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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Bank Fraud and Predatory Lending Articles

 

Subprime Lenders Keep Churning Out Bad Loans

As home foreclosures continue to rise and homeowners struggle to pay abusive subprime mortgages, subprime lenders and some policymakers keep assuring us that the market will correct itself—in other words, that skyrocketing foreclosures and poor loan performance will be enough to make subprime lenders stop marketing and approving risky loans. Subprime Lenders

Ameriquest Payments May Be Near

Early last year, California-based Ameriquest Mortgage Co. and related firms agreed to pay customers $295 million and change their lending prac­tices. That came after attorneys general in the District of Columbia and 49 states — all but Virginia, where the company does no business — inves­tigated the company's lending prac­tices. Ameriquest Payments

Ameriquest Downsizes

Tuesday's announcement comes on the heels of a $325 million nationwide settlement in January, in which ACC Capital Holding Corp. and its subsidiaries agreed to pay $295 million to consumers and make sweeping reforms of practices that states alleged amounted to predatory lending. Ameriquest also agreed to pay $30 million to 49 states and the District of Columbia for costs of the investigation or consumer education and enforcement. Ameriquest Downsizes

STEALING HOMES: Some people unknowingly sign away ownership

Metro Detroit residents in danger of losing their homes to foreclosure, or those looking to tap equity from their houses to catch up on overdue bills, are falling prey to mortgage fraud scams that promise to rescue them from financial peril.

Instead of being helped, however, unsuspecting homeowners are tricked into believing their homes can be saved -- only to later learn that they've lost their houses for good. Stealing Homes

Real Estate Fraud Booms!

Mortgage scams thrive amid soaring home prices, little regulation and, in some cases, complicit borrowers. Higher rates result because of Yield Spread Premiums. Fraud Booms

Ocwen Facing Litigation Wave

Plaintiff lawyers are currently seeking class action status for 57 federal cases being consolidated in Chicago and the West Palm Beach company says it is facing 331 lawsuits altogether. Ocwen (NYSE: OCN) previously wound down its savings and loan subsidiary after an enforcement action by the Office of Thrift Supervision. Litigation

Texas Jury Rules Against Ocwen

A jury in Galveston, Texas, has awarded $11.5 million to a customer of Ocwen Financial Corp. and its former Ocwen Federal Bank subsidiary, after determining they committed fraud in servicing her home equity loan. Against Ocwen

NAR Backpedals On Predatory Lending Stance; Will Support Bill That Lets Predators Off The Hook.

It's all in the name of the bill, stupid! Inside sources tell us that the National Assn. of REALTORS® will announce support for a bill that is fiercely opposed by civil rights leaders and consumer activists.Off the hook.

Belini vs. Washington Mutual Bank

The plaintiffs, Richard and Theresa Belini, alleged that the defendant, Washington Mutual Bank, sold them a high-cost mortgage without making disclosures required by TILA and equivalent Massachusetts law. They sued in federal court, asserting claims for damages for failure to make these disclosures, for rescission, and for damages for Washington Mutual's alleged failure to respond properly to their notice of rescission, under both TILA and similar Massachusetts law. The district court held that all of the Belinis' damages claims were time barred, without discussing separately their claim for Washington Mutual's alleged failure to-3- respond to their notice of rescission. This left the rescission claim itself and the question of whether there was either federal question jurisdiction or diversity jurisdiction. The court found that the amount-in-controversy requirement was not met, so there was no diversity jurisdiction, and that there was no federal question jurisdiction over a claim for rescission (as opposed to a claim for damages) because of the Massachusetts exemption from certain TILA requirements. Belini vs Washington Mutual.

Court of Appeals Reinstates $6 Million Punitive Damage Award Against Servicer

Court of Appeals Reinstates $6MM Punitive Damage Award Against Servicer  In  Stark v. Sandberg, Phoenix & von Gontard, PC  , the Court of Appeals reinstated a six million dollar punitive damage arbitration award against a mortgage loan servicer. EMC Mortgage Corporation bought Stark's loan after he was in default. The fact that the loan was in default at the time of the purchase made EMC subject to the Fair Debt Collection Practices Act, even though it was collecting its own loan. The arbitrator was outraged at the lender's disregard for the borrower's right (1) to be free from physical intrusion into the home and (2) to be represented by legal counsel. He decided that the prohibition in the arbitration agreement against punitive damages ". . . as to which borrower and lender expressly waive any right to claim to the fullest extent permitted by law" might not prohibit punitive damages because the law did not expressly permit the borrower to waive such damages. Furthermore, the arbitration agreement incorporated Missouri law and public policy, which prohibited waivers of this nature. Stark vs EMC.

