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Can Lender-Creditor Continue to Fight Motion For Relief From Automatic Stay After They Sell Debt to 3rd Party? AND MERS?

San Diego, CA |

1) Motion: I filed Chapt. 11 Bankruptcy (B/K) and my main creditor filed a Motion for Relief from Automatic Stay, which I am fighting in b/k court. Now I learn this creditor has SOLD the debt so we have no relationship. Can this creditor still have standing to prosecute the motion?
2) MERS: In 2010 I discharged a certain debt, (a mortgage), in Ch. 7 B/K, however I now see that they are still listed as 'active' debts in the Mortgage Electronic Registration System. Any Ideas WHY?? Could it be that I only discharged the past due amounts on the mortgage, but since I still owe for the balance of property the mortgage generally is still an active outstanding debt

Attorney Answers 4

Posted

On the matter of standing, this is a technical question. You filed BK 11; your main creditor filed a Motion for relief of Stay, which you are now disputing in BK court. You have learned that your creditor has sold the debt, so you are arguing that there is no relationship (privity of contract?) between the parties. Based on your representations, I would have to agree with you. Your creditor has no longer standing because the creditor has sold the debt to another purchaser. The new purchaser has standing but nit the old. So, how come you are still fighting the old creditor?
Maybe it has something to do with the fact that you are being sued by the foreclosure trustee?

Sometimes these institutions serve as the trustee for several financial institutions and sometimes they are represented by the same law firm. Also, I can bet you that your original creditor introduced an assignment clause within the debt instrument, naming the old Trustee as the new trustee for the subsequent purchaser of the debt. Nevertheless, if the proper papers were not filed in a timely basis to allow you an opportunity to examine the validity of the documents presented, you may request the Court to allow you some time for an examination of the documents. Normally, you will find that the Debt instruments were assigned to MERS, but often the Deed is not filed with the local recorder of deeds or signed by the purchasers of the Debt. Most importantly, MERS does not take title to the property. MERS is just a recording office, more like a clearinghouse, and it is most definitely not an owner of any deed. I believe that if you continue doing discovery on them and pushing your argument, the Court may agree with you on the matter of standing. Also, research the latest opinion from the 9th district specifically on point on this issue. I believe that it was published about a month ago either in Oregon or Washington.

Your second question has been answered by my colleagues. If you want the house, you owe the debt. I wish you the best of luck. I hope I was able to explain a rather difficult subject and I commend you for taking on the big finance companies all by yourself. Let me know if I can be of further assistance.

I am licensed only in California. This information is good only in California and it is not to be taken as legal advise in any other type of situation.

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Posted

What is the opinion case number or parties name or a URL for the latest 9th circuit opinion you suggest? My creditor too doesn't have standing as this is a deed and note that has been sold and supersede and amended years ago. Can I just file a motion for discovery or I filed an appeal of a relief from stay order so would I request Discovery and decl. Relief in my Brief (that I have to learn and write in less than a week)?

Posted

(1) An attorney would know what to do in this situation. (2) An attorney would understand why MERS is not misreporting anything and how badly you're misconstruing what you've seen. So why don't you hire one?

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Ernest J. Lee

Ernest J. Lee

Posted

I have flagged this answer as "objectionable" because Mr. Oney is insulting and does not answer the question. Instead he only advises to hire an attorney, in an insulting manner. This forum is to ask questions for information, and then the asker, armed with additional information, can make a more knowledgeable decision on whether and, or when to hire counsel. Wow , I think the forum would be better off if Mr. Oney didn't answer questions he didn't like rather than answer them as he did mine.

Walter C Oney Jr

Walter C Oney Jr

Posted

What you may not know is that someone in California asked on this forum just a few months ago about filing a Chapter 11 case pro se and was strongly advised not to. That individual expressed the idea that he didn't need an attorney and didn't want to pay for one. Chapter 11 is no place even for a very experienced bankruptcy attorney unless he's handled many cases under other chapters and has at least understudied experienced Chapter 11 counsel on several cases. Hence, I don't think I was even slightly out of line to be curt.

Ernest J. Lee

Ernest J. Lee

Posted

Thank you for your response. It is understood. Sorry if I seemed overly sensitive. Actually here, I am a criminal defense attorney who is assisting a friend by asking their questions in this forum, which I consider a valuabe resource. In this case my friend, a formerly wealthy broker, can not afford an attorney due to their financial reverses. If I knew b/k law I would help, but I agree with you. If you do not know an area of law, especially the more difficult as you say Ch 11 is, you should not attempt it. Thanks again for your input.

Walter C Oney Jr

Walter C Oney Jr

Posted

A Chapter 11 case is a reorganization, in which the debtor proposes a plan that will make payments acceptable to his creditors. (In fact, a Chapter 11 debtor can't get a discharge if the plan simply liquidates his assets). It presupposes that there are sufficient assets, and sufficient cash flow, to make payments on claims that are acceptable to the claimholders. Legal and other professional fees in a reasonably simple Chapter 11 would start at $30,000 because they are so much work for everyone involved. Your friend may need a Chapter 7 liquidation but wouldn't be able to get a discharge because his prior Chapter 7 was too recent. He probably has debts that are too high for Chapter 13, but it's too soon to get a discharge in Chapter 13 either. It may be that the Bankruptcy Code simply won't provide him a remedy. But he shouldn't expect (and won't get) quality advice from anyone but an experienced local bankruptcy attorney.

Posted

A person that files two bankruptcy cases in two years (and one a Chapter 11 pro se!) to save a house is probably a person that's very unlikely to actually be able to afford that house. I'm sorry.

Of course the mortgage debt is still "active". Chapter 7 doesn't make mortgages disappear, it only limits the ability to the lender to enforce their note against you.

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Posted

How does it limit the lender to enforce the note? Do they have to have any prima facile evidence for a secured debt and claiming to own the note in ch 7 bk court? Especially when their many letters in the past say they are only servicer and don't have knowledge or access to whereabouts of subject note.? Yet months later they can write a motion full of lies saying they are the creditor and have the note. I'm runnin out of time like the sand is runnin out and I'm Dorothy with these servicers and pretender lenders being the flying monkeys. Any help in helping my pro se self get educated lickitty split would be more than appreciated

Posted

I am unsure what you are trying to do here. If you discharged them in chapter 7 then they can foreclose. I assume you then filed a Chapter 11 to reorganize after Chapter 7. If the lender transfers the note and it is a valid transfer then they likely have standing. I would certainly wonder if you have a lawyer if you don't you need one.

Arguing the standing issue can be a winner, but most of the time it is a losing issue. If the note is endorsed in blank then any holder can enforce the note. Almost all mortgages allow for the transfer of the note and mortgage as well as a servicing agreement that allows it to change with notice to the borrower. The big issue is whether you can reorganize and repay the mortgage standing may work for short time or not, but if you cannot file a feasible reorganization plan the case will still get dismissed.

The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of Illinois. Responses are answers to general legal questions and the receiver of such question should consult a local attorney for specific answers to questions.

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Posted

Where can I see what a note endorsed in blank looks like being that all fail to furnish one, even with a QWR. Any suggestions how to compel them to show it? Can I ask for that in my appeal to BAP for foreclosure mill attorneys bogus proposed order that included far more than the judge allowed. He only allowed a color able claim but never said they were a secured creditor. I'm ch 7 and it's still open case

Marc Gregory Wagman

Marc Gregory Wagman

Posted

If you are still in Chapter 7 you likely have no standing to argue the issue. The trustee has the right to liquidate assets for the benefit of creditors. The note will have an endorsement on it by the mortgage company (it will be a simple endorsement).

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