Eviction Delayed As Bank, Ms. Mills Agree To Negotiate A Way Forward
By: Brian Kehrl
Rhonda G. Mills may yet be able to keep her home.
After five years of negotiating through a mortgage foreclosure of her family property on Emma Oakley Mills Road, Ms. Mills’ effort to challenge her eviction in court took an unexpected turn on Monday morning, when an attorney for US Bank National Association took Ms. Mills up on an offer made several months back, to try to have the Mashpee Wampanoag Tribal Council Housing Department purchase the property on behalf of Ms. Mills and her family.
Ms. Mills agreed, and Falmouth District Court Judge Don Carpenter granted the two parties 60 days to work out a compromise. Before granting the request, however, Judge Carpenter asked a series of questions that indicated a level of skepticism about whether the foreclosure process had been followed properly.
The new negotiations may mean that Ms. Mills’ legal arguments about the validity of the foreclosure—questions that tie into the broader, national debate about whether banks and other businesses involved in mortgage lending and investment properly followed legal requirements when processing loans and foreclosures—may not be fully answered.
The hearing Monday was intended to consider a motion from US Bank, asking the judge to enforce the eviction without a full trial. Ms. Mills was seeking a jury trial at which she planned to challenge US Bank’s legal ownership of the property as a result of the presence of an alleged “robosigner” in a key mortgage assignment document. Ms. Mills asserted that the robosigner did not properly follow document processing requirements, like signing the papers in front of a notary public.
In court filings, US Bank argued that the documents were signed properly. The bank also submitted an affidavit from the official who signed the paper arguing that she had the proper authority to sign the mortgage assignment.
Marie McDonnell, a certified fraud examiner and forensic mortgage specialist with Truth In Lending Audit and Recovery Services in Orleans, who reviewed Ms. Mills’ documents at the request of the Enterprise, said last week that Ms. Mills eviction is ripe for a challenge. Her case is “precisely” the type of situation that state Attorney General Martha Coakley’s recent lawsuit against five large mortgage lenders and the servicing giant Mortgage Electronic Registration System, known as MERS, was meant to address, Ms. McDonnell said.
Ms. McDonnell pointed to the securitization of the mortgage loan, a process in which the loan was sold and resold several times and ended up in a trust of mortgage pass-through certificates, Lehman XS Trust Series 2007-4N, as evidence that the transactions involving the loan were not properly recorded in the Barnstable Registry of Deeds.
Investments in the trust were first distributed in 2007. An investment prospectus for the trust indicates that it was bought and sold at least twice before it ended up pooled into the trust.
Because the registered property was created under a ruling by the land court, all changes of ownership are required to be recorded at the registry of deeds. The sale of the loan into the trust, however, was not recorded at the registry.
The records on file at the registry indicate that the mortgage was originated in 2006 by MortgageIT, with MERS as the nominee. MERS then assigned the mortgage to OneWest Bank in 2009.
The foreclosure, which Ms. Mills did not challenge in court, was completed with an auction of the property in January 2011.
US Bank, acting as trustee for the XS trust, purchased the home for $217,500, well below the $376,000 value of the adjustable rate mortgage on the property.
Judge Carpenter on Monday questioned whether the mortgage documents are all in order. “I want to ask you,” the judge said to the bank attorney, “if all the ducks are lined up in a row here. Are you ready to go forward to trial?”
The attorney, Matthew R. Braucher, said the legal documents “speak for themselves.”
“I think it’s pretty clear,” he said. The mortgage servicer successfully pursued a foreclosure, the home was sold at auction, and eviction is the next step, he said.
“The bottom line is, when payments are not made, it results in foreclosure,” he said.
Ms. Mills, for her part, said after the hearing that she continued to make the approximately $1,500 monthly minimum payments she was required to make. But unless she could afford to pay about $3,000 per month, the principal was set to increase. She could not afford the larger amount, which is why she began to pursue a loan modification through an independent firm, which she said advised her to stop paying her mortgage. She said she only stopped paying for a few months.
Judge Carpenter asked if Mr. Braucher agreed with the judge’s interpretation that the chain of title could be contested and that the bank would have to come in and prove what it owned and when. “Someone has to come up with the original note,” he said.
Mr. Braucher said he does not think the bank would have to prove chain of title and possession of the original note. The judge said he disagrees with that reading of the law.
Judge Carpenter also inquired of Ms. Mills whether she had notified the attorney general of her concerns, which Ms. Mills said she had, earlier this year.
He suggested to Ms. Mills that she find a lawyer and ask the attorney general to become involved.
After the hearing, Mr. Braucher declined to comment on the case.
Ms. Mills said she is relieved at the development and she hopes that during the next two months she can work with the bank and the tribe to find an arrangement that works for all parties.
She said she asked the bank if they would explore a deal with the tribe several months ago, but was told that the eviction would proceed.
Yesterday morning, Ms. Mills said she received a call from a OneWest representative, asking her to agree to negotiate purchasing the property back. Ms. Mills said she asked for the representative to agreed to certain terms, like selling the house for no more than the auction price, but was told that the representative could not make such a pledge. Further, she said she was wary of signing paperwork to initiate a loan when she has doubts about the legal title.
“I’ve tried to work this out with them for four years,” she said. “I am not going to go backwards.”
A spokesman for the Minneapolis-based US Bank said the matter is being handled by the mortgage servicer OneWest, and referred all questions about Ms. Mills’ case to the California-based lender.
A spokesman for OneWest said privacy restrictions prevented him from responding to a series of questions submitted by the Enterprise. He did not respond to a request for comment on the latest developments by the Enterprise’s deadline yesterday evening.
Marie A. Stone, secretary of the Mashpee Wampanoag Tribal Council and a housing advocate, said the information that the bank wants to negotiate is “wonderful news.” The tribe may be able to purchase the home and lease it to Ms. Mills under a federal loan guarantee program known as Section 184, she said.
The Section 184 Indian Home Loan Guarantee Program, part of the federal Department of Housing and Urban Development’s Office of Native American Programs, guarantees to lenders that the loan will be repaid by the federal government if the borrower defaults.
Ms. Stone said the negotiations for this deal have not yet begun, but the tribal council has committed to using the program for five homes at first, and 15 after, to prevent tribe members from being evicted as a result of mortgage foreclosure.
“Our goal is to not lose one more tribal home to foreclosure, even if that means we assume the loan under Section 184,” Ms. Stone said.