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In re: KATHLEEN THOMAS | More Mortgage Morass for MERS
"Furthermore, CitiMortgage may not rely on the recorded assignment of the plaintiff’s
mortgage from MERS to CitiMortgage as evidence that the note was transferred to it. While the assignment purports to assign both the mortgage and the note, MERS, which is a registry system that tracks the beneficial ownership and servicing of mortgages, was never the holder of the note, and therefore lacked the right to assign it. While MERS was the mortgagee of record, it was acting only as nominee for Allied, its successors and assigns. MERS is never the owner of the obligation secured by the mortgage for which it is the mortgagee of record."
In re: KATHLEEN THOMAS | More Mortgage Morass for MERS
But wait, there's more. More trouble in paradise...
From the Memorandum...
Entered 02/09/11
In re:
KATHLEEN THOMAS
Debtor.
KATHLEEN THOMAS,
Plaintiff
v.
CITIMORTGAGE, INC., FLAGSTAR
BANK, FSB and ALLIED HOME
MORTGAGE CAPITAL CORPORATION,
Defendants.
MEMORANDUM OF DECISION ON THE MOTION TO COMPEL ARBITRATION OF
ALLIED HOME MORTGAGE CAPITAL CORPORATION, THE MOTION TO
DISMISS OF FLAGSTAR BANK, FSB AND THE MOTION FOR JUDGMENT ON THE
PLEADINGS OF FLAGSTAR BANK, FSB AND CITIMORTGAGE, INC.
Before
me is a motion of defendant Allied Home Mortgage Capital Corporation
(“Allied”) to compel arbitration, a motion of defendant Flagstar Bank,
FSB (“Flagstar”) to dismiss this adversary proceeding pursuant to
Fed. R. Civ. P. 12(b)(6), made applicable to this proceeding by Fed.
R. Bankr. P 7012 and a motion of Flagstar and CitiMortgage, Inc.
(“CitiMortgage”) for judgment on the pleadings pursuant to Fed. R.
Civ. P. 12(c), made applicable by Fed. R. Bankr. P. 7012. Because the
motions involve the same facts and underlying transaction, I will
address them together.
Mortgage Electronic Registration Systems,
Inc. (“MERS”), acting solely as a nominee for Allied and its successors
and assigns, was named as mortgagee. The note was subsequently
indorsed to defendant Flagstar. Flagstar and CitiMortgage claim that
Flagstar indorsed the note in blank by way of an allonge and sold the
plaintiff’s loan to CitiMortgage. CitiMortgage attached a copy of the
note to its motion for judgment on the pleadings to support this claim.
The last page of the note is blank except for the following legend:
PAY TO THE ORDER OF
WITHOUT RECOURSE
FLAGSTAR BANK, FSB
There
are two entirely illegible signatures under this legend. On August 3,
2009, MERS executed an instrument entitled “Assignment of Mortgage”
which purported, inter alia, to assign to CitiMortgage the “mortgage
and the note and claim secured thereby.”
Allied’s Motion to Compel Arbitration
Allied
argues that the arbitration agreement of April 20, 2006 obligates the
plaintiff to submit her claims against Allied to binding arbitration
and, therefore, seeks dismissal and an order compelling arbitration.
The agreement is signed by the plaintiff only and not by Allied.
The
second paragraph of the agreement states that “[t]his Agreement is
effective and binding on both you and your heirs, successors and
assigns and us when it is signed by both parties.”
While the law
in Massachusetts may permit the enforcement of an arbitration agreement
that is not signed by both parties, such would not be the case when
the express language of the
agreement requires the signature of both parties.
Because Allied did not sign the agreement, it never became binding on the parties and is unenforceable.
Flagstar’s Motion to Dismiss
In
its motion, Flagstar seeks dismissal of Count I (violation of Chapter
183C) and Count II (determination of extent of mortgage lien due to
Chapter 183C violation) of the plaintiff’s complaint on the grounds
that Chapter 183C is preempted by federal law because Flagstar is a
federal savings bank.
