Maryland's Court of Appeals decides Anderson v. Burson, and leaves the lender "standing."

On December 20, 2011, the Maryland Court of Appeals deftly greased the skids for continued enforcement of mortgage notes and deeds of trust in the case Anderson v. Burson. Judge Harrell has poured oil over the troubled waters created by repeated challanges to lender standing to enforce debt instruments, as described in my prior post on this case.

The anlysis is elegantly simple, dealing with the Uniform Commercial Code and the differences between a "holder" and a "transferee."  More importantly, the Court gives yearning litigation lawyers a standard analysis for establishing the "standing" of their lender clients. In practice, the standard will impose a large investigative burden on the lender.  But it is perfectly reasonable for any entity seeking relief from the court to do the work required to establish it's particular entitlement, n'est pas? Take a walk through the decision, after the jump.

Masssachussetts takes on the Medusa

The Massachussetts Attorney General has cast herself as Perseus, hoping to slay the many headed banking Medusa that allegedly has been foreclosing upon Massachussetts citizens in violation of state recording and foreclosure laws. The December 1, 2010 Complaint alleges that lenders have sued to foreclose while falsely representing themselves as the "holder" of the indebtedness. The Complaint recites examples where the foreclosing lender did not take actual assignment of the mortgage until after the cases were filed, after important orders and affidavits were filed, or even after the foreclosure process was final. This is alleged to be a deceptive and unfair trade practice.

But wait, there's more!

Unlike Maryland, the Commonwealth of Massachussetts requires that every transaction involving real property, including assignments of interests in the recorded liens, must hit the land records. Several lenders are being sued for deceptive and unfair trade practices for keeping MERS related assignments off record.

WWMD (what would Maryland do)?  IHTS (it's hard to say). Read more after the jump.

Ground rent confiscation law is stricken by the Maryland Court of Appeals.

The long awaited ground rent decision is here!  On October 25, 2011, the Maryland Court of Appeals published Muskin v. State Department of Assessments and Taxation, declaring a significant portion of the ground rent registration statute unconstitutional.

The short and sweet is this:  The legislature went beyond its authority to implement a “register or forfeit” system that transferred a ground rent owner’s reversionary interest to the lessee.  The Court recognized the vested ownership rights of ground rent owners, echoing my own thoughts from a previous post  about this appeal.  That post has links to the webcast of oral argument, if you like that sort of thing. Read about the important parts of this opinion, after the jump.

Get to the point, already, whether you write pleadings or opinions.

The U.S. Court of Appeals for the 7th Circuit hammered an attorney for his poor writing, and sustained dismissal of his second amended complaint on the grounds of "unintelligibility." In Stanard v. Nygren, decided September 19, 2011, the three judge panel ripped counsel with this elegant admonition:

 ...the district court was well within its discretion in refusing to accept Stanard’s proposed second amended complaint. We agree that it crossed the line from just “unnecessarily long” to “unintelligible.”Though the complaint was far longer than it needed to be, prolixity was not its chief deficiency. Rather, its rampant grammatical, syntactical, and typographical errors contributed to an overall sense of unintelligibility. This was compounded by a vague, confusing, and conclusory articulation of the factual and legal basis for the claims and a general “kitchen sink” approach to pleading the case.

The court discerned that "[a]t least 23 sentences contained 100 or more words. This includes sentences of 385, 345, and 291 words but does not include sentences set off with multiple subsections"  The court quotes the longest, in full, at footnote 7, which begins on page 13 of the opinion.  I'll spare you the full quote, but do click the link and give it a read.  Consider it your "puzzler" of the day (if you listen to NPR's "Car Talk," you get my reference).

When you cruise this opinion you might chuckle at the lawyer's expense, or you may even gasp at the horror of his writing.  But I think the appellate judges were just a tad showy in their slap down of this fellow.  Really, now, "prolixity?"

I tell the young folks in the office, try not to write like a lawyer....and, above all, don't write like a judge.

But there are examples and lessons in good writing readily available, if you want to delve into self improvement. If you have free time (and what litigator doesn't??), read Justice Scalia's 205 page book entitled Making Your Case, the art of persuading judges. It is co-written with Bryan Garner, an accomplished speaker and lecturer on the subject of legal writing.  Mr. Garner's most recent book is Legal Writing in Plain English. The exercises will make you feel like a college freshman, again, but they are well worth an hour of time.  You will remember how much you have forgotten!  And, finally, take a run through one of Mr. Garner's other books, The Winning Brief: 100 Tips for Persuasive Briefing in Trial and Appellate Courts.  I keep this one on my kindle. It can be read in small bites, while you are waiting for your case to be called on the morning docket. I alternate between this and The Art of War (not a litigation book, certainly, but with many congruent principles) and The Tragedy of Pudd'nhead Wilson (I can't explain why, but it's been a favorite since I was a kid).

And let me push one last book on you, Typography for Lawyers, by Matthew Butterick. His premise is that lawyers don't fully accept the role of "professional writer," and thus limit any improvement in our writing to the words used, and not the appearance of those words on the page.  Our word processing programs are tools that should make briefing easier and more persuasive, in conjunction with our prose. By way of example, Mr. Butterick shares simple facts about why wider margins make for better briefs, because of the imperceptible shifting of the reader's eye as he scans across the width of the page.  Each physical movement causes an interruption in comprehension by your audience.  And why on earth do any of us manipulate the font to give the appearance of a typewritten pleading?  There are so many good reasons to bring your views on brief writing current, with 21st Century thinking. Give it read!

