have not found this to be a legal requirement, and therefore, the note should not be endorsed to MERS prior to the foreclosure.
At the trustee sale, the certifying officer will instruct the trustee regarding the bid to be entered on behalf of MERS. If the bid is the highest bid, then MERS can assign the bid to the investor. This assignment is simply a paragraph incorporated in the substitution of trustee document authorizing the substituted trustee to convey the property directly to the investor in the Substituted Trustee’s Deed. We have been
Version 1.1
November 1999
56
advised that this procedure is the same procedure used when foreclosing in the name of the servicer. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the servicer can be assigned the bid. This way, the eviction can be brought in the name of the servicer. Once the eviction is completed, then the servicer can issue a deed to HUD. Again, you should follow the same procedures you follow when foreclosing in the name of the servicer.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of MERS and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
57
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR MISSOURI
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are foreclosed non-judicially under a power of sale. Local counsel advises that a foreclosure can be brought in the name of MERS. A notice of sale is published and the borrower is notified along with all parties entitled to notice under state laws. A sale is then held. The same requirements continue to be followed except that Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing entity instead of the servicer.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the Substitution of Trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require that the promissory note be endorsed in blank when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced. We have been advised that sometimes there is an endorsement of the note to the servicer prior to the foreclosure. However, we recommend that the agencies’ requirements be followed.
At the trustee sale, the certifying officer will instruct the trustee by a written bid letter that the bid is being assigned to the investor and that title should vest with the investor. We have been advised that this procedure is the same procedure used when foreclosing in the name of the servicer. Therefore, no additional fees are incurred by foreclosing in the name of MERS.
Version 1.1
November 1999
58
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the servicer can be the assignee of the bid. This way, the eviction can be brought in the name of the servicer. Once the eviction is completed, then the servicer can issue a deed to HUD. Again, you should follow the same procedures you follow when foreclosing in the name of the servicer.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
59
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR MONTANA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are foreclosed non-judicially. Local counsel advises that a foreclosure can be brought in the name of MERS. The Notice of Sale includes the same required information as when foreclosing in the name of the servicer except that Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing entity instead of the servicer. The Notice of Sale is recorded in the county where the property is located and is published in a newspaper of general circulation.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the Substitution of Trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents on behalf of the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells the loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.
At the trustee sale, the certifying officer will instruct the trustee regarding the bid to be entered on behalf of MERS. If the bid is the highest bid, then a trustee’s deed will be issued to MERS. Title should only remain with MERS for as short of time as possible. A certifying officer of MERS will subsequently execute a Grant Deed to the investor. We have been advised that this procedure is the same procedure used when foreclosing in the name of the servicer. Because the MERS recommended
Version 1.1
November 1999
60
procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
61
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR NEBRASKA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
If a mortgage is used, it is foreclosed judicially. If a deed of trust is used, it can be foreclosed non-judicially under power of sale. Regardless of the type of security instrument used, MERS local counsel advises that a loan can be foreclosed in the name of MERS.
In a judicial foreclosure, when MERS has been assigned the mortgage, the caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. However, this changes slightly if MERS is the original mortgagee of record, meaning that MERS is named on the mortgage in a nominee capacity for the originating lender. The caption should then state Mortgage Electronic Registration Systems, Inc. as nominee for [insert name of the current servicer].23 The key is how MERS is named as the mortgagee of record.
The body of the complaint should be the same as when foreclosing in the name of the servicer. However, it is advised that a paragraph be inserted that explains that the servicer is the entity that is servicing the loan. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.
In a non-judicial foreclosure, a notice of default is filed and recorded with the register of deeds in the county in which the property is located. The same procedures that are followed when foreclosing in the name of the servicer should continue to be followed except that Mortgage Electronic Registration Systems, Inc. will be named as the foreclosing entity.
Version 1.1
November 1999
62
23 We have been advised that the named plaintiff in the foreclosure action should be both the record holder of the mortgage and the owner and holder of the promissory note. This is typically considered to be the servicer because if the promissory note is endorsed in blank and the servicer has physical custody of the note, the servicer will technically be the note holder as well as the record mortgage holder. By virtue of having its employees become certifying officers of MERS, there can be an in-house transfer of possession of the note so that MERS is considered the note holder for purposes of foreclosing the loan. Therefore, MERS is both the mortgage holder and the note holder as nominee for the current servicer.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS unless it is legally required to be endorsed to the foreclosing entity and not just the preferred method.24
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents today on behalf of the servicer will continue to sign the documents, but now as an officer of MERS.
After a judgment to MERS is entered in a judicial foreclosure, a foreclosure sale is held. The certifying officer enters a bid on behalf of MERS. If it is the successful bid, then the bid will be assigned to the investor. The sheriff’s deed will be issued directly to the investor. This is the same method that is used when the servicer forecloses in its name. Because the MERS recommended procedure is the same as when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commenced the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the bid assignment is given to the servicer instead of to HUD. This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of MERS and the servicer. It is advised to file in both names in order to disclose to the court the relationship between MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
24 Even though the servicer has physical custody of the note, custom in the mortgage industry is that the investor (Fannie Mae, Freddie Mac, Ginnie Mae or a private investor) owns the beneficial rights to the promissory note.
Version 1.1
November 1999
63
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR NEVADA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is the deed of trust that gives MERS the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are used and are generally foreclosed non-judicially pursuant to a power of sale. Local counsel advises that a foreclosure can be brought in the name of MERS. It is important to note that the same procedures and state requirements that are required to be followed when foreclosing in the servicer’s name must still be followed when foreclosing in the name of MERS. The Trustee must still record the Notice of Default and Election to Sell the Property. After the expiration of the three-month period, the Notice of Trustee’s Sale is filed and published the same way it is when foreclosing in the name of the servicer except that Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing entity.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the Substitution of Trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS. The substituted trustee is typically the foreclosing attorney.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. The note should remain endorsed in blank when the servicer commences the foreclosure. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.
At the trustee sale, the certifying officer will instruct the trustee regarding the bid to be entered on behalf of MERS for the investor. This is the same process that is used
Version 1.1
November 1999
64
when foreclosing in the servicer’s name. If it is the successful bid, then the trustee will be instructed to execute the Trustee’s Deed directly to the investor. Therefore, the MERS recommended procedure is the same as the current practice of bidding on behalf of the investor so that the Trustee’s Deed is issued directly to the investor. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional recording or transfer taxes are incurred by foreclosing in the name of MERS. Furthermore, there will not be a transfer tax when the trustee’s deed is issued directly to Fannie Mae, Freddie Mac, VA or HUD.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan, then the deed is not recorded to the investor until after the eviction is completed. The eviction is conducted the same way it is conducted when the foreclosure is brought in the name of the servicer.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
65
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR NEW HAMPSHIRE
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. (MERS) is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be record mortgage holder. It is the mortgage or deed of trust that gives MERS the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are used and are generally foreclosed non-judicially under a power of sale in the security instrument. Local counsel advises that a foreclosure can be brought in the name of MERS.25 The Notice of Sales must be published with all required information except that Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing entity instead of the servicer.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies’ (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.
At the foreclosure auction, the certifying officer will instruct the foreclosing attorney regarding the bid to be entered on behalf of MERS. If the bid is the highest bid, MERS will assign the bid to the investor so that the foreclosure deed is issued directly to the investor. We have been advised that the current foreclosure procedure is a one-deed process with the investor taking title. Therefore, the MERS
25 Please Note: Fannie Mae’s foreclosure regulations require an assignment from MERS to Fannie Mae in New Hampshire. This means that Fannie Mae will be the foreclosing entity. This is the same requirement that exists when the servicer is the record mortgage holder.
Version 1.1
November 1999
66
recommended procedure is same the as the current practice with an assignment of the bid to the investor. Therefore, no additional taxes are incurred by foreclosing in the name of MERS in place of the servicer.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the servicer may be assigned the bid so that the servicer is the grantee of the foreclosure deed. This way, the servicer is able to commence the eviction. The servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name. After the eviction is completed, the servicer will then issue a deed to HUD.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
67
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR NEW JERSEY
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS. When MERS has been assigned the mortgage, the caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. However, this changes slightly if MERS is the original mortgagee of record, meaning that MERS is named on the mortgage in a nominee capacity for the originating lender. The caption should then state Mortgage Electronic Registration Systems, Inc. as nominee for [insert name of the current servicer]. The key is how MERS become the mortgage holder.
The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.26
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. We have been advised that sometimes there is an endorsement of the note to the servicer prior to the foreclosure. However, we recommend following the agencies’ policies.
26 If the promissory note is endorsed in blank and the servicer has physical custody of the note, the servicer will technically be the note holder as well as the record mortgage holder. By virtue of having the servicer’s employees be certifying officers of MERS, there can be an in-house transfer of possession of the note so that MERS is considered the note holder for purposes of foreclosing the loan.
Version 1.1
November 1999
68
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
After a judgment to MERS is entered, a sheriff’s sale is held. The certifying officer will instruct the foreclosing attorney as to the bid to be entered on behalf of MERS. If it is the highest bid, then the sheriff would be instructed that MERS has assigned its bid to the investor. This is the same method that is used when the servicer forecloses in its name. The sheriff would issue a sheriff’s deed directly to the investor. Local counsel advises that only VA and HUD are exempt from transfer taxes on the sheriff’s deed. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the bid assignment is given to the servicer instead of to HUD. This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
69
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR NEW MEXICO
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is the mortgage or deed of trust that gives MERS the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS. When MERS has been assigned the mortgage, the caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. However, this changes slightly if MERS is the original mortgagee of record, meaning that MERS is named on the mortgage in a nominee capacity for the originating lender. The caption should then state Mortgage Electronic Registration Systems, Inc. as nominee for [insert name of the current servicer]. The key is how MERS is named as the mortgagee of record.
The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same position as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.27
