                                                   I attest to the accuracy and
                                                    integrity of this document
                                                      New Mexico Compilation
                                                    Commission, Santa Fe, NM
                                                   '00'05- 16:46:29 2011.11.14
Certiorari Granted, October 25, 2011, No. 33,224

       IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: 2011-NMCA-110

Filing Date: August 23, 2011

Docket No. 29,945

THE BANK OF NEW YORK as Trustee for
POPULAR FINANCIAL SERVICES
MORTGAGE/PASS THROUGH
CERTIFICATE SERIES #2006,

       Plaintiff-Appellee,

v.

JOSEPH A. ROMERO and MARY ROMERO,
a/k/a MARY O. ROMERO a/k/a MARIA ROMERO,

       Defendants-Appellants.

APPEAL FROM THE DISTRICT COURT OF RIO ARRIBA COUNTY
James A. Hall, District Judge

Little & Dranttel, P.C.
Elizabeth M. Dranttel
Peggy A. Whitmore
Albuquerque, NM

Severson & Werson
Jan T. Chilton
San Francisco, CA

for Appellee

Joshua R. Simms, P.C.
Joshua R. Simms
Albuquerque, NM

for Appellant


                                        1
Santa Fe Neighborhood Law Center
Frederick M. Rowe
Daniel M. Yohalem
Santa Fe, NM

for Amici Curiae

                                          OPINION

VANZI, Judge.

{1}      In 2006, Joseph and Mary Romero (the Romeros) refinanced the mortgage on their
home in order to pay off existing debts and loans. When they defaulted two years later, The
Bank of New York, as trustee for Popular Financial Services Mortgage/Pass Through
Certificate Series #2006, (the Bank) started foreclosure proceedings. In response to the
complaint for foreclosure, the Romeros counterclaimed against the Bank, alleging, among
other things, predatory lending practices. At issue in this appeal is whether the district court
correctly determined that the Bank did not engage in “flipping” the loan in violation of
NMSA 1978, Section 58-21A-4(B) (2003) (amended 2009), of the Home Loan Protection
Act (HLPA), or violate the Unfair Practices Act (UPA), NMSA 1978, Sections 57-12-1
through -26 (1967, as amended through 2009). Because substantial evidence supports the
district court’s findings, we affirm.

BACKGROUND

{2}     The Romeros inherited their home, located in Chimayo, New Mexico, from Joseph
Romero’s father in the early 1970s. They have owned the property ever since. Prior to
refinancing the mortgage at issue in this case, the Romeros were making monthly payments
on their home of approximately $1,200 to New Century Mortgage Corporation (New
Century). In early 2006, the Romeros were behind on the New Century loan, which had an
estimated payoff of $176,450.08, and were in debt on credit card and other loan obligations.
Mr. Romero wanted to refinance his home loan in order to repay his debts and to revitalize
the Romeros’ clothing and music store in Espanola, New Mexico. As a result, the Romeros
accepted and signed a new home loan offered by Equity One, Inc. (Equity One) for $227,240
that repaid their existing home loan, credit card debt, and other obligations. The loan also
gave the Romeros $31,164.82 in cash to pay bills and restock their store. Monthly payments
of $1,683.28 became due starting August 1, 2006.

{3}     In September 2007, the Romeros stopped making payments on their mortgage and
note. They fell behind in repaying the home loan, and by the end of the year, the Romeros
owed over $8,000 in payments and fees. They were also eventually locked out of their store
for failure to pay rent. The Romeros agree that they were properly served with notices of
delinquency and default. Although the Romeros were given an opportunity to cure their


                                               2
default, they did not do so; and on April 1, 2008, the Bank, as trustee/assignee of the
Romeros’ mortgage, filed its complaint for foreclosure.

