Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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I have an earlier thread here where I mentioned Chase foreclosed and sold my home with no notice. They sold it to a third party.

I visited the courthouse and got copies of my property documents.

Someone told me there should be an Assignment of Mortgage document dated around the time of the foreclosure but there is none.

What is the significance of that? I

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William A. Roper, Jr.
It is unclear from your post as to what jurisdiction your property is located and whether the sale you describe was a judicial foreclosure or a non-judicial foreclosure by private sale.  You also neglect to mention when this took place or whether you are still in possession of the property.

These are details which have a rather significant effect on your rights and your situation.

In general, foreclosure without notice tends to be a problem for the foreclosing mortgage investor in either a judicial sale or non-judicial sale setting, though for different reasons.  And you also fail to elaborate on precisely what you mean by "without notice".

For example, the promissory note and the mortgage, deed of trust and/or other mortgage security instrument probably has very specific provisions providing that notice under these instruments is effective if delivered to you at the property address.  If you were not residing at the property and a notice was delivered there, you might not actually receive the notice, but it still might be a valid, proper notice according to the contract.

Similarly, foreclosure mills very often use sleezy characters to serve legal process.  In New York there has been quite a bit of news lately regarding state enforcement actions pertaining to what is described as "sewer service", basically documents showing service of legal process where no such process took place.

The trouble is that in most places when a process server completes an affidavit and swears that they served you at a particular place and time, this affidaivt is very likely to be believed.  And you are put in the position of proving that the service didn't take place as alleged in the affidavit of service.

This tends to be easiest when you were vacationing in Europe at the date of the alleged service or laid up unconscience in a hospital.  In such an instance, you can readily prove that you weren't even available to accept service.  But in more routine cases where you might have been home or just do not remember (or cannot prove) where you were, proving that the affidavit is false can be a problem.

In some places, service must be personal.  In other places, it is considered to be acceptable service to leave the process with an adult person at your residential address or at the property address.  That is, the summons or complaint might have been left with another member of the family or a tenant and this might be valid service in some states.

Constructive service is yet another matter.  You could have been served by placing a legal notice in a newspaper.  The legal effect of such service varies, but this is very often permissible where other service has been attempted and you could not be found.

If you really had no service and no notice, then you probably have a possibly valid and interesting defense under state law or under the U.S. 14th Amendment in most places.  But such rights also carry with them soime limits on when they may be asserted.  If the foreclosure took place some time ago, then your right to raise such issues by bill or review or appeal is probably limited by time and you may have already waived your rights by failing to act.  You should consult a lawyer about this!


As to your question about the assignment of the mortgage, the way you phrase the question admits a variety of possibilities.

Ideally for the mortgage investor, the original mortgage lender would have executed a mortgage assignment contemporaneous to the sale of the mortgage to an institutional mortgage investor, usually a mortgage trust or one of the GSEs.  So there might have been an assignment recorded well before the foreclosure was ever intitiated.  You should be able to check the records going back to the date the mortgage was executed.  You might have missed the assignment actually recorded within the records.

More often, the mortgage originators and mortgage investors seem not to be executing and recording an assignment until at or near the date of foreclosure and then the assignment is very often a forgery.

Despite what many others are posting here, a mortgage assignment is not actually required to entitle a proper owner or holder of the mortgage indebtedness to foreclose.  Under the common law, the mortgage follows the debt.  So when the debt was sold, the mortgage followed even absent an assignment (Ohio may be an exception to this).  (MERS mortgages are also a special case.)

The reason that the servicers are forging assignments is to use these assignments as evidence in judicial foreclosures or to use in support of the documentation in a foreclosure by private sale in a non-judicial foreclosure state.  If the servicer was able to obtain a foreclosure on the mortgage investors behalf without ever filing the forged assignment, then they certainly wouldn't bother filing the forgery!

So the absence of a forged assignment from the record certainly is not a basis to hope to set aside the judgment.

I have found that in many instances, the foreclosure mills will create forged assignments as well as perjured affidavits and will bring these along to court, but will avoid actually submitting them if this can be avoided.  Some judges are very attentive to detail and may ask about and demand to see an assignment or an affidavit in support of the complaint.  In undefended cases, particularly cases decided by default, many judges will give the complaint only a cursory read and may never notice the absence of the assignment or affidavit.  The lawyer has the forgery ready to plead if necessary, but avoids this where possible:  "Oh, sorry Your Honor!  Isn't that in the record?  I have a copy of the assignment right here in my briefcase!"