$3,000,000 Jury Award Against Ocwen

Plaintiff Attorney: Hilliard & Munoz, L.L.P.

Jury finds Ocwen Federal Bank guilty of malfeasance and criminal conduct and awards plaintiff $3,000,000.00. Guzman vs. Ocwen

Think Twice Before Telling a Little Lie to your Lender

If you needed to stretch your actual income to qualify for a mortgage to buy the house you love, would you consider telling a little white lie, fibbing to your lender? Little Lie.

Predatory Lending Bill Introduced

New Bill Expands Homeowners' Protection Against Predatory Lending. On Wednesday March 9 Rep. Brad Miller, Rep. Mel Watt and Rep. Barney Frank introduced a bill that would protect homeowners from predatory lenders significantly better than current federal law.  Modeled after North Carolina's successful anti-predatory lending law, the bill would eliminate existing loopholes in federal law. Lending Bill.

Widespread Mortgage Fraud Threatens America´s Homeowners, New Report Finds

Home Insecurity: How Widespread Appraisal Fraud Puts Homeowners At Risk, reveals troubling evidence that many American homeowners and buyers are at financial risk from mortgage appraisal fraud. As a consequence, countless homeowners have borrowed more money than their homes are really worth. Mortgage Fraud.

$60 Million Settlement with First Alliance Mortgage Company

The settlement, awaiting approval by a federal court, is expected to return $2,500 to $3,300 each to 18,000 First Alliance borrowers in 18 states and the District of Columbia. Settlement.

What Isn't Disclosed Under the Truth in Lending Act?

Five pieces of important information that are not disclosed are identified by writer, Professor of Finance Emeritus Jack Guttentag at the Wharton School of the University of Pennsylvania. What isn't Disclosed.

Major Mortgage Lender Sues for Millions in Real Estate Fraud

A major wholesale mortgage lender is suing an Indiana mortgage broker, a title company and an appraiser for allegedly using inflated appraisals to bilk the lender out of millions of dollars, the Fort Wayne News-Sentinel reported. Real Estate Fraud.

FTC Settles Deceptive Loan Case

Capital City Mortgage, a mortgage lender and servicer has settled Federal Trade Commission charges that it deceptively induced consumers into taking loans secured by their homes, overcharged borrowers, and, in some instances, caused consumers to lose their homes. The settlement permanently bans the defendants from future lending fraud and requires them to pay consumer redress and other monetary relief totaling at least $750,000. Settles Case.

Fannie Mae Dismisses CEO, CFO

Franklin Raines, the powerful and politically savvy CEO of Fannie Mae, was forced out Tuesday night by the mortgage finance company's board of directors, bringing an end to a contentious, three-month public brawl over the quality of Fannie's financial statements. Dismiss Raines.

Poll: Half of Americans Worry About Debts

WASHINGTON - During a season with shoppers racing about to wrap up holiday spending, half of Americans say they worry about their overall level of debt, an Associated Press poll found. Poll.

More U.S. Home Buyers Fall Prey to Predatory Lenders and Subprime Loan Market Grows Despite Troubles.

Two great articles about how Subprime lenders provide mortgages or home equity loans to people, including high-income borrowers, who don't qualify for conventional financing. Such lenders accept credit scores below the 620-660 threshold generally needed for prime financing and require less-stringent income documentation. And how Subprime lending (higher-interest loans to consumers with impaired or non-existent credit histories) has been the fastest-growing part of the mortgage industry. Homeowners Fall Prey.

Ameriquest Accused Of 'Boiler Room' Tactics

Monday, February 07, 2005 - UPI LOS ANGELES, (UPI) -- Ameriquest, the largest sub-prime U.S. lender, has been accused of allegedly fabricating data, forging documents and hiding fees. Copyright 2005 by United Press International Used With Permission. Boiler Room.

Was Your Yield Spread Premium Disclosed?

