Tuesday, April 29, 2008

bankruptcy - sanctions - Rule 9011 - misrepresentation - ownership of note

In re Nosek - Bankr. D. Mass. - April 25, 2008

https://ecf.mab.uscourts.gov/cgi-bin/op.pl?jbr - Nosek decision 02-46025

or

http://online.wsj.com/public/resources/documents/LB_Nosek-Decision.pdf?mod=WSJBlog

In this individual bankruptcy case, the court sanctioned Ameriquest ($250,000), Wells Fargo ($250,000) and various attorneys ($25,000) and a firm ($100,000) under Bankruptcy Rule 9011 http://www.law.cornell.edu/rules/frbp/rules.htm#Rule9011 (Signing of Papers; Representations to the Court; Sanctions; Verification and Copies of Papers) for misrepresentations about the ownership of a note and mortgage.

holder/standing - The court expressed itself in the strongest language, e.g. - "As this Court has noted on more than one occasion, those parties who do not hold the note or mortgage and who do not service the mortgage do not have standing to pursue motions for relief or other actions arising from the mortgage obligation....The Court has had to expend time and resources, as have debtors already burdened in their attempts to pay their mortgages, because of the carelessness of those in the residential mortgage industry and the bombast this Court and others have encountered when calling them on their shortcomings."

intent - The court rejected the claim of lack of bad intent on the part of the attorneys, firms and creditors - "Virtually all of parties argue that there was no intent to mislead the Court. Because the standard to be applied is an objective one, the Court may quickly dispatch this argument. Intent is irrelevant. The argument that the assignment of the note and mortgage was a matter of public record and therefore the Debtor knew or should have known of Norwest’s identity is relevant but disingenuous, indeed even arrogant, since many of these same parties asserting this position allege they had no way of knowing about the assignment. They seek to bind the Debtor to one standard and themselves to a much lower one. Moreover the attorneys and law firms’ argument that notes and mortgages frequently change hands multiple times, often with written documentation executed later, which they offer as explanation as to why its reasonable for them to rely on the representations of their clients should provide little shelter when they insist that the Debtor should have known better than to take their pleadings literally. This Court will not countenance creditors and creditors’s attorneys holding themselves to a different and clearly lower standard than what they expect of the Debtor. It will not tolerate a lender’s or servicer’s disregard for the rules that govern litigation, including contested matters, in the federal courts. It is the creditor’s responsibility to keep a borrower and the Court informed as to who owns the note and mortgage and is servicing the loan, not the borrower’s or the Court’s responsibility to ferret out the truth." (emphasis added)

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