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b. the mortgage was not assigned to the plaintiff prior to the filing of this foreclosure
action;
c. the January 30, 2006 assignment of mortgage attached to the plaintiff’s amended
complaint states that the assignment is of the mortgage and the promissory note that are the
subject of this foreclosure action, but the plaintiff has failed to provide any admissible evidence
to this court that identifies or establishes how Mortgage Electronic Registration Systems, Inc.
(“MERS”) had any right or legal ability to transfer any interest in the subject promissory note;
d. the January 30, 2006 assignment attached to the plaintiff’s amended complaint that
purportedly assigns the mortgage and the promissory note from MERS in its corporate capacity
as owner and not “as nominee”is in “c/o Wells Fargo Bank, N.A.” while the mortgage attached
to the complaint identifies the owner of the mortgage as “Trimerica Mortgage Corporation dba
Avaris Capital”, with MERS as a nominee for said lender;
e. the mortgage in the name of Trimerica Mortgage Corporation dba Avaris Capital
contradicts the assignment submitted by the plaintiff and further contradicts and disputes the
plaintiff’s allegations of standing and real party in interest;
f. the plaintiff’s factual claims in its amended complaint that the “Plaintiff owns and
holds the Note and Mortgage” is directly contradicted and disputed by the plaintiff’s admissions
in its amended complaint that the “plaintiff is not presently in possession of the original note and
mortgage”; and
g. the January 30, 2006 assignment from an unrelated entity (from MERS as owner in
“c/o Wells Fargo Bank, N.A.”) attached to the Plaintiff’s amended complaint presents issues of
material fact in dispute and such assignment is legally defective to transfer ownership or
assignment of the subject note or mortgage to the plaintiff.
a. the December 19, 2005 notice fails to specify the action required by me to cure the
default within 30 days which was to pay the unpaid amounts due as of the date of the notice;
b. instead, the December 19, 2005 notice demands that I pay by January 18, 2006,
additional money in the sum of $455.58 (to cover my January 2006 mortgage payment not yet
due) to cure;
c. the notice misinforms me that I can bring a court action to refute the existence of a
default when paragraph 22 of my mortgage says that I am entitled to a notice telling me that I
have the right to assert the non-existence of a default in the foreclosure proceeding.
The defendant has presented a dispute of fact based on the plaintiff’s own pleadings and
documents filed in this action that the lack of a timely assignment of the mortgage that predates
the commencement of this foreclosure action renders the plaintiff’s complaint fatally defective
and leaves the plaintiff without standing or real-party in interest status to pursue this foreclosure
and also leaves this court without subject matter jurisdiction.
FAILURE OF CONTRACTUAL CONDITION PRECEDENT–NO NOTICE OF DEFAULT
16. The December 19, 2005 notice attached to the plaintiff’s filings fails to meet the
requirements of paragraph 22 of the mortgage because the notice fails to specify the action
required to cure the default within 30 days which was to pay the unpaid amounts due as of the
date of the notice. Instead, the December 19, 2005 notice erroneously demands that in order for
the defendant to cure the default and avoid the acceleration that she all monies due through
December, 2005 plus additional money not yet due in the sum of $455.58 to cover an anticipated
January 2006 mortgage payment.
17. Another issue of material fact is clearly in dispute as to whether the plaintiff’s
December 19, 2005 notice of default fails to comply with the mortgage because said notice
misinforms the defendant that she can bring a court action to refute the existence of a default
when paragraph 22 of the subject mortgage clearly provides that the plaintiff must provide
defendant with a notice advising her that she has the right to assert the non-existence of a default
in the foreclosure proceeding.
FAILURE OF 12 USC 1701x(c)(5) PRE FORECLOSURE HOMEOWNERSHIP COUNSELING NOTICE
18. Defendant asserts in her affirmative defenses that Plaintiff failed to comply with the
preforeclosure prevention notice requirement imposed by the National Housing Act, 12 U.S.C.
