Posted in Foreclosure Defense, Legal News

In Re Simpson

Following is an excellent analysis of recent case law written by a gentleman named William A. Roper, Jr.  Mr. Roper posted this analysis on MSFraud.org.

http://ssgoldstar.websitetoolbox.com/post/show_single_post?pid=1268411365&postcount=1

The North Carolina Court of Appeals handed down a breakthrough evidentiary decision yesterday in the case In re Foreclosure by David A. Simpson:

In re Foreclosure by David A. Simpson, P.C., Substitute Trustee, No. COA10-361, 2011 N.C. App. LEXIS 836 (NC App. 2011).
http://appellate.nccourts.org/opinions/?c=2&pdf=MjAxMS8xMC0zNjEtMS5wZGY=

I think that this is probably the single most significant decision I have seen come out of North Carolina!
 
It turns primarily on evidentiary issues, but there are several other nuggets in the decision that should warm the hearts of those elsewhere.
 
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Bear in mind that North Carolina has a somewhat hybrid system of quasi-non-judicial foreclosure in which the trustee under a deed of trust has to file certain documents with the Clerk rather than in a Court.  The Clerk makes a determination on the narrrow issues prescribed by statute.
 
This differentiates North Carolina from other non-judicial foreclosure states where no court intervention is necessary to effect foreclosure, as well as the judicial foreclosure states where a foreclosure is based upon judicial action.
 
Here are a few excerpts from the decision (Forum participants will no doubt identify other nuggets):

“Respondents note the third and final assignment on the Allonge was made to “Deutsche Bank Trust Company Americas as Trustee,” which is not the party asserting a security interest in Respondents’ property; this action was brought by Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6, the entity the trial court found to be the owner and holder of the Note.
 
. . .
 
Whether Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6 is the owner and holder of the Note and Deed of Trust is a legal conclusion that is to be determined by a court of law on the basis of factual allegations.  As such, we disregard Stephan’s conclusion as to the identity of the “owner and holder” of the instruments.  See Lemon v. Combs, 164 N.C. App. 615, 622, 596 S.E.2d 344, 349 (2004) (“‘Statements in affidavits as to opinion, belief, or conclusions of law are of no effect.'” (quoting 3 Am. Jur. 2d, Affidavits § 13 (2002))); see also Speedway Motorsports Int’l Ltd. v. Bronwen Energy Trading, Ltd.,     N.C. App.    ,     n.2,     S.E.2d    ,     n.2, slip op. at 12 n.2, No. 09-1451 (Feb. 15, 2011) (rejecting a party’s contention that this Court must accept as true all statements found in the affidavits in the record, stating, “our standard of review does not require that we accept a witness’ characterization of what ‘the facts’ mean”).  While Stephan referred to a Pooling and Servicing Agreement (“PSA”) that allegedly governs the securitization of the Note to Deutsche Bank Trust Company Americas as Trustee, the PSA was not included in the record and will not be considered by this Court. See N.C. R. App. P. 9(a) (2011) (“In appeals from the trial division of the General Court of Justice, review is solely upon the record on appeal, the verbatim transcript of proceedings, if one is designated, and any other items filed pursuant to this Rule 9.”)  The record is void of any evidence the Note was assigned and securitized to a trust.
 
We also note that Stephan alleged no facts as to who possesses Mr. Gilbert’s note, other than his averment that the Note was “delivered” to the original lender, First National Bank of Arizona.  Stephan referred to a statement made by counsel for GMAC Mortgage that the original Note “would be brought to the foreclosure hearing,” but he did not provide any facts from which the trial court could determine who has possession of the Note.  As demonstrated by Connolly, discussed above, production of a note at trial is not conclusive evidence of possession.  63 N.C. App. at 551, 306 S.E.2d at 125.  Thus, we conclude Stephan’s affidavit is not competent evidence to support the trial court’s conclusion that Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6 is the owner and holder of Mr. Gilbert’s note.
 
Residential Funding Corporation sold, assigned and transferred all of its right, title and interest in and to the Note and Deed of Trust to Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6.  This is reflected on the Allonge to the Note, a true and accurate copy of which is attached and incorporated hereto as EXHIBIT 5.  (Emphasis added.)  This statement is factually incorrect; the Allonge in the record contains no indorsement to Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6.  Zeitz further stated that “Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6 is the current owner and holder of the Note and Deed of Trust.”  This statement is a legal conclusion postured as an allegation of fact and as such will not be considered by this Court.  See Lemon, 164 N.C. App. at 622, 596 S.E.2d at 349.
 
Unlike Jeffrey Stephan, Zeitz stated that Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6 “has possession of the original Note and Deed of Trust.”  We note, however, that “[w]hen an affiant makes a conclusion of fact, it must appear that the affiant had an opportunity to observe and did observe matters about which he or she testifies.”  Lemon, 164 N.C. App. at 622, 596 S.E.2d at 348-49 (quoting 3 Am. Jur. 2d Affidavits § 13) (internal quotation marks omitted).  Moreover,[t]he personal knowledge of facts asserted in an affidavit is not presumed from a mere positive averment of facts but rather the court should be shown how the affiant knew or could have known such facts and if there is no evidence from which an inference of personal knowledge can be drawn, then it is presumed that such does not exist.  Id. at 622-23, 596 S.E.2d at 349 (quoting 3 Am. Jur. 2d Affidavits § 14, cited with approval in Currituck Associates Residential P’ship v. Hollowell, 170 N.C. App. 399, 403-04, 612 S.E.2d 386, 389 (2005)).  Thus, while Zeitz concluded as fact that Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6 has possession of the Note, his affidavit provides no basis upon which we can conclude he had personal knowledge of this alleged fact.  Because of these deficiencies, we conclude that neither the affidavit of Jeffrey Stephan nor the affidavit of Scott Zeitz is competent evidence to support the trial court’s finding that Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6 is the owner and holder of Mr. Gilbert’s note.”
 
In re Foreclosure by David A. Simpson, P.C., Substitute Trustee, No. COA10-361, 2011 N.C. App. LEXIS 836 (NC App. 2011).

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It should probably be noted that indorsement or assignment in favor of the trustee WITHOUT SPECIFYING THE FULL NAME OF THE TRUST HAS BEEN A COMMON GAMBIT TO CONCEAL THE IDENTITY OF THE TRUST!

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