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.28 We have not found it to be a requirement in New Mexico that the Note be endorsed to the foreclosing entity.
27 Even though the servicer has physical custody of the note, custom in the mortgage industry is that the investor (Fannie Mae, Freddie Mac, Ginnie Mae or a private investor) owns the beneficial rights of the promissory note.
28 If the promissory note is endorsed in blank and the servicer has physical custody of the note, the servicer will technically be the note holder as well as the record mortgage holder. By virtue of having the servicer’s employees be certifying officers of MERS, there can be an in-house transfer of possession of the note so that MERS is considered the note holder for purposes of foreclosing the loan.
Version 1.1
November 1999
70
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution from MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
After a foreclosure judgment to MERS is entered, a Notice of Sale is published. The certifying officer will instruct the attorney regarding the bid to be entered on behalf of MERS. After the sale, a Report of Special Master is filed and an Order approving Sale and Special Master’s Report is filed. If MERS bid is the highest bid, then the Special Master’s Deed is recorded conveying the title to MERS. The title should only be held by MERS momentarily. A second deed should be prepared as soon as possible conveying the property from MERS to the investor. This is the same method that is used when the servicer forecloses in its own name. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional recording or transfer taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of MERS and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
71
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR NEW YORK
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is the mortgage or deed of trust that gives MERS the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. When MERS has been assigned the mortgage, the caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. However, this changes slightly if MERS is the original mortgagee of record, meaning that MERS is named on the mortgage in a nominee capacity for the originating lender, its successors and assigns. In that case, the caption should then state Mortgage Electronic Registration Systems, Inc. as nominee for [insert name of the current servicer]. The key is how did MERS become the mortgagee of record.
The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. We have been advised that sometimes there is an endorsement of the note to the servicer prior to foreclosure. However, we recommend that the agencies’ policies be followed.
Employees of the servicer will be authorized to sign any necessary documents as a certifying officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. This typically will be the same individual that signs the documents for the servicer, but now will be signing as an officer of MERS.
Version 1.1
November 1999
72
A foreclosure judgment to MERS would be entered. At the foreclosure sale the certifying officer will instruct the foreclosing attorney regarding the bid to be entered on behalf of MERS. If it is the successful bid, MERS will assign the bid to the investor. The assignment of the bid is a simple one-sentence reference that is submitted to the referee that states MERS assigns the bid to investor. The referee’s deed would be directly issued to the investor. This is the same method that is used when the servicer forecloses in its name. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the bid assignment is given to the servicer instead of to HUD. This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is for the servicer so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
73
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR NORTH CAROLINA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are foreclosed non-judicially under power of sale. Local counsel advises that a foreclosure can be brought in the name of MERS. Notices are sent to all interested parties, and a hearing is scheduled with the Clerk of Superior Court. The same process followed when foreclosing in the name of the servicer continues to be followed except that Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing entity instead of the servicer.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the Substitution of Trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents on behalf of the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. However, we have been advised that sometimes there is an endorsement of the note to the servicer prior to the commencement of the foreclosure. We have not found this to be a legal requirement, and therefore, the agencies’ requirements should be followed.
At the trustee sale, the certifying officer will instruct the trustee regarding the bid to be entered on behalf of MERS. If the bid is the highest bid, then MERS will assign its bid to the investor. We have been advised that this procedure is the same Version 1.1
November 1999
74
procedure followed when foreclosing in the name of the servicer. Because it is the same procedure, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the bid can be assigned to the servicer. This way, the eviction can be brought in the name of the servicer. Once the eviction is completed, then the servicer can issue a deed to HUD. Again, you should follow the same procedures you follow when foreclosing in the name of the servicer.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship between MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
75
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR NORTH DAKOTA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through this instrument that the authority is given to MERS to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS.29 When MERS has been assigned the mortgage, the caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. However, this changes slightly if MERS is the original mortgagee of record, meaning that MERS is named on the mortgage in a nominee capacity for the originating lender. The caption should then state Mortgage Electronic Registration Systems, Inc. as nominee for [insert name of the current servicer]. The key is how MERS is named as the mortgagee of record.
The body of the complaint should be the same as when foreclosing in the name of the servicer. However, it is advised that a paragraph be inserted that explains that the servicer is the entity that is servicing the loan. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.30
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to
29 We have been advised that the named plaintiff in the foreclosure action should be both the record holder of the mortgage and the holder of the promissory note. This is typically considered to be the servicer because if the promissory note is endorsed in blank and the servicer has physical custody of the note, the servicer will technically be the note holder as well as the record mortgage holder. By virtue of having the servicer’s employees be certifying officers of MERS, there can be an in-house transfer of possession of the note so that MERS is considered the note holder for purposes of foreclosing the loan.
Version 1.1
November 1999
76
30 Even though the servicer has physical custody of the note, custom in the mortgage industry is that the investor (Fannie Mae, Freddie Mac, Ginnie Mae or a private investor) owns the beneficial rights to the promissory note.
them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS unless it is legally required to be endorsed to the foreclosing entity and not just the preferred method. If it is required to endorse the promissory note to the foreclosing entity, then the note may need to be endorsed to MERS. However, we have not found it a requirement in North Dakota that the Note be endorsed to the foreclosing entity.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents today on behalf of the servicer will continue to sign the documents, but now as an officer of MERS.
After a judgment to MERS is entered, a sheriff’s sale is held. A bid is entered on behalf of MERS, and if the successful bid, then the certificate of sale can be issued to MERS. At the sale, only the party who conducted the foreclosure is entitled to “credit.” At this point, one of two options can be followed. One is to assign the certificate of sale to the servicer or the investor. This way, the sheriff’s deed will be issued directly to the assignee. The other is the sheriff’s deed can be issued to MERS, and a Grant Deed will be subsequently issued to the investor. The latter option is the same method that is used when the servicer forecloses in its name. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is for the servicer so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
77
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR OHIO
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are used and are foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS. The caption should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. We have been advised that sometimes there is an endorsement of the note to the servicer prior to foreclosure. However, we recommend that the agencies’ policies be followed.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
After a judgment to MERS is entered, a sheriff’s sale is held. The certifying officer will instruct the foreclosing attorney as to the bid to be entered on behalf of MERS. If it is the successful bid, then MERS will assign its bid to the investor. The deed will then be issued directly to the investor. This is the same method that is used
Version 1.1
November 1999
78
when the servicer forecloses in its name. Because the MERS recommended procedure follows the same procedure that is used when the servicer foreclosures in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the bid assignment is given to the servicer instead of to HUD. This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
79
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR OKLAHOMA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS, so long as MERS is the record mortgage holder and the holder of the promissory note (even if not the beneficial owner of the promissory note). The caption should reflect Mortgage Electronic Registration Systems, Inc. as the plaintiff. The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note.31 An investor, typically a secondary market investor, will still be the beneficial owner of the promissory note.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them.32 Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. However, we have been advised that sometimes there is an endorsement of the note to the servicer prior to foreclosure. However, we recommend that the agencies’ policies be followed.
31 Even though the servicer has physical custody of the note, custom in the mortgage industry is that the investor (Fannie Mae, Freddie Mac, Ginnie Mae or a private investor) owns the beneficial rights to the promissory note.
32 If the promissory note is endorsed in blank and the servicer has physical custody of the note, the servicer will technically be the note holder as well as the record mortgage holder. By virtue of having the servicer’s employees be certifying officers of MERS, there can be an in-house transfer of possession of the note so that MERS is considered the note holder for purposes of foreclosing the loan.
Version 1.1
November 1999
80
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
After a judgment to MERS is entered, a Special Execution and Order of Sale is issued. The party instituting a foreclosure action must send a notice of the sheriff’s sale date to the borrower and all other persons that have a recorded interest or other known interest in the property that will be extinguished by the sale. This would include any junior lienholders, current owners or tenants and the holders of any other encumbrances on the property. The notice must be executed by the county sheriff and must contain a legal description of the property, as well as the date, time and place of sale. This notice must be sent at least 10 days prior to the date of sale. The attorney for the foreclosing party must execute and file an affidavit of compliance with these notice rules.
In addition, the party instituting a foreclosure action must publish notice of public sale for two successive weeks in the newspaper of the county in which the property is situated. The notice must also be executed by the sheriff and must state the names of persons having an interest in the property that will be extinguished by the sale. If the county does not have a newspaper, then a notice must be published on the court house, in 5 other public places in the county, as well as in any general circulation paper distributed in the county. If the county has a population of 110,000 as of the latest federal census, then the notice of sale must be published in a newspaper in the city or township in which the property is situated, or if no such paper exists, then the notice must be published in some newspaper published in the county. Okla. Stat. Tit. 12, section 764 (1995).
The sale is conducted by the county sheriff and must be held not less than 30 days after the date of the first publication or posting of the sale notice. Okla. Stat. Tit. 12, section 764 (1995). The sale is conducted through a public auction and the property is awarded to the highest bidder.
The certifying officer will instruct the foreclosing attorney to enter a bid on behalf of MERS. If it is the highest bid, then in the motion to confirm sale, MERS will request that the sheriff’s deed be issued to the investor. Upon the entering of the order confirming sale, the sheriff’s deed will be executed in favor of the investor. The MERS recommended procedures do not cause any additional taxes to be incurred.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of MERS and the servicer. It is advised to file in both names in order to
Version 1.1
November 1999
81
disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
82
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR OREGON
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is the mortgage or deed of trust that gives MERS the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are used and are foreclosed non-judicially by conferring a power of sale on the trustee in the event of default by the borrower. MERS local counsel advises that a loan can be foreclosed in the name of MERS.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the substitution of trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The only change to the foreclosure procedure is to name Mortgage Electronic Registration Systems, Inc. in the foreclosure notices as the beneficiary instead of to name the servicer. At the trustee’s sale, a bid will be entered on behalf of MERS. The bid is entered the same way it is entered for the servicer when foreclosing in the servicer’s name. If the bid is the highest bid, then the trustee’s deed can be issued directly to the investor. The Trustee’s deed will identify the investor as the grantee under the trustee’s deed and will recite that MERS, as nominee, successfully bid for the property at the trustee’s sale. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.