Even if mortgage brokers yield to pressure to make clear and timely disclosures of controversial yield spread premiums (YSP's), consumers will still have to contend with a substantial segment of the mortgage industry that doesn't have to disclose YSP's. Was YSP Disclosed?

Mortgage Borrowers File R.I.C.O. Lawsuit

Two former Tennessee customers of nationwide mortgage lender Household International are charging in a Nashville federal court that the corporation was functioning as a racketeering operation when it offered misleading loan terms to its potential clients. R.I.C.O. Lawsuit

A Nation in Debt

All Things Considered Series Explores America's Borrowing Culture. Nation in Debt.

Financial Education: No Substitute for Predatory Lending Reform

As consumers today enjoy more access to credit from a wider variety of sources, opportunities also have expanded for predatory lending in subprime markets. Education is one way to help people achieve financial literacy and avoid abusive loans, but it does not represent a panacea. In this paper, we provide a brief overview of literacy programs and discuss why education alone will not adequately address predatory lending issues. Education.

Freddie Mac Scandal Could Hurt Housing Market

Who is Freddie Mac, and why should a corporate governance scandal and an SEC investigation, as well as a criminal investigation into Freddie Mac, impact housing prices?  Scandal.

Federal Trade Commission Letter Dated February 7, 2002

This letter responds to your request for information regarding the enforcement activities of the Federal Trade Commission ("Commission" or "FTC") under the Truth in Lending, Consumer Leasing, Equal Credit Opportunity, and Electronic Fund Transfer Acts ("Acts") during the year 2001 for use in preparing the Federal Reserve Board’s ("Board") Annual Report to Congress. You have asked for information regarding the Commission’s enforcement activities pursuant to those Acts, including methods of enforcement, and the extent to which compliance is achieved by entities subject to the Commission’s enforcement authority. Also, you have asked whether the Commission recommends any changes to these laws or their implementing regulations or wishes to provide other comments or observations. FTC Letter.

Audit Review of First County National Bank

The examination report stated that the bank's level of compliance with consumer laws and regulations was less than satisfactory. The examination report noted many violations of the RESPA, TILA, and BSA. Since the examination, management has taken steps to ensure corrective action. This review revealed that such actions have been effective in correcting noted violations. Audit Review.

Brokerage Fined for Predatory Loans to Black Home-Buyers

HARRISBURG, Pa. - A state agency has hit a black-owned mortgage brokerage with nearly $910,000 in damages and fines for so-called "reverse redlining" - selling loans with predatory terms to black families. Predatory Loans.

Overvalued Appraisals in a Softening Market

The New York Daily News ran a story today on the problem of inflated appraisals. The article addresses run of the mill overvaluation. Overvalued Appraisals.

AARP Class Action

Whether an arbitration clause that is silent regarding class actions under TILA affords plaintiff the ability to pursue class claims in any forum. AARP Class Action.

Recent Massachusetts Federal Court Case May Spur Truth In Lending Class Actions Seeking Rescission of Mortgage Loans

A recent court decision may trigger a new wave of Truth in Lending litigation in Massachusetts. McIntosh v. Irwin Union Bank & Trust Co., 215 F.R.D. 26 (D. Mass. 2003), holds that a suit seeking rescission of a mortgage loan due to Truth in Lending Act (TILA) violations can properly be maintained as a class action. Class Actions.

The information here is presented by:

The Bank Fraud Victim Center


 

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Smurf and everyone reading,

I apologize if I was confusing everyone by posting under my real name and a alias. But all of this stuff that has happened can be detrimental to a person's  well being.

Just so everyone know's I went to court for the first time in my life yesterday. I had talked to my attorney Thurs about my case once again and was contemplating just filing a chp 7 to get out of the nightmare that has transpired with all of this. But to me fighting for what's right is what's right. So some of these articles are an inspiration to what I've been fighting.

