With Eviction Fight, Mashpee Woman Wades Deep Into Foreclosure Mess
By: Brian Kehrl
Rhonda G. Mills’ five-year-long endeavor to save her home is coming down to the wire.
The Mashpee resident and member of the Mashpee Wampanoag Tribe is scheduled to appear before a judge in Falmouth District Court on Monday morning for an eviction hearing, the latest stage in the foreclosure and eviction process that stands to kick her and her family out of her home on Emma Oakley Mills Road.
Ms. Mills is hoping the judge will rule against US National Bank Association, which purchased the property for $217,500 at an auction following a mortgage foreclosure earlier this year, and its request for a quick judgment to remove Ms. Mills from the house.
A decision against the bank and the summary judgment request would likely lead to a jury trial, tentatively scheduled for early January, at which Ms. Mills’ claims of fraud and improper dealings by her lenders could take center stage. A jury trial would put the burden on US Bank to prove that its title is valid, a role reversal from the foreclosure process, when the homeowner must prove that the lender’s title is questionable.
The coming days will be the culmination of an epic, trying experience for Ms. Mills, a bus driver and specialized foster parent who survived a bout with breast cancer in 2003.
Ms. Mills’ case comes at a time when the foreclosure industry is in an uncertain state of flux in Massachusetts. State Attorney General Martha Coakley earlier this month announced a lawsuit against five major mortgage lenders and the Mortgage Electronic Registration Systems, known as MERS, alleging that the foreclosure process was full of fraud.
Meanwhile, the federal government is leading negotiations with state officials and major banks to come to a comprehensive settlement dealing with possible improprieties in lending and foreclosures.
In Massachusetts, Southern Essex County Register of Deeds John L. O’Brien has been leading a one-man crusade against what he describes as a frenzy of fraudulent document submissions his office has received in recent years. According to an audit conducted on more than 500 mortgage assignments in his southern Essex registry in 2010, only one in six mortgage assignments were valid.
The state Supreme Judicial Court this week heard oral arguments in a case that may affect many other future foreclosures.
Responsibility For What Happened
At the ground level, though, underneath the grand negotiations, lawsuits, accusations, and policy debates are hundreds of individual homeowners on Cape Cod like Ms. Mills, and many thousands more nationwide. They are people in jeopardy of losing their homes. According to the most recent data from the Barnstable County Registry of Deeds, 33 final foreclosures were processed here last month, bringing the 2011 total to 459. In 2010, there were 699 foreclosures processed on the Cape.
The foreclosure process for Ms. Mills’ loan, a $376,000 adjustable rate mortgage originally from the firm MortgageIT, was completed late last year and early this year.
“I accept responsibility for what I did. I worked hard to try to make it right with a loan modification...But I think the loan originators have some responsibility for this, too,” she said.
Behind Ms. Mills’ experience is a trail marked by involvement with troubled firms.
MortgageIT is being sued by the US Department of Justice for making false claims about the financial situation of borrowers in order to obtain federal insurance.
MERS, which has been widely accused of not following local guidelines for registering mortgage documents, though its practices have remained on solid footing in several court cases, processed the mortgage.
OneWest Bank, which purchased the remains of IndyMac, the large lender that went bankrupt and was seized by the federal government in 2008, took on the foreclosure from MERS. The mortgage assignment from MERS to OneWest is signed by a bank official widely accused of being a “robosigner.”
While foreclosures do not go to court in Massachusetts, evictions do, so that is where Ms. Mills has taken her fight.
It Goes To Court
Ms. Mills’ eviction case may turn on two major points: whether she can challenge the title now held by US Bank by claiming the mortgage assignments and foreclosure were fraudulent and whether her questions about the process are valid, claims that focus in part on the securitization of the loan.
She said her primary argument in court will be that the title now held by US Bank is invalid because the mortgage transfer from MERS to OneWest was signed by a “robosigner,” OneWest Vice President Erica A. Johnson-Seck.
Ms. Mills obtained an affidavit from Southern Essex County Register John O’Brien stating that his office no longer accepts documents with signatures from alleged “robosigners.”
“I am aware that Erica A. Johnson-Seck is an alleged robo or surrogate signer,” he states in the affidavit.
In another document released by Mr. O’Brien, he includes Ms. Johnson-Seck on a list of “approved robo-signers.”
Ms. Mills also pointed to a deposition of Ms. Johnson-Seck that she obtained, in which the bank official acknowledges she signed about 750 documents related to bankruptcies and foreclosures per week, during approximately 10 minutes a day that she devotes to the process.
