J. S73006/16


NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37

U.S. BANK NATIONAL ASSOCIATION,          :     IN THE SUPERIOR COURT OF
AS TRUSTEE FOR STRUCTURED ASSET          :           PENNSYLVANIA
INVESTMENT LOAN TRUST MORTGAGE           :
PASS-THROUGH CERTIFICATES,               :
SERIES 2006-BNC3                         :
                                         :
                    v.                   :
                                         :
CHARLES E. McGOWAN, THE UNITED           :
STATES OF AMERICA                        :         No. 1843 WDA 2015
                                         :
APPEAL OF: CHARLES E. McGOWAN            :


              Appeal from the Order Entered November 2, 2015,
           in the Court of Common Pleas of Westmoreland County
                      Civil Division at No. 3065 OF 2014


BEFORE: FORD ELLIOTT, P.J.E., LAZARUS AND JENKINS, JJ.


MEMORANDUM BY FORD ELLIOTT, P.J.E.:              FILED DECEMBER 22, 2016

       Charles E. McGowan (“appellant”) appeals the November 2, 2015 order

of the Court of Common Pleas of Westmoreland County that granted the

motion for summary judgment of U.S. Bank National Association, as Trustee

for   Structured   Asset   Investment   Loan   Trust   Mortgage   Pass-Through

Certificates, Series 2006-BNC3 (“appellee”), and entered an in rem

judgment in favor of appellee and against appellant in the amount of

$106,412.29 plus interest from April 21, 2015, and other costs and charges
J. S73006/16


collectible under the mortgage, for foreclosure and sale of the mortgaged

property.1

      On May 22, 2006, appellant made, executed, and delivered a

mortgage for real property located at 1360 Conway Drive, Greensburg,

Pennsylvania, to BNC Mortgage, Inc. (“BNC”). BNC subsequently assigned

the mortgage to appellee.     On July 1, 2014, appellee filed a complaint in

mortgage foreclosure and alleged that the mortgage was in default because

monthly payments of principal and interest due January 1, 2012, and each

month thereafter had not been made. Appellee alleged that the amount due

and owing was $97,221.64, which was comprised of the principal balance of

$72,803.72, interest from December 1, 2011 to May 29, 2014 of

$17,252.38, an escrow deficit of $5,593.27, and late charges, property

inspections, appraisal/broker’s price opinion, and prior servicer fees of

$1,562.77.    The complaint was verified by Caroline Cochran (“Cochran”),

contract management coordinator for Ocwen Loan Servicing, LLC (“Ocwen”).

In the verification, Cochran explained that appellee delegated the mortgage


1
  On October 31, 2014, the trial court entered a consent judgment in which
appellee and the United States of America (“U.S.”) agreed that a judgment
would be entered in favor of appellee and against the U.S. for foreclosure of
the mortgage of appellant and for sale of the mortgaged property of
appellant. It was further ordered that the U.S. shall be notified by appellee
of the date, time, and place for any sheriff’s sale of the real property of
appellant, that the U.S. shall be entitled to payment from the proceeds of
the sheriff’s sale to the extent its proper priority would entitle it to the same,
and the U.S. shall be entitled to redeem the property within 120 days from
the date of sale as provided by 28 U.S.C. § 2410. The U.S. is not
participating in the proceedings before this court.


                                      -2-
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servicing responsibility to Ocwen for appellant’s loan.     As a result, Ocwen

possessed all the documents and records that supported the statements in

the complaint and appellee lacked sufficient information to make the

verification because it did not maintain the business records for the

mortgage. While initial attempts to effect service were unsuccessful, service

of the complaint was made on July 3, 2014, at 10 Old Clairton Road,

Suite 12A, in Pleasant Hills, Pennsylvania, at a United Parcel Service Store

where appellant maintained a post office box.

      On August 25, 2014, appellant preliminarily objected to the complaint

on the basis of allegedly ineffective service of process, the failure to identify

the particulars of default, the failure to identify sufficiently the parties, the

failure to identify the transaction through a note, and that the verification

was spurious. On October 22, 2014, the trial court overruled the preliminary

objections and directed appellant to file an answer.

