July 7, 2011

FDN is now entering its fourth year assisting borrowers nationwide in challenging and defending foreclosures. Our attorney network has grown from the Barnes Firm and one local counsel in the eastern United States in early 2008 to some 38 local counsel nationally in over 30 states ranging from Hawaii to New Jersey to Minnesota to Texas to Arizona and throughout the US. The website has had over 3.8 million hits to date.

Our network has successfully brought issues such as to securitization, MERS, toxic assignments, and foreclosure irregularities to the attention of courts in each of the states where we litigate, and we have had numerous foreclosures dismissed and have been awareded attorneys’ fees in others. We have forced the lenders and servicers to produce discovery which, from 2008 to 2009, they claimed to be “privileged” or “subject to privacy interests”. We have successfully established in Michigan the fatal flaw of noncompliance with the PSA resulting in summary judgment for the borrower. 

The Oregon Trial Lawyers’ Association has recently filed an Amicus Curiare Brief in support of our pending appeal in the Oregon Court of Appeals on the MERS issue, which is as yet undecided on the appellate level in Oregon. Recently, we have implemented the holding from In Re Veal to challenge Proofs of Claim and Motions for Relief From Stay in the Bankruptcy Courts, as the Veal case has, according to at least one Washington Bankruptcy Judge, “changed everything”. Our network is becoming more and more involved in Federal Bankruptcy work due to the wealth of positive decisions from the BK courts.

Which brings us to Veal. The decision is a 46-page virtual encyclopedia as to issues arising out of Article 3 and Article 9 of the Uniform Commercial Code as they relate to promissory notes and mortgage instruments (finally dispelling the myth propounded by foreclosing attorneys that a promissory note on a mortgage loan is a “negotiable instrument” under Article 3 when in fact it is not as it is tied to a security instrument, thus implicating Article 9 of the UCC and the issues of delivery and proof of delivery), and standing and real party in interest requirements for POCs and stay relief requests. The case, which reversed the Arizona Bankruptcy Court’s grant of stay relief and denial of the borrower’s objection to claim, emanates from the 9th Circuit Bankruptcy Appellate Panel, which covers the Bankruptcy Courts in Alaska, Hawaii, Washington, Oregon, California, Nevada, and Artizona.

The decision clarifies and binds those Bankruptcy trial courts listed above on issues which borrowers have been raising for years, and provides a framework for objections to POCs and challenges to Motions for Relief From Stay. We expect the impact of the decision to “travel east” to other Bankruptcy courts, with our network attorneys advancing the principles from Veal across the nation.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com


July 6, 2011

Many attorneys and paralegals have been inquiring about our next foreclosure defense seminar. Unfortunately, someone who Mr. Barnes recently met with in Florida to discuss a possible seminar has, without Mr. Barnes’ permission or consent, posted that there will be a seminar on July 26, 2011 at the Hyatt hotel in Sarasota, Florida.

THERE WILL BE NO SUCH SEMINAR ON THAT DATE. The person who posted this announcement on several internet bases had no authority to do so and did not even clear the announcement or date with Mr. Barnes.

This website will announce when Mr. Barnes will be conducting any seminar, and will advise if any third-party sources as to such seminars is valid or not.

Jeff Barnes, Esq., www.ForeclosureDefensenationwide.com


June 23, 2011

We have recently received a literal avalanche of inquiries in view of the now almost daily positive developments in court decisions as to issues such as those surrounding MERS, securitization, real party in interest, and the like. The problem, however, is that a great number of these inquiries are from borrowers whose cases have already gone to final judgment or whose properties have already gone to sale.

All of the information on the “other blogs” is great, but what these other blogs do not talk about is PROCEDURE. All courts in all jurisdictions, state and Federal, have specific timing requirements for asserting defenses to a foreclosure. The very Summons that accompanies a Complaint for Foreclosure in a judicial state has a specific number of days set forth in which any papers must be filed in response to the Complaint. If not, the foreclosing party may seek the entry of a default and a Final Judgment, as there is nothing in the court file from the borrower telling the court that they have defenses.