I have seen hundreds of instances where the plaintiff obtains a judgment without an assignment, without an affidavit and even without a copy of the promissory note!  Once such a judgment is obtained, it becomes final when the defendant fails to file a timely appeal.

So even if there is a defect that might have won your case, if you failed to make a timely appeal, you may have already forfeited your right to raise these arguments.

IT WOULD BE A GOOD IDEA TO TAKE THE FACTS OF YOUR CASE TO A GOOD ATTORNEY TO DETERMINE WHAT, IF ANY, RIGHTS YOU HAVE TO APPEAL OR SET ASIDE THE JUDGMENT.  Many attorneys may give you fifteen minutes for an intitial preliminary consultation to determine whether you have a case in which the attorney can be useful.  Some county bar associations have a lawyer's referral service that will identify a lawyer who will meet with you briefly for free to assess whether you have a meritworthy case.
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Beside Myself! wrote:
I have an earlier thread here where I mentioned Chase foreclosed and sold my home with no notice. They sold it to a third party.

I visited the courthouse and got copies of my property documents.

Someone told me there should be an Assignment of Mortgage document dated around the time of the foreclosure but there is none.

What is the significance of that? I

If someone paid off the note at the time of the sale the mortgage wouldn't be assigned - in effect, it no longer exists.


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I feel so confused and frustrated! My attorney filed a lawsuit and today he told me he talked to Chase and my end of redemption period date is on hold. This message came to me via his assistant so tomorrow I will talk to him to find out what Chase said.

In the meantime, I got a call from NACA escalations - Chase won't rescind the sale. The reason? It was sold to a third party. So much for NACA - but then I already knew that!

I called HAMP. They can't help. Calling them is a waste of time. Apparently, they only make sure the guidelines are followed during a loan modification; however, should a bank illegally foreclose with no notice in the middle of a loan modification, they can't help. They say once it's foreclosed there's nothing they can do. What a load of nonsense!

I guess I should just accept Chase ruined by credit! NO WAY, CHASE!

At least my "move" date is on hold because of the lawsuit.

I just don't know what else to do.

By the way, state is Michigan. Foreclosure occurred last November.

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I forgot to mention also that this is a MERS mortgage.
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William A. Roper, Jr.
Was the plaintiff in the foreclosure suit MERS?  Or was the suit brought in the name of Chase or in the name of a mortgage trust?

When you say that the foreclosure took place without notice, what do you mean?  What do the court records actually allege as to service of the foreclosure complaint?  There should probably be an affidavit of service in the court files showing the basis that the plaintiff has represented to the court that it obtained personal jurisdiction over you.

Where there is no service and no notice at all, there are usually strong Constitutional grounds to seek to have an order vacated or otherwise set aside, as long as you act timely upon learning of the suit and the judgment.

Usually, a redemption period is a period of time you are given to repay your mortgage in full, even after sale, and recover your property.  Redemption periods are usually available by state statute and are not available everywhere.  The redemption periods vary from state to state where they exist at all. 

If your property is worth well in excess of the mortgage amount, the redemption period gives you a little additional time to find cash to pay off the mortgage in full (including by obtaining a new mortgage from another lender) and recover the property.  Where the property is worth less than the outstanding balance, it is not usually in your economic interest to redeem the property, even if you were able to assemble the resources to do so.  And most borrowers who find themselves in default cannot readily assemble the cash to pay off the loan nor can they usually qualify for and obtain new alternative financing.

If your attorney is focusing on your right of redemption, this may be unproductive unless you have considerable resources or if the property is worth well in excess of the mortgage balance.  If there was a real notice problem, which can be proven, this might be a better avenue to seek to have the judgment vacated.  

I am glad to hear that you have an attorney.  You should use this Forum as a source of ideas and approaches to discuss with your lawyer!
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My neighbor Florida homestead house was sold in court action Jan 2008. She moved out since. The Bank is now own it and it is still vacant.

During the foreclosure procedure, she was assisted by an attorney. They raised the defenses of lost note, not a party of interest, Plaintiff not owner of notes and fraudulent assignment etc. However, The Judge granted Plaintiff the Summary Judgment,authorized the Sale,  ignored all Defendant defenses.

Since late last year, Florid Judges starting to grant Defendant's Motion to Dismiss for same defenses. Florida Supreme Court Order on 16 Feb even requires Bank to prove ownership of notes before filing Foreclosure lawsuit.

How can my neighbor now files lawsuit to reclaim her house ?  Does the law can be retroactive ?
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Bill, welcome back, and thanks for your service.

