Has Erica Johnson-Seck met her match in the person of Elpiniki Bechakas in the robo signer hall of shame?

Nicholas M. Moccia, Esq.
Law Offices of Robert E. Brown, P.C.

During the course of drafting a reply affirmation in support of a motion to dismiss a foreclosure action, I encountered an unusual assignment of mortgage emanating from the Law Office of Steven J. Baum, P.C.  An assignment of mortgage is a crucial document for foreclosing banks and their attorneys because this document is usually the only way a bank can prove it owns a particular mortgage and, therefore, prove it has the legal right to foreclose—i.e. that the bank has standing.  An assignment memorializes an arms-length transfer of a mortgage from one bank to another.   A sizeable portion of mortgage assignments produced by Baum’s office are executed by a certain Elpiniki Bechakas, Esq., who is an attorney from Baum’s office.  In my motion papers, I regularly question Ms. Bechakas’ legal capacity to execute mortgage assignments because, as an attorney, she should not be representing multiple parties in an arms length transaction.  It’s like having the same attorney simultaneously representing the buyer and seller of a house while having permission to sign all legal documents on behalf of both the buyer and seller.  There is an obvious conflict of interest.  The response from Baum’s office is that she has authority to sign from the various financial institutions.  Some judges agree with Baum’s position, some agree with mine—it depends on the ideology of the judge and what else is going on with the case.

However, this time something was truly amiss with the latest Bechakas assignment that came my way.  Here, the signature seemed a little too bubbly, and not the angular scrawl that I have grown to know and love.  And then it occurred to me, could it be that Ms. Bechakas is a robo signer? or better yet, could it be she now has a team of ghost signers who robo sign on her behalf? For your reading pleasure--and for those pro se defendants who have taken to plagiarizing my blog posts--I have pasted below a new, that is to say, untested point heading wherein I question the authenticity of an assignment of mortgage executed by Ms. Bechakas.  Also, included is a link to the dubiously executed mortgage assignment, and other samples of Ms. Bechakas' signature should you be inclined to make the comparison yourself.

THE ASSIGNMENT OF MORTGAGE PROVIDED BY PLAINTIFF’S COUNSEL APPEARS TO BE FORGED OR IS THE PRODUCT OF A “ROBO SIGNER” AND IS THEREFORE DEFECTIVE ON ITS FACE

14.         Plaintiff, in support of its position that it does have standing to foreclose, provides an Assignment of Mortgage executed on May 11, 2010, and annexed as Exhibit C to the Plaintiff’s Aff. in Opp.

15.         The Assignment of Mortgage was purportedly executed by Elpiniki Bechakas, Esq., an attorney associated with Plaintiff’s counsel, Steven J. Baum, P.C.  Remarkably, the Assignment of Mortgage does not in any way reveal Ms. Bechakas’ association with Plaintiff’s counsel.

16.         Most curiously, the signature of Elpiniki Bechakas—a signature with which I have become well familiar—is notably different than the signature of Elpiniki Bechakas on other assignments of mortgage that I have encountered.  See seven assignments of mortgage pertaining to other matters handled by this firm executed by Elpiniki Bechakas annexed hereto as Exhibit “B”.

17.         A comparison of the signatures of Ms. Bechakas on the annexed assignments of mortgage reveal a pronounced difference in the shaping and curvature of the letters as compared to the signature found on the Assignment of Mortgage proffered by Plaintiff in its Aff. in Opp. at Ex. C.

18.         The difference in form of the signatures apparently suggests that the Assignment of Mortgage supplied by Plaintiff’s counsel was forged or the product of a “robo signer”.  Accordingly, the Assignment of Mortgage is suspect and should be disregarded by the Court for determining the Plaintiff’s standing to bring this action, unless and until Plaintiff’s counsel can prove its authenticity. 

