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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FlaProSe
Appellants Domenic Lombardo and Nancy Anzalone, defendants
below, appeal a Final Summary Judgment of Mortgage Foreclosure
entered in favor of the Appellee HSBC Bank, National Association as
Trustee for Wells Fargo Asset Securities Corporation Mortgage Pass
Through Certificates, Series 2006-AR8, plaintiff below. We reverse the
summary judgment because, based on the record evidence in its present
state, there remains a genuine issue of material fact regarding whether
appellee complied with the condition precedent contained in the
mortgage to provide pre-suit notice of acceleration. See Serrano v. HSBC
Bank USA, Nat’l Ass’n, 107 So. 3d 527 (Fla. 4th DCA 2013); Dominko v.
Wells Fargo Bank, N.A., 102 So. 3d 696 (Fla. 4th DCA 2012).

http://www.4dca.org/opinions/July%202013/7-03-13/4D12-8.op.pdf
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Mike H
   The problem with the "conditions precedent" defense, ie failure to send the default notice required
by paragraph 22 of the standard Fannie Mae mortgage, is that at most you will get a dismissal "without
prejudice" to refiling.
   However, by using this defense, you have admitted you have a contract with the plaintiff and that
once they correct their error, they have standing to foreclose.
   In most of these cases, the loan documents are phony in that the lender named on the documents
is not the real lender, therefore all the assignments and endorsements transferred nothing and the
entity foreclosing ( the servicer) has no standing.
   To find the true originator, you have to follow the money trail, as Neil Garfield has stated many times
in his blog, not the phony paper trail.
   The true lender did not want their name on the loan documents because they were intending to
defraud the investors by selling the same Notes multiple times on the secondary market.
    Think about it, if you were going to commit fraud, would you want your name on it, or some
fly by night defunct entity that was judgment proof?
    So before you use the "conditions precedent" defense, find out who the true lender was. Look
at cancelled checks, wire transfers and title insurance policies. Also, look at who got the "yield
spread premium", paid outside closing, that is usually the true lender.
    Yield spread premium is the profit the true lender made by selling the Note for more than its
face value in a "table funded" loan. For example, if $100,000 was loaned, and the lender sold it
for $103,000, the yield spread premium would be $3,000. In a table funded loan, the true original
lender is supposed to be on the loan documents. It would contain an endorsement to whomever
bought the Note. Many times this was not done, in order to hide the identity of the true lender.
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texas
Avoid admissions, and Yield Spread not really relevant.
Money is equity, title is law, difference and apply accordingly.
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Tom
Quote:
The problem with the "conditions precedent" defense, ie failure to send the default notice required
by paragraph 22 of the standard Fannie Mae mortgage, is that at most you will get a dismissal "without
prejudice" to refiling.
   However, by using this defense, you have admitted you have a contract with the plaintiff and that
once they correct their error, they have standing to foreclose.

Mike shows his lack of legal knowledge or sophistication in his response. 

A correct enunciation of the law shows precisely why the suggested strategies regarding the conditions precedent defense are so robust!

Judicial Admissions
First, Mike's assertion that by pleading conditions precedent that one is admitting the existence of the contract is simply wrong on three counts.

When pleading any defense, such a pleading can be made in the alternative and in so doing there is no judicial admission whatsoever.

Also, since conditions precedent is a primary rather than an affirmative defense, as explained in several posts, it is not necessary for a borrower to put in any evidence to show that the notice of grievance and/or notice of acceleration was not sent.  Rather, the plaintiff must plead and prove that the necessary notices were sent.  A borrower can rest on the mere denial, in the alternative, within his or her answer and is not required to put on any proof at all.

Mike is also completely mistaken in his assertion about the legal effects of having made the argument in one legal proceeding.  Generally speaking, a position taken in one's answer in one action is a judicial admission only for the purposes of that action.  Such an admission does not carry over to a subsequent action.  This is often confused and misunderstood.

