by @yvessmith of Naked Capitalism
As we’ve suggested, a not-well-recognized effect of the widespread publicity on robo-siging abuses and more recently, the widespread failure of securitization industry participants to adhere to their own agreements is more pushback in the courts. It takes a while for new information to trickle into courtroom strategies, but as the abuses get more press, it isn’t just attorneys for borrowers that are taking a new stance, but also some judges and other official watchdogs.
An example today comes via the US trustee, which is a Department of Justice overseer of bankruptcy courts, in two cases in Albany, New York (hat tip April Charney). In both, the US trustee has filed responses which are effectively in support of the debtor (the bankrupt borrower) and in opposition to creditors, which in this case are servicers claiming to act on behalf of securitization trusts. The issue? The parties trying to foreclose haven’t presented a document trail that the bankruptcy trustee finds persuasive.
Both cases, one with GMAC, the other with BAC as the servicer, both involve a foreclosure mill, the Baum Law Firm, which had been sanctioned and fined for submitting pleadings with documentation defects. As the first pleading, the one with BAC as plaintiff, noted “The state court judge called the Baum Firm’s actions ‘reprehensible.’”
The underlying issue is pretty simple, a failure to prove standing. Again from the BAC case:
The Debtor and his wife gave the Mortgage to Home Funding Finders, LLC (“HFF”) on or about September 8, 2004 as collateral security for a Note in the principal amount of $125,000 (“Note”)….With respect to BAC, there is no document in the record establishing that either the Note or
the Mortgage were assigned to BAC. The assignment attached to the proof of claim shows a transfer
of the right in the mortgage to Countrywide. There is nothing to indicate that the Note also was
assigned. If BAC is not the holder of the Note, then there is no basis for the claim. As such, BAC is not a “creditor” of this Debtor as that term is defined in the Bankruptcy Code and lacks statutory authority to file a proof of claim.
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