Real Estate:
State Supreme Court finding flaws in some foreclosure filings
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10 July 2011
12:56 p.m.
The Nevada Supreme Court has sent a message to banks trying to foreclose on homeowners: Follow the rules, or forget about foreclosing and face sanctions.
In three decisions last week, the court sided with homeowners who complained they tried to save their homes through the state’s foreclosure mediation program, but that lenders either didn’t provide the right documentation or didn’t send someone with decision-making authority to the mediation.
In a Washoe County case pitting Emiliano and Yvette Pasillas against HSBC Bank USA, Power Default Services and American Home Mortgage Servicing Inc., the court sent the case back to District Court so it could determine sanctions against the defendants.
“Because (state law) and the Foreclosure Mediation Rules expressly require that certain documents be produced during foreclosure mediation and that someone with authority to modify the loan must be present or accessible during the mediation, we conclude that a party’s failure to comply with these requirements is an offense subject to sanctions by the District Court,’’ the court said in its ruling.
In this case, the District Court judge had allowed the foreclosure to proceed even after the mediator recommended against it and reported:
• The loan “beneficiary or his representative failed to participate in good faith.”
• The “beneficiary failed to bring to the mediation each document required.”
• Two pages of the mortgage note were missing.
• The assignment purportedly assigning the mortgage note and deed of trust to HSBC was incomplete.
• Instead of an appraisal, HSBC provided a broker’s price opinion.
• The foreclosing parties “stated they would need additional investor approval before agreeing to a loan modification.’’
Perhaps significantly, the Nevada Supreme Court also noted that in this case, “an assignment for the mortgage note was provided, but the name of the assignee was missing.’’
“We determine that an assignment provided without the name of the assignee is defective for the purposes of the Foreclosure Mediation Program because it does not identify the relevant parties,’’ the court found.
The court referenced in its opinion in a Massachusetts Supreme Court ruling from January, finding two banks couldn’t gain clear title to homes they had foreclosed on because they couldn’t produce documents showing they had an interest in the mortgages at the time of the foreclosures.
“Similar to this case, the banks (in Massachusetts) were not the original mortgagees and, therefore, they had to show that the mortgages were properly assigned to them in writings signed by the grantors before they could notice the sales and foreclosures of the properties,’’ the Nevada ruling said.
“In an attempt to prove that they had the authority to foreclose on the properties, the banks provided contracts purporting to assign to them bundles of mortgages; however, the attachments that identified what mortgages were being assigned were not included in the documents provided. The court concluded that the banks demonstrated no authority to foreclose on the properties because they did not have the assignments,’’ the Nevada ruling said.
“We agree with the rationale that valid assignments are needed when a beneficiary of a deed of trust seeks to foreclose on a property,’’ the Nevada court ruling said.
In a second ruling last week from Clark County District Court involving Wells Fargo Bank, the court rejected arguments by Wells Fargo that it produced adequate documentation at a foreclosure mediation.
In this case, involving homeowner Moises Leyva, records show Wells Fargo “produced a certified copy of the original deed of trust and mortgage note, on both of which MortgageIT Inc., not Wells Fargo, was named as the lender, as well as a notarized statement from a Wells Fargo employee asserting that Wells Fargo was in possession of the deed of trust and mortgage note, as well as any assignments thereto.’’
That documentation was insufficient, the Nevada court found.
“To prove that MortgageIT properly assigned its interest in land via the deed of trust to Wells Fargo, Wells Fargo needed to provide a signed writing from MortgageIT demonstrating that transfer of interest. No such assignment was provided at the mediation or to the District Court, and the statement from Wells Fargo itself is insufficient proof of assignment. Absent a proper assignment of a deed of trust, Wells Fargo lacks standing to pursue foreclosure proceedings against Leyva,’’ the court found.
As in the first case, the court sent Leyva’s case back to District Court in Las Vegas for a determination of sanctions against Wells Fargo.
Wells Fargo argued in the case it did not participate in the mediation in bad faith.
“Wells Fargo attended the mediation with all necessary documents to show its authority to enforce the note and deed of trust, presented Leyva with several options for avoiding foreclosure and informed Leyva of its reasoning and basis for such options,’’ bank attorneys argued in a court brief. “That Leyva did not like these offers and rejected them does not constitute bad faith on the part of Wells Fargo.’’
In a third case, involving Washoe County homeowners Philip and Patricia Redmon and loan servicer HomEq Servicing Inc., the Nevada Supreme Court sent the case back to District Court to determine if HomEq made someone available during the mediation at issue who had the authority to negotiate the Redmons’ loan.
“If the District Court concludes that HomEq failed in this regard, the District Court shall determine how HomEq should be appropriately sanctioned,’’ the Nevada high court said in its order.
Last week’s orders came as Nevada continues to lead the nation in foreclosures, as the nation’s largest banks continue to negotiate a settlement to federal and multistate probes of foreclosure issues related to “robosignings’’ and other problems and as Nevada Attorney General Catherine Cortez Masto continues to pursue a lawsuit charging Bank of America mismanaged foreclosures and harmed Nevada homeowners by falsely leading them to believe it would modify their mortgages – charges denied by Bank of America.
