Legal Question in Bankruptcy in Maryland
Is it legal for my Mortgage Servicer to take out an additional mortgage on my property via the MERS org. and then foreclose on that property for nonpayment of that additional Mortgage by me? I just discovered that my Servicer is a member of MERS(mortgage electronic registration service). Ihave and get an emai news letter from the LivingLies.com website and from what they say has caused me great concern, especially from the strategy they advocate of compelling my Servicer to produce the original note that I signed. Are you familiar with this defensive strategy to prevent foreclosures? Here's the site if you wish to read what they're offering:
EXHIBITS MORE IMPORTANT THAN PLEADINGS
Neil Garfield | July 1, 2010 at 10:39 am | Categories: foreclosure | URL: http://wp.me/p7SnH-2bo
From www.foreclosureblues.wordpress.com
Editor's Note: I think we posted the referenced case when it came out, but this article from foreclosure blues does point out some things that I had not emphasized. They are right that a primary point to remember is that where there is a conflict between what the would-be forecloser SAYS and what they submit as EXHIBITS, the Exhibits control for purposes of motion hearings. Of course neither the pleading nor the exhibits are evidence until there is an evidential hearing, the exhibits are offered into evidence after a competent witness establishes authenticity, personal knowledge, business records, foundation etc.and the Judge accepts them into evidence. Of course you can change all that by just sitting back and saying nothing while they keep offering exhibits into evidence without any objections from you.
Editor�s Note�.This decision is directly on point and this strategy has the potential to sway the entire foreclosure pendulum in favor of the homeowner, in order to obtain the leverage needed to force a truly viable financial solution.
A Florida Circuit Court Judge has issued a 5-page written opinion dismissing a foreclosure filed by Aurora Loan Services, LLC finding that the Plaintiff (Aurora) lacked standing at the inception of the case and that the MERS assignment was invalid.
The court cited several Florida cases and the Bellistri v. Ocwen case from Missouri as to the necessity of standing being established and that it cannot be waived. Aurora claimed to have standing by an alleged �equitable transfer� of the note, possession of the original note, and the MERS assignment. The court stated very bluntly �These arguments are without merit�.
As to the �equitable transfer� argument, the court found that there was no indication in the assignment that the note and mortgage were physically transferred to Aurora, and could not have been in view of the second count of the Complaint to �enforce a lost note�. The �physical possession� argument was vitiated by the fact that the exhibits attached to the Complaint, including the Note and Mortgage, were executed in favor of an entity other than Aurora (which we all know is nothing more than a servicer which was the servicer for the now-bankrupt Lehman Brothers), and that when there is a conflict between what the Complaint alleges and what the exhibits show, the exhibits control. The court also found that none of the documents attached to the Complaint identified Aurora as the �holder�.
The Court went on to show why the MERS assignment was a legal nullity, citing the LaSalle Bank v. Lamy case from New York, the MERS v. Nebraska Department of Finance case, the Arkansas and Kansas Supreme Court cases on the lack of authority of MERS, the Saxon v. Hillery case from California, and the In Re Vargas case from the California Bankruptcy Court to demonstrate that MERS� capacity is limited and that MERS had no authority to execute the assignment. The Court held the assignment to be invalid.
The Court finally noted that the lack of standing at the inception of the case is not a defect that may be cured by the acquisition of standing after the case is filed, citing a Florida appeals case from the same appellate court which issued the BAC Funding case on standing (which we previously discussed on this website).
The Court dismissed the foreclosure and reserved jurisdiction to address the borrower�s request for attorneys� fees.
The importance of this April 28, 2010 opinion is severalfold: first, it shows that trial court Judges are willing to accept the law on MERS from other jurisdictions. Second, it shows that trial court Judges are going to hold foreclosing parties to their legal obligations of proving standing by competent evidence. Third, it shows that courts will dismiss legally infirm foreclosure cases and entertain borrower requests for attorneys� fees in having to defend a legally infirm foreclosure.
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1 Answer from Attorneys
Formulating a foreclosure defense strategy requires an attorney to review your mortgage documents and overall situation. In some instances homeowners have successfully stopped foreclosure proceedings based on the legal standing of the foreclosing party. That being said, your reference to "taking out an additional mortgage" is puzzling. It is not clear if you are referring to a refinance (which could only happen with your express consent) or to a sale of the note between your original lender and someone else. Lenders frequently sell loans -- the sale does not void the borrower's obligation to repay, but the foreclosing party should document how it came to hold the note it now seeks to foreclose.
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