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The lawsuit was brought against Chase Home Finance. The "jurisdictions" quoted are:

- Federal Real Estate Settlement Procedures Act (RESPA)
- Fair Debt Collections Practices Act
- Fair Credit Reporting Act

Here's a brief history. February 2009 I applied for a loan modification with the assistance of NACA. A foreclosure notice was taped to my door at that time. The foreclosure was postponed. Foreclosure dates were set for March and April and May and all were postponed because of the loan modification. I was informed of the March, April and May foreclosures by NACA via email. Upon notification, I called Chase and had them postponed. Chase sent me a loan mod proposal - July, I believe. I was approved for a loan modification. During August and September there were various discussions about proposals made by Chase. The escrow figures were wrong and Chase was asked to correct them. Next thing I know the home was sold! NACA said they didn't know about it until I let them know. They said they received no notice from Chase - neither did I.

The only notification of foreclosure I received from Chase was the very first one when they tagged my door.

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The lawsuit also has two more counts -

- Breach of contract/wrongful foreclosure
- Violation of Michigan Foreclosure Law

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William A. Roper, Jr.

Beside Myself:

You are facing a very tough set of facts and how those facts are assessed and interpretted is going to be a matter of Michigan law.

Where notice of the suit was affixed to the property and you actually timely received that notice, it would appear to me that you have a pretty weak argument that you lacked actual notice of the suit.  Had you taken the notice to a lawyer, the lawyer almost surely would have been able to help you avoid the surprise of continued legal proceedings while you were negotiating with the plaintiff.

Whether the notice affixed to your door was sufficient notice under Michigan state law is unknown to me.  In some places, personal service is required (actually handing you citation of the suit).  But even in such places, "substitute service" is usually authorized where a plaintiff makes a bona fide but unsuccessful attempt at personal service (as in the situation where a defendant conceals themselves and refuses to accept service).

A different argument might be made that the plaintiff willfully misled you about the continuation of the suit.  For example, where the plaintiff actually tells you that you can ignore the lawsuit, that it has been withdrawrn or discontinued or makes other misrepresentations, in many places this would be considered extrinsic fraud.

But here you have a proof problem.  Even if the plaintiff's representatives told you this, absent some actual corroborating evidence, it will be your word against the servicer's!  And, quite frankly, the servicer's employees and agents have no hesitation whatsoever in lying about this sort of thing!  So unless you have some written communication from the plaintiff telling you that it was OK to ignore the suit or there is another witness to conversations in which the plaintiff made such misleading representations to you, it would seem to me to be difficult to get traction even if you were misled.

It is probably not enough that you misunderstood and thought that the suit was being discontinued or at least stayed during the modification discussions.  The question probably isn't whether you were confused about this, but rather whether you were deceived by the plaintiff's representatives.

A counterargument which you will face is that after having received notice of the suit that you could have checked the court records at any time to verify the status of the proceedings.

Another matter that merits some investigation is the plaintiff's duty under the Michigan court rules to contemporaneously serve you with each and every other paper or filing after the commencement of suit.  In most jurisdictions, each party has to serve the other party not only with citation of the suit, but also every other motion, application for an order, hearing notice, etc.

An exception would usually be when the opposing party cannot be found and where citation was effected by substitute service.  For example, suppose that you were married and your husband totally disappeared and abandoned you and you couldn't find him.  In many states, after making some concerted effort, you could probably effect service through a published notice in one or more general circulation newspapers.  This would give your estranged husband an opportunity to be aware fo a divorce suit.  But unless he actually came forward and filed an answer, it would be essentially impossible to serve each and every subsequent notice in person or by mail given his unknown whereabouts.

By contrast, if he appeared and filed an answer, then in most places he would be entitled to be served subsequent notices of motions, hearings, etc., at the address he gave in his answer.

Where a person's address and whereabouts is known, they are usually entitled to notice not only of commencement of a suit, but of various subsequent developments in the case.  Also, where a person's whereabouts are known, a person is usually entitled to actual rather than substittue service (e.g. if I know your address, a notice by advertisement is probably Constitutionally deficient).  But if the parties agreed to notices to be served at particular addresses, and you failed to keep the other party informed of changes, notices delivered to the contractually agreed upon address may be satisfactory.  In determining adequacy of service, there is black and white and a lot of grey!

So you should carefully inspect the court records and particularly look at any certificates of service or affidavits of service to see whether the plaintiff was telling the court that you were being served with such notices as well as how and where such service was effected.  The minimum requisites of such service in Michigan will likely be found in the court rules.