19.         To be sure, the multitude of mortgage assignments executed by Ms. Bechakas for scores of different financial institutions bears all the tell-tale signs of the notorious robo signers, who have gotten so much attention of late.[1]

20.         In Onewest Bank, F.S.B. v. Drayton, 2010 N.Y. Slip Op 20429, 29 Misc.3d 857 (Sup. Ct. Kings County, October 21, 2010), a Kings County judge wrote with reference to Erica Johnson-Seck, a notorious robo signer alluded to in footnote 1 infra, as follows:

A "robo-signer" is a person who quickly signs hundreds or thousands of foreclosure documents in a month, despite swearing that he or she has personally reviewed the mortgage documents but has not done so. Ms. Johnson-Seck, in a July 9, 2010 deposition taken in a Palm Beach County, Florida foreclosure case, admitted that she: is a "robo-signer" who executes about 750 mortgage documents a week, without a notary public present; does not spend more than 30 seconds signing each document; does not read the documents before signing them; and did not provide me with affidavits about her employment in two prior cases. (See Stephanie Armour, Mistakes Widespread on Foreclosures, Lawyers Say, USA Today, Sept. 27, 2010; Ariana Eunjung Cha, OneWest Bank Employee: 'Not More Than 30 Seconds' to Sign Each Foreclosure Document, Washington Post, Sept. 30, 2010.)

21.         There is every reason to believe that Ms. Bechakas has likewise engaged in such practices.

---

[1] See “Robo Signer Update List for Feb. 28, 2011”, wherein Ms. Bechakas is conspicuously included in the list along with other known robo signers, such as the now legendary Erica Johnson-Seck: http://dell.beforeitsnews.com/story/447/809/Robo_Signer_Update_List_For_Feb.28,_2011.html

Spurious Elpiniki Bechakas Assignment

Elpiniki Bechakas signature sampler

Governor Cuomo! Are you taking our Judicial Hearing Officers away?

Nicholas M. Moccia, Esq.

Law Offices of Robert E. Brown, P.C.

Full disclosure:  I am a fiscal conservative and strongly supportive of our Governor’s strict budgetary measures.  “We need to make sacrifices.”  Indeed, I cheerfully applaud the sacrificial slaughter of our ponderous state bureaucracy; however, I strongly question the wisdom of discontinuing the Judicial Hearing Officer (“JHO”) program.  The JHOs are a group of retired judges who help the New York State Court system manage its heavy case load.  JHOs play an extremely important role in the foreclosure context as they facilitate the progress of cases in the foreclosure conference parts wherein homeowners are given an opportunity to settle with their banks via loan modifications.  JHOs also preside over traverse hearings and play an important role in the disposition of matrimonial matters.

I work closely with JHOs almost daily in each of the five boroughs of the  City of New York.  I find the JHOs to be essential to the efficient working of our court system.  To cut the JHO program would be catastrophic, and would probably make the system much more costly both to the State and to the people whom it serves.  Kings County in particular would fall apart without its JHOs.  Especial kudos to the Hon. Michael V. Ajello (JHO) of Richmond County and the Hon. Lewis Douglass (JHO), both of whom I find to be particularly helpful.

For more on the JHO issue, see article below.

Group of Hardworking Retired NY Judges Face Layoffs

Justice Anthony I. Giacobbe of the Supreme Court, Richmond County, opines that standing is a waivable defense

Nicholas M. Moccia, Esq.

Law Offices of Robert E. Brown, P.C.

In a remarkable decision, Justice Giacobbe of the Supreme Court, Richmond County, held that standing was a waivable defense in the mortgage foreclosure context.  See Flagstar Bank, FSB, v. Louis P. Bonaccolta et al., 2011 N.Y. Slip Op 30645(U)(Sup. Ct. Richmond County March 10, 2011).

The following factual circumstances underlie this matter:   Flagstar Bank ("Plaintiff Bank") commences a foreclosure action against Louis P. Bonaccolta ("Defendant Borrower").  Plaintiff Bank obtains a judgment of foreclosure and sale, and schedules an foreclosure auction.  Defendant Borrower brings an Order to Show Cause to stay the foreclosure sale and requests that the Court give him more time to negotiate a short sale with the Plaintiff Bank.  Defendant Borrower argues that the foreclosure auction should be stayed by attacking the regularity of the notice of foreclosure sale of the premises, arguing that he received said notice by regular mail a mere two days before the foreclosure auction.  Defendant Borrower contends that such short notice was improper and unfair, placing the defendant "at such a disadvantage to protect his interest in 385 Ramona Avenue."  Nevertheless, the Defendant Borrower acknowledges receipt of the notice of foreclosure sale.  The Court also notes that the Defendant Borrower's attempt to sell the property via a short sale or to renegotiate the terms of the loan were fruitless.  Lastly, but most significantly, the Defendant Borrower argues in his Reply that the Plaintiff bank lacked standing to bring the foreclosure.