It is clear, therefore, that federal
thrifts are not subject to Chapter 183C with respect to loans they
originate. The calculus changes, however, when a federal thrift does
not originate a loan but merely acquires it from a non-federal thrift
lender. If a non-federal thrift lender could “cleanse” a predatory
loan by selling it to a federal thrift, a vital component of many
states’ consumer protection regimes would be undermined.
So if
Flagstar were the originator of the plaintiff’s loan, then federal
preemption would dispossess the plaintiff from her Chapter 183C claims
against it, but if Flagstar were an assignee who purchased the loan,
then the plaintiff’s state law claims against Flagstar survive
preemption.
Therefore, Chapter 183C is not preempted with respect
to this transaction and I must deny Flagstar’s motion to dismiss
Counts I and II of the complaint.
CitiMortgage and Flagstar’s Motion for Judgment on the Pleadings
Chapter
183C, §§ 2 and 3 categorize certain consumer home mortgage loans as
high cost home mortgage loans (“high cost loans”) and render them
unenforceable unless an approved housing agency certifies to the lender
or broker that the borrower received pre-closing counseling on the
advisability of the transaction. The plaintiff alleges that her loan
is unenforceable because it is a high cost loan made in the absence of
the required counseling.
The plaintiff argues that her mortgage
loan meets the definition of a high cost loan because the “points and
fees” associated with the loan,as defined by Chapter 183C, § 2, net of
up to two bona fide discount points, exceeded five percent of the total
loan amount. To support this allegation, the plaintiff included in
her complaint a list of charges from the loan settlement statement that
she argues qualify as points and fees. The total of these charges is
$10,446.44, which exceeds five percent of the $153,000 loan.
CitiMortgage and Flagstar argue that many of these charges do not
qualify as points and fees, and the ones that do total significantly
less than $7650, which is five percent of the loan amount.
The
sum of the loan discount charge, the attorney’s fees and lien
certificate recording fee is $2780.22. Adding this to the undisputed
charges of $4879 brings the total points and fees to $7659.22, which is
more than five percent of the total loan amount.
The plaintiff
has stated a prima facie claim that her loan is a high cost loan made
in violation of Chapter 183C, and, therefore, I must deny the motion
for judgment on the pleadings with respect to Counts I and II of the
complaint.
Count III of the Complaint
In
Count III of the complaint, the plaintiff alleges that her promissory
note payable to Allied was never properly transferred to CitiMortgage,
and as a result, CitiMortgage has no valid secured claim against her
bankruptcy estate. The allegation is based on the fact that the copy
of the note attached to CitiMortgage’s motion for relief from stay in
the main bankruptcy case includes no indorsement transferring the note
CitiMortgage. CitiMortgage attached a different version of the note to
its motion for judgment on the pleadings, which includes an additional
page containing the “pay to the order” language quoted at the outset
of this memorandum. CitiMortgage and Flagstar claim that the last page
is an “allonge” by which Flagstar indorsed the note in blank and then
transferred the note to CitiMortgage, giving CitiMortgage the right to
enforce it. The Plaintiff argues that the existence of this second
copy of the note raises thequestion as to whether the allonge
effectively transferred Flagstar’s rights in the note to CitiMortgage.
Given
that CitiMortgage has produced two different copies of the note—one
with and one without the purported allonge—the plaintiff argues that
there is a question of fact as to whether the allonge is affixed to the
note, and therefore whether CitiMortgage has a valid claim in her
bankruptcy case. Even if it is not the “holder” of the note, however,
CitiMortgage may be entitled to enforce the note. UCC § 3-203(2)
provides that the transfer of a negotiable instrument, “whether or not
the transfer is a negotiation, vests in the transferee any right of the
transferor to enforce the instrument.” The official commentary to this
section explains that while the transferee of an instrument may
enforce the instrument without being its holder, the transferee, unlike
a holder, is not entitled to the presumption of the right of
enforcement, and must prove the transaction through which the
instrument was acquired. UCC § 3-203, § 2, cmt. 1 (1999).
In
its answer, CitiMortgage asserts that it has physical possession of the
note indorsed in blank by Flagstar. If the allonge is not effective
because it was not affixed to the note, CitiMortgage must then prove
the transaction through which it acquired the note from Flagstar. It
did not plead any facts about this transaction in its answer, however.