Don't skimp on your affidavits if you expect summary judgment

I am just back from a wonderful vacation in the Berkshires of Massachusetts, catching up on recent decisions.  On September 7, 2011 a Florida appeal out of Palm Beach was widely reported because it involved a failed foreclosure. The headlines trumpet the "further complications" for other pending foreclosure cases in Florida.  The various blogs and listserves trumpet this as yet another smack down for lenders and servicers.  *yawn*

This case is an ordinary, plain vanilla, and rudimentary decision about application of the rules of evidence. It has little to say about the validity of mortgages, standing to foreclose, or "robo-signing."  It is simply another admonition to trial lawyers (regardless of the area of concentration or specialty) to adhere to the rules of evidence for the authentication of business records and the data they contain when seeking judgment. Period.

But first, please enjoy the view I had from my relative's boat, last week, and then I'll explain a bit about the court opinion:

Gary Glarum's lender, LaSalle Bank, sued to foreclose on a defaulted mortgage loan. Florida conducts its foreclosures a bit differently than here, in Maryland, and requires a judgment of foreclosure. The lender filed a motion for summary judgment, supported by the affidavit of a "specialist" employed by the lender's loan servicer (a different entity, as is usual). Judgment in favor of the lender for the full amount of the claimed indebtedness was granted on the strength of the facts presented in the "specialist's" affidavit, and Mr. Glarum appealed.  The appellate court reversed, in a reported opinion.

The Florida appellate court held that the affidavit of the "specialist" was bad evidence.  It was hearsay, based on facts contained in a computer database.  Now, ordinarily, a witness can rely on data kept in the ordinary course of business.  But in this case, the data had been migrated from another loan servicer's system, had been entered by others, and was thus not considered the business record of this particular entity employing the witness.  I think the most troubling aspect for the court was the lack of any verification by the succeeding loan servicer.

In prior posting on this site, I've stated the opinion that a court does not sit to cure deficiencies in my evidence. This case underscores this simple point.  An affidavit that simply regurgitates data from a screen shot will not convert hearsay into an admissible business record.  The Florida decision quickly runs through the elements of its evidence rule on business records.  It is similar to Maryland's evidence rule.

The crux of the matter is trial counsel's willingness to push the lender/client to conduct a proper investigation into the calculation of the debt or element of damage, and to then draft a proper affidavit.  In the Florida case, the "specialist" was deposed, giving trial counsel another shot to prepare the witness so that the underlying data could be explained.

This is a simple point, and one that is lost on most lenders and servicers who delegate trial preparation to very low level employees, or worse, to designated corporate witnesses who fly around the country to recite whatever counsel puts in their hands a few hours before trial.  This annoys me, endlessly.  But did I mention that I am just back from a wonderful vacation in the Berkshires?  I thus refuse to be annoyed, and choose, instead, to reflect on last weeks more tranquil moments, as the ice slowly melted in my glass....see you in court!

The difference between clogged arteries and clogged rights of redemption

Poor circulation or shooting pains in your arms might suggest a trip to your doctor for lack of proper circulation in your arteries, but how do you know if your redemption rights have been clogged?  And why should you care? And is it fatal?


If you have even heard the phrase "clogging the equity of redemption" before, congratulations!   If you harbor an interest to know more, then you are very special, indeed.  I had not given this legal concept much thought, until a recent exchange between several very bright colleagues on the Maryland State Bar Listserves.  And if the cool kids are talking about it, well, then count me in, too!


What is the equity of redemption? Imagine you had but one remaining payment to make to your bank, but because your payment was made one day late the bank took ownership of the property....the whole thing...lock, stock and barrel. That is the harshest of harsh results. Since the reign of Charles I, the common law has recognized that a mortgagor remains at high risk to lose title to his land right through the last payment, and has fashioned a doctrine that permits some leniency for the temporarily defaulting debtor. (follow this link to a first person account of the execution of Charles I in 1649)


The common law evolved to recognize that a mortgagor has the right to reacquire clear title to the property pledged as security upon repayment of that debt, plus interest. This is your "equity of redemption." You can find a more "lawyerly" description in a motion for summary judgment I filed, several years ago.( I have redacted information about the parties' identities and the property location.) 


Maryland takes a strong public policy position against documents that preemptively strip a borrower's right to exercise this redemption in the future.  But some private, or "hard money" lenders continue to require a borrower to execute a deed in lieu of foreclosure, when the loan is made, as added protection to the lender in case of default.  The deed in lieu is then filed away until the borrower misses a payment....and then it is pulled from the file, dusted off, and recorded in the land records.  And just like that, the borrower's title is lost to the lender, without a foreclosure action ever being filed.


This morning, I stumbled on an exchange of questions/answers on the Maryland State Bar Listserve that questioned application of the rule against clogging the equity of redemption in foreclosure cases, where a deed in lieu is negotiated AFTER the foreclosure is filed, but BEFORE the sale.


One very able foreclosure lawyer, Jeff Fisher, posited that:

The purpose of foreclosure is to put the property to a public sale so that a price for it can be obtained and, if the price is sufficient to satisfy the debt, the excess proceeds are available for the benefit of the mortgagor or those who claim under the mortgagor. It is a fundamental right. All deeds in lieu of foreclosure are subject to equitable scrutiny, even when the deed in lieu is negotiated after default occurs. If the mortgagor is just giving his equity away to his mortgagee, how is that not a clog on the equity of redemption.

