Ofor v. Ocwen Loan Servicing, LLC

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 10-2974
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Vincent Ofor, *
*
Plaintiff - Appellant, *
*
v. *
*
Ocwen Loan Servicing, LLC; Aames *
Funding corporation, d/b/a Aames * Appeal from the United States
Home Loan, * District Court for the
* District of Minnesota.
Defendants, *
*
U.S. Bank, N.A., as Trustee for the *
Registered Holders of MASTR Asset *
Backed Securities Trust. *
*
Defendant - Appellee. *
___________

Submitted: March 17, 2011
Filed: August 12, 2011
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Before SMITH, BRIGHT, and SHEPHERD, Circuit Judges.
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SMITH, Circuit Judge.

Vincent Ofor filed suit against, inter alia, U.S. Bank, N.A. ("U.S. Bank")
seeking to invalidate the foreclosure and sale of his home. Ofor alleged that (1) the
mortgage that the lender relied upon in foreclosing on his home was defective and
therefore could not provide a valid basis for foreclosure under Minnesota law and (2)
the lender violated the Truth in Lending Act (TILA), 15 U.S.C. § 1601, et seq., by
failing to provide required notice to Ofor of his ability to cancel the transaction and
by refusing to cancel the mortgage when Ofor exercised his right to rescind the
mortgage on those grounds. Following a bench trial, the district court1 dismissed
Ofor's claims with prejudice. Ofor now appeals that dismissal, and we affirm.

I. Background
In 2005, Ofor decided to refinance the two existing mortgages on his home in
New Brighton, Minnesota. He met with Ken Lindsay, a mortgage broker with
Mortgage One, to discuss refinancing options.2 At that time, Ofor and his then-wife,
Lisa Ofor, owed more than $218,000 on the original two mortgages on their home.
They planned to pay off consumer loans, student loans, and miscellaneous judgments
with the proceeds of the refinanced mortgage; these expenses amounted to more than
$24,000. Additionally, they wanted cash back from the transaction, which they
ultimately received in the amount of $18,643.04.

After meeting with Lindsay, Ofor attempted to obtain traditional financing from
various lenders, but he could not qualify because of his poor credit and the low
appraisal value of his home. He then hired Lindsay to obtain refinancing, which
Lindsay did through Aames Funding Corporation, d/b/a/ Aames Home Loan
("Aames"). The refinancing transaction involved two different loans—a first mortgage
for $220,000 and a second mortgage for $55,000. The $55,000 loan was a balloon
loan, requiring minimal monthly payments for the first 15 years and a single balloon

1
The Honorable Paul A. Magnuson, United States District Judge for the District
of Minnesota.
2
"Mortgage One is no longer a viable entity and is not a party to this lawsuit,
and Mr. Lindsay has apparently left Minnesota and did not testify either by deposition
or at trial." Ofor v. Ocwen Loan Servicing, LLC, Civil No. 09-1402 (PAM-JJG), 2010
WL 2133013, at *1 (D. Minn. May 27, 2010).

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payment of more than $47,000 in 2020. The monthly payment for the two loans was
$2,200 per month.

The closing was scheduled for October 24, 2005. But Ofor left Minnesota in
early October 2005 to take a temporary job in New York. To facilitate the closing in
his absence, Ofor agreed to give his wife a power of attorney to act on his behalf and
sign any documents necessary for closing. Ofor testified that he intended for his wife
to sign all necessary closing documents on his behalf, did not expect her to read or
check those documents in any way, and understood the powers that he was granting
his wife through the power of attorney.

Before leaving for New York, Ofor signed a power of attorney on September
26, 2005, granting his wife the power to act on his behalf and sign the required closing
documents, including the mortgages. Although he did not recall signing the September
26, 2005 power of attorney before a notary, he agreed that the signatures on the
document were his. He also agreed that Lindsay had received this power of attorney
in October 2005. Michael Nordman, a notary, confirmed that his stamp and signature
appeared on the September 26, 2005 power of attorney. According to Nordman, his
stamp and signature on the power of attorney indicated that Ofor appeared before him
on September 26, 2005, and signed the power of attorney.