If I wouldn't of went to court yesterday my bankruptcy would of been dismissed for not showing up and my attorney just saying no money in hand  with him for me. It was an enlightening/scary experience since I'm going thru life like everyone else. Kinda amazing that people won't represent themselves in some degree. To be honest I didn't want bankruptcy dismissed cause I'm not sure how to fight this fight anymore. And if I need the protection of a chp 7 I wanted to be able to still have this option. Instead of it being dismissed then having to wait 180 days to file again if that's what has to be done. I actuallly got judge to not dismiss it by offering $500 of what we actually have available to survive right now. My attorney informed me on Thursday that I probably didn't have much of a choice that it would be dismissed probably if I didn't pay half of what we're actually behind. Judge accepted less and was somewhat helpful. I was nervous as hell...Also when I asked my attorney what the conversion fee would be to go from chp 13 to chp 7 he told me $6000 and they were knocking off $1200 for the adversary he's never filed. Called court and found out is only $25.
 
But the other main reason for telling everyone this is in reviewing the articles posted when I looked at website their from they're from the group I asked about a couple of weeks ago that wants $6800 up front to assist in taking such endeavors forward.
 
Since I overlooked an attorneys name the first time in one of the articles I did a search and found another company offering the same services. Nothing about how much they charge though. So who knows if these people have actually helped facilitate these settlements? Are they just referring them to these attorneys like some of the one's below and earning xxx to refer them or what? Sure makes u wonder....

Also for HELP here's some information about assignments. If you ask me HOMEQ, WeLLS FARGO, WACHOVIA SHOULD ALL be out of BUSINESS...While loan docs make you aware Argent will be placing with Ameriquest no where in paperwork does it mention a trustees name that'll be in control of the documents. Something that would give you a way to hold someone responsible for causing the HAVOC... But in reviewing the information I've put below I found out on your deed of trust possibly it'll have the name of the person whose suppose to be trustee. If you need help finding them LET ME KNOW!
 
If they refer to an attorney for foreclsoure I would make foreclosing trustee aware that you know debt has been sold. That if they try to foreclose they'll be in worse shape than rectifying any issues with you...As they've created a cloud on title for what they've done... Here's the title info...

 

Q. Could I get your opinion on something?  We did an exhaustive search to get a deed of trust released but were unable to find anyone to release it.  The lender no longer exists and the gentleman who ran it is nowhere to be found. The Secretary of State lists an attorney as the agent for the company but when he was reached he said he had no idea where he was.  He would not do a release himself.  We also contacted the trustee named in the deed of trust, but they also would not do a release without direction from the lender.  The loan was part of a down payment assistance program where an incidental loan is put on the property. The borrower quickly paid back, so quickly that he says he no longer has any documentation on it. We have told our borrower to go to court to get this released, but I’m sure that will be time consuming and naturally they are trying to close quickly.  Do you have any other suggestions?  Can we insure over this deed of trust since we exhausted all avenues to get a release and are kind of at a dead end?  The loan amount was only for a few thousand dollars. Any ideas?

 

TITLEMAN™:  He'll have to come up with some proof that it was paid. Perhaps cancelled checks on microfilm with his bank perhaps. Sometimes an underwriter will insure over the enforcement or attempted enforcement over such a matter if there is adequate proof of payoff together with some evidence and indemnifications from the borrower. Without anything at all, I would say no. Have him try harder to find the evidence you need.

 

This is a tidbit I found about my own case and the point I've been making all along. If someone can't be notified how can they foreclose? Especially when their the one's who've lost who the owner is? Especially when I would think most state statutes would require the same as MO that all lenders be notified before a sale? 

OK, now moving on, if the mortgage is deemed valid, the foreclosing attorney is looking for other liens and encumbrances. The attorney must be certain that all parties who may have an interest are served good notice of the foreclosure action. If any one of the parties who may have an interest are not served, their interest will not be divested and that lien will stay with the property and survive the foreclosure.

 

To me if they can't give proper notification of foreclosure to another lender and foreclose wouldn't that be defrauding another company of the money for the lein?

 

Also, I found a case about unfortunately someone dying and a administrator of her estate went after GMAC for some of the same transagressions..It's an interesting read and can help you learn legal terminology a little more as I know it's all been a learning experience for me like everyone else....While this case is from OHIO the rules should apply nationally...Get your CASE PROVEN that they've lost the lein owner!

 

6/13/2005 LUTZ et al.; GMAC Mortgage Corporation, Appellee.

:

APPEAL FROM FAYETTE COURT OF COMMON PLEAS PROBATE DIVISION Case No. 20021180A

John H. Wead, for appellant, estate of Angela M. Lutz.

Carpenter & Lipps, L.L.P., and Angela M. Paul, for appellee, GMAC Mortgage Corporation.