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It is about that time that Judge Hardesty and his boys at the supreme court finally did something correct. The reason I say this is that in 2002 I went to Washoe County District Court to prevent a foreclosure on my property. The case was heard by Judge Brent Adams and on appeal went to the state supreme court. In any case, in my case the district court and the supreme court both acted quite improperly. My foreclosure was initiated because Option One Mortgage Company received my payments, signed for them, right after 9/11/2001, claimed that they never received the check and initiated the foreclosure. Thereafter, the holder of the second deed of trust initiated foreclosure on an amount of four hundred and some odd dollars, after receiving notice by the Option One of its initiation of foreclosure, by providing a hand written accounting to the district court. Subsequently, I mailed the original payments plus a penalty of around $1,400 to Option One Mortgage Company. I then went to court to stop the foreclosure proceeding by the holder of the second mortgage. Judge Brent Adams dismissed my case, even though the holder of the first mortgage subsequently found my payment, sent by USPS next day mail with signature receipt, after the foreclosure and cashed my check, whose copy was also submitted to Brent Adams. This fact was also submitted to the district court as were bank statements and checks indicating that I was not delinquent with the second mortgage, However, Judge Brent Adams dismissed my case and allowed the foreclosure to proceed. On appeal this sad Nevada Supreme Court, who is now so much on the side of foreclosures did also side with my opponents and upheld Judge Brent Adams' decision. I think that when I mentioned that I had to pay extra fines to the holder of the first mortgage, Option One, thus may have been late in making payment to the holder of the second mortgage, however, this was not my fault as payment was mailed and received by Option One. To this Brent Adams replied something of the sort that if your electric bill is excessive you must pay the car payment. His statement shows Brent Adams' illogical mind at that moment for the extra payment made to Option One was because of Option One's fault not mine. For reference my case number was CV02-01132 - MOBASHIR N. AHMAD VS. FIRST AMERICAN TITLE, ETAL
This judge Hardesty was the chief judge at the Washoe County District Court who actually appointed judge Brent Adams, and, thereafter, I tried to remove Brent Adams from the case, as I felt that either he was incompetent or prejudicial, however, an appeal to the chief judge nor a hearing to remove Brent Adams was successful. My point is that the Nevada Supreme Court, through Chief Justice Hardesty, which now proclaims to be a defender of the people is actually a hypocritical court which sways to political pressure more than anything else.
Hang on to your houses a little longer. There is a resolution going through the legislature to help you stay in your houses longer w/o paying. I know it is stressful but they are working on a plan because enough citizens have been calling their representatives and telling the real stories as to what they are going through with the banks. Hang in there a little longer, Sir Harry has been listening.
YES!!
"My point is that the Nevada Supreme Court, through Chief Justice Hardesty, which now proclaims to be a defender of the people is actually a hypocritical court which sways to political pressure more than anything else."
Mobashir -- welcome to the knee-in-the-crotch that passes for our "just us" system. Law, truth and justice are alien concepts to them.
Still it's nice to see some homeowners actually get something for their $170k/year/justice.
"Hang on to your houses a little longer. There is a resolution going through the legislature to help you stay in your houses longer w/o paying."
Bob_Realist -- actually as these two opinions and order show, the centuries-old law of notes prevailed. It survives nationally as UCC 3, in Nevada it's NRS 104 Article 3. All our Supreme Court did was just affirm the simplicity of "Where's the Note? Who's the Holder?" with a couple of Nevada twists to it.
Congress has authority to do little more than pass the laws regulating Wall Street greed (if the regulators would actually regulate), and the state legislature is out for another year and a half. Both their meddling since this crisis begin has actually made things worse than better.
"Why don't the banks want us to see the paperwork on all these mortgages? Because the documents represent a death sentence for them..... in America, it's far more shameful to owe money than it is to steal it." -- an article from the November 25, 2010 issue of Rolling Stone by Matt Taibbi "Courts Helping Banks Screw Over Homeowners"
The banks were not prepared for the onslaught of people stiffing them. I laugh when I hear people say "I called them and they are not getting back to me" or they are not being responsive. Well, you're calling to restructure a deal you made. I wouldn't be eager to accommodate you either. Anytime you're calling a business or a person to tell them "I can't pay"...don't expect people to jump to their feet to help you.
"The banks were not prepared for the onslaught of people stiffing them..."
TomD1228 -- I see you still persist on remaining completely ignorant. Read these two new published rulings from our Supreme Court and educate yourself @ http://www.nevadajudiciary.us/index.php/.... Or remain ignorant, your choice. Just expect to continue without credibility here.
"If you're going to take my house away from me, you better own the note." -- Joe Lents (who hasn't made a payment on his $1.5 million mortgage since 2002) in Bloomberg's 2/22/08 "Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish"
I'd say I'm right on target. People who renege on their financial responsibility don't have a leg to stand on. I don't need to read your legal BS. The intent is...pay your bills and you will not have a problem. You come off as a scam artist lawyer who looks for technicalities rather than the actual intent of the deal. You represent what is wrong in America..."do whatever I can to avoid paying what I owe".
Have fun with that.
"People who renege on their financial responsibility don't have a leg to stand on. I don't need to read your legal BS."
TomD -- to "renege" on something the promisor must first have an obligation to one's promisee. If there is neither promise nor promisee there is no obligation. And that "legal BS" isn't mine, it's three good rulings by our state's highest court.
In the future just moo on with the rest of your herd. You'll get nothing more from me.
"...how little does the common herd know of the nature of right and truth." - Socrates in Plato's "Euthyphro" (399 B.C.E.?)
Pay your bills KB..you'll sleep better at night. Stop looking for an avenue to welch on your debt. You borrowed the money. I don't care if the note is buried in concrete. You borrow, you pay.