      In an answer filed November 21, 2014, appellant denied the material

allegations.   Appellant averred in new matter that the trial court lacked

personal jurisdiction over him because he was not properly served, appellee

failed to state a cause of action because appellee did not identify itself as a

person entitled to enforce the note, did not allege a dishonor on the

promissory note, and that the trial court also lacked subject matter

jurisdiction over him since appellee did not properly assert a default on the

mortgage. Appellant also asserted a host of affirmative defenses.



                                      -3-
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     On June 26, 2015, appellee moved for summary judgment and alleged

that there were no material facts in dispute regarding appellant’s default on

the mortgage.     The motion contained an affidavit from Peter Nocero

(“Nocero”), contract management coordinator from Ocwen, which explained

that the mortgage had been assigned to appellee and that appellant had

failed to make the scheduled payments beginning with the payment that was

due on January 1, 2012. At this point, the amount due and owing according

to Nocero was $106,412.29.

     On August 3, 2015, appellant moved to dismiss the motion for

summary judgment and alleged he had never been served with a complaint

and that appellee had not properly sent the motion for summary judgment,

brief in support of summary judgment, and scheduling order.

     On August 20, 2015, appellant moved to strike the motion for

summary judgment on the basis that the trial court lacked personal

jurisdiction because appellee had not served appellant with a copy of the

complaint, appellee violated a court scheduling order, appellee failed to show

that it had standing, appellant had not admitted to a default on the

mortgage, the trial court lacked subject matter jurisdiction, the mortgage

contract was void ab initio because it was based upon LIBOR2 rates that are


2
  LIBOR stands for the London InterBank Offered Rate. LIBOR is the
annualized, average interest rate at which a select group of large, reputable
banks that participate in the London interbank money market can borrow
unsecured            funds            from            other            banks.
(http://fedprimerate.com/libor/index.html.)


                                    -4-
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fraudulently manipulated, and appellee violated Section 1692g of the Fair

Debt Collection Practices Act, 15 U.S.C.A. § 1692g, because it did not send

an initial communication to appellant stating that it was a debt collector

trying to collect a debt.

         Following oral argument on September 4, 2015, the trial court denied

the motion to dismiss and gave appellant 30 days to file a brief in opposition

to the motion for summary judgment. By order dated November 2, 2015,

the trial court determined that appellee was entitled to summary judgment

and entered an in rem judgment in favor of appellee and against appellant

in the amount of $106,412.29 plus interest from April 21, 2015, and other

costs and charges collectible under the mortgage for foreclosure and sale of

the mortgaged property. On November 20, 2015, appellant appealed to this

court.

         On appeal to this court, appellant raises the following issues for our

review:

              1.    Did Plaintiff/Appellee lack standing to bring this
                    action because the pre-acceleration notice
                    required by Paragraph 22 of the Mortgage was
                    not sent, and because the Act 91 Notice is
                    defective?

              2.    Did the [t]rial [c]ourt lack personal jurisdiction
                    over [appellant] since the Plaintiff/appellee did
                    not serve [a]ppellant . . . with a copy of the
                    Complaint as required by Pa.R.C.P. No. 402?

              3.    Did the [t]rial [c]ourt lack subject matter
                    jurisdiction in this mortgage foreclosure case
                    where the Plaintiff/Appellee did not provide


                                       -5-
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                   evidence that it had standing as the Holder in
                   Due Course to enforce a promissory note
                   signed by [appellant]?

            4.     Did the [t]rial [c]ourt err in granting summary
                   judgment for Plaintiff/Appellee where the
                   Plaintiff/Appellee did not prove the existence of
                   a default upon the mortgage?

            5.     Did the [t]rial [c]ourt err in granting summary
                   judgment for Plaintiff/Appellee where the
                   Plaintiff/Appellee’s   Motion     for   Summary
                   Judgment did not include a Statement of
                   Undisputed Facts as required by 25 Pa.C.S.A.
                   [§] 1021.94a(b)(1)(ii) and 25 Pa.C.S.A.
                   [§] 1021.94a(d)?

            6.     Is the Summary Judgment void because the
                   fixed-rate mortgage contract itself is void
                   ab initio because the interest rate is based
                   upon the LIBOR rates which are fraudulently
                   manipulated by the banks?

Appellant’s brief at 6.