____________________

BRESSLER, Judge.

Plaintiff-appellant, John Wead, as administrator of the estate of Angela Lutz, appeals the decision of the Fayette County Court of Common Pleas, Probate Division, ordering the sale of real estate subject to a finding that defendant-appellee, GMAC Mortgage Corporation ("GMAC"), possessed a valid and secured mortgage on the

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land. We affirm the trial court's decision.1

On February 11, 2002, Angela Lutz purchased real property in Bloomingburg, Ohio. Lutz signed a note in the amount of $87,516 with Alligriff Mortgage Corporation, Inc. She secured the note by a mortgage upon her property. Also on the same day, Alligriff assigned the mortgage to Mortgage Electronic Registration Systems, Inc. ("MERS") as nominee for Huntington Mortgage Company ("Huntington"). The mortgage and assignment were recorded in the Fayette County Recorder's Office.

On June 25, 2002, Lutz died in an automobile accident, leaving two minor children, Zachary and Janee Lutz, as heirs. Her estate was admitted to probate and appellant was appointed as administrator. Michelle Issel, a paralegal for GMAC, testified that GMAC acquired the mortgage as part of a bulk transaction with Huntington in July 2002, but no documents verifying such transaction were offered into the evidence.

Believing itself to be the holder of Lutz's promissory note, GMAC brought a foreclosure action in the General Division of the Fayette County Common Pleas Court on the property on December 18, 2002, because the mortgage payments were in default dating back to June 2002. Appellant moved to dismiss because GMAC was not a real party in interest. GMAC opposed the motion and cited Civ.R. 17(A) for purposes of remedying the basis of the administrator's objection. However, on July 7, 2003, the trial court found a

1.

Pursuant to Loc.R. 6(A), we sua sponte remove this case from the accelerated calendar and place it on the regular calendar for purposes of issuing this opinion.

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reasonable time to remedy had passed and dismissed GMAC's foreclosure action because GMAC did not prove that it had received an assignment from Huntington. The court found that GMAC lacked standing and failed to state a claim upon which relief could be granted.

On July 17, 2003, appellant filed a complaint to sell real estate, the subject action of the current appeal, in the Probate Division of the Fayette County Common Pleas Court.

Appellant included MERS as nominee for Huntington among the party defendants. On August 15, 2003, Huntington assigned the mortgage to GMAC, and GMAC soon thereafter recorded the assignment on August

28.

On September 10, 2003, appellant amended his complaint and included GMAC as an additional party defendant. GMAC answered the amended complaint on October 22, 2003.2

On November 10, 2003, GMAC brought another foreclosure action in the common pleas court, general division. Once again, the general division of the common pleas court dismissed the action. In its judgment entry of January 28, 2004, the court discussed the concurrent jurisdiction between the foreclosure suit and appellant's pending complaint to sell real estate in the probate court. Because appellant's complaint was filed first, the jurisdiction of the probate court took precedence over the general division's jurisdiction.

The probate court held a hearing on May 19, 2004 on

2.

The trial court accepted the answer as timely after the parties' stipulation for extension of time in which to answer and a subsequent dispute irrelevant for the purposes of this appeal.

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appellant's complaint to sell real estate and found that appellee possessed a valid and secured mortgage on the property. The court ordered that the property be sold accordingly. Appellant now appeals this decision, raising a sole assignment of error.

However, before addressing appellant's assignment of error, appellee argues that this court is without jurisdiction in the following matter because the probate court's decision was not a final, appealable order. We disagree.

R.C. 2505.02(B) provides:

"An order is a final order that may be reviewed, affirmed, modified, or reversed, with or without retrial, when it is one of the following:

"* * *

"(2) An order that affects a substantial right made in a special proceeding or upon a summary application in an action after judgment."

The term "special proceeding" is defined as "an action or proceeding that is specially created by statute and that prior to 1853 was not denoted as an action at law or a suit in equity." R.C. 2505.02(A)(2). Generally, matters related to estate administration are treated as special proceedings. See In re Estate of Lilley (Dec. 20, 1999), Warren App. Nos. CA99-07-083, CA99-07-084, CA99-07-087, and CA99-07-088, citing In re Estate of DePugh v. DePugh (Mar. 31, 1995), Miami App. No. 94CA43.

