Tag Archives: Trustee

Trustee claims Nationstar Mortgage wrongfully foreclosed on property

SAN FRANCISCO — A special trustee has filed suit against a mortgage company for allegedly wrongfully foreclosing on a property.

3216 Balboa LLC filed a complaint Oct. 5 in U.S. District Court for the Northern District of California against Nationstar Mortgage LLC, alleging that the Texas company breached its duty of good faith and fair dealing.

According to the complaint, the plaintiff alleges that on May 19, 2014, 3216 Balboa LLC’s sole managing member, David Rienhart, was named as a special trustee by his former wife, together with Joanna Cheung, who later quitclaimed all of the trust’s interests in the subject property to the plaintiff for the benefit of his children.

Read on.

UBS Judge Strives For Best Way Forward As $2B Trial Wraps

Law360, New York (May 13, 2016, 8:00 PM ET) — A New York federal judge said Friday he is wrestling to come up with the best method for ruling on trustee U.S. Bank’s contract claims against UBS AG over $2 billion in bundled home loans as a three-week bench trial featuring 39,000 separate allegations of breach flowing from 8,000 allegedly defective mortgages wrapped.

U.S. Bank’s attorney pressed the judge to order UBS to pay for a swath of allegedly defective loans. (Credit: AP) U.S. District Judge P. Kevin Castel stressed again during a daylong closing session…

Source: Law360

Foreclosures: What Role Should a Trustee Play?

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It’s one of those questions that seems pulled from a final exam at the Harvard Business School but if you’re a homeowner caught in the foreclosure wringer it’s something worth thinking about. Now, if you’re seeking an answer about the trustee’s role from any of the parties suing to extricate you from home and hearth the response, no doubt, will be an unequivocal “no.”

When it comes to snatching houses current banking wisdom goes something like this: mortgages (most of them) are held in securitized trusts which in turn hire servicers to collect monthly payments and if something goes awry — say the homeowner defaults on monthly payments — the servicer can initiate a foreclosure action on behalf of the investors in the trust. The role of the trustee — whose name usually appears as “plaintiff” in a foreclosure lawsuit — is simply that of a passive custodian storing the original mortgage documents (“wet ink,” in the vernacular).

It’s almost an article of faith in the foreclosure industry that trustees stand idly by as the servicers do the dirty work. Ask a trustee to comment on their role in a particular foreclosure case they’ll invariably respond with:

Loan servicing companies, and not {fill in the blank} as trustee, are responsible for foreclosure activity, the resale of foreclosed properties, and other foreclosure-related tasks including decisions regarding loan modifications and evictions. The trustee and servicer are parties to the pooling and servicing agreement which governs the administration of the trust.

Fill in the blank with “Deutsche Bank” and this is precisely the boilerplate supplied by the PR folks when I’ve made inquiries regarding foreclosures brought by Deutsche as trustee. These cases include a 2007 foreclosure/eviction of a Maryville, Tennessee, couple, Bob and Stacy Schmidt; a 2010 foreclosure of a Los Angeles postal worker,Carlos Marroquin; a foreclosure initiated in 2011 against an Akron, Ohio, couple,Glenn and Ann Holden, and in 2014, a foreclosure targeting Houston, Texas, homeowner, Tommy Cooper.

Pooling and Servicing Agreements (“PSA’s”), trustees claim, are the legal handcuffs limiting their role in foreclosures. PSA’s are complicated, tortuous, sleep-inducing documents written by legions of tax lawyers defining how investors in mortgage-backed securities can make their money while avoiding the taxman. Servicers contracted to the trust, via the PSA’s, are given virtual carte blanche to go after underwater homeowners and as a rule have been quick on the foreclosure draw given they make more dough via eviction than through negotiated loan modifications.

Enter Christopher Wyatt: a homeowner’s advocate and former Litton Loan Servicing executive with twenty years’ experience in the mortgage game and he’s never bought into the passive, standby status claimed by trustees. As head of a Litton team fielding homeowner complaints between 2001 and 2010 he received numerous phone calls from Deutsche Bank lawyers (Deutsche Bank being the trustee) asking him to look into situations where a foreclosure may, in fact, not be a good thing for the investment trusts they represent.

