RLSS Logo                       real snow flake

Southern Points

Safely guiding you through today's changing mortgage environment

Winter, 2011 - Vol 1, Issue 2
In This Issue
Keeping Up with Litigation
Department of Justice Liens
Bankruptcy Happenings
Document Execution: Back to Basics
New Faces
Winter Food Drive

Positive Words from Clients and Borrowers!


"Nicole, Thank you so much for your assistance.  I hope RLSS knows the value of you as their associate!  This is my 35th year in the real estate business, and you far outshine most foreclosure specialists that I have dealt with!!  It's great to see high work ethics...keep it up!" - Client

 

If you've received great service, we'd love to hear from you!  Please email lfierman@rubinlublin.com with your comments. 

Need Training?
Do you have any new staff that need training on mortgage default laws in Georgia, Tennessee or Mississippi? 

Want to update existing staff or provide more in-depth information to managers?

We are happy to prepare materials and deliver learning sessions on site for you! Just email lfierman@rubinlublin.com to discuss your needs. 

Join Our Mailing List!
Giving Back
We feel it's important to stay active in our community, as well as yours!  Here's some of the charitable efforts we've been involved in this year:
  • Norcross Community Co-Op
  • LPS's United Way Fundraiser

 


Greetings!

Glen Headshot

 

As we progress through the early part of 2011, the mortgage default industry is undergoing a great deal of change. There are new developments each day. Now, more than ever, it is critical that we stay abreast of the latest developments and take a minute to be certain we protect the integrity of our profession. This newsletter focuses on critical and impactful issues that we believe will help you navigate through this new territory. I hope you enjoy the newsletter and I look forward to seeing you in 2011.

 

  

Glen D. Rubin

Managing Partner

Rubin Lublin Suarez Serrano, LLC

Keeping Up with Litigation:

Dipping into the Deep End of a Dark Pool

                                                   Written By: Michele Murray, Associate

 
Michele Murray

On January 7th, 2011, the Massachusetts Supreme Court held in U.S. Bank Nat'l Assoc., trustee vs. Antonio Ibanez that two separate foreclosure sales were invalid because, in violation of Massachusetts General Laws ch. 244, 14, the notices of the foreclosure sales named plaintiffs as the mortgage holders who had not been assigned the mortgages until well after the sales took place.  U.S. Bank. Nat'l Assoc. vs. Antonio Ibanez, 2011 Mass. Lexis 5 (2011).  The decision consolidated two separate quiet-title actions involving mortgages that were held in a securitized trust and pooled together.  U.S. Bank and Wells Fargo, as trustees for the respective mortgage-backed securities pools, attempted to claim that they could show that there were securitization agreements and other documentation that would prove they in fact held valid title at the time of the foreclosure sales, however, the Judge found that none of the documents presented before the Court contained the requisite specificity or evidence that the assignments to the two plaintiffs had in fact occurred prior to the foreclosure sale. 

The decision ultimately turned on the improper assignments post-foreclosure sale, which in turn invalidated all activity prior to the foreclosure sales, including the notice requirements.  The Court found that under 14 and Mass. Gen. Laws ch. 183, 21, plaintiffs had the authority to exercise the power of sale contained in the mortgages only if they were the assignees of the mortgages at the time of the notice of sale and the subsequent foreclosure sale. 

            The issue that the banks faced in the recent decision should not present concerns for Georgia foreclosure sales as Georgia has already addressed this situation by statute.  The Georgia Statute, O.C.G.A. 44-14-162(b) essentially requires an assignment into the foreclosing entity be recorded prior to the conducting of a foreclosure sale.  The relevant statute states that "[t]he security instrument or assignment thereof vesting the secured creditor with title to the security instrument shall be filed prior to the time of sale in the office of the clerk of the superior court of the county in which the real property is located." O.C.G.A. 44-14-162(b).  The legislative history behind the Georgia statute is to make the identity of the owner of the mortgage and foreclosing party known to the borrower.  So long as the Georgia laws are followed by validly assigning prior to foreclosure sale, the outcome in Ibanez is avoidable. 

In Tennessee neither law nor practice requires that assignments be recorded.  Thus, the recent Massachusetts decision is minimized when applied to Tennessee foreclosure sales. 

There is common law providing support for the principle that collateral follows the debt, meaning that as long as the note is properly transferred, then proof of assignment of title to the property is not necessary or the lack thereof is not detrimental to the ability to foreclose.   See W.C. Early Comp. v. R.S. William, et. al., 135 Tenn. 249, 254 (1916) (Court holding that "[i]t is a well-settled rule with us that the lien of a mortgage or trust deed passes, without a special assignment thereof, to the endorsee of a note or transferee of the debt secured by the instrument. The policy of the law is to treat the note as the principal thing and the mortgage as the incident--the transfer of the note secured as a transfer pro tanto of the incident, the lien of the mortgage."). 

