Federal Judge In Dayton: Says Most Foreclosures Before Him Lack Proof, Threatens Lawyer

DAYTON (TDB) -- A federal judge in Dayton says 26 of the 27 mortgage foreclosure cases pending before him lack proof the claims are valid. U.S. District Judge Thomas M. Rose said the same lawyer filed the 26 incomplete cases and is warning of sanctions that include dismissal for lack of good faith. Rose said he has been assured records supporting the foreclosure filings exist, but said he will toss the cases out by mid-December if the records are not produced. He said he has had "extensive discussions and argument" over the records, and is concerned that banks and the lawyer may be trying to game the legal system.

The cases in Dayton federal court involve Citibank, 1; HSBC Mortgage Services Inc, 1; Household Realty Corp., 4; Indymac Bank FSB, 1; Deutsche Bank Trust Co. Americas, 4; Wells Fargo Bank NA, 6; LaSalle Bank Nat'l Assn, 2, and Saxon Mortgage Service Inc., 1. There are apparently 6 other cases that The Daily Bellwether was unable to trace in court records.

The judge said the records he wants to see include a written payment history, an affidavit verifying that the amount in controversy exceeds $75,000, a legible copy of the promissory note and any loan modifications, a recorded copy of the mortgage, any applicable assignments of the mortgage, an affidavit documenting that the named plaintiff is the owner and holder of the note and mortgage, and a corporate disclosure statement.

"While each of the complaints for foreclosure pleads standing and jurisdiction, evidence submitted either with the complaint or later in the case indicates that standing and/or subject matter jurisdiction may not have existed at the time certain of the foreclosure complaints were filed. Further, only one of these foreclosure complaints thus far was filed in compliance with the Court's General Order 07-03 captioned "Procedures for Foreclosure Actions Based on Diversity Jurisdiction."

His order noted,

"While the plaintiff in each of the above-captioned cases have pled that they have standing and that this Court has subject matter jurisdiction, they have submitted evidence that indicates they may not have had standing at the time the foreclosure complaint was filed and that subject matter jurisdiction may not have existed when the foreclosure complaint was filed. Further, this Court has the responsibility to assure itself that the foreclosure plaintiffs have standing and the subject-matter jurisdiction requirements are met at the time the complaint is filed. Even without the concerns raised by the documents the plaintiffs have filed, there is reason to question the standing and the jurisdictional amount."

Rose said he has been waiting for the records to appear at the Dayton U.S. Courthouse. He said he agreed with U.S. District Judge Christopher A. Boyko of Cleveland, who late last month dismissed several foreclosures that lacked proof. Rose said Boyko correctly noted at the time that the integrity of the federal court system was on trial, and there could not be any shortcuts taken in foreclosure actions.

Said Rose:

"This Court is well aware that entities who hold valid notes are entitled to received timely payments in accordance with the notes. And, if they do not receive timely payments, the entities have the right to seek foreclosure on the accompanying mortgages. However, with regard to the enforcement of standing and other jurisdictional requirements pertaining to foreclosure actions, this Court is in full agreement with Judge Christopher A. Boyko of the United States District Court for the Northern District of Ohio who recently stressed that the judicial integrity of the United States District Court is "Priceless."

[Rose put the word priceless in bold print in his written decision.]