SECTION C

BANKRUPTCY CASES INVOLVING MORTAGE-BACKED

TRUSTS WHERE THE TRUSTEE WAS NOT ALLOWED TO
PROCEED BECAUSE OF STANDING OR LOAN
DOCUMENTATION ISSUES
Cases
In re Bass,
720 S.E.2d 18, (N.C.Ct.App.2011)
Mortgage Amount: $139,988
Trial court dismissed the claim of U.S. Bank, as Trustee.
In the case sub judice, Petitioner has offered only
a bare assertion that the challenged stamp is a facially
valid indorsement. Absent an allonge, testimony, or
other evidence indicating that the stamp is an
authorized signature, it would be imprudent for this
Court to accept Petitioner's position. We hold that the
facial invalidity of this stamp is competent evidence
from which the trial court could conclude the stamp is
"unsigned" and fails to establish negotiation from
Mortgage Lenders to Emax. Consequently, Petitioner
has failed to establish it is the holder of the Note, and
the trial court did not err in dismissing Petitioner's
summary foreclosure proceedings against Respondent.
For the foregoing reasons, the trial court's order is
Affirmed.
In re Bevins,
Case No. 10-12856, USBC, Northern District of New
York, Albany Division
Trust: RALI2006QS18

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U.S. Trustee Davis filed objections to a proof of

claim filed by a mortgage servicer. The servicer filed
an Assignment of Mortgage by MERS. The Trustee
asserted that Deutsche Bank had no standing because
an Assignment of Mortgage does not demonstrate that
there was also an assignment of the underlying note.
In re Canellas,
Case No. 6:09-bk-12240-ABB, M.D. Fla. 2009
Trust: Lehman Brothers Small Balance Commercial
Mort. PT Certs., 2006-3
Movant asserts in its Motion it is the owner and
holder of the Note and Mortgage, but has presented
no evidence substantiating that assertion. The copies
of the Note presented do not contain an endorsement
evidencing an assignment of the Note. The Affidavit
executed by Movants loan servicer makes no mention
of the location of the original Note or who has
possession of it. Movant proffered no business records
or testimony tracing ownership of the Note and
establishing Movant is the present holder of the Note..
The veracity of the Allonge and Assignment is
questionable. The dates contained in the Allonge are
chronologically impossible. The Allonge is dated
August 1, 2006, but references a trust that came into
existence on October 31, 2006. The signature of
Jennifer Henninger is undated and not notarized. The
Allonge was not referenced in or filed with Movants
Motion in October 2009, but was presented three
months later as an attachment to its post-hearing
brief.
Deutsche Bank National Trust Company v. Tarantola,

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Case No. 4:09-bk-09703-EWH, Bankr., D. AZ. July 29,

2010
Trust: Argent Securities, Inc. ABPT Certs., 2004-W8
Deutsches Motion for Relief from Stay was denied.
Deutsche's witness admitted that the Allonge was
created after the MRS was filed to "get the attorneys
the information they needed." (Tr. 36, 47, 73.)
Creation of evidence to support a motion for relief
from stay, after filing has been found to violate Fed. R.
Bankr. P. 9011(b)(3) Deutsche's witness also
admitted that the Allonge had not been attached to
the Original, but to a copy. (Tr. 79.) The Allonge,
therefore, was never properly affixed to the Note and
could not accomplish a transfer of the Note under
ARIZ. REV. STAT. ANN. 47-3204(A) (2010). Last,
but certainly not least, even if the Allonge had been
affixed to the Original, it would have been ineffective
to transfer the Note to Deutsche because the party
executing the Allonge had no authority to do so. First,
while the Allonge is executed by Kathy Smith "as an
Assistant Secretary and Vice President" of Argent, the
evidence presented by Deutsche demonstrates that
she was instead a "Special Officer of Citi Residential
Lending Inc." exercising the LPA. But the LPA only
authorized assignments in specific circumstances not
present here
If, in the future, the court is confronted with filings as
deficient and incorrect as filed in this case, the court
will issue an order to show cause and consider
imposing sanctions including, but not limited to, an
award of fees to debtors' counsel for having to oppose
motions filed without proper evidence or worse with
improper evidence.