With regard to the Defendant Borrower's standing argument, Justice Giacobbe opines as follows:

Turning to the defendant's argument that "it may be that Flagstar Bank, FSB is not the proper mortgagor [sic]" such that plaintiff may lack sufficient standing to sue, such argument is improperly raised for the first time in his Reply, and therefore, will not be considered.  See, generally, Burlington Insurance Co. v. Guma Construction Corp., 66 A.D.3d 622 (2d Dep't 2009); Pinkston v. Weiss, 238 A.D.2d 393 (2d Dep't 1997).  Moreover, were the Court to consider it, such argument would be unavailing, particularly in light of the fact that defendant is not contesting service and that the affidavits of service appear regular on their face, because where, as here, a defendant has failed to raise the affirmative defense of a plaintiff's lack of standing in an answer or pre-answer motion to dismiss, the objection is deemed waived.  HSBC Bank, USA v. Dammond, 59 A.D.3d 679 (2d Dep't 2009); Wells Fargo Bank Minnesota, NA v. Mastropaolo, 42 A.D.3d 239 (2d Dep't 2007).

Justice Giacobbe's position is remarkable insofar as there is some disagreement among Staten Island judges regarding the waivability of the standing defense.  Justice Maltese quite explicitly holds that standing is never waivable and the defense can be raised at any time. See e.g. Deutsche Bank National Trust Company v Abbate, 25 Misc 3d 1216(A) 2009 NYSlipOp 52154(U) (Sup. Ct. Richmond County October 6, 2009). Justice McMahon, however, is in agreement with Justice Giacobbe and regularly holds that standing is a waivable defense. In my experience, Justice Fusco, Justice Aliotta and Justice Minardo, have not ruled one way or another on the standing issue; rather, they appear to avoid the issue in the foreclosure context and seem to make a point of rendering their decisions on some other basis.

For my part, I respectfully disagree with Justice Giacobbe and Justice McMahon on the standing issue, and agree with the Justice Maltese that standing cannot be waived.  I cite Aurora Loan Services, LLC, v. Thomas, 70 A.D.3d 986, 897 N.Y.S.2d 140 (2d Dep't 2010), wherein the Second Department held that a defendant borrower in a foreclosure action did not waive the defense of lack of standing--notwithstanding the Mastropaolo decision, notably cited as authority by J. Giacobbe--and further held that the defendant borrower should be granted leave to amend his pleadings to include lack of standing as an affirmative defense.  Indeed, the Second Department explicitly distinguished its position from that of Mastropaolo.  With regard to amending pleadings, leave to amend is to be freely given absent prejudice or surprise on the other party.  Essentially, the Second Department is saying that standing cannot be waived, since motion to amend pleadings are almost always granted.

The bottom line is that standing, according to the Second Department, isn't automatically waived even if the defense  happens to not be raised in an answer or pre-answer motion to dismiss.  The Court of Appeals held that “[s]tanding to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked.”  See Saratoga County Chamber of Commerce, Inc. v Pataki, 100 N.Y.2d, 801, 812 (2003), cert denied 540 U.S. 1017, 124 S. Ct. 570, 157 L. Ed. 2d 430 (2003).

The ugly truth about Obama's HAMP loan modification program revealed in New Jersey class action complaint

Nicholas M. Moccia, Esq.

Law Offices of Robert E. Brown, P.C.

