Several state courts, and the Cook County Sheriff, recently joined the "robosigner" affidavit fray, announcing new rules and requirements affecting foreclosures. Prominent examples include:
COOK COUNTY, ILLINOIS
Cook County Sheriff Thomas J. Dart announced he will not carry out any evictions involving three servicers most affected by the affidavit media blitz, until they can provide complete assurance that the foreclosure was done properly and legally.
Dart also sent notice to attorneys for the affected servicers that he wants them to provide an affidavit affirming any foreclosures they file in Cook County have been properly processed in accordance with Illinois law. Additionally, he is asking those servicers to provide the same affidavits for awaiting eviction orders.
A copy of the press release is available at:
http://www.cookcountysheriff.org/press_page/press_DartSuspendForclosures_10_19_2010.html
MARYLAND
The Maryland Court of Appeals adopted special rules regarding foreclosure proceedings in Maryland. The Rules changes “govern the courts of this State and all parties and their attorneys in all actions and proceedings, and shall take effect and apply to all actions commenced on or after October 20, 2010, and insofar as practicable to all actions then pending.”
A copy of the new Rules is available at: http://mdcourts.gov/rules/rodocs/ro166.pdf
In general, the Rules changes allow judges to screen affidavits filed in residential foreclosure cases, and if they have reason to believe that an affidavit may be invalid, enter an order directing the affiant, and where applicable, the notary, to appear before the court and establish that the affidavit is genuine, failing which the foreclosure action may be dismissed.
NEW YORK
Foreclosure attorneys in New York are now required to file affirmations in a specific form, as follows:
• For new cases, the affirmation must accompany the Request for Judicial Intervention
• In pending cases, the affirmation must be submitted with either the proposed order of reference or the proposed judgment of foreclosure
• In cases where a foreclosure judgment has been entered but the property has not yet been sold at auction, the affirmation must be submitted to the referee, and a copy filed with the court, no later than five business days before the scheduled auction.
Counsel remain under a continuing obligation to file an amended version of the affirmation if new facts emerge after the initial filing.
A copy of the Afirmation is available at: http://www.nycourts.gov/attorneys/foreclosures/Affirmation-Foreclosure.pdf
Friday, November 5, 2010
DC AG Issues Opinion Letter Affecting MERS, DC Nonjudicial Foreclosures
Washington, D.C. Attorney General Peter Nickles issued an opinion letter asserting that certain notices used to commence foreclosures in DC may supposedly mislead homeowners and allegedly violate DC's consumer protection law. According to the DC AG, "a foreclosure may not be commenced against a DC homeowner unless the security interest of the current noteholder is properly supported by public filings with the District’s Recorder of Deeds."
A copy of the opinion letter is available at:
http://newsroom.dc.gov/show.aspx?agency=occ§ion=2&release=20673&year=2010&file=file.aspx%2frelease%2f20673%2fforeclosure%2520statement.pdf
According to the DC AG, "[a] noteholder’s security interest in a DC home should normally be reflected in the public land records maintained by the District’s Recorder of Deeds. Under District law, in contrast to the laws of many states, each deed or other document transferring a mortgage interest must be recorded with the Recorder of Deeds within 30 days of execution. This requirement is not satisfied by private tracking of mortgage interests through the Mortgage Electronic Registration Systems (MERS)."
As you may recall, DC has a non-judicial foreclosure process that begins with a Notice of Foreclosure on a form prescribed by the Recorder of Deeds. The form requires identification of a “Holder of the Note” and a “Security Instrument recorded in the land records of the District of Columbia.”
According to the DC AG, “[t]he homeowner who receives such a notice is entitled to presume that the recordation of the security interest complies with District law, and that each intermediate transfer of the security interest between the original maker of the note and the current holder of the note is documented in the public record. ...When a foreclosure sale notice misrepresents to a homeowner that the foreclosing noteholder has a recorded security interest, the homeowner may fail to seek legal help in determining whether there may be a good basis for challenging the foreclosure in court. Misrepresentations of material facts, when made to homeowners or other consumers, violate the District’s Consumer Protection Procedures Act, which is enforced by the attorney general."
The enforcement statement invites “homeowners or their advocates” to inform the Office of the Attorney General (OAG) if foreclosures “continue to be commenced or pursued with deceptive foreclosure sale notices” in order that the Office may consider bringing enforcement actions to stop foreclosure proceedings and seek restitution for consumers.
