Maine Moving toward the Truth About the Mortgages, MERS and Foreclosures

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The Maine Supreme Court has been active in the last few months – issuing several decisions that will likely impact foreclosure actions in that state. The decisions covered a full range of foreclosure issues, from whether a lender can establish standing when it holds an assignment of the mortgage from Mortgage Electronic Registration Systems, Inc. (“MERS”) to the amount a borrower must pay to cure a default. If you originate and/or service RESIDENTIAL MORTGAGE LOANS in this state, you may want to review these recent cases. This alert focuses on the court’s holdings in one of these cases, Bank of America, N.A. v. Greenleaf, — A.3d —-, 2014 WL 2988236 (Me., July 3, 2014) (Review the Maine Supreme Court Opinion.)

Assignment from MERS May Only Transfer Right to Record Mortgage

The Maine Supreme Court’s decision in Greenleaf may require lenders to make some changes before they initiate FORECLOSURE actions in this state in which the mortgage identifies MERS as the nominee for the lender. This case presented some simple basic facts, but the court’s holdings may raise concerns. In 2006, Scott Greenleaf executed a promissory note for $385,000 to RESIDENTIAL MORTGAGE Services, Inc. (“RMS”) and signed a mortgage securing the debt. The note was endorsed in blank. The mortgage listed RMS as the lender and MERS as the nominee for the lender.
In 2011, Bank of America, N.A. (“BofA”) initiated FORECLOSURE proceedings against Greenleaf. It was undisputed that Greenleaf had failed to make payments on the loan since 2008. Although some interim drama played out in the FORECLOSURE proceeding, a trial was held in 2013. BofA presented the following documents to the court: the original note, the mortgage, and a document recorded in 2011 reflecting the assignment of the mortgage from MERS to BAC Home Loans Servicing, LP (“BAC”), an entity that subsequently merged with BofA. The court entered a judgment of FORECLOSURE IN favor of BofA and Greenleaf appealed.
Greenleaf alleged, among other things, that BofA lacked standing to seek foreclosure of the property since BofA did not have an interest in both the promissory note and the mortgage securing that note. Since the note was endorsed in blank and BofA had possession of the note, the Maine Supreme Court held that BofA met the first prong of the standing test. However, the court found that BofA failed to establish the second prong of the test, ownership of the mortgage.
The court struggled with the 2011 assignment of the mortgage by MERS to BAC. The court focused on one sentence in the 2006 mortgage that specifically provided that MERS was the mortgagee of record for purposes of recording the mortgage. The court held that this provision of the mortgage only granted MERS the right to record the mortgage as the lender’s nominee. When MERS then assigned its interest to BAC, the court held that it granted BAC only the right that it possessed, the right to record the mortgage as nominee for the lender. When BAC then merged with BofA, BofA only obtained the right that BAC had possessed, the right to record the mortgage as nominee. The court also noted that there was no separate and independent assignment of the mortgage from RMS to MERS, BAC, or BofA. As such, the court held that the record only demonstrated a series of assignments of the right to record the mortgage as nominee. In the absence of evidence that BofA owned the Greenleaf mortgage, the Maine Supreme Court held that BofA lacked standing to seek foreclosure and vacated the lower court’s judgment of foreclosure.
Since similar “right to record” language is included in many mortgage forms, lenders and servicers should pay particular attention to whether they are relying on assignments from MERS before initiating a foreclosure action in this state. Unless a lender holds or can obtain an assignment of the mortgage from the originating lender (and many of this lenders may no longer be in business), a lender may need to explore other options for establishing the second prong of the standing test in Maine. A mortgage assignment by MERS, standing alone, may not be sufficient to prove an assignment of a mortgage.
In response to the Greenleaf decision, many of the title insurers in the state have issued guidance regarding title issues under various scenarios in which MERS had assigned the mortgages. At least one title insurer has indicated that if MERS assigned the mortgage in a pending foreclosure action, an assignment from the original lender to the FORECLOSING mortgagee will be required in order for title to be insured without exception.