I had the opportunity to review a class action complaint recently filed in the U.S. District Court of New Jersey, wherein it is alleged that Citimortgage flagrantly disregards its obligations to offer loan modifications to New Jersey homeowners under Obama's Home Affordable Modifcation Program ("HAMP") notwithstanding the fact that Citimortgage received some $45 billion in TARP money on the condition that it participate in HAMP program.  See Juan Silva and Elizabeth Silva v. Citmortgage, Inc., 11-CV-01432 (D.C.N.J.).  The full text of the complaint may be accessed here:

  Silva v. Citimortgage complaint, 11-CV-01432


In light of the fact that I spend a good portion of my week working with banks to get my clients loan modifications under HAMP, I believe that I can say with some authority that the HAMP program is nothing less than an embarrassing failure for the Obama administration.  The allegations made in the Silva complaint are sadly all-too-familiar in my dealings, not only with Citimortgage, but with other lenders.

The plaintiff borrowers allege that Citimortgage intentionally set up its loan modification program to fail, and that Citimortgage instituted its HAMP program in order to feign compliance with TARP's conditions, although it never had any intention to allow widespread loan modifications for homeowners.  The complaint, in my opinion, correctly identifies a number of  financial factors that make it more profitable for a financial institution like Citimortgage to avoid modification and to continue to keep a mortgage in a state of default or distress and push loans to foreclosure.  The specifics factors may be found in ¶9 of the Silva complaint.  As a result, Citimortgage is incentivized to (1) maintain borrowers in default and delay decisions on modifications so that they can generate income through the imposition of late fees and inspection fees; (2) capitalize arrears to increase principal balances; and (3) create additional float income by putting borrowers in foreclosure.

In particular, the following allegation in ¶51 of the Silva complaint strongly resonated with me and was very reminiscent of a specific recent experience I myself had in my dealings with Citimortgage:

Throughout the HAMP application process, Citi also repeatedly and inappropriately demands that borrowers update their application materials, while warning homeowners that their modification is at risk and threatening to deny the modification if they fail to comply with requests.  Typically, Citi requests the same document(s) over and over. In other instance, it requests documentation that is irrational or impossible to obtain--such as W-2 forms for elderly individuals surviving on social security, or self-employment profit and loss statements for wage-earning employees. 

Citimortgage is not unique in its engagement in this paper shuffling charade.  This is standard operating procedure in the foreclosure conference parts throughout the City of New York--and, apparently, New Jersey as well.

In short, the Silva complaint alleges that Citimortgage has failed to comply with HAMP in a variety of ways and has essentially undermined the purpose of the program--namely, to help homeowners in foreclosure or facing the prospect of foreclosure make their loan payments more affordable during the current economic downturn.  For the past three years, the United States has been in a foreclosure crisis.  In late 2009, one in eight U.S. mortgages was in foreclosure or default, and 2.8 million homeowners received foreclosure notices in 2009.  New Jersey is among the top ten highest states for foreclosure filings.

Class Action Notice:

PHILADELPHIA, PA, March 16, 2011 (PRNEWSWIRE) -- The law firm of Berger & Montague, P.C. has filed a class action complaint in the United States District Court for the District of New Jersey on behalf of all New Jersey homeowners whose mortgage loans have been serviced by CitiMortgage, Inc., and who, since April 13, 2009, (1) have entered into a Trial Period Plan (“TPP”) contract with CitiMortgage and made all payments required by their TPP contract, but (2) have been denied a permanent loan modification agreement that complied with the U.S. Department of the Treasury’s Home Affordable Modification Program (“HAMP”) rules.

If you believe that you have been improperly denied a permanent loan modification by CitiMortgage, Inc., after April 13, 2009, please contact plaintiff’s counsel, Eric Lechtzin of Berger & Montague , P.C. at 888-891-2289 or 215-875-3000, or by e-mail at elechtzin@bm.net. A copy of the Complaint can be viewed on Berger & Montague, P.C.’s website at www.bergermontague.com or may be requested from the Court. The docket number is 11-cv-1432.

The Complaint alleges that CitiMortgage accepted billions in government bailout money under the Troubled Asset Relief Program (“TARP”) earmarked to help struggling homeowners avoid foreclosure. CitiMortgage, like other TARP-funded financial institutions, is contractually obligated to modify mortgage loans it services for homeowners who qualify under HAMP, a federal program designed to abate the foreclosure crisis by providing mortgage loan modifications to eligible homeowners.

