10-2205- CV NO.

_______________

MARIA AND JOSE PEREZ
V.

IN THE DISTRICT COURT OF GUADALUPE COUNTY
25 th ____ JUDICIAL

BAC HOME LOANS SERVICING LP, RECONTRUST, NA

DISTRICT

PLAINTIFF’S VERIFIED ORIGINAL PETITION APPLICATION FOR TEMPORARY RESTRAINING ORDER, PRELIMINARY INJUNCTION AND REQUESTS FOR DISCLOSURES AND ADMISSIONS

TO THE HONORABLE JUDGE PRESIDING:

Plaintiffs Maria and Jose Perez, husband and wife, residents of Seguin, Guadalupe County, Texas (“Plaintiff”) complain of BAC Home Loans Servicing LP., (“BAC”) and RECONTRUST, N.A. (“Recon”) collectively referred to as ( “Defendants”) and for cause of action state: Discovery Level 1. This action is governed by TRCP 190.3 (Level 2). Corporate Disclosure - Public Company 2. Bank of America Corp., the direct or indirect parent of Bank of

BAC Home Loans Servicing LP., and RECONTRUST, NA, is a publicly traded, NYSE (symbol BAC) company.

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Jurisdiction and Venue 3. This action seeks damages within the jurisdiction of the The District Court may quiet title and enter declaratory

District Court.

relief. See Tex .Civ. Prac. & Rem. Code §37.004 1 4. Venue is proper under the mandatory venue rules, C.P.R.C. §

15.011(a) (5) 2 as this action seeks to determine that Defendants have no present right to foreclose on Plaintiffs’ home and to quiet title, remove encumbrances and obtain damages arising from Defendants’ wrongful efforts to collect a previously paid note and deed of trust covering Plaintiffs’ home, property located in Seguin, Guadalupe County. 5. Plaintiffs request that the clerk of the Court prepare citation

and that same be served by the Clerk as authorized by the Texas rules by certified mail, return receipt requested, to the parties and addressed as follows: A BAC Home Loans Servicing LP may be served by serving its registered agent for service of process to wit BAC Home Loans Servicing LP % CT CORPORATION SYSTEM 350 N. ST. PAUL ST. Suite 2900 DALLAS, TX 75201

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References to the Texas Civil Practices and Remedies Code will hereafter be “CPRC”.

See, CPRC Sec. 15.011. LAND. Actions for recovery of real property or an estate or interest in real property, for partition of real property, to remove encumbrances from the title to real property, for recovery of damages to real property, or to quiet title to real property shall be brought in the county in which all or a part of the property is located.

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B RECONTRUST, N.A. may be served by serving any officer or agent at its principal business address in the State of Texas, to wit RECONTRUST N.A. 2380 Performance Drive, TX 2-985-07-03 Richardson, TX 75082

Background 6 Recording acts, like Tex. Prop. Code chapter 13, 3 provide

legal effect (actual and constructive actual notice) for real property deeds, deeds of trust and assignments of the obligations secured by liens therein created or retained against third parties without actual notice of the instrument. The act of recording a document, for which fees are charged by County Clerk of the County where the property is located, requires that the instrument have certain formalities, including signature and

acknowledgement.

These formalities have served Texans well for

generations providing a written “paper trail” by which owners and mortgagees or assignees of either can be ascertained. And the fees for recording of documents, while small per item in Texas 4 , represent a

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Sec. 13.001. VALIDITY OF UNRECORDED INSTRUMENT. (a) A conveyance of real property or an interest in real property or a mortgage or deed of trust is void as to a creditor or to a subsequent purchaser for a valuable consideration without notice unless the instrument has been acknowledged, sworn to, or proved and filed for record as required by law. (b) The unrecorded instrument is binding on a party to the instrument, on the party's heirs, and on a subsequent purchaser who does not pay a valuable consideration or who has notice of the instrument. Sec. 13.002. EFFECT OF RECORDED INSTRUMENT. An instrument that is properly recorded in the proper county is: (1) notice to all persons of the existence of the instrument; and (2) subject to inspection by the public. Other states may impose a “transaction tax” or “stamp fee” for recording of instruments varying by the dollar amount of the stated transaction. Texas does not.