Our inquiry, however, must also determine whether the probate court order affects a substantial right. R.C.

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2505.02(A)(1) provides that a "substantial right" is "a right that the United States Constitution, the Ohio Constitution, a statute, the common law, or a rule of procedure entitles a person to enforce or protect." In Bell v. Mt. Sinai Med. Ctr. (1993), 67 Ohio St.3d 60, the Ohio Supreme Court clarified the standard for determining when a substantial right is affected. The court stated that "[a]n order which affects a substantial right has been perceived to be one which, if not immediately appealable, would foreclose appropriate relief in the future." Id. at 63. In the case at bar, the probate court found that GMAC has a valid and secured mortgage on the real estate and ordered the property to be sold accordingly.

We find that the ensuing obligation imposed upon the estate constitutes a substantial right affected by the court's order.

Because we find that this court has appropriate jurisdiction over the final, appealable order, as required by R.C. 2505.02, we now turn to appellant's sole assignment of error alleging that the trial court erred when it found GMAC has a valid and secured mortgage on the property to be sold and is a valid creditor with a valid claim in the estate.

Appellant's first argument challenges the validity of GMAC's mortgage on the basis of the alleged untimely recordation of the mortgage's assignment. However, the issue of when the mortgage assignment was recorded becomes relevant only to the extent of establishing creditor priority and subsequent notice to a bona fide purchaser of the land. The validity of the mortgage itself remains unaffected by the timing of the assignment's recordation.

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The Revised Code specifically provides for the assignment of mortgages by either writing the assignment on the original mortgage, writing the assignment upon the margin of the record of the original mortgage, or by executing a separate instrument of assignment. R.C. 5301.31; 5301.32. The assignment of the mortgage "shall transfer not only the lien of the mortgage but also all interest in the land described in the mortgage." R.C. 5301.31.

Detailing the recording requirement, R.C. 5301.25 provides the following:

"All deeds, land contracts referred to in division (A)(2)(b) of section 317.08 of the Revised Code, and instruments of writing properly executed for the conveyance or encumbrance of lands, tenements, or hereditaments * * * shall be recorded in the office of the county recorder of the county in which the premises are situated. Until so recorded or filed for record, they are fraudulent, so far as relates to a subsequent bona fide purchaser having, at the time of purchase, no knowledge of the existence of such former deed or land contract or instrument."

Appellant cites Wagner v. Bank One, Athens, N.A. (Dec. 20, 1995), Gallia App. No. 95CA7, and Pinney v. Merchants' Natl.

Bank of Defiance (1904), 71 Ohio St. 173, for the proposition that in a foreclosure action, if a mortgage assignee does not provide the proper notice by recording the assignment and thus is not named as a party, the assignee is bound by a foreclosure decree to the same extent as the named party assignor. Appellant's briefs, however, fail to clearly articulate the purpose for which this

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proposition is offered.

In Wagner, Bank One held a mortgage as successor of Central Trust, but Bank One did not record the assignment. The Wagners, holders of a second mortgage on the subject real estate, brought a foreclosure action and named as defendants those with whom the mortgage had been executed, as well as Central Trust, among others. A summons and copy of the complaint were served upon Central Trust. Central Trust did not file an answer or any other pleading in the matter. A decree for judgment, foreclosure, and sale barred any interest Central Trust had in the real estate.

Bank One, formerly known as Central Trust, acknowledged that it had notice of the summons and a copy of the foreclosure complaint and that both should have been forwarded on to and addressed by the appropriate department. However, Bank One's initial appearance, despite such notice, did not occur until it moved to vacate the trial court's judgment. Bank One's motions were denied because the company did not record the assignment from Central Trust and did nothing to correct this. Bank One was barred as assignee of Central Trust because Central Trust had failed to answer Wagner's complaint. See, also, Pinney, 71 Ohio St. at 184-185 (assignee was bound by foreclosure decree to extent of the named party-assignor when the former did not provide proper notice by recording the assignment and was thus not named as a party in the action).

