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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William A. Roper, Jr.
The Indiana Court of Appeals handed down a decision last Friday in the case Hutchens v. BAC Home Loans Servicing, LP, which contains some instructive discussion identifying some borrower mistakes before the trial court.  The Court affirmed the trial court's grant of summary judgment.

This is not a case to celebrate or trumpet.  Neither is it of any significant precedential value.  Rather, it is merely another borrower loss by an attorney representing himself pro se which shows that even attorneys can make some careless and foolish mistakes.

The case is:
Hutchens v. BAC Home Loans Servicing, LP, No. 29A02-1010-MF-1085 (Ind. App. June 24, 2011) [unpublished]

There is some discussion within the decision about Mr. Robert Hutchens' second mortgage (home equity line of credit) on the same property.  This seems to be a bit of a red herring.

The second lien was apparently assigned to United Guaranty, a private mortgage insurer which must have insured this loan, and Mr. Hutchens seems to have successfully negotiated a settlement of that second lien.  While he wanted to find fault in the timeliness of the satisfaction, this seemed not to be a central issue in the foreclosure case and the, probably correctly, affirmed the findings of the trial court regarding the second lien.

The first indication of a rather conspicuous mistake by attorney Hutchens appears on page four of the decision.  The decision indicates that the foreclosure suit was filed on April 14, 2009.  But it seems that Mr. Hutchens allowed seven months to elapse before filing an answer.  While the record is silent about when Mr. Hutchens was actually served. we have noted elsewhere within other threads the importance of filing a timely answer.

Here, the sequence identified by the appellate court is that six months after filing the complaint BAC Home Loans Servicing, the purported servicer of the first mortgage file a motion for summary judgment.  Seemingly, only after this (and a month later) did Mr. Hutchens file his first defensive response, a motion to dismiss, together with an answer.

(It is unclear why BAC didn't first seek a default judgment rather than a MSJ.)

At the hearing on the motion for summary judgment (MSJ), BOA moved to strike Hutchens' late filings including apparently late filed designations of evidence and the motions to strike were granted.


Before further discussing the merits of the Hutchens case, it is noteworthy that courts almost everywhere usually have specific provisions in the rules about enlargements of time and late filings.  Under the Federal Rules, the guidance appears in Rule 6.  So even when a party has missed a deadline, the party can obtain court permission for the late filing by a motion for enlargement.

Since Mr. Hutchens is an attorney, surely he must have known this.  But at least as shown by the appellate decision, it appears that he treated the deadlines casually and may not have asked for an enlargement.  This probably set him up for failure, because absent the court ordered enlargement, he was vulnerable to a motion to strike!

In the subsequent discussion of the key issues of the case, a few other subtle errors emerge.  It is unclear which of these might have been addressed within the defensive filings stricken, but it should first be mentioned that Mr. Hutchens seems to have raised a real party at interest argument rather than a standing argument.

I have been cautioning about this distinction now for several years since the real party at interest argument is a prudential rule and the standing argument is often a state Constitutional imperative.

It would seem that Mr. Hutchens hasn't been visiting the Forum or taking advice from this pro se litigant!

The decision also seems to suggest that the copy of the note appended to the complaint was unindorsed.  But the note was later filed together with an allonge by the plaintiff.

Longtime Forum participants will recall that I have persistent cautioned against the so called produce the note strategy.  When pressed, the plaintiff virtually always produces and indorsed note.

Rather, I have suggested the advisability of getting the plaintiff to embrace and wrap their arms around both the unindorsed note and the forged assignment.

And there is a rather potent argument, seemingly waived by Mr. Hutchens that a document attached to the pleadings is incorpoated into the pleadings and, when inconsistent with the allegations, supersedes the allegations in the complaint!

But there are two other rather telltale mentions within the decision which suggest that Mr. Hutchens probably could have prevailed had he only timely answered and made the correct standing argument.

First, the court tells us of the indorsement:
This endorsement and an allonge to the Note dated on February 18, 2010 were provided to the trial court as part of BAC's response to Hutchens's motion to dismiss BAC's complaint.
And the court further tells us:
Further, both the Note and the Mortgage were properly assigned on February 18, 2009 to Countrywide Home Loans Servicing, L.P., which later changed its corporate name to BAC, and BAC was in possession of the Note and the Mortgage.

Recall that the suit was actually filed on April 14, 2009.

So what happened in this case?

First, it should be noted that it is unlikely that the date of the indorsement and assignment were precisely one year apart.  More likely, these two were executed on the same day and one of these sentences contains a typo.

My guess is that February 18, 2010, is the correct date.  That is, one possiblity is that BAC forged an allonge and an assignment before the commencement of the suit.  This would be usual

Assignments are forged in essentially every case.  Sometimes the forgery is just before the foreclosure filing and sometimes the assignment is forged after commencement.

Allonges are usually forged to order only after the defendant calls the attention of the court and the plaintiff to the omission of the indorsement.

In this case, Hutchens raised various defenses in an answer filed on November 19, 2009.  So my guess is that it was this response that precipitated the forgery of the allonge two months later.  This is also suggested by the specific language of the decision showing that the allonge was "provided to the trial court as part of BAC's response to Hutchens's motion to dismiss BAC's complaint".

To the extent that the note was only shown to be indorsed on February 18, 2010, Hutchens had a totally viable standing argument, entitling him to dismissal of the suit.  But he didn't have a viable real party in interest argument.  Mr. Hutchens made the wrong argument!

Within Footnote 3, we find that Mr. Hutchens also sought to create a dispute as to material fact by asking the court to take judicial notice of the results of the Fannie Mae Lookup Tool.  But the trial court declined to take judicial notice of this online resource and the Appellate Court pointed out that its inquiry in confined to the record before the trial court.

A better practice would have been to have an expert or fact witness perform the lookup and to attach the lookup results to an authenticating affidavit.

Even so, reference to the Fannie Mae Lookup Tool would seem totally unnecessary.  A post commencement allonge and indorsement ought to entitle a defendant to a dismissal in respect of a properly framed standing argument.


It is unfortunate to see an attorney LOSE a case that was absolutely WINNABLE.  Compare this decision with the outcome in the Augenstein case in Kentucky. 
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William A. Roper, Jr.
I should have also noted, the Hutchens is also exceptional in being a case where the Plaintiff appearently voluntarily put a copy of the MERS Milestone Report into evidence.  See Footnote 5 on Page 10:
Hutchens also argues that several pieces of evidence designated by MERS and BOA, including the affidavit of Carrie Daugherty, an Operations Manager of the Litigation Management Department of BAC, the MERS Milestone Report, the Loan Payment History for the Property, and the Satisfaction of the Mortgage should not have been considered by the trial court. Hutchens filed a motion to strike these exhibits, and his motion was stricken by the trial court. As Hutchens is not arguing that the trial court erred when it struck his motion, but instead is arguing why the evidence should not have been considered, we do not reach his argument.
This is rather unusual for a second reason.  An actual copy of the MERS Milestone Report presumably would have shown that Fannie Mae was the owner of this loan, calling into question whether the MER Milestone Report furnished to the court was real or whether this was simply fabricated!
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William A. Roper, Jr.
See also the related thread:

The MERS Milestone Report

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Bank of America is completing an agreement to pay $8.5 billion to settle claims by investors that purchased mortgage securities that soured when the housing bubble burst, according to people briefed on the deal. It represents what is likely to be the single biggest settlement tied to the subprime mortgage boom and the subsequent financial crisis of 2008.

The settlement would wipe out all of the company’s earnings in the first half of this year, and it could also provide a template for deals with other big banks that face tens of billions in similar claims.
If you are an investor why should you expect to be compensated when ones gambling does not pay-off? If the banks duped the sophisticated investor and they are bailed out, why not bailout the unsophisticated homeowner - the one who is unaware and a non-consenting participant in a well-honed securitization scheme. 
Is the solution to organize a protest via the internet? What might happen if organizers called town meetings and invited the media in order to expose the banks and servicers' fraudulent actions and corporate sociopath behavior. 
How about going before our city council and demand that they not allow mortgage bankers and servicers to conduct business in our communities when they have shown a pattern, practice, and propensity to harass, intimidate, steal or wrongfully foreclose?


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The frustrating part is this is the type of attorneys available to help cash-strapped homeowners. They quickly take money, but then tell the homeowner, "You WILL lose your house, but it will be delayed in the process." Sand in the gears, so to speak.

Sure lowers the client's expectation about the attorney's responsibility to diligently defend a case.

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James wrote:
The frustrating part is this is the type of attorneys available to help cash-strapped homeowners. They quickly take money, but then tell the homeowner, "You WILL lose your house, but it will be delayed in the process." Sand in the gears, so to speak.

Sure lowers the client's expectation about the attorney's responsibility to diligently defend a case.

In many jurisdictions it is difficult to find attorneys that understand foreclosure defense.  I really think this shows how important it is to KNOW, UNDERSTAND, AND FOLLOW THE LOCAL TRIAL RULES. 
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Mr. Roper,

Do you know of any specific case law that supports that a judgment void ab initio cannot be defeated by the mootness doctrine?  In other words, after a party has been granted a void judgment, they cannot then defend that judgment by an attack pursuant to Rule 60 by the opposition by ultimately claiming the opposition is too late, we got the judgment and you should have appealed 9 months ago, now your Rule 60 motion is moot. 

Thanks for any assistance you can provide.

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