The closing occurred at the Ofor residence on October 24, 2005. Ofor's wife
testified that Ofor participated in the entire closing by speakerphone and that Lindsay
explained the terms of the loans and mortgages to Ofor, including that two mortgages
were involved instead of one. Ofor denied attending the closing via speakerphone,
contending that he was at work during the time the closing took place.

According to Ofor's wife, during the closing, Lindsay could not find the
September 26, 2005 power of attorney, so he faxed a second power of attorney to Ofor

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in New York. Ofor signed the power of attorney and faxed it back to Lindsay in
Minnesota, where it was notarized and entered into the closing file.

As agreed, the lender paid Ofor's debts and obligations with the loan proceeds
from the October 24, 2005 refinancing and paid Ofor $18,643.04 in cash, which his
wife deposited into his bank account.

On November 7, 2005, the mortgages and deed were recorded with the Ramsey
County Recorder's Office, along with the October 24, 2005 power of attorney. In late
November 2005, Aames sent a package via Federal Express to the Ofor home that
contained a "Notice of Right to Cancel" informing the Ofors that they had until
midnight on December 7, 2005, to cancel the loan transaction. The package also
contained a copy of Ofor's "Truth-in-Lending Statement Disclosure." When Ofor
returned from New York in December 2005, he "glanced at some of the documents"
but did not "look at them all" because he "had previously gotten a mortgage" and, as
a result, "felt no compunction at all to read any of these documents."

Without objection to the mortgage's validity, Ofor made monthly payments on
the two mortgages until September 2006. He has made no mortgage payment since
that time yet continued to live in the home. According to Ofor, the refinanced loans
did not comport with his understanding of the transaction, as he believed that, instead
of two loans, there would be a single loan of $260,000. Ofor claims that he did not
notice the discrepancy between his understanding of the refinancing transaction and
the actual transaction until several months after closing.

The mortgages were later sold and assigned to U.S. Bank, and the assignment
was recorded with the Ramsey County Recorder's Office on September 28, 2007. On
June 4, 2008, Ofor, through counsel, sent a rescission letter to U.S. Bank, Aames, and
Ocwen Financial Corporation ("Ocwen"), the loan servicer. Ofor contended that he
did not receive the required disclosures under TILA. In July 2008, Ocwen denied
Ofor's rescission claim.

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 In October 2008, U.S. Bank proceeded to foreclose the mortgages by
advertisement pursuant to Minnesota Statute § 580.02. On December 10, 2008, Ofor
filed the instant complaint in state court alleging that (1) the mortgage that the lender
relied upon in foreclosing on his home was defective and therefore could not provide
a valid basis for foreclosure under Minnesota law, and (2) the lender violated the
TILA by failing to provide required notice to Ofor about his ability to cancel the
transaction and by refusing to cancel the mortgage when Ofor exercised his right to
rescind the mortgage on those grounds. Ofor also filed a notice of lis pendens. Ofor
did not ask the state court for emergency relief to enjoin the sale, and the sheriff's sale
occurred on December 11, 2008. U.S. Bank purchased the home at the sale. Ofor did
not exercise his statutory right to redeem after the sheriff's sale; that right expired in
June 2009. See Minn. Stat. § 580.001 et seq.

Following removal to federal court, the district court held a bench trial and
ultimately dismissed with prejudice Ofor's claims against U.S. Bank in their entirety.3
Ofor moved for a new trial or an amended verdict. The district court denied all post-
trial relief.

II. Discussion
On appeal, Ofor argues that the district court erroneously dismissed his claims
that (1) U.S. Bank's foreclosure of the mortgages by advertisement was invalid and
(2) the lender violated the TILA by failing to provide required disclosures to him.

A. Foreclosure by Advertisement
Ofor asserts that U.S. Bank's foreclosure of the mortgages by advertisement was
invalid. According to Ofor, under Minnesota law, the mortgage must be "recorded."

3
Because the district court dismissed the lawsuit, it also discharged the notice
of lis pendens recorded with the Ramsey County Recorder's Office.