1701x(c)(5) which requires the plaintiff and all private lenders servicing non-federally insured
home loans to advise borrowers of the home ownership counseling the Plaintiff provides.
19. The Plaintiff failed to refute or otherwise resolve this disputed issue of material fact
in any papers or affidavits filed with this court.
20. 12 USC 1701x(c)(5) imposes a specific statutory obligation on all creditors across the
United States who service conventional loans, (non federally-insured home loans) that requires the
creditor to send a specific notice about access and availability of homeownership counseling to defaulting
homeowners within 45 days of a home loan payment default. The creditor is obliged to advise the
homeowner of any homeownership counseling offered by the servicer of the loan and/or information
about how to access HUD homeownership counseling.
21. The issue before the court in this action on plaintiff’s motion for summary judgment is
whether the creditor’s failure to comply with the federal statutory notice obligation before instituting this
foreclosure action can be grounds for the court to equitably deny the lender the remedy of a foreclosure.
22. 12 USC 1701x(c)(5) was enacted 21 years ago as part of the Housing and Community
Development Act of 1987. This statute was recently extended to require creditors to send another very
specific pre-foreclosure notice directed to homeowners in the military service of this country.
23. In this action, the relevant part of the federal statute provides:
12 USC 1701x. Assistance with respect to housing for low-and moderate income families
(c)(5): Notification of availability of homeownership counseling.
(A) Notification of availability of homeownership counseling.
(i) Requirement. Except as provided in subparagraph C, the creditor of
a loan…shall provide notice under clause (ii) to (I) any eligible
homeowner who fails to pay any amount by the date the amount is due
under a home loan,…
(B) Deadline for notification. The notification required in subparagraph (A) shall
be made—
(ii) before the expiration of the 45-day period beginning on the date on
Which the failure referred to in such subparagraph occurs.
(A) The term “creditor” means a person or entity that is servicing a home loan on behalf of
itself or another person or entity.
(B) The term “eligible homeowner” means a homeowner eligible for counseling under
paragraph 4.
(C) The term “home loan” means a loan secured by a mortgage or lien on residential property.
(D) The term “homeowner” means a person who is obligated under a home loan.
(7) Regulations. The Secretary shall issue any regulations that are necessary to carry out this subsection.
Under the terms of the statute, an “eligible homeowner” is one who is eligible for counseling as
follows:
12 USC 1701x(c)(4) Eligibility for counseling. A homeowner shall be eligible for
homeownership counseling under this subsection if—
(A) the home is secured by property that is the principal residence…of the
homeowner;
(B) the home is not assisted under title V of the Housing Act of 1949; and (emphasis
added)
24. The secretary of HUD, in a question and answer supplement “ published in order to respond
to creditor inquiries and to clarify creditor responsibilities” under the statute. 55 FR 2416 (01/24/1990)
states: “We note that if a creditor’s compliance…is challenged in court, the ultimate determination of the
adequacy of the creditor’s notification and the legal consequences of any noncompliance will be made
by the court.” (emphasis added)
The question and answer supplement advises creditors that:
1. The “notification requirement applies to all home loans except those assisted by the Farmers
Home Administration…Thus, both conventional mortgages and loans, and those insured by HUD or
guaranteed by the Department of Veterans Affairs, are subject to section 169.” (Section 169 is a reference
to the section of the Housing and Community Development Act that enacted 12 USC 1701x(c)(5))
2. “[S]ince the purpose of the notice is to help the homeowner avert foreclosure, it should be
sent soon enough to enable the homeowner to benefit from the counseling. HUD recommends that the
notice be included in the creditor’s first communication with the homeowner regarding the delinquency.”
3. “A notice must be sent to every homeowner every time the homeowner becomes delinquent.
If the homeowner brings the loan current and becomes delinquent again, another notice must be sent.”