Another very bright and capable lawyer, Byron Huffman, posted this rejoinder:

I respectfully disagree with Jeffrey as to the “clog on redemption” where a deed in lieu is executed post-default.  At that point, the DIL is a negotiated instrument for valuable consideration.  The clog on redemption occurs where there is no present intent of conveyance whether in connection with the original loan transaction or in connection with, say, a loan modification or forbearance.  That in my view always results in a deed in the nature of a mortgage.  Title insurance counsel may disagree with me, but where there is a negotiated DIL and a present intent of conveyance, a sale thereafter to a bona fide purchaser would be unassailable

This exchange caused me to go back through my old research. I found that in 1892, a published treatise on Maryland property law said "[t]he right to redeem, even in a mortgage context, can be itself divested by a valid mortgage foreclosure sale, or by a waiver made subsequent to, and outside the mortgage instrument itself." (you can buy the book, on Amazon, if you are a legal history buff, for about twenty bucks).

The Venable treatise continues to be quoted by the Maryland appellate courts. It was most recently quoted authoritatively in late 2010. This leads me to agree with Mr. Huffman. A deed in lieu that is negotiated later, after the initial loan transaction, should not be deemed to clog the equity of redemption. To borrow Venable's words, the waivers made in the deed in lieu are subsequent to the loan transaction, and are "outside the mortgage instrument itself."


So, my title friends, here's what I conclude: A deed in lieu that is given in the course of a foreclosure proceeding is not an impermissible clog of the equity of redemption. It is a subsequent waiver of the right of redemption.

Time for recess! Meet you all at the jungle gym.

It is important to keep track of the bad guys, and here is one operating in Baltimore City.

I just obtained a $31,000 judgment against a fellow who has been "title squatting" in Baltimore City. Take a look at the complaint that was filed in the circuit court and you'll see a very simple scheme, particularly in an economy where so many properties are being abandoned by their record owners. Another lawyer has been chasing him for the same conduct, and so I share the facts of my case and an outline of the scheme to alert those of you handling claims in Baltimore City to this type of fraud.

Here's the scheme, step-by-step:

• True owner of the property, "Good Realty LLC" allows its charter to lapse with the Maryland State Department of Assessments and Taxation.
• Mr. Kutchera, the title squatter, identifies the property and forms a new entity, called "Good Realty, LLC."  Notice the slight change in the name, by adding a comma after "Realty."
• Mr. Kutchera entices a settlement company to assist in the transfer of title to the property from "Good Realty" into his other entity, Acuity Real Estate Investments, LLC.
• Mr. Kutchera and Acuity then sell the property to an unsuspecting purchaser, who intends to renovate the property and place it on the rental market.
• Mr. Kutchera and Acuity take back owner financing for all but closing costs and the purchaser's deposit.
• True owner wakes up and sues buyer, alleging that she bought nothing from a thief. And he's right.

It's a close call on whether the settlement company should have caught this scheme on the sale from Mr. Kutchera to the innocent buyer.  Because he had already conducted a sham transaction to transfer title into his longstanding Acuity entity, it was not expected that the settlement company would go back to a prior transaction to investigate the bona fides of the limited liability company.

What was particularly galling about this case was Mr. Kutchera's early demands for payment under the owner financed deed of trust, and his threats of foreclosure. It didn't take much to demonstrate the true fraud to Mr. Kutchera's lawyer, who then withdrew from the engagement.

I suspect that this form of fraud is not limited to this case, and the one being handled by another lawyer.  And if Mr. Kutchera is doing it, then there are surely others engaged in the same scheme.

Be vigilant.

The Debt Collection system is not broken, it just needs lawyerly attention.

A July 24th article in the Baltimore Sun  decries the glut of debt collection cases in Maryland’s District Court, where far too many claims are passed through the system with little scrutiny. Judge Clyburn is quoted as saying that 200,000 judgments by default are granted each year, and that two-thirds of that sum involve debt collection. The actual statistics for the District Court are available, here, , but they are not broken down so precisely that defaults granted in certain types of civil cases can be identified.


It is no surprise to active bar members that many, many cases result in default judgment simply because a defendant failed to plead or appear at the affidavit trial. This is an entirely appropriate result when a defendant is properly served, and then fails to engage in the process. The author, however, points to the many evils resulting from this process: judgments based on scant or absent documentation of debt ownership; judgments based on mistaken or wrongly stated accounts; judgments on claims falling outside the statute of limitations; and judgments on debts discharged in bankruptcy.

But who is signing off on each default affidavit? A judge. As counsel for a creditor, I don’t get a judgment against the defendant unless the court signs my proposed order. And if I give the court flimsy evidence, then the court should withhold that signature.

The system does not require much to address these perceived or real harms. Try these on for size:

• Amend the rules of pleading to require an affirmative statement that the claim is within the statute of limitations. I have seen many, many complaints on time-barred debt claims. But since the statute of limitations is an affirmative defense, there is nothing patently wrong about suing on a stale claim, and there is nothing that requires a judge to advocate for application of limitations. Putting this requirement in place for claims in the District Courts, where the vast majority of collection work is conducted, would be a potent gate-keeper. This would prevent a large number of bogus claims from reaching the courthouse.
• Enforce the existing rules of evidence in connection with the affidavits being submitted. Nobody is directing the judiciary to rubber stamp anything. The current salary for the 112 District Court judges is $127,252. That is more than adequate recompense to read the complaints and affidavits! None of the harms complained of can occur if a judge does not sign an order. So, upon reading the affidavits, they simply need to apply the existing rules of evidence. And if the affidavit is defective, set that matter in for a disposition hearing. Let the Plaintiff bring its witnesses and evidence to the courthouse. Is that too old-fashioned?
  
