Howard v. Mortg. Elec. Registration Sys., Inc.

• Court: U.S. District Court — Northern District of Georgia
• Writing for the Court: WILLIAM S. DUFFEY
• Decision Date: 17 August 2012
• Docket Number: 1:10-cv-1630-WSD
• Citation: Howard v. Mortg. Elec. Registration Sys., Inc., 1:10-cv-1630-WSD (N.D. Ga. Aug 17, 2012)
• Parties: MATTHEW W. HOWARD, Plaintiff, v. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., GMAC MORTGAGE, LLC, E-TRADE FINANCIAL, and E-TRADE SAVINGS BANK, Defendants.

MATTHEW W. HOWARD, Plaintiff, v. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. GMAC MORTGAGE, LLC, E-TRADE FINANCIAL and E-TRADE SAVINGS BANK, Defendants.

1:10-cv-1630-WSD

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION

Date: August 17, 2012

OPINION AND ORDER

This matter is before the Court on Matthew W. Howard's ("Plaintiff" or "Howard") Motion for Reconsideration [39] of the Court's September 12, 2011, Order [37] granting summary judgment for Defendants Mortgage Electronic Registration Systems, Inc. ("MERS"), GMAC Mortgage, LLC ("GMAC"), E-Trade Financial and E-Trade Savings Bank (together, "E-Trade") (collectively, "Defendants").

I. BACKGROUND

This action arises from a foreclosure on real property following Plaintiff's default on the mortgage loan secured by the property. Plaintiff alleges claims forwrongful foreclosure and fraud against the entities that held and serviced Plaintiff's mortgage loan and security deed.

A. The Note, Security Instrument and Foreclosure

On January 19, 2005, Matthew Howard obtained a loan from Quicken Loans Inc. ("Quicken Loans") in the amount of $132,000.00 and executed a promissory note ("Note"), promising to repay the loan to "Lender." [31.13]. The Note defined "Lender" as Quicken Loans. Id. The Note also stated that Lender may transfer the Note, and Lender, or anyone who takes the Note by transfer and who is entitled to receive payments under this Note is called the "Note Holder." Id. The Note provides:

In addition to the protections given to the Note Holder under this Note, a Mortgage, Deed of Trust, or Security Deed (the "Security Instrument"), dated the same date as this Note, protects the Note Holder from possible losses that might result if I do not keep the promises that I make in this Note.

Id. at 4. At some point, Quicken Loans endorsed the Note to E-Trade Bank and E-Trade Bank thus became the Note Holder. Id. at 5.¹

On January 19, 2005, Howard also executed a Security Deed. [31.4]. The Security Deed and its accompanying Riders are called the "Security Instrument." The Security Instrument states that Howard is the "Borrower" and the "grantor,"and MERS is the grantee "solely as a nominee for Lender and Lender's successors and assigns." Id. The "Lender" is Quicken Loans. The Security Instrument provides:

TRANSFER OF RIGHTS IN THE PROPERTY. This Security Instrument secures to Lender: (i) the repayment of the Loan, and all renewals, extensions and modifications of the Note; and (ii) the performance of Borrower's covenants and agreements under this Security Instrument and the Note. For this purpose, Borrower does hereby grant and convey to MERS (solely as nominee for Lender and Lender's successors and assigns) and the successors and assigns of MERS, with power of sale, [the Property].

TO HAVE AND TO HOLD this property unto MERS (solely as nominee for Lender and Lender's successors and assigns) and to the successors and assigns of MERS . . . . Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender's successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument.

. . .

13. Joint and Several Liability; Co-signers; Successors and Assigns Bound. . . . The covenants and agreements of this Security Instrument shall bind (except as provided in Section 20) and benefit the successors and assigns of Lender.

. . .

20. Sale of Note; Change of Loan Servicer; Notice of Grievance. The Note or a partial interest in the Note (together with this SecurityInstrument) can be sold one or more times without prior notice to the Borrower.

. . .

22. Acceleration; Remedies. Lender shall give notice to Borrower prior to acceleration following Borrower's breach of any covenant or agreement in this Security Instrument . . . . If the default is not cured on or before the date specified in the notice, Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may invoke the power of sale granted by Borrower and any other remedies permitted by Applicable Law. Borrower appoints Lender the agent and attorney-in-fact for Borrower to exercise the power of sale.

. . .

If Lender invokes the power of sale, Lender shall give a copy of a notice of sale by public advertisement for the time and in the manner prescribed by Applicable Law. Lender, without further demand on Borrower, shall sell the Property at public auction to the highest bidder at the time and place and under the terms designated in the notice of sale . . . .

. . .