Version 1.1
November 1999
83
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the bid assignment is given to the servicer instead of to HUD. This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
84
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR PENNSYLVANIA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS will be the record mortgage holder. It is through the mortgage that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer or the investor to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. The caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. The body of the complaint should be the same as when foreclosing in the name of the servicer or investor. A paragraph should be added that MERS, is or will be, the owner of legal title to the mortgage that is the subject of this action, and nominee for the [insert name of investor, or name of current servicer, if investor is Fannie Mae or Freddie Mac], which is the owner of the entire beneficial interest in the mortgage.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. We have been advised that sometimes there is an endorsement of the note to the servicer prior to foreclosure. However, we recommend that the agencies’ policies be followed.
After the foreclosure judgment is entered in favor of MERS, the sheriff’s sale is scheduled. The servicer provides bidding instructions to the foreclosure attorney. After the sale, assuming that the foreclosure attorney was the successful bidder, the
Version 1.1
November 1999
85
attorney instructs the sheriff, in writing, to assign the bid to the investor and to name the investor as grantee on the sheriff’s deed.33
The name of MERS must not appear on any post-sale documents, including sheriff’s deeds and complaints in ejectment. For FHA-insured loans that require evictions, the attorney must instruct the sheriff, in writing, to assign the bid to the investor, instead of to HUD, and to name the investor as grantee on the sheriff’s deed. The servicer, on behalf of the investor, proceeds with the eviction and deeds the property to HUD once the eviction is completed.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of MERS and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
33 MERS local counsel has contacted and received a letter from the Department of Revenue of the Commonwealth of Pennsylvania that indicates the investor can use the foreclosing mortgagee transfer tax exemption by showing that MERS participated in the sheriff’s sale merely as an agent of the investor.
Version 1.1
November 1999
86
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR RHODE ISLAND
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is the mortgage or deed of trust that gives MERS the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are used and are foreclosed non-judicially. MERS local counsel advises a loan can be foreclosed in the name of Mortgage Electronic Registration Systems, Inc.34 The foreclosure is advertised with Mortgage Electronic Registration Systems, Inc. as the named foreclosing entity.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents on behalf of the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. We have been advised that sometimes there is an endorsement of the Note to the servicer prior to foreclosure. However, we recommend that the agencies’ policies be followed.
34 Please Note: Fannie Mae’s foreclosure regulations require an assignment from MERS to Fannie Mae in Rhode Island. This means that Fannie Mae will be the foreclosing entity. This is the same requirement that exists when the servicer is the record mortgage holder.
Version 1.1
November 1999
87
MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.35
At the foreclosure auction, MERS can waive the requirement of a deposit as to the investor. This way, the servicer can enter a bid on behalf of the investor without the investor needing to produce any funds. If it is the highest bid, the foreclosure deed can be issued directly to the investor. We have been advised that this procedure is the same procedure used when Freddie Mac or Ginnie Mae are the investors. Because the MERS recommended procedure follows the same procedure that is used when the servicer foreclosures in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
35 Even though the servicer has physical custody of the note, custom in the mortgage industry is that the investor (Fannie Mae, Freddie Mac, Ginnie Mae or a private investor) owns the beneficial right to the promissory note.
Version 1.1
November 1999
88
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR SOUTH CAROLINA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS.36 When MERS has been assigned the mortgage, the caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. However, this changes slightly if MERS is the original mortgagee of record, meaning that MERS is named on the mortgage in a nominee capacity for the originating lender, its successors and assigns. The caption should then state Mortgage Electronic Registration Systems, Inc. as nominee for [insert name of the current servicer]. The key is how MERS is named as the mortgagee of record.
The body of the complaint should be the same as when foreclosing in the name of the servicer. However, it is advised that a paragraph be inserted that explains that the servicer is the entity that is servicing the loan. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note. 37
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require that the promissory note be endorsed in blank when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure
36 We have been advised that the named plaintiff in the foreclosure action should be both the record holder of the mortgage and the holder of the promissory note. This is typically considered to be the servicer because if the promissory note is endorsed in blank and the servicer has physical custody of the note, the servicer will technically be the note holder as well as the record mortgage holder. By virtue of having the servicer’s employees be certifying officers of MERS, there can be an in-house transfer of possession of the note so that MERS is considered the note holder for purposes of foreclosing the loan.
Version 1.1
November 1999
89
37 Even though the servicer has physical custody of the note, custom in the mortgage industry is that the investor (Fannie Mae, Freddie Mac, Ginnie Mae or a private investor) owns the beneficial rights to the promissory note.
is commenced in the name of MERS unless it is legally required to be endorsed to the foreclosing entity and not just the preferred method. We have been advised that sometimes there is an endorsement of the note to the servicer prior to the foreclosure. However, we recommend that the agencies’ requirements be followed.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
After a judgment to MERS is entered, a foreclosure sale is held. A bid is entered on behalf of MERS, and if the successful bid, then the bid will be assigned to the investor by using a one-page form instructing the sheriff of the assignment of bid. This is the same method that is used when the servicer forecloses in its name. The master in equity or the special referee would issue a deed directly to the investor. Local counsel advises that Fannie Mae, Freddie Mac, VA and HUD are exempt from transfer taxes on the sheriff’s deed. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the bid assignment is given to the servicer instead of to HUD. This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
90
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR SOUTH DAKOTA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS. When MERS has been assigned the mortgage, the caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. However, this changes slightly if MERS is the original mortgagee of record, meaning that MERS is named on the mortgage in a nominee capacity for the originating lender. The caption should then state Mortgage Electronic Registration Systems, Inc. as nominee for [insert name of the current servicer]. The key is how MERS become the mortgage holder.
The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer in relation to not being the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.38
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the
38 Even though the servicer has physical custody of the note, custom in the mortgage industry is that the investor (Fannie Mae, Freddie Mac, Ginnie Mae or a private investor) owns the beneficial right to the promissory note.
Version 1.1
November 1999
91
same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
After a judgment to MERS is entered, a sheriff’s sale is held. The certifying officer will instruct the foreclosing attorney as to the bid to be entered on behalf of MERS. If it is the successful bid, then one of two options can be followed39. The first is that the Certificate of Sale may be assigned from MERS to the investor. This way, upon expiration of the redemption period, the sheriff’s deed will issue directly to the investor. There is a recording cost for the Certificate of Sale. The second option is that upon the expiration of the redemption period, MERS is issued the sheriff’s deed by virtue of being the holder of the Certificate of Sale. If this option is followed, MERS should only remain in the chain of title for as short of time as possible. A subsequent deed will then be executed from MERS to the investor. We have been advised that this latter option is the method that is used when the servicer forecloses in its name. Typically the servicer is issued the sheriff’s deed, and then issues a subsequent deed to the investor. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
39 MERS prefers to not take title to the property, so the Certificate of Sale should be assigned if possible. However, either option is acceptable.
Version 1.1
November 1999
92
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR TENNESSEE
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, in place of the servicer, will be the record mortgage holder. It is the mortgage or deed of trust that gives MERS the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are used and are generally foreclosed non-judicially under a power of sale in the security instrument. Local counsel advises that a foreclosure can be brought in the name of MERS. The Notice of Default is filed and published the same way it is when foreclosing in the name of the servicer except that Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing entity.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the Appointment of Substitution of Trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.
At the trustee sale, the certifying officer will instruct the trustee regarding the bid to be entered on behalf of MERS. In the Trustee’s Deed, the bid will be assigned to the investor, unless the certifying officer instructs the trustee to assign the bid to the servicer. We have been advised that the current foreclosure procedure is a one-deed process with the investor directly taking title upon the conclusion of the trustee’s sale. Therefore, the MERS recommended procedure is the same as the current practice of assigning the bid to the investor. Because the MERS recommended
Version 1.1
November 1999
93
procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan, the eviction may need to be brought in the name of MERS. Therefore, MERS may need to be the grantee of the trustee’s deed. After the eviction is completed, MERS will then issue a deed to HUD.40
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of MERS and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
40 MERS should only be in the chain of title for as short of a time as possible. As soon as the eviction is completed, the deed to HUD should be recorded.
Version 1.1
November 1999
94
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR TEXAS
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the mortgagee or beneficiary of record in the chain of title. It is through the power of sale in the deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are foreclosed non-judicially. Local counsel advises that a foreclosure can be brought in the name of MERS. The foreclosure is commenced the same way as if it were being brought in the servicer’s name except that Mortgage Electronic Registration Systems, Inc. (MERS) will be named the foreclosing entity as the mortgagee or beneficiary of record as the nominee for the current servicer.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the Appointment of Substitution of Trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.
At the trustee sale, the certifying officer will instruct the trustee regarding the bid to be entered on behalf of MERS as the mortgagee of record. If the bid is the highest bid, then the trustee’s deed is issued to MERS as the mortgagee of record and as the nominee for the current servicer. The servicer, as a duly appointed officer of MERS, can then convey the property by deed to the investor which is the same as the current practice that is used when foreclosing in the name of the servicer as mortgagee or
Version 1.1
November 1999
95
beneficiary of record. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of MERS and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
96
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR UTAH
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are foreclosed non-judicially. Local counsel advises that a foreclosure can be brought in the name of MERS. The Notice of Default and Election to Sell is filed with the county recorder. Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing entity instead of the servicer.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the Substitution of Trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.
After the reinstatement period expires, the Notice of Sale is published for the required length of time. Once this is completed, the foreclosure sale is held. The certifying officer will instruct the trustee regarding the bid to be entered on behalf of MERS. If the bid is the highest bid, the certifying officer will instruct the trustee to deed the property directly to the investor. We have been advised that this procedure is the same procedure used when foreclosing in the name of the servicer. Therefore, no additional taxes are incurred by foreclosing in the name of MERS in place of the servicer.
Version 1.1
November 1999
97
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the servicer can be substituted as the interested party.41 This way, the eviction can be brought in the name of the servicer. Once the eviction is completed, then the servicer can issue a deed to HUD. Again, you should follow the same procedures you follow when foreclosing in the name of the servicer.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
41 MERS local counsel advises that an eviction is brought in the name of the party that takes title to the property following the foreclosure sale.
Version 1.1
November 1999
98
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR VERMONT
