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24 June 10

Frivolous Foreclosure Lawsuit Leads Brooklyn Judge to Order Sanctions Against Bank

A Brooklyn man being sued for foreclosure was led to a legal victory with the help of South Brooklyn Legal Services attorney Sara Manaugh. Not only did a judge find the suit frivolous, but he ordered $10,000 in sanctions against the bank for foreclosing on a property they didn’t even own.

Mr. G bought a home in Bedford-Stuyvesant in 2007 with the assistance of two loans from an organization known as “GE Money Bank.”

But within two years a foreclosure had been filed by a bank, U.S. Bank National Association, which claimed it had acquired the senior mortgage after the mortgage had been assigned first from GE Money Bank to a trust held by Deutsche Bank National Trust Company, and then from that trust to a different trust held by U.S. Bank.

SBLS attorneys dug up online records on a database maintained by Wells Fargo, the custodian of both trusts, which revealed that Mr. G.’s mortgage loan was not owned by U.S. Bank — it was still held in the original trust.

Judge Wayne P. Saitta of Kings County Supreme Court wrote, “It appears that the plaintiff never owned the debt which was the subject of the foreclosure action. Plaintiff has submitted no evidence that the note was ever transferred to it. ... Simple due diligence would have revealed that the plaintiff did not own the mortgage upon which it sought to foreclose.”

The judge threw out the foreclosure lawsuit against Mr. G and ordered that U.S. Bank pay $10,000 in sanctions for this “frivolous litigation.”

The judge wrote, “The court can only speculate in how many other cases plaintiffs with no interest in mortgages wrongfully foreclose on them and collect proceeds to which they are not entitled.”

(Foreclosure Prevention) | More SBLS Spotlights >