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» FROM THE BENCH Oregon Judge Rejects 'Split the Note' Theory A three-judge panel of the Oregon Court of Appeals affirmed a lower court ruling rejecting a borrower's use of the "split the note" theory to argue against a non-judicial foreclosure, Merscorp Holdings, parent company of Mortgage Electronic Registration Systems, Inc. (MERS) recently announced. In the case Hunt v. Aurora Loan Services, the basis of the plaintiff's complaint was that the note had been securitized and separated from the deed of trust and that a foreclosing party must be the owner or holder of the note, according to court documents. However, nowhere did the plaintiff argue he was not in default, and he admitted he owed the "proper owner" of the note. The plaintiff decided to stop making payments because he became "aware that in many instances the purported lender was not the lender at all, but instead an imposter or interloper," according to documents filed with the court. The plaintiff argued the defendants could not initiate a non-judicial foreclosure on his home because they were not holders of the note and could not produce it for the plaintiff. In the decision, Judge Stephen Tiktin determined the borrower was not able to prove the defendants violated Oregon law. "Critically, plaintiff has not alleged that the circumstances required by ORS 86.735 to nonjudicially foreclose a trust deed have not been met and plaintiff has not pointed to any provision of the non-judicial trust deed foreclosure statutes that requires the presentation of documents, including the note, to the debtor as a prerequisite of proceeding non-judicially," Tiktin wrote. In addition, the plaintiff didn't point to any person or entity who claimed to have the right to foreclose the trust deed instead, the panel noted. KNOW THIS Fannie Mae and Freddie Mac have increased the allowable timeline to foreclose on a home with a GSE-backed mortgage in Oregon to 390 days. Pennsylvania rank: 16 90+ Day Delinquency Rate Foreclosure Rate February 2013 3.0% Unemployment Rate 3.4% 8.1% year ago 3.0% 3.6% 7.6% year-over-year change 2.5% -6.4% 6.6% Top County Monroe CounTy 90+ Day Delinquency Rate February 2013 6.2% Foreclosure Rate 13.2% year ago 6.6% 12.3% year-over-year change -5.9% 7.3% Top Core-Based Statistical Area eAST STroudSBurg, PA 90+ Day Foreclosure Delinquency Rate Rate February 2013 6.2% 13.2% year ago 6.6% 12.3% year-over-year change -5.9% 7.3% note: The 90+ day delinquecy rate is the percentage of outstanding mortgage loans that are seriously delinquent. The foreclosure rate is the percentage of outstanding mortgage loans currently in foreclosure. State rank is based on the February 2013 foreclosure rate. All figures are rounded to the nearest decimal. The unemployment rate reflects preliminary February 2013 figures released by the Bureau of Labor Statistics. All other data courtesy of LPS Applied Analytics. FROM THE BENCH Change in Motion: A New Foreclosure Hurdle in Western Pennsylvania The Mortgage Foreclosure Diversion Program model has percolated into the U.S. Bankruptcy Court for the Western District of Pennsylvania. Enacted on October 1, 2012, the loss mitigation program (LMP) is available to debtors with delinquent mortgages. Debtors seek admission into the LMP by filing a request for loss mitigation notice no later than three days before the first meeting of creditors. Debtors must also file a certificate of service and indicate on the notice the adequate protection payments they will make during the loss mitigation period. Upon receipt of the notice, lenders have 14 days to object. If no objection is filed, the bankruptcy court is authorized to issue a loss mitigation order (LMO), which institutes a 90-day stay (an automatic stay on top of the automatic stay) for loss mitigation to occur. VISIT US ONLINE @ DSNEWS.COM If lenders file an objection, they must include specific grounds for why loss mitigation would be unsuccessful. Bankruptcy judges have discretion to schedule a hearing to determine if admission into the LMP is warranted. In fact, bankruptcy courts appear authorized to overrule lenders' objections sua sponte in the event the court finds the lenders' grounds unpersuasive. After issuance of the LMO, the following timelines go into effect: 1. Lenders must register on the loss mitigation Web portal within 14 days of the LMO order (registration is a one-time event) and make available a complete list of all of its loss mitigation requirements (known as the "creditor's package"). 2.Debtors must submit a complete creditor's package (not piecemeal) within 35 days of the LMO. 3.Lenders must acknowledge receipt of the creditor's package and provide contact information of designated contact agent(s) within 10 days of receipt. 4.Debtors must file a status report (containing a printout of the Web portal's account history page) within 60 days of the LMO, but only after receiving adequate input from lenders. 5. Lenders must provide a final report within 14 days prior to termination of the loss mitigation period regardless of whether an agreement has been reached. 6.The loss mitigation period expires 90 days after the date of the LMO, unless otherwise extended. Admission is available to virtually any debtors who have a mortgage securing residential real property. Bankruptcy judges will not consider motions for relief during the pendency of the loss mitigation period. Moreover, dates of confirmation hearings must also wait until expiration of the loss mitigation period. As of January 21, the Middle District of Pennsylvania has had preliminary discussions about instituting a similar program, while the Eastern District has no plans to explore one. This "From the Bench" article was contributed by Richard M. Squire of Richard M. Squire & Associates, LLC, headquartered in Jenkintown, Pennsylvania. KNOW THIS The median age of homes on the market in Philadelphia in March was 82 days, according to Realtor.com. 103

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