MERS issued a press release response, which is available at:
http://www.mersinc.org/news/details.aspx?id=250
A copy of the opinion letter is available at:
http://newsroom.dc.gov/show.aspx?agency=occ§ion=2&release=20673&year=2010&file=file.aspx%2frelease%2f20673%2fforeclosure%2520statement.pdf
According to the DC AG, "[a] noteholder’s security interest in a DC home should normally be reflected in the public land records maintained by the District’s Recorder of Deeds. Under District law, in contrast to the laws of many states, each deed or other document transferring a mortgage interest must be recorded with the Recorder of Deeds within 30 days of execution. This requirement is not satisfied by private tracking of mortgage interests through the Mortgage Electronic Registration Systems (MERS)."
As you may recall, DC has a non-judicial foreclosure process that begins with a Notice of Foreclosure on a form prescribed by the Recorder of Deeds. The form requires identification of a “Holder of the Note” and a “Security Instrument recorded in the land records of the District of Columbia.”
According to the DC AG, “[t]he homeowner who receives such a notice is entitled to presume that the recordation of the security interest complies with District law, and that each intermediate transfer of the security interest between the original maker of the note and the current holder of the note is documented in the public record. ...When a foreclosure sale notice misrepresents to a homeowner that the foreclosing noteholder has a recorded security interest, the homeowner may fail to seek legal help in determining whether there may be a good basis for challenging the foreclosure in court. Misrepresentations of material facts, when made to homeowners or other consumers, violate the District’s Consumer Protection Procedures Act, which is enforced by the attorney general."
The enforcement statement invites “homeowners or their advocates” to inform the Office of the Attorney General (OAG) if foreclosures “continue to be commenced or pursued with deceptive foreclosure sale notices” in order that the Office may consider bringing enforcement actions to stop foreclosure proceedings and seek restitution for consumers.
MERS issued a press release response, which is available at:
http://www.mersinc.org/news/details.aspx?id=250
Are 401k withdraws income for the Means Test?
My understanding is that withdrawals from qualified retirement plans (pension, IRA) within six months prior to filing bankruptcy are included as income for purposes of the means test. Large amounts of income from retirement accounts may disqualify a debtor from filing Chapter 7 in which case the debtor should postpone filing Chapter 7 until the retirement withdrawals “age” beyond the six month means test look back.
On the other hand, if the debtor chooses to file Chapter 13 bankruptcy the pre-filing pension withdrawals will not be used to calculate available income to fund a Chapter 13 plan. In other words, the pension withdrawals will not increase the plan payment amount.
On the other hand, if the debtor chooses to file Chapter 13 bankruptcy the pre-filing pension withdrawals will not be used to calculate available income to fund a Chapter 13 plan. In other words, the pension withdrawals will not increase the plan payment amount.
Stern Watch
http://www.dailybusinessreview.com/PubArticleDBR.jsp?id=1202474434795&hbxlogin=1
Some articles say he has laid off 70% of his 900 employees within the last month.
Some articles say he has laid off 70% of his 900 employees within the last month.
Mortgage Rates
The GSE reported that rates for 30-year fixed mortgages averaged 4.24 percent (0.8 point) for the week ending November 4, 2010. That’s up slightly from last week’s average of 4.23 percent, and marks the third consecutive week the 30-year rate has increased in Freddie Mac’s study.
The average rate on 15-year fixed mortgages came in at 3.63 percent (0.7 point), according to the GSE, down from 3.66 percent last week.
The average rate on 15-year fixed mortgages came in at 3.63 percent (0.7 point), according to the GSE, down from 3.66 percent last week.
Wednesday, November 3, 2010
Free Webinar Explores Appraisal Side Of Dodd-Frank Act
in FYI
by MortgageOrb.com on Friday 29 October 2010
Coester Appraisal Group, based in Rockville, Md., will host a free educational webinar training session on lender requirements mandated in the Dodd-Frank Act. The 45-minute webinar will be held Nov. 23 at 2:00 pm EST, and registration is available on the company's website.
According to Coester Appraisal Group, more than 132 pages of the Dodd-Frank Act are dedicated to appraisal related issues. Among the provisions are fiduciary standards, lender compensation, licensing requirements, disclosure and documentation requirements, new deadlines, and many others. The lender education session will address some of the most important appraisal-related issues within the act that pertain to lenders.
"The Dodd-Frank Act is extensive - there are a lot of new requirements, and several of them are vague and hard to interpret," says Brian Coester, CEO of Coester Appraisal Group. "The general feedback I'm getting from lenders is that they’re either confused or overwhelmed by the mass quantity of detail and information in the bill. With the increasing amount of pressure being put on lenders these days, they're hungry for answers and explanations."
SOURCE: Coester Appraisal Group
http://www.coesterappraisals.com/
in FYI
by MortgageOrb.com on Friday 29 October 2010
Coester Appraisal Group, based in Rockville, Md., will host a free educational webinar training session on lender requirements mandated in the Dodd-Frank Act. The 45-minute webinar will be held Nov. 23 at 2:00 pm EST, and registration is available on the company's website.