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significant element of recovery of the costs of operating the county clerk’s real property division. 7 At the risk of oversimplification, Wall Street’s interest in

“securitizing” mortgages by creating mortgage backed securities to be sold without specific reference to the underlying mortgage loans resulted in efforts to free up transfer of interests in the loans (notes secured by deeds of trust) by eliminating traditional elements of transactions in notes secured by deeds of trust covering real property, specific endorsement of the note and recorded assignment of the deed of trust in the county real property records. The “mortgage backed securities industry” did so by avoiding that paper work and even the nominal fees for recording of the assignment of the mortgages by using a “straw lender” or “nominee” to be the named beneficiary of the recorded original deed of trust when the loan was made. Using this short cut, assignments of notes secured by deeds of trust (mortgages) were no longer recorded in the real property records where the property securing the loan was located. 8 Mortgage Electronic Registration Systems, Inc. (“MERS”)

entered into the business of being the recorded entity as “nominee” for the true lender. According to MERS’ statements about its history, MERS has “saved” lenders “billions in recording fees.” But at the price that there is no open public record to inspection of who was or is the actual assignee of the loans secured by real property. Recordkeeping of who the owner of

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the real property secured loan was, or transfers of the ownership of interests in the loan from time to time, would be handled by some other facility or means not accessible to the public. Texas recognized the

market imperative created by securitization, adopting a new set of definitions to include a “book entry system” and mortgage servicer into its lexicon, expansively defining both Mortgagee and Mortgage Servicer, giving them rights and responsibilities and after notice allowing the Mortgagee’s enforcement of contract liens by non-judicial sale 5 . The Perez’s “Morgan Loan” 9 In 2007 Maria and Jose Perez purchased the property and

improvements commonly called 148 Tonto Trails, Sequin, Texas and legally described as: LOT: 107 BLK: ADDN: GERONIMO'S HAVEN #3 (the “Property”). This purchase was financed in part by a note payable to Mortgage Electronic Registration Systems, Inc., as nominee for Morgan Financial d/b/a Morgan Funding and secured by a deed of trust covering the Property recorded at Real Property Records Book 2559 at page 512 (the “Morgan Loan”). There are, on information and inspection of the real property record of Guadalupe County, no recorded assignments or transfers of the Morgan Loan to BAC.
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Tex. Prop. Code Art 51.0001 added “’Mortgage servicer’ means the last person to whom a mortgagor has been instructed by the current mortgagee to send payments for the debt secured by a security instrument. A mortgagee may be the mortgage servicer. "Mortgagee" means: (A) the grantee, beneficiary, owner, or holder of a security instrument; (B) a book entry system; or (C) if the security interest has been assigned of record, the last person to whom the security interest has been assigned of record. (5) "Mortgagor" means the grantor of a security instrument.

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In August 2009 Plaintiff’s paid the Morgan Loan in full with the

proceeds of a refinancing loan. This payment is shown by the records of Orange County Title Company of Texas (see Business Record Affidavit attached and incorporated herein) documenting payoff of the Morgan Loan by the title company’s wire transfer of funds effected on August 5, 2009. The payoff was made to the Mortgage Servicer of the Morgan Loan, Taylor Bean & Whitaker.

BAC attempts to collect the Perez’s “Morgan Loan” 11 BAC claims to have received rights in the Morgan Loan from

Taylor Bean & Whitaker as of September 1, 2009. 6 Notwithstanding that by then the Morgan Loan was fully paid BAC has attempted repeatedly to collect the paid off Morgan Loan. 6. Since September 2009 BAC has sent collection letters,

dunning statements and threatening letters to Plaintiff demanding payment of the Morgan Loan. Among the letters sent to Plaintiff after the Morgan Loan was paid off were two sets of notices that the Morgan Loan shortly would be transferred to HUD and that Plaintiff were going to lose their home.

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Letter Notice from BAC dated 8-21-09 attached, stating:

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7.

Since first receipt of dunning notices from BAC, Plaintiffs have

undergone the frustrating process of trying to speak with representatives of BAC. Patiently Plaintiffs have repeated ventured into the labyrinth that is BAC explaining that the Morgan Loan was fully paid in August 2009, before BAC claims that it received rights to the Morgan Loan, and that they are current with their refinanced note. Despite oral assurances that BAC would clear up the problem of its records, Defendants continue to prosecute collection of the paid obligation. 8. In September 2010, Plaintiff received letters from RECON on

behalf of BAC as the “mortgage servicer” of the paid Morgan Loan advising that it had been designated as substitute trustee to enforce the Morgan Loan. Included within the demand was notice of default of the Morgan Loan and notice of substitute trustee’s sale setting a foreclosure sale date of November 2, 2010 in enforcement of the Morgan Loan. A true copy of the September 2010 demands made on Plaintiff and its enclosure – notice of substitute trustee’s sale is attached as an exhibit hereto. RECON

asserted that it was acting both as substitute trustee and as a debt collector and servicer. 9. The recent foreclosure “moratorium” declared by Bank of

