2011 Amherst Bowl

Years ago I put together a father son Thanksgiving football game hoping to fill those empty morning hours and hang out with my son.

I succeeded beyond my wildest dreams.

Celebrating its 8th year, the tournament, christened "The Amherst Bowl", has swollen to 127 players spanning 6 football fields and 12 teams playing 5 continuous football games in authentic AFC or NFC team jerseys.

The trash talk begins on Labor Day and echoes through our Township’s lunchrooms and playing fields with kids wearing prior years’ jerseys like badges of glory.

During Thanksgiving’s wet early morning hours, we map out and line the fields and set up tables overflowing cakes, hot chocolate and coffee.

The horde shows up at around 8:00 a.m. eager to learn the team to which to they’ve been assigned, whom their teammates will be, and how gloriously muddy the fields are.

Shirts are distributed, rules are explained, and at 9:00 a.m. the carnage begins.

During the ensuing rigidly timed five games, fathers put their middle-aged bodies at risk, re-live their youth and play football with their sons.

Throughout the morning used soccer gear is collected by "Heads Up Soccer" which transports and distributes it to impoverished third world youth.

Additionally, monies raised are donated to "Katie at the Bat" http://www.katieatthebatteam.org/ (improving inner-city youths’ lives through athletics, literacy, nutrition and health, and the arts), "Adam Spandorfer Memorial Fund" http://www.adamsfield.org/ (raising monies for Variety Club Camp at which children with disabilities can play baseball), and Hope with Heart http://hopewithheart.com/ (providing a summer camp and building a community for children with moderate to severe heart problems).

Although, at the Tournament’s end, some need help getting off of the field, that evening’s Thanksgiving tables are abuzz with boasts of heroic plays, grudges revisited, and glorious victories.

Until next year, when we do it bigger and better.

Regulator’s Burdensome Foreclosure Abuse Investigation Resolution “Proposal”

To resolve ongoing foreclosure abuse investigations, federal regulators and 50 state attorneys general recently proposed settlement terms to the 5 largest mortgage servicers ("Proposal").

The Proposal requires modification eligibility based on valuation formulas, bars simultaneous foreclosing and modifying of a residential mortgage, requires independent “modification denial” reviews, and sets forth requirements for foreclosure affidavits and internal policies to ensure settlement compliance.

The Proposal also creates significant oversight authority in the Consumer Financial Protection Bureau ("Bureau") including enforcing compliance with the Proposal’s terms, receiving information regarding servicers' loan modification policies and activities, and providing input into each servicers' Proposal compliance procedures.

Expands Modification Options and Independent Review of Modification Denials

Loss mitigation programs presently are voluntary either through independent agreements or federal initiatives like the Home Affordability Modification Program ("HAMP").

The Proposal requires servicers to offer some form of loss mitigation based on loan's "net present value" ("NPV") as defined by servicer and used in creating a “modification determination standard” of whether modification will lead to a greater NPV than foreclosure.

Further, even where not mandated by NPV or HAMP, servicers must consider loan modifications including reducing “principal” in "appropriate circumstances to provide for sustainable modifications”, offering "performance-based reductions" in lieu of principal forbearance, and forgiving 1/3 of forborne amount for borrowers complying with modification terms over a 3 year period.

The proposal also requires independent review of denied modifications through an ombudsman reviewing servicers’ files and basis for modification denial.

The Bureau will oversee loan modifications and independent review process including reviewing servicers’ modification files and NPV formula.

Bar on Dual Tracking

The Proposal eliminates "dual tracking", i.e., simultaneously foreclosing upon, and attempting to modify, a residential mortgage.
The Proposal also halts initiating a foreclosure - - or filing a motion for relief from, objecting to Chapter 13 plan confirmation in, or moving to dismiss a bankruptcy case - - while a good faith modification evaluation proceeds or restarting foreclosure activity before applicant receives a “written loss mitigation denial notice”.

This dual tracking prohibition and loan modification requirement imposes duties on servicers including providing adequate staffing and systems for tracking documents, a "single point of contact" including "email address and direct toll-free telephone number with a voicemail box”, a “designated employee” responsible for handling all loss mitigation communications, and “electronic documentation” of every foreclosure, loan modification, bankruptcy, or other servicing file action including all communications with the borrower.