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Minn. Stat. § 580.02. In turn, Minnesota law requires that any instrument affecting
real estate that is to be recorded "must contain the original signatures of the parties
who execute it and of the notary public or other officer taking an acknowledgment."
Minn. Stat. § 507.24, subdiv. 2(a). Ofor asserts that to legally record the October 24,
2005 power of attorney4—which was required to validate the mortgage at issue—two
separate signature pages would have to be part of the filing: (1) the signature page
with the original signatures of Ofor's wife and Michael Speer, the notary, obtained in
Minnesota and (2) the signature page faxed to Ofor and signed by him in New York
on the same day. Ofor notes that the power of attorney filed with the Ramsey County
Recorder's Office contained only one signature page and thus cannot contain the
"original" signatures of the parties and the notary; furthermore, he points out that the
signatures of Ofor and Speer are on the same page even though Speer was not in New
York with Ofor that day. Because the power of attorney does not satisfy Minnesota
law, Ofor concludes that the mortgages were not properly recorded and U.S. Bank was
not entitled to foreclose on Ofor's home.

Additionally, Ofor argues that the October 24, 2005 power of attorney is invalid
because it was a "short form" power of attorney requiring a notary's acknowledgment
that Ofor signed the power of attorney in the notary's presence; he points out that
Speer, the notary, was in Minnesota when Ofor signed the power of attorney. See
Minn. Stat. § 523.23.

"We review the findings of fact made by the district court in a bench trial only
for clear error, but review the district court's interpretation of state law de novo."
Falcon Steel, Inc. v. J. Russell Flowers, Inc., 635 F.3d 369, 373 (8th Cir. 2011)
(internal citations omitted).

4
The district court never determined the validity of the September 26, 2005
power of attorney; therefore, we will only analyze the validity of the October 24, 2005
power of attorney.

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 "To entitle any party to make [a] foreclosure [by advertisement], it is requisite
. . . that the mortgage has been recorded and, if it has been assigned, that all
assignments thereof have been recorded . . . ." Minn. Stat. § 580.02(3). "Foreclosure
by advertisement was developed as a non-judicial form of foreclosure designed to
avoid the delay and expense of judicial proceedings." Jackson v. Mortg. Elec.
Registration Sys., Inc., 770 N.W. 2d 487, 494 (Minn. 2009) (quotation and citation
omitted). The foreclosure-by-advertisement statute is "strictly construed" because it
"is a purely statutory creation." Id. A foreclosing party must "show exact compliance
with the terms of the statutes. If the foreclosing party fails to strictly comply with the
statutory requirements, the foreclosure proceeding is void." Id. (quotation and internal
citation omitted). "[T]he 'manifest purpose' of the foreclosure by advertisement
statute's recording requirement is 'to make the contents of the mortgage, and, as far as
the statute goes, to make the title to the mortgage [a] matter of record.'" Id. at 497
(quoting Morrison v. Mendenhall, 18 Minn. 212 (Gil. 212, 219) (1872)) (emphasis
and alteration added in Jackson).

To "properly foreclose under [§ 580.02], there must be of record a valid
mortgage." Backus v. Burke, 51 N.W. 284, 286 (Minn. 1892). Here, Ofor contends
that for the mortgage to be validly recorded under § 580.02(3), it must contain the
original signatures of all parties executing the document. See Minn. Stat. § 507.24,
subdiv. 2(a) ("Unless otherwise provided by law, an instrument affecting real estate
that is to be recorded as provided in this section or other applicable law must contain
the original signatures of the parties who execute it and of the notary public or other
officer taking an acknowledgment."). Essentially, Ofor is arguing that because the
power of attorney was not properly recorded, the requirements of foreclosure by
advertisement were not satisfied.

"A husband or wife may appoint the other as an attorney-in-fact for property
transactions." Bengston v. Dzandzara, No. A05-531, 2006 WL 538951, at *1 (Minn.
Ct. App. Mar. 7, 2006) (unpublished opinion) (citing Minn. Stat. § 519.06). "A

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conveyance of the homestead requires signatures of both spouses, and '[a] spouse's
signature may be made by the spouse's duly appointed attorney-in-fact.'" Id. (quoting
Minn. Stat. § 507.02) (alteration added in Bengston). Under Minnesota Statutes
§ 523.01, "'[t]he power of attorney is validly executed when it is dated and signed by
the principal.'" Id. (quoting Minn. Stat. § 523.01). The power of attorney "is presumed
valid if it 'is dated and purports to be signed by the principal named in it.'" Id. (quoting
Minn. Stat. § 523.04). Only those parties possessing "'actual knowledge that the power
was not validly executed'" may not rely on the presumptive validity of the power of
attorney. Id. (quoting Minn. Stat. § 523.04).