Thus, a borrower can argue in one action that there was a contract, and in a later action can argue (if this is ever useful) that there was no contract at all.  But if one argues in the alternative, then the argument is not even a judicial admission in the first action.

Even so, a borrower ought to take exceptional care (and it is far easier if the borrower has a lawyer to make the argument in court).  The reason for the care is that while making the argument (in the alternative) would not be a judicial admission, if the borrower denies receiving the notice under oath, this can give rise to another different problem, which Mr. Roper also discussed in some older posts.

This is the problem of judicial estoppelJudicial estoppel is different from judicial admission.  The idea is that a party ought not be allowed to swear to an averment in one proceeding and then take a contrary position in another different proceeding.  Judicial estoppel does carry over from one case to another.  The distinction concerns taking an oath.

One reason that borrowers need to take exceptional care (and are better represented by an attorney) is that in some courts an activist judge may simply ask the borrower if the borrower received the notice and might even put the borrower under oath.  (This pre-supposes that one is not in a summary judgment proceeding where no oral testimony is taken.)  If the borrower states under oath that he didn't receive the notice, then this can have some judicial estoppel preclusion in another later proceeding.

Re-litigation 
Mike also errs in his explanation about re-litigation after dismissal.  He is correct that Florida appellate courts have held that a dismissal there due to failure of conditions precedent does not operate as res judicata to another suit in respect of new notices.

But there are two really critical points that deserve elaboration. 

First, this holding of Florida courts in not the universal rule nationally.  In a number of other states, a dismissal due to failure of conditions precedent is an absolute res judicata bar to a subsequent suit when res judicata is properly pleaded as an affirmative defense.  Unlike conditions precedent, which is never an affirmative defense, res judicata is always an affirmative defense in every state and must be plead and proven.  Failure to assert res judicata is a waiver of this defense.  So every borrower needs to carefully review and assess the cases for their jurisdiction.

Second, even in Florida, Mike fails to appreciate the nuance of the court's holding.

Suppose, in Florida, that a servicer sends a notice of acceleration, for example on June 1, 2008.  Further suppose that the case languishes and finally goes to trial (or is re-litigated on appeal).  But suppose that the borrower makes a robust argument in the alternative regarding satisfaction of conditions precedent and the servicer fails to prove up the original notice.

A borrower might very well win this case earning a dismissal.

What Florida's appellate courts have held is that the earlier dismissal is not res judicata to a new suit in respect of the old notice.  That is, if the servicer brings a new suit again making the same allegations, res judicata applies.  But if the lender sends a new notice of acceleration, then the servicer (in Florida) can re-litigate in respect of the new notice.

No this seems bad enough, but there is still a silver lining under the facts outlined above for the astute borrower who has carefully saved the original notice of acceleration.  In respect of the second suit, the borrower can plead limitations as an affirmative defense.  The borrower then produces and proves up the original notice and shows that more than five years (in Florida) have elapsed since the original acceleration and thereby recovery of the debt is completely barred.

Mike would certainly be correct that if the borrower comes into court (in person or by affidavit) and swears that he didn't receive the original notice, then the borrower is going to be precluded by judicial estoppel from arguing limitations in the second suit.  Mike is in error if he thinks that the borrower who doesn't swear to this would be barred by judicial admission.  The arguments in the prior case simply do not carry over to the new case.  Even so, it is better to argue each limitations defense in the alternative so that the argument is never even a judicial admission in the original proceeding!

Mike, go back and read the decisions and also look up the cases on judicial admissions and judicial estoppel.  This was brought to my attention several years ago and I am now beyond limitations!

Best of luck to all!  
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Tom
Alternative Conditions Precedent Arguments
I should probably also add that there are actually several closely related but distinct conditions precedent arguments which might or might not apply in various states.  These include presentment, notices of default, notice of grievance, notice of intent to accelerate and notice of acceleration.

Presentment means a presentation of the overdue note for payment.  Most notes include an express waiver of presentment.  This doesn't mean that a borrower cannot make the argument.  The lender would then need to make the counter-argument that presentment had been waived.

