Southern Points

Safely guiding you through today's changing mortgage environment

Fall, 2012    
In This Issue
Keeping Up With Litigation
What You Need to Know: CFPB
Tennessee Title: Mobile Homes
Reese v. Provident
Show Me the Note
New Faces

Positive Words from Clients and Borrowers!

 "I am not a stranger to the mortgage industry and have been using one of your employees, Judy Diaz, as my contact.  Judy is always courteous and prompt.  She treats me as if I am a top priority.  Judy is not just a good example of what customer service is, but a EXCELLENT example."

- Client


If you've received great service, we'd love to hear from you!  Please email 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 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 quarter:
  • MBA Georgia Lend-A-Hand Annual Fundraiser
  • Georgia Legal Food Frenzy Food Drive


Glen Headshot

In developing our e-newsletter we had to come up with a catchy name and tagline. We settled on Southern Points...Safely guiding you through today's changing mortgage environment. Never before have those words been as relevant as they are today.


We'd become a little jaded here in Georgia, Tennessee and Mississippi. The foreclosure practice here is pretty straightforward for our lender clients and borrowers as well. Sure, we'd heard about what was occurring in places like Florida, New Jersey or D.C. Nothing against those places, but we were thankful we didn't have practice amid the uncertainties and delays in those jurisdictions.


Then mid July, the Georgia Court of Appeals changed things in an instant with the issuance of its opinion in Reese v. Provident Bank.  Now it was our turn to deal with uncertainty. Without over-reacting, we helped our clients sort through Reese  and in case you still have not heard about the case, we have an excellent summary of the case for you in this edition so you can come up to speed. Also, we've got   some other timely and insightful articles on Manufactured Homes and the CFPB.  Enjoy, and thank you for trusting us to... safely guide you through today's changing mortgage environment!   







Glen D. Rubin

Managing Partner 

Rubin Lublin, LLC  










































Keeping Up with Litigation:
Does A Borrower's Default Defeat A Wrongful Foreclosure Claim?

 Written By: Bret Chaness, Law Clerk


On August 14, 2012, Judge Richard Story of the United States District Court for the Northern District of Georgia granted Deutsche Bank's Motion to Dismiss on the grounds that a borrower who is in default can never state a claim for wrongful foreclosure.[1] Judge William Duffey, Jr. came to the same conclusion just three days later.[2] Under Georgia law, there are four factors that a borrower must properly allege to state claim for wrongful foreclosure: 1) a legal duty owed by the foreclosing party; 2) a breach of that duty; 3) an injury actually and proximately caused by the breach; and 4) damages.[3]


These two rulings are predicated on the idea that a borrower's alleged injury - foreclosure - can never be proximately caused by a lender that allegedly lacks standing to foreclose because foreclosure would be the end result regardless. The support in state law for this proposition comes from the 2004 Georgia Court of Appeals case of Heritage Creek Dev. Corp. v. Colonial Bank.[4] In Heritage Creek, the Court of Appeals affirmed the dismissal of a wrongful foreclosure claim because its "alleged injury was solely attributable to its own acts or omissions [default] both before and after the foreclosure."[5]


Although the District Court's reliance on a binding decision from the Georgia Court of Appeals should give lenders a sense of relief, it should not be without some apprehension. A close reading of Heritage Creek shows that the borrower "admit[ted] . . . that Colonial Bank had the legal right to foreclose on the subject property."[6] The legal right to foreclose is often the dispositive issue in a wrongful foreclosure case, yet no federal District Court utilizing Heritage Creek has attempted to discern whether this fact should make a difference in the causation analysis. Likewise, there is no subsequent Georgia Court of Appeals or Supreme Court decision on point. Because of this uncertainty, lenders should not be overly confident that they can avoid an adverse decision solely by ensuring that a borrower is in default before proceeding with a foreclosure sale.

[1]Harvey v. Deutsche Bank Nat'l Trust Co., No. 1:12-CV-1612-RWS, 2012 WL 3516477 (N.D. Ga. Aug. 14, 2012).

[2]Howard v. Mortg. Elec. Registration Sys., Inc., No. 1:10-cv-1640-WSD, 2012 WL 3582586 (N.D. Ga. Aug. 17, 2012).

[3]Id. (citing DeGolyer v. Green Tree Servicing, LLC, 662 S.E.2d 141 (Ga. Ct. App. 2008).

[4]601 S.E.2d 842.

[5]Id. at 845.

[6]Id. at 844.