These cases are distinguishable from the case at bar because they both address the issue of competing creditors and the underlying purpose of the recording statutes, namely to provide

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notice of the real condition of the land with respect to encum- brances to all interested. Id. at 184. Here, it was appellant, the administrator of the original mortgagor's estate, who initiated the action to sell the real estate. He filed an amended complaint and included GMAC as a defendant. Unlike Bank One or Central Trust, GMAC answered the amended complaint, thus making the status of the named party-assignor irrelevant. With respect to GMAC's foreclosure actions, we find Wagner and Pinney to be procedurally distinguishable. GMAC was the plaintiff who sought foreclosure, thus rendering the purpose of recordation unnecessary. As assignee of the previous mortgagee, GMAC sought to redeem the value of the note and mortgage from the original mortgagor. There is no competing creditor or subsequent bona fide purchaser issue in this scenario.

R.C. 5301.25 does not invalidate an assignment that has not been recorded. The recording statute deems such an instrument for the encumbrance of land as fraudulent "so far as it relates to a subsequent bona fide purchaser" who, at the time of purchase, has no knowledge of the existence of an encumbrance on the land.

In Creager v. Anderson (App.1934), 16 Ohio Law Abs. 400, the Third District found that the failure of a mortgage assignee to record his assignment was not fraudulent with respect to creditors that received the conveyance of real property as security for antecedent debts because the parties did not constitute subsequent bona fide purchasers within the meaning of the statute. Regardless of whether they had notice of assignment, the creditors received

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all they were entitled to receive, which was security of the debtor's property for the antecedent debt. In the present case, there is no statutory basis that suggests appellant should be permitted to improve his legal position on the basis of whether the mortgage assignment was recorded. The recording statute is meant to protect innocent, subsequent bona fide purchasers of land who have no knowledge of any encumbrances. The statute does not release the mortgage obligation of the original mortgagor's estate or her heirs.

Appellant further argues that a judicial lien cannot be created after the debtor's death because the estate assets and debts are fixed at the time of her death. Consequently, no creditor would be able to improve its priority position by filing a certificate of judgment after the debtor's death. However, appellant inaccurately describes the trial court's finding as creating a judicial lien. Instead, the trial court found that GMAC held the mortgage originally agreed to between Lutz and Alligriff by way of Alligriff's assignment to MERS, as nominee for Huntington, and Huntington's assignment to GMAC.

In essence, appellant seeks to avoid the mortgage obligation of the estate, but long-standing precedent prevents the heirs from inheriting a greater interest in the estate property than what the decedent possessed during her lifetime. The Ohio Supreme Court has stated that the "heir takes the land subject to the payment of the ancestor's debts." Gill v. Pinney's Admr. (1861), 12 Ohio St. 38, 46. Furthermore, the mortgage itself

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provides that the "covenants and agreements of this Security Instrument shall bind and benefit the successors and assigns of Lender and Borrower." The trial court did not create an improper judicial lien after Lutz's death. Instead, the court found that GMAC was the assignee of the original mortgage, a debt entered into by Lutz that subsequently passed to her estate.

Appellant's final argument contends that under the doctrine of res judicata, encompassing both claim and issue preclusion, the dismissal of GMAC's two previous foreclosure actions on the property precludes GMAC from asserting an interest in the case at bar. We disagree. Under claim preclusion, "a valid, final judgment rendered upon the merits bars all subsequent actions based upon any claim arising out of the transaction or occurrence that was the subject matter of the previous action." Grava v. Parkman Twp. (1995), 73 Ohio St.3d 379, 382. Issue preclusion, also known as collateral estoppel, bars the relitigation in a second action of an issue that has been "actually and necessarily litigated and determined in a prior action." Krahn v. Kinney (1989), 43 Ohio St.3d 103, 107, citing Goodson v. McDonough Power Equip., Inc. (1983), 2 Ohio St.3d 193, 195.

In Grava, the Supreme Court expressed its adherence to the modern application of res judicata as stated in Sections 24 and 25 of the Restatement of the Law 2d, Judgments (1982). The court stated:

"When a valid and final judgment rendered in an action extinguishes the plaintiff's claim pursuant to the rules of merger

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or bar * * *, the claim extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose." Grava, 73 Ohio St.3d at 382, citing 1 Restatement of Judgments (1982) 196, Section 24(1).