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. When the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS. Over 90% of the foreclosures are by strict foreclosures. When MERS has been assigned the mortgage, the caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. However, this changes slightly if MERS is the original mortgagee of record, meaning that MERS is named on the mortgage in a nominee capacity for the originating lender, its successors and assigns. The caption should then state Mortgage Electronic Registration Systems, Inc. as nominee for [insert name of the current servicer]. The key is how MERS is named as the mortgagee of record.
The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will still be the ultimate owner of the promissory note.42
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS unless it is legally required to be endorsed to the
42 The servicer usually has physical custody of the note at the time of the foreclosure with a blank endorsement. This makes the servicer the noteholder for the purposes of foreclosing. However, custom in the mortgage industry is that the investor (Fannie Mae, Freddie Mac, Ginnie Mae or a private investor) owns the beneficial rights to the promissory note.
Version 1.1
November 1999
99
foreclosing entity. If it is required to endorse the promissory note to the foreclosing entity, then the note may need to be endorsed to MERS. Local counsel has advised that it is essential that the Promissory Note be held in the name of the mortgage holder.43
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
Because the majority of the foreclosures are by strict foreclosure, title will vest in MERS momentarily.44 The certifying officer will submit an affidavit of amounts due to the Clerk of Court, after which a default or summary judgment will be issued by the Court. The Clerk will prepare an accounting. Once the accounting is received, a judgment is prepared and served. The judgment is then signed by the Court. After the redemption period expires, a Certificate of Non-Redemption and Writ of Possession will be issued by the Court to MERS. The property will then be deeded from MERS to the investor. This is the same process that occurs when the servicer of the mortgage loan forecloses in its name. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional taxes are incurred by foreclosing in the name of MERS.
An alternative option is to file a Motion for Substitution of Parties after the judgment to MERS is entered. At this time, an unrecorded assignment of the mortgage needs to be shown to the judge. It should be noted that certain courts are not staffed with full time judges and there may be a slight increase in time before this Motion can be decided. It is recommended that this Motion be filed as soon as possible after the judgment is entered so that it is completed prior to the expiration of the redemption period. At the end of the redemption period, a Certificate of Non-Redemption is recorded which transfers the title. Prior to the Certificate being issued, the assignment of the mortgage is recorded.
Local counsel advises that Fannie Mae, Freddie Mac, VA and HUD are exempt from transfer taxes on the sheriff’s deed.
43 We have been advised that the named plaintiff in the foreclosure action should be both the record holder of the mortgage and the holder of the promissory note. This is typically considered to be the servicer because if the promissory note is endorsed in blank and the servicer has physical custody of the note, the servicer will technically be the note holder as well as the record mortgage holder. By virtue of having the servicer’s employees be certifying officers of MERS, there can be an in-house transfer of possession of the note so that MERS is considered the note holder for purposes of foreclosing the loan.
44 MERS should only remain the titleholder for as short as time as possible. A subsequent deed should be executed to the investor immediately. Version 1.1
November 1999
100
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
101
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR VIRGINIA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are foreclosed non-judicially by a power of sale given to the Trustee upon default. Local counsel advises that a foreclosure can be brought in the name of MERS.45 The same procedure that is followed when foreclosing in the name of the servicer is followed when foreclosing in the name of MERS except that Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing entity.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the Substitution of Trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Because the original note is required to be shown to the Commissioner at the time of the final accounting, the note is usually endorsed to the servicer when foreclosing in the name of the servicer. Therefore, local counsel advises that the note may need to be endorsed to MERS as the foreclosing entity. The endorsement of the note to the servicer is the same procedure that is followed when foreclosing in the name of the servicer.
45 Local Counsel advises that the promissory note is endorsed to the servicer prior to commencing a foreclosure so that the servicer becomes the noteholder. In order for a foreclosure to be brought in the name of MERS, the note should be endorsed to MERS so that MERS is the noteholder.
Version 1.1
November 1999
102
At the trustee sale, the certifying officer will instruct the trustee regarding the bid to be entered on behalf of MERS. If the bid is the highest bid, then the trustee will be instructed to deed the property directly to the investor. We have been advised that this procedure is the same used when foreclosing in the name of the servicer. Therefore, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the servicer can be deeded the property so that the eviction can be brought in the name of the servicer. Once the eviction is completed, then the servicer can issue a deed to HUD. Again, you should follow the same procedures you follow when foreclosing in the name of the servicer.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
103
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR WASHINGTON
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are used and are foreclosed non-judicially by conferring a power of sale on the trustee in the event of default by the borrower. MERS local counsel advises that a loan can be foreclosed in the name of MERS.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the substitution of trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.
The only change to the foreclosure procedure is to name Mortgage Electronic Registration Systems, Inc. as the foreclosing entity. The Notice of Default and Notice of Trustee’s Sale is still required to be sent and published and all requirements related to these Notices must be followed. At the trustee’s sale, a bid will be entered on behalf of MERS. The bid is entered the same way it is entered for the servicer when foreclosing in the servicer’s name. If the bid is the highest bid, then the trustee’s deed can be issued directly to the investor. This is the same procedure that is followed when commencing a foreclosure in the name of the servicer. The Trustee’s deed will identify the investor as the grantee under the trustee’s deed and will recite that MERS, as nominee, successfully bid for the
Version 1.1
November 1999
104
property at the trustee’s sale. Because the MERS recommended procedure follows the same procedure that is used when the servicer forecloses in its name, no additional recording or transfer taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the bid assignment is given to the servicer instead of to HUD. This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
105
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR WEST VIRGINIA
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Deeds of Trust are foreclosed non-judicially. Local counsel advises that a foreclosure can be brought in the name of MERS. The notice of sale is served on the grantor of the Deed of Trust by certified mail. The foreclosure sale is published according to the same requirements followed when foreclosing in the name of the servicer. Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing entity instead of the servicer.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents, such as the Substitution of Trustee, as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.
At the trustee auction, the certifying officer will instruct the trustee regarding the bid to be entered on behalf of MERS. If the bid is the highest bid, then the certifying officer will instruct the trustee on how to deed the property. A three-party deed can be used with the trustee transferring the property to the investor. MERS simply signs the deed and states that it has assigned its right in its bid to the investor. We have been advised that this procedure is the same procedure used when foreclosing
Version 1.1
November 1999
106
in the name of the servicer. Therefore, no additional taxes are incurred by foreclosing in the name of MERS.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the property can be deeded to the servicer. This way, the eviction can be brought in the name of the servicer. Once the eviction is completed, the servicer can issue a deed to HUD. Again, you should follow the same procedures you follow when foreclosing in the name of the servicer.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
107
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR WISCONSIN
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like a servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed in conjunction with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are typically used and are foreclosed judicially. The caption of the complaint should name Mortgage Electronic Registration Systems, Inc. (MERS) as the plaintiff. The body of the complaint should be the same as when foreclosing in the name of the servicer. MERS stands in the same shoes as the servicer to the extent that it is not the beneficial owner of the promissory note. A secondary market investor will still be the owner of the promissory note. A paragraph can be added to the complaint to explain the role of MERS as being the mortgagee of record with the authority to foreclose.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when a seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
After a foreclosure judgment in favor of MERS is entered and after expiration of the redemption period, a foreclosure sale is held. The certifying officer will provide local counsel with bid instructions. A bid will be entered on behalf of MERS, and if it is the highest bid, MERS will assign its bid to the investor and the investor can appear as the grantee on the Sheriff’s Deed. The Sheriff’s deed is then issued
Version 1.1
November 1999
108
directly to the investor. The assignment of the bid is the method that is being used when the servicer forecloses in its name. The sheriff’s deed is exempt from transfer tax as are sheriff’s deeds following an assignment of bid. Certain other transfers, as between “principal and agent for no consideration may also be exempt from transfer tax. Because the MERS recommended procedure follows the procedure used when foreclosing in the servicer’s name, no additional taxes are incurred.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the bid assignment is given to the servicer instead of to the investor (HUD). This way, the servicer will proceed with the eviction the same way it would if the foreclosure were filed in its own name.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
109
MERS RECOMMENDED FORECLOSURE PROCEDURE
FOR WYOMING
Foreclosing a loan in the name of Mortgage Electronic Registration Systems, Inc. is something new in the foreclosure arena. However, when the role of MERS is examined, it becomes clear that MERS stands in the same position to foreclose as the servicer. MERS, like the servicer, will be the record mortgage holder. It is through the mortgage or deed of trust that MERS is given the authority to foreclose.
To help make a smooth transition from foreclosing loans in the name of the servicer to foreclosing loans in the name of MERS, we have developed state by state recommended guidelines to follow. These guidelines were developed with experienced foreclosure counsel in your state. We have been able to keep the MERS recommended procedures consistent with the existing foreclosure procedures. The goal of the recommended procedures is to avoid adding any extra steps or incurring any additional taxes or costs by foreclosing in the name of MERS instead of the servicer.
MERS will continually review the guidelines and, if necessary, will issue revisions. The recommended guidelines to follow in your state are as follows:
Mortgages are foreclosed non-judicially by a power of sale contained in the mortgage. Local counsel advises that a foreclosure can be brought in the name of MERS. Notice of the sale is recorded in the real estate records and mailed by certified mail to all interested parties. The same procedures followed when foreclosing a mortgage loan in the name of the servicer is followed when foreclosing in the name of MERS except that Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing entity instead of the servicer. Publication of the sale occurs ten (10) days after the recording and mailing of the Notice.
Employees of the servicer will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the servicer will continue to sign the documents, but now as an officer of MERS.
The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/servicer sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS.
At the sheriff’s sale, the certifying officer will instruct the sheriff regarding the bid to be entered on behalf of MERS. If the bid is the highest bid, then MERS will be issued a Certificate of Purchase. The Certificate of Purchase will be assigned to the investor. We have been advised that this is the same procedure used when foreclosing in the name of the servicer. Because the MERS recommended procedure
Version 1.1
November 1999
110
follows the same procedure that is used when the servicer forecloses in its name, no additional recording costs are incurred by foreclosing in the name of MERS. Wyoming does not have transfer taxes.
Evictions are handled the same way they are handled when the servicer commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the servicer can be assigned the Certificate. This way, the eviction can be brought in the name of the servicer. Once the eviction is completed, then the servicer can issue a deed to HUD. Again, you should follow the same procedures you follow when foreclosing in the name of the servicer.
If the debtor declares bankruptcy, the proof of claim should be filed jointly in the name of Mortgage Electronic Registration Systems, Inc. and the servicer. It is advised to file in both names in order to disclose to the court the relationship of MERS and the servicer. The address to be used is the servicer’s address so that all trustee payments go directly to the servicer, not to MERS. The Motion for Relief from Stay may be filed either solely in the name of MERS or jointly with the servicer. If MERS is the foreclosing entity, then it is MERS that needs the relief from the bankruptcy.
Version 1.1
November 1999
111

