Mortgage-Backed Securities, Chain of Title, and Foreclosure Hawaii Class Action

Plaintiffs Clyde and Michelle Igarashi claim that their home was illegally foreclosed on by parties who did not own their mortgage. The central allegations in this class action involve a long list of defendants and the ways that the turning of mortgages into mortgage-backed securities (MBSs) or “trusts” has led to a clouding of title and improper foreclosures in Hawaii.

The class for this action is all mortgagors in Hawaii whose mortgages are or were publicly recorded in the name of MERS, regardless of whether there is a foreclosure suit against the property.

The pro se complaint makes complicated allegations which can only be roughly summarized.

In 2006, the Igarashis bought a property with a mortgage from IndyMac. They executed a promissory note in favor of IndyMac secured by a deed of trust. In 2013, Ocwen acquired servicing rights from IndyMac. IndyMac went bankrupt and no longer exists.

The mortgage was folded into a group of mortgages or MBS, officially named Harborview Mortgage Loan Trust 2006-14. The trust allegedly was a real estate mortgage investment conduit (REMIC). REMICs don’t own the mortgages; it holds them for the investors. In exchange, it pays no taxes. 

Under the rules for REMICs, the trustee for the trust had to have the original promissory notes and assignments of the mortgages. Also, the mortgages had to be recorded in the investors’ names when the trust “closed.” Nothing was supposed to be added after that date. However, the complaint says that the trust never obtained the promissory notes and the mortgages were never properly recorded. 

Deutsche Bank was the trustee for the trust. In 2015, the Igarashis got a letter from Deutsche Bank. That letter named Ocwen as the lender; the complaint says this is false. 

According to the complaint, however, Ocwen had the promissory note until 2014. This would mean that the REMIC/trust did not have the Igarashis’ note and mortgage before it closed.  

In April 2016, the Igarashis had to pay more than $42,000 to bring their note current. A few days later, they paid more than $43,000. On June 6, they received another foreclosure complaint from Deutsche Bank, but it was eventually dropped.

In June 2017, the received another foreclosure complaint. This one said the deed of trust was held by the Mortgage Electronic Registration Systems, Inc. (MERS). The complaint says that this is false. An assignment of deed was attached to the complaint that showed a transfer from IndyMac to Deutsche Bank after IndyMac had gone bankrupt, and the assignment was signed not by an employee of IndyMac but an employee of OneWest Bank. 

The complaint alleges breach of contract, fraud, and violations of Hawaii laws, among other things.

Article Type: Lawsuit
Topic: Consumer
Tags: Chain of Title, Foreclosure, Mortgage-Related Unfair Practices, Your Bank