According to Coester Appraisal Group, more than 132 pages of the Dodd-Frank Act are dedicated to appraisal related issues. Among the provisions are fiduciary standards, lender compensation, licensing requirements, disclosure and documentation requirements, new deadlines, and many others. The lender education session will address some of the most important appraisal-related issues within the act that pertain to lenders.
"The Dodd-Frank Act is extensive - there are a lot of new requirements, and several of them are vague and hard to interpret," says Brian Coester, CEO of Coester Appraisal Group. "The general feedback I'm getting from lenders is that they’re either confused or overwhelmed by the mass quantity of detail and information in the bill. With the increasing amount of pressure being put on lenders these days, they're hungry for answers and explanations."
SOURCE: Coester Appraisal Group
http://www.coesterappraisals.com/
Florida Housing Sees Steady Interest In Foreclosure Prevention Pilot Program
by MortgageOrb.com on Monday 01 November 2010
More than 600 borrowers in Lee County, Fla., submitted applications last week for financial assistance from the Florida Hardest-Hit Fund (HHF) pilot program administered by Florida Housing Finance Corp. The online application process opened on Oct. 25, and will remain open until 1,000 applications are received.
"HHF advisors in Lee County already have made initial contact with most of these applicants to determine their eligibility for this assistance," says Steve Auger, executive director of Florida Housing. "The information captured by the advisors is an important part of our ongoing communication with the large banks and loan servicers regarding how they can participate with us to help eligible homeowners.”
The fund was established to help unemployed or underemployed homeowners in Florida who are having difficulty paying their mortgages. Currently, the program is available as a pilot in Lee County only and will expand statewide early next year.
More than 600 borrowers in Lee County, Fla., submitted applications last week for financial assistance from the Florida Hardest-Hit Fund (HHF) pilot program administered by Florida Housing Finance Corp. The online application process opened on Oct. 25, and will remain open until 1,000 applications are received.
"HHF advisors in Lee County already have made initial contact with most of these applicants to determine their eligibility for this assistance," says Steve Auger, executive director of Florida Housing. "The information captured by the advisors is an important part of our ongoing communication with the large banks and loan servicers regarding how they can participate with us to help eligible homeowners.”
The fund was established to help unemployed or underemployed homeowners in Florida who are having difficulty paying their mortgages. Currently, the program is available as a pilot in Lee County only and will expand statewide early next year.
Fannie Mae Retaining Extra Counsel In Florida
After announcing recently that it has suspended all activity on cases handled by Plantation, Fla.-based Law Offices of David J. Stern, Fannie Mae has reached out to additional firms in the state.
Fannie Mae has issued retention letters to nine attorney firms in Florida, spokesperson Amy Bonitatibus confirmed to MortgageOrb.com in an e-mail. The names of the firms will be announced if and when they sign on to the retention letters.
On Friday, The Palm Beach Post reported that Fannie Mae President and CEO Michael Williams explained the expansion of the company's attorney network in a letter to House Democrats who had previously inquired about so-called "foreclosure mills" in the state. According to the report, Fannie Mae solicited the additional firms in late August and early September.
Rumor has it... Freddie Mac was visiting firms in Tampa Bay this week.
Fannie Mae has issued retention letters to nine attorney firms in Florida, spokesperson Amy Bonitatibus confirmed to MortgageOrb.com in an e-mail. The names of the firms will be announced if and when they sign on to the retention letters.
On Friday, The Palm Beach Post reported that Fannie Mae President and CEO Michael Williams explained the expansion of the company's attorney network in a letter to House Democrats who had previously inquired about so-called "foreclosure mills" in the state. According to the report, Fannie Mae solicited the additional firms in late August and early September.
Rumor has it... Freddie Mac was visiting firms in Tampa Bay this week.
Small Business Loans
Small Business Administration (SBA) loans, with their low cost and flexible terms, offer an “excellent choice” for small business owners looking to refinance their existing real estate or to acquire a new property.
Based on CIT Group Inc.’s survey results, one-fifth of respondents indicated that SBA loans were designed to help business owners with less than perfect credit. Small business owners indicated that SBA loans allowed borrowers to make a lower down payment, have a lower monthly payment, and pay off the loan over a longer time period.
But CIT says few are familiar with recent small business legislation and its benefits. Over half – 52 percent – of small business owners indicated that they did not know what the Small Business Jobs and Credit Act was or how it might impact them as small business owners.