Bear in mind that the sleezy foreclosure mills may make a rather bare, minimal showing of service under the rules. 

For example, a rather specific certificate of service might say something like:

"By my signature below, I certify that I mailed an exact copy of the foregoing instrument, “Plaintiff's Motion for Summary Judgment”, by Certified U.S. Mail, return receipt requested, to each of the following on Friday, April 23, 2007:

Beside Myself
100 Main Street
Detroit, MI 99999
CMRRR: 1234 5678 9012 3456"

This certificate says how the motion was served, upon whom, and at what address, giving the specific certified mail return receipt.

By contrast a more general certification might say something like:

"By my signature below, I certify that the foregoing instrument was served upon every party in accordance with Michigan Court Rules."

This doesn't say who was served (other than "every party"), how the motion was served (personally, by mail, by facsimile transmission, by advertisement or posting, etc.), or give any specific verifiable details as to when the service was accomplished other than "in acordance with Michigan Court Rules".

In many places, there may be appellate court rulings which show the latter service to be deficient, but unless a party objects a trial court judge may very often overlook some obvious defects in the certification!

Where the certificate of service shows that service is being made at the incorrect address or was misaddressed to someone else or gives some other detail making it unlikely that such notice was received, you are going to have some challenge in making a defense.  For example, suppose that the certificate of service gave a seriously defective street address and even garbled your name, making delivery very unlikely.

But bear in mind that had you gone to the court house and checked the record, you might have seen the various continuing motions, hearings, etc., and might have noticed the error in the records as to addressing.

I do not want to seem to be second guessing your lawyer.  Your Michigan lawyer is in the very best position to advise you about your rights under Michigan law.  But even when well represented, it is helpful to understand that you can usually achieve a better outcome by remaining informed about the case, going over all of the materials and asking a lot of questions. 

Generally, while the lawyer should be familiar with the law, you may be far more familiar with the important facts of the case.  I would encourage you to read the Michigan Court Rules a couple of times.  Also read everything in the Court file a couple of times.  Pay to obtain copies if you can so that you have everything for ready reference.  Look particularly carefully at the plaintiff's representations as to service of citation of the suit and any certificates of service thereafter.  You can look up some case law yourself to be better informed.  Then ask you lawyer good questions and you should usually follow the lawyer's advice.


You also need to understand that in most places, court rules require that various affirmative defenses and counterclaims be raised in the same action being originally litigated (unless they arise later).  So in mentioning that you are now suing the Lender on other grounds, you need to bear in mind that the plaintiff is likely to seek a dismissal based upon the argument that these arguments should have been raised during the foreclosure and that you may now be barred from raising these issues if you waived them in failing to answer the suit!

Where you had notice of the suit and the plaintiff followed the rules in serving subsequent motions and hearing notices, you may not have any valid basis to be suing on these other allegations at all.  It would only be where you were wronged subsequent to the suit that you might have a new valid cause of action.  And where the period for appeal has run on the original default judgment, even a suit on these various counterclaims may not disturb the final judgment of foreclosure.

Because of the Constitutional implications of notice problems, a serious defect in service of notice of a suit or of notice of subsequent developments, including hearings in the case may be the very best way to set aside the prior judgment and final order, IF the facts in the case show that service was deficient.
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William A. Roper, Jr.


I cannot speak to the specifics of the application of new Florida appellate court rulings on past cases.

But, generally speaking, as a matter of both well settled jurisprudence and public policy it is believed that the public's interest in the finality of court decisions outweighs the occasional unremedied injustices arising from uneven application of the law over time.

If litigants were free to reopen each and every case at any point in time, the courts would be filled with suits rearguing every matter where past injustices have tarnished our history.  That is, why stop with the foreclosure?  Maybe the property should be restored to the ill-treated relative of a prior deceased owner or restored to the indigenous Americans who inhabited the area before the creation of the state of Michigan.

There are a variety of reasons for courts to insist that judgments be considered final after reasonable opportunities for reconsideration and appeals run.  While new evidence may emerge, over time not all evidence is perpetually retained or archived.  Some evidence will just disappear.  The memory of witnesses fade.  Some witnesses die.  Which evidence survives and which evidence is preserved might be uneven as to the parties and a relitigation of distant and faded evidence might operate as an injustice on the parties?

Do you perpetually archive your cancelled checks?  Would it be fair to you to be sued over a matter of non-payment two decades old after you had discarded your old financial records?  Where should the cutoff be?