Servicers must cease all collection efforts while borrowers apply for modification or make timely trial modification payments and all “judicial foreclosure state” servicers must submit an affidavit detailing their loss mitigation efforts and the results.

Enhanced Foreclosure Documentation Required

In response to "robo-signing" allegations, the Proposal increases foreclosure documentation requirements.

Affidavits must include a detailed description of affiant's basis of personal knowledge and employers must implement "standards for qualifications, training, and supervision" which, along with training materials, videotaped copies of standard training sessions, and related operational manuals shall be made available to both the attorneys general and the Bureau.

The Proposal requires servicers to conduct independent audits regarding the accuracy of their financial systems’ “mortgage information”, audit the accuracy of the information contained in foreclosure affidavits, and provide audits results to the attorneys general and Bureau.

Bureau’s Compliance, Monitoring, and Enforcement Authority

The Bureau will monitor servicers' compliance efforts and enforcement of the agreement.

The Proposal provides that servicers must adopt "enhanced" corporate governance procedures to monitor agreement compliance and provide the attorneys general and Bureau with "regular state-specific data reports” on agreement compliance with loan modification efforts and “remedial actions" including foreclosure actions court orders.

Additionally, the attorneys general and Bureau may select, and receive regular reports from, independent third parties monitoring servicers' agreement compliance and have input on servicers' procedures for resolving borrower “noncompliance with agreement” complaints.

Further, because the Proposal states that material agreement violation constitutes an “unfair and deceptive trade practice” and “duty of good faith and fair dealing” breach, the Bureau could enforce agreements through Dodd-Frank’s “prohibiting unfair and deceptive trade practices” authority.

New Jersey Courts Require Original Note and Endorsements in Mortgage Lending Proceedings

New Jersey courts keep putting the screws to mortgage lenders in bankruptcies and foreclosures.

The recent In re Kemp, 440 B.R. 624 (Bkrtcy D.N.J. 2010) and Bank of New York v. Raftogianis, 10 A.3d 236 (N.J. Super. Ch. 2010) opinions refused to let a “securitized” mortgage proof of claim or foreclosure proceed without demonstrable possession of the note at “filing” or satisfying New Jersey’s Uniform Commercial Code (“UCC”) requirements.

In re Kemp involved a Countrywide Home Loans securitized mortgage loan, i.e., pooled with other mortgages into a trust consisting of mortgage loans and proceeds, that was sold to the Bank of New York as trustee. Although the pooling agreement stated that the note would be transferred with an appropriate endorsement, neither the transfer nor endorsement occurred.

After borrower filed for Chapter 13 bankruptcy, Countrywide filed a proof of claim acting as Bank of New York’s servicer but did not locate the note until trial and the endorsement, via execution of an “allonge” that is supposed to be affixed to the note, did not occur until several weeks before trial.

The In re Kemp court disallowed the proof of claim ruling that the note could not be enforced because UCC-required possession and endorsement were lacking and, while reflecting ownership, the recorded mortgage assignment did not transfer enforcement rights because the note memorializing the underlying debt was not transferred or endorsed to the Bank of New York when the mortgage was assigned.

Similarly, Bank of New York v. Raftogianis also involved a securitized mortgage loan winding up in the Bank of New York as trustee’s hands.

After the borrower defaulted, the bank filed the foreclosure and moved for summary judgment, but did not present the original note until oral argument and arguing that New Jersey Rule of Court Rule 4:34-3 allowed a case to continue by the original party following a transfer of interest.

In denying summary judgment, the Raftogianis Court held that Rule 4:34-3 did not apply in actions involving negotiable instruments like mortgage notes where plaintiffs should be able to establish possession of the note at the complaint’s filing or face dismissal.

After holding that the bank failed to prove it had the original note at the case’s filing and refusing a presumption of “possession at filing” based on bank’s ability to produce the note at trial, the Bank of New York v. Raftogianis court dismissed the foreclosure without prejudice specifying that the re-filed complaint must contain a certification confirming possession of the original note as of re-filing date and stating note’s physical location and name of entity in possession.

Both opinions reflect the increasing level of scrutiny to which mortgage lender are being subjected in New Jersey proceedings and the decreasing level playing field in which banks must defend their interests.