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Deutsche Bank National Trust Company v. Triplett,

Cuyahoga App. No. 94924, 2011-Ohio-478
Trust: HSI Asset Securitization Trust 2007-HE1
Mortgage Amount: $81,000
Summary judgment for bank reversed.
In the instant case, since it is undisputed that the
assignment of the mortgage was executed and
recorded after Deutsche Bank filed its foreclosure
complaint, then the only evidence in the record that
the Magistrate could have relied on to conclude that
Deutsche Bank was a real party in interest was the
affidavit of ownership dated March 31, 2009 and filed
February 2, 2010. Thus, our resolution hinges on
whether an affidavit of ownership, standing alone, is
sufficient to satisfy Jordan.
In U.S. Bank Natl. Assn. v. Duvall, Cuyahoga App. No.
94714, 2010-Ohio-6478, this Courts recent decision
affirming the trial courts dismissal of a foreclosure
complaint involving facts substantially similar to the
present case, we rejected an affidavit that stated the
plaintiff acquired the note and mortgage prior to the
filing of the complaint. Likewise, Deutsche Banks
affidavit of ownership, sworn out more than a year
after the foreclosure complaint was filed, is insufficient
to vest the bank with standing to file and maintain the
action.
In re Doble,
2011 WL 1465559 (Bankr. S.D. Cal. April 14, 2011)
Trust: Harborview Mort. Loan Trust 2005-6
Mortgage amount: $650,000
Sanctions were imposed by the bankruptcy court
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on HSBC, its attorneys and agents. The bank and its

lawyers were sanctioned for pressing a relief motion
on admissions that were known to be untrue and
signing and filing pleadings without knowledge or
inquiry regarding the matters pled therein.
The
bankruptcy court held four hearings over several days.
The most disconcerting misrepresentation to the
Court was Defendants' submission of multiple "true
and correct" copies of the Note under penalty of
perjury without any endorsement from Plaza. Whether
the Note was endorsed is central to the merits of this
case. When Defendants finally submitted an endorsed
copy of the Note on November 8, 2010, they
attempted to pass off the first three unendorsed
copies of the Note as "illegible." The first three copies
of the Note were fully readable, so the phantom
endorsement page was not a problem with legibility.
The timing of this tardily produced endorsement,
produced after several requests, suggests it was
added only in response to the litigation. To add to the
Court's incredulity, Defendants have never answered
the Court's specific questions as to when and under
what circumstances this newly proffered endorsement
was executed.
In re Foreclosure Cases ( Judge Boykin),
No. 07 Civ. 2282, 2007 WL 3232430
(N.D. Ohio Oct. 31, 2007)
Fourteen cases dismissed for lack of standing
where the mortgage assignments were executed after
the complaint was filed. On October 31, 2007, Judge
Boyko dismissed 14 more Deutsche Bank cases.
In re Foreclosure Cases (Judge Holschuh),
Case 2:07-cv-0016-JDH-TPK
(S.D. Ohio December 27, 20O7)
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Fifteen cases dismissed for lack of standing where

the mortgage assignments were executed after the
complaint was filed.
In re Foreclosure Cases (Judge OMalley),
(N.D. Ohio December 14, 2007)
Thirty-two cases dismissed for lack of standing
where the mortgage assignments were executed after
the complaint was filed.
In re Foreclosure Cases (Judge Rose),
(N.D. Ohio December 14, 2007)
Twenty cases dismissed for lack of standing where
the mortgage assignments were executed after the
complaint was filed.
In re Hayes,
393 B.R.259
Bankr. D. Mass. 2008
Trust: Argent Mortgage Securities, Inc. ABPT Certs.,
Series 2004-W11
Deutsche Bank, as Trustee of Argent Mortgage
Securities, Inc. Asset-Backed Pass through Certificates
Series 2004-W11, filed a Motion without Recourse for
Relief from Stay against Hayes, claiming that it had
standing to seek relief because Hayes mortgage
transferred from Argent Mortgage Securities to them.
The Court used the real party in interest rule under
Section 362 of the Bankruptcy Code to determine
standing, stating that a real party in interest is 1)
the party with the legal right to bring suit, and 2) a
party who is not seeking to assert another partys
rights. Id at 371, citing In re Woodberry, 383 B.R. 373
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(Bankr. D.S.C. 2008). The Court determined that