If every matter subject to judicial determination was subject to being reopened and relitigated, much of today's commerce would be burdened with additional risk and expense and life would be in many ways mroe difficult.

This is not to say that matters can never be reopenned.  In the prior post, I mentioned some of the issues relating to notice.  Where there are Constitutional implications, a matter may be subject to being reopened for some time.  For example, suppose that you brought a suit against me using some sort of "sewer service" and I really never had any notice of the suit at all. 

Suppose that I was not hard to find, but that no effort was really made to find me.  And suppose further that I could readily demonstrate that the allegations appearing within the affidavit of service were false.

Let me give you an example.  Suppose that I am in the military serving in Iraq at the date of the suit.  But suppose that the plaintiff alleges in the affidavit of service that I was personally served at an address at which I hadn't resided in years.  The affidavit swears that Roper was served on 10 Main Street in Providence, Rhode Island.

I am not going to have any great difficulty in proving that I was overseas at the date of this false affidavit.  Nor will I have any great difficulty showing that I am no longer inhabiting this prior address.

The judgment so obtained by a dishonest plaintiff is going to be essentially void ab initio due to the fact that the plaintiff never actually obtained personal jurisdiction over me.  Obtaining judicial recognition of the voidness of the judgment is yet another matter.

I probably do not have to actually appeal this void judgment.  It has no lawful effect and cannot be accorded any respect in any other future court action.  Even amongst void judgments, courts sometimes distinguish between those judgments which are discernibly void on their face and those which are merely voidable.

Where I was actually serving in Iraq at the date of the alleged service, this wouldn't be something that could be readily determined from the court's order itself or even from the prior court record, where false service affidavits were filed by a plaintiff.

By contrast, suppose that a court issued an order that the court clearly had no authority to grant.  For example, in many jurisdictions there are various types of courts which have jurisdiction over various kinds of matters.  Sometimes the jurisdiction relates to the amount in dispute, as with small claims courts. 

Other times the jurisdiction relates to the subject matter of the dispute.  For example, some jurisdictions have special housing courts to hear landlord tenant matters.  Texas has both "county courts" and "district courts" and district courts generally have state Constitutional jurisdiction over matters pertaining to real estate.

In such a climate, if a court were to issue an order which on its face that particular court had no authority to make, the the decision might be void on its face due to lack of subject matter jurisdiciton.  A similar problem can arise where a court loses jurisdiction over a matter.

For example, in many places after a court renders an opinion, it retains jurisdiction to set aside its own final orders for a limited period of time.  After that period runs, the court loses jurisdiction to set aside even its own erroneous orders, which can only be disturbed by an appeal or by other process by which some re-litigation is permissible.

Suppose that under court rules the court can set aside its own final orders and judgments for a period of thirty days.  Further suppose that six months after the final order is issued, a party shows the court that its original order was legally erroneous, that the court had made a mistake.  Under such circumstances, the trial court might very well lack any authority to set aside the erroneous order and a new order which purported to set aside the erroneous decision would be void on its face due to the court's lack of jurisdiciton to revisit its own final orders!  (Most states usually have some provisions by which a court retains jurisdiction to revisit certain decisions for a somewhat more extended period of time where there can be shown to be certain types of fraud in the proceedings, etc.)

Where an order is void on its face, it really need not be appealed in most places.  All that is necessary is to point out the rather obvious defect in the order which renders such order void.

In the scenario previously described, if I was overseas at the date of the original order and the order was unknown to me, some time might pass before I came to know of it.  The original order may have been void ab initio.  But if I went back and asked the judge to vacate the void order, any new order by that same judge after the period to set aside orders might also be void on its face!  If the appeal period had also run, I might not be able to appeal this void order.

But in any subsequent proceeding to act upon such an order or even some collateral action attacking the order, I could probably validly argue that the original order was void.  For example, if the plaintiff sought to attach my property or to obtain a salary garnishment I could argue that the original order was not entitled to any respect in the jurisdiction obtained or anywhere else.

Bear in mind that in such an instance, I am not really "relitigating" the matter.  Rather, I never had the due process opportunity to litigate the matter in the first place.

This would be somewhat more problematic if someone had obtained a foreclosure order and possession of some of my property.  (I would note here that if I was paying my mortgage, it would be unusual for me not to discover in some way that the foreclosure had been undertaken and completed, as the plaintiff suing for foreclosure while continuing to accept my timely payments would be pretty clearly engaging in a fraud!  If I was not paying my mortgage, I would have a harder time explaining why the foreclosure was a surprise, though I would still be entitled to Constitutional notice.)