 What Mortgage Servicers Need to Know in Anticipation of the CFPB's Default Servicing Guidelines

                                                   Written By: Lauren Turowetz, Law Clerk

The Consumer Financial Practices Bureau ("CFPB" or "Bureau") was formed after the passage of Dodd-Frank to protect American consumers in the market for consumer financial products and services through regulation. Not surprisingly, the mortgage market became the immediate target for reform, but the Bureau also has future plans to regulate private student loans, credit card debt, and other financial services. When the Consumer Financial Protection Bureau celebrated its birthday on July 21, many regarded the Bureau's first year as a successful one and anxiously awaited the debut of progress made during that time.


Citing a lack of both transparency and accountability in a market where "consumers have the most at risk and the most at stake," CFPB Director Richard Cordray's first order of business was to revamp the process of getting a mortgage, through a set of rules governing the process, from the initial shopping phase to closing to servicing. Before the CFPB was created, there was no national servicing standard, and servicers operated with little or no regulation or governance from regulatory agencies. However, that is all about to change as the Bureau is slated to release a set of default servicing guidelines that will be followed nationwide and are set to be proposed this summer and (hopefully) implemented by January 21, 2013. The rules' objective is to prevent borrowers from incurring unexpected, expensive costs while obtaining a mortgage and offer them increased assistance and information. However, with mortgage servicers currently responsible for juggling customer service requests, loan modifications, monthly payment collection, and foreclosures, American consumers aren't the only ones who will benefit from default servicing guidelines; servicers will also reap long-term benefits from a consistent set of rules that streamline and simplify industry practices as a whole.


 In April, 2012, the CFPB announced that it was working on a mortgage services rules proposal that would establish new policies for servicers to abide by, as well as modify concepts already found within the mortgage provisions of the Dodd-Frank Act and existing law. At the time this article was published, the Bureau had not yet released the rules for mortgage servicers, but the market was aware of various considerations likely to be addressed in the Bureau's proposal.  

To continue reading this article click here.

Tennessee Title: Spotlight on Manufactured Homes

Written By: Joshua R. Hopkins, Associate

Manufactured homes continue to be an area of great concern in the default arena. Laws vary from state to state, making it very difficult for lenders to implement consistent protocol for resolution. The number one concern for foreclosure purposes is whether the manufactured home curative should be addressed pre or post-foreclosure.


In Tennessee, the legislature passed a manufactured home statute in 2003. This law allows for the "record owner" of both the manufactured home and real estate to surrender the certificate of title to the manufactured home to the Tennessee Department of Revenue-Vehicle Services Section (this process is referred to as "De-Titling" the manufactured home). To be noted from this, is the fact that manufactured homes can retain their "personal" property nature, while being situated on a piece of real estate. Accordingly, since the defaulting mortgage borrower in Tennessee continues to be the "record owner" of at least the real estate until foreclosure, lenders must foreclose first in order to become the new "record owner".  Once the lender acquires title to the real estate through foreclosure, the foreclosure attorney can then assess the issue of ownership in and to the manufactured home. The foreclosure attorney requests a certificate of title/vehicle history from the DMV, and then proposes a plan for "De-Titling" the manufactured home.


One question that is often asked by lenders and servicers is: if the manufactured home was permanently affixed to the real estate at time of loan origination, why does foreclosure not result in the lender acquiring title to both the home and the land? The simple answer is that while the security instrument encumbers the real estate and everything "attached to it," until the Certificate of Title to the manufactured home is surrendered to the DMV, a "cloud" on title exists.


This "cloud" has apparently increased in size over the years to the point that both lenders and title insurance underwriters will typically not originate/insure a new mortgage loan on a manufactured home, until proof of "De-Title" has been provided. On the flip side, for default purposes, it is crucial for lenders to be aware of FHA (HUD), Fannie Mae and Freddie Mac manufactured home standards when it comes to foreclosure claims. If a manufactured home is not properly "De-Titled" prior to conveyance to HUD, Fannie or Freddie, reconveyance is a distinct possibility.

Georgia's Reese v. Provident Decision

Written By: Jennifer VanderVeur, Associate

Georgia PeachA recent case concerning the definition and requirements of secured creditors has added some uncertainty to the mortgage default industry. Reese v. Provident Funding Associates, LLP, 2012 WL 2849700, (Ga. App. July 12, 2012) concerns who is the appropriate secured creditor under O.C.G.A. 44-14-162.2, and how or whether Georgia law requires the secured creditor's name to be contained in foreclosure notices.