With no allegation in the pleadings to support how CitiMortgage
acquired the note, I must rely on the plaintiff’s well-pleaded
allegations that the note was not properly transferred to CitiMortgage.
Furthermore,
CitiMortgage may not rely on the recorded assignment of the
plaintiff’s mortgage from MERS to CitiMortgage as evidence that the
note was transferred to it. While the assignment purports to assign
both the mortgage and the note, MERS, which is a registry system that
tracks the beneficial ownership and servicing of mortgages, was never
the holder of the note, and therefore lacked the right to assign it.
While MERS was the mortgagee of record, it was acting only as nominee
for Allied, its successors and assigns. MERS is never the owner of the
obligation secured by the mortgage for which it is the mortgagee of
record. See, e.g., Landmark Nat. Bank v. Kesler, 289 Kan. 528, 536,
216 P.3d 158, 164 (2009) (providing a profile of MERS). The plaintiff’s
claim that CitiMortgage lacks a valid secured claim, therefore,
survives the motion for judgment on the pleadings.
All case files below...
4closureFraud.org
In RE Thomas Supplemental Memo of Plaintiff
In Re Thomas Supplemental Memorandum of Defendant
In Re Thomas Memorandum for SJ of Citimortgage
In RE Thomas Allied Memo and Arbitration
In Re Thomas Affidavit of Flagstar and Table Funding and Allied Mortgage
»
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Ya'll.
Look into adverse possession.
Banks should have to follow the law, no doubt. This will slow down the foreclosure process but ultimately grifters will be dehoused. But some of you keep up the vain hope that you will get a free house. If you live in a recourse state all that interest and penalty money keeps adding up. It wont be worth much to the banks, but they will sell that debt for pennies on the dollar. I will let you buy it back from me and clear your credit record or i will force.you into bankruptcy or grab your tax return, put a lien on your car, or occasionally take any money you leave in your bank accounts. There are no other good investments right now, so i may be chasing nickels and dimes but if i have only invested pennies it will be worth it.
By your very namesake you are a troll and your blithering idiotic statements bear out that you are a moron as well. The poster said he was in a non-recourse state, and, even barring that, one can easily move from recourse to non-recourse states. These debt farms are grimy and worthless. They have almost no power to grab assets or money, unless one lets them. Debtholders are the slimy underbelly of the economy and should be firebombed or at least suffer the fate of their higher-up brethren, the banks, and reach insolvency.
Chasing bad money is a horrible business, attracting only the most worthless of society. Results are difficult and turnover is high. In a nation with so much debt overhang, these scum-suckers can still eek out a meagre living, preying only on the ill-informed and fearsome.
Once you stand up to them, they have nothing on which to fall back. They are easily disposed of or ignored. Give them nothing but polite lip service, don't offer anything by way of compromise and they'll go away or can easily be beaten down in court - a task very few will endeavor due to the costs involved.
So, go crawl back under your bridge, troll. You have no useful information to impart.
Not looking good for the banks and MERS. Hope they lose their shirts for being shits.
Squatters rights, Bitchez!
Hehehe......have you heard of debtholders rights? Property liens? Garnishments? Prepare to never own anything in your name or ever work as an on-the-books official employee again.
dated May 8, 2006 YET recorded October 1, 2009
same thing as my townhouse, although mine was passed like a hot potato 4 times and the idiots actually back dated the records where company C was dated BEFORE company B !!!
i dont see how they will ever be able to foreclose as they do not even have the fraudulent paperwork correct....i am actually starting to think i will be able to stay here for 30 years ,just as the bank intended ;)
Unless you live in a nonrecourse state someone will be able to go after your other income and assets to satisfy mortgage debt. At best a very few will have a free place to live.for a while, but they can still come.after you personally for the debt. They just might not be able to take the house for a while.
nothing that a nice clean fresh start of bankruptcy cant make go away
and yes we do live in a non recourse state
Judge to CitiMortgage "Ahem, gentlemen, you are fucked!"
"indorsed" ? Court can't spell but if you missplace a comma...
Sleight of hand in Houdini land?