No Adjustments to Disclosed Payoff Amount Permitted During Cure Period

The Greenleaf court also defined the amount a borrower can be required to pay to cure a default. The notice of default and right to cure sent to Greenleaf included an itemization of all past due amounts and identified the total amount required to be paid by Greenleaf to cure the default. This total amount included a footnote reference that Greenleaf should “[c]ontact the servicer to obtain an up to date figure for outstanding attorney fees, unpaid taxes and costs before sending payment” and the notice also separately provided that Greenleaf should contact BAC at a prescribed telephone number “to obtain an up to date figure before sending payment.” Similar disclosures are generally included in the right to cure notices provided by many lenders and servicers.
Me. Rev. Stat. Ann. tit. 14, § 6111 provides that the contents of the notice of default and right to cure must include, among other things, an itemization of all past due amounts causing the loan to be in default and an itemization of any other charges that must be paid in order to cure the default. Greenleaf argued that the addition of the “call for updated information” references did not meet the statutory requirement that the notice itself must provide an itemization of other charges that must be paid in order to cure the default. The Maine Supreme Court agreed with Greenleaf and held that state law effectively freezes additions to the payoff amount during the cure period.
As such, the amount stated in the notice of default and right to cure is the only amount the borrower can be required to pay to cure the default during the 35 day cure period. Any attorneys’ fees incurred in continuing efforts to recover on the loan and advances made for property taxes or insurance during the cure period – none of these amounts can be added to the amount a borrower may be required to pay to cure the default. The court noted that the incorrect “call for updated information” references in the cure notice were an independent basis on which they could have vacated the lower court’s foreclosure judgment.

Changing Landscape?

Lenders and servicers should work closely with their foreclosure counsel to ensure they can establish standing before initiating a foreclose action in Maine. Lenders and servicers may also want to work with the title insurers to address any title issues that may arise in connection with MERS assignments. With certain changes in their foreclosure practices, lenders and servicers should still be able to prove up ownership of each mortgage sufficient to pass the Greenleaf court’s standing scrutiny. In addition, lenders and servicers should review their cure notice form templates used in this state and any corresponding policies and procedures to ensure that a borrower is never advised or required to pay more than the total amount due as disclosed in the cure notice. The Greenleaf court may have stirred the lobster pot – but lenders and services have options to adapt to the court’s recipes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

25 Responses

  1. Deb Wynn- thanks. Were there changes in your loan number or “instrument number” at or around the same time? How many different numbers did you have duri g the life of your “loan”?

  2. Ian
    The 1099a was issued on the SAME day as the ” auction” of my former home via credit bid to trustee of a alt a trust as I said in my prior posts these documents have differing amounts of debt that trustees deed is nearly 90k more than the 1099a it’s not a few bucks out it’s a lot of money out. These documents can’t be relied upon and neither can the dirty hands that were involved. I’m sharing this because I just can’t be the only one that has recognized this as an issue there has to be thousands where this has happened. Thing is I challenged the 1099a because I do not believe that servicer ( servicing ” rights” – which I believe meets definition of debt collector) is lender and that crap ” for value received without recourse” assignment is just that – it’s different to ” consideration” but I digress I’m keeping it simple – I’m using the documents they touted in front of the judge and public record. As for your main question it’s indymac/ one west and I know you are aware if that conservator – ship sweetheart deal ship sailing off into the sunset with FDIC so ONEwEST bought and I quote ” most of indymac assets ( being 95% toxic btw) one being “servicing rights”. So yes one west picked up where indymac left off and went through to foreclosure -however and I quote again ” ONEwEST were Not the successor in interest to indymac” FDIC said that to me, in writing.

    UKG nice post got link.

  3. CREDITORS’AND DEBTORS’ RIGHTS
    15-7-5032 Grubb v. Green Tree Servicing LLC, U. S. Dist. Ct. (Wolfson, U.S.D.J.) (20 pp.) In this matter, plaintiff alleges that defendant, a debt collection agency, violated the Fair Debt Collection Practices Act by sending false or misleading debt collection letters. Defendant moves to dismiss the FDCPA claims. The court finds that defendant’s May 1 letter was not simply a “welcome” letter but was a communication related to the collection of a debt and thus constitutes debt collection activity under the FDCPA. It also finds that the May 1 letter failed to effectively convey the “amount of debt” in compliance with the statute and as such, plaintiff has stated a claim pursuant to 15 U.S.C. § 1692g. However, it does not find that the letter failed because it provided the amount of debt once day prior to the date of the letter but because it failed to include information regarding how the amount of the debt was calculated. The court also finds that plaintiff stated a valid § 1692g claim because even if the May 1 letter had effectively conveyed the amount of the debt, by sending the May 3 letter which contained a different amount (the amount of the loan balance without fees, costs and interest) the least sophisticated debtor could reasonably be confused as to the “amount of debt” actually owed. The court also finds that plaintiff has stated a claim pursuant to § 1692e, based on the same facts and theories of the § 1692g claim. Defendant’s motion to dismiss is denied. [Filed July 24, 2014]