Lender shall convey to the purchaser indefeasible title to the Property, and Borrower hereby appoints Lender Borrower's agent and attorney-in-fact to make such conveyance.

Id. at 1-3, 11, 12, 14. By the terms of the Security Instrument, MERS (as nominee for Lender and Lender's successors and assigns) has the right to exercise any or all of the interests conveyed by Howard to MERS, including the right to foreclose on the Property.

At the time of foreclosure, E-Trade was the Note Holder, and the Note provides that the Security Instrument also protects the Note Holder. [31.13 at 4-5]. Thus, MERS held the Security Instrument, with the power of sale, as nominee for E-Trade, the assign of Quicken Loans.

In September 2008, Plaintiff defaulted on his loan obligations. [1.1 at 68; 31.12 at ¶ 7]. On June 5, 2009, McCurdy & Candler sent Plaintiff an Initial Communication Letter and Notice of Foreclosure Sale advising Plaintiff that he was in default and the Property would be sold at foreclosure on July 7, 2009. [1.1 at 78-79].

On July 30, 2009, McCurdy & Candler sent Plaintiff another Initial Communication Letter [30.5] and Notice of Foreclosure Sale [30.6], with a September 1, 2009, foreclosure date. On June 26, 2009, Plaintiff filed a lawsuit in state court, which was dismissed on January 13, 2010. Foreclosure proceedings were postponed while that case was pending.

On January 22, 2010, Plaintiff sent a Qualified Written Request to GMAC requesting information on GMAC "Account/Loan # 0354539633." [30.15]. On February 3, 2010, E-Trade replied to Plaintiff's letter with information about the account number he requested. [30.16]. E-Trade attached documents including acopy of the account's payment history evidencing Plaintiff's default, and a copy of the Note and Security Instrument. The letter also provided:

The current Master Servicer is: E-Trade Savings Bank. The Loan is currently owned by: E-Trade Savings Bank. However, the loan is currently being subservicer by E-Trade Financial and all legal inquiries should be directed to the subservicer.

. . . GMAC Mortgage has responded to the provisions it is required to as provided by law.

Id. On February 17, 2010, Plaintiff sent E-Trade a Second Qualified Written Request, requesting more of the same vague information. [30.17]. On March 3, 2010, E-Trade responded that it had sent Plaintiff the relevant requested information, and that GMAC had responded as required by law. [30.18].

On April 2, 2010, McCurdy & Candler sent Plaintiff another Initial Communication Letter [30.7] and Notice of Foreclosure Sale [30.9] advising Plaintiff that his loan, number 0354539633, was in default and foreclosure was scheduled for May 4, 2010. The Notice of Sale Under Power,² attached to the Notice of Foreclosure Sale and as published,³ provides:

Because of default in the payment of the indebtedness, secured by a Security Deed executed by Matthew W. Howard to [MERS] datedJanuary 19, 2005 in the amount of $132,000.00 . . . the undersigned, [MERS] pursuant to said deed and the note thereby secured, has declared the entire amount of said indebtedness due and payable and pursuant to the power of sale contained in said deed, will [sell the Property at foreclosure].

[31.8; 31.9 at 4]. On May 4, 2010, MERS sold the Property at foreclosure and executed the Foreclosure Deed, as attorney-in-fact for Plaintiff, in favor of GMAC. [30.11].

B. Procedural History

On April 22, 2010, Plaintiff filed this action in the Superior Court of Cherokee County, Georgia. In his initial Complaint, Plaintiff alleged that the Defendants lacked legal standing to foreclose on the Property because MERS did not hold both the Note and Security Deed. On May 6, 2010, two days after the Property was sold at a foreclosure sale, Plaintiff filed in state court a Motion to Set Aside Unlawful Foreclosure and Security Deed.

On May 26, 2010, Defendants removed the state court action to this Court on the basis of diversity jurisdiction. In June 2010, Plaintiff moved to enjoin eviction proceedings, to remand the action, and to amend his complaint.

On October 15, 2010, the Court denied Plaintiff's motions to set aside the foreclosure, for injunctive relief, to remand, and to amend his initial complaint. The Court expressly rejected Plaintiff's argument that MERS does not havestanding to initiate foreclosure proceedings. The Court found that "[t]he Security Deed in this case states: 'MERS (as nominee for Lender and Lender's successors and assigns) has the right to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property.'" [18 at 4]. The Court held: "MERS, as a nominee of a lender, lawfully initiated foreclosure proceedings against Plaintiff's property." Id.

On November 12, 2010, Plaintiff for the second time moved to amend his complaint to include, inter alia, more allegations that MERS lacked standing to foreclose on the Property. On January 21, 2011, the Court again informed Plaintiff that his claim that MERS lacked standing to foreclose on the Property was meritless, and that his only potentially...