  The facts set forth in an affidavit must be admissible, no less than if a live witness is sitting before the judge. The live witness must demonstrate a basis for personal knowledge, or a familiarity with the business records. Also, the documents would have to be shown by the live witness to be properly within the business records of the suing entity. Presentation by affidavit is no different. I lay responsibility for reading the submitted affidavits on the bench. It is not an excuse for Judge Clyburn or others to explain that most affidavit judgments are automatic, based on the submitted affidavit. They are paid to vette the document, not to rubber stamp the claim. And if any lawyer or firm is consistently submitting bogus affidavits, they should not be acquiring judgments. Period. I don’t ask judges to plug holes in my pleadings, nor should they.
• Require an affidavit concerning non-discharge in bankruptcy as a threshold matter of pleading. The Bar is already required to affirm that a defendant is not in active military service. To do this, we check a public database, or hire private investigator’s to check that same public database. With the federal PACER system, it is just as easy for the Bar to check whether a debtor/defendant has been adjudged bankrupt, and whether a discharge has been granted (currently a "for fee" system, but my feelings about whether public access to the federal docket system should be free is for another day). There is also the ability of the debtor, or even the court, to report clear violations of the Automatic Stay, to the bankruptcy trustee’s office for further sanction.

And for a nickel more, I’ll tell you a story about a bridge….

Cert granted! Is the bank a non-holder in possession? Should it matter to you?

Anderson v. Burson will be argued in the Court of Appeals on September 1, 2011.  Cook some popcorn in the office microwave, pop up the big screen in your conference room, and settle in for the webcast!

Maryland's highest court will hear argument on whether a "non-holder in possession" has standing to execute on the debt's security instrument.  In a world of missing endorsements, missing originals, or incomplete assignments, this could be huge.  I posted a summary of the COSA opinion in December, 2010.

It's like a game show, these days, trying to identify the holder/owner/servicer/agent/nominee/beneficiary/etc. for a given instrument to the courts. Cue up the introductory fanfare from the band, pick curtain one, two or three, and let the announcer's voice resonate throughout the courtroom, declaring for the judge "and the lender is....."

A title insurer's duty to defend may not terminate until the check is written!

A New York case feeds the debate about when a title insurer's duty to defend ends. In Busch v. Fidelity National Title Ins. Co., 2011 N.Y. Slip Op. 03948, 2011 WL 197259 (N.Y.A.D. 3 Dept.), the title insurer offered money to its insured for diminution in value caused by a neighbor's claimed easement over the insured's property.  Fidelity stopped paying for the insured's counsel, and the insured continued the litigation for several years, hiring a succession of lawyers.

Fidelity was sued by its insured, who sought recovery of fees he spent in the litigation.  Fidelity took the position that its duty to defend ended when it made an offer to pay for diminution in value.  The insured alleged that there was no such agreement made.

The appellate court said that more litigation was necessary to flesh out the terms of the offer, and whether there was a settlement.  It was important to the court that Fidelity never tendered a settlement check. But the court was clear that an offer, alone, does not terminate the duty to defend.  There must be  a tender of money, a signed agreement or a release.

So, my claim handling friends, what is the lesson?  It is sound practice, in any state, to tender a check and obtain a signed document.  And if the check is not negotiated, or the agreement is not signed, the insurer is left to either continue defending or to file a declaratory judgment action that seeks relief from the policy.

How to get your Facebook and MySpace facts into evidence in a Maryland trial court.

Witnesses, plaintiffs and defendants are all on Facebook, Myspace and other social media.  It's not just the cool kids, anymore.  It's everybody.  And every posting, picture, link and message is a potential bit of evidence in your case.  Like many of my fellow court lizards, I run every witness, deponent and party through a social media background check (usually done by my social network savvy law clerks).  The practice is useful, and it is here to stay.

But how to get any  of this information into the record? I want the court or jury to hear that the defendant typed on his girlfriend's MySpace page that "I shouldn't have lied to the bank, but they owed me, big time!"  Or, perhaps, I hope to corroborate a witness with her contemporaneous posting that "I saw you dancing at the club, tonight, and you weren't wearing your neck brace.  I thought you had an accident?  Glad you're all better, dude."

The Maryland Court of Appeals just published a "how to" decision for Maryland lawyers, in Griffin v. State, 419 Md. 343 (2011). The issue came to the court, frankly, because of the absolute slothfulness of the prosecution in preparing this part of its case. It offered only the testimony of a police officer that had logged on to MySpace, and printed the screenshot. Nothing more more than that...really.  Let's cruise through the facts, briefly:

• Darvell Guest was shot to death in a bathroom at Ferrari’s Bar in Perryville, in Cecil County, Maryland on April 24, 2005.
• In August of 2006, Antoine Levar Griffin [nicknamed "Boozy"] was tried for the murder of Guest.
• During the 2006 trial, the testimony of Griffin’s cousin, Dennis Gibbs was offered. Gibbs testified that he did not see Griffin pursue Guest into the bathroom.