America, parent to BAC and RECON, on information and belief is in partial recognition that the tried and true means of actual assignment and endorsement of the note and deed of trust, written loan servicing

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agreement and required notices must be correctly completed before enforcement (“administration”) of the deed of trust. 7 10. The notice and demands issued by Defendants to Plaintiff on

the Morgan Loan have caused Plaintiffs to suffer emotional distress, mental anguish, lose sleep and incur expenses. The notices are wrongful as the Morgan Loan was paid. 11. BAC and RECON are debt collectors of the Morgan Loan and

Plaintiffs are consumers as such terms are defined by fair debt collection practices laws. Plaintiffs have been damaged by Defendants conduct and breach of the contract, the Morgan Loan which Defendants are wrongfully seeking to collect. 12. Plaintiffs prior to commencement of this suit made demand on

Defendants to withdraw the notice of November 2010 foreclosure sale of the Property and verify the amount of the obligation Defendants were seeking to collect. Such demand was made under the Federal Fair Debt Collection Practices Act and required response within five days of the demand.

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Texas law was amended to recognize the role of the mortgage servicer and the servicer’s power to administer or enforce the deed of trust. Tex. Property Code, Sec. 51.0025 provides: “ ADMINISTRATION OF FORECLOSURE BY MORTGAGE SERVICER. A mortgage servicer may administer the foreclosure of property under Section 51.002 on behalf of a mortgagee if: (1) the mortgage servicer and the mortgagee have entered into an agreement granting the current mortgage servicer authority to service the mortgage; and (2) the notices required under Section 51.002(b) disclose that the mortgage servicer is representing the mortgagee under a servicing agreement with the mortgagee and the name of the mortgagee and: (A) the address of the mortgagee; or (B) the address of the mortgage servicer, if there is an agreement granting a mortgage servicer the authority to service the mortgage.

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13.

Defendants did not withdraw the notice of foreclosure.

Defendants did not verify the obligation or existence of any debt secured by the Morgan Loan’s deed of trust. 14. 15. All predicates to suit have occurred. Plaintiff has been required to engage the undersigned

attorney, licensed to practice law in the State of Texas. Plaintiffs’ rights to recovery of attorney fees from Defendants arise under: C.P.R.C. § 37.009 (declaratory judgment); § 38.001 (contract), and 15 USC §1692 et seq (FDCPA). FIRST CAUSES OF ACTION DECLARATORY RELIEF TO REMOVE ENCUMBERACE OR QUIET TITLE 16. 17. Plaintiffs incorporate all prior allegations of this petition. Defendants are wrongfully seeking to enforce the deed of trust As applied that deed of trust is a

executed as part of the Morgan Loan.

cloud on Plaintiffs’ title to the Property and must be declared inoperative. 18. Plaintiffs are entitled to receive and here demand that

Defendants withdraw their claims to hold any note or right to enforce the Morgan Loan, and that Court enter its judgment declaring that Defendant BAC has no right to recover from Plaintiff on the Morgan Loan, declaring and removing liens securing the Morgan Loan from the title to the Property save as it may be equitably held by their refinancing lender.

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19.

Plaintiffs seek recovery from Defendants of their reasonable

and necessary attorney fees and contingent awards of attorney fees in the event Defendants or any of them undertake unsuccessful appeals or proceed for or obtain discretionary review in the Supreme Court. SECOND CAUSES OF ACTION – MONEY DAMAGES 20. 21. Plaintiffs incorporate all prior allegations of this petition. Defendants’ efforts and communications seeking to collect the

Morgan Loan after it was paid off breached the contract that was the Morgan Loan causing Plaintiffs’ damages and consequential damages foreseeable at the time of the contract. 22. Plaintiffs seek recovery of reasonable attorney fees through

judgment and conditional awards of attorney fees should Defendants or either of them prosecute unsuccessful appeal of the judgment rendered including but not limited to proceedings for discretionary review and further proceedings, if any in the Supreme Court of Texas. 23. Defendants’ efforts and communications seeking to collect the