      This court reviews a grant of summary judgment under the following

well-settled standards:

                   Pennsylvania law provides that summary
                   judgment may be granted only in those
                   cases in which the record clearly shows
                   that no genuine issues of material fact
                   exist and that the moving party is
                   entitled to judgment as a matter of law.
                   The moving party has the burden of
                   proving that no genuine issues of
                   material fact exist.     In determining
                   whether to grant summary judgment,
                   the trial court must view the record in
                   the light most favorable to the non-
                   moving party and must resolve all doubts
                   as to the existence of a genuine issue of
                   material fact against the moving party.


                                      -6-
J. S73006/16


                  Thus, summary judgment is proper only
                  when      the      uncontroverted     [sic]
                  allegations in the pleadings, depositions,
                  answers to interrogatories, admissions of
                  record,    and      submitted    affidavits
                  demonstrate that no genuine issue of
                  material fact exists, and that the moving
                  party is entitled to judgment as a matter
                  of law. In sum, only when the facts are
                  so clear that reasonable minds cannot
                  differ, may a trial court properly enter
                  summary judgment.

                  [O]n appeal from a grant of summary
                  judgment, we must examine the record
                  in a light most favorable to the
                  non-moving party.         With regard to
                  questions of law, an appellate court’s
                  scope of review is plenary. The Superior
                  Court will reverse a grant of summary
                  judgment only if the trial court has
                  committed an error of law or abused its
                  discretion.    Judicial discretion requires
                  action in conformity with law based on
                  the facts and circumstances before the
                  trial    court     after    hearing    and
                  consideration.

            Gutteridge v. A.P. Green Services, Inc., 804 A.2d
            650, 651 (Pa.Super. 2002).

Wright v. Allied Signal, Inc., 963 A.2d 511, 514 (Pa.Super. 2008)

(citation omitted).   Summary judgment in mortgage foreclosure actions is

subject to the same rules as any other civil action. See Pa.R.C.P. 1141(b).

      Initially, appellant contends that the trial court lacked subject matter

jurisdiction to hear this case because there is nothing in the record to

indicate that appellee served him with a Notice of Default as contractually




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required by paragraphs 20 and 22 of the Mortgage Security Contract

Agreement before accelerating the loan and proceeding with foreclosure.

      A review of the exhibits attached to the complaint indicates that a

notice of default labeled “Act 91 Notice Take Action to Save your Home from

Foreclosure” was sent to appellant at the address where he received service:

10 Old Clairton Road, Suite 12A, Pleasant Hills, Pennsylvania.       The notice

also indicates that it was sent to appellant by first class mail and by certified

mail with the certified mail number indicated on the form. This court does

not agree with appellant’s contention that appellee failed to properly issue a

notice of default so that it lacked standing.

      Appellant next contends that the trial court lacked personal jurisdiction

over appellant since appellee did not serve him with a copy of the complaint

as required by the Pennsylvania Rules of Civil Procedure. Appellant asserts

that the Sheriff made only one attempt to serve him at his actual residence:

540 Lisa Drive, West Mifflin, Pennsylvania.     As a result, appellant believes

that appellee’s request for alternative service was premature because it only

attempted service at his domicile once.         Appellant argues that there is

nothing in the record to indicate that appellee served him with a copy of the

complaint in accordance with the trial court’s November 21, 2014 order

which permitted service by mail and by posting at the property. Appellant

also disagrees with the trial court’s determination that he waived any

objection to lack of service of the complaint when he filed an answer to it.



                                      -8-
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Appellant asserts that he filed an answer under threat, duress, and coercion

because he believed that the trial court would enter a default judgment

against him if he did not answer the complaint.

      Rule 402 of the Pennsylvania Rules of Civil Procedure provides in

pertinent part:

            (a)     Original process may be served

                    (1)   By handing a copy to the
                          defendant; or

                    (2)   By handing a copy

                          (i)   at the residence of the
                                defendant to an adult
                                member of the family
                                with whom he resides;
                                but if no adult member
                                of the family is found,
                                then to an adult person
                                in charge of such
                                residence; or

                          (ii) at the residence of the
                               defendant to the clerk
                               or manager of the
                               hotel, inn, apartment
                               house, boarding house
                               or   other   place   of
                               lodging at which he
                               resides; or

                          (iii) at any office or usual
                                place of business of the
                                defendant to his agent
                                or to the person for the
                                time being in charge
                                thereof.