Dealing with Department of Justice Liens

Written By: Erica Malcom, Associate

 

DOJ SealWhenever a judgment is entered in United States District Court, generally under the "Fines and Restitution Pursuant to the Anti-Terrorism and Effective Death Penalty Act of 1996," it acts as a lien against property.  These liens are typically the result of criminal restitution orders against a defendant from a conviction for some criminal act.  In cases where a defendant owes any amount of restitution or fine and special assessment, the United States Attorney's office files a lien in the defendant's county of residence, and any other county where they may have interest in real property.  These liens are similar to Federal Tax liens in that they attach to the property and property rights of the defendant.  The lien remains in effect for 20 years from the date the judgment is entered or 20 years from the date the defendant is released from prison.

 

The issue most lenders encounter arises when the defendants' to whom these liens have been filed against become borrowers facing foreclosure.  Unlike other junior liens, a notice of lien by the Department of Justice cannot be foreclosed out by a prior mortgage lienholder.  In order to proceed with foreclosure, the United States Attorney's Office must either provide a release or consent to a non-judicial foreclosure.  It is for this reason that when a notice of lien from the Department of Justice is found in the title exam, the current foreclosure proceeding may need to be cancelled or postponed, as there are a number of documents that are required and must be complied with for the United States Attorney's Office to review.  The documents that they require are:

1.         Copy of the Deed to Secure Debt which is the subject of the foreclosure;  

2.         A title search or title insurance information showing when all interests in the property were recorded, including the interest into the foreclosing lender;           

3.          Information showing the approximate value of the real estate, including an appraisal with comparables or broker's price opinion;

4.         Information regarding the payoff amounts of the foreclosing lender's interest, and any other interests or liens which are believed to be prior to the lien of the United States;

                5.         Loan underwriter's notes and requirements;

                6.         URLA or other loan application and;

                7.         HUD-1 Settlement Statement.

Once this information is received, the United States Attorney's Office reviews it to determine if they believe there is any equity in the property.  If they conclude there is no equity in the property which is the subject of the foreclosure action, they typically will draft a release of the subject property which is then recorded in the real estate records.  However, if they feel there is equity in the property they will request a payment to release the lien.  While these payoffs are typically not for the entire lien amount, they can be substantial.  Unfortunately, in order to proceed with foreclosure lenders must provide the funds to pay off the lien so they may obtain a release which can be recorded in the real estate records.  Once the release is of record, then the foreclosure process can resume.

 

  

 

 

A Summary of IN RE: Dewberry

Written By: Molly Sutter, Associate

 

Judge Wendy L.  Hagenau's recent decision examines the question of what supporting documentation is required when filing a Proof of Claim in Georgia. 

In Dewberry, the Debtor rained numerous objections to the Creditor's claim, with the following being the most pertinent:  the claim did not include proof of a proper assignment of the Note to BOA; the claim did not show proper assignment of the Security Deed to BOA; the Purported assignment of the Note and Security Deed violated 11 U.S.C. 362 (a)(4).

In regard to the assertion that the assignment of the Note was improper, Judge Hagenau found that the Note attached to the Proof of Claim in the instant case was sufficient. The Note at issue was endorsed in blank by Pine State Mortgage Corporation, making it payable to the bearer, meaning that the Note could be negotiated by merely transfer of possession alone. O.C.G.A. 11-3-301 clearly states that to enable one to enforce a note they must be a "holder" of the Note.  A "holder" is the person in possession if the instrument is payable to bearer. Additionally, even if said transfer was not sufficient to make BOA the "holder", the transfer in itself can constitute an assignment of the Note. An assignee also has the power to enforce a Note, but is not entitled to the same protections as a "holder" under the Uniform Commercial Code. 

The blank endorsement from Pine State Mortgage, accompanied by an affidavit stating under oath that it is in physical possession of the Note, signed on behalf of the Creditor were enough to provide prima facie evidence that the Creditor did in fact have a right to make a claim on the Note.

When addressing the issue of proper assignment of the Security Deed, Judge Hagenau referenced Georgia law regarding proper execution of a Security Deed. Georgia law requires that assignments meet the same formalities required for an original security deed in that it must be executed by one witness and a notary public (O.C.G.A. 44-14-64(a)).  The assignment of the Security Deed in the instant case met both of the aforementioned requirements. Georgia law does not require an assignment to be recorded timely with a proof of claim, instead it only requires the assignment to be recorded prior to any foreclosure under the Security Deed (O.C.G.A, 44-14-162(b)). The Court held that a copy of the Security Deed, together with the copy of the assignment which appears to be properly executed, was sufficient to create a prime facie claim on behalf of the Creditor.  

Lastly, Judge Hagenau found that the post petition recordation of the assignment was not a violation of the Automatic Stay provided by 11 U.S.C. 362 (a)(4). Fed. R. Bankr. P. 3001(e) contemplates post-petition assignments and procedures to be followed if a post-petition assignment is made AFTER a proof of claim has been filed. An assignment of a security deed post-petition undoubtedly is not a violation of the Automatic Stay provided by the Bankruptcy Code.  