Deutsche Bank was not a real party in interest
because it never proved that Hayes assigned its
mortgage to Argent Mortgage Company, LLC or Argent
Securities, Inc., the trusts depositor, in the Pooling
and Servicing Agreement (PSA) of the Trust. In
addition, the Court asserted that Deutsche Bank
submitted no evidence that the November 3, 2004
mortgage was included in the PSA or was subject to
Section 2.09 of the PSA. Judge Joan M. Feeney
ordered Deutsche Bank to show cause, as to why they
should not be sanctioned under Fed.R.Bankr.P.9011
for filing without competent evidence that they had
standing. The Court subsequently released the order
to Show Cause because the parties reported in open
court that the matter was resolved.
In re Kemp,
440 B.R. 624 (Bankr. D.N.J. 2010)
Trust: CWABS 2006-8
Mortgage Amount: $167,199
Countywides claim here must be disallowed,
because it is unenforceable under New Jersey law on
two grounds.
First, under New Jerseys Uniform
Commercial Code (UCC) provisions, the fact that the
owner of the note, the Bank of New York, never had
possession of the note, is fatal to its enforcement.
Second, upon the sale and mortgage to the Bank of
New York, the fact that the note was not properly
indorsed to the new owner also defeats the
enforceability of the note.
In re Lippold,
Case No. 11-12300 (Bankr. SDNY 2011)
Trust: Asset-Backed Sec. Corp. Home Equity Loan Trust,
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Series AEG 2006-HE1

Mortgage Amount: $344,000
U.S. Banks Motion to lift the automatic bankruptcy stay
in order to foreclose denied.
The language of the Assignment in this case
purports to transfer both the Mortgage and the Note
to U.S. Bank. But MERS, as the purported assignor,
could not legally assign the Note; it only had legal
rights with respect to the Mortgage. Aegis did not
confer any rights on MERS in the NoteMERS is not a
party to the Note nor is there any indication that MERS
was authorized to take any action with respect to the
Note. See Agard, 444 B.R. at 246. Thus, "assignment
of the note[] [is] . . . beyond MERS's authority as
nominee or agent of the lender." Silverberg, 926
N.Y.S.2d at 538. There is also no evidence in the
record showing that U.S. Bank received physical
delivery of the Note, or that U.S. Bank is in possession
of the Note. Since U.S. Bank failed to "provide
satisfactory proof of its status as the owner or holder
of the note at issue," see Escobar, 2011 WL 3667550,
at *9, the Court concludes that U.S. Bank does not
have standing to obtain stay relief.
In re Nosek,
544 F.3d 34 (1st. Cir. 2008)
Ameriquest
Mortgage
Company
(Ameriquest)
claimed that it was the holder of Noseks mortgage,
despite the fact that Ameriquest was the loan
originator, had not held the note since November 30,
1997, and ended its mortgage servicer role as of
March 31, 2005. Judge Joel B. Rosenthal placed blame
on Ameriquest, the mortgage servicer, and Wells
Fargo, the mortgage lender, for the mishandling of the
Mortgage Assignment, stating: It is the creditors
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responsibility to keep a borrower and the Court

informed as to who owns the note and mortgage and
is servicing the loan, not the borrowers or the Courts
responsibility to ferret out the truthThat Ameriquest
had no role after March 2005well before the trial in
Adversary Proceeding 04-4517, was unknown to the
court. Judge Rosenthal also blamed Wells Fargo, the
mortgage lender, for the mishandling of the Mortgage
Assignment, stating This Court will not allow Wells
Fargo or any other mortgagee to shirk responsibility
by pointing the finger at their servicers. Judge
Rosenthal imposed sanctions of $250,000 on
Ameriquest and Wells Fargo, as well as sanctions on
the law firms. The fines were later reduced to $5,000.
In re Nuer,
No.08-17106
Bankr. S.D.N.Y. 2010
Trust: Long Beach Mortgage Loan Trust 2006-2
Diane G. Adams, the United States Trustee for the
Southern District of New York, in a Memorandum of
Law of the United States Trustee in Support of
Sanctions Against J.P.Morgan Chase Bank National
Association, filed January 4, 2010, alleged that Chase
has filed documents that appear to be either patently
false or misleading in connection with the Motion for
Stay ReliefChase took the posiion that it was acting
only as the servicer of the Mortgage. Chase at the
same time attached documents which supported a
different position.
The Trustee reviewed the testimony of Mr. Herndon, a
witness for Chase, who testified that the chain of title
for the property in question passed through three
entities. Previously, however, Chase had submitted
contrary documents. In particular, Chase had
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submitted an assignment that appeared to show that