Pa.R.C.P. 402(a).


                                       -9-
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      Appellee argues that it properly served appellant when it served

appellant at the UPS store at 12 Old Clairton Road, Suite 12A, Pleasant Hills,

Pennsylvania,    in   compliance     with    Pennsylvania    Rule      of   Civil

Procedure 402(a)(2)(iii). Appellee attempted to serve appellant both at the

mortgaged property and at another address for him, 3567 Mountain View

Drive, #122, West Mifflin, Pennsylvania, but the Sheriff of Allegheny County

as deputized by the Sheriff of Westmoreland County found the property

vacant. Appellant established the UPS store as his address. The Sheriff of

Allegheny County served appellant by way of Mr. Nestor, the UPS store

manager, who accepted service on behalf of appellant. Although appellant

argues that Nestor was not authorized to accept service, the sheriff’s

affidavit of service creates a presumption of effective service.            See

Hollinger v. Hollinger, 206 A.2d 1 (Pa. 1965) (in the absence of fraud, the

return of service by a sheriff, which is full and complete, is conclusive and

immune from attack by extrinsic evidence). The trial court did not err when

it determined that appellant was properly served.

      In addition, the trial court, by order dated November 21, 2014,

directed appellee to serve a copy of the complaint by posting at the

mortgaged property and by first class mail to three “last known addresses”

of appellant which included the UPS store at 10 Old Clairton Road,

Suite 12A, Pleasant Hills, Pennsylvania, as well as the mortgaged premises.

There is no allegation that appellee did not comply with this order.



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      Appellant next contends that the trial court lacked subject matter

jurisdiction where appellee did not provide evidence that it had standing as

the holder in due course to enforce a promissory note signed by appellant.

First, appellant argues that none of the pleadings filed by appellee,

subsequent to the filing of the complaint, were verified as required by

Pennsylvania Rule of Civil Procedure 1024. A review of the record including

appellant’s motion to dismiss the motion for summary judgment and his

motion to strike the motion for summary judgment fails to reveal that

appellant raised this point about verification beyond verification of the

complaint before the trial court. Therefore, it is waived. Pennsylvania Rule

of Civil Procedure 302(a) provides that only issues properly raised and

preserved in the trial court will be considered on appeal.

      Second, with respect to whether appellee had standing, appellant

argues that appellee failed to offer proof that it was the holder of the

promissory note. Appellant notes that appellee failed to attach a copy of the

note to the complaint though it did when it responded to appellant’s

preliminary objections.    Appellant argues that appellee lacked standing

because it failed to prove that it was the holder of a promissory note signed

by appellant.   Further, appellant asserts that because appellee did not

possess the note, it could not institute foreclosure proceedings.

      Pennsylvania Rule of Civil Procedure 2002 provides, “[e]xcept as

otherwise provided . . . all actions shall be prosecuted by and in the name of



                                    - 11 -
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the real party in interest, without distinction between contracts under seal

and parol contracts.”    Pa.R.C.P. 2002(a); see also J.P. Morgan Chase

Bank, N.A. v. Murray, 63 A.3d 1258, 1258 (Pa.Super. 2013) (finding a

debtor’s claim that appellee bank was not a real party in interest to bring

foreclosure action was a challenge to appellee’s standing). “[A] real party in

interest is a [p]erson who will be entitled to benefits of an action if

successful. . . . [A] party is a real party in interest if it has the legal right

under the applicable substantive law to enforce the claim in question.”

U.S. Bank, N.A. v. Mallory, 982 A.2d 986, 993-994 (Pa.Super. 2009)

(citation and quotation marks omitted; some brackets in original).

      In a mortgage foreclosure action, the mortgagee is the real party in

interest.   See Wells Fargo Bank, N.A. v. Lupori, 8 A.3d 919, 922 n.3

(Pa.Super. 2010). Of course, an original mortgagee may assign its interest

as mortgagee, as was the case here.           This is made evident under our

Pennsylvania Rules of Civil Procedure governing actions in mortgage

foreclosure that require a plaintiff in a mortgage foreclosure action

specifically to name the parties to the mortgage and the fact of any

assignments.     Pa.R.C.P. 1147.      A person foreclosing on a mortgage,

however, also must own or hold the note. This is so because a mortgage is

only the security instrument that ensures repayment of the indebtedness

under a note to real property. See Carpenter v. Longan, 83 U.S. 271, 275

(1872) (noting “all authorities agree the debt is the principal thing and the



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mortgage an accessory.”). A mortgage can have no separate existence. Id.

When a note is paid, the mortgage expires.         Id.   On the other hand, a

person may choose to proceed in an action only upon a note and forego an

action in foreclosure upon the collateral pledged to secure repayment of the

note. See Harper v. Lukens, 112 A. 636, 637 (Pa. 1921) (noting, “as suit

is expressly based upon the note, it was not necessary to prove the

agreement as to the collateral.”). For our instant purposes, this is all to say

that to establish standing in this foreclosure action, appellee had to plead

ownership of the mortgage under Rule 1147, and have the right to make

demand upon the note secured by the mortgage.3

      Here, appellant alleged that appellee failed to prove that it had

standing to enforce the note because appellee did not establish that it had

possession of the promissory note when it filed its complaint in mortgage

foreclosure.   Appellant argues that the note attached to the motion for

summary judgment does not establish that appellee owned the note because

no witness verified the note or testified to its authenticity.     Once again,

appellant failed to raise any issue based on verification before the trial court

so any argument based on verification is waived.




3
  The rules relating to mortgage foreclosure actions do not expressly require
that the existence of the note and its holder be pled in the action.
Nonetheless, a mortgagee must hold the note secured by a mortgage to
foreclose upon a property. “The note and mortgage are inseparable; the
former as essential, the latter as an incident.” Longan, 83 U.S. at 274.


                                     - 13 -
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      The trial court determined that appellee had been assigned the

mortgage and that the note was endorsed in blank, was negotiable, and was

possessed by appellee prior to the commencement of the foreclosure action.

(Trial court opinion, 12/23/15 at 3.)

      Here, the note produced by appellee indicated that appellant was the

borrower and BNC Mortgage, Inc., was the lender. An allonge to the note

was endorsed without recourse in blank by Eleanora Martino, Vice President

of Quality Assurance for BNC Mortgage, Inc.      A note endorsed in blank

becomes payable to “bearer” and may be negotiated by transfer of

possession alone until specially endorsed.   See 13 Pa.C.S.A. §§ 3109(a),

3205(b). The note as a negotiable instrument entitles the holder of the note

to enforcement of the obligation.       See id. §§ 3109(a), 3301.      Thus,

appellant’s argument that ownership of the note cannot be established in

appellee because there was no formal assignment or transfer is unavailing,

because “the chain of possession by which [a party] c[o]me[s] to hold the

[n]ote [is] immaterial to its enforceability by [the party].” Murray, 63 A.3d

at 1266; see Bank of America, N.A. v. Gibson, 102 A.3d 462, 466

(Pa.Super. 2014) (rejecting an identical argument). Appellee, as the holder

of the note, a negotiable instrument not challenged herein, was entitled to

make demand upon and to enforce the obligations under the note.

Accordingly, given appellee’s ownership of the mortgage and possession of




                                    - 14 -
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the note, the trial court did not err in concluding that appellee had standing

as a real party in interest to bring the underlying foreclosure action.

      Appellant continues to argue that appellee did not possess the note

and did not prove the existence of endorsements to the note and that

Mortgage Electronic Registration Systems, Inc. (“MERS”), did not have

possession of the note and lacked authority to assign the note.

      Appellee produced the note before the trial court.        Further, to the

extent that appellant contends that MERS lacked standing to foreclose

because it did not hold the note, this argument is meritless. MERS was not

a party to this litigation, did not seek to enforce an interest in the underlying

loan in the litigation, and was only involved to the extent that it was a

nominee for the original lender.     In addition, while appellant asserts that

MERS could not assign the note, appellee never asserted that MERS assigned

the note to appellee. Further, in Murray, 63 A.3d at 1265-1266, this court

held that a note secured by a mortgage was a negotiable instrument

governed by Section 3104 of the Pennsylvania Uniform Commercial Code,

13 Pa.C.S.A. § 3104, such that defects in the chain of possession did not

affect the right of the mortgagee to enforce the note.

      Appellant next contends that the trial court erred when it granted

summary judgment because appellee did not prove the existence of a

default upon the mortgage. Appellant argues that because appellee did not




                                     - 15 -
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plead a default upon the promissory note, it could not claim a default on the

mortgage.

     Pennsylvania Rule of Civil Procedure 1147 provides in pertinent part:

            (a)   The plaintiff shall set forth in the complaint:

                  (1)   the parties to and the date of the
                        mortgage, and of any assignments,
                        and a statement of the place of
                        record of the mortgage and
                        assignments;

                  (2)   a description of the land subject to
                        the mortgage;

                  (3)   the names, addresses and interest
                        of the defendants in the action and
                        that the present real owner is
                        unknown if the real owner is not
                        made a party;

                  (4)   a specific averment of default;

                  (5)   an itemized statement         of   the
                        amount due; and

                  (6)   a demand for judgment for the
                        amount due.

Pa.R.C.P. 1147(a).

     A review of the complaint reveals that appellee complied with the

requirements of Pa.R.C.P. 1147(a).

     Appellant also argues that the affidavit of Nocero does not offer any

evidence of a default to support the motion for summary judgment. Nocero,

a contract management coordinator for Ocwen, states in the affidavit, that

he had access to the business records maintained in the servicing of the


                                     - 16 -
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mortgage in question, that appellant entered into the mortgage with MERS,

the nominee for BNC Mortgage, Inc., that the mortgage was assigned to

appellee, that appellant’s payment was due and owing on January 1, 2012,

and for each month thereafter, and set forth the amounts due.            Appellant

argues that Nocero is not a competent witness because he does not go into

detail about his knowledge about the facts to which he attests.

      This court does not find any merit in appellant’s claims here. In order

for summary judgment to be proper in a mortgage foreclosure action, the

moving party must establish the amount of the mortgage, that the mortgage

is in default, and that the mortgagor has failed to pay interest on the

mortgage. Cunningham v. McWilliams, 714 A.2d 1054, 1057 (Pa.Super.

1998). Appellee did so. Nocero’s affidavit established how he had access to

the information.    Appellant points to no statute, rule, or case law that

requires the degree of specificity demanded by appellant regarding exactly

how Nocero acquired the information.

      Furthermore, when responding to the allegations of default listed in

the complaint in his answer, appellant did not provide specific denials as

required under Pennsylvania Rule of Civil Procedure 1029.               Rule 1029

provides in pertinent part:

            (b)    Averments in a pleading to which a responsive
                   pleading is required are admitted when not
                   denied specifically or by necessary implication.
                   A general denial or a demand for proof, except
                   as provided by subdivision (c) of this rule, shall
                   have the effect of an admission.


                                     - 17 -
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            (c)     A statement by a party that after reasonable
                    investigation the party is without knowledge or
                    information sufficient to form a belief as to the
                    truth of an averment shall have the effect of a
                    denial.

Pa.R.C.P. No. 1029(b)-(c).

      In his answer, appellant responded with general denials except for his

argument that appellee lacked standing. The trial court did not err when it

granted summary judgment.

      Appellant next contends that the trial court erred when it granted

summary judgment where appellee’s motion for summary judgment did not

include a statement of undisputed facts.

      Appellee asserts that appellant waived this issue because he did not

raise it before the trial court.   Appellant admits that he did not raise the

issue before the trial court.       Accordingly, this issue is waived.   See

Pa.R.A.P. 302(b).

      Finally, appellant argues that the summary judgment is void because

the fixed rate mortgage contract is void ab initio because the interest rate

is based upon LIBOR which is fraudulently manipulated by the banks.

Appellant argues that a cartel of banks act together criminally to set the

rates such that his mortgage rate was fraudulently established.          This

argument has no merit.       Regardless of the actions of banks that set the

LIBOR rates, appellant agreed to the rate when he signed the mortgage and

obtained the loan and then defaulted on his obligation.



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     Order affirmed.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary

Date: 12/22/2016




                          - 19 -
