Financial Services Law Developments: 11/14/10

Wednesday, November 17, 2010

FYI: DC AG Issues Q&A Regarding Opinion Letter on DC Nonjudicial Foreclosures

The DC Attorney General's Office issued the attached "Question & Answer" Guide to further explain the October 27, 2010 Statement of Enforcement Intent Regarding Deceptive Foreclosure Sale Notices, discussed in our prior update below.

Among other things, the attached Q&A explains the expected procedure for recording the interest of the foreclosing noteholder, including the recording of an acknowledged copy of the note with its endorsements prior to, or attached to, the notice of foreclosure sale.

Notes indorsed in blank are acceptable. The accompanying affidavit need only indicate that the note is a true copy of the original, and identify the location of the original.

The Q&A also provides a recommended procedure for enforcing lost notes.

Let me know if you have any questions. Thanks.

Ralph T. Wutscher

Kahrl Wutscher LLP

The Loop Center Building

105 W. Madison Street, Suite 2100
Chicago, Illinois 60602
Direct: (312) 551-9320

Fax: (866) 581-9302
Mobile: (312) 493-0874

Email: RWutscher@kw-llp.com

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From: Ralph Wutscher [mailto:rwutscher@kw-llp.com]
Sent: Thursday, November 04, 2010 7:39 AM
To: Ralph Wutscher
Cc: socaloffice@kw-llp.com; dcoffice@kw-llp.com; Chicago Office
Subject: FYI: DC AG Issues Opinion Letter Affecting MERS, DC Nonjudicial Foreclosures

Washington, D.C. Attorney General Peter Nickles issued an opinion letter asserting that certain notices used to commence foreclosures in DC may supposedly mislead homeowners and allegedly violate DC's consumer protection law. According to the DC AG, "a foreclosure may not be commenced against a DC homeowner unless the security interest of the current noteholder is properly supported by public filings with the District's Recorder of Deeds."

A copy of the opinion letter is available at:

http://newsroom.dc.gov/show.aspx?agency=occ&section=2&release=20673&year=2010&file=file.aspx%2frelease%2f20673%2fforeclosure%2520statement.pdf

According to the DC AG, "[a] noteholder's security interest in a DC home should normally be reflected in the public land records maintained by the District's Recorder of Deeds. Under District law, in contrast to the laws of many states, each deed or other document transferring a mortgage interest must be recorded with the Recorder of Deeds within 30 days of execution. This requirement is not satisfied by private tracking of mortgage interests through the Mortgage Electronic Registration Systems (MERS)."

As you may recall, DC has a non-judicial foreclosure process that begins with a Notice of Foreclosure on a form prescribed by the Recorder of Deeds. The form requires identification of a "Holder of the Note" and a "Security Instrument recorded in the land records of the District of Columbia."

According to the DC AG, "[t]he homeowner who receives such a notice is entitled to presume that the recordation of the security interest complies with District law, and that each intermediate transfer of the security interest between the original maker of the note and the current holder of the note is documented in the public record. ...When a foreclosure sale notice misrepresents to a homeowner that the foreclosing noteholder has a recorded security interest, the homeowner may fail to seek legal help in determining whether there may be a good basis for challenging the foreclosure in court. Misrepresentations of material facts, when made to homeowners or other consumers, violate the District's Consumer Protection Procedures Act, which is enforced by the attorney general."

The enforcement statement invites "homeowners or their advocates" to inform the Office of the Attorney General (OAG) if foreclosures "continue to be commenced or pursued with deceptive foreclosure sale notices" in order that the Office may consider bringing enforcement actions to stop foreclosure proceedings and seek restitution for consumers.

MERS issued a press release response, which is available at:

http://www.mersinc.org/news/details.aspx?id=250

Let me know if you have any questions. Thanks.

Ralph T. Wutscher

Kahrl Wutscher LLP

The Loop Center Building

105 W. Madison Street, Suite 2100
Chicago, Illinois 60602
Direct: (312) 551-9320

Fax: (866) 581-9302
Mobile: (312) 493-0874

RWutscher@kw-llp.com

http://www.kw-llp.com

Our updates are available on the internet, in searchable format, at: http://updates.kw-llp.com

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The Editor's Bio

Ralph T. Wutscher
Maurice Wutscher LLP
20 N. Clark Street, 33rd Floor
Chicago, Illinois 60602
Direct: (312) 493-0874
RWutscher@MauriceWutscher.com
https://www.MauriceWutscher.com/

Ralph Wutscher's practice focuses primarily on representing depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, distressed asset buyers and sellers, loss mitigation companies, automobile and other personal property secured lenders and finance companies, credit card and other unsecured lenders, and other consumer financial services providers. He represents the consumer lending industry as a litigator, and as regulatory compliance counsel.

Ralph has substantial experience in defending private consumer finance lawsuits, including cases ranging from large interstate putative class actions to localized single-asset cases, as well as in responding to regulatory investigations and other governmental proceedings. His litigation successes include not only victories at the trial court level, but also on appeal, and in various jurisdictions. He has successfully defended numerous putative class actions asserting violations of a wide range of federal and state consumer protection statutes. He is frequently consulted to assist other law firms in developing or improving litigation strategies in cases filed around the country.

Ralph also has substantial experience in counseling clients regarding their compliance with federal laws, and with state and local laws primarily of the Midwestern United States. For example, he regularly provides assistance in connection with portfolio or program audits, consumer lending disclosure issues, the design and implementation of marketing and advertising campaigns, licensing and reporting issues, compliance with usury laws and other limitations on pricing, compliance with state and local “predatory lending” laws, drafting or obtaining opinion letters on a single- or multi-state basis, interstate branching and loan production office licensing, evaluations and modifications of new or existing products and procedures, debt collection and servicing practices, proper methods of responding to consumer inquiries and furnishing consumer information, as well as proposed or existing arrangements with settlement service providers and other vendors, and the implementation of procedural or other operational changes following developments in the law.

Ralph is a member of the Governing Committee of the Conference on Consumer Finance Law. He is also the immediate past Chair of the Preemption and Federalism Subcommittee for the ABA's Consumer Financial Services Committee. He served on the Law Committee for the former National Home Equity Mortgage Association, and completed two terms as Co-Chair of the Consumer Credit Committee of the Chicago Bar Association.

Ralph received his Juris Doctor from the University of Illinois College of Law, and his undergraduate degree from the University of California at Los Angeles (UCLA). He is a member of the national Mortgage Bankers Association, the American Bankers Association, the Conference on Consumer Finance Law, DBA International, the ACA International Members Attorney Program, as well as the American and Chicago Bar Associations.

Ralph is admitted to practice in Illinois, as well as in the United States Court of Appeals for the Seventh Circuit, the United States District Courts for the Northern and Southern Districts of Illinois, and the United States District Court for the Eastern District of Wisconsin, and has been admitted pro hac vice in various jurisdictions around the country.