In the non-judicial states, a challenge to a foreclosure generally has to be made PRIOR to the sale. As we have repeatedly pointed out on this website, Washington state, for example, has a “use it or lose it” statute which provides that if a borrower does not challenge the sale prior to the sale date that the borrower is thereafter FOREVER barred from seeking to undo the foreclosure, and the ONLY remedy is damages. Although some jurisdictions permit a borrower to raise defenses to a foreclosure in an eviction proceeding, there are timing requirements for this as well.

Substantive defenses are meaningless without their being asserted pursuant to the proper procedures and within the timing requirements of court rules. Those websites which are managed by non-litigators who do not actually practice in court are thus giving borrowers false hopes if they do not qualify their information by stating that all such matters must be properly and timely raised by an attorney who regularly practices in this area.

We have seen many, many situations where a borrower pulled something off of some blog or website and tried to bring it up after a Final Judgment has been entered or on appeal when the matter was not raised before the case was appealed, and they are shocked and angered that the court did not accept their “defense” because it was not timely raised. The court is just following the law as to procedure, which is equally if not more important than the substantive law.

We have also seen many cases where the borrower claims that they were in “loan mod negotiations” and were told “not to worry” about the foreclosure, and did nothing to defend the case. If a borrower is told “not to worry about the foreclosure”, then the borrower needs to let the court know that, in writing filed with the court and copied to the foreclosing party’s attorney setting forth names, dates, etc., and do so IMMEDIATELY after the borrower is told this and within the response timeframe of the court rules. Remember, the Court only knows what is in the court file, and if there is nothing, the court presumes that the borrower chose not to defend or has no defenses. Trying to bring it up after the fact will most likely not work.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com


June 22, 2011

In an 11-page Order dated June 2, 2011, the United States District Court for the Central District of California has denied JPMorgan Chase Bank’s Motions to dismiss a borrower’s claims for violations of CA Civ. Code 2923.5, Wrongful Foreclosure, Quiet Title, Quasi Contract, Declaratory Relief, and Injunctive Relief in the matter of Javaheri v. JPMorgan Chase Bank, Case No. CV10-08185 ODW. The decision cites case law from the United States Supreme Court, the United States Court of Appeals for the 9th Circuit, and California state courts.

The borrower filed a Second Amended Complaint for numerous causes of action including those identified above. The loan had been originated by Washington Mutual Bank (WaMu), with the loan thereafter being securitized. JPM relied upon the Purchase and Assumption Agreement between JPM and the FDIC as Receiver for WaMu, contending that it had succeeded to all of WaMu’s assets, including the borrower’s note. (Significantly, and although not mentioned in the Javaheri Order, JPM has affirmatively represented to the United States District Court for the District of Columbia in separate Federal litigation that it is NOT the “successor in interest” to WaMu, and that it only purchased certain assets of WaMu from the FDIC.)

The borrower claimed that between November 13 and 30, 2007, WaMu transferred his Note to Washington Mutual Mortgage Securities Corporation and that the Note was sold to an investment trust and became part of a loan pool, PSA, CDO, mortgage-backed security or pass-through certificate, credit default swap, investment trust, and/or a special purpose vehicle. The loan was identified with a CUSIP number and the pool number. The court found that “Coupled with Plaintiff’s allegation that JPMorgan never properly recorded its claim of ownership in the subject property, the above mentioned facts regarding the transfer of Plaintiff’s Note prior to JPMorgan’s acquisition of WaMu’s assets raise Plaintiff’s right to relief above a speculative level”, warranting denial of JPM’s Motions to Dismiss as to the claims set forth above.

