Monday, July 25, 2011

LAW FIRMS' STRATEGIES IN MORTGAGE HOLDERS' STRUGGLES PROVOKE ETHICS ISSUES

OCC CIVIL MONEY PENALTY ORDERS TO JPMORGAN CHASE BANK, NA

NR 2011-94
Contact: (202) 874-5770

OCC Enforcement Actions

WASHINGTON — The Office of the Comptroller of the Currency (OCC) today released new enforcement actions taken against national banks and individuals currently and formerly affiliated with national banks.

All Cease and Desist Orders, Civil Money Penalty Orders, and Removal/Prohibition Orders are issued with the consent of the parties, unless otherwise indicated as a Decision and Order issued by the Comptroller of the Currency.

Copies of the final actions are available for download by viewing the searchable database of all public enforcement actions taken since August 1989 at http://apps.occ.gov/EnforcementActions/.
You may also submit a request electronically to obtain copies through the OCC's online FOIA site, https://appsec.occ.gov/publicaccesslink/. Fax requests should be sent to (202)-874-5274. You can also obtain copies by writing to the Comptroller of the Currency, Communications Division, Mail Stop 2-3, Washington, DC 20219. When ordering, specify the appropriate enforcement action number.

Civil Money Penalty Orders
No.Name/Bank/CityDate
Ohio
2011-094   JPMorgan Chase Bank, National Association, Columbus6/14/2011

Acting Comptroller Provides Senate a 'Progress Report' on OCC's Implementation of the Dodd-Frank Act

NR 2011-96
Contact: Robert M. Garsson
(202) 874-5770

Acting Comptroller Provides Senate a 'Progress Report' on OCC's Implementation of the Dodd-Frank Act

WASHINGTON — Acting Comptroller of the Currency John Walsh today gave members of the U.S. Senate a progress report of the agency’s initiatives undertaken to implement the Dodd-Frank Act.  In testimony before the Committee on Banking, Housing, and Urban Affairs, Mr. Walsh focused on the integration of the staff and functions of the Office of Thrift Supervision; efforts to support the Bureau of Consumer Financial Protection; OCC’s contributions and participation in the Financial Stability Oversight Committee; efforts to strengthen risk-based capital, leverage, and liquidity requirements; and the agency’s progress on key rule-makings.


 pub-test-2011-96-written.pdf (application/pdf Object)
 
http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-96.html

OCC Chief Counsel Testifies on Recent Enforcement Actions to Correct Mortgage Servicing and Foreclosure Practice Defects

Contact: Bryan Hubbard
(202) 874-5770

OCC Chief Counsel Testifies on Recent Enforcement Actions to Correct Mortgage Servicing and Foreclosure Practice Defects

WASHINGTON — The Office of the Comptroller of the Currency’s Chief Counsel Julie L. Williams today testified before Subcommittee on Financial Institutions and Consumer Credit of the House Committee on Financial Services. Her testimony provided information on recent developments related to our enforcement actions against several large servicers to address defects in mortgage servicing and foreclosure processes and other concerns, and to describe the recent initiatives the Office of the Comptroller of the Currency (OCC) has undertaken related to mortgage servicing.

FOR MORE INFORMATION:

http://www.occ.gov/news-issuances/congressional-testimony/2011/pub-test-2011-91-written.pdf


http://www.occ.gov/news-issuances/congressional-testimony/2011/pub-test-2011-91-oral.pdf


Saturday, July 23, 2011


Chase Targeted In Proposed Class Action With Allegations Of Ignoring Legal Obligations, Violating Rights Of Tenants In Foreclosed Homes

The following excerpt has been lifted from a recent lawsuit, filed in Los Angeles, California and that seeks class action status, against JPMorgan Chase accusing it of illegal conduct designed to drive tenants in foreclosed properties out of their homes in violation of local rent control laws:
  • JP Morgan Chase Bank's "evict and sell" business model, in summary, goes as follows: When JP Morgan Chase Bank becomes the owner of a foreclosed property, JP Morgan Chase Bank chooses to evict whatever tenants reside at the property in order to enhance the property's sale prospects.

    JP Morgan Chase Bank has no intent in becoming a landlord of the property or to comply with the law as it concerns the innocent tenants residing on the property.

    In furtherance of JP Morgan Chase Bank's scheme, JP Morgan Chase Bank uses realtors to sell the properties and "handle" the tenants prior to eviction. The realtors only get paid if the property is sold, so the realtors do everything possible to force the tenants off the property.