Bank Robo-Signers Oust Homeowners

It could almost come from a science fiction movie where tens of thousands are forced out of their homes by a cold, mechanized Robo-Signer. But it’s not science fiction. It’s reality.

Over the past two weeks, both Bank of America and JPMorgan Chase have suspended their foreclosure proceedings for tens of thousands of mortgages as they look at their foreclosure process. The issue? Robo-Signers are authorizing thousands of foreclosures every week denying homeowners a proper, human review and proper consideration for their individual foreclosure case.

At least RoboCop had it right when he said, “Serve the public trust, protect the innocent, uphold the law.” Have banks’ foreclosure practices violated the public trust? Foreclosed on innocent homeowners? Broken the law?

In fact, banks in Florida, Texas, Maine and other states are withdrawing their foreclosure affidavits that were signed by Robo-Signers. GMAC and Chase in particular have admitted in sworn depositions that they have used Robo-Signers to authorize as many as 10,000 foreclosure documents a month without proper review and notorization.

Banks like GMAC claim that the errors are technical in nature and didn’t result in any inappropriate foreclosures. Attorneys General in states like Colorado, Texas, Iowa and others are looking into GMAC’s practices to see if they constitute criminal fraud.

Unfortunately, many homeowners, maybe 60% or more, facing foreclosure do little or nothing to safeguard their rights allowing Robo-Signers to run rough-shod over them. But some homeowners who have fought back have found irregularities in the foreclosure process used by banks. In some cases, the bank didn’t even own the loan it. It had been sold into a securitized trust held by other investors meaning that the bank had no basis for foreclosure.

According to the Wall Street Journal, IndyMac used a Robo-Signer named Erica A Johnson-Seck to sign more than 6,000 documents a week. Upon review by a court, it was determined that IndyMac couldn’t possibly have properly reviewed foreclosure cases as required by law.

More and more homeowners are beginning to fight their foreclosure process. Some complain that this will slow down the foreclosure process and, thus, the housing recovery.

Homeowner v Robo-signer

Bank Robo-Signers Oust Homeowners

It could almost come from a science fiction movie where tens of thousands are forced out of their homes by a cold, mechanized Robo-Signer. But it’s not science fiction. It’s reality.

More and more homeowners are beginning to fight their foreclosure process. Some complain that this will slow down the foreclosure process and, thus, the housing recovery.

the debate

Debunking the Gospel of Garfield

April 7, 2010 by admin · 15 Comments

Since starting MFI-Miami almost 2 years ago, I have received some pretty strange calls from people. I’ve had real estate agents call me who have bought 15 income properties and then try to claim they are victim of Predatory Lending. I’ve had people who have bought investment properties who thought because they watched two episodes of The Apprentice they’re as smart as Donald Trump. I have gotten calls from the conspiracy theorists who think the Obama Administration wants their property so they can build an internment camp on it when the armed UN hovercraft come skimming over the Everglades. These are some of the more interesting calls.

However, the most interesting calls I get are from Pro Se litigants. What are Pro Se litigants? Pro Se litigants are homeowners who represent themselves in court and usually have no training as a lawyer. They are usually people who think they know more than everyone else or have the attitude of “Why should I hire a lawyer when I can do it myself.”

As the saying goes, “An attorney who represents themselves has a fool for a client.” Here’s a case in point. I had a foreclosure client when I started MFI-Miami, who filed an answer to his foreclosure that he copied and pasted off Neil Garfield’s website, Living Lies. My client then tells me he was going file a federal civil RICO case against his lender because his wife’s “forged” signature violated interstate commerce laws which is a RICO predicate. When I asked him who told him he could do that, he claimed he read he could do it on Garfield’s site. I have since received dozens of calls from people asking me for free advice based on what they read by Neil Garfield.

I have received at least 6 calls in the past week from Pro Se litigants claiming that they don’t know what to do because their Florida judge laughs at them for demanding the wet inked copy of their note. This is one of those misconceptions out on the blogosphere that had its origin from the Living Lies site. The misconception is that if the servicer or the Trustee cannot produce the original wet inked note, then they lack legal standing to execute a foreclosure and therefore the debt obligation is now nullified. This is absolutely false. In Florida, the transfer affidavit or note must officially be on record with the county 60 days prior to a servicer or Trustee filing the initial foreclosure complaint. When the attorney files the foreclosure complaint, all they are required to do is attach a copy of the original note.

For those you who don’t know who Neil Garfield is, he is a self-proclaimed Foreclosure Expert who holds seminars across the country for lawyers and Pro-Se litigants helping them fight foreclosures. According to his biography, was an Economist, Accountant and he is a “Chairman Emeritus” of a consortium of financial service companies and claims to be the “ultimate insider” on Wall Street. (Page 4, Garfield Continuum Handbook) Yet, he never mentions which companies he has worked with or the positions he held. The state of Florida also has no license on file for him being an accountant.

If he was a Wall Street “Insider,” he was like Lon Chaney aka The Man of Thousand Faces because friends of mine in the media who cover Wall Street had never heard of him until he started doing seminars. He was a trial attorney in Florida from 1977 until 1993 and by his own admission to me when I attended his seminar in Orlando last May, has not done any litigation work since then.

He preaches that, “homeowners can walk into a foreclosure hearing and walk out owning their house free and clear.” (Page 5, Garfield Continuum Handbook)

He even preaches this on his website and it is over-simplified comments like this that draw people to his website looking for easy answers. Like a late night televangelist, Garfield delivers a lot of what on the surface appears to be easy solutions but in reality are very complex legal arguments. Unfortunately, for the homeowner, foreclosure defense is not easy. It is a lot of painstaking detective work and TILA rescissions happen in only one of out of 50-75 loans.

Neil Garfield’s theories make for great legal debate and table talk for foreclosure defense junkies and conspiracy theorists. However, in reality his theories are impractical for the average homeowner due to the astronomical fees of legal research and litigation that they would require. What Neil Garfield fails to understand or express to his seminar participants is that judges do not like going out on the proverbial limb and therefore will not make precedent making decisions.

In other words, Neil Garfield is great at talking the talk but is a little short on walking the walk. He lacks the practical litigation experience to transform his theories into reality. Even now if you read his blogs, attorneys as well as Pro Se litigants who are frequent contributors phrase their comments as if expressing opinion instead of fact.