The company says the legislation sweetens SBA loan terms for both lenders and borrowers, eliminating borrowers’ fees, raising the loan guarantee to 90 percent from 75 percent, and increasing loan limits.
U.S. small businesses have a significant impact on the American economy. CIT says they employ nearly 59 million Americans – approximately half of all private-sector jobs – and collectively account for more than half of the country’s non-farm private gross domestic product
http://www.sba.gov/jobsact/
Based on CIT Group Inc.’s survey results, one-fifth of respondents indicated that SBA loans were designed to help business owners with less than perfect credit. Small business owners indicated that SBA loans allowed borrowers to make a lower down payment, have a lower monthly payment, and pay off the loan over a longer time period.
But CIT says few are familiar with recent small business legislation and its benefits. Over half – 52 percent – of small business owners indicated that they did not know what the Small Business Jobs and Credit Act was or how it might impact them as small business owners.
The company says the legislation sweetens SBA loan terms for both lenders and borrowers, eliminating borrowers’ fees, raising the loan guarantee to 90 percent from 75 percent, and increasing loan limits.
U.S. small businesses have a significant impact on the American economy. CIT says they employ nearly 59 million Americans – approximately half of all private-sector jobs – and collectively account for more than half of the country’s non-farm private gross domestic product
http://www.sba.gov/jobsact/
Fitch Says 7M Homes in the Shadows Will Take 40 Months to Clear
Fitch Ratings puts the industry's shadow inventory - meaning loans that are seriously delinquent, in foreclosure, or REO - at 7 million homes. The agency says based on recent liquidation trends, it will take more than 40 months to clear this distressed inventory. While the volume of newly delinquent mortgages has begun to improve, liquidation rates have been constrained by weak demand and initiatives to modify loans. On top of that, Fitch says the recent discovery of defects in the foreclosure process is prolonging the housing correction.
http://www.dsnews.com/articles/fitch-says-7m-homes-in-shadows-will-take-40-months-to-clear-2010-11-01
http://www.dsnews.com/articles/fitch-says-7m-homes-in-shadows-will-take-40-months-to-clear-2010-11-01
http://www.hopenow.com/
HOPE NOW says servicers have been granting permanent loan modifications to struggling borrowers at a steady pace of about 150,000 per month. But many consumer advocacy groups, and even federal watchdog agencies such as the Congressional Oversight Panel, say their efforts are unfortunately overshadowed by the sheer volume of delinquencies.
Data released by the organization Monday shows that the industry completed close to 150,000 permanent loan modifications during the month of September alone – 120,000 of which were through servicers own proprietary programs and 27,840 under the federal government’s Home Affordable Modification Program (HAMP).
HOPE NOW says servicers have been granting permanent loan modifications to struggling borrowers at a steady pace of about 150,000 per month. But many consumer advocacy groups, and even federal watchdog agencies such as the Congressional Oversight Panel, say their efforts are unfortunately overshadowed by the sheer volume of delinquencies.
Banks seized a record 288,345 homes in the third quarter
U.S. homeownership rate was unchanged at a 10-year low in the third quarter as banks stepped up property seizures from borrowers who defaulted on mortgages, Bloomberg News reported today. The homeownership rate was 66.9 percent, matching the second-quarter level, which was the lowest since 1999, the U.S. Census Bureau said in a report today. The homeowner vacancy rate, or the share of properties vacant and for sale, was unchanged at 2.5 percent, according to the report. Banks seized a record 288,345 homes in the third quarter, up 22 percent from a year earlier, according to an Oct. 14 report from RealtyTrac Inc. in Irvine, Calif. There were 18.8 million vacant homes in the third quarter, including foreclosures, residences for sale and vacation homes, down from 18.9 million in the second quarter, according to today’s Census report.
http://www.bloomberg.com/news/2010-11-02/homeownership-in-u-s-stays-at-lowest-level-in-decade-as-foreclosures-rise.html
http://www.bloomberg.com/news/2010-11-02/homeownership-in-u-s-stays-at-lowest-level-in-decade-as-foreclosures-rise.html
MORTGAGE MODIFICATION FAILURES PUSH BORROWERS INTO FORECLOSURE
http://www.bloomberg.com/news/2010-11-02/mortgage-modifications-meant-to-save-u-s-homes-push-them-into-foreclosure.html
Homeowners being evicted while participating in programs designed to avert foreclosures is a scenario that is being repeated thousands of times at the biggest mortgage firms, according to groups that aid borrowers, Bloomberg News reported today. The government’s Home Affordable Modification Program came under fire at hearings last week for “trial” arrangements that allow late fees and debts to stack up and documents to disappear, triggering seizures. “Many homeowners end up facing foreclosure solely on the basis of the arrears accumulated during a trial modification,” said Julia Gordon, senior policy counsel at the Center for Responsible Lending, in Oct. 27 congressional testimony. “One incomplete payment or one accounting mistake can land you on an apparently unstoppable conveyor belt to eviction.” With as many as 7 million homes facing foreclosure or already seized, according to Zillow Inc., both the government and companies such as Bank of America and JPMorgan Chase & Co., the two biggest U.S. lenders, offered programs to forestall seizures by easing mortgage terms. Changes include cutting interest rates for as long as five years and extending repayment to 40 years. About half the 1.4 million temporary or “trial” modifications granted since the program’s March 2009 inception have been canceled, according to U.S. Treasury Department data. Only 466,708 borrowers have received permanent modifications. About one in five of the canceled modifications is either in foreclosure or bankruptcy, according to a Treasury survey of the nation’s eight largest mortgage servicers, which handle billing, collections and foreclosures.