{4}      The Romeros answered the complaint and admitted that they had entered into the
mortgage and note and that they were several payments behind on the loan. The Romeros
also counterclaimed against the Bank, alleging deceptive loan practices and unfair trade
practices. The Romeros’ basic contention is that Equity One took advantage of them—two
individuals with limited education— and coerced them to incur a debt that Equity One knew
they could never afford. Based on these allegations, the Romeros claimed that the Bank had
(1) failed to disclose the “actual rate upon the home loan” as required by the HLPA; (2) had
“flipp[ed]” the loan in violation of Section 58-21A-4(B); (3) had engaged in predatory
lending practices including using deceptive marketing, concealing fees and costs, and
structuring the loan to strip the Romeros of their equity; and (4) had violated the federal
Truth in Lending Act (Regulation Z), Real Estate Practices Act, as well as the New Mexico
HLPA and UPA.

{5}      After a bench trial, the district court entered findings and conclusions, ruling in favor
of the Bank and ordering the sale of the Romeros’ home. The district court found, among
other things, that the Bank did not engage in “flipping” because the loan resulted in a
“reasonable, net tangible benefit” to the Romeros, nor did it violate the UPA. Further, the
district court found that the HLPA did not apply to the Bank because it was preempted by
federal law. The district court ruled against the Romeros on all of their counterclaims.

{6}     On appeal, the Romeros raise five issues challenging seven of the district court’s
findings of fact and three of its conclusions of law. The Romeros contend that, with the
exception of the court’s ruling on preemption, which they claim fails as a matter of law, the
remaining four issues fail based on lack of substantial evidence. Because we conclude that
substantial evidence exists for each of the district court’s findings and conclusions, and we
affirm on those grounds, we do not address the Romeros’ preemption argument.

DISCUSSION

Standard of Review

{7}     As we have noted, the issue raised by the Romeros and that we address in this appeal
is whether substantial evidence exists to support certain findings and conclusions made by
the district court. In accordance with our standard of review, the judgment of the trial court
will not be disturbed on appeal if the findings of fact entered by the court are supported by
substantial evidence, are not clearly erroneous, and are sufficient to support the judgment.
See Mascarenas v. Jaramillo, 111 N.M. 410, 412, 806 P.2d 59, 61 (1991) (stating that it is
the appellate court’s duty to interpret the trial court’s findings to determine whether they are
sufficient to support the judgment). When considering a claim of insufficient evidence, we
resolve “all disputes of facts in favor of the successful party and indulge[] all reasonable
inferences in support of the prevailing party.” Las Cruces Prof’l Fire Fighters v. City of Las
Cruces, 1997-NMCA-044, ¶ 12, 123 N.M. 329, 940 P.2d 177. Thus, “[t]he question is not
whether substantial evidence exists to support the opposite result, but rather whether such


                                                3
evidence supports the result reached.” Id. Finally, “we will not reweigh the evidence nor
substitute our judgment for that of the fact finder.” Id.

{8}     Before we turn to the issues in this case, however, we express our concern about the
Romeros’ brief in chief, which, in large measure, fails to conform to the New Mexico Rules
of Appellate Procedure. The brief contains almost no argument, it fails to cite the record,
and it fails to present the evidence as a whole. In order to properly support a challenge to
the sufficiency of evidence, the argument section of the brief in chief must include “citations
to authorities, record proper, transcript of proceedings or exhibits relied on.” Rule 12-
213(A)(4) NMRA. This Court has no duty to review an argument that is not adequately
developed. Headley v. Morgan Mgmt. Corp., 2005-NMCA-045, ¶ 15, 137 N.M. 339, 110
P.3d 1076 (declining to entertain a cursory argument that relied on several factual assertions
that were made without citation to the record). Further, where a party fails to cite any
portion of the record to support its factual allegations, we need not consider its argument on
appeal. Santa Fe Exploration Co. v. Oil Conservation Comm’n, 114 N.M. 103, 108, 835
P.2d 819, 824 (1992). Although the deficiencies in the Romeros’ brief make it almost
impossible to address many of their assertions, we consider their arguments where we can.

{9}    We begin our analysis with the issue of whether the Bank violated the HLPA’s
requirement that a borrower receive a reasonable, tangible net benefit as this appears to be
the crux of the Romeros’ appeal. See § 28-21A-4(B). We then turn to their remaining
arguments.