According to the lawsuit, CitiMortgage systematically slows or thwarts homeowners’ requests to modify mortgages, depriving borrowers of federal bailout funds that could save them from foreclosure. The bank ends up reaping the financial benefits provided by TARP-funds and also collects higher fees and interest rates associated with stressed home loans.

For more information about this case, please contact:

Sherrie R. Savett, Esq.
Russell D. Paul, Esq.
Eric Lechtzin, Esq.
Kimberly A. Walker
BERGER & MONTAGUE, P.C.
1622 Locust Street
Philadelphia, PA 19103
Telephone: 1-888-891-2289 or 215-875-3000

Berger & Montague, founded in 1970, is a pioneer in class action litigation. The firm’s approximately 70 attorneys concentrate their practice in complex litigation, including consumer protection, securities fraud, whistleblower and false claims actions, antitrust.

Straniere trounces the credit card companies again in American Express Bank, FSB v. Dalbis

Nicholas M. Moccia, Esq.
Law Offices of Robert E. Brown, P.C.



Judge Straniere, a long time advocate of Staten Island consumers, renders a colorful and comprehensive decision whereby he dismisses a consumer credit case purportedly based on Utah law.  For those attorneys in the practice area or for those self-represented individuals interested in some insight on how to respond to a credit card summons in New York, here is the link to  Straniere's decision in full:

American Express Bank, FSB v Dalbis, 2011 NY Slip Op 50366(U)(Civ. Ct. Richmond County March 14, 2011)

I have included Judge Straniere's concluding remarks as a teaser:
 

Conclusion:

One of these days in your travels a guy is going to come to you and show you a nice brand-new deck of cards on which the seal is not yet broken, and this guy is going to offer to bet you that he can make the Jack of Spades jump out of the deck and squirt cider in your ear. But son, do not bet this man, for as sure as you stand there you are going to wind up with an earful of cider.^[FN11]

Credit card issuers and third party debt buyers have over the last few years been "squirting cider" in the ears of the court system...Plaintiffs should spend more time putting all fifty-two cards in the deck rather than just a Jack of Spades that can squirt cider in the court's ear.

Courts Overstepped in Requiring NY Attorneys to Sign Affirmations in Foreclosures

By Andrew Keshner | New York Law Journal

A state judge on Long Island has ruled that court administrators overstepped their rule-making powers when they required lenders' attorneys to attest to the accuracy of the documents they file in residential foreclosure actions.

Supreme Court Justice Thomas F. Whelan in Suffolk County concluded in LaSalle Bank v. Pace, 15822-2008, that no statute or legislative action gave Chief Judge Jonathan Lippman the power to require the attorney affirmations.

The judge granted summary judgment to LaSalle Bank in the action, approving an order of reference on the foreclosure of a Hampton Bays house. Among other defenses, the homeowners claimed the bank failed to supply the required affirmation.

According to court papers, the bank's attorneys later submitted the affirmation as part of papers in support of summary judgment. At any rate, Justice Whelan observed that the affirmation could be supplied at a later stage of the proceedings.

However, he went further, saying that he was "not convinced that the subject order constitutes a permissible exercise of the rule making authority vested in the chief administrator of the courts."

The judge noted that the Legislature had delegated to the courts the power to regulate the practice and procedure of settlement conferences it had mandated, but he said the administrators' rule-making authority did not give them "carte blanche" to "enlarge or abridge rights conferred by statute."

"This court can find no legislative delegation to the chief administrator by statute or otherwise which empowers the chief administrator to impose the substantive requirements that touch upon the nature and sufficiency of proof which the plaintiff must supply to the court in mortgage foreclosure actions," Justice Whelan wrote.

The affirmation requirement had "significantly" impaired lenders' "statutory remedy for foreclosure and sale," he said, pointing to a "vast reduction" in case filings and a "resounding halt" in the prosecution of foreclosure actions. And he said the requirement had had a "chilling" effect on the court's ability to exercise its own authority.

Christopher H. Thompson of Staten Island, the attorney for homeowners James F. and Linda Pace, said he planned to appeal.