http://makinghomeaffordable.gov/pr_05172010.html
Homeowners being evicted while participating in programs designed to avert foreclosures is a scenario that is being repeated thousands of times at the biggest mortgage firms, according to groups that aid borrowers, Bloomberg News reported today. The government’s Home Affordable Modification Program came under fire at hearings last week for “trial” arrangements that allow late fees and debts to stack up and documents to disappear, triggering seizures. “Many homeowners end up facing foreclosure solely on the basis of the arrears accumulated during a trial modification,” said Julia Gordon, senior policy counsel at the Center for Responsible Lending, in Oct. 27 congressional testimony. “One incomplete payment or one accounting mistake can land you on an apparently unstoppable conveyor belt to eviction.” With as many as 7 million homes facing foreclosure or already seized, according to Zillow Inc., both the government and companies such as Bank of America and JPMorgan Chase & Co., the two biggest U.S. lenders, offered programs to forestall seizures by easing mortgage terms. Changes include cutting interest rates for as long as five years and extending repayment to 40 years. About half the 1.4 million temporary or “trial” modifications granted since the program’s March 2009 inception have been canceled, according to U.S. Treasury Department data. Only 466,708 borrowers have received permanent modifications. About one in five of the canceled modifications is either in foreclosure or bankruptcy, according to a Treasury survey of the nation’s eight largest mortgage servicers, which handle billing, collections and foreclosures.
http://makinghomeaffordable.gov/pr_05172010.html
Bad Faith Lacking, No Sanctions for Creditor's Firm That Bungled Proofs
The 3rd Circuit has refused to apply sanctions against a law firm that, although committing "textbook unprofessional" conduct in a bankruptcy case, did not act in bad faith. |
http://www.law.com/jsp/nj/PubArticleNJ.jsp?id=1202474271695
Tuesday, November 2, 2010
Monday, November 1, 2010
Written Testimony of Phyllis Caldwell- Homeownership Preservation Office
On October 6th, Treasury issued guidance to servicers reiterating the fact that they are to comply with all applicable federal and state laws, and are also prohibited from conducting a foreclosure sale until the HAMP-required written certifications to foreclosure counsel or the trustees have been issued.
Under MHA guidelines, participating servicers must evaluate all eligible homeowners for a HAMP modification before referring them to foreclosure. For those homeowners that were already in foreclosure proceedings, Treasury guidelines require servicers to stop the foreclosure proceedings while the homeowners are being evaluated for HAMP. Should a homeowner not qualify for HAMP (or if the homeowner fails or cancels the modification), participating servicers are required to evaluate that homeowner for alternative loss mitigation modifications, such as HAFA, or one of the servicer's own modification programs. If a homeowner proves ineligible for an alternative modification, servicers are required to evaluate that homeowner for a short sale or deed-in-lieu of foreclosure...
If all of these efforts are unsuccessful, participating servicers may not proceed to foreclosure unless they have issued a written certification to their foreclosure attorney or trustee stating that "all available loss mitigation alternatives have been exhausted and a non-foreclosure option could not be reached." Only after these steps are taken and the certification delivered, may the foreclosure process proceed...
http://www.treas.gov/press/releases/tg928.htm
Under MHA guidelines, participating servicers must evaluate all eligible homeowners for a HAMP modification before referring them to foreclosure. For those homeowners that were already in foreclosure proceedings, Treasury guidelines require servicers to stop the foreclosure proceedings while the homeowners are being evaluated for HAMP. Should a homeowner not qualify for HAMP (or if the homeowner fails or cancels the modification), participating servicers are required to evaluate that homeowner for alternative loss mitigation modifications, such as HAFA, or one of the servicer's own modification programs. If a homeowner proves ineligible for an alternative modification, servicers are required to evaluate that homeowner for a short sale or deed-in-lieu of foreclosure...
