Cocroft v. HSBC Bank USA, N.A. ex rel. Deutsche ALT-A Mortgage Loan Trust Series 2007-OA3
796 F.3d 680
7th Cir.2015Background
- Cocrofts refinanced in 2007, with the loan pooled into a mortgage loan trust where MERS acted as Countrywide’s nominee and Bank of America became successor; BAC Home Loans Servicing managed the loan servicing during the relevant period; HSBC Bank USA, as trustee, held the trust’s title interests.
- The note and mortgage were pooled under a PSA setting HSBC Bank as trustee and establishing May 1, 2007 as the trust’s loan-acceptance cutoff and May 31, 2007 as the closing date; MERS assigned its interest to HSBC Bank in 2009.
- The Cocrofts made most payments through early 2008; after July 2008 their payments were dishonored, and Countrywide notified them of delinquency in 2008.
- Countrywide secured the property’s locks, secured and winterized the home in August 2008; the Cocrofts alleged misrepresentations in May–July 2009 and sent what they termed affidavits exercising rescission rights.
- Foreclosure proceedings were filed by HSBC Bank in January 2010; the Cocrofts filed a federal complaint in June 2010 asserting multiple claims, most of which were dismissed or resolved against them at summary judgment.
- The district court addressed the Jenkins affidavit, the ICFA claim, a fraudulent possession theory, and a quiet-title theory related to the trust transfer; the court granted summary judgment for the defendants on all remaining claims, which are affirmed on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of Jenkins affidavit and testimony | Cocrofts argued Jenkins’s statements lacked personal knowledge and conflicted with deposition. | Bank of America maintained Jenkins’s testimony met Rule 56 personal-knowledge requirements. | District court did not abuse its discretion; Jenkins’s affidavit was proper personal-knowledge testimony. |
| ICFA claim viability | HSBC’s November 23 letter deceived the Cocrofts and caused injury. | No cognizable injury shown; deception, if any, did not injure Cocrofts. | Summary judgment upheld; no injury shown by Cocrofts. |
| Applicability of Illinois fraudulent possession statute | Bank of America/BACHLS violated 735 ILCS 5/15-1701(b)(1) through post-entry conduct. | Statute governs possession during foreclosure and does not apply pre-foreclosure. | Statute does not apply pre-foreclosure; claim fails. |
| Quiet title standing and trust transfer validity | Transfer to trust after closing violated PSA; transfer void ab initio; HSBC lacked title. | Transfer at most voidable; beneficiaries can ratify; Cocrofts lack standing as non-beneficiary third parties. | Transfer only voidable; Cocrofts lack standing; quiet-title claim fails. |
Key Cases Cited
- Balderston v. Fairbanks Morse Engine Div. of Coltec Indus., 328 F.3d 309 (7th Cir. 2003) (abuse-of-discretion standard for striking affidavits)
- Thanongsinh v. Bd. of Educ., 462 F.3d 762 (7th Cir. 2006) (custodian may testify about recordkeeping practices; affidavits may rely on business records)
- Woods v. City of Chicago, 234 F.3d 979 (7th Cir. 2000) (reliability and timing of business records)
- Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795 (Sup. Ct. 1999) (contradictory affidavits may create issues of fact if not properly explained)
- Mooney v. Madden, 193 A.D.2d 933 (N.Y. App. Div. 1993) (NY trust beneficiary ratification of trustee acts; voidable transfers)
- Wells Fargo Bank, N.A. v. Erobobo, 127 A.D.3d 1176 (N.Y. App. Div. 2015) (non-beneficiary lacks standing to challenge PSA-compliance)