Chase assigned its right as mortgagee to Deutsche, as
trustee for Long Beach Mortgage Trust 2006-2. The
Assignment was signed by Scott Walter as Attorney
in Fact for Chase (the Walter November 1
Assignment) It was signed on November 1, 2008,
after the Filing Date. This 2008 Assignment to a trust
that closed in 2006 signed by an individual who did
not in fact work for Chase has become the focus of the
sanctions debate. Regarding the Walter Assignment,
the Trustee states: Here, the misconduct of Chase
includes the attachment of the Walter November 1
AssignmentChases own witness could not explain
the Walter November 1 Assignment [Walter was
actually an employee in the Minnesota office of Lender
Processing Services.]
In re Obasi,
No.10-10494
Bankr. S.D.N.Y. 2011
Trust: Soundview Home Loan Trust 2005-OPT3
The claim did not include an assignment of
mortgage from Option one to Deutsche Bank, or any
other document explaining the basis for Deutsche
Bank to seek payment based upon the mortgage
between the Debtor and Option One.
In re Parker,
445 B.R. 301 (2011)
Trust: Adj. Rate Mortgage Trust 2007-1
Summary judgment for bank denied because the
bank could not prove it was the holder of the note as
of the date of the debtors bankruptcy filing. The
allonge presented by the bank was undated.
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In re Ruest,
No. 09-01035,
(Bankr. D. Vermont 2011)
Trust: MLMI Trust Series 2006-HE5
However, the date on which the Bank came into
possession of the Note is conspicuously absent from
the Banks summary judgment pleadings. This
presents the same impediment to summary judgment
as in Densmore. Since the date the Note was endorsed
is a material fact essential to the determination of
whether the Bank is entitled to judgment as a matter
of law on the issue of standing, and since the record of
undisputed material facts does not include any
information about the date of the endorsement,
summary judgment is not proper. See Densmore, 445
B.R. at 312. Accordingly, the Banks motion for
summary judgment on the issue of standing is denied.
In re Salazar,
448 B.R. 814 (2011) (Bankr. S.D. Cal. April 12, 2011)
Trust: C-BASS Mortgage Loan AB Certs., Series 2006CB2

Denying relief from stay at this time is the least

prejudicial option for both parties. Even if the stay
prohibits U.S. Bank from regaining possession of the
Property in the near term, that inconvenience is
appropriate because the foreclosure process was
flawed. The Court has scheduled a further hearing on
relief from stay to determine the economic feasibility
of Salazar's plan, and also to order that adequate
protection payments be made to U.S. Bank to prevent
diminution of the value of its collateral.

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In re Sima Schwartz,
366 B.R. 265 (Bankr. D. Mass. 2007)
In re David A. Simpson, P.C.,
__N.C. App. __, 711 S.E. 2d 165
Trust: RASC 2006QA6
Mortgage Amount: $525,000
We conclude the record is lacking of competent
evidence sufficient to support tht Petitioner is the
owner and holder of Mr. Gilberts note and deed of
trust.
The trial court erred in permitting the
Substitute Trustee to proceed with foreclosure
proceedings.
In Footnote 2, the Court also discussed its concerns
over documents submitted as evidence signed by
Jeffrey Stephan:
This Court finds troubling that GMAC Mortgage,
LLC was recently found to have submitted a false
affidavit by Signing Officer Jeffrey Stephan in a
motion for summary judgment against a mortgagor
in the United States District Court of Maine. Judge
John H. Rich, III concluded that GMAC Mortgage
submitted Stephan's false affidavit in bad faith and
levied sanctions against GMAC Mortgage
In re Tarantola,
2010 WL 3022038 (Bankr.D.Ariz. July 29, 2010)
Trust: Argent Securities, Inc. ABPT Certs., Series
2004-W8
Mortgage Amount: $377,600

86

Yet again, the court is called upon to decide

whether the purported holder of a note allegedly
transferred into a securitized mortgage pool has
standing to obtain relief from the automatic stay. Yet
again, the movant has failed to demonstrate that it
has standing. To make matters worse, the movant
filed its motion without evidentiary support of its claim,
attempted to create such evidentiary support after the
fact, and only disclosed its real evidence on the day
of the final evidentiary hearing. The relief will be
denied.
Frankly, the court is puzzled by Deutsches
inability to offer competent evidence of its standing.
Presumably, the PSA places obligations on Deutsche
as the Initial Custodian and as Trustee to maintain
records, including original notes and mortgages as
well as documentation of all assignments of pooled of
notes and mortgages. Deutsche and its servicer,
therefore, should be able to easily produce the
documents needed to prove standing. Instead of doing
so, Deutsche, through its servicer and its counsel, filed
the MRS without any evidence of standing, thereafter
created an ineffective Allonge and falsely represented
that it was attached to the Original. It then waited
until the last possible moment to obtain the Original,
disclosed the existence of the Original through the
testimony of a witness, instead of bringing it to the
courts attention at the commencement of the
evidentiary hearing, and failed to satisfactorily explain
the discrepancies between the Original and earlier filed
versions of the Note.
In re Taylor,
407 B.R. 618, 623 (Bankr. E.D. Pa. 2009).
At issue in these cases are the homes of poor and
unfortunate debtors, more and more of whom are
87