Notice of default would be the optional declaration by the lender that a default under the note or mortgage had occurred.

Notice of grievance is very often overlooked and thereby waived.  The lender cannot even file suit without first giving such notice.  See Paragraph 20 of your mortgage.

Some states, like Texas, have an express requirement that there be a notice of intent to accelerate separate from the notice of acceleration.

As Mike points out, notice of acceleration usually appears in Paragraph 22 of the standard FNMA/FHLMC uniform mortgage, deed of trust, security deed or other security instrument.

Bear in mind that in most places, a lender can combine one of more of these notices, though some (like the notice of intent to accelerate / notice of acceleration in Texas) must be separate, etc.

Under the rules of every jurisdiction, a defendant must plead conditions precedent specifically or this defense is waived.  But pleading specifically simply means that the answer needs to inform the plaintiff as to which conditions have not been satisfied.  Thus something along this line might be sufficient:

Defenses
1.  Alternatively, Defendant DENIES that Plaintiff has presented the alleged note for payment.

2.  Alternatively, Defendant DENIES that Plaintiff has declared a default under the alleged note or alleged mortgage.

3.  Alternatively, Defendant DENIES that Plaintiff has sent the notice of grievance required by Paragraph 20 of the alleged mortgage.

4.  Alternatively, Defendant DENIES that Plaintiff has sent a notice of intent to accelerate.

5.  Alternatively, Defendant DENIES that Plaintiff has sent the notice of acceleration required by Paragraph 22 of the alleged mortgage.

Be sure to ADD any pre-suit statutory notices required in your jurisdiction!

In most places, this would sufficiently inform the plaintiff as to what the Defendant alleges is deficient.

By making each argument in the alternative and identifying the note and mortgage as the alleged note and the alleged mortgage nothing is judicially admitted!
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Tom
An Afterthought on the Validity of the Florida Appellate Holding on Conditions Precedent
I want to add one other afterthought regarding the Florida appellate holding that a plaintiff can re-litigate conditions precedent.  While I would encourage every borrower to avoid calling this holding into question by using the strategies outlined above, it is not clear that the Florida appellate holding is even correct.

Sine the Rules impose upon a defendant the duty to plead conditions precedent defenses particularly, a plaintiff is put immediately on notice about possible defects in its case.

A plaintiff which has not complied with conditions precedent can thus simply take a voluntary dismissal, serve the requisite notices and then re-file.

The idea that a plaintiff can litigate a case to conclusion and then still get another bite at the apple later is actually completely contrary to both the letter and spirit of the rules, which is WHY other states do not follow the anomalous holding of a Florida appellate court in this regard. 

It is unclear whether this holding would be sustained if it went up to the Florida Supreme Court.

While it is certainly true that the banking lobby would exert heavy pressure on the Florida Supreme Court to uphold this holding, borrowers would discover that they have a key ally in the insurance industry.  Insurers rely heavily on conditions precedent as a defense in cases on denial of insurance claims.  If this matter were taken up to the Florida Supreme Court on appeal, the insurers would almost certainly file amicus briefs asking the Florida Supreme Court to reverse this holding and would show that this provision is totally contrary to justice and fair play!

For the interim, it is easier to make the arguments in the alternative, avoid labeling conditions precedent as "affirmative defenses" and avoid swearing to these notice failures.  Then, put the notice of acceleration in a safe place and hope to get past limitations!
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Veal
FYI:

from: http://www.stayinmyhome.com/paragraph-22-briefing-an-appeal-in-the-2dca/

Paragraph 22 … Briefing an Appeal in the 2DCA

Those in the foreclosure industry know I’ve been able to get a lot of foreclosure cases dismissed where the bank did not comply with the conditions precedent in paragraph 22.  Not all, of course, but a lot.

For a long time, the banks have been unwilling, unable, or just plain scared to appeal any of the cases where I prevailed.  Recently, however, they appealed one.