The Restatement of Judgments defines "transaction" as a "common nucleus of operative facts." 1 Restatement of Judgments, at 198-199, Comment b to Section 24. Section 25 of the Restatement of Judgments continues:

"The rule of § 24 applies to extinguish a claim by the plaintiff against the defendant even though the plaintiff is prepared in the second action (1) to present evidence or grounds or theories of the case not presented in the first action, or (2) to seek remedies or forms of relief not demanded in the first action."

As the Supreme Court noted in Grava, "an existing final judgment or decree between the parties to litigation is conclusive as to all claims which were or might have been litigated in a first lawsuit." (Emphasis sic.) Grava at 382, citing Natl. Amusements, Inc. v. Springdale (1990), 53 Ohio St.3d 60, 62.

We first find that the dismissal of appellant's second foreclosure action is not a final judgment rendered upon the merits. The general division of the common pleas court noted appellant's pending complaint in the probate division to sell real estate, the same subject property of GMAC's second foreclosure action. On the basis of Peoples Sav. Assn. v. Sanford (1938), 59 Ohio App. 294, the general division of the court explained that the

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party first filing determines which court will take precedence over the concurrent jurisdiction concerning the subject property.

Appellant filed his amended complaint on September 10, 2003, two months before GMAC filed its second foreclosure suit. The general division court recognized that the probate court took jurisdiction first and dismissed GMAC's second foreclosure action. Therefore, the decision does not constitute a final judgment upon the merits.

With respect to the first foreclosure action, appellant argues that because GMAC's foreclosure action was dismissed because it failed to state a claim for which relief could be granted, the dismissal constitutes a final judgment that should extinguish any right GMAC would have with respect to any claim of having a valid and secured lien on the property. However, that argument disre- gards the dispositive issue that GMAC's claim to the lien does not arise from the transaction that was the subject matter of a previ- ous action.

Even though appellee's foreclosure action and appellant's complaint to sell real estate share similar facts (indeed the mortgage Lutz signed on February 11, 2002 was at issue in both actions), that does not necessarily lead to the conclusion that the actions arise from a common nucleus of operative facts. With respect to the foreclosure action, the trial court found that GMAC was not the real party in interest. The trial court's entry, dated July 7, 2003, stated that GMAC had no standing and "fail[ed] to state a claim upon which relief can be granted." Following this decision, Huntington assigned the mortgage to GMAC on August 15,

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2003, and GMAC recorded the assignment shortly thereafter.

Appellant's amended complaint was filed on September 10, 2003.

Between the July 7 dismissal and the September 10 filing, GMAC significantly altered the nucleus of operative facts by becoming a real party in interest. Despite the testimony of Issel claiming that GMAC acquired the mortgage as part of a bulk transaction with Huntington in July 2002, the probate court relied on the August 15, 2003 assignment and August 28, 2003 recordation of the assignment as the bases for its ruling. GMAC received all the rights to which it was entitled pursuant the assignment that it did not possess when the original foreclosure action was dismissed.

Accordingly, GMAC should not be barred by res judicata on the basis of this earlier decision. Appellee was not attempting to advance an alternative legal theory that might have been raised nor seeking some form of relief not demanded in the first action. In fact, the trial court dismissed the foreclosure action because GMAC was not entitled to relief at all. GMAC lacked standing as a real party in interest. In appellant's subsequent amended complaint to sell real estate, GMAC appeared under changed circumstances.

Furthermore, issue preclusion should not act as a bar to GMAC's claim in the present case. Chronologically, the issue of whether GMAC held a valid and secured lien after Huntington assigned the mortgage could not be litigated in the first foreclosure action because the assignment had not yet occurred. In the second foreclosure action, the trial court dismissed GMAC's action because of the pending complaint in the probate court.

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Again, the issue of GMAC's lien was not "actually and necessarily litigated and determined" in the foreclosure action. Krahn, 43 Ohio St.3d at 107. Thus the trial court did not err when it found res judicata and collateral estoppel to be inapplicable in the present case. Appellant's sole assignment of error is overruled.

The judgment is affirmed.

Judgment affirmed.

POWELL, P.J., and WALSH, J., concur.

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Best of Luck to EVERYONE!

 

God Bless,

 

Kathy

 

 





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NotToTrust
http://mortgage-home-loan-bank-fraud.com

The web site above has a lot of good info, BUT DO NOT GIVE THEM ANY MONEY! I have not heard of anyone getting any help from them.

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Good Luck Kathy.
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