In Bengston, a husband and wife argued that a lease-back arrangement
conveying their homestead was void as a matter of law because the husband
fraudulently obtained his wife's signature on the power-of-attorney form. Id. The
husband claimed that he sold the property without his wife's knowledge "by signing
the documents as her attorney-in-fact." Id. The husband and wife argued that "a
conveyance is void if both parties do not sign the documents of conveyance or if one
party signs under false pretenses." Id. at *2. The Minnesota Court of Appeals rejected
this argument because the power of attorney was presumptively valid, as it bore the
wife's signature and the date. Id. Furthermore, no evidence existed that the defendant
had "actual knowledge that [the husband] obtained his wife's signature by lying to
her." Id. According to the court, Minnesota law protects "good-faith purchasers who
rely on a presumptively valid power of attorney." Id. (citing Minn. Stat. §§ 519.06 and
523.04).

The court also determined that "the proposition that a conveyance is void if both
parties do not sign the documents of conveyance or if one party signs under false
pretenses" did not apply "because a power of attorney is not a conveyance." Id. (citing
Minn. Stat. § 507.01 ("The word 'conveyance,' . . . includes every instrument in
writing whereby any interest in real estate is created, aliened, mortgaged, or assigned

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or by which the title thereto may be affected in law or in equity, except . . . powers of
attorney.") (emphasis added in Bengston)).

Ofor attempts to distinguish Bengston by arguing that Minnesota Statute
§ 523.23—as opposed to § 523.01—applies to the present case. According to Ofor,
the power of attorney that he signed is a short form power of attorney requiring a
proper acknowledgment. Because Speer, the notary, was in Minnesota when Ofor
signed the power of attorney, Ofor contends there is no proper acknowledgment and,
therefore, the power of attorney is invalid.

The district court never addressed § 523.23 because, as Ofor concedes, he never
cited this provision to the district court at trial. Nor did Ofor cite to § 523.23 in his
motion for new trial or amended verdict. "It is old and well-settled law that issues not
raised in the trial court cannot be considered by this court as a basis for reversal."
Campbell v. Davol, Inc., 620 F.3d 887, 891 (8th Cir. 2010) (quotation and citation
omitted). We therefore decline to reach Ofor's § 523.23 argument.

B. TILA
At trial, Ofor asserted that the lender violated the TILA by failing to provide
required disclosures to him and refusing to cancel the mortgage after he sent a notice
of rescission. See 15 U.S.C. §§ 1635 and 1638. He presented two legal theories in
support of his claims: (1) he did not receive a Notice of Right to Cancel, as it was only
given to his wife at closing, and (2) he did not receive the second Notice of Right to
Cancel that the lender sent to his home on November 30, 2005, which was addressed
to him but not his wife.

We apply "an objective standard of review" to allegations that a creditor
violated TILA. Rand Corp. v. Yer Song Moua, 559 F.3d 842, 845 (8th Cir. 2009)
(quotation and citation omitted).

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 Under TILA, if a loan is secured by a debtor's primary residence, "the
obligor shall have the right to rescind the transaction until midnight of
the third business day following the consummation of the transaction or
the delivery of the information and rescission forms . . . whichever is
later." 15 U.S.C. [§] 1635(a). Further, "[t]he creditor shall clearly and
conspicuously disclose, in accordance with regulations of the Board, to
any obligor in a transaction subject to this section the rights of the
obligor under this section." Id. Notice must be provided "on a separate
document that identifies the transaction and . . . clearly and
conspicuously discloses" the debtor's rights. 12 C.F.R. § 226.23(b)(1).
A creditor's failure to comply with these provisions extends the debtor's
right to rescind for up to three years following the transaction.
15 U.S.C. § 1635(f); 12 C.F.R. § 226.23(a)(3).

