THE SHARKS ARE FEEDING ON THEMSELVES: ASSOCIATION OF FINANCIAL GUARANTY INSURERS NOTIFIES BANK OF AMERICA THAT ITS REPURCHASE OBLIGATIONS ON INSURED BOA SECURITIZATIONS ARE $10 TO $20 BILLION

October 18, 2010

In a letter dated September 2, 2010 from Teresa M. Casey, Executive Director of the Association of Financial Guaranty Insurers (hereafter AFGI) to Brian T. Moynihan, Chief Executive Officer and President of Bank of America Corporation (hereafter BOA), Ms. Casey notifies Mr. Moynihan of the obligations of BOA (including Countrywide Home Loans) which are owed to the financial guaranty insurance industry “arising from representations and warranties provided by BOA on securitizations, insured by our industry members, of home equity lines of credit (“HELOCs”), and first and second lien residential mortgage loans.” The letter states that while BOA has publicly announced its intention to challenge its representation and warranty obligations on a “loan by loan” basis, the AFGI “submits that this defensive posture will soon prove ineffective in shielding BOA from the financial, accounting, legal and other implications of its massive obligations to our industry members.”

How massive? The letter states that each of the industry members which has insured BOA securitizations has concluded, based on reports of third-party experts, that “well more than half” of the non-performing loans originated in 2005, 2006, and 2007 “qualify for repurchase by BOA”, and that the current estimate for repurchase liability is in the range of $10 to $20 billion for industry members alone. The letter states that “all of the HELOC securitizations and tens of billions of dollars of other residential mortgage (including first lien) securitizations sponsored by BOA were insured by our industry members”. The letter goes on to advise that the industry members “are committed to pursuing their rights against BOA for representation and warranty repurchases in connection with our insured securitizations.”

What does this mean for residential foreclosures initiated by BOA? it means that there is and will continue to be unresolved issues as to at least the following:

     (a)  whether a loan was misrepresented in any respect to the insurers, including the ability of the borrower to continue payments throughout the life of the loan. If so, this could provide evidence that the loan was predatory and result in a counterclaim or defense to a foreclosure by the borrower.

     (b)  the extent of available insurance on the loan (arising out of the apparent coverage and repurchase issues implicated by the letter), which itself gives rise to issues as to available setoffs against amounts claimed due and owing.

     (c)  the extent of payments made on defaulted loans in securitizations by whatever insurance may have been available prior to coverage being contested.

     (d)  if BOA persists in its “loan by loan” defensive challenge to coverage, a possible stay of any BOA-related foreclosure until it is determined whether securitization insurance on the particular loan the subject of the foreclosure is being challenged by BOA and pending the final disposition of any such challenge.

We have been hammering on these issues as to available insurances and setoffs in securitized loans for years. We have repeatedly sought this information in discovery only to receive objections. We have also had several opposing attorneys claim that no such insurance on securitized mortgage loans even existed. This letter proves that such insurance exists and has existed as to loans originated as far back as 2005, so opposing counsel either (a) lied, or (b) was not informed as to their own client’s operations.

Fortunately, we have had many courts in our cases deem this discovery relevant, and we have had many foreclosures dismissed for the foreclosing party’s failure to provide this very discovery with any refiling conditioned on the subject court-ordered discovery being provided in total. What we see happening in light of this letter are the assertion of additional defenses, additional discovery, and possibly additional claims being made by borrowers in securitization cases. Further, if the insurance industry is making such a claim against BOA, it is probably not long before similar claims will be made against Wells Fargo, US Bank, Deutsche Bank, and the others pursuing foreclosures.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com  

 

THE “DELAYED/LATE PAYMENT” SCAM TO RAILROAD BORROWERS INTO FORECLOSURE

October 15, 2010

We previously wrote on this website about various scams being engaged in by “lenders”, servicers, “trustee” banks, and the like with regard to “temporary forebearance agreements” which are, in our view and experience, nothing more than a method for the foreclosing parties to pull money from the borrower to fund their operations and attorneys for an ultimate foreclosure when the “permanent” loan mod request is denied. However, based on the literal slew of e-mails we have been receiving lately, there is apparently a new scam which seems to be intentionally designed to railroad borrowers attempting to work with the foreclosing party into a fraudulently manufactured foreclosure.

The fact pattern is always the same: the “lender”, servicer, etc. reaches out, at least on paper, to the borrower facing or in a foreclosure as to a possible workout with a payment schedule. There is an agreement made, and the borrower makes the first payment on time, receipt and delivery confirmed (e.g. certified mail RRR, Fedex, etc.), but the “lender”, servicer, or whoever made the offer then intentionally sits on the borrower’s payment, does not post it until after the “due date”, and then claims that the borrower defaulted on the agreement and proceeds to foreclosure. To add insult to this injury, many of the so-called “workout” agreements contain waiver of defenses clauses where the borrower gives up the right, by contract, to later contest or challenge the foreclosure.