In late August, 2007, Wyatt received an interesting memo from Deutsche Bank referring to “one or more securitization trusts for which Deutsche Bank National Trust Company or Deutsche Bank Trust Company Americas act as trustee.” It was a warning of sorts, highlighting the “significant hardship being imposed on tenants, including low-income families, who may be dislocated in the mortgage foreclosure process and about the potential deterioration of neighborhoods surrounding vacant properties.”

In short, the memo seemed to fly in the face of common foreclosure wisdom that trustees keep their mouths shed, eyes closed and noses out of any on-going litigation. It called for servicers to follow “good housekeeping” principles and avoid foreclosures “if eviction will not enhance the marketability or resale of the value on Trust REO properties,” adding, that “maintaining occupancy may preserve affected neighborhoods…”

I ran the August 30, 2007 memo by Lynn Armentrout, currently the Deputy Director, Housing, Brooklyn Legal Services and someone with a fair bit of experience dealing with foreclosure issues (formerly she served as director of the Foreclosure Project at the NYC City Bar Justice Center)

Lynn found it fascinating:

In my experience, Deutsche Bank as trustee has been completely disengaged from the foreclosure crisis and unconcerned about the impact its foreclosures were having. The memo seems to be written by an entirely different entity, one that cares about communities.

Ocwen Comments on Notice From Trustee

ATLANTA, Feb. 27, 2015 (GLOBE NEWSWIRE) — Ocwen Financial Corporation (NYSE:OCN), a leading financial services holding company, today commented that on February 24, 2015 Ocwen received notice from a trustee that a majority of Certificateholders of two Trusts had voted to terminate Ocwen as Servicer following an event of default triggered when Ocwen’s servicer ratings were downgraded in October 2014. These two Pooling and Servicing Agreements (“PSAs”) represent $260 million of unpaid principal balance or 0.07% of Ocwen’s overall servicing portfolio and $0.8 million in MSR value.

These two PSAs were part of the 119 transactions referenced in our February 5, 2015 Form 8-K filing with the Securities and Exchange Commission. The Company believes the financial impact of these transfers will be immaterial to Ocwen’s overall financial condition.

“We regret the decision made by this particular group of investors who have been critical of Ocwen’s superior loan modification results, but are pleased that in the majority of the affected securities investors are keeping Ocwen as their servicer,” commented Ron Faris, President and CEO of Ocwen. “We were also gratified to see reports earlier this week by Morgan Stanley and reported by Bloomberg confirming Ocwen has been more effective at keeping borrowers in their homes, and it is unlikely that investors will replace Ocwen in the small percentage of cases where the servicer ratings have fallen below the minimum criteria set forth in certain PSAs.”

– See more at: http://globenewswire.com/news-release/2015/02/27/710989/10122439/en/Ocwen-Comments-on-Notice-From-Trustee.html#sthash.Sp7U9Ilz.dpuf

Link

SUDDENLY APPEARING ENDORSEMENTS USED BY BANK-TRUSTEES IN FORECLOSURES

SUDDENLY APPEARING ENDORSEMENTS USED BY BANK-TRUSTEES IN FORECLOSURES

42 CASES WITH SUDDENLY APPEARING ENDORSEMENTS 

“The Court is concerned, as a result, that OneWest does not hold the Endorsed Note. But, perhaps more significantly, the Court is concerned that OneWest has determined that business expediency and cost containment are more important than complete candor with the courts.”[1]

 –  In Re Jessie M. Arizmendi (At the time of this California foreclosure decision in 2011, the homeowner/debtor, Ms. Arizmendi, was a frail 86-year-old with hearing loss and difficulty walking.)

This article discusses 42 cases with suddenly appearing (often called “ta-da”) endorsements.  In each case, a bank-trustee tried to foreclose on behalf of a mortgage-backed trust.  Most of these cases began with the filing of an unendorsed note that was described in the bank’s pleadings as a true and correct copy of the original note.  Several of the Florida cases began with a Lost Note claim, alleging that the bank at one point had the note in its custody and control, but somehow lost the note.  Later in the litigation, these lost notes were invariably and inexplicably found.