Document Execution: Back to Basics

Written By: Heidi Billington, Associate

 

Document Execution2

 

Georgia law states that a president or vice president and a secretary or assistant secretary shall execute documents on behalf of a corporation.  It is also acceptable for a corporate officer authorized by the corporate resolution documents to sign as long as the secretary or assistant secretary signs and a corporate seal is affixed.   Be careful when using corporate seals; make sure you affix the correct seal for the entity who is executing the document.  In Tennessee and Mississippi, any corporate officer named in the corporate resolution documents may execute instruments on behalf of the corporation.

 

Proper checks should be in place to ensure that the individuals executing documents on behalf of the corporation have authorization to do so.  It is a good idea to provide our firm with the corporate resolution documents naming the authorized signors of the corporation.  We will keep this information in our file in case we are called upon by a third party to prove authorization.  Each officer should sign the document as they would normally sign their name and the individual's name and capacity should be clearly noted under the signature. 

 

When documents are executed by power of attorney, the signing authority should be clearly stated on the face of the document.  The best way to show the relationship is to include attorney-in-fact language in the signature block.  It is equally important to verify that the power of attorney grants authority to the principal to execute the specific document and that the power of attorney is effective prior to executing documents under its authority.  In Georgia, the title companies will allow a copy of a power of attorney recorded in Georgia to be attached to the document as an exhibit.  A good rule of thumb is to record the power of attorney in the four largest counties in Georgia to provide notice of authority to subsequent title examiners and attorneys.  Mississippi title companies accept a similar practice but in some instances require that the power of attorney be recorded prior to the execution of the document to be signed by power of attorney.  The requirements in Tennessee are a bit more stringent. The power of attorney should be recorded in the county where the property is located and a reference to the recorded power of attorney should be included on the face of the document. 

 

To be in proper recordable form, all documents must be signed in front of a notary who is commissioned in the state where the document is being executed.  The key is that the notary should be present when the corporate officer signs.  The exception to this rule is when a notary acknowledgment is used. In these instances, the document may be executed outside the presence of the notary but the officer must then present themselves to the notary to acknowledge that they made the signature.  The commission's expiration date should be included on the notary seal or at least written under the notary's signature.  It is good practice to perform quality control checks from time to time to ensure your notaries' commissions are up to date.  In Georgia, unlike Tennessee and Mississippi, all documents must be witnessed.  If a notary acknowledgement is used, Georgia requires two witnesses.   The witnesses should be present when the corporate officer executes the documents and the notary may not also serve as a witness.

 

It might sound simple, but following these guidelines will ensure that your company is adhering to applicable laws and industry practices surrounding this controversial topic.  If you have any questions regarding your current practice, please do not hesitate to contact us. 

 

It is important to evaluate your document execution procedures from time to time in order to identify areas that need improvement. Follow these straightforward principles to create a strong foundation for legal compliance in this area.

New Faces: Michael Baringer, Tenise Cook & Michele Murray

 

Our firm is still growing!  We are proud to introduce three new attorneys to our group: 

Michael Baringer, Tenise Cook and Michele Murray.

Michael Head Shot

Assoiciate Michael Baringer

 

Michael, a former military officer, brings a strong sense of accountability and reliability to our Foreclosure Department.  He is bar licensed in Georgia, Pennsylvania and the District of Columbia.  You can read more about Michael here.     

 

Tenise Head Shot

Associate Tenise Cook 

  

    

  Tenise joins our Litigation Department with five years experience in title, litigation and team management.  She loves the challenges that litigation cases present every day.  For Tenise's bio, click here. 

   

       

 

Michele Murray
Associate Michele Murray

 

 

 

 

Last, but not least, Michele is our second valuable addition to the Litigation Department, which has now grown to five attorneys.  Michele specializes in Georgia bankruptcy litigation and is the co-author of "From Proofs to Payment: (Almost) Everything You Need to Know About Claims."  Click here to find out more about Michele. 

 

 

 

 

 

 

   

  "It's so encouraging to see the way our firm is growing," comments Managing Partner Glen Rubin.  "Our goal in founding RLSS was to create a company that clients wanted to work with, and attorneys and staff wanted to work for.  I think we've done just that."   

 

 

 

 

Winter Food Drive

 This past holiday season, the office held a canned food drive to help the Norcross Co-Op feed local families in need.  Thanks to our generous staff, we proudly donated 310 canned and boxed food items!  

  Food Drive 2010

Stay Warm Y'all,

  
Lauren Fierman
Marketing Director
770.246.3353
Rubin Lublin Suarez Serrano, LLC
3740 Davinci Court
Suite 400
Norcross, GA 30092
www.rubinlublin.com
  

Enjoy photos of Georgia's snow storms!

UGA snow 

 The University of Georgia covered with snow!
  
Atlantic Station Snow
I-75 / I-85 Connector & Atlantic Station
  
Snow Highway
Spaghetti Junction - Not too many people making it into work!
  
Snow Peachtree Rd.
Classic Peachtree Road
  
Snow Piedmont Park
Piedmont Park overlooking Midtown and Downtown Atlanta