If all of these efforts are unsuccessful, participating servicers may not proceed to foreclosure unless they have issued a written certification to their foreclosure attorney or trustee stating that "all available loss mitigation alternatives have been exhausted and a non-foreclosure option could not be reached." Only after these steps are taken and the certification delivered, may the foreclosure process proceed...
http://www.treas.gov/press/releases/tg928.htm
5th Circuit Denial on Class Certification Against Fannie Mae
The U.S. Court of Appeals for the Fifth Circuit recently affirmed a district court's denial of class certification in an alleged breach of fiduciary case against Fannie Mae, holding that differences in state law precluded class certification.
A copy of the opinion is available at:
http://www.ca5.uscourts.gov/opinions/pub/09/09-40997-CV0.wpd.pdf
The key issue in the case was whether Fannie Mae was in a fiduciary relationship with the plaintiff mortgagors. The plaintiffs were mortgagors whose mortgages for low-income multi-family housing were held or serviced by Fannie Mae and insured by HUD. HUD required mortgagors participating in its insurance program to sign a Regulatory Agreement. The Agreement mandated that mortgagors establish two funds with the mortgagee: 1) a Reserve Fund and 2) a Residual Fund. The Reserve Fund provision of the Agreement specifically contemplated that those funds may take the form of cash deposit or guaranteed investment. Fannie Mae gave mortgagors certain investment options for both their Reserve Fund and Residual Fund moneys. Some mortgagors chose to retain the liquidity and not invest any such funds. The "uninvested funds" were the subject of this lawsuit. Between 1969 and 1995, Fannie Mae invested "uninvested funds" in the overnight federal funds marketplace, retaining the interest proceeds for itself.
Plaintiffs allege that Fannie Mae tried to discourage mortgagor investments in order that Fannie Mae could maximize the earning potential of its federal funds investments. Plaintiffs sued Fannie Mae on behalf of themselves and those similarly situated for breach of fiduciary duty and also sought relief under an unjust enrichment theory.
The district court found that the class satisfied the requirements of Rule 23(a) but denied certification under Rule 23(b). The Fifth Circuit Court of Appeals reviewed the denial of class certification for abuse of discretion, and reviewed de novo the question of whether the district court applied the proper local law.
The Fifth Circuit applied the analysis in the Restatement (Second) of Conflict of Laws and found that the intention to create a trust (such as giving property to the trustee) manifested outside of Washington D.C. for many of the plaintiffs. As a result, there was no single jurisdictional law that could be applied to the class as a whole.
The Fifth Circuit also turned to the Restatement for guidance to examine the unjust enrichment claims. The Court concluded there were not sufficient contacts to apply D.C. law to each plaintiff's unjust enrichment claim, and found that D.C. law should not be applied to all putative plaintiff class members in either the fiduciary law or the unjust enrichment claims.
The Court found that determining whether a trust or fiduciary relationship has been created (and breached) was not as uniform as the plaintiffs' proposed. Although the basic principles of fiduciary law may be the same throughout the country, the nuances vary and those nuances affect the outcome of claims. The Court noted that the plaintiffs failed to demonstrate that state law variations do not preclude the certification of a nationwide class.
The Fifth Circuit held that a court may certify a class under (b)(1)(A) if the court finds that separate lawsuits could create inconsistent results that would establish incompatible standards of conduct for the party opposing the class. The court did not find that separate actions would result in incompatible standards of conduct for Fannie Mae.
Most importantly, the Fifth Circuit found that various state laws apply to different class members. Therefore, varying judgments with respect to plaintiffs' injunctive requests would not be "incompatible" but rather would reflect diverse state fiduciary law. The Court noted that the Supreme Court has held that Rule 23(b)(1)(A) encompasses cases in which the defendant is obliged by law to treat members of the class alike.
Thus, the Fifth Circuit Court of Appeals determined that the district court did not abuse its discretion in failing to certify under either Rule 23(b)(3), Rule 23(b)(1)(a), or Rule 23(b)(2) and the denial of class certification was affirmed.
A copy of the opinion is available at:
http://www.ca5.uscourts.gov/opinions/pub/09/09-40997-CV0.wpd.pdf
The key issue in the case was whether Fannie Mae was in a fiduciary relationship with the plaintiff mortgagors. The plaintiffs were mortgagors whose mortgages for low-income multi-family housing were held or serviced by Fannie Mae and insured by HUD. HUD required mortgagors participating in its insurance program to sign a Regulatory Agreement. The Agreement mandated that mortgagors establish two funds with the mortgagee: 1) a Reserve Fund and 2) a Residual Fund. The Reserve Fund provision of the Agreement specifically contemplated that those funds may take the form of cash deposit or guaranteed investment. Fannie Mae gave mortgagors certain investment options for both their Reserve Fund and Residual Fund moneys. Some mortgagors chose to retain the liquidity and not invest any such funds. The "uninvested funds" were the subject of this lawsuit. Between 1969 and 1995, Fannie Mae invested "uninvested funds" in the overnight federal funds marketplace, retaining the interest proceeds for itself.
