World Wide Financial Services fraudulent mortgage assignment results in sanctions
Daniel and Sheryl Sutter endured financial difficulties and sought relief from World Wide Financial Services, Inc., which loaned them $78,000.00. World Wide then forged a "mortgage instrument" on the Sutter's Lapeer home, which it assigned to U.S. National Bank with Saxon Mortgage Services, Inc., acting as the servicing company. The latter companies attempted to foreclose on the mortgage, however, a federal bankruptcy proceeding exposed the fraudulent mortgage and foreclosure was denied.
The latter companies then "assigned" the fraudulent mortgage to Ocwen Loan Servicing, LLC, and Ocwen purchased a homeowners insurance policy on the Sutters' home (apparently because the Sutters had either not purchased coverage required under the fraudulent "mortgage" or because they had not provided the servicer with proof of purchase. When the home suffered wind damage, the insurer issued a check for $16,000.00 to the Sutters, but delivered it to Ocwen. Ocwen refused to turn it over to the Sutters, claiming a mortgagee interest in the payment despite the federal court's having previously ruled the mortgage fraudulent and void.
The Sutters sued for conversion and defaulted Ocwen when it failed to timely answer the suit. Ocwen then objected and sought to set aside the default and a judgment that included statutory punitive fees and interest. The Court of Appeals ruled that Ocwen had not violated Michigan's conversion statute because it had not converted the insurance proceeds "to its own use," but that it was guilty of common law conversion, nevertheless. Therefore, the appellate judges overturned the statutory award of treble damages, but affirmed the award of the lower court in so far as it granted the insurance proceeds to the Sutters (less the premium paid by the "mortgage servicer."
So, the Sutters get the insurance check they were entitled to at the outset, but the corporation that attempted to use a fraudulent mortgage to its advantage owes nothing in the way of punitive damages or legal fees.