"I am disappointed with the decision and although I respect Judge Whelan, I believe he misunderstands the law," he said. "I believe the court seized the opportunity to challenge the enforceability of the chief administrative judge's rules and directives."

James G. Ryan and Justin F. Capuano of Cullen & Dykman in Garden City represented LaSalle Bank. Mr. Ryan declined to comment.

David Bookstaver, a spokesman for the Office of Court Administration, said the affirmation requirement is still in force.

"We are aware of the decision," he said. "However, we are not a party to the case and we'll be watching to see if there's an appeal filed."

Judge Lippman announced the affirmation requirement last fall, as national concern grew over inaccurate court documents in residential foreclosures. Since then, the number of foreclosure filings has plummeted, with observers attributing that decline, at least in part, to the affirmation requirement.

Other judges are still enforcing the affirmation requirement.

Supreme Court Justice Peter H. Mayer in Suffolk Countyrecently denied a foreclosure action and ordered a sanction hearing. The decision was due, in part, because he faulted a submitted attorney affirmation that replaced the affirmation's official language of "diligent" inquiry with "reasonable" inquiry.

"[T]his Court requires counsel to submit an attorney affirmation in the specific form and with the specific language originally mandated by [Chief Administrative Judge Ann Pfau's] order of October 20, 2010," the judge said in Bayview Loan Servicing v. Bozymowski, 00296-2010.

A call for comment to Rosicki, Rosicki & Associates of Plainview, the firm representing the lender, was not returned.

Judge Thomas Whelan of Suffolk County, New York, defies directive of Chief Judge regarding foreclosures

Nicholas M. Moccia, Esq.
Law Offices of Robert E. Brown, P.C.

In LaSalle Bank, N.A. v. Pace, 2011 N.Y. Slip Op 21070, Judge Thomas of Whelan, of the Supreme Court of the State of New York, County of Suffolk, allows a foreclosure action to proceed notwithstanding the fact that the foreclosing bank failed to comply with the October 20, 2010, Administrative Order [#548-10] issued by Chief Administrative Judge Ann Pfau.  The Administrative Order, which has gotten much attention by foreclosure practitioners, requires counsel for the foreclosing banks to verify the accuracy of documents filed in support of residential foreclosure actions.

Judge Whelan opines that the Administrative Order is not binding on him based on New York State constitutional grounds.  His Honor writes,

The Administrative Order at issue and the recent amendment of 22 NYCRR 202.12-a, by the addition of subparagraph (f), which purports to establish the continuing authority of the Chief Administrative Judge to require the affirmations and affidavits that are the subject of the October 20, 2010 Administrative Order, are not administrative in nature, as they are not aimed at supervising the administration and operation of the Unified Court System or at the efficient and orderly transaction of business in the trial courts (see Judiciary Law § 211; 212[1]; 22 NYCRR 80.1[b]). They are, instead, "legislative" in nature, as their provisions purport to regulate practice and procedure in the courts (see NY Const. Art. VI, § 30; Judiciary Law § 212[2][d]). The legislative nature of the Administrative Order and the amendment of 22 NYCRR 202.12-a(f) are apparent even upon a most cursory review of their terms, as they impose additional, substantive requirements upon a plaintiff seeking the remedy of foreclosure that is not contemplated by the statutes which now regulate foreclosure actions (see RPAPL Article 13, CPLR 3408 and the Laws of 2009 Ch. 507 §§ 1,3,5,6,9,10,10-a)(Emphasis supplied).

Accordingly, Judge Whelan holds:

[T]his court finds that Administrative Order numbered 548-10 and the newly added subparagraph (f) to court rule 202.12-a, exceed the rule making authority of the Chief Administrative Judge, in her capacity as chief administrator of the courts.  (Emphasis supplied).

Thankfully, Judge Whelan's decision is not binding authority on other judges.  In my opinion--and I don't foresee myself practicing in Suffolk any time soon, so I can be blunt--this is a poor decision and appears to be nothing more that an elaborate rationalization for a deep-seated ideological bias favoring banks.  His decision does a disservice to homeowners, and wholly ignores the rampant documentary irregularities that occur in so many foreclosures. Instead, Judge Whelan concerns himself with the "chilling effect upon [his] court's adjudicatory authority and powers to determine issues raised in pending mortgage foreclosure actions duly assigned to it."