Substantial Evidence Supports the District Court’s Finding That the Romeros Received
a Reasonable, Tangible Net Benefit

{10} The New Mexico Legislature enacted the HLPA in 2003 in response to the harm that
predatory lending schemes were causing residents, resulting in the loss of home equity and
an increase in foreclosures. NMSA 1978, § 58-21A-2 (2003). Like most states in the nation,
our Legislature has found that such abusive practices are often intended to drive
unsophisticated consumers into making ill-advised financial decisions and, as a result, too
many homeowners find themselves victims of overreaching creditors. Under the HLPA, a
proposed loan that refinances an existing home loan has to sufficiently protect the interests
of the borrower from financial harm.

{11} Although it underwent substantial revisions in 2009, two provisions of the HLPA
applied to the Romeros’ 2006 loan. The first, Section 58-21A-4, applied to all home loans
and included restrictions on predatory lending practices such as “flipping” a loan and
encouraging default in connection with refinancing the loan. On the other hand, NMSA
1978, Section 58-21A-5 (2003) (amended 2009), sets forth limitations and prohibited
practices for “high-cost” mortgages. High-cost loans are those that exceed either a rate or
a points and fees threshold. NMSA 1978, § 58-21A-3(I) (2003) (amended 2009).

{12} On appeal, the Romeros do not challenge the district court’s finding that their loan
did not meet the “total points and fees threshold” or the “rate threshold” and, as a result, that
their mortgage was not a “high-cost” home loan under Section 58-21A-5 of the HLPA. We


                                               4
therefore consider the Romeros’ argument as it pertains to Section 58-21A-4 only. The
relevant provision of that section provides:

               B.      No creditor shall knowingly and intentionally engage in the
       unfair act or practice of flipping a home loan. As used in this subsection,
       “flipping a home loan” means the making of a home loan to a borrower that
       refinances an existing home loan when the new loan does not have
       reasonable, tangible net benefit to the borrower considering all of the
       circumstances, including the terms of both the new and refinanced loans, the
       cost of the new loan and the borrower’s circumstances.

Section 58-21A-4(B).

{13} The Romeros argue that substantial evidence does not support the district court’s
findings that the loan they received provided a “reasonable, tangible net benefit” to them,
as that term is used in Section 58-21A-4(B). In particular, they challenge the following
findings of fact and conclusions of law entered by the district court:

               62.    [The Bank] did not violate the [HLPA], [UPA], Regulation Z,
       or the Real Estate Settlement Procedures Act in the extension and servicing
       of the [Romeros’] loan.

               ....

              64.    The subject loan resulted in the payoff of several of the
       Romeros’ debts, and a $31,164.82 cash payment to the Romeros. The subject
       loan provided a reasonable, net tangible benefit to the Romeros.

               ....

               H.     [The Bank] did not engage in “flipping” as set forth in . . .
       [S]ection 58-21A-4(B) . . . as the subject loan resulted in a reasonable, net
       tangible benefit to the [Romeros].

               I.      [The Bank] did not violate the [UPA.]

{14} The Romeros’ argument is not entirely clear. They do not challenge the district
court’s reasoning that the payoff of several of the Romeros’ debts and a $31,164.82 cash
payment to the Romeros constituted a reasonable, tangible net benefit. Instead, they argue
that the new loan did not confer upon them a reasonable, tangible net benefit because the
loan was made with “no regard to the ability of the Romeros’ to repay” and because the loan
“clearly stripped [them] of their entire equity.” The Romeros go on to say that “[i]f [Equity
One] had asked for tax returns, [Equity One] would certainly have realized that Mr. Romero
had clearly misunderstood what the question was asking for when they asked for his gross
monthly income.” We begin with a review of the district court’s findings and then turn to
the Romeros’ argument.