threatened with foreclosure due to the historic job loss

and housing crisis in this country. Congress, in its
wisdom, has fashioned a bankruptcy law which
balances the rights and duties of debtors and creditors.
Chapter 13 is a rehabilitative process with a goal of
saving the family home. The thoughtless mechanical
employment of computer driven models and
communications to inexpensively traverse the path to
foreclosure offends the integrity of our American
bankruptcy system. It is for those involved in the
process to step back and assess how they can fulfill
their professional obligations and responsibly reap the
benefits of technology.
Nothing less should be
tolerated.
In re Veal,
450 B.R. 896 (B.A.P. 9th Cir. June 10, 2011)
Trust: Option One Mortgage Loan Trust 2006-3
The appellate court overruled the decision of the
bankruptcy court granting Wells Fargos motion for
relief from stay because Wells Fargo had no standing.
The motion of American Home Mortgage Servicing was
also overturned. We have conducted such a review of
the record, and we have found nothing in the record
that establishes AHMSIs standing to file the proof of
claim.
In re Weisband,
427 B.R. 13 (Bankr. D. Ariz. 2010)
Trust: Structured Asset Securities Corp.
In this case, however, there is no proof that the
allonge containing the special endorsement from
GreenPoint to GMAC was executed at or near the time
the
Note
was
executed.
Furthermore,
the
88

Endorsement does not have any identifying numbers

on it, such as an account number or an escrow
number, nor does it reference the Note in any way.
There is simply no indication that the allonge was
appropriately affixed to the Note, in contradiction with
the mandates of A.R.S. 47-3204. Thus, there is no
basis in this case to depart from the general rule that
an endorsement on an allonge must be affixed to the
instrument to be valid.
In re Wells,
407 B.R. 873 (Bkrtcy. N.D.Ohio 2009)
Trust: Aegis AB Securities Mortgage PT Certs., 2005-4
Mortgage Amount: $99,700
The Court rejected two assignments prepared years after
the trust closing date.
U.S. Bank failed to show that it had standing to file
claim 1, and also failed to show at the hearing that it
is entitled to enforce the note and mortgage. Claim 1
is, therefore, disallowed under 11 U.S.C. 502(b)(1).
The court will issue a separate show cause order on
U.S. Bank regarding its factual and legal bases for
filing claim 1.
In re Wilhelm,
407 B.R. 392 (Bankr. D. Idaho 2009)
Here, even accepting Bank of America/HSBC's
contention that the Court is limited to considering the
allegations in the motions, these allegations are insufficient
to establish standing. Among other things, the narrative
allegations are contradicted by the exhibits to the motions.
Moreover, Bank of America/HSBC did not cure the standing
issues with the declarations submitted in support of their
motions, as these declarations fail to comply with basic
89

evidentiary rules. In short, as discussed further below,

standing has not been properly alleged, much less proved
Turning first to possession, Movants presumably rely on the
supporting declarations, because the motions themselves do
not allege that Movants possess the notes. (Although the
motions typically allege that Movants are the "holders" of
the notes, the notes filed as exhibits to the motion
defeat this allegation since, as already noted, the notes are
not indorsed.)
The declarations parrot the motions, again stating that
Movant is the "holder" of the original promissory note at
issue. But this statement is an inadmissible legal conclusion
and an impossible one at that, given the absence of
indorsements not a fact. As explained, "holder" is a
defined term when dealing with negotiable instruments. To
qualify as holders, these Movants must possess an indorsed
note. See Idaho Code 28-1-201(b)(21)(A). None of these
notes is indorsed, either in blank or specifically, making it
impossible for any of these Movants to be a "holder." The
declarations are insufficient. See, e.g., Nationwide Transp.
Fin. v. Cass Info. Sys., Inc.,523 F.3d 1051, 1059-60 (9th
Moreover, it is the Court's job (not the witnesses') to
determine whether the relevant facts establish, as a matter
of law, that Movants are holders. The same proposition
applies to the question of whether they are non-holders with
rights of enforcement. So what the Court needs to know is a
fact: Who has possession of the original notes? None of the
declarations answers that question. Accord Sheridan, 09.1
I.B.C.R. at 26, 2009 WL 631355, at *5 (noting that the
movant's submissions did not answer "the key question
Who was the holder of the Note at the time of the Motion?").
(footnotes omitted)
Conclusion: Movants lack standing to seek stay relief.

90