Perhaps because the eye witness testimony failed to place the defendant in the bathroom, where the victim was shot, the trial resulted in a hung jury.

Griffin was tried a second time in 2008. During the 2008 trial, Mr. Gibbs recanted his prior testimony and claimed that Griffin was, in fact, the only person in the bathroom with Guest during the shooting. Gibbs explained his inconsistent testimony by claiming that Griffin’s girlfriend, Jessica Barber, threatened him prior to the 2006 trial.

To reinforce Gibbs’ testimony that he had been threatened, the State introduced a printout of the girlfriend's MySpace account.

The printout was of the profile for “Sistasouljah” and contained the following information:

• “Female, 23 years old, Port Deposit, Maryland.”
• “Birthday: 10-2-83.”
• “FREE BOOZY!!! JUST REMEMBER SNITCHES GET STITCHES!! U KNOW WHO YOU ARE!!”
• The printout also contained pictures of persons bearing a resemblance to Barber.

The State offered the testimony of Sergeant John Cook, the lead investigator in the case, to authenticate the printout. When asked how he knew that Barber had posted the material in the printout, Cook responded “I can’t say that.” Over Griffin’s objection, the printout was admitted into evidence.

Griffin was convicted on all counts, and received sentences of twenty and thirty years, to be served consecutively. The conviction was affirmed by the Court of Special Appeals on May 27, 2010, and reversed by the Court of Appeals on April 28, 2011.

The Court gives all Maryland practitioners a roadmap for introducing this evidence.  And none of it involves simply printing out a screenshot and handing it to the fact finder while on the witness stand!  Let's go through the analysis, now.

Maryland Rule 5-901, which is substantially similar to Fed. R. Evid. 901, outlines a series of non-exclusive ways that evidence may be authenticated. In Griffin, the State sought to authenticate the MySpace printout using Rule 5-901(b)(4), proposing that the pictures, gender, date of birth, town of residence, and reference to the accused were “distinctive characteristics” sufficient to authenticate the printout as being Ms. Barber’s profile.

The Griffin court held that pictures and biographical information on a social networking website were insufficient to authenticate the printout as Ms. Barber’s profile. In its holding, the court emphasized the frequency and ease by which such profiles are improperly created or hacked. The Griffin court established a higher standard for authentication of evidence obtained from social networking websites, as opposed to more traditional electronic mail. In a footnote, the Griffin court noted the difference between online profiles, which are generally broadcast to the public, and e-mails, which are transmitted form person-to-person. The relative insecurity of social network communications demands a stricter rule of evidence.

The Griffin court politely observed that the printout could have been properly authenticated by any of the following methods:

• While the State called Ms. Barber as a witness, it failed to ask her about the printout. Ms. Barber’s testimony, as a person with knowledge of the MySpace profile, would have been sufficient to authenticate the printout under Rule 5-901(b)(1).
• Additionally, the State could have searched Ms. Barber’s computer to examine the internet history and hard drive to determine whether the posting had originated from her computer.
• Finally, the State could have subpoenaed information regarding the profile from MySpace directly.

And there it is, a roadmap. Make it yours, incorporate it into your standard deposition, witness and trial prep, and I'll see you in court!

Maryland's Ground Rent Registration Statute is in the hands of the Court of Appeals

I've intended to post this for the last week.  Shame on me, but the house has needed a new coat of paint!

The challenge to Maryland's ground rent registration law has finally percolated to the Court of Appeals in the case captioned Muskin v. State Department of Assessments and Taxation.  It was argued on June 6, 2011 (one day before I argued the much sexier "curative act" case, with my friends Betsy Nowinski and Tim Maloney).  You may watch the video of the entire argument (it is case #140) or you can read a very good summary of the arguments published in the Baltimore Sun.

I spend a lot of my professional time wading in the big pool of title disputes.  Many claims and cases involve ground rents, absent ground rent owners, and ground rent foreclosures.  I have lectured on this subject to clients located in several states, and I remain ambivelent about this statute.  On the one hand, I know how difficult it is for regular folks to locate a "true" ground rent owner.  The lack of a meaningful database has crippled many residentail real estate transactions, and has caused heartburn for many purchaser/sellers that only wanted to do the right thing. Unpaid ground rent has triggered hundreds of title insurance claims, which has been good for business, but not so good for the parties, title agents, closing officers or the courts involved.

But I get stuck on the confiscatory nature of the statute.  The State argued that it is merely prospective, giving ground rent owners three years to register, and thus does not constitute a "taking" that must be compensated. I just don't see it.  Regardless of a ground rent owner's choice to register, he still loses a real and tangible property right- the reversion.  Converting that right to something akin to a contract for a periodic payment just does not sit well with me.

And now we wait for the Maryland Court of Appeals to do its work.

On June 7, 2011, I was privileged to argue questions of law certified from the U.S. Bankruptcy Court before the Maryland Court of Appeals.  At issue is the effect of Maryland's curative statutes, and how it operates to bar the bankruptcy trustee's 130+ lien avoidance actions, and oppositions to lender motions for relief from the automatic stay.

The court's website has a webcast of the oral arguments, if you are so inclined to burn your billable time over a cup of coffee. The case is captioned Guttman v. Wells Fargo, Misc. #20.  I believe the link is at the top of the page.

This issue will impact the title industry in a significant way.  The 35 cases in this office, alone, implicate over $7 Million in secured liens that could be rendered unsecured.