In the deposition, Ms. Johnson-Seck also states that she signed the documents in her office, while the notary who would later testify to her signature was seated at a desk outside her office.
Massachusetts law requires mortgage assignments to be signed in the presence of a notary public.
“How long do you spend [executing] each document,” Ms. Johnson-Seck is asked during the 2009 deposition.
“I have changed my signature considerably. It’s just an ‘E’ now. So not more than 30 seconds,” she replied.
US Bank, in court filings, submitted an affidavit stating that Ms. Johnson-Seck is an officer at OneWest, which is a member of MERS; that she was also appointed as vice president of MERS in March 2009 and that she signed the mortgage assignment in Ms. Mills’ case in her proper capacity as a vice president of MERS in April 2009.
US Bank, for its part, argued in a lengthy court document that challenging the validity of the mortgage transfer from MERS to OneWest is “outside the scope of this proceeding,” and it has followed every rule required to evict Ms. Mills, even giving her more notice than was required by law that the eviction was being pursued.
The bank also preempted some of Ms. Mills’ claims about the validity of the chain of title, arguing that an assignment of mortgage only needs to be signed by a person “purporting to be” in the necessary position.
“Here, the assignment was at the very least purportedly signed by a vice president of MERS in the presence of a notary public. Therefore, the assignment of mortgage is enforceable against MERS regardless of whether Erica Johnson-Seck actually signed it or read it before she signed it,” according to the bank’s complaint.
In other cases, lenders accused of similar improprieties have argued that the signatures are merely a technicality in a process in which the bottom line is that the property owners have not met their obligation to pay their mortgage dues.
MERS And The Attorney General
Attorney General Coakley’s lawsuit against MERS is narrowly focused. The complaint argues that because any assignment of registered land in Massachusetts must be recorded at the registry of deeds, the MERS system is inherently illegal. According to documents from the registry of deeds, Ms. Mills’ property on Emma Oakley Mills Road is registered land, so any assignment of the mortgage had to be recorded in the registry of deeds.
Glenn F. Russell Jr., an attorney specializing in foreclosures and real estate law based in Fall River, said that the effect of Ms. Coakley’s suit for a homeowner with a MERS mortgage and registered land is that the title may be broken and the current mortgagee could lack standing.
Mr. Russell said the issue of “robosigners” and whether they affect the chain of title has not been fully determined by judges in Massachusetts, though several cases are pending.
Marie McDonnell, a certified fraud examiner with Truth In Lending Audit & Recovery Services, wrote in an e-mail to the Enterprise that Ms. Mills’ case falls within the narrow scope of the attorney general’s case.
“Rhonda’s case is precisely the type of situation that Attorney General Martha Coakley’s lawsuit is designed to redress. If she hasn’t already, Rhonda should immediately file a complaint to the Attorney General’s Office. She should also consult an attorney about seeking a restraining order against any eviction,” Ms. McDonnell wrote.
Who Owns What?
Ms. McDonnell, who performed the audit for Mr. O’Brien’s registry of deeds, has taken a leading role in researching mortgage assignments and the securitization of the notes. In addition to the Orleans-based Truth In Lending Audit & Recovery Services, Ms. McDonnell recently started a firm in Dedham, McDonnell Property Analytics, formed in part to train lawyers and others to perform forensic document research.
According to research on Ms. Mills’ mortgage by Ms. McDonnell, the loan was securitized and sold through a financial holding firm, Lehman XS Trust, in spring 2007.
“Since this loan was securitized back in 2007, I would expect to find at least three (3) missing assignments necessary to move the Note and Mortgage into the LXS 2007-4N Trust,” she wrote.
According to documents on file in the Barnstable Registry of Deeds, the loan assigned from MortgageIT to MERS and from MERS to OneWest, but there is no indication that it was resold in between.
Because the loan was resold and the sale was not recorded, Ms. McDonnell said, the assignment of mortgage from MERS to OneWest is not valid. And because the assignment of mortgage is invalid, the foreclosure itself should be void, she said.
Mr. Russell said that, in general, many people do not fully comprehend that the banks that made the loans do not actually own the loans. The loans, or the rights to the repayments of principal and interest, were typically sold through a series of special purpose financial vehicles or trusts that separate them from the original lender.
“The real question is not whether they took out a loan from a bank, it is how does the trust have the rights to enforce that,” he said. “So the banks are nothing more in this instance than a bill collector.”
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