If, somehow, a foreclosure order had been obtained without any notice, using such false affidavits, I might very well be able to bring a new action to quiet title, arguing that the original foreclosure order was void due to Constitutionally deficient notice defects and failure to obtain personal jurisdiction.

It should probably also be noted that notice in foreclosure matters is further clouded by a couple of other details. 

First, there is probably going to be something in the promissory note and mortgage stating that the parties have agreed to certain kinds of notice.  If the plaintiff followed the contractual provisions, I may have a somewhat tougher time arguing that the notice was defective, though I would have certain additional protectioins under the Servicemembers Civil Relief Act and similar state laws relating to service of servicemembers in the example described above.

Second, courts very often recognize in rem jurisdiction in addition to personal jurisdiction.  That is, a court can obtain subject matter jurisdiciton of a thing, the land.

Absent the special protections for servicemembers, I might very well find that in rem jurisdiction might have attached making the order valid as to the land, but void as to me personally (that aspect of the order relating to a judgment under the note as opposed to foreclosure under the mortgage).

I have gone to some length in answering what ought to be an otherwise simple question as to what happens when appellate courts elaborate on the law.  Generally, the court's elaboration will apply to cases currently underway and will apply prospectively.  Generally, matters already well settled by final judgment and order will not be reopened and relitigated except in exceptional circumstances where there is found to be a Constitutional imperative to do so.  This would tend to include where serious due process considerations deprived a person of his or her rights.

Arguments relating to a court's subject matter jurisdiction to hear and consider a case in respect to the plaintiff's standing may very well be near the borderline.  Generally, a court has some authority to determine its own jurisdiciton over a matter, subject to state and Federal Constitutional restraints.  And such jurisdictional decisions, when erroneous, are subject to general court rules and appellate rules relating to setting aside orders and taking appeals to other higher courts.  When the trial court determines that it has jurisdiction over a matter and this decision is erroneous, is the order void or voidable?

Unlike the instance where I never had an opportunity to appear and oppose a suit of which I had no notice, the typical foreclosure defendant was afforded an opportunity to appear and make the standing arguments.  Most failed to answer or failed to make a very compelling defense.  And in these cases, the courts are probably likely to find that the defendant waived these issues.

In many jurisdictions, since standing is a state Constitutional defect, it can be raised for the first time on appeal (New York seems to be a notable exception).  So even if the argument wasn't made in the trial court, it might be raised for the very first time in a timely appeal.  But once the appeals period runs, this may no longer be possible.

To the extent that the plaintiff engaged in fraud in alleging jurisdiciton, as with forged assignments, there may be a longer period under a jurisidction's rules to seek to have the order set aside for exceptional reasons.  And this may be a productive avenue in some cases.  But even these tend to have some time limits.

Once all of these various time limits run, I would think it generally likely that a judgment would have some finality and probably could not be set aside in another collateral action, even if this was an injustice to those who failed to effective raise this argument.

I hope this helps!
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Bill!!! Welcome back!
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Thanks Bill.  How long is the  status of limitation for foreclosure lawsuit  ? 

However, it is evident now that thousands  homeowners lost their homes because of judicial errors : Judges granted Bank Final Judgments even if the suing Bank is not the owner of the notes, producing fraudulents affidavits, allongement, fake notary stamps etc.

These owners , pro-se or represented by attorneys, followed the required court procedures and the bias Judges just ignored the law and favored the Bankers.

Do you think a class action lawsuit is possible in this situation ?

 After all , the Japanesse-American was able to file lawsuit for damages compensation caused by the Government harsh treatment to them during World War II. They won.
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William A. Roper, Jr.


Statutes of limitations vary from state to state and from matter to matter.  That is, limitations of suits for breach of contract will vary from limitations on various torts, including fraud.

But one must also distinguish between limitations on bringing a suit and limitations relating to reopening matters already litigated, by motion to set aside a judgment or by appeal.

In most states, court rules identify matters which are deemed "affirmative defenses", "compulsory counterclaims" and "permissive counterclaims".

For example, in suit on a note several available defenses in most jurisdiction might include accord and satisfaction, duress, failure of consideration, fraud, illegality, release, res judicata, statute of frauds, statute of limitations, etc.

A defense of accord and satisfaction would essentially be that the loan had already been paid off (satisfied). 