Garfield has created a problem in judicial foreclosure states such as Florida. He has unleashed an army of Pro Se litigants who have clogged the courts trying to argue their foreclosure cases using theories they barely understand. They lack not only legal expertise but lending expertise. They are totally unprepared to argue their own cases and fail to learn or obey court procedure. Many of them go in to court trying to argue constitutional law or TILA and find themselves summarily dismissed by a judge. They then write comments on the blogosphere claiming the judicial system is corrupt and that corruption is a result of some mass government conspiracy.

What the Garfield seminars fail to express to these litigants is that foreclosure laws vary from state to state and if you are fortunate enough to live in a judicial state like Florida or New York, judges want to hear state statute not federal statute unless it is relevant to your case.

This also creates another problem for the court system. The problem consists of the homeowners who have been successful in getting their foreclosures postponed. Fed by what they read on Living Lies, these pro se litigants begin having delusions of grandeur and begin believing they are the next Alan Dershowitz or Gerry Spence. They begin dispensing legal advice on the internet. The reality is, it was not the Gospel of Neil Garfield or the Pro Se litigant’s superior linguistic or legal abilities that got the foreclosure postponed but forces beyond the homeowner’s control.

In his 683 page handbook which is riddled with errors, he claims, “Neil has come out of retirement with one purpose in mind – to do all he can to counter the effects of the mortgage meltdown and save the people and the country from the disaster of created by free money using derivative securities that not even experts understood and targeting the least sophisticated members of society.”
This may sound charitable, but don’t believe the hype. At the end of the day, it’s all about the Bejamins. Garfield and his partner Brad Keiser use these seminars to market future consulting work and forensic audits from law firms and Pro Se litigants that attend their conferences.

Don’t get me wrong, I have no problem with people making money and I don’t have a problem with the fees Garfield and Kaiser charge their clients, I do have an issue with what they preach and how they manage the expectations of what they preach to the average homeowner. This industry is filled with enough wannabe Elmer Gantrys or messianic types with no practical mortgage industry experience and the last thing it needs is to encourage more unqualified “healers” to come into this business which is what Garfield and Keiser are doing.

0diggsdigg

Share/Save

Filed under Mortgage Fraud News, Steve’s Blog · Tagged with avoiding foreclosure, banking, consumer protection, economic meltdown, financial crisis, florida foreclosures, foreclosure crisis, foreclosure defense, foreclosure help, foreclosure rescue, foreclosure rescue scams, Housing Crisis, illegal foreclosures, Living Lies, mortgage backed securities, mortgage fraud, mortgage help, mortgages, Neil Garfield

Comments

15 Responses to “Debunking the Gospel of Garfield”

KevinG says:

April 9, 2010 at 11:46 pm

Steve, I’m just an average guy with properties that are upside down like alot of my friends whom I network with here in Las Vegas. Like Florida, Vegas has been hard hit with foreclosures. The State Fight Fraud Task Force trys to keep up with the foreclosure ‘consultants’ and even passed legistlation requiring registration and licensing. But, many innocent, ignorant and desperate homeowners are still being SCAMMED on a regular basis. Self procalimed ‘Experts’ like Garfield tend to flourish in ecomonic times like this.

I have attended at least four local meetings her in Vegas that all pitch slight variations on Garfields approach to ‘fighting back’ with the tools he provides from ‘Living Lies’. I’ve met with an attorney listed as a reference for one of these companies who represents homeowers in predatory lending situations…he was not the least positive about the outcome. On the other hand, I’ve met with 60+ people in a $2,000,000 home with the owner who shared his personal experience in using this ‘Administrative Process’ to reconvey his property back into his name (I’m still trying to get eyes on proof of this claim). Every week I hear from somebody who’s considering trying this Living Lies strategy…mainly out of desperation.

I’ve seen the paperwork and process and the claims, claims and more claims…but no proof as you say. I’ve even started to document this investigation to help inform and warn others like the gray haired lady and her elderly husband who asked at one of these meetings…”If I am already in the Foreclosure Process will your methods effect my credit rating?” That really sadden me to think that people really don’t know what they’re getting themselves into.

I have looked for others in Nevada who can validate, proof positive, that Neils methods will work in Nevada. So far, I haven’t found anyone…except those who CLAIM sucess.

His methods are also being combined with what’s called ‘Accepted for Value” …A4V for short. As I understand it, this involves paying your debts from your “Treasury Account” that is based upon your Birth Certificate. I’ve heard so many claims about this for paying credit cards, mortgages, etc. it’s amazing how much buzz there is about this. But, as I say again…how can the average guy or gal validate an of this with the IRS and Treasury Dept?

Tonight is the first time I came upon your blog…based upon a search I googled for Neil Garfield. I have yet another meeting with yet another person making claims that they helped people by using the LIVING LIES principles.

The report I am writing entitiled “Mortgage Elimination Education – Fact or Fiction” could use the input by someone with better creditials than mine. If you know of anyone … hint…hint… in Nevada whom I may confer with I would appreciate hearing from anyone both pro or con.
skeptical-optimist-1 says:

April 10, 2010 at 12:38 am

I also heard of a few others ‘educating’ people.

Any comments would be appreciated.
admin says:

April 10, 2010 at 5:00 am

I have picked up on your hint. Feel free to contact me at the phone number on the website or send me over anything you would like my opinion on.

From what I’ve seen with the “Accepted For Value” programs (it also goes by different names) is that it is essentially the same thing as those Money Merge Accounts scams that were floating around about three years ago. It’s the BS but in a different package.
Capt. Jack says:

April 10, 2010 at 1:09 pm

I’m not here to defend Neil Garfield or Brad Kaiser or the Livinglies website. I am here to question how you differentiate yourself from them.

Where is your resume? Is everyone doomed without your service? Surely you are not suggesting you are the only one with the skills to defend against fraud.
Capt. Jack says:

April 10, 2010 at 2:03 pm

What is the policy here on posting links? I see that mine were “trimmed” but others are allowed!

Very revealing!
admin says:

April 10, 2010 at 2:10 pm

There are several big difference between what I do and what Neil Garfield and Brad Keiser do. First, I don’t encourage people to play Perry Mason without a law degree. I will not take a client on unless they have either retained a attorney or have spoken to an attorney before they hire me to tear apart their mortgage. Matter of fact, I won’t do business with pro se litigants because of the problems they create. They exacerbate the problem of their foreclosure because they read on the internet that foreclosure defense is easy and they can simply walk into foreclosure hearing and walk out with a free house. Here’s a perfect example from the client I mentioned in the article. In his answer that he copied and pasted off Living Lies, he accused the Lender of violating “Florida mini-FTC laws”. This was actually in the sample Neil and Brad had on the website. There is a huge problem with this because Florida never called the Florida Deceptive and Unfair Trade Practices Act (Florida Statute 501) a “Florida Mini-FTC”. Neil Garfield being a member of the Florida Bar and licensed attorney should know this.

Second, I don’t give my clients false expectations of what the outcome will be. Myself and the attorneys I work with (4 have gone to a Garfield seminar) all give the client realistic expectations of what to expect if they fight their foreclosure. The attorney also explains to them any alternatives, they feel may be better for the client.

I not saying and I never said foreclosure victims are doomed if they don’t use my services. I said the problem I have with what Neil Garfield and Brad Keiser do is that they do not manage the expectations of their clients or their readers. There are other companies out there doing excellent work. I will even bring on competitors to help me on files. If we are successful on file like Cindi Dixon (who operates Mela Capital Group) and I were on the Cirigliano file, I have no problem sharing the accolades or the credit.
admin says:

April 10, 2010 at 2:12 pm

Your post was “trimmed” because you were plugging your sites. The links were the only things removed.
Alina says:

April 10, 2010 at 3:30 pm

admin,

There is an old Texas saying – load your brain before you shoot off your mouth.

Above you state that Florida does not have a mini-FTC statute. First let me begin by enlightening you. Every state’s UDAP statute is patterned after the FTC, therefore they are commonly referred to as the mini-FTC. If you want to proof of this, I have plenty of case law I can send to you. It appears from your statement and also from your disclaimer on the right of this site that you are not an attorney. But yet, you believe you have the right to negatively comment on an attorney’s work.

The homeowner in your story was unprepared. He copied and pasted something for which he was not versed in. However, this is in no way Neil’s or Brad’s fault. The Living Lies site should be used as a starting point. From there every homeowner should be taxed with the duty to research their own state’s laws, rules, statutes. The site have a vast amount of invaluable information.

Alina
endGOVTwaste says:

April 10, 2010 at 3:41 pm

This contradicts the MFI-Miami blogpost that appears above this one. There’s no way the courts are being clogged up by homeowners – the ones that know their rights and choose to defend themselves are few and far between. Comrad, you should embrace the fact that Mr. Garfield has enlightened many… for you to edit “snippets” of his site and brand him as an alarmist converting the masses into pro se litigants is completely BUNK. I think it is merely an attempt to use his name to further your stat counter!

When I search your name I find the article “Steve Dibert at MFI-Mod Squad Leaves Consumers Confused” & “Another Smart & Feisty Chick Doesn’t Take Any Crap From Martin Andelman, Steve Dibert or Aaron Krowne.” But this doesn’t mean I would go out and spread bad words about you and your company.