I'd like to hear from the Little Judge from Brooklyn on this one.

Judge Schack threatens Baum with sanctions for apparently attempting to collect a debt...from him!

Nicholas M. Moccia, Esq.
Law Offices of Robert E. Brown, P.C.

This is a classic Judge Schack moment in Wells Fargo Bank, N.A. v Zelouf, 2011 N.Y. Slip Op 50212[U].  To fully appreciate this, you have to deal with Baum's office on a regular basis.  Nearly every interaction or communication with his office is prefaced by the following mantra ad nauseam:

[t]he law firm of Steven J. Baum, P.C. and the attorneys whom it employs are debt collectors who are attempting to collect a debt. Any information obtained by them will be used for that purpose.

To be sure, Baum is required to give this warning to all his prospective judgment debtors in order to be in compliance with the Fair Debt Collection Practices Act.  However, in Zelouf, it appears an overzealous paralegal--I'll give the attorneys the benefit of the doubt on this one--had the misfortune to include the now-famous Fair Debt Collections mantra in a correspondence with Judge Schack.  You gotta love this guy's sense of humor.  The good Judge writes:

Further, plaintiff's counsel states in his notice of withdrawal, "[t]he Plaintiff will not be discontinuing the above referenced action." Moreover, in his cover letter to myself, plaintiff's counsel states that "[t]he law firm of Steven J. Baum, P.C. and the attorneys whom it employs are debt collectors who are attempting to collect a debt. Any information obtained by them will be used for that purpose." Since this statement was in a cover letter to me and does not appear to be preprinted on the letterhead of the Baum firm, the Court would like to know what debt it [*2]personally owes to the Baum firm or its clients? This statement borders upon frivolous conduct, in violation of 22 NYCRR § 130-1.1. Was it made to cause annoyance or alarm to the Court? Was it made to waste judicial resources? Rather than answer the above rhetorical questions, counsel for plaintiff is directed never to place such a foolish statement in a cover letter to this Court. If this occurs again, the firm of Steven J. Baum, P.C. is on notice that this Court will have the firm and the attorney who wrote this nonsensical statement appear to explain why the firm and the individual attorney should not be sanctioned for frivolous conduct.

Baum, there is no winning with the Little Judge from Brooklyn!

Joy Leopold does not quite get it right with regard to MERS

Nicholas M. Moccia, Esq.

Law Offices of Robert E. Brown, P.C.

Commentary:   The article below by Joy Leopold reports on a recent decision that came down in the Bankruptcy Court for the Eastern District of New York.  The caption of the case is In re: FERREL L. AGARD, Case No. 810-77338-reg.  This article misses the point in two respects with regard to MERS:   

First, a decision from the Bankruptcy Court, EDNY, is not binding on the Supreme Court of the State of New York.  It's perhaps persuasive authority, but it is not binding.  One gets the impression that Ms. Leopold overestimates the significance of this decision.

Second, Ms. Leopold fails to explain why MERS does not have the right to transfer mortgages or file foreclosures on behalf of lenders or its own behalf.  MERS is a "nominee" of banks and acts as a record keeper and clearing house for mortgages that are originated and sold by financial institutions.  MERS is an agent or middleman of sorts.  The most important fact about MERS is that it does not have an ownership interest in any mortgage and is never the holder of the note.  For this reason, it cannot on its own initiative transfer mortgages between banks, nor can it file foreclosure actions on its own behalf.  The problem with MERS is that it transfers mortgages and sometimes commences foreclosures without being able to demonstrate to the courts or to defaulting borrowers that it has the right to do so.  The mere title "nominee" does not give MERS carte blanche.  It needs to show a power of attorney or a corporate resolution from the financial institution that actually owns the mortgage [i.e. "the holder the note and mortgage"] in order to demonstrate that MERS has the capacity to make assignments or commence foreclosure actions.  MERS time and again has been unable to prove that it has such authority--for that reason its assignments of mortgage are defective; for that reason it does not have standing to commence foreclosure actions.  The bottom line is that courts and homeowners need to know that the correct financial institution is bringing the foreclosure action.  After all, this is not just about balance sheets and payment ledgers--it's about people's home.  