    They have no incentive or desire to comply with LARSO [Los Angeles Rent Stabilization Ordinance] and help the respective foreclosing bank manage the rental property as a landlord.

    When JP Morgan Chase Bank cannot force tenants to vacate properties by deception and intimidation, JP Morgan Chase Bank resorts to high volume, "eviction millattorneys to handle the preparation and service of eviction notices and the filing of Unlawful Detainer complaints.

    The attorneys' job is not difficult and is to illegally force the tenant off the property in violation of LARSO by serving a notice to quit, wait the notice period (whether 30, 60, or 90 days), and then file a Judicial Council form unlawful detainer lawsuit. Under general State law, no reason is required for an eviction as long as the bank provides the proper notice period. As far as JP Morgan Chase Bank is concerned, the "evict and sell" business model is efficient, quick, and cheap.

    The "evict and sell" business model, though, is not legal in the City of Los Angeles, where an entire body of rent control laws protecting tenants - LARSO, protects tenants and promotes stable communities. Evictions must be supported by "good cause," rather than at the owner's whim.

    Moreover, landlords are required to pay tenants fixed relocation assistance when they intend on taking the rental unit off the market, which is the intent of all the banks, including JPMorgan Chase Bank, when foreclosing upon the subject properties, especially when the tenant resides in an "illegal unit."
***
  • Many of these tenants that are being subjected to JP Morgan Chase Bank's "evict and sell" model are the poorest of the poor and live in intolerable conditions. Also, they do not know their rights or cannot defend themselves against these multi-billion dollar institutions bent on throwing them out of their homes.
***
  • To further expedite the vacating ofthe units, JP Morgan Chase Bank generally refuses to undertake the necessary repairs or cuts the tenant's utilities. [...] Within the broader group ofLos Angeles tenants falling victim to the JP Morgan Chase Bank's "evict and sell" model, there is a subset of the poorest, often minority residents of Los Angeles living in basements, attics, garages, storage rooms, in corners of a house that have been haphazardly separated by drywall - all of which have been illegally converted into living quarters with varied levels of bathroom, kitchen, and entrance.

    These converted spaces share the same basis of illegality in that these now-dwelling units have been constructed without permits, without the watchful eye of local regulatory agencies, and not in conformity with the laws intended to protect the illegal unit's human habitants. Thus, these illegal units have not been granted a Certificate of Occupancy issued by the City ofLos Angeles Department of Building and Safety ("LADBS").

    Because of the inherent danger of these illegal units, the City of Los Angeles deems them "unapproved" for occupancy. In other words, their existence for the purpose of human habitation is illegal. In such situations, landlords are required to either (a)sufficiently remediate the illegal unit so as to obtain a Certificate of Occupancy and make it habitable, which the banks steadfastly refuse to do, or (b) relocate the tenant and pay the tenant a relocation fee fixed by LARSO.

    Notwithstanding JP Morgan Chase Bank's legal obligations as landlords under rent control, JP Morgan Chase Bank has instead chosen to steadfastly continue with its "evict and sell" model without paying the tenants relocation fees as mandated by LARSO.
For the entire lawsuit, see Gonzalez v. JPMorgan Chase Bank, National Association.

Monday, July 18, 2011

SUMMARY JUDGMENT DEFEATED IN IOWA -- AFFIDAVIT GOES DOWN IN SMOKE

SUMMARY JUDGMENT DEFEATED IN IOWA; TWO SIGNIFICANT SUPREME COURT DECISIONS IN NEVADA

July 14, 2011
An Iowa District Court has issued a 5-page Order denying Wells Fargo’s (second) Motion for Summary Judgment. Wells Fargo had originally been granted summary judgment against the borrower, who was pro se at the time, in 2005 based upon a sworn affidavit that Wells Fargo was the holder of the note. The borrower had filed an affidavit which stated that she had spoken to Wells Fargo and was told that the “investor” on her loan was Lehman. The case languished in an appellate posture and was continued for various reasons.

Jeff Barnes, Esq. began representing the borrower in early 2010 with local Iowa counsel Christine Sand, Esq., who immediately initiated extensive discovery. The Court ordered Wells Fargo to submit an original of the Note by July 20, 2010. The next day (after the time for compliance with the Court’s Order had already passed), Wells Fargo filed a Motion for additional time to comply with the Order, and a Motion to Substitute Plaintiff which stated that pursuant to a servicing agreement between Wells Fargo and Lehman Brothers Bank FSB that the holder of the note and mortgage was Lehman. The 2005 summary judgment was thus vacated.