    Read more: http://www.njlawjournal.com/id=1202668484591/Unapproved-Opinions-August-2027-2014#ixzz3Cgn1MzyX

  4. Deborah Wynn- did the filing of the 1099a coincide with the transfer of servicing rights? I’m curious as to the pattern a d timing In your case.

  5. You know I’m not an attorney goes without saying
    But the rules and court jurisdiction are easily researched.

  6. aND
    Wrong jurisdiction should be justice court. ( about possession not title)
    Just a small point tho :/- not

  7. As above
    ” The Greenleaf court may have stirred the lobster pot – but lenders and services have options to adapt to the court’s recipes.”

    So in my case does the lender named on the IRS document get out of a 1099a they issued for full amount of loan – just one problem they are the debt collector.then I have atl A trust ” trustee” being represented as a owner of real,property and a seller of real property , do you see a problem here go to sec website and it describes a trustees duties and responsibilities. So I have conflicting documents that were offered up to the court that conceal facts and pervert the course of justice being a trustees deed upon sale to the trustee of a MBS with extra 90k as debt and a 1099a naming servicer as lender sent to IRS. I have a suit that was filed back in 2010 by the attorney ( works for foreclosure mill) and a judgement I found out about recently which casts further doubt on the issues and a court that never had a hearing on the matter and a docket sheet that shows I was never served the summons or a copy of the complaint AND the address was hand changed on the actual judgement – default judgement prepared by the foreclosure atty. does that not stink a bit.

  8. Neider on your list of admissions get him to admit he filled the prescription and took the antibiotic. ( slight tissue damage does not make a person disabled or anything close)

  9. @ Deb Wynn ,

    Will do… just put together my demand for admissions … he did get antibiotics but they were prescribed at the time of the bite as a preventative… his suit is full of fluff but no substance… and I have very recent photo’s of him doing yard work and opening the tailgate of his SUV with the “injured” arm. What I can’t believe is that his lawyer actually wants me to answer THEIR questions … they’re getting a big fat 5th to all those..

  10. @charles Reed- thanks. And you were right on w the Ginnie/Wamu “loans”. All along, I backed up your statements w my own research, the FDIC shared-loss agreement details etc. keep pluggin charles

  11. As I report here over 2yrs ago it all about “holder in due course”, but because I am not a lawyer it as if we little people don’t know what is up. As what said the Maine is dealing with this, but the state of Massachusetts is also dealing with the issue as with Washington, Oregon and Texas are coming to the same conclusion.

    Look at the Suntrust agreement where they just flat out admitted that they were not processing HAMP modification and agreed to payup. Now the real proof is that BOA wanted to purchase 150,000 loan back, but they are ordered to modify/refinance all troubled government insured loan at a permanent 2% interest rate and reduce the principal balance to 75% Loan to Value.

    Folk the Federal know that in the cases of Countrywide and Washington Mutual that there is a “holder in due course” problem and is why they demanded that BOA refinance these loans.

    Neil and these other lawyer are being cut out of the money because they come to these conclusion to late! We been telling them yet they kept going down the same rabbit holes!

  12. @Ian I received a Milestone report and it the end of the road for these lenders and investors, because it show the date that certain procedures were done. The Milestone report versus and nobody going up against a Ginnie Mae pooled loan is a must, as I believe its the nail in the coffin. I received my Milestone request from Ginnie Mae through a Freedom of Information request, but I believe now Ginnie probably been ordered to not release them!

  13. Neidermeyer
    As a nurser I’ve seen dog bites and dog bites.
    ask for the med consult history and treatment and look at the timeliness if there was delay … in treatment ( if any) did they prescribe antibiotics and so on
    In other words how much ” harm” was there and did any lack of diligence on his part contribute, are there pictures of the injury and re any debilitation were they specific ? Is it believable compared to the injury. Remember attorney’s motto is sue first ask questions later does not always work!