Here is the Order Granting Summary Judgment entered by a circuit judge in Tampa.

Here is the bank’s Initial Brief

Here is my Answer Brief.

I’m not going to elaborate too much, as the Answer Brief says it all.  48 pages.  50(+) legal citations.  Read it.  Understand the arguments/issues.  That said, here are a few thoughts:

The more I dug into this project, the more I realized … Substantial compliance is a joke.  It’s not defined anywhere in Florida law, and the cases make it clear “substantial compliance” is really no different than “compliance.”

Banks want courts to believe there’s a difference so they can win foreclosure cases easier.  But when it comes time to writing a brief and defining “substantial compliance” or citing cases that explain what it means, they can’t.  Tellingly, the bank doesn’t cite a single case which articulates any difference between “compliance” and “substantial compliance.”  And they can’t cite a single appellate decision in Florida which employs a “substantial compliance” standard in the paragraph 22 context.

I’m very confident the Second District won’t employ some nebulous concept of “that’s close enough.”  That’s what the banks want judges to do – look at a defective paragraph 22 letter and conclude “yeah, that’s defective, but it’s close enough.”  There’s no case law that employs such a standard.  None.  That’s a big part of what my Answer Brief tries to accomplish – beat the bank over the head with the concept that there’s no legal authority for its position.

As I’ve explained in recent blogs, the Second District has already made it clear that “compliance” is the standard when adjudicating an acceleration letter under paragraph 22 of a mortgage, not substantial compliance.  After this appeal, I’m confident that will be even more clear."

ps I have zero affiliation with Mark Stopa - this info is simply presented to aid in this discussion. And, I would strongly urge all to read the Briefs provided. / banned

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Tom
Quote:
FYI:

from: http://www.stayinmyhome.com/paragraph-22-briefing-an-appeal-in-the-2dca/

Paragraph 22 … Briefing an Appeal in the 2DCA

Those in the foreclosure industry know I’ve been able to get a lot of foreclosure cases dismissed where the bank did not comply with the conditions precedent in paragraph 22.  Not all, of course, but a lot.

For a long time, the banks have been unwilling, unable, or just plain scared to appeal any of the cases where I prevailed.  Recently, however, they appealed one.

Here is the Order Granting Summary Judgment entered by a circuit judge in Tampa.

Here is the bank’s Initial Brief

Here is my Answer Brief.

I’m not going to elaborate too much, as the Answer Brief says it all.  48 pages.  50(+) legal citations.  Read it.  Understand the arguments/issues.  That said, here are a few thoughts:

The more I dug into this project, the more I realized … Substantial compliance is a joke.  It’s not defined anywhere in Florida law, and the cases make it clear “substantial compliance” is really no different than “compliance.”

Banks want courts to believe there’s a difference so they can win foreclosure cases easier.  But when it comes time to writing a brief and defining “substantial compliance” or citing cases that explain what it means, they can’t.  Tellingly, the bank doesn’t cite a single case which articulates any difference between “compliance” and “substantial compliance.”  And they can’t cite a single appellate decision in Florida which employs a “substantial compliance” standard in the paragraph 22 context.

I’m very confident the Second District won’t employ some nebulous concept of “that’s close enough.”  That’s what the banks want judges to do – look at a defective paragraph 22 letter and conclude “yeah, that’s defective, but it’s close enough.”  There’s no case law that employs such a standard.  None.  That’s a big part of what my Answer Brief tries to accomplish – beat the bank over the head with the concept that there’s no legal authority for its position.

As I’ve explained in recent blogs, the Second District has already made it clear that “compliance” is the standard when adjudicating an acceleration letter under paragraph 22 of a mortgage, not substantial compliance.  After this appeal, I’m confident that will be even more clear."

ps I have zero affiliation with Mark Stopa - this info is simply presented to aid in this discussion. And, I would strongly urge all to read the Briefs provided. / banned


This was a great post Veal!  Stopa presents some really terrific arguments and analysis regarding the sufficiency of various notices, separate and distinct from whether a notice was sent or not.  And these sorts of arguments definitely ought to be folded in by defendants where applicable, including in other places!