4. “The notice must contain information on any counseling provided by the creditor and either
the name, address and telephone number of the HUD-approved counseling agencies near the homeowner
or a cost-free telephone number at the creditor’s office where the homeowner can obtain this
information…”
5. HUD does not supply a form. “It is HUD’s view that sufficient information has been provided
on the section 169 notice requirement to enable creditors to prepare the notice.
6. “Creditors may prefer to send the notice to all delinquent homeowners, rather than attempt to
determine the cause of each delinquency.”
7. “The notice is not required (on) property sold under a land sales contract…until the contract is
completed…”
9. If a creditor does provide homeownership counseling, the creditor still has to “notify the
delinquent homeowner of the availability of homeownership counseling by HUD-approved counselors or
by the Department of Veterans Affairs…”
25. HUD published an advisory on the notice requirement of the statute which states: 54 “[T]he
notice requirements …apply virtually to all mortgagees…” and that “noncompliance with the law’s
requirements could be an actionable event that could affect a mortgagee’s ability to carry out foreclosure
in a timely manner…HUD regards the obligations imposed on creditors by the new law as self-executing:
that is, the law speaks directly to creditors, imposing and obligation upon any and all creditors to notify
any eligible homeowner counseling, whenever a home loan is “delinquent”. 54 Fed. Reg. 20964-65 (May
15, 1989)
26. The record in this action fails to establish that Plaintiff has given the required pre-foreclosure
counseling notice within the required 45 days from the failure to pay. Whether Defendant received the
12 USC 1701x(c)(5) preforeclosure counseling notice raises a factual dispute based on defendant’s
equitable defenses sufficient to deny Plaintiff’s Motion for Summary Judgment.
27. In a Florida mortgage foreclosure action in which a borrower similarly argued that the
Plaintiff failed to comply with a federally-mandated notice provision, the court denied the Plaintiff’s
motion for judgment of foreclosure based on Plaintiff’s failure to provide the required notice to borrower.
In U.S. v. Trimble, 86 F.R.D. 435 (S.D. Fla. 1980), the court held that the failure of the mortgagee to
comply with the notice requirement contained in the federal regulation is a valid defense to a mortgage
foreclosure action. Trimble dealt with a Farmers Home Administration loan, but the holding of that case
is premised on the same principle-- compliance with applicable federal laws can be upheld as equitable
defense to deny a creditor the judicial remedy of foreclosure. Defendant has properly raised an equitable
defense to the plaintiff’s claim in this action.
TRUTH-IN-LENDING VIOLATIONS
28. The Plaintiff does not dispute that for purposes of the defendant’s affirmative
defenses that it is a holder-in-due course and therefore subject to all claims Defendant has
against the Plaintiff’s predecessor in interest involving the subject transaction;
29. The defendant asserts that the plaintiff engaged in unfair and/or deceptive acts or
practices in violation of the federal Truth In Lending Act (TILA), 15 U.S.C. 1601, et. seq., and
its implementing Regulation Z, 12 C.F.R. Part 226 which gives the Defendant a continuing right
to rescind the subject mortgage which right Defendant exercised and Defendant confirmed the
exercise of this right by sending a rescission letter to Plaintiff and to all other requisite entities,
These material facts the plaintiff does not dispute.
30. The defendant asserts and the plaintiff does not dispute that it materially failed to
comply with TILA by, among other things, understating the Annual Percentage Rate (APR) by
more than the allowed .125%. 15 U.S.C. 1601.
31. The defendant’s assertion that the plaintiff failed to materially comply with TILA is
based on the “Federal Truth-In-Lending Disclosure Statement” involved in the subject loan
transaction which discloses an APR of 9.573%. The actual APR of the subject variable rate loan
is more than .125% higher than the disclosed rate because the overshadowing violation set up in
the defendant’s affirmative defenses and discussed below, by definition renders the disclosures
of the APR on the HUD-1 inaccurate and beyond the allowable tolerances of TILA.