Plaintiffs allege that Fannie Mae tried to discourage mortgagor investments in order that Fannie Mae could maximize the earning potential of its federal funds investments. Plaintiffs sued Fannie Mae on behalf of themselves and those similarly situated for breach of fiduciary duty and also sought relief under an unjust enrichment theory.
The district court found that the class satisfied the requirements of Rule 23(a) but denied certification under Rule 23(b). The Fifth Circuit Court of Appeals reviewed the denial of class certification for abuse of discretion, and reviewed de novo the question of whether the district court applied the proper local law.
The Fifth Circuit applied the analysis in the Restatement (Second) of Conflict of Laws and found that the intention to create a trust (such as giving property to the trustee) manifested outside of Washington D.C. for many of the plaintiffs. As a result, there was no single jurisdictional law that could be applied to the class as a whole.
The Fifth Circuit also turned to the Restatement for guidance to examine the unjust enrichment claims. The Court concluded there were not sufficient contacts to apply D.C. law to each plaintiff's unjust enrichment claim, and found that D.C. law should not be applied to all putative plaintiff class members in either the fiduciary law or the unjust enrichment claims.
The Court found that determining whether a trust or fiduciary relationship has been created (and breached) was not as uniform as the plaintiffs' proposed. Although the basic principles of fiduciary law may be the same throughout the country, the nuances vary and those nuances affect the outcome of claims. The Court noted that the plaintiffs failed to demonstrate that state law variations do not preclude the certification of a nationwide class.
The Fifth Circuit held that a court may certify a class under (b)(1)(A) if the court finds that separate lawsuits could create inconsistent results that would establish incompatible standards of conduct for the party opposing the class. The court did not find that separate actions would result in incompatible standards of conduct for Fannie Mae.
Most importantly, the Fifth Circuit found that various state laws apply to different class members. Therefore, varying judgments with respect to plaintiffs' injunctive requests would not be "incompatible" but rather would reflect diverse state fiduciary law. The Court noted that the Supreme Court has held that Rule 23(b)(1)(A) encompasses cases in which the defendant is obliged by law to treat members of the class alike.
Thus, the Fifth Circuit Court of Appeals determined that the district court did not abuse its discretion in failing to certify under either Rule 23(b)(3), Rule 23(b)(1)(a), or Rule 23(b)(2) and the denial of class certification was affirmed.
Wells Fargo Affvdts
https://www.wellsfargo.com/press/2010/20101027_Mortgage
http://www.dsnews.com/articles/wells-fargo-owns-up-to-finding-errors-in-55000-foreclosure-affidavits-2010-10-28
Wells Fargo Owns Up to Finding Errors in 55,000 Foreclosure Affidavits
For weeks, Wells Fargo has insisted that it's not a part of the robo-signing debacle, but that changed with an announcement late Wednesday that it will submit new affidavits for approximately 55,000 pending foreclosures in 23 judicial states. Wells Fargo says it has identified instances where employees did not adhere to legal procedures in conducting final reviews and did not execute notarizations properly. The bank reaffirmed that it does not plan to institute a moratorium on foreclosure sales.
http://www.dsnews.com/articles/wells-fargo-owns-up-to-finding-errors-in-55000-foreclosure-affidavits-2010-10-28
Wells Fargo Owns Up to Finding Errors in 55,000 Foreclosure Affidavits
For weeks, Wells Fargo has insisted that it's not a part of the robo-signing debacle, but that changed with an announcement late Wednesday that it will submit new affidavits for approximately 55,000 pending foreclosures in 23 judicial states. Wells Fargo says it has identified instances where employees did not adhere to legal procedures in conducting final reviews and did not execute notarizations properly. The bank reaffirmed that it does not plan to institute a moratorium on foreclosure sales.
FDIC
The Federal Deposit Insurance Corporation is moving to exercise its newly granted authority under the Dodd-Frank Wall Street Reform and Consumer Protection Act to become both the trustee and bankruptcy court for future distressed financial firms. Earlier this month the agency issued proposed regulations to structure resolution proceedings under the new law. Unfortunately, most of these regulations are little more than a grand exercise in reinventing the wheel.