Note that Stopa expressly picks up Mr. Roper's point about conditions precedent being often an insurance company argument.

Borrowers and the insurance industry are generally mostly on the same side in respect of conditions precedent, EXCEPT that as Stopa points out in the brief, insurance contracts are typically drafted by the insurer and are contracts of adhesion which must be construed against the insurer, just as notes and mortgages must be construed against the lender.

In my view, the only mistake in the brief is for Stopa to unnecessarily concede that the dismissal should be without prejudice.  This ought to have been a point on a cross-appeal asking for a dismissal with prejudice.  When the lender wants to wander out of state with cases, it would have been better to bring this issue to the fore to get Florida into the mainstream of American jurisprudence!

When a plaintiff has failed to comply with conditions precedent or when there is even doubt about the sufficiency of the notice, what ought to happen is the plaintiff should assess its case and make a strategic decision.  It can voluntarily dismiss, clean up the notices and re-file; OR it can proceed to summary judgment and trial.  Giving the lender two bites at the apple is not required by the rules, by any mainstream concepts of jurisprudence or even common sense.  The courts are cluttered enough with unnecessary litigation.

If the lenders faced actual dismissal with prejudice, they might just slow down and stop running roughshod over all borrowers' rights!

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Gary
It would be useful to obtain copies of the defendant's motion for defensive summary judgment and reply in the trial court in the pending appeal by attorney Mark Stopa.  I think that the defensive arguments outlined by Tom cover what is needed for an answer, but if one is arguing not simply that there wasn't a notice but that the notice given was non-compliant, having some strong arguments for a motion for defensive summary judgment and/or opposition to the plaintiff's motion for summary judgment would be helpful.

One thing I do not understand though is why Mr. Stopa filed a motion for summary judgment at all unless this was a cross-motion filed for hearing and determination with the plaintiff's motion.  If one has a strong winning argument that is going to get a case dismissed without prejudice the defendant ought not be in a rush to obtain that result.
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Veal
Re: "It would be useful to obtain copies of the defendant's motion for defensive summary judgment and reply in the trial court in the pending appeal by attorney Mark Stopa.  I think that the defensive arguments outlined by Tom cover what is needed for an answer, but if one is arguing not simply that there wasn't a notice but that the notice given was non-compliant, having some strong arguments for a motion for defensive summary judgment and/or opposition to the plaintiff's motion for summary judgment would be helpful."

When time permits I will upload the requested motion's above and post links here.

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Veal
ps yes Stopa's sj motion was in response to the fraudsters sj motion!
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Veal
re: "...Stopa to unnecessarily concede that the dismissal should be without prejudice."
**
I don't think "without prejudice" is actually an issue, as if he wins, then I "believe" that this will force the fraudster to begin the foreclosure process from the beginning, since the 'default' 'breach' letter is a required step prior to the filing of the complaint.  Thus, the current complaint can't be re-filed as an 'amended complaint'.  (I think that my understanding is correct, if not please correct me!)

 
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Veal

two corrections:

1. lower court briefs -- I did request the relevant lower court briefs, but the file had already been sent to the appellate court.  Thus, not available.  My apology.

2.  re "Stopa lower court filing: again I was wrong, I was thinking of another Stopa Para 22 case.  From the Busquets Docket:

    7/20/2012 - Homeowner's sj motion filed
    7/27/2012 - Motion for default entered
    8/03/2012 - Fraudsters reply to Stopa's sj motion
    9/27/2012 - Judge grant's Stopa's sj motion
   12/14/2012 - Fraudster's motion for rehearing
   12/28/2012 - Rehearing denied
     1/07/2013 - Notice of Final Appeal to 2nd dca 

my apology for the confusion..