32. The defendant further asserts that plaintiff materially failed to comply with TILA by
not providing the Defendant with a handbook explaining the features of adjustable rate
mortgages (ARMs) as required by law. 15 U.S.C. 1601.
33. TILA requires certain special information be provided and disclosed to borrowers
when an interest rate is an ARM, including a booklet titled “Consumer Handbook on Adjustable
Rate Mortgages,” or a suitable substitute. Plaintiff failed to provide or disclose to defendant the
aforementioned handbook and plaintiff does not dispute this fact.
34. The defendant asserts that the plaintiff failed to comply with its legal obligation to
terminate any security interest in the Defendant’s residence on account of the rescission which
occurred in a timely manner and, as a result of said rescission, the Plaintiff has no lawful right to
pursue the equitable remedy of foreclosure.
35. The ARM booklet is a material disclosure which triggers rescission rights in the
borrower when not provided and the failure to give an ARM booklet is a material violation of
TILA. See: note 48 of Section 226.23 of Regulation Z
36. Adjustable rate mortgages (ARMs), secured by the borrower’s principal dwelling
with a maturity longer than one year, are required to be disclosed with additional information. To
simplify disclosure requirements for variable rate loans, creditors may disclose any variable rate
transaction applying the ARMs disclosure rule. However, the reverse is not allowed. Reg. Z. §
226.18(f); 52 Fed. Reg. 48665 (Dec. 24, 1987)….Failure to disclose properly and accurately the
requirements of variable rate loans entitles the consumer statutory and actual damages and also
rescission right. In re Fidler, 210 B.R. 411 (D. Mass. 1997).
OBJECTION TO ATTORNEY FEES AND COSTS
49. Supporting affidavits must be made on personal knowledge. "The purpose of the
personal knowledge requirement is to prevent the trial court from relying on hearsay when ruling
on a motion for summary judgment . . . and to ensure that there is an admissible evidentiary basis
for the case rather than mere supposition or belief." Pawlik v. Barnett Bank of Columbia County,
528 So. 2d 965, 966 (Fla. 1st DCA 1988). See also Thompson v. Citizens National Bank of
Leesburg, Florida, 433 So. 2d 32 (Fla. 5th DCA 1983) (employee of the lender’s predecessor in
interest, the FDIC, who claimed to be in custody of the bank’s business records could not state
he had personal knowledge of its predecessor’s records which were also not kept under his
supervision and control); See also In re: Stewart 391 B.R. 327 (Bankr. E.D. La. 2008) (judgment
for debtor based upon Wells Fargo’s failure to reconcile its records and inherent failures in its
records administration)
Wherefore, Defendant believes she has shown the court that material facts are in genuine
dispute as to whether the plaintiff comes to court entitled to receive equitable relief in the form of a
foreclosure. Because the Plaintiff has not sustained its burden or its entitlement to a foreclosure,
summary judgment should be denied. Warring v. Winn-Dixie Stores, Inc., 105 So 2d. 915 (Fla 3rd
D.C.A. 1958).
CERTIFICATE OF SERVICE
The undersigned certifies that a true copy of this document has been hand delivered on
this day 5thd day of November, 2009 to: Michael K. Winston, Carlton Fields, P.A. ,
CityPlace Towers, 525 Okeechobee Blvd. Suite 1200, West Palm Beach, Fl. 33401
Fax: 561 659-7368
Donna S. Glick
Law Offices of Davd J. Stern, P.A.
Attorney for Plaintiff
900 South Pine Island Road, Suite 400
Plantation, Fl. 33324-3920
Fax: 954 233-8577
_____________________________________
April Carrie Charney, Esquire
Fla. Bar. No.: 310425
126 W. Adams Street
Jacksonville, Florida 33202
Telephone: (904) 356-8371, ext. 373
Facsimile: (904) 224-1587
april.charney@jaxlegalaid.org
Attorneys for Separate Defendant