A defense of duress might be that you signed the promissory note because the evil bankers had kidnapped your daughter, tied her up and placed her on train tracks in front of an oncoming locamotive and that you signed only to spare her life. 

A defense of failure of consideration might be that you had signed the promissory note, but that the plaintiff had never actually advanced the promised funds which constituted the consideration for the contemplated loan (and that you had paid your own cash for the house). 

A defense of fraud would include assertions that you had been induced to execute the promissory note by the fraudulent representations of the Lender. 

Illegality would have once included usury (state usury laws were pre-empted nationally for mortgages by the Depository Institutions Deregulation and Monetary Control Act of 1980), but would probably include any assertion that the consideration involved illegality (e.g. a loan for prostitution services or a loan to finance an illegal drug purchase). 

A defense of release would involve the assertion that the Lender had already forgiven (released) the loan balance, more common where the loan was from a close friend or relative (e.g. Aunt Lucy had leant you $5,000 taking back a promissory note, had forgiven the balance but later had insisted upon repayment when you married a redhead). 

A statute of frauds defense would involve the assertion that the alleged loan for an amount in excess of a certain threshold amount or for repayment over a period in excess of that threshold (e.g. loans over $10,000 or to be performed over a period in excess of one year) was not made in writing, when a state statute so requires (state statutes of frauds in virtually every state require contracts for the sale of interests in real estate to be in writing).  If the plaintiff alleged a debt on an oral contract when the state statute of frauds required such a contract to be in writing the oral contract might be found to be unenforceable.

A statute of limitations defense could be asserted where the alleged breach of promissory note had occured sufficiently long ago that recovery was now barred by such a limitations period.  Usually with mortgage loans the limitations period wouldn't start until the loan's maturity (when the last payment was due), but this might be advanced when the Lender accelerated the loan upon default.  So if a Lender accelerated the balance and then tarried in filing suit for several years, the suit might be time barred under state law.

Res judicata might be asserted where you had been sued on this very debt before and the matter had been litigated and resolved through final judgment.  It is res judicata that the mortgage investor plaintiff will plead when a borrower seeks to reopen a matter already litigated. 

Generally in most states, the defendant is going to have to plead these affirmative defenses during the suit on the original claim and failure to do so is typically going to operate as waiver and a bar to subsequent assertion.

There is a common sense aspect of this.  In the interests of both judicial economy and of the public's interest inthe finality of judgments, it would make no sense to allow a trial on a suit on a promissory  note to proceed to judgment and then have the defendant reappear years later and assert, "Oh, by the way, that loan was paid in full but I neglected to interpose that defense".

Judicial rules that allow a party to amend pleadings and to explore the facts through discovery, as well as ask for continuances for cause, are all intended to give a defendant time to obtain the facts, marshall the evidence and plead all of the known effective possible defenses.

Counterclaims similarly may be required to be consolidated into the original action.  Counterclaims are very often distinguished as to whether these are compulsory or permissive.

Generally, where the defendant's counterclaims arise out of the same set of facts as the original complaint, judicial economy and the interests of those who may be called upon as witnesses dictates that these matters be consolidated into a single action.  This avoids having to have multiple trials on different aspects of the very same matters.  There may be some instances where counterclaims cannot be reasonably consolidated, as where a counterclaim involves the rights of some parties who cannot be brought before the court.

Suppose that you purchased a newly constructed house and subsequently found that the roof was defective (it leaked) and the builder used defective Chinese drywall which was causing a chemical problem.  These problems emerged as you sought to sell the property.  Ultimately, you stopped paying your mortgage.  The mortgage investor sues you under the promissory ntoe and mortgage.  You want to counterclaim about the defects in the construction.

Generally, you are going to find that the mortgage investor is going to interpose holder in due course defenses (that it innocently purchased the promissory note while not in default, that this was simply a financing transaction and that the mortgage investor has nothing to do with the construction defects).  The builder isn't even a party to the suit.

A claim against the mortgage investor would be a counterclaim.  A claim against a non-party would be a third party claim (you would have to serve that party and get jurisdiction).

The mortgage investor's holder in due course defense is probably going to be pretty potent and you are probably going to have difficulty holding the mortgage investor responsible for the construction defects.  Moreover, the construction defects might be said to arise out of a different set of facts (facts relating to faulty construction) than the alleged default (facts arising out of the financing and non-payment).

Since the builder isn't even a party to the original suit, while you might file a third party claim and bring the builder in, you probably need not do so in most places.  You can later sue the builder separately and the builder is unlikely to obtain any res judicata immunity from your failure to assert the faulty construction claim in the original suit.