Stay tuned.

Pennsylvania lawyer sues foreclosure firm employees for unauthorized practice of law.

Many thanks to my friend in Pennsylvania for alerting me to this interesting state court case, Loughren v. Bair, where the employees of a foreclosure law firm are being sued for their alleged unauthorized practice of law.  Here is a copy of the complaint,  or here.  If you have access to the docket system for the Allegheny Court of Common Pleas, input the case reference GD-10-021437, and you will find the entire docket.

The Amended Complaint details the allegations of the Plaintiff, a Pennsylvania lawyer, against more than a dozen firm employees who are processing foreclosures.  Among the allegations is reference to deposition testimony in a federal lawsuit, Robinson v Countrywide, 08-cv-01563,where a law firm partner admitted during deposition that foreclosure complaints were processed and even signed without attorney oversight. The testimony is recited along with facsimiles of various lawyer signatures made by the non-lawyer firm employees.  The federal case is plodding through discovery, with a recent court order requiring disclosure of portions of attorney/client fee agreements to the Plaintiff.  Use PACER to access the full docket of the federal case, which is now plodding through discovery and motions.

The state court complaint goes on to allege that foreclosures filed by the law firm violate FHA regulations, primarily because there was no oversight or review to determine whether the regulations had been satisfied before filing.  The amended complaint also collects several citations to federal court cases where non-lawyer signatures on foreclosure documents are discussed.

Emergency Mortgage Assistance Program for Maryland homeowners.

 I am sharing important information for my friends in the title industry.  We all encounter borrowers who need assistance.  Here is information that can be shared by all.  It is re-posted, without any edits, as written by Ms. Gipspon of St. Ambrose.  These are her words:

I am actively engaged in getting the word out about Maryland’s Emergency Mortgage Assistance (EMA) Program.   This program is designed to meet the needs of homeowners facing foreclosure due to involuntary unemployment, underemployment or who have experienced a loss of income due to medical condition.  A homeowner may receive up to $50,000.00 in either arrearage or forward payments or both.  The borrower must be at least 3 months behind and less than 12 months in the arrears.  The arrears will be paid and going forward payments toward the mortgage can last for up to two years not to exceed $50,000.00.  The borrower’s income must fall within 120% of HUD Area Median Income FY 2010 Limits and the only real estate that they can own is their principal residence.  The loan is interest free and, if certain conditions are met (i.e., the borrower resumes making the full mortgage payments), the loan will be extinguished by the end of the fifth year that the borrower resumes making his or her full and timely mortgage payments.   Please share this information with your clients as it is a quick way to save their properties from foreclosure.  As a prime partner for this program we are accepting applications for submission to DHCD.  This program, at least at our agency, has not had the overwhelming response that we had anticipated.  The good news for your clients is that funding is still available.  The bad news is that this is still time sensitive and time limited program.  For those of you affiliated with groups interested in learning more about the program, I am available to come meet with your organization.  Please let me know how we can work together to get the word out about this fantastic program.     Please feel free to contact me at the numbers below or have your clients contact our EMA HOTLINE to apply for this program 410-366-6091.

Thank you,

Ms. Vickie Gipson, Esq.

Director, Foreclosure Prevention Division

St. Ambrose Housing Aid Center, Inc.

321 E 25^th Street, Baltimore, MD 21218

410-366-8550, ext. 235

Vickieg@stambros.org

St. Ambrose’s EMA Hotline # 410-366-6091.

Bankruptcy Judge sanctions mortgage servicer for lying.

This one is a must read for anyone working in or around the mortgage foreclosure industry.  Bankruptcy Judge Elizabeth Manger sanctioned a lawyer, an affiant, and a mortgage servicer for botching the accounting of a debtor's post-petition payments, and then presenting false and incomplete affidavits and pleadings to the court in an effort to lift the automatic stay.  This particular order addresses the culpable actions of the loan servicer, LPS.

If you have PACER access, search for case #07-11862, styled as "LaRhonda Wilson" in the Eastern District of Louisiana. This will take you to the April 7, 2011 opinion of Judge Manger, where she details the "fraud perpetrated on the court, Debtors and trustees..."

If you don't have Pacer, start  with this 2010 article.  A more recent article appears in this 2011 blog post, after discovery on the issue had been concluded.

I've read the opinion and reviewed the court's docket of prior orders in the case.  Counsel for the lender was sanctioned $1,000 for filing pleadings that did not properly report payments received in his office from the debtor.  The lender, Option One and an employee who executed affidavits prepared by counsel in reliance only on information shown on a screen shot, were each sanctioned $5,000 in prior orders.  The court's docket shows these sums were actually paid in July, 2008.  This particular order is directed at the loan servicer's conduct.

After discovery and a merits trial, Judge Manger held that the affiant/employee was not qualified to execute the affidavits, and that her training by the mortgage servicer, Lender Processing Services, Inc. (a Fidelity National related entity) had been "insufficient and negligent."

This order is a wonderful cautionary tale for anyone dealing with servicers, and who regularly obtains affidavits from loan servicers in connection with litigation.  Judge Manger also cites to other bankruptcy cases that discuss different aspects of the loan servicing industry that are worth a read:  In re Stewart, 391 B.R. 327 (E.D. La. 2008) (post petition application of payments and errors in automated programs); Jones v. Wells Fargo, 366 B.R. 584 (E.D. La. 2007) (automated software and mis-application of debtor payments).