So what to do… post my comment and reply to me or delete my comment. I guess we’ll see what happens. Take care and please, lets try & stick together. We need all the help we can get (HB 1523).
admin says:

April 10, 2010 at 3:56 pm

Alina,
I didn’t say Florida didn’t have it’s own version of an FTC law, I said it’s not called “Mini-FTC” and no one in the legal profession here in Florida calls it that. I know because 90% of my business comes from law firms. They refer to as FS 501 or FDUTP. Again, the problem is that the majority of people who read that site substitute it for bona fide legal advice. As I told the other person who wrote a comment, I get 6-10 phone calls a week saying, “I read on Living Lies, I can do. . .” and usually followed by some theory the courts have already shot down. It’s usually some person with no legal training that thinks he’s Gerry Spence or Alan Dershowitz.
admin says:

April 10, 2010 at 4:26 pm

I haven’t seen that article. It was probably written by Erin Baldwin who was a self-proclaimed “fraud fighter” because she couldn’t qualify for a modification and lost her house. I later exposed her for being a scam and being mentally unbalanced. If not, it was Krista Railey who is a friend of everyone’s favorite ex-convict and illegal mod company operator Moe Bedard, who was mad because the three of us said nice things about a mod company she was hell bent on taking down.

I do agree about HB 1523. We need to put pressure on the Florida legislature to vote no on HB 1523. I will be posting an article about it Monday or Tuesday. Feel free to cut paste the information from the article. I’m also going to make up flyers people can print out and pass out in their neighborhoods. I have a call into some trial lawyers who are going to help. I will also spread the word with my friends in the Florida media next week as well.
ppulatie says:

April 10, 2010 at 6:37 pm

I work with attorneys in CA, doing examinations. I have many of the same concerns as Steve. To give all an idea:

1. Garfield talks about the “2nd Yield Spread Premium” paid to lenders. The YSP is based upon the purchase price of the bonds, and also when the interest rate changes on a adjustable rate loan. There is no potential way that these differences could ever be considered YSP and need to be disclosed.

YSP is a payment to a broker for placing a borrower into a higher interest rate than what they were qualified for. It is a required disclosure.

When a lender sells a loan, if they receive a “YSP”, it is not a requirement for disclosure. This “YSP” has occurred after the sell, so how could it be disclosed anyway?

When bonds are sold, that is a completely different transaction, and cannot be considered a YSP. Those would fall under Security Laws, anyway, and not TILA or RESPA.

2. In his seminars, Garfield quotes 226.34, the section that covers the requirement of the lender to determine the ability of the borrower to repay the loan. This sounds great, unless one knows that statute. 226.34 ONLY applies to HOEPA loans, of which there are very few done. It does not apply to 99% of the loans that were done. I see attorneys file complaints with 226.34 alleged, and I can immediately sees the flaws in the arguments. This should get tossed, if the lenders have competent attorneys.

BTW, most attorneys and even auditors do not realize that the “CAP” on the interest rate is not to be used in determining HOEPA violations. It is the Fully Amortized Rate.

3. Garfield and others have made representations that the securitization of the Note changes the character of the Note and that it might make the loan no longer forecloseable. Under CA Uniform Commercial Code, and I suspect most others, the Code covers this and allows for such foreclosures.

4. Most of the cases that are posted on the website are preliminary rulings or they are the initial complaints. As such, they have not generally would their way through appeal, and until they do so, the cases are not much use.

5. Garfield does not really expound upon the fact that case law is jurisdictional, and what might work in one jurisdiction, would not work in another.

6. Foreclosure law is state specific. And Non-Judicial v Judicial foreclosures are completely different animals.

7. The Countrywide/B of A Class Action in Washington that Garfield posted, has major issues with the complaint. It alleges violations of HAMP. I tried to point out these issues, with regard to the fact that HAMP does not guarantee a loan modification, nor is there likely a Private Right of Action, among other issues. Furthermore, many of the claimants in the action would not qualify for HAMP, but unless the attorneys fully understand this, and only a few do, then it will pose issues for determining Class members. Garfield deleted my post for this. This occurs each and every time that I right something contradictory to what he writes.

Garfied also deleted my post ragarding a case that Max Gardner, the BK attorney posted. Gardner made mention when “MERS transfers the Note”. I called him out on this and suggested that either Gardner “mis-wrote” or he was in error. The reason is that MERS does not transfer a Note. The Note is endorsed, usually in blank, and transferred by the original lender to the Trust. MERS only transfers the Deed. (I also explained other issues that could be exploited.)

Well, that post was deleted as well. And Gardner’s comments have not been corrected. If Garfield is not willing to correct false or incorrect information, then what good is he?

8. Most attorneys that I know who went to his seminar in CA, also say that much of his info is useless, if not garbage.

9. He promotes seminars, whereby he will train people in forensic analysis and expert witness testimony in just a couple of days. This is pure bunk. There is too much to know and understand in just a couple of days. The concepts and the statutes and case law are just too complicated. Especially so when you consider California, whereby one court will rule one way, and another court will rule the opposite, both in the same day, and the merits are the same.

Expert Witness? That is a joke. There are only a few people I know that are competent to be an expert witness. And those people have no desire to be one. That is because the “true auditor” can look at a file and see not just lender fraud, but also broker fraud and borrower fraud. The lenders that know what I do would love to get me on the stand because they know that I would be able to also indict most borrowers, if questioned correctly. That is why each of my Predatory Lending Exams, I provide the attorney a separate Comment Sheet, apart from the Exam, which details the other issues and how the lender will discredit the borrower.

I do not do Pro Se litigants either. They end up wanting me to act as an attorney for them, and I am not one and do not pretend to be. It is just that over 30 months of doing this, I understand how CA courts work, and what works in the court and does not.

When a homeowner calls, I will talk with them a bit, to find out what is going on. I then refer them to an attorney. I will not work with a homeowner without an attorney who litigates. I will not work with attorneys who simply do loan modifications. I do not contact lenders, servicers or other entities, because under CA law, I then become a foreclosure consultant. I have been checked out twice by the CA DRE and both times, they have concluded that I am doing things “right” and in accordance with CA law.

I make no representations about what I do and what it can accomplish. In fact, I tell people that there are no guarantees about what will occur. The best that can be hoped for is to bring the lender to the table for a loan modification. There will be no principal reductions, or getting homes for free. Better to be realistic, that give them false hopes.

That said, I am working with three different Class Action law firms, to attack lenders on specific items I have discovered. These are very narrow issues, and are designed to prevent Federal Preemption arguments, but they do have a Private Right to Action. These will be interesting to see what happens. They won’t help everyone, but they will help many.

I know that the Garfield followers will likely not care for what I write. But, it is time to address the issues and let the chips fall where they do. I am tired of the blatant misrepresentations or errors by so many people who claim to be “auditors” and other foreclosure assistance personnel. Unfortunately, there are too many “scam artists” out there, epecially in CA, and no, I am not calling Garfield a scam artist, and are just preying on homeowners in trouble.
Elvis says:

April 11, 2010 at 5:39 pm

Steve
Really…the axe you are grinding with Garfield and Keiser just discredits you. First, like you I have attended the Lawyers seminar. They both are very clear that their target audience is Lawyers and that homeowners need to have “competent” local counsel and the objective of their seminars is to surface competent lawyers willing to take foreclosure defense cases that homeowners can be referred to, since you are not a lawyer you may not have picked up on this… So your whole diatribe that they have “unleashed an army of Pro Se litigants” is patently false.

I have followed the blog for sometime and I know you used to post frequently and include the link to your site to solicit “loan audit” business.

Essentially, you were “trolling” the Livinglies site for customers for loan audits. Since you say you have four lawyers that you work for that have attended the Garfield seminar, I can only assume you like many other “loan auditors” (including Mr. Pulatie who posts here)have also used the list of lawyers posted to benefit homeowners the site as a prospect list to solicit business. Just curious have you ever sent a dollar of donation to the Livinglies blog site? I bet not. I have.

If homeowners cannot find competent lawyers to represent them and have to go Pro Se and use the internet, well you have to admit the Livinglies site is a good resource for them. The fact is there are not enough lawyers to serve the homeowners that need help, but like “loan auditors” there are even more lawyers that will take homeowners money an DO NOTHING…because they don’t know what to do.

So really this whole article is misguided, Garfield and Keiser have as another poster here commented “enlighted” thousands, maybe hundred of thousands to the reality of the fraud taking place with these foreclosures, helped many lawyers and homeowners who they will probably never meet and you want to take issue with “snippets” of their materials. Really we all need to work together. I do have to hand it to you if this was a strategy to increase the stats/hits on your website its not a bad angle. If you have the “nads” to actually allow this comment to be posted, then good for you. If not you will be confirming that you are just another fringe player out there trying to leverage Livinglies and the work that Garfield and Keiser have done to enlighten the marketplace and homeowners to the facts for your own benefit.(I think you used the term “its all about the Benjamins”)

Oh and by the way a recent post on Livinglies re: “Produce the Note is Not Enough” kind of contradicts your point that Garfield originated that angle…it was April Charney long before Garfield came along, I like to give credit where credit is due…but since you only started your business a little less than two years ago you may have not known that…did you by chance attend their Forensic Mortgage Analysis Workshop a couple weeks ago? I talked to a couple folks who did and they were very impressed and felt it was worth the money. I am just hoping they will do one in the East sometime soon.

Hopefully you actually allow this comment to be posted…if not I understand your agenda.

Truth
admin says:

April 11, 2010 at 6:35 pm

Elvis,

First, I don’t have an “axe to grind” against Neil and Brad. If you actually read the article you would have known that. You and other Neil Garfield Groupies make a lot of assumptions about how I run my business, how I market my company and my motivations. I find it interesting all of you want to question my testicular fortitude but none of you have the spine to post your real names on these posts.