Id. at 846.

As to the first Notice of Right to Cancel, Ofor concedes in his brief that "[i]f the
power of attorney is valid . . . then [Ofor's wife] would be authorized to receive the
Notice of Right to Cancel on behalf of Vincent Ofor." We have already concluded that
the October 25, 2005 power of attorney is valid, see Part II.A., supra, and there is no
dispute that Ofor's wife, acting pursuant to this valid power, signed an
acknowledgment at closing that she received the required disclosures on Ofor's behalf.
The signing of this acknowledgment establishes delivery of the required disclosures
under TILA. 15 U.S.C. § 1641(b) ("[W]ritten acknowledgement of receipt by a person
to whom a statement is required to be given . . . shall be conclusive proof of the
delivery thereof and . . . of compliance with this part."). "No right to rescind existed
here because [Ofor, through his wife acting as attorney-in-fact,] received a timely
notice of right to cancel, as evidenced by [Ofor's wife's] signature[ ] on the document."
Henderson v. GMAC Mortg. Corp., 347 F. App'x 299, 302 (9th Cir. 2009)
(unpublished memorandum) (citing 15 U.S.C. § 1641(b)).

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 Ofor's second claim is that the lender violated TILA by mailing the second
Notice of Right to Cancel only to "Vincent Ofor" and not his wife. Ofor asserts that
the second notice was required under TILA because the terms of the transaction
changed from those presented at the October 24, 2005 closing as a result of an audit
of the loan filed by the lender. According to Ofor, the lender's failure to provide his
wife with the second notice constitutes a violation of TILA. Additionally, he argues
that he rebutted the presumption that the second notice was delivered to him, as he
testified that he did not receive the second notice until weeks after the three days for
rescission had expired. He also cites his wife's testimony that she did not open the
mailing that was addressed only to him. Because of this purported TILA violation, he
maintains that he properly exercised his right to cancel within three years of the
transaction.

Ofor cites to no evidence or legal authority that the second Notice of Right to
Cancel was required under TILA. And, as previously explained, Ofor's wife, who was
present during the closing and acting as Ofor's attorney-in-fact, received the first
notice on Ofor's behalf.

Furthermore, Ofor has no standing to challenge the lender's failure to send the
second notice to his former wife. Hodak v. City of St. Peters, 535 F.3d 899, 904 (8th
Cir. 2008) ("As a general rule, a plaintiff may only assert his own injury in fact and
cannot rest his claim to relief on the legal rights or interests of third parties."
(quotation and citation omitted)). Nor has Ofor argued or shown that he falls within
the narrow exception for third-party standing. Id. ("Third-party standing is an
exception to the general rule that a plaintiff may only assert his own injury in fact and
permits a litigant who lacks a legal claim to assert the rights of a third party.").

Finally, Ofor has not overcome the "rebuttable presumption of delivery" of the
required notice to him. 15 U.S.C. § 1635(c) (emphasis added); Taylor v. Domestic
Remodeling, Inc., 97 F.3d 96, 98 (5th Cir. 1996) ("If the creditor fails to deliver the

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forms, or fails to provide the required information, then the consumer's right of
rescission extends for three years after the date of consummation of the transaction.").
Ofor concedes that the lender sent a package via Federal Express to the Ofor
home—addressed to Vincent Ofor—that contained the second Notice of Right to
Cancel, informing him that he had until midnight on December 7, 2005, to cancel the
loan transaction. Ofor's wife received this package. This concession establishes that
the lender fulfilled any purported obligation to deliver the second notice to Ofor.
Ofor's own delay in reviewing the documents contained in the package does not
somehow confer liability on the lender or U.S. Bank. As the district court noted in its
memorandum and order denying Ofor's motion for a new trial or amended verdict,
TILA

does not require . . . that the lender ensure that the borrower opens his or
her mail. The undisputed evidence is that the disclosures were mailed to
Plaintiff and that Plaintiff's wife received them. Whether she opened
them and read them is Plaintiff's responsibility, not the lender's.

Therefore, Ofor's TILA claims fail.

III. Conclusion
Accordingly, we affirm the judgment of the district court.
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