Wells Fargo filed a “lost note affidavit” a month later on August 20, 2010 which the Court found did not disclose the specific facts in the “record of account” which was reviewed by the Wells Fargo affiant upon which she based her conclusion. On February 23, 2011, Wells Fargo filed an Amended Foreclosure Petition alleging that Wells Fargo was the owner and holder of the note and that Lehman Brothers Bank, Lehman Brothers Holdings, and a securitized mortgage loan trust of which US Bank was the “trustee” were added “for the purposes of quieting title to subject property and to comply with” Iowa statutory law. The court noted that it was unclear what form of relief was being sought with the addition of these parties.

Wells Fargo filed another affidavit executed by the same Wells Fargo affiant who executed the “lost note” affidavit. This “new” affidavit stated that the original note and mortgage were sent to Wells Fargo’s prior counsel in November 2004 and were lost while in the custody of said counsel. The Court again found that the affiant did not state the facts upon which the affiant relied for her conclusions nor what parts of the file she reviewed upon which she relied.

In its Reply to the borrower’s opposition (which is termed “Resistance” in Iowa) to Wells Fargo’s second Motion for Summary Judgment, Wells Fargo attached a copy of a lost note affidavit which the Court stated was “purportedly” executed by Wells Fargo’s attorney in 2005. Wells Fargo’s current counsel represented to the Court in its Reply that Wells Fargo’s previous counsel filed a lost note affidavit on March 28, 2005. The Court stated that it had reviewed both the docket sheet and the court file and found no evidence that the original of the alleged 2005 lost note affidavit was ever filed.
Based on these matters, the Court found that there were factual issues as to whether or not the note has been lost and whether the note has been “transferred”, and denied summary judgment to Wells Fargo on its foreclosure claim.

Our question to Wells Fargo is, were you lying then or are you lying now? Round and around and around we go, and where Wells Fargo and its attorneys will stop, nobody knows! Note, note, who has the note? Lehman? Lehman Holdings? The USBank securitization? None of the above?
Separately, the Supreme Court of Nevada issued two opinions on July 7, 2011 which finally compel foreclosing parties in Nevada to produce material documentation as to chain of title to the Note and Deed of Trust in order to be permitted to continue with a foreclosure action when mediation is requested. in Leyva v. National Default Servicing et al., No. 55216, 127 Nev. Advance Opinion 40, the Supreme Court held that strict compliance is required with Nevada statutes governing the production of certain documents including any assignment of the Deed of Trust; that a foreclosing party’s failure to do so “is a sanctionable offense; and the district court is prohibited from allowing the foreclosure process to proceed”. Wells Fargo was also the culprit in this case.
Significantly, in discussing the transfer of the Note, the Supreme Court of Nevada cited to the recent In Re Veal decision from the 9th Circuit Bankruptcy Appeals Panel (which was previously discussed on this website), holding that the borrower “has the right to know the identity of the entity that is ‘entitled to enforce’ the mortgage note under Article 3 (of the Uniform Commercial Code).” The Court concluded that Article 3 “clearly requires Wells Fargo to demonstrate more than mere possession of the original note to be able to enforce a negotiable instrument”. The court found that there was no endorsement and no assignment, and reversed the District Court.

The opinion in Leyva cited to the Court’s opinion in Pasillas v. HSBC Bank as Trustee, No. 56393, 127 Nev. Advance Opinion 39 (also decided July 7, 2011), which also reversed the District Court and also cited to Veal , setting forth the requirements for production of evidence of chain of title to the note and Deed of Trust in a foreclosure.

The multiple citations to Veal, which is a Federal Bankruptcy appellate court opinion, by the state Supreme Court of Nevada, is more than important. It demonstrates that simply because a foreclosure issue is decided by a Bankruptcy court does not mean that it is not applicable to a non-Bankruptcy (or non-Federal) foreclosure case. Time and again, when we argue that an issue in a state foreclosure case has already been decided by a Bankruptcy court in the foreclosure context, attorneys representing foreclosing “lenders” and servicers argue “Well, Judge, that was a Bankruptcy case, and we are not in Bankruptcy Court”. Leyva and Pasillas have now put that argument to bed. If a Federal Bankruptcy decision is good enough for the Supreme Court of Nevada in two separate opinions, it should be good enough for any state court.

We thank one of our dedicated readers for alerting us to these two highly significant Nevada decisions.