The specific requirements as to what constitutes a compulsory counterclaim and what counterclaims are permissive is likely to be set forth in the court rules of your jurisdiction as elaborated by your jurisdiction's court rulings.

Where a counterclaim was compulsory and you failed to assert it in the origianl proceeding, you are going to have some difficulty in asserting it later.

Courts often recognize an exception for torts which were unknown to you at the time, as where you were a victim of fraud the nature of which was unknown to you at the time of the suit and not readily discoverable by you through reasonable diligence.  That is, it is not enough to simply assert that you didn't know about the fraud, but you may also need to show that you couldn't have readily discovered or detected the fraud using ordinary diligence expected from a person in a similar situation.

When such an exception is recognized, you may get some additional time to sue on your additional claim.  Often, the limitation period is said to toll during the period when the fraud was unknown to you and the limitation period then begins with your discovery of the fraud, giving rise to the term the "discovery rule".

Alleging an undisclosed fraud can be particularly problematic though within the context of a matter already litigated.  Court rules relating to discovery are expressly intended to give each party the opportunity to explore and discover the critical facts of the case.  And if the reason that the fraud remained undiscovered was your failure to conduct any discovery (as opposed to the plaintiff's willful resistence to discovery or even false discovery responses), then it may turn out that you failed to exercise reasonable diligence!

Courts also often distinguish between what is termed intrinsic fraud and extrinsic fraud.  Extrinsic fraud may keep the defendant from appearing at all and denies the defendant a full trial on the merits.  For example, forms of "sewer service" (as are now emerging in New York State) which precluded a defendant from even knowing about a suit or representations which kept the defendant from the courthouse or trial, as in telling the defendant that the matter is being dismissed when in fact proceeding (both of these present proof problems, but when such deceit can be shown it can be potent).

By contrast, intrinsic frauds are those which took place during trial and which might very well have been discovered through legal skill and good pre-trial and courtroom diligence.  There might very well have been some excellent means of discrediting or otherwise impeaching a plaintiff's witness which went undiscovered throughout the trial of a matter (perhaps due to failure to ask the right interrogatories or to depose the witness in advance of trial or to have explored some avenue with other witnesses).  The subsequent discovery of such impeaching evidence may very well not be a means to set aside a judgment absent the actual perjury or fraud of the other side.  And even where perjury or fraud is belatedly discovered, court rules in most places limit the time period during which a matter can be reopened and a judgment set aside on this basis.

The period for setting aside judgments based on extrinsic fraud may be extended or the judgment itself may be actually void where a court never really obtained jurisdiction over a party.  In the limiting case, imagine a judgment rendered after sewer service where the defendant is already dead.  Any dispute as to whether the named defendant had actual notice of the suit is rather persuasively resolved by the fact of known death prior to the alleged sewer service!  Such a judgment would pretty clearly be void ab initio and unworthy of respect in any forum!


So, overall, even if a defendant had an excellent case or argument that might have changed the outcome, if the defendant failed to assert this defense in the original trial, the matter may often not be re-litigated unless there was some demonstrable fraud on the part of the other party.  A forged assignment might very well be something that could be the basis for reopening a matter, as long as the reopening was undertaken in a timely way as expressly permitted within the rules.


The example of the interred Japanese Americans is not particularly relevant.  These folks mostly never had their day in court, so there wasn't a res judicata problem.

Very often, class actions are mostly beneficial primarily to the attorneys bringing the suit and may be most helpful in discouraging certain ill behavior in the future.  Prior victims very rarely receive adequate compensation for the wrongs they suffered.  Moreover, a class action settlement can actually immunize the perpetrators by res judicata from individual suits by those victims that fail to timely opt out of the class!


I would also distinguish that in most cases the mortgage investors bringing the foreclosures actually were the owners of the alleged mortgage indebtedness, with the promissory notes actually timely endorsed and delivered to the mortgage investor's institutional custodian.  So these mortgage investors mostly probably did have standing to sue.  However, they used forged assignments and perjured affidavits in support of their cases, mostly as a matter of arrogance and convenience rather than due to the inability to produce truthful evidence that might have supported a foreclosure. 

This makes establishing the measure of damages somewhat problematic.  The forgeries and perjury no doubt resulted in a faster and more certain outcome.  I am doubtful that the ultimate results would have been much different in most of the cases, unless the defendant was able to persuade the court that the forgery and perjury was sufficiently egregious as to merit a dismissal with prejudice.
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