Banks, if you want to take someone's home, do it correctly and be able to show that you're doing it correctly.

 

By: Joy Leopold

February 16, 2011

A New York judge has ruled that Mortgage Electronic Registration Systems, Inc. (MERS) does not have the right to transfer mortgages on behalf of its members, meaning it does not have the right to file foreclosures on behalf of lenders. 

The company has recently been under fire for the practice, but the company defended its actions saying that borrowers are required to sign documents stating that MERS can assume rights and responsibilities on behalf of creditors. 

The company’s Web site says, “MERS was created by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper.”

In recent years, though, that role has evolved substantially, with MERS taking foreclosure actions on behalf of lenders and servicers all over the country, even becoming embroiled in the robo-signing scandal.

At present, the company has about half of all the mortgages in the United States in its electronic database.
But last week, Judge Robert Grossman ruled MERS does not have the authority to act on behalf of its members, and the actions of the company are actually illegal, no matter what papers MERS requires members sign.

“The court recognizes that an adverse ruling regarding MERS’s authority to assign mortgages or act on behalf of its members/lenders could have a significant impact on MERS and upon the lenders which do business with MERS throughout the United States,” said his statement.

He continued, “However, the court must resolve the instant matter by applying the laws as they exist today. MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage recording process. This court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.”

A New York judge has ruled that Mortgage Electronic Registration Systems, Inc. (MERS) does not have the right to transfer mortgages on behalf of its members, meaning it does not have the right to file foreclosures on behalf of lenders. 

The company has recently been under fire for the practice, but the company defended its actions saying that borrowers are required to sign documents stating that MERS can assume rights and responsibilities on behalf of creditors. 

The company’s Web site says, “MERS was created by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper.”

In recent years, though, that role has evolved substantially, with MERS taking foreclosure actions on behalf of lenders and servicers all over the country, even becoming embroiled in the robo-signing scandal. 

At present, the company has about half of all the mortgages in the United States in its electronic database.

But last week, Judge Robert Grossman ruled MERS does not have the authority to act on behalf of its members, and the actions of the company are actually illegal, no matter what papers MERS requires members sign.

“The court recognizes that an adverse ruling regarding MERS’s authority to assign mortgages or act on behalf of its members/lenders could have a significant impact on MERS and upon the lenders which do business with MERS throughout the United States,” said his statement.

He continued, “However, the court must resolve the instant matter by applying the laws as they exist today. MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage recording process. This court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.”

HSBC Halts All Foreclosures and Admits to "Robo-signing" in SEC filing

Nicholas M. Moccia, Esq.
Law Offices of Robert E. Brown, P.C.

The following regarding HSBC was reported on 4closurefraud.org:

HSBC Bank USA and HSBC Finance Corp. have stopped all home foreclosures until further notice and may face unspecified regulatory actions or fines, after regulators found “certain deficiencies” in servicing and foreclosure procedures, HSBC said in government filings Monday.

The disclosure by HSBC, buried deep within its annual financial report to the Securities and Exchange Commission, marks the first time HSBC has admitted to a foreclosure moratorium in the wake of a legal and paperwork crisis that swept the industry.

That’s a dramatic reversal from its stance just a few months ago, when it said publicly that it would not suspend home seizures because it didn’t feel its procedures were compromised by so-called “robo-signers” and faulty court affidavits.

“Robo-signing” refers to bank or law firm employees signing off on foreclosures without actually being familiar with the cases or reading paperwork.

In the SEC document, known as a 10-K, HSBC said it has “suspended foreclosures until such time as we have substantially addressed the noted deficiencies in our processes.” That suspension took effect in December, said spokesman Neil Brazil.

The company said it is also “reviewing foreclosures where judgment has not yet been entered and will correct deficient documentation and refile affidavits where necessary.”

Link to original:   4closurefraud.org