                                             5
{15} The HLPA does not specify under what circumstances a “reasonable, tangible net
benefit” will be considered to exist. Here, the district court took several factors into
consideration in making that determination. The court began by noting that the Romeros
wanted to refinance their prior mortgage, reducing the equity in their property in order to pay
off other debts. The Romeros’ prior mortgage was in default at the time they signed the new
loan, leaving their home subject to foreclosure proceedings by New Century. In addition,
the Romeros were in debt and needed funds to revitalize their music and clothing store in
Espanola. In evaluating whether there was a reasonable, tangible net benefit to the Romeros,
the district court took into consideration those aspects of the 2006 loan that it found were not
beneficial to the Romeros, including the fact that their new loan had a higher monthly
payment, it required payment of costs and fees for the refinance, and the overall term of the
loan was extended. The district court nevertheless concluded that the Romeros received a
reasonable, tangible net benefit. It specifically found that the Romeros received a minor
benefit insofar as a lower rate was extended on the loan for an additional year, there was a
slightly lower cap on the interest rate, and the Romeros had signed a form acknowledging
they had received a reasonable, tangible net benefit. Of greater significance to the district
court, however, was the fact that with the new loan, the Romeros were able to pay off about
$9,000 in other debts, and they received a cash payment in excess of $30,000 as a result of
the transaction. Thus, the district court concluded that under these circumstances, “the
subject loan resulted in a reasonable, net tangible benefit to the [Romeros].” We are
persuaded that these findings—in particular, the cash out of over $40,000—support the
district court’s determination that, considering all of the circumstances, the Romeros
received a reasonable, tangible net benefit from the 2006 loan.

{16} As we have noted, the Romeros make a generalized argument that the refinanced loan
was made without regard to their ability to repay and that it stripped them of their entire
equity. They contend that “[c]ourts outside New Mexico have found that these predatory
practices are not acceptable.” However, the Romeros do not cite to any case in support of
this statement. Where a party cites no authority to support an argument, we may assume no
such authority exists. In re Adoption of Doe, 100 N.M. 764, 765, 676 P.2d 1329, 1330
(1984). The Romeros do not explain why the ability to repay a loan is or should be a factor
in assessing whether a borrower has received a reasonable, tangible net benefit under New
Mexico law. This Court has no duty to review an argument that is not adequately developed.
Headley, 2005-NMCA-045, ¶ 15 (declining to entertain a cursory argument).

{17} Notwithstanding the Romeros’ failure to develop their argument, we nevertheless
make two observations. First, we note that the issue of repayment ability and the resulting
prohibition on equity stripping is specifically addressed in the HLPA with respect to high-
cost home loans. See § 58-21A-4(C), (N). There is no such requirement in the provision
prohibiting flipping a home loan. See § 58-21A-4(B). This Court assumes that the
Legislature was fully aware of the language in all of the HLPA’s statutory provisions when
it enacted Section 58-21A-4(B) and that it chose not to require consideration and
documentation of a borrower’s reasonable ability to repay the loan when determining what
tangible benefit, if any, the borrower would receive from a mortgage loan. See Jicarilla
Apache Nation v. Rodarte, 2004-NMSC-035, ¶ 15, 136 N.M. 630, 103 P.3d 554 (“We
presume that the Legislature acts with full knowledge of, and consistent with, existing


                                               6
legislation.”). We are mindful that while the ability to repay a loan is an important
consideration when otherwise assessing a borrower’s financial situation, we will not read
such meaning into the statute’s “reasonable, tangible net benefit” language simply because
we are asked to do so.

{18} Additionally, it is noteworthy that in 2009, the Legislature amended Section 58-21A-
4 of the HLPA setting additional minimum standards and prohibited practices for creditors
making home loans. See § 58-21A-4(C)-(N). Under the new version of the statute, several
provisions have been added, including Section 58-21A-4(C), which provides, in part, “No
creditor shall make a home loan without documenting and considering the borrower’s
reasonable ability to repay that loan pursuant to its terms.” Similarly, Section 58-21A-4(D)
prohibits the making of a home loan without determining the borrower’s ability to repay
costs. Section 58-21A-4(B), however, is identical to the prior version. The 2009
amendments are not applicable to this case.

{19} We believe that the reasonable, tangible net benefit standard requires a finding that
the benefit of making the transaction outweighs the costs associated with the loan. In other
words, a lender must make a reasonable inquiry of the borrower that refinancing the existing
home loan is in the borrower’s interest. In this case, whether there was a reasonable,
tangible net benefit to the Romeros depended in large part on the importance of curing the
default on their prior mortgage, as well as paying off their debts and getting an infusion of
cash in an effort to get their business back on its feet. The district court found that at the
time of the loan, the refinanced mortgage enabled the Romeros to realize their goals of
obtaining debt relief and attempting to save their business. We agree with the district court
that, looking back, the price to the Romeros was high because their business ultimately
failed, and they were unable to make the payments on their new loan. However, we also
agree with the district court that viewing the new loan at the time it was accepted, the
Romeros received a reasonable, tangible net benefit from the 2006 mortgage and note
because it could have salvaged their business and saved their home from foreclosure by New
Century. For these reasons, we affirm the district court’s ruling that the Bank did not violate
Section 58-21A-4(B) of the HLPA or the UPA.

The Bank of New York, as Trustee for Popular Financial Services, Holds the Romeros’
Note and Mortgage

{20} The Romeros contend that there is not substantial evidence to support the district
court’s finding that the Romeros’ note and mortgage were held by the Bank and that, as the
legal and beneficial owner, the Bank is entitled to enforce the note and mortgage. The sum
of the Romeros argument is that “[t]he assignment stamps or endorsements that appear on
the note are to JP Chase Morgan, not the Bank of New York.” They point to no other
evidence, nor do they provide any support or citation for the proposition that such an
endorsement is required to transfer rights in a promissory note. In re Adoption of Doe, 100
N.M. at 765, 676 P.2d at 1330 (stating that an appellate court will not consider an issue if
no authority is cited in support of the issue, as absent cited authority to support an argument,
the court assumes no such authority exists). Furthermore, we have said that in order to
challenge the district court’s findings of fact as not supported by substantial evidence, a


                                               7
party must provide this Court with a summary of all the evidence bearing on the finding
being challenged, including the evidence that supports the trial court’s determination,
regardless of interpretation. Martinez v. Sw. Landfills, Inc., 115 N.M. 181, 184-85, 848 P.2d
1108, 1111-12 (Ct. App. 1993). The Romeros have failed to do this.

{21} Our review of the record shows that an assignment of mortgage was admitted into
evidence at trial without objection. The assignment transferred the mortgage and note at
issue in this case from Equity One to the Bank in June 2008. Kevin Flanagan, a senior
litigation processor for Litton Loan Servicing, a service provider for the Bank, testified that
the note and mortgage had been assigned to the Bank and that it had not been assigned to
another financial institution. With no evidence to the contrary, we conclude that the record
provides substantial evidence for the district court’s factual determination that the Bank is
the legal owner of the note and mortgage and had standing to enforce it when the complaint
for foreclosure was filed.

The District Court Did Not Abuse Its Discretion When It Rejected Harold Johnson’s
Expert Opinions

{22} After hearing the testimony of the Romeros’ expert witness, Harold Johnson, the
district court determined that Johnson did “not have sufficient knowledge, skill, experience,
training[,] and education under Rule 11-702 [NMRA] to testify as an expert witness in this
case.” Accordingly, the district court did not admit Johnson’s opinion testimony into
evidence. The standard of review on appeal for a district court’s decision regarding the
admission of expert testimony is abuse of discretion. “[T]he admission of expert testimony
or other scientific evidence is peculiarly within the sound discretion of the trial court and
will not be reversed absent a showing of abuse of that discretion.” State v. Alberico, 116
N.M. 156, 169, 861 P.2d 192, 205 (1993). “An abuse of discretion occurs when a ruling is
clearly contrary to the logical conclusions demanded by the facts and circumstances of the
case.” Sims v. Sims, 1996-NMSC-078, ¶ 65, 122 N.M. 618, 930 P.2d 153.

{23} The Romeros’ argument that there is not substantial evidence for the district court’s
findings concerning Johnson’s expertise is reduced to a single sentence: “Where, as a bare
investigator his opinion or knowledge of the Romero[s’] loan is quite substantial.” The
Romeros do not explain why they believe Johnson’s knowledge is substantial or why he was
qualified to render expert opinions about the legality of their loan, nor do they challenge any
of the district court’s specific findings as inconsistent with other evidence in the record.

