Category Archives: Arizona Foreclosure Defense

Arizona Mortgage Settlement Funds Sweep Litigation

by Christine Springer on September 15, 2012

Short Sale, Foreclosure Attorney, Pre Foreclosure, Foreclosure News Back in March, I wrote a post about the mortgage settlement and what various states are doing with the settlement money. In many cases, the states essentially took the mortgage settlement money and were using it for other budgetary shortfalls instead of helping the homeowners who were injured by the mortgage servicing abuses.

Here in Arizona, the state government was prepared to sweep about half of the money it received for other uses. It made my blood boil when the Arizona government planned to sweep the money that should be spent helping Arizona homeowners.

I was happy to learn that the Arizona Center for Law in the Public Interest filed a lawsuit to stop the sweep of the mortgage settlement funds here in Arizona. In May, the Center filed in Maricopa County and obtained a temporary restraining order.

The sweep was placed on hold. According to the Arizona Capitol Times, “Arizona Attorney General Tom Horne has said the transfer is poor public policy but that he’ll defend the decision made by the state’s policymakers.”

That probably explains why he agreed to wait until December 31. This also gave the judge time to review the briefs on the matter.

The disagreement is whether the money can be used to fill in the state’s budgetary gaps, or whether it must be used for foreclosure-related relief. Oral argument was set for August 22, 2012. I’m sure there will be a decision forthcoming shortly, and I’ll report on that as soon as I see the decision.

Here are the pleadings:

What’s hiding in your loan and foreclosure documents? Find out here!

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Arizona District Court Orders Production of Documentation of Transfers and Robo-Signer Authority

by Christine Springer on May 3, 2012

You may remember Dave Campbell, who was a guest blogger on this site. I audited Dave’s loan. The biggest issue with his loan was that the mortgage pool claiming ownership was already closed by the time his loan was originated. Dave survived the Motion to Dismiss.

A discovery dispute arose between the Plaintiff and the Defendants. The bank’s lawyers argued that this is just another “produce the note” case and Hogan v. WaMu applies.

Judge Campbell disagreed. His order states:

“IT IS ORDERED that Defendants shall, within 14 days of this order, produce to Plaintiffs (1) all documentation of the transfer of the note from First Magnus to Washington Mutual and subsequent transfers into and out of the Trust, and (2) all documentation of Deborah Brignac’s authority to sign on behalf of MERS and U.S. Bank.”

Yes, it’s THE Debra Brignac who signs foreclosure documents all over the United States.

I think this is a great decision for homeowners. Although Dave’s facts are a little different than most foreclosure cases, we now have ONE decision in Arizona that says a bank has to demonstrate that a robo-signer had authority to sign the foreclosure documents and show documents evidencing the proper transfer of the loan from its origination to the mortgage pool.

Maybe we’re getting somewhere!

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Attorney Sanctioned for “Show Me the Note”

by Christine Springer on April 9, 2012

U.S. District Judge Patrick J. Schiltz has sanctioned Minneapolis attorney William Butler for filing “show-me-the-note” lawsuits (a/k/a “produce the note”). This lawyer was apparently sanctioned because he brought nearly 30 of these cases on behalf of several hundred people and apparently never won.

You can read more on this story here.

Christine here: This story is a good example of the disconnect between the practice of law and what laypersons think should happen in a court room. If you read the first comment at the bottom of the story (use the link above), you’ll see that the first person who commented thinks that the judge is covering up for the banks by sanctioning the attorney.

I hear from my attorney clients all the time that homeowners ask them to make arguments like this despite the case law that exists showing that their arguments don’t work. It’s a byproduct of there not being enough lawyers to affordably help the overwhelming number of people facing foreclosure.

These arguments are also jurisdiction specific, so what applies in one state may not apply in another. There is at least one case there, Jackson v. MERS, that is pro-bank, so it doesn’t surprise me that the produce the note argument doesn’t work there either. If the entire body of case law is against homeowners, it would mean the courts have decided that there are few defenses to a foreclosure in that state.  I haven’t done the case law research in Minnesota, I’m just using this as an example to illustrate my point.

Most lawyers don’t wait to lose thirty cases before they change their approach and arguments. They do that after losing one or two cases because they are afraid of being sanctioned or using the legal system to drag things out frivolously, which is what happened here.

In general, I do think judges are not making the banks prove their cases, but I don’t think that’s what this judge was doing here.

Minneapolis attorney Daniel Tyson was quoted in this article as saying: ”I’m hoping it doesn’t have a chilling effect on the ability to bring these. And I don’t think it will because this was a very limited situation where this individual attorney was using wrong methods and for those clients out there and those attorneys out there who have right claims and good claims to try to prevent foreclosures, that should be brought they should be able to bring them. That is our system.”

Homeowners, consider this before you hire a lawyer to defend your foreclosure. Ask them what the causes of action are that are getting them traction and work together to gather the facts and evidence.

 

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Ninth Circuit: Violation of Hawaii Deed of Trust Statutes for Failure to Publicly Announce Continued Sale Date Voids Sale

by Christine Springer on April 2, 2012

In re Kekauoha-Alisa, from the Ninth Circuit Court of Appeals, holding that the failure to publicly announce the continuation of a sale date voids the sale in Hawaii. I think this is a nice case on the breach of contract issues for Arizonans too. I’ve seen a handful of cases where lower courts shot down the contractual arguments made by attorneys. However, the Ninth Circuit clearly understood the contract issues in the Kekauoha case.

 

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Arizona Court of Appeals: Deficiency Protection Applies Even if Borrower Doesn’t Occupy the Home

by Christine Springer on March 26, 2012

The Arizona Court of Appeals’ held in M&I v. Mueller, 1 CA-CV 10-0804, that M&I Bank was not entitled to a deficiency judgment simply because the Muellers did not actually inhabit the property.

The Muellers took out a loan from M&I to build a home. Several months later, they learned that the construction was behind schedule and much of the work was defective. They notified M&I that they needed disbursements under the loan to correct the problems. M&I did not disburse the additional funds. 

The Muellers abandonded the property, M&I foreclosed non-judicially and then brought suit against the Muellers for a deficiency of $68,196.91. The lower court held that M&I was not entitled to a deficiency judgment.

M&I appealed the decision, saying that it was entitled to a deficiency because the Muellers never occupied the home because construction was never completed.

The Court of Appeals affirmed the lower court’s decision, saying that M&I was not entitled to a deficiency judgment under ARS Section 33-814(G) because M&I’s interpretation that the borrowers actually inhabit the home would “create a blurry and artificial line.”

M&I appealed to the Arizona Supreme Court on February 23, 2012, and the law firm representing M&I has called for amicus curiae briefs in support of its appeal.

Christine here: I know of a lot of people who were being pursued by the same bank for a deficiency judgment and I’ve been trying to figure out why given the anti-deficiency protections in this state. It’s possible they thought their aggressive strategy would lead to some payment under the loan terms, or maybe they were seeking to change the case law case by case, much like the banks are doing in foreclosure litigation, to pave the way for more deficiencies against homeowners.

Personally, I am thankful that the Court affirmed the lower court’s decision in this matter. Can you imagine losing your house to a foreclosure in which the paperwork was bad, only to lose in court, and then to add insult to injury, get sued for a deficiency? This will happen to many people across the US, but thankfully not here in Arizona. It’s like the Arizona Courts’ gift to homeowners — if they’re not going to care about the paperwork in foreclosures, at least they’ve affirmed and expanded the deficiency protections in the state.

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