This is plain, outright, blatent fraud. There is absolutely no excuse whatsoever, under any circumstances, for a foreclosing party who sets forth a payment schedule which the borrower complies with to not code the payment as received on the confirmed day of receipt. It thus appears, under the totality of the circumstances and in view of the frequency of the fact pattern, that what the “lenders”, servicers, and others are doing is to falsely lure the unsuspecting borrower into a set of false representations for the express purpose of fraudulently manufacturing a foreclosure while depleting the borrower’s liquid reserves which could have been used to defend the foreclosure.

In view of the recent revelations in the depositions of employees of the law offices of David J. Stern where a multitude of instances of illegal and unlawful conduct were revealed (which actions were engaged in to force foreclosures through the system due to the pressure by the lenders, etc.), we are not surprised at what we are hearing. What needs to be done, however, is to vehemently challenge these fraudulently manufactured foreclosures and, if appropriate under the proper circumstances, assert claims for money damages as well.

Jeff Barnes, Esq., www.ForeclosureDefenseNtionwide.com

CITIBANK DROPS STERN; JPM DROPS MERS; ROBO-SIGNER DEPOSITIONS REVEAL MASSIVE FRAUD

October 13, 2010

In a national press release, Citibank has announced that it is dropping The Law Offices of David J. Stern as foreclosure counsel due to and pending the investigation of Stern’s office by the Florida Attorney General.

In a separate release, JPMorgan Chase announced that it is withdrawing from MERS in connection with legal challenges to foreclosures. We expect others to follow in an effort to try to circumvent the chain of title and document problems created by interjecting MERS into the mortgage loan process. What this tells us is that there was never, at any time, any authority to have MERS assume any role, title, or function in connection with a mortgage loan other than as an electronic tracking system, and thus the conclusion is that MERS was deliberately used as an instrumentality for the express purpose of ultimately furthering the perpetration of a fraud upon borrowers.

In another headline, depositions of “robo-signers” and other investigations have revealed that financial institutions and their servicing units hired hair stylists, WalMart floor employees, and assembly line workers and installed them as “foreclosure experts” with no formal training to further foreclosures.

The tsunami of fraud which we have been talking about for years is thus finally coming to the fore and is being set forth “on the record”. Again, we believe that this fraud will permit tens of thousands, if not hundreds of thousands, of foreclosure victims to successfully petition the courts to re-examine their foreclosures for fraud, document irregularities, and other legal infirmities, and will probably lead to the filing of significant damage claims as well.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

 

 

 

OREGON FEDERAL COURT GETS IT RIGHT AGAIN: INJUNCTION GRANTED AGAINST SALE; MERS NOT A BENEFICIARY

October 12, 2010

In a decision rendered October 6, 2010, an Oregon Federal Judge has granted the borrower’s preliminary injunction prohibiting a trustee’s sale and has once again noted that pursuant to decisional law, MERS is not a beneficiary despite claiming to be so and claiming the right to substitute the trustee for purposes of advancing a foreclosure. The case involves Bank of America as a successor trustee to a LaSalle Bank securitization with Mortgage Lenders Network as the originating lender; Litton as the servicer; LSI as the title company; and Quality Loan Service (of San Diego) as Defendants in addition to MERS.

The opinion cites the Landmark v. Kesler, Bellistri v. Ocwen, and Saxon v. Hillery cases in support of its position as to MERS in addition to the recent In Re Allman decision from the Oregon Bankruptcy Court, and rejects the pro-MERS decisions cited by the Defendants in their Motion to Dismiss.

We have also been notified by one of our readers that the State of Washington is also issuing rulings that foreclosing parties are lacking critical documents to foreclose. We will publish more details on this.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

BANK ADMISSIONS MAY CONSTITUTE NEWLY DISCOVERED EVIDENCE FOR PURPOSES OF UNWINDING FORECLOSURES

October 11, 2010

We celebrate Columbus Day today today for his finding a new world. We also today celebrate today the continuing admissions and relevations being made by various banks and servicers (Bank of America, GMAC/Ally Bank, and JPMorgan Chase) that many of the foreclosures which they “processed” may have been legally infirm due to, among other things, “document irregularities”, which is a sugar-coated way of saying that they essentially filed fraudulent documents to foreclose. We here at FDN are going into our third straight year of seeking, in discovery, the alleged authority of the various “lenders”, servicers, “trustee” banks, and “successors by merger” entities to foreclose, and more and more courts are finally starting to seriously question this authority instead of blindly accepting whatever the foreclosing party alleges or files.