  14. Louise
    Your a trailblazer best to you

  15. Hope you have opportunity for a motion before the court. I think, and in law as you know so well who the F%$k knows what will happen. But I think it will look very bad for him before the Court. His lawyer is a jerk as well and taking him for a ride. Yes. Make it cost. I see this going well for you if you get a judge to look at the bullshit.

    They must produce the medical evidence if any. That is where he is going down. Cost of litigating, which will be considerable, may make him go away. Go to property records on line and see what is the value of his property–all property, everything he owns in the way of real estate. If he is saying his livelihood is being dinged, make him bring tax returns and costs to operate business. He will go away if he thinks someone is getting close to his, ahem, business and hiding money. People often sue without thought to their “position”. They think it is a one-way street, but it is not. You put your big mouth out there, and you will find out that your “secrets” are subject to discovery as well.

    Just my nonlegal opinion even though I have many years’ of “practical” experience. BTW, like your posts.

  16. @ louise ,

    Only legally allowed defense in Florida is provocation ,, and I have it (my dog was defending me from him .. so it’s a “he said ,, he said”)… ,, setting was subd. common area so it was “my” yard (and his too) , plaintiffs case is VERY weak , yes he was bit but it was so minor the treatment (before he started playing up that he was “dying”) at the local ER was an antiseptic wipe and a band-aid. He attempted to sue 1.5 years ago and his lawyer talked him out of it.. This is a Korean who owns a 5 acre nursery operation (orchids) and hides his (cash) income by sending it back to Korea,, he claims a loss in his ability to do business due to the dogbite ,, he filed no information or evidence with the suit , just (currently) baseless accusations… I’m going to make him earn it with endless depositions and discovery… The worst thing is that he claims physical impairment but does not state what the impairment is… This bs suit is therefore almost impossible to answer… I predict many billable hours in his future.

  17. Neidermeyer, Do you have any other information on this dog bite case? Are there medical records of the bite? Check the laws in your state w/regard to laws re dog bite. Was the alleged victim trespassing or have they filed any “frivolous lawsuits”? Check results of dog bite cases in your immediate area. Do not make the decision to file bkcy until you get more info. Just my 2 cents and not legal advice. BTW, if opp. counsel is stalling, maybe their case is not that good. Possibly, hoping that you will just pay up.

  18. Opp. counsel has until September 15 to produce discovery. Judge nailed him on holder in due course. We shall see. Trial is scheduled for Oct. 13.

  19. I’m still up on appeal to get the CHANCE!

  20. Anyone here hit any real discovery YET

  21. Has anyone here ever requested (and received) a MERS milestone report?

  22. @ louise ,

    All your points are valid… I find it encouraging that in at least one state , Maine , that there is attention actually being paid to what is stated in the documents… Imagine that!

  23. Off Topic;

    I’m being sued over a very minor dogbite that occurred almost 2 years ago (sol=2years) , it occurred in a common area to the subdivision and the “victim” definately provoked the bite … the suit is for big money (unspecified but over $15k) and is so void of facts that it will be hard to answer ,, to make things worse the security DVR footage showing the “victims” behaviour (key to my claim of provocation) was lost as I am not in control of that footage .. I want to accuse the lawyer of intentionally delaying the case (I was contacted at the time and it was dropped) to spoil the evidence against his client.

    Should I fight him or just let the bastard win and file BK to void the judgement? What would your strategy be?? Right now he’s just on a fishing trip with his inquiries.

    Thanks for the input…

  24. I am not sure why there are no comments on this post. It is a good post with some new innovative ideas about the MERS mess. That the only right MERS has to transfer is the right to record the mortgage. Not the right to transfer the property. After all MERS does not have the right to “own” anything. It is like you threw the property into a black hole and maybe it will come out again, maybe not. As my last assignment (not accurate name) transfers my property from Am Brokers Conduit (went into bankruptcy as of August 2007 and discontinued doing any business) to a Trust which closed in 2006. The “alleged assignment” is dated October 2014. Opp. counsel will not tell me who the creditor is, because I do not have a right to know. Really? has he read the FDCPA?

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