{24} The district court found that although Johnson had worked as a loan officer, his
experience with respect to the type of loan at issue was very limited. Johnson testified that
he had only worked as a loan officer under a broker’s supervision and that he had only
occasionally performed HLPA calculations. He had no certifications, no specific training
or classes related to the issues in the case, and had never testified as an expert. The district
court also determined that Johnson’s opinions were not credible because they consisted of
“novel legal arguments regarding the interpretation of applicable statutes and rules which
are not supported by existing law.” Given these uncontested findings, we conclude that



                                               8
substantial evidence supported the exercise of the district court’s discretion to exclude the
testimony of Johnson and to exclude his opinions about the Romeros’ loan.

Substantial Evidence Supports the District Court’s Finding That the Romeros Had a
Sufficient Opportunity to Review the Loan Closing Documents

{25} Lastly, we turn to the Romeros’ assertion that they did not have an adequate
opportunity to review the loan closing documents and, therefore, the status of their loan
under the HLPA is necessarily affected. [BIC 8] The Romeros raise this issue under the
substantial evidence standard. As we have noted, “[s]ubstantial evidence is such relevant
evidence as a reasonable mind might accept as adequate support for a conclusion.” Samora
v. Bradford, 81 N.M. 205, 207, 465 P.2d 88, 90 (Ct. App. 1970). When determining whether
a finding of fact is supported by substantial evidence, we review the evidence in the light
most favorable to upholding the finding and indulge all reasonable inferences in support of
the district court’s decision. Id.

{26} The Romeros cite to evidence presented at trial that when they arrived at the title
company for their closing, the loan documents were not at the title company, they had to
wait, and the time allotted for the closing was shortened as a result. Mr. Romero testified
that he completed the 12th grade and that it would take him at least a week with a dictionary
to understand the documents. Mrs. Romero only completed the 10th grade. It appears that
the Romeros are arguing that they did not have enough time to review the loan documents,
and we can only assume that this means they would not have signed the documents if they
understood what the documents said.

{27} The district court found, however, that the Romeros did have an opportunity to
review all of the loan closing documents and that the closing agent made a good faith effort
to explain those documents to the Romeros at the closing. Further, Mr. Romero testified that
they received copies of the loan documents and had three days to examine them and exercise
their right to rescind the loan if they had problems with the transaction. We acknowledge
that loan documents are often lengthy, complex, and difficult to understand. However, upon
our review of the record, coupled with the fact that the Romeros had entered into a mortgage
previously and were familiar with the process, we cannot conclude that substantial evidence
did not support the district court’s findings that the Romeros had adequate time to review
the documents during the closing and after they had signed the loan.

{28} Without question, the Romeros’ financial situation has greatly deteriorated over the
past several years. Their debts have continued to pile up, they lost their business, and the
Bank now stands positioned to sell their family home. Notwithstanding this unfortunate set
of circumstances, however, we conclude that the record supports the district court’s finding
that neither Equity One nor the Bank violated the HLPA in this case.

CONCLUSION

{29}   For the reasons set forth above, we affirm the decision of the district court.



                                             9
{30}    IT IS SO ORDERED.

                                          _____________________________________
                                          LINDA M. VANZI, Judge

WE CONCUR:

____________________________________
MICHAEL D. BUSTAMANTE, Judge

____________________________________
CYNTHIA A. FRY, Judge

Topic Index for Bank of New York v. Romero, No. 29,945

AE                  APPEAL AND ERROR
AE-AJ               Appellate Jurisdiction
AE-FE               Fundamental Error
AE-HE               Harmless Error
AE-PA               Preservation of Issues for Appeal
AE-SR               Standard of Review
AE-SB               Substantial or Sufficient Evidence

CM                  COMMERCIAL LAW
CM-CP               Consumer Protection
CM-NI               Negotiable Instruments
CM-UP               Unfair Practices Act

CN                  CONTRACTS
CN-PN               Promissory Notes

EV                  EVIDENCE
EV-EW               Expert Witness

FL                  FEDERAL LAW
FL-PE               Preemption

MS                  MISCELLANEOUS STATUTES
MS-HP               Home Loan Protection Act
MS-UP               Unfair Practices Act

PR                  PROPERTY
PR-FC               Foreclosure
PR-MG               Mortgages




                                        10