Morgan Loan after it was paid off were wrongful under violation of the Texas and Federal Fair Debt Collection Practices Acts proximately causing Plaintiffs’ actual damages and if no actual damages be proved, Plaintiffs’ seek statutory damages. 24. Plaintiffs seek recovery of reasonable attorney fees through

judgment and conditional awards of attorney fees should Defendants or

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either of them prosecute unsuccessful appeal of the judgment rendered including but not limited to proceedings for discretionary review and further proceedings, if any in the Supreme Court of Texas. 25. Defendants’ efforts and communications seeking to collect the

Morgan Loan after it was paid off breached a civil duty owed by Defendants to Plaintiffs not negligently issue notices or statements that are factually wrong or to seek to foreclose on a paid debt. Defendants’ breach proximately caused Plaintiffs’ damages. 26. Defendants’ efforts and communications seeking to collect the

Morgan Loan after it was paid off acts were negligent, grossly negligent or intentional actions seeking to extort or wrongfully obtain money not due from Plaintiff through the use of false, confusing or erroneous demands for payment, notices Plaintiffs would shortly have to quit living in their home, and threatened non-judicial foreclosure of Plaintiffs’ home producing or causing Plaintiffs’ damages. 27. 28. Plaintiffs seek actual and exemplary damages. Prior to trial and after passage of such time, if any, as may be

required by minimum notice provisions of the Deceptive Trade Practices Act 8 , Plaintiff reserves the right to add damage claims arising under the DTPA.

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Tex. Bus. & Com. Code Art 17.41 et seq, (hereafter “DTPA”).

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Causes of Action for Injunction Restraining BAC, RECON or their privies from Non-judicial Foreclosures In whole or in Part 29. 30. Plaintiffs incorporate all prior allegations of this petition. Defendants and all persons in privity with Defendants,

including but not limited to their respective agents, servants or employees and parent Bank of America are seeking to collect a paid debt and have threatened Plaintiffs with foreclosure of their home. A non-judicial

foreclosure sale was noticed by RECON for November 2, 2010. 31. The Morgan Loan as sought to be enforced by Defendants

constitutes a cloud on Plaintiffs’ title. Defendants’ foreclosure pendete lite would further cloud Plaintiffs’ title to their home and frustrate or render ineffectual complete relief available by declaratory judgment or quiet title actions. 32. The Court is authorized in the circumstances to issue an

injunction to preserve the subject matter of the suit until the suit is resolved by judgment. See CPRC §65.011(2) an d (4) 33. While Bank of America has unilaterally announced a

moratorium on its agents’ conduct of foreclosures on its behalf, that moratorium may end as quickly as it was announced requiring the Court’s intervention. Plaintiffs lack an adequate remedy at law to protect their home and continued occupancy of their home

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34.

Plaintiffs as shown by the pay off documents are likely to

prevail on the merits of this action while Defendants will not be damaged in the slightest by being required to establish that there is any debt obligation on the Morgan Loan. 35. Proof of fact, that there is a debt in default secured by real

property is elemental before a foreclosure may occur. Moreover confirmation of debt is a duty imposed on demand by the Federal Fair Debt Collection Practices Act. 36. No public interest is harmed by the issue of preliminary

injunction. In fact the public interest is served by restraining reckless debt collectors employing the non-judicial foreclosure statutes of this State in the terroristic manner employed by Defendants in this case. 37. Noticed foreclosure sales can be passed and re-noticed for

subsequent months. Unless Defendants are restrained from foreclosure through Judgment by Preliminary Injunction, Plaintiffs will be continuously at risk of foreclosure on the paid off Morgan Loan. 38. Also as shown by Bank of America’s self declared moratorium

to clarify its entities foreclosure “paperwork” BAC has serious systemic paperwork problems not only in Texas but across the United States. These problems, arising from use of MERS or other shortcuts to a prudent foreclosure, on information and belief led to BAC and RECON issue of wrongful foreclosure demand letters, such as those sent to Plaintiff - a

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deceptive trade practice violation, or by foreclosures or seizures of property where no debt was due. 39. Texas gives a privilege allowing non-judicial foreclosure of

purchase money deeds of trust, but requires judicial foreclosure on an expedited process to foreclose “home equity loans”. Defendants have

abused the privilege of non-judicial foreclosure and should be required to proceed by judicial foreclosure generally to enforce any note secured by Texas property until Defendants or its parent Bank of America can get its act together to demonstrate that there is a debt unpaid, in default, held by Defendants or its privies and to be administered or enforced by the party seeking to administer or enforce the lien. 40. The DTPA authorizes a court to issue equitable relief when

the interests of the public at large are endangered by a defendant’s pattern of reckless conduct. See DTPA §17.50(b) (2). Defendant Bank of America and persons or entities in concert with it must be restrained from conducting non-judicial foreclosures and required to proceed with bona fide foreclosures only judicially wherein the Court will require proof of facts that there is a debt secured by the property and that conduct of the foreclosure meets legal requirements until they can satisfy the Attorney General of the State of Texas that such relief is not necessary to protect the consumers of this State. This Court may enter such an order at the request of a private litigant, and in the circumstances of this case, must

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enter its order requiring only judicial foreclosures. Notice of suit is being given to the Attorney General of the State of Texas Consumer Protection Division but class action status has not been requested at this time. 41. A bond of no greater than $100.00 should be ordered as a

condition of the issue of a temporary or preliminary injunction restraining Defendants, those in privity with them as well as their agents, servants or employees from taking any actions on the Morgan Loan against the Property. 42. Defendants should be enjoined and restrained from

conducting any non-judicial foreclosures in the State of Texas but required as a consequence of their violations of Texas Deceptive Trade Practices Act and a bond of no greater than $100.00 should be ordered as a condition of the issue of such a preliminary injunction. . Prayer Wherefore, Premises considered Plaintiffs pray that Defendants be cited to appear and give answer herein, that upon just trial hereof, and that consistent with their pleadings herein that Plaintiffs have and recover: their actual damages, consequential damages, special damages and such exemplary damages as may be adequate to deter and are constitutionally appropriate to the Defendants and the wrongs established; reasonable attorney fees, inclusive of conditional awards of attorney fees in the events specified in this petition; costs of suit and reasonable disbursements

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incurred in the prosecution hereof;

pre and post judgment interest as

allowed by law; and such other and further relief at law or in equity to which they may prove themselves entitled. Plaintiffs further pray that prior to final trial the Court enter its: a) Orders on notice to Defendants restraining Defendants, those

in privity with Defendants including but not limited to Bank of America and their respective agents servants and employees from taking any action to enforce the Morgan Loan or foreclose upon the Property through hearing on such application and continuing until judgment in this case and directing the clerk of this Court to issue the Order upon Plaintiffs’ cash deposit or bond in the amount of $100.00, said deposit or bond to be conditioned as required by law. b) Order on notice to Defendants restraining Defendants, those

in privity with Defendants including but not limited to Bank of America and their respective agents servants and employees from employing nonjudicial foreclosures under the Texas Property Code until adequate showings eliminating violations of the Texas Deceptive Trade Practices Act as stated herein have been made. . Requests for Disclosure to All Defendants Pursuant to Rule 194 Texas Rules of Civil Procedure (the “Rule”), each Defendant is requested to disclose within thirty days of service of this request, the information or material described in Rule 194.2 subparts (a)-(l) inclusive.

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. Requests for Admissions to All Defendants Pursuant to Rule 198 Texas Rules of Civil Procedure, each Defendant is required no later than Fifty (50) days after service of these requests upon you to admit or deny or explain in detail the reasons that you cannot admit or deny the request. Your response must fairly meet the substance of the request. You may qualify an answer, admitting or denying a request in part only when good faith requires it. If you fail to timely respond to the requests the request is considered admitted without necessity of an other action. REQUEST No. 1. Admit that the Morgan Loan (as the term “Morgan Loan” is defined in the forgoing petition) was paid in full. ANSWER REQUEST No. 2. Admit that BAC Home Loans Servicing LP has no right to take collection actions on the Morgan Loan or direct exercise of the deed of trust on the Property (as such terms are defined in the foregoing petition) ANSWER

REQUEST No. 3 admit that Recontrust, N.A. and or its employees may not lawfully conduct a foreclosure of the Property or take collection actions on the Morgan Loan (as such terms are defined in the forgoing petition. ANSWER

This date: October 19, 2010
x/s Barry A. Brown ________________ Barry A. Brown SBOT NO. 03093000 Suite 1100, The Arena Tower 7322 Southwest Freeway Houston, Texas 77074 Tel: 713 981 3880 Fax: 713 981 3881 e-mail: tebear05@msn.com Attorney For: Plaintiffs

Attachments: 1. Business Record Affidavit 2. Demand & Posting 3. Verification

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