One of the more interesting theories raised was the “Quasi Contract” claim, where the borrower alleged that JPM was unjustly enriched by any payments made by the borrower to JPM which were not paid to the lender or beneficiary. The Court concluded, for purposes of pleading, that “if indeed JPMorgan did not own the Note yet received payments therefrom, those payments may have been received unjustly”. We believe that if in fact JPM fraudulently represented to the borrower that it did own or have rights to collect monies under the Note when in fact it did not, this would support a fraud-based claim as well.

The Court specifically found that “in the face of these specific factual allegations (by the borrower as to the securitization of the loan) JPMorgan’s assertion that the P&A Agreement suffices to establish their ownership of the Note is no longer viable. Indeed, the P&A Agreement does not specifically identify Plaintiff’s Note.” 

That quote exemplifies a central issue we have been confronted with in the numerous Chase/WaMu cases we have in litigation in various states: Chase claims to be the “successor in interest” to WaMu by virtue of its “acquisition” of the “assets” of WaMu, when in fact no such wholesale “acquisition” of mortgage loans across the board ever occurred, as evidenced in Javaheri and in the Federal litigation in the District of Columbia. Honestly, does JPM think that it can get away with taking one position in its contract and in “East Coast” Federal litigation and take a completely contradictory position in California Federal court?

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com


June 21, 2011

We have been receiving almost daily inquiries following the decision in the Hendricks case where the Michigan court granted summary judgment in favor of the Michigan borrowers represented by FDN network attorneys Jeff Barnes, Esq. and James Fraser, Esq. We have thus added additional affiliate counsel in Michigan so that representation is available to Michigan borrowers throughout the state who are seeking to defend against and challenge foreclosure.

Separately, a source published an article yesterday which was forwarded to us by one of our readers which stated that the “foreclosure mess” in New York alone will take 67 (yes, sixty-seven) years to resolve. Even assuming that estimate to be on the high side, we anticipate that foreclosures will continue into the millions per year for the coming years, especially given that certain banks and their downline foreclosure vendors (e.g. servicers, trustee sale companies, appraising brokers, etc.) have developed foreclosure into a well-entrenched business.

Remember, big-time securitization began in roughly the year 2000 and continued unabated until the last quarter of 2007, and in some cases into early 2008, thrusting into high gear after deregulation of the MBS industry. A freight train which has been running at that speed for 7 years is not going to stop in 2 or 3.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com


June 20, 2011

In response to numerous recent requests, we are in the process of scheduling another of our foreclosure defense seminars for attorneys and paralegals for either Friday, July 15 or Friday, July 22, 2011. Please e-mail us at jeff@wjbarneslaw.com if you have a preference for either date. We intend to publish the firm date for the July seminar, which will be held in our Newport Beach, California offices, by this Thursday, June 23, 2011. (There will be no seminar on June 24 as Mr. Barnes must travel out of town for court proceedings in Florida).

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com


June 14, 2011

Today, Mr. Barnes successfully defeated a Motion for Relief From Stay filed by Wells Fargo Bank National Association as Trustee for a Morgan Stanley securitized mortgage loan trust in a case in the United States Bankruptcy Court for Western District of Washington. The Bankruptcy Court denied the stay relief request finding that the Declaration submitted by Wells Fargo was void of any facts to show that Wells Fargo was a “person entitled to enforce” and that Wells Fargo did not satisfy its burden to show delivery, proof of delivery, and purpose of delivery.

The decision is supported by the recent 46-page opinion of the 9th Circuit Bankruptcy Appellate Panel in the matter of In Re Veal, opinion issued June 10, 2011, which reversed the Arizona Bankruptcy Court’s grant of stay relief to Wells Fargo and vacated that court’s denial of the debtor’s objection to a proof of claim filed by the servicer. The decision thoroughly discussed and analyzed the requirements of constitutional and prudential standing, Rule 17 real party in interest, evidence of “holder” and “person entitled to enforce”, and the interplay between Articles 3 and 9 of the UCC in the context of stay relief requests and objections to a proof of claim.

As the Veal decision emanated from the 9th Circuit BAP, we believe that it will have significant effects on challenges to foreclosure being asserted in Bankruptcy courts in California, Washington, Oregon, Arizona, Nevada, Alaska, and Hawaii. As it is an appellate court decision, servicers and “trustees” of securitized mortgage loan trusts who move for stay relief to foreclose will now be held to their significant burdens of proof to be entitled to seek such relief, and will no longer be able to rely upon conclusory declarations such as the one submitted in the WD Washington case argued today.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com


June 14, 2011

As those of you who follow this website know, Colorado has essentially a two-phase foreclosure process after a default is declared: the first being what is called a “Rule 120 proceeding” to schedule a Public Trustee’s sale, then the actual sale itself. The Rule 120 is essentially a “probable cause” hearing where the movant (the party claiming the right to foreclose) claims a default and, if applicable, that the borrower is not in the military, and requests that the Court schedule a sale date. The standard is quite low for the movant to prevail (simply establishing a “default” without going to the merits of whether the party claiming the default has the right to do so), but there is no preclusive effect on any separate proceeding the borrower may file to challenge the foreclosure; that is, the granting of a Rule 120 Motion to schedule a sale does not operate to preclude the assertion of defenses in a separately-filed action to challenge the foreclosure.

The problem is that although Colorado case law permits the real party in interest issue to be raised at a Rule 120 hearing, there is no direction from the Colorado appeals courts as to what the Rule 120 court is supposed to do with such matters when raised. In 1989, the Supreme Court of Colorado issued the Goodwin v. District Court for the 16th Judicial District decision, 779 P.2d 837 (Colo. en banc 1989) which held that the real party in interest issue can be properly raised in a Rule 120 proceeding, and that a court’s refusal to consider such evidence in resolving the issue of default adversely is tantamount to the taking of propery in summary fashion without any hearing at all, which is a violation of due process.

However, the decision does not direct the courts entertaining Rule 120 proceedings as to what weight to attach to real party in interest issues or whether if the borrower’s real party in interest issues raise questions of fact as to the legality of the party claiming default sufficient to deny the Rule 120 Motion. This procedural problem came to light in a Rule 120 hearing yesterday in Logan County, Colorado where Mr. Barnes represents a borrower who opposed the Rule 120 Motion in a case involving a securitization and the lack of any evidence of an assignment of the Deed of Trust or compliance by the securitized trustee movant with the PSA of the Trust of which the movant is the claimed “trustee”.

The court stated that the matters raised by the borrower as to the lack of evidence of any compliance by the securitized trustee bank with the PSA, the lack of any assignment of the Deed of Trust, and other issues were affirmative defenses to be asserted in a separate proceeding to challenge the foreclosure in an action for declaratory and injunctive relief where the issue of the foreclosing party to overcome these defenses is to be litigated, as the scope of the Rule 120 hearing is very narrow and the standard for the movant to have a sale date set is “very low”. This was the first such pronouncement that we are aware of by a Colorado court that issues surrounding compliance with the PSA and the like are in fact affirmative defenses to a foreclosure, but by a separate action. We believe that the procedural questions left unanswered by Goodwin contributed to this pronouncement, as Goodwin was raised by both sides at the Rule 120 hearing, albeit for different purposes.

Further, as agreed to by both counsel, there is no Colorado appellate decision as to whether MERS can effect any assignment of the Note or Deed of Trust or the circumstances under which any MERS assignment may take place. Colorado thus remains one of those jurisdictions where issues surrounding MERS and securitization issues are as yet undecided on the appellate level.

Separately, a recording Clerk in Massachusetts has stated that foreclosure documents executed by known “robo-signers” will no longer be accepted for recording. This is a very positive development toward precluding the perpetration of fraudulent foreclosures. The statement comes following the Ibanez decision which was directly decided on the issue of a legally flawed recording of foreclosure documents.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com


June 6, 2011

FDN attorneys Jeff Barnes, Esq. and James Fraser, Esq. have scored what appears to be the first decision in Michigan granting summary judgment to borrowers against a securitized mortgage loan trust and MERS based on the failure of the Defendants to comply with the terms and conditions of the Pooling and Servicing Agreement and New York Trust law as to the purported conveyance of the borrowers’ loan to the trust. The decision also appears to be only the second in the entire United States on this specific legal issue, the other being the recent Horace decision from Alabama.

The borrowers sued US Bank National Association as Successor Trustee to Bank of America as successor by merger to LaSalle Bank as Trustee for a First Franklin Mortgage Loan Trust, MERS, and First Franklin for Declaratory and Injunctive Relief to declare that a nonjudicial foreclosure was void. The Court, after full briefing, granted the Plaintiff borrowers’ Motion for Summary Judgment in a 7-page written opinion. The Court cited to the recent Residential Funding v. Sauerman decision from the Michigan Court of Appeals and detailed the history of MERS, rejecting the Defendants’ contention that the Defendants could grant MERS authority to take action where Michigan statute prohibits it.

Most important, however, is the Court’s holding that the securitized trustee bank (US Bank) never actually received ownership of the Plaintiffs’ loan because the loan was not ever properly transferred to US Bank according to the terms of the PSA, and that the assignments did not follow the law of trusts in the State of New York. The Court found that the MERS assignment to US Bank did not comply with the chain of intervening assignments required by the PSA:

    “Defendants’ failure to strictly comply with the terms of the PSA means that the loan at issue was never properly transferred to the trust. Any transfer of mortgage loans, such as Plaintiffs, was mandated to comply with New York Trust law and the terms and conditions of the PSA governing conveyance of mortgage loans into the Trust. This the Defendants did not do. The Court finds that the [MERS] “Assignment” recorded on December 30, 2009 in the Washtenaw County Register of Deeds serves to transfer nothing. The alleged conveyance failed to comply with the terms and conditions of the PSA and New York Trust law which governs the PSA. The alleged conveyance stated that MERS assigned the Mortgage and Promissory Note to USB, however, there has been no evidence presented to support the chain of the required assignments and endorsements of the mortgage and note as required by the terms and conditions of the PSA….Therefore, the purported transfers, endorsements or assignments are void ab initio or never properly transferred to the Trust.” (emphasis added)

The Court granted summary judgment to the borrowers and declared that the nonjudicial foreclosure sale was void ab initio.

This extremely well-written decision demonstrates that the Horace decision was not isolated, and also demonstrates that millions of MERS “assignments” which did not comply with the strict requirements of a PSA governing a securitized mortgage loan trust are worthless and of no legal effect.

The drafting of the pleadings, Plaintiffs’ Motion for Summary Disposition, and briefing was a joint effort of Mr. Barnes and Mr. Fraser.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com


June 3, 2011

We hope that everyone had a safe and happy Memorial Day holiday.

Today, Jeff Barnes, Esq. appeared in court hearings in three separate counties in New Jersey on Motions to Compel Discovery which were filed by him and his local counsel. An Order was entered in one case compelling IndyMac to produce trust documents relating to an admitted Fannie Mae securitization (over the objection of IndyMac’s counsel), and compelling depositions of HSBC “as Trustee” and Ocwen Loan Servicing in a separate case where HSBC, although admitting a secuitization, claims that “there is no Pooling and Servicing Agreement”. New counsel for the Plaintiff in the third case agreed to produce certain of the discovery in lieu of defending the Motion.

Separately, Mr. Barnes has been recently admitted to courts in Washington, Tennessee, and Minnesota pro hac vice where he is assisted by local counsel.

The FDN network also expanded last week, adding local counsel Michael Collins, Esq. in Maui, Hawaii in connection with Mr. Barnes recently receiving requests for representation in six cases in Maui. Mr. Collins’ Firm also practices Bankruptcy and handles ejectment (eviction) proceedings.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com