Besides, I really don’t need to start a blog war with Neil Garfield to increase my SEO. I get plenty of traffic from the exposure I get from international media. I find it interesting that the people helping drive traffic to this site are the upset Garfield Groupies who keep pasting the link and spreading it around.

Those quotes where from his handbook were not “snippets.” They were the actual quotes from his hand book. Look at both page 4 and 5 of his handbook.

Tell you what, if you can show me 5 cases of a pro se litigants who were awarded a free and clear title to their home using the what they learned at a Garfield seminar without the help of a lawyer, I will retract the article.

Also, why would I “donate” to a website that is clearly a marketing tool for a for-profit venture. Does that mean I should ask you for an $11 donation for my Go Daddy bill next month?
ppulatie says:

April 11, 2010 at 7:27 pm

For the record, I do not recommend any attorneys from the Neil Garfield website. Heck, most of those who attended the CA seminars quickly understood that CA law is different from Florida, and what works in Florida does not work in Ca. I only accept work from attorneys who I interview, and know that they will do good work. I work for very few attorneys as a result, because most attorneys really haven’t got past the first three months of a learning curve that is needed in CA.

CA Civil Code 2924 is considered “exhaustive” and as such, Produce the Note does not work. 2924 has no requirement. Nor do other arguments that Garfield talks about.

I will say that I was more than happy to see that Garfield did write recently about using reasonable arguments and not theories that courts were not ready for. But prior to that post, he had never mentioned such before, and so large numbers of homeowners were led astray. I know, because I have read the complaints filed by these Pro Se litigants, and I have talked with large numbers on the phone. That is a major reason why I do not do retail audits, and only work through attorneys.

BTW, the post previous to this one was the very first one I had ever done on this website. I only respond to your post to explain that I do not work with attorneys on Garfield’s list.

Also, I should note that I do not do audits outside of CA and a couple of other states. That is because the laws are so different and the case law per state takes months to really understand. To be proficient in other states, a person must understand what is going on and tailor the exam to what the courts in that state will accept. Otherwise, the exam is a waste of money. That is why I have consistently turned down offers to take my operation nationwide.

Also, I have found that to train an examiner, it takes at least a year of very hard work and effort. It is not about plugging information into a software program, as most so called auditors do. It is about understanding the statutes, the lending process, underwriting process, and knowing and keeping up to date on case law. As well, it is an intuitive feel for what happens in the loan process.

That is why I differentiate my operations from others. I don’t do forensic audits. I do Predatory Lending Exams. That is far beyond what all but a few companies will ever do, because they don’t understand the full process. Most were former loan officers who decided to jump into this business long after people like Steve and I developed it. They never took the time to learn the law, go into court and watch what happened, and they never tried to read the case law and understand how it related to loans.

And that is why, when I start working with knowledgeable attorneys, they come back time and again.

foreclosure out of control

Foreclosure Paperwork Scandal ‘Same Process’ That Fed The Housing Bubble

Foreclosure Crisis Has Disproportionately Affected African-Americans, Study Says

Nervous Insurer Halts New Policies Over Foreclosure Docs

Maria Foscarinis, 10.04.2010

Founder and executive director, National Law Center on Homelessness and Poverty

Human habitat is a broad term. But no matter the definition, it includes a safe, secure place to live: a home.

Read Post | Comments

Homeowner Activists and Attorneys Vindicated After Years of Being Ignored

Richard Zombeck, 10.04.2010

Eyes and Ears Mortgage Specialist and ShametheBanks.org Founder

Recent news of blatant fraud on the part of mortgage lenders and servicers has offered proof that homeowner activists’ actions have not been in vain.

Read Post | Comments (19)

While We Are On the Subject of Bad Foreclosures, What About HAMP’s Compliance?

Anna Cuevas, 10.02.2010

The American public is losing countless homes due to non-compliance in procedures and incorrect answers being given to homeowners. You must be your own best advocate and question authority.

Read Post | Comments (27)

The Big Squeeze — Unwitting Tenants Caught Between Defaulting Owners and the Banks

Gary Stein, 09.30.2010

Health Reform Advocate

An interesting by-product of any downturn in an economy is that you can categorize the stakeholders into four categories — victims, users, scavengers and survivors.

Read Post | Comments

Profiles in Doing Both: The Resiliency of the American Real Estate Agent

Inder Sidhu, 09.30.2010

Senior Vice President of Strategy and Planning for Worldwide Operations at Cisco

If you’re one of the 11 million Americans who owe more on their mortgages than their properties are worth, the last person you probably want to hear f…

Read Post | Comments

THE WEASEL BLINKS

Alfred Gingold, 09.29.2010

Writer, actor

Readers of my recent posts know that my wife and I are locked in combat with our mortgage bank, which persists in creating false penalties to add to o…

Read Post | Comments

Fight Brewing Over the Best Law You’ve Never Heard of

Preeti Vissa, 09.28.2010

Community Reinvestment Director, The Greenlining Institute

What if there was a law that told big corporations that they have responsibilities to the communities they serve? There is. It’s called the Community Reinvestment Act and a fight over it’s future is brewing in Congress.

Read Post | Comments

Will the Fed’s Zero Rate Policy Bring Another Speculative Bubble?

Jeffrey Rubin, 09.28.2010

Economist

If the Fed is blaming the last recession on the financial meltdown from the subprime mortgage market, why is it keeping interest rates effectively at zero, which could recreate those same credit conditions?

Read Post | Comments (10)

The Final HUD OIG Report on AHCOA

Mike Shea, 10.04.2010

Executive Director of Affordable Housing Centers of America

The Department of Housing and Urban Development’s Office of the Inspector General (HUD OIG) has issued a final report evaluating the use of grant fund…

Read Post | Comments

What Wall Street Thinks of Wall Street

Danny Groner, 09.26.2010

Video Editor/Online Assistant Editor at TheWeek.com

With movie critics split on the film, here’s a look at what Wall Street’s real bankers — and those who cover them — had to say about the movie, its 1987 original, and the larger-than-life Gordon Gekko.

Read Post | Comments

I Know Firsthand That When Mortgage Banks Compete, You’re Screwed

Jane White, 09.24.2010

Author, America, Welcome to the Poorhouse

Until we get Democrats in office who work for the electorate, we can’t count on legislation to mandate plain-English disclosure, or better yet, prohibit irresponsible lending so disclosure won’t be necessary.

Read Post | Comments (24)

A LETTER TO JAMIE DIMON

Alfred Gingold, 09.23.2010

Writer, actor

Readers of my last Chase Home Weasel Update on Huffpo know that we are four weeks past the talk with the Tax Department’s dulcet JoAnne, during which …

Read Post | Comments

Michelle Obama’s Mortgage

Sunil Adam, 09.22.2010

Editor, “The Indian American”

…

Read Post | Comments

Reagan’s Welfare Queen has Morphed into the Health Care Queen

Howard Steven Friedman, 09.22.2010

Statistician/Economist for International Organization; Columbia University

Welfare Queens are portrayed as lazy leeches on society, pilfering money from “hard working people’s taxes.” In any large group, some will take advantage of the system, but that doesn’t mean the system should be abolished.

Read Post | Comments

Weekly Audit: Can Elizabeth Warren Save the Economy?

The Media Consortium, 09.21.2010

Network of Leading Progressive Independent Journalism Organizations

by Zach Carter, Media Consortium blogger President Barack Obama’s decision to appoint Elizabeth Warren to set up the new Consumer Financial Protection…

Read Post | Comments

Low Credit Scores Challenge Recovery in Illinois Communities of Color, but All Is Not Lost

Dory Rand, 09.17.2010

President, Woodstock Institute

Over half of the people in Illinois’ predominantly African-American communities likely would not qualify for low-cost, prime credit. What does this mean for these neighborhoods’ chances for revitalization?

Read Post | Comments (10)

One in Seven Live in Poverty — and Counting

Maria Foscarinis, 09.16.2010

Founder and executive director, National Law Center on Homelessness and Poverty

This number reflects a record increase in poverty over the previous year. But it does not capture many of those who are suffering the most: homeless Americans.

Read Post | Comments

Expanded Mortgage Disclosure Through HMDA Reform Would Detect Discrimination, Unsustainable Loans

Dory Rand, 09.16.2010

President, Woodstock Institute

HMDA is a crucial tool in the fight against discriminatory lending, but the data currently collected is not sensitive enough to detect some of the problematic practices that triggered the foreclosure crisis.

Read Post | Comments

Judith Sandalow: Politicians Are Failing An Entire Generation Of Children

Diane Tucker, 09.26.2010

Writer/producer/director living in Washington DC

In the shadow of the White House, nearly 45,000 American children live in poverty, a number that has been soaring since 2007. The District of Columbia…

Read Post | Comments (13)

Fixing America’s Broken Housing Market

Joseph E. Stiglitz, 09.15.2010

Professor at Columbia University and a Nobel Laureate in Economics

The Obama administration’s reluctant and belated recognition that its efforts to get the housing and mortgage markets working again have largely failed.

	Randolph Frodsham on Viral Burger King Worker Fired…
	April on Prosecuting Violations of the…
	Kansas Supreme Court… on MERS Is Dead: Can Be Sued For…
	frontncenter on NOMI PRINS…Foreclosure c…
	Yadullah westry on Robo-signers List

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Suggestions

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Bank Robo-Signers Oust Homeowners

Share this:

Debunking the Gospel of Garfield

Comments

Share this:

Share this: