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.
In a decision of the New York Supreme Court Appellate Division, 2nd Department, the Court modified a decision of the Supreme Court for Richmond County finding that "the plaintiff failed to demonstrate its prima facie entitlement to judgment as a matter of law because it did not establish that it had standing, as the lawful holder or assignee of the subject note on the date it commenced this action, to commence the action (see U.S. Bank, N.A. v Collymore, 68 AD3d 752; see also Suraleb, Inc. v International Trade Club, Inc., 13 AD3d 612; Tawil v Finkelstein Bruckman Wohl Most & Rothman, 223 AD2d 52, 55).  Accordingly, the Supreme Court should have denied those branches of the plaintiff's motion which were for summary judgment on the complaint as to the Maderos and for an order of reference."

The case was:

US Bank Natl. Assn. v Madero, 2011 NYSlipOp 00505 (App Div, 2d Dept. 01/25/2011). 
http://www.nycourts.gov/reporter/3dseries/2011/2011_00505.htm

A better citation will emerge with publication in AD3d.  I will post a better citation when it becomes available.

Some New York litigants may find this language (which includes the quoted material above) to be useful:

". . .  the plaintiff must prove its standing to be entitled to relief (see U.S. Bank, N.A. v Collymore, 68 AD3d 752, 753; Wells Fargo Bank Minn., N.A. v Mastropaolo, 42 AD3d 239, 242).  "In a mortgage foreclosure action, a plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced" (U.S. Bank, N.A. v Collymore, 68 AD3d at 753).  "Where a mortgage is represented by a bond or other instrument, an assignment of the mortgage without assignment of the underlying note or bond is a nullity" (id. at 754).  "Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident" (id.; see LaSalle Bank Natl. Assn. v Ahearn, 59 AD3d 911, 912).  Here, the plaintiff failed to demonstrate its prima facie entitlement to judgment as a matter of law because it did not establish that it had standing, as the lawful holder or assignee of the subject note on the date it commenced this action, to commence the action (see U.S. Bank, N.A. v Collymore, 68 AD3d 752; see also Suraleb, Inc. v International Trade Club, Inc., 13 AD3d 612; Tawil v Finkelstein Bruckman Wohl Most & Rothman, 223 AD2d 52, 55).  Accordingly, the Supreme Court should have denied those branches of the plaintiff's motion which were for summary judgment on the complaint as to the Maderos and for an order of reference."

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William A. Roper, Jr.
Google Scholar has posted the Madero decision at:

http://scholar.google.com/scholar_case?case=11299985545886232717


This version has links to the cited cases.



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...so what happens with this matter down the road?

Assume the following facts: neither MERS nor the servicer attempting to close owns the mortgage and/or note, and it can't be found (in my case, the originating bank is out of business).

We get a dismissal (with or without prejudice) and one way or the other there's no action on the matter since whoever owns the mortgage and/or note either doesn't realize (being, say, a humongous trust with thousands of these, all chopped up where the trustee isn't allowed to foreclose - not being an appropriate "plaintiff" since HIS funds aren't at risk so he hasn't "a horse in the race") or realizing can't prove ownership.

So...no further action ensues. Look at the Arthur Schack cases in Brooklyn. How many of them have been re-filed? Not a lot, I would guess...

Looking up NY law, the term "quiet title" doesn't apply since it's a very specialized action that doesn't concern mortgages.

The statute of limitations ("SOL") on mortgages is six years...but careful research says that until the mortgage is accelerated (i.e. upon the filing of the foreclosure case) the statute only applies to each individual payment that wasn't made (i.e. if my last payment was October 2009, if I were sued in November 2015 that one payment is off the books; when my mortagee sued for foreclosure in July 2010 and thus accelerated the payment, the statute would run until July 2016 and the entire mortgage eaten by the SOL).

I believe a case could be made by someone that the acceleration by the entity that tried to sue but was barred by lack of standing wouldn't count, since if it didn't have standing to sue, it also didn't have standing to accelerate therefore the SOL never even started to run except on the individual payments.

The statute of "adverse possession" requires possession for ten years before action can be taken which in other states would result in "quiet title".

SOOOOO...the question is this: We have them on the ropes. We get to live in the house (and, in a multi-family, collect rent). BUT "someone" still has a lien on the house for the mortgage. At what point, in NY State, can we successfully sue to clear the lien and be able to sell or re-mortgage the house as our property (e.g. the often-referred-to "free house")?

Oh...if, after dismissal, some other entity were to crawl out of the woodwork with an original note and mortgage and establish somehow that they were pristine and with clear succession of title, would they not have to go through the entire process, set themselves up as the owner and either service or appoint a servicer, demand that payments commence immediately and if not forthcoming then file the required 90-day notice (under NYS law) etc. rather than just starting where the old, discredited servicer left off?
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"careful research says that until the mortgage is accelerated (i.e. upon the filing of the foreclosure case)". I do not believe it it is necessary true that they are both the same thing. In many states as it is the case in NY the lender/servicer is required to send you either a demand to cure the default or/and  the notice of intent to accelerate among of  number of correspondence.  Because they have send you the notice, it does not mean they are necessarily going to jump and file for foreclosure.  Many Judges in the New York court system is making sure they get their paperwork in order before filing. Some do not follow suit  right away even though the owner stopped payment  for months. Some lenders/servicers  wait a lot longer for month and even a few years.  Also, if you have file for bankruptcy within those six years the statute of limitation would be tolled.  When should you file? I would argue that once you get those six years and no payment whatsoever have ever been made and there is no tolling, one can file. The goal of the acceleration letter is to present a formal correspondence from the lender telling you unless you bring the money in full, they will do all the can to foreclose on you. It is not a way for them to circumvent the statute of limitations. But then again, should you file right after those six years?  I would say that the more you can wait, the better position you will be in court when a pretender come in so many years later and tell the court  they are the rightful owner.  
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Angelo
Question, does a notice of acceleration or default have to be rescinded? Meaning if you file BK after a notice of default or notice of acceleration is issued, I know the SOL is tolled but if the Original plaintiff makes of motion for relief of stay and it is granted at some point during the BK does the previous notice still hold? And to muddy the water even more, let's say a loan modification was given after the relief of stay, then the debtor defaults again, does a new notice now need to issued because of the modification? But in all modifications there is a provision that if the debtor defaults again, there need not be any further notices given.
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