 

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Gary
Quote:
I don't think "without prejudice" is actually an issue, as if he wins, then I "believe" that this will force the fraudster to begin the foreclosure process from the beginning, since the 'default' 'breach' letter is a required step prior to the filing of the complaint.  Thus, the current complaint can't be re-filed as an 'amended complaint'.  (I think that my understanding is correct, if not please correct me!)

It is hard to argue that a notice of acceleration was legally deficient and then still try to argue that it was legally effective to accomplish acceleration and trigger limitations.  But in many jurisdictions a dismissal due to failure to satisfy conditions precedent is a merits dismissal with res judicata.

Also, I have seen cases where more than one law firm was involved and more than one notice of acceleration was sent.

If a plaintiff has difficulty proving up the notices and the case is dismissed due to a failure to prove conditions precedent, this would not preclude the defendant from later arguing limitations and putting the notice in as part of a limitations defense.  Tom discussed this earlier.

If it was me, I would have argued for a merits dismissal and then filed a cross-appeal that the dismissal ought to have been with prejudice.  That would be the correct legal outcome.  

Even though Mark Stopa wrote a pretty good brief, he doesn't think and operate on the same level as Mr. Roper!
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Gary
Quote:
   7/20/2012 - Homeowner's sj motion filed
    7/27/2012 - Motion for default entered
    8/03/2012 - Fraudsters reply to Stopa's sj motion
    9/27/2012 - Judge grant's Stopa's sj motion
   12/14/2012 - Fraudster's motion for rehearing
   12/28/2012 - Rehearing denied
     1/07/2013 - Notice of Final Appeal to 2nd dca 


This case was filed on May 18, 2012.  The homeowner filed a motion for summary judgment just two months later.  That is just idiotic!  When the matter gets dismissed, the plaintiff can and will just send new notices and re-file.

The borrower would have been far better off to file a motion to dismiss, LOSE, file an answer, run discovery and then finally file a motion for defensive summary judgment a year or two later when the plaintiff finally gets around to filing.

All that this case seems to really show is that Stopa can write a good appellate brief, but that he lacks any real sense of strategic vision.  He is lining his own pockets, while his client gets the shaft!

The borrower got a dismissal too soon.  Stopa no doubt got a retainer up front.  He probably got paid well for the appellate brief, which was ably done.  The borrower got a quick dismissal, but after the appeal will be right back in the meat grinder and will almost certainly lose the suit.

If the borrower had followed Mr. Roper's suggested strategies, he would probably be two or three years closer to limitations before the matter even got sent up on appeal.  So many of Mr. Roper's supporters are now past limitations! 

Stopa has some great arguments, but these never, ever should have been presented in a motion for summary judgment after only two months.  That is just plain idiotic!
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Veal
Gary: "If the borrower had followed the Forum's suggested strategies, he would probably be two or three years closer to limitations before the matter even got sent up on appeal.  So many of homeowners are now past limitations!"

100% agree with ur analysis 100%!!!!
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LoneStranger
May I suggest that Veal re-post the original material from the Stopa post in another separate dedicated thread, highlighting the filed briefs in U.S. Bank v. Busquets?  Even though this case has not yet been decided, it may be extremely important and deserves its own thread with a subject that makes it easy to find, something like:

New Florida 2nd DCA Appellate Case Calls Notice Deficiencies into Sharp Focus: U.S. Bank v. Busquets

This thread started out being about one case just decided, Lombardo v. HSBC, but has drifted off into new related topics.  Keep this thread going and link this thread from the new thread, but lets make the appellate briefs from Busquets easier to find.

Also, Gary and Veal are correct that filing a motion for summary judgment two months into a case is a totally boneheaded strategy.  It sounds as though the Busquets have deep pockets (despite their default) and Stopa must have his hand in those pockets.  As pointed out, Stopa gets a nice retainer, gets paid for handling the appeal and will no doubt get a new retainer when the case is re-filed in the Circuit Court.  Stopa will probably make upwards of $20,000 on this case.  The borrower will lose the house, but has the sensation that he is winning.

Stopa's arguments are credible.  
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