Pennsylvania is a judicial foreclosure state.  What that means is for a lender to foreclose on your home, they must get approval from a judge to foreclose.

The first step to foreclosing in Lehigh County is to file an Act 91 notice.  An Act 91 notice is a notification from your lender that you have fallen past due on your mortgage and the lender intends to foreclose on your home.  You can stop a foreclosure in its tracks by filing bankruptcy, but that is not what we are talking about today.

Today we are talking about fighting a foreclosure case. 

Today we are talking about a specific foreclosure case.

Yep, its war story time with your friendly neighborhood foreclosure defense attorney, and its a doozy.  The lender made so many mistakes that they will probably wind up just walking away from the foreclosure lawsuit and settling with us instead.  My client will probably be able to stay in their home for several years before they get around to foreclosing again and it will save my client nearly $50,000 in rent and mortgage payments.

Because the case is pending, I’m not giving out names, but once this case is done, I’ll make the bank that did this famous.

In order to foreclose on you, a bank first has to have standing to sue in foreclosure.  Prior to 2002, selling and assigning mortgages wasn’t all that common in Pennsylvania, but during the 2002-2007 mortgage boom, lenders sold mortgages like kids in the 80s traded baseball cards.  A lot of these mortgages were placed into trusts.  Some of these trusts were revocable, and some of them were irrevocable, but regardless of what type they were, there were requirements onto what kind of mortgage could be made a part of the trust.

In this particular case, it appears that my client’s mortgage was meant to be put into a 2005 irrevocable trust, however due to “clerical errors” it was not actually put into the trust until 2012.  This mortgage was put into the trust through the process of assignment, and that is the first problem.

On September 4, 2012, the bank, who will heretofore be called “Total Bastard Bank”, assigned the loan to a trust, who will heretofore be called “Irrevocable Trust of Doom”.

So the first thing I did was look at the assignment, since that is where most of the errors occurred.  (The bank did not include copies of the assignment in their complaint, probably because they knew how toxic they were!)  Now its important to understand that the banks got better at this after about 2010, but apparently Total Bastard Bank hasn’t gotten with the program.  The assignment was signed by one party who claimed to be a Vice President of the bank, and that in itself is a problem, but on top of that, the signer of the assignment did not even work for Total Bastard Bank at the time he signed it!  Clearly the signer did not have the authority to assign the mortgage on behalf of Total Bastard Bank.  In order to sue in foreclosure, the complainant (Plaintiff Bank) is required to have standing to sue, and if the assignment is invalid, they do not own the mortgage and do not have standing to sue.

Total Bastard Bank figured this might be a problem so they filed a “Corrective Assignment.”  Corrective Assignment basically means “we are hiding fraud.”  So I read the Corrective Assignment, and this time it was it was signed by a pair of assistant secretaries.  Generally speaking, the position of assistant secretary is not one that has the authority to assign a mortgage.  Even if this pair of assistant secretaries did have the authority to assign a mortgage, guess what, Neither of these two ladies were employees of Total Bastard Bank either!

I called and tried to verify employment and sure enough there was no record of them either.  Even if it is later found that they are employees and were authorized to assign a mortgage, the corrective assignment was still invalid.  Words matter, and in this case, the wording of the Corrective Assignment indicated that the only thing that was being corrected was the name of the Assignee.  So even if they did everything right (they didn’t) all they were doing was correcting the Assignee name on an invalid assignment.  So as you may have guessed, the bank still did not have standing to sue in foreclosure.

A sloppy attorney would have stopped there, but there is always the chance that something will surface that will mitigate the failed assignments.

So then I went to look at the trust prospectus of Irrevocable Trust of Doom.  A trust prospectus tells you how a trust is supposed to work and what loans can and more importantly cannot be made a part of the trust.  A cursory review of the trust indicated that there were three factors in my client’s mortgage that made it impossible for the trustee to add his loan to the trust.

More research indicated that Irrevocable Trust of Doom had stopped making annual filings in 2006, and the reason it stopped doing so was because it was no longer accepting new mortgages to be a part of that investment vehicle.  If this trust is found to have continued adding debt to its books, it will be required to file monthly and annual reports from February 2006 until today (that is 84 costly reports) and will have to pay tens of thousands of dollars in SEC (Securities and Exchange Commission, not best college football conference on earth) fines.  The trustee of this trust has more of an interest in this mortgage not being made a part of the trust than foreclosing on this $400,000 property.  If Irrevocable Trust of Doom could not have added this mortgage to the trust, it did not own the mortgage did not have standing to sue in foreclosure.

So after using two fraudulent documents to attempt to illegally add a non-qualified mortgage to a trust, you would think Total Bastard Bank was done being nefarious, but no, there is more.  Most of the time I file one or two preliminary objections, in this case there were six!

Total Bastard bank listed interest charges and late fee charges but failed to break them down.  In Pennsylvania, the charges have to be listed with enough detail to fairly put the Defendant on notice of how they were calculated so he can admit or deny them.  By not listing how the fees, particularly the late fees, were calculated, my client could not admit or deny them.

As if that weren’t enough, the verification Total Bastard Bank submitted was invalid as well.  Pennsylvania 18 Pa. C.S. Sec. 4904 requires the information to be true and correct to the best of his or her knowledge.  Not only was I again unable to locate the employee doing the verification, but the employee signed the verification on March 25, 2013, prior to the filing of the Corrective Assignment, rending the verification invalid.

Sometimes the other side leaves an open net for you to shoot the puck in.  Total Bastard Bank left it open six times.  A double hat-trick for the good guys!

For an added bonus, I filed an additional preliminary objection claiming that because the mortgage was sold from Total Bastard Bank to Irrevocable Trust of Doom, and Irrevocable Trust of Doom was unable to add it to itself, that Total Bastard Bank lacked standing to sue because they had been paid in full and what they had was completely unsecured loan they could sue on in civil court.

I’m always competitive, but I’m rarely vindictive, but I doubt this is the only homeowner who is being sued in foreclosure illegally, and if Total Bastard Bank and Irrevocable Trust of Doom don’t back off, I might just forward my findings to the SEC (again, not the football guys) and watch the fun.

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