The Reese Court concluded that Provident's notice of foreclosure failed to comply with O.C.G.A. 44-14-162.2 in that they failed to identify Residential Funding Company, LLC (RFC) as the "secured creditor" under the statute. The Court found that although RFC admitted that it was the investor and holder of the note, the foreclosure was done in Provident's name, despite the fact that Provident was only the servicer, and neither owned the loan nor held the note.


This decision essentially says that the true and/or correct identity of the "secured creditor" must be stated in the notice of sale. In Reese, the the Court felt that notice of sale clearly did not accomplish this. The Court found this was misleading and ruled the foreclosure sale invalid. The Court held that the "secured creditor" was not the servicer in this case, yet the Court stopped short of telling us who the appropriate "secured creditor" should be in all foreclosure cases. This is critical because the Georgia foreclosure statutes use the term "secured creditor" but also don't define the term for us.


Reese represents a departure from earlier decisions in Georgia which did not place such emphasis on which party was named in the Notice of Sale, so long as that party held a recorded assignment of the loan prior to the sale date. Provident has asked the Georgia Supreme Court to hear an appeal of this decision.  Also, a US District Court Judge has certified a very related question to the Georgia Supreme Court as well, due to the fact that the holding in Reese conflicts with so many prior decisions. Thus, it is likely that the Georgia Supreme Court will give clarity to this issue in the coming months.    


Although the Reese Court did not specifically hold that the holder of the note is the only proper party who may foreclose, there is a school of thought based on the UCC and case law, that a foreclosure is proper if it proceeds in the name of the holder of the note.


Until the Supreme Court resolves this issue, we have amended our processes on each foreclosure file to confirm that the last named entity in both the assignment and the note match the foreclosing entity in the Notice of Sale. While we view this as an extra precaution rather than a requirement, this should ensure that the secured creditor is named in the Notice of Sale will withstand even the strictest of standards. Of course, we will keep you apprised of things as they develop in this area.

"Show Me the Note"

Written By: Sarah Smith, Associate

In 2011, The Federal Rules of Bankruptcy Procedure 3001 was amended to set forth specific requirements for filing a proof of claim. In part, this amendment includes a provision stating that "When a claim, or an interest in property of the debtor securing the claim, is based on a writing, the original or a duplicate shall be filed with the proof of claim." A recent trend has surfaced by Trustees and Debtors attempting to limit this language to require the original document. This is commonly referred to as the "show me the Note" argument.


To establish standing in a bankruptcy, the mortgage company must provide proof that they are the actual holder of the Note. If a Note transfer is made, it is not required to list a new holder. A blank endorsement is sufficient, making the actual party in possession of the Note the true and proper bearer of the instrument. However, the Notes endorsed in blank tend to be an easier target for challenge and scrutiny by the Trustees and Debtors. It has yet to be settled whether or not the holder is required to produce the original document and is currently being litigated in various states and districts.


While it is our position that the original Note is not required to show standing in a bankruptcy, there are steps lenders and servicers can take to mitigate the negative effects of these requests. If your loan documents are being stored by a third party, it is recommended to have those delivered to a person with knowledge of your company's record-keeping and loan transfer procedures to properly be able to respond to an inquiry on location of original Note.


With the rise of Pro-Se Debtors, QWRs and "internet" pleadings, we can expect this trend to continue. If you receive correspondence that may be a "show me the note" demand, consult with your attorney immediately.

New Faces: Growing Rapidly

The offices of Rubin Lublin are busting at the seams.  Over the past many months we have brought in a new group of talented attorneys to augment many of our departments.  Emlyn Eason, Chelsey Murray and Jennifer VanderVeur have all joined our Foreclosure Department.  Additionally, Holly Strawn has taken over at our Nashville office.  The Litigation Department brought in Jonathan Brezel and Tyler Hurst is the newest member of the Eviction Department.  You may click on any attorney's name to see their bio. 


The firm is also very pleased to announce our new Compliance Manager, Kim Stephenson.  Ms. Stephenson has been in the industry for 18 years, most of which were spent at a servicing shop.  She brings incredible knowledge and experience to her new role and is responsible for firm compliance with client contracts as well as audit management. 


We are all very pleased to welcome our new employees and look forward to growing with them and our clients in the future.

Hitting the Road for You

Managing Partner Glen Rubin and Supervising Foreclosure Attorney Heidi Billington attended the ALFN's Legislative Day at the Capitol to keep our states' Senators abreast of the big issues facing our industry. 



Happy Football Season Y'all,
Lauren Fierman
Marketing Director
Rubin Lublin, LLC
3740 Davinci Court
Suite 400
Norcross, GA 30092