Judge Manger ends her opinion, saying that "one hopes the bottom of the barrel has been reached and that the industry will self correct. Sadly, this doesn't appear to be a reality."

Amen.

A funky HUD-1 may earn this lawyer a five year term in the slammer.

I'm originally from Connecticut, so I poke around their papers.  The on-line "ctpost" often has little items that mainstream Hartford Courant doesn't catch (because the Courant, owned by the same company that ruined our own Baltimore Sun, tends to sling the same old syndicated articles shared by everyone).

Here's one that caught my eye:  Attorney Byrk may go to jail for five years for playing games with a HUD-1.  His clients took a loan from Argent Mortgage, with a second mortgage to be held by the sellers.  But because Argent's guidelines barred a second mortgage, the lawyer simply omitted it from the HUD-1. That was in 2007.

Roll forward a few years, and his clients get caught up in fraudulent activity involving their family company.  The far reaching investigation into the couple's finances reveals the lawyer's sneaky work.  He now faces at least 6 months in jail, and maybe five years.  He will surely lose his license.

Oh yes, this investigation also snagged a Superior Court judge involved in other fraud involving the same couple.  He must have been a Yankee fan.

Your creditors can't stalk you on Facebook...at least in Florida.

On April 17th, the Orlando Sentinel reported that a Pinellas Circuit Court judge has banned a creditor from posting to her Facebook page, and from communicating with her friends and family through the site.  Now, this decision has no value as a legal precedent, but it does suggest how the federal laws intended to protect consumers will be extended to social media. 

The article says there are lots more of these cases pending in Florida.  It will take one of these cases reaching an appellate court before something really important is established.

Nothing prevents lawyers from trolling your public pages for evidence and potential witnesses, of course.

Witches and Warlocks now part of the foreclosure team

The Wall Street Journal recently reported on the rising use of witches, warlocks and faith based "house cleansing" ceremonies.  I chuckled, at first, imagining a bedazzled 70 year old man chanting in a living room, shouting "out, out, damn spot!" while surrounded by the doe eyed new homeowner's, anxiously wringing their hands.  But its mention of my Catholic faith's own tradition of home blessing required a quick bit of research to see how deep the supersition runs.

The Catholic tradition is summarized in this muli-part prayer, published by a Catholic church in Virginia.  The magic works if you shuffle the group room-by-room and repeat the appropriate incantation that reflects the rooms intended use. The ceremony ends with the crucifix or other suitable icon being affixed in a prominent location.

I would love to know how many foreclosures that happy little ceremony has prevented.

Elsewhere, I've read that the Buddhist ceremony requires a whole fish, rock salt, and a bottle of sake. Sounds like lunch!

Of course, if you are a believer, there is another way to look at all this that is just as simplistic.  Assume the purpose of the blessing and certain prayers is to prevent something aweful from happening-- and who can doubt that financial crisis that causes the loss of a home to foreclosure falls in that category. Then maybe the entire foreclosure process is not held in particular favor by God?  Let's extend this to its absurd conclusion, and suggest further that the problems experienced by the foreclosure bar (robo-signing, bad affidavits, class actions) are the real estate world's versions of the locusts and the flood?

Or perhaps we shouldn't take any of it too seriously, but just deal with each other decently.

"Blah, blah, blah, Law Firm Name.....blah, blah."

General Counsel for Wolverine tells Amlaw Daily what I have always felt about generic law firm marketing, most firms are "throwing content into the wind."  No law firm does everything, but all law firms are afraid to tell you what they don't do.  As a result, potential clients get the Pretty Woman response , cited in the article, when Richard Gere asks Julia Roberts, "what is your name?" and she replies, "what would you like it to be."

And this General Counsel's use of a hooker metaphor to describe the big law firms is not lost on me, either.

So, to be clear, I don't do domestic, family law, or criminal work.  When a  promise must be enforced in court, or you are accused of breaking a  promise in court- call me.

Lawyers sued by former paralegal/notary forced to notarize wrongly signed documents

In another twist, the Baltimore Sun reports that Shapiro & Burson has been sued by a former employee who alleges that he was told to notarize stacks of instruments signed by one non-firm attorney who had signed for absent firm attornies.  I have not yet read the complaint, so I can't describe more than what is in the news article.

As a title lawyer, I have only received one claim involving allegations of wrongfully notarized lawyer signatures. I expect that the plaintiff's bar recognizes that most of these signatures are easily fixed, and that even if a foreclosure is vacated and re-advertised, the borrower either can or cannot afford his mortgage.

MERS is engrossing fiction, according to the NY Times.

Well worth reading.  If you haven't been chasing the recent decisions around the Country, here's a good primer on the MERS mess.  With phrases like "engrossing fiction," "cut corners," and "colossal mistakes," you can see where this article is heading.

Welcome to the family...mind if I steal from you?

This plot was on Lifetime or the O network, wasn't it?  The Billings Gazette reports the following family yarn:  Young woman lives with her fiance's family for several years, with her infant son.  She steals future father-in-law's credit card to make $6,000 in purchases, spread over 55 transactions.....including wedding items.

She defended her actions, saying they were in retaliation for not being reimbursed for gas she purchased for the "family" vehicles.