In a few cases, the judges expressed their disbelief and frustration with the documents presented by the banks and the claims made.  These cases are the exception, however, not the norm. Very few cases address the issue of whether the endorsements or found notes were illegally fabricated or forged.

BlackRock & Pimco Sue Deutsche Bank & US Bank For Trustee Failings

From Al Yoon at The Wall Street Journal via Morningstar:

Investors led by BlackRock Inc. and Pacific Investment Management Co. are zeroing in on a new target in their bid to recoup losses tied to the U.S. housing bust: the so-called trust banks that oversee payments and enforce terms on more than $2 trillion in residential mortgage securities.

A group led by the giant investment firms on Wednesday sued units of Deutsche Bank AG and U.S. Bancorp in New York Supreme Court for their roles as trustees overseeing the bonds on behalf of investors who bought the securities.

The group also filed lawsuits against trustee units of Wells Fargo & Co., Citigroup Inc., HSBC and Bank of New York Mellon over their roles overseeing more than 2,000 bonds issued between 2004 and 2008. The investors are seeking damages for losses on the bonds that have surpassed $250 billion, according to a person familiar with the litigation.

Link

U.S. Bank as Trustee v Merrill Lynch Mortgage Trust

U.S. Bank as Trustee v Merrill Lynch Mortgage Trust

MERRILL LYNCH MBS TRUST SUES BANK OF AMERICA OVER MBS –> Trustee Lawsuits beginning –> This is an important development in MBS litigation. *U.S. BANK AS TRUSTEE SUES MERRILL LYNCH AND BofA – REPRESENTED BY QUINN EMANUEL (SAME LAYWERS AS FHFA AND MBIA)

Hat tip Manal Mehta

Plaintiffs Merrill Lynch Mortgage Investors Trust, Series 2006-RM4 (“RM4 Trust”) and Merrill Lynch Mortgage Investors Trust, Series 2006-RM5 (“RM5 Trust”, and collectively, the “Trusts”), by U.S. Bank National Association (“U.S. Bank”), not in its individual capacity but solely as current trusteewith respect to the Trusts (the “Trustee”), by its attorneys, Quinn Emanuel Urquhart & Sullivan LLP, for their Complaint against Merrill Lynch Mortgage Lending, Inc. (“Merrill”, the “Sponsor”, or “Merrill Sponsor”), Merrill Lynch Mortgage Investors, Inc. (“Merrill Depositor”), and Bank of America, National Association (“Bank of America”) (all collectively, “Defendants”) allege as follows:

 

1. In this action, Plaintiffs are two securitization trusts that hold and administer mortgage loans on behalf of investors who own securities collateralized by such loans. Plaintiffs seek to enforce their contractual rights against the parties that orchestrated the securitizations and created the two Trusts, sold defective loans into the Trusts, and have refused to repurchase such loans in violation of the contracts governing the securitizations.

2. In 2006, as a part of its effort to increase its share of the then-highly profitable residential mortgage-backed securities (“RMBS”) market, Merrill bought over 6,000 mortgage loans (“Mortgage Loans”) with original principal balance of over $1.1 billion dollars from a third-party loan originator, ResMAE Mortgage Corporation (“ResMAE”). Through the process of securitization, Merrill turned these mortgages into tradable securities in the form of certificates (“Certificates”). Certificates were issued by the RM4 Trust and the RM5 Trust on September 27, 2006 and October 27, 2006 for the RM4 Trust and RM5 Trust, respectively, and sold to investors, which resulted in over a billion dollars of proceeds to Merrill Depositor. Each Certificate entitles its holder to cash flows from the loan payments on the corresponding mortgages.

3. Merrill accomplished each securitization primarily through three contracts:

http://www.ritholtz.com/blog/2012/12/u-s-bank-as-trustee-v-merrill-lynch-mortgage-trust/