The real advantage of these admissions for the borrowers is that they may be construed to constitute “newly discovered evidence” in the context of seeking to set aside or “unwind” a foreclosure which has already taken place. Obviously, the borrower could not have discovered something which the banks, servicers, etc. have just now revealed, especially when these foreclosing parties previously took the position that the foreclosure documents were legitimate. This newly discovered evidence, which has ONLY been recently made available by the foreclosing parties themselves, should be sufficient to mount a challenge against a foreclosure which has already been “processed” so that the borrower can seek to unwind it. Further, as the banks, servicers, etc. are essentially admitting that they engaged in fraud by nondisclosure of the legal infirmities in their documents, a fraud by omission claim could be advanced for the purposes of the borrower’s seeking damages remedies against the offending foreclosing parties.

Since we posted our prior article on this website as to the real upshot of these recent revelations, we have been receiving hundreds of inquiries from borrower victims of foreclosures which went otherwise unchallenged or incompletely defended, which is one of the reasons which our network is expanding at a rapid rate. What will really be interesting is the deposition testimony and other matters which will be revealed in formal discovery so that we may understand the real magnitude of the fraud and continue to seek justice for borrower victims of the illegal foreclosures.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

FDN’s 30th AFFILIATE LAW FIRM ADDED; NUMBERS 31, 32, AND 33 ON THE WAY

October 10, 2010

FDN is pleased to announce the addition of attorney R. Harvey Dye, Esq. as the network’s 30th affiliate law Firm. Mr. Dye is located in Anthem, Arizona and is working with Jeff Barnes, Esq. on cases in Yavapai County, AZ.

FDN will shortly be adding affiliate counsel in Tennessee, Kentucky, and Michigan as well, and we have had inquiries from law Firms in Arkansas and Georgia requesting to become part of our ever-growing network.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

FDN ANNOUNCES LAW FIRM FORECLOSURE DEFENSE CONSULTING

October 7, 2010

We have recently received a number of requests from law Firms around the United States for assistance with case screening, discovery, case management, and litigating foreclosure defense issues. FDN principal Jeff Barnes, Esq. will thus be forming a private consulting entity to personally assist law Firms in setting up foreclosure defense departments and educating attorneys and their paralegals in order to better serve foreclosure clients. Details are available by e-mailing us.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

 

THE REAL UPSHOT OF THE ATTORNEY GENERAL INVESTIGATIONS, ATTORNEY GENERAL LAWSUITS, AND TEMPORARY STOPPAGE OF FORECLOSURES BY BANK OF AMERICA, JPMORGAN CHASE, AND GMAC/ALLY BANK: TIME TO START UNWINDING THE FRAUDULENT FORECLOSURES PAST

October 7, 2010

The recent investigations of Florida foreclosure mills by the Florida Attorney General’s Office; the Attorney General filings in Ohio and other states; and the recent temporary foreclosure stoppages by Bank of America, JPMorgan Chase, and GMAC/Ally Bank because of “document irregularities” are news and are well-discussed on the internet. However, no one is discussing what the real upshot of these matters are in terms of their effect on victims of the fraudulent foreclosure practices perpetrated by the wrongdoers.

Literally millions of foreclosures were railroaded through the system with missing documents, fraudulent documents, and incomplete proofs before the judiciary was made aware of the fraudulent practices of those undertaking these actions. The majority of the victims of these practices originally believed that they had no defense to a foreclosure, and many still do not know that they do. What these AG investigations, etc. have done is to send up a red flag that many of the foreclosures which have already been “processed” are probably open to being challenged and possibly set aside on grounds that the judgments were void or were procured by fraud.

Most states have the equivalent of Federal Rule 60 which provides a legal mechanism to seek to vacate and set aside a judgment for a number of defined reasons. The state versions are usually pursuant to a procedural rule, and provide that a judgment may be challenged on the grounds that it was procured by fraud or is void or suffers from some other infirmity. Although there is generally a one-year time limit on these types of Motions, several states have a “catch-all” provision within their rules which has no such limit to challenge the judgment on “any other grounds”.

As such, the next wave of foreclosure litigation is most probably going to be legal proceedings instituted by borrowers/homeowners/investors who were victimized by the likes of The Law Offices of David J. Stern, The Law Offices of Marshall C. Watson, Shapiro & Fishman, and other foreclosure mills which perpetrated millions of fraudulent foreclosures. With the massive amount of foreclosure judgments which were entered within the past year, the number of challenges is probably going to be significant, but necessary to preserve the integrity of the judicial system and further foreclosure reform.

Foreclosure victims should thus pull their entire court file and scrupulously examine all documents in the file for possible irregularities. A deposition of someone from the Stern law Firm taken by the Florida Attorney General’s office is being posted on the internet where the deponent testifies, under oath, as to signatures of persons on documents not being by the named signatory; “floating” notary stamps used by others than the given notary; and directives given to workers by Stern paralegal Cheryl Samons to undertake actions which were, shall we say, suspect and questionable at best.

Exposing these frauds and illegal actions is necessary. Challenging fraudulent foreclosures is necessary. Educating the judiciary to the extent of these frauds is necessary. Enforcing the rules on vacating judgments procured by fraud is necessary. It is only in this way that true justice will be achieved.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

 

FINALLY! CONGRESS BLASTS FANNIE MAE FOR USING FLORIDA FORECLOSURE MILLS UNDER INVESTIGATION BY FLORIDA ATTORNEY GENERAL FOR FRAUD

October 1, 2010

In a detailed, 2-page letter on the letterhead of the Congress of the United States dated September 24, 2010 signed by representatives Alan Grayson, Barney Frank, and Corrine Brown to Michael J. Williams, President and CEO of Fannie Mae, Congress advises that it is “disturbed by the increasing reports of predatory ‘foreclosure mills’ in Florida working for Fannie Mae servicers” especially when four of such “mills” are “under investigation by the Attorney General of Florida for fraud”. The letter notes that several of the busiest of these mills show up as members of Fannie Mae’s Retained Attorney Network.

The letter states that “The legal pressure to foreclose at all costs is leading to a situation where servicers are foreclosing on properties on which they do not even own the note” and that this practice “is blessed by a legal system overwhelmed with foreclosure cases and unable to sort out murky legal details, and a set of law firms who mass produce filings to move foreclosures as quickly as possible.” Congress requests that Fannie Mae remove the foreclosure mills under investigation for document fraud from the Retained Attorneys Network, and that “Fannie should have guidelines allowing servicers to proceed on a foreclosure only when its legal entitlement to foreclose is clearly documented”. Congress is thus now thinking along the same lines as the Florida Courts and the Supreme Court of Florida which require that chain of title to a mortgage and note be established by valid, admissible evidence and that foreclosure lawsuits be verified.

The letter goes on to ask: “Why is Fannie Mae using lawyers that are accused of regularly engaging in fraud to kick people out of their homes?” and “what steps is Fannie Mae taking to avoid the use of foreclosure mills?” and further “What additional steps is Fannie Mae going to take to ensure that foreclosures are done only when necessary and only in accordance with recognized law?” As to the first question, we have our own suspicions. As to the second and third, the answer is obviously “none”.

It is no secret that the “mills under investigation” are Shapiro & Fishman, The Law Offices of David J. Stern, and The Law Offices of Marshall C. Watson. Shapiro & Fishman has, notably, become very aggressive and arrogant in its tactics as we have personally evidenced in several cases. Stern’s misdeeds are a matter of public record and court documents.

Suspicious? You bet. Insidious? Absolutely. A possible ROCI conspiracy? Maybe. Looks like we are going to have to start doing some intensive discovery here.

Jeff Barnes, Esq., www.ForeclosureDefensenationwide.com

 

VICTORY IN OREGON FEDERAL COURT: JUDGE DENIES MOTIONS TO DISMISS FILED BY ONE WEST BANK AND MERS; INJUNCTION AGAINST SALE GRANTED FOR DURATION OF BORROWERS’ LAWSUIT; ONE WEST’S COUNSEL ADMITS ON THE RECORD THAT MERS CANNOT TRANSFER PROMISSORY NOTES

September 30, 2010

FDN attorneys Jeff Barnes, Esq. and Elizabeth Lemoine, Esq. have achieved a significant victory in Federal Court in Oregon. On Tuesday, September 28, Mr. Barnes and Ms. Lemoine defended and argued Motions to Dismiss the borrowers’ lawsuit challenging a nonjudicial foreclosure. The Motions were filed by the Defendants OneWest Bank and MERS. The action was originally filed in state court where a temporary restraining order was entered stopping the sale. On the eve of the scheduled hearing on the borrowers’ Motion for Preliminary Injunction, Defendants OneWest Bank, MERS, and Regional Trustee Services removed the case to Federal Court in an obvious attempt to circumvent the state court injunction hearing. The Federal Court entered an Injunction and scheduled a hearing on the Motions filed by the Defendants.

During the course of the hearing, the Court repeatedly raised the “MERS as nominee” issues to counsel for the Defendants, with said counsel finally admitting, upon repeated inquiry by the Court, that MERS cannot transfer promissory notes. The Court denied the Motions to Dismiss and has, by Order, commanded the injunction against the sale to remain in place through the duration of the borrowers’ lawsuit.

The questions posed to the Defendants’ counsel by the Court on the record demonstrate, again (as with the concerns of the Michigan court highlighted in our other post today), that courts are really starting to examine the inconsistent claims made by MERS (e.g. that it is “solely a nominee” yet purports to have authority to further foreclosures by, among other things, transferring promissory notes and appointing successor trustees). As those of you who follow this website know, what the case law is consistently holding is that MERS cannot do what it has purported to do (and has done in what appears to be over sixty (60) million mortgage transactions nationally).

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com