I can see the news article to come: "The bride looked lovely in lace and taffeta, as she did the twelve inch shuffle down the aisle, the shackles gently rustling in sync with the cascading organ music.  The bride was flanked by her lawyer, and a probation officer, who presented her to the groom with a key for the ankle lock and a list of pre-release conditions on honey moon travel..." 

I saw the Defendant do it, says juror #8

Here is one for the ages- after 20 years of hearing judges ask jury pools, "do any of you know anything about the events in this case" comes the story of Juror #8, as reported in Albany Times Union.  She made it through voir dire, but while a prosecution witness was testifying, she recognized the defendant.  She not only recognized him, but recalled watching him drag the victim across a bridge as the crime was in progress.

The fact that there was any discussion among the lawyers and the court about NOT declaring a mistrial is amazing, by itself. 

So,  Juror #8 will soon be "prosecution witness #1."

The Supremes tell corporations, "don't take it personally."

The Supremes announced that corporations don't have "personal privacy rights" under the Freedom of Information Act.  AT&T argued that use of the word "personal" in a statutory exemption must be read with the definition of "person" in another part of the statute, to give corporations the protection from certain FOIA requests.

At page 7 of the slip opinion, the Court shares a nice discussion of words that change meaning when used as nouns or adjectives.  For instance, words like "corny," "crabbed" and "cranky" have nothing to do with corn, crustaceans or handles that are used to operate machines.  And so, AT&T's argument was dismissed for lack of a real world connection between "personal" and "person." It is a fun english lesson, and at 15 pages, it is mercifully short.

I enjoy the last sentence: "We trust that AT&T will not take it personally."  Priceless.

Jason lost his Head, and now he's lost his law license.

As small firm guy, and as a real property litigator, this Virginia bar opinion caught my attention for two reasons.  First, when a lawyer fails to record deeds, it is usually just the first thread of a frayed practice.  Pull that thread and you'll find things like unpaid recording fees, and ultimately missing IOLTA or escrow funds. 

But as a small firm lawyer, I was in awe of this fellows attempts to over-sell his firm.  He represented multiple fake locations, he posted a video on his website depiciting a lay person as a lawyer, he included descriptions of false "practice groups," and used pronouns like "we" to describe the lawyers in the offfice.....but there was only Mr. Head.

Ballsy.....and stupid.

So, for the record, I am the only lawyer here.  Mr. Young is enjoying his retirement, and I have chosen to surround myself with very talented folks who make me more effective.  A few of them may even pass the bar and become excellent lawyers.  And while I practice in multiple locations, they are usually places like "home," or "the beach house," or "ski lodge," and "the train."  I just can't fit them all on a business card.

California weighs in on MERS, not ready to slide into the ocean, just yet

On February 18, 2011, Judge Irion of the California Court of Appeal, in San Diego, issued a reported decision upholding MERS right to initiate foreclosures in California. The Gomes v. Countrywide decision is worth reading. What is remarkable are the reports about the case saying that the decision was issued only one day after oral argument.

This brief was in the can, before counsel stepped to the podium!

With California leading the nation in the volume of foreclosures, this is a real shot in the arm to the foreclosure bar.

imMERSed in a sea of differing opinions.

On February 11, 2011, Judge Karlin of the Kansas bankruptcy court sent more waves through the foreclosure and title community pool (a "title pool?"). The Martinez decision upholds MERS status as the lender's agent, for purposes of establishing standing by the current lienholder.

Compare this to New York bankruptcy Judge Grossman's February 10, 2011 Agard decision, for purposes of assignments that establish standing.

Read for yourself, and you'll be left to ask, "who's steering this boat?" I've talked with several local trustees, and they simply don't know what to do with this patchwork of analysis that is dropping from the various courts. I personally believe that recent state court decisions defining "non-possessory holders" will cut through this issue.

Unforgettable

I continue to be amazed at what lingers on the internet. Here's something from a 1998 parental rights case. Even I forgot about this one! This fellow fought to reclaim his daughter, who had been given up for adoption by her mother. I may be listed as co-counsel, but Jack Condliffe pulled the heavy weight, fired by some real passion for this client. It cemented my opinion of Jack as one of the best family law lawyers around. I was deeply dissapointed when he didn't get his appointment to the Circuit Court bench.

What do we give to our clients?

I stumbled across this link to the minutes of the Dorchester County Council describing a road abandonment case of mine. I really enjoy that part of the State, but I didn't enjoy getting to that particular hearing! It was scheduled on the same date as my wedding anniversary, while my wife and I were in Duck, N.C. on vacation with about a dozen family members.

My wife graciously dropped me at the car rental agency so I could drive to Norfolk, and then fly to BWI, rent another car, and drive to the 6:30 PM hearing in Dorchester County. I was home, in Baltimore, by 2 AM, and back to BWI by 8 AM to fly to Norfolk and then drive to Duck in order to celebrate our Anniversary, a day late.

I sure love that woman!

But the client who wouldn't allow my car rental expense from BWI to the hearing, and then wanted to cut time I spent at the hearing??? Not so much.

Oh, yes, and we persuaded the council to abandon the road.

Of course, you don't get any of that from the council minutes!

What is MERS?

WaPo Explains the ABCs of MERS, Which Struggling Homeowners Are Leveraging in Loan Negotiations - News - ABA Journal

Here is something that even title lawyers struggle with--what is MERS, and what is its standing to sue or be sued in cases involving liens, and lien priority? Our practice is very simple, if it isn't a "named insured," it isn't a client.

Read on, the links are helpful.