"http://dealbook.blogs.nytimes.com/2010/10/27/resolution-rules-and-bankruptcy-reality/?scp=2&sq=bankruptcy&st=cse
"http://dealbook.blogs.nytimes.com/2010/10/27/resolution-rules-and-bankruptcy-reality/?scp=2&sq=bankruptcy&st=cse
Bk Case Update
In Jacobsen v. Moser (In re Jacobsen), 609 F.3d 647 (5th Cir. 2010), the Fifth Circuit joined an increasing number of courts in holding Marrama v. Citizens Bank, 549 U.S. 365, 127 S. Ct. 1105, 116 L.Ed.2d 956 (2007) compels the conclusion that a chapter 13 debtor does not have an absolute right to dismiss a case where the debtor has acted in bad faith or abused the bankruptcy process and requested dismissal under §1307(b) in response to a request for conversion.
Bank Fees
Has your bank started charging you a maintenance fee for your checking account? If so, check to see if you can avoid paying a fee by meeting certain requirements, such as signing-up for direct deposit or electronic statements.
http://www.fdic.gov/consumers/consumer/news/cnsum10/bank_accounts_are_changing.html
http://www.fdic.gov/consumers/consumer/news/cnsum10/bank_accounts_are_changing.html
GSEs Instruct Servicers to Help Unemployed Through State Programs
http://www.dsnews.com/articles/gses-instruct-servicers-to-help-unemployed-through-state-programs-2010-10-29
Fannie Mae and Freddie Mac have both issued notices to servicers that they must work closely with state housing finance agencies to provide mortgage assistance to homeowners who’ve lost their jobs.
But they said:
Servicers have been instructed that they may not determine borrower eligibility or communicate qualification for a state HFA program to a borrower. Servicers can, however, refer potentially eligible borrowers to the HFA in accordance with relevant state requirements.
Conflicting?
Fannie Mae and Freddie Mac have both issued notices to servicers that they must work closely with state housing finance agencies to provide mortgage assistance to homeowners who’ve lost their jobs.
But they said:
Servicers have been instructed that they may not determine borrower eligibility or communicate qualification for a state HFA program to a borrower. Servicers can, however, refer potentially eligible borrowers to the HFA in accordance with relevant state requirements.
Conflicting?
Debt Collectors Face "Robo-Signer" Scrutiny
While much attention has been paid to the documentation issues in foreclosure proceedings, lawyers who defend consumers in debt-collection cases say that the banks did not invent the "robo-signer" approach to financial paperwork, but that debt buyers have been utilizing these shady practices for years, the New York Times reported today. "The difference is that in the case of debt buyers, the abuses are much worse," says Richard Rubin, a consumer lawyer in Santa Fe, N.M. The debt in these cases - such as credit cards, auto loans and utility bills - is sold by finance companies and banks in a vast secondary market, bundled in huge portfolios, for pennies on the dollar. Debt buyers often hire collectors to commence a campaign of insistent letters and regular phone calls. Or, in a tactic that is becoming increasingly popular, they sue. Nobody knows how many debt-collection affidavits are filed each year, but a report by the nonprofit Legal Aid Society found that in New York City alone more than 450,000 were filed by debt buyers, from January 2006 to July 2008, yielding more than $1.1 billion in judgments and settlements.
http://www.nytimes.com/2010/11/01/business/01debt.html?adxnnl=1&adxnnlx=1288627315-BaHTyz1wRCxX6Yih5aC7dQ
http://www.nytimes.com/2010/11/01/business/01debt.html?adxnnl=1&adxnnlx=1288627315-BaHTyz1wRCxX6Yih5aC7dQ
U.S. Trustee Program Probing Law Firms, Mortgage Handlers In Bankruptcy Cases
The U.S. Trustee Program is scrutinizing law firms and a large U.S. mortgage processor to ensure they properly handle foreclosure proceedings, Dow Jones Daily Bankruptcy Review reported today. In recent months, the U.S. Trustee Program has intervened in two cases, in Mississippi and Louisiana. Bankruptcy trustees are examining whether law firms and Lender Processing Services Inc., a Jacksonville, Fla., mortgage technology and information provider, bungled foreclosures and hurt borrowers, according to court documents. The law firms and Lender Processing deny wrongdoing. A trustee in the Louisiana case installed a two-year program to monitor how a law firm handles bankruptcy proceedings, according to a document filed in bankruptcy court last week. Pursuing mortgage servicers for improper filings is an important new "prong" of the trustee program's efforts to oversee the flood of bankruptcy cases following the mortgage crisis, Clifford White III, director of the program, said in an August speech. "We aim to hold mortgage servicers to the same standard of completeness and accuracy in their filings that we do the debtors who owe them money," White said.
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