November 9, 2010

In what can only be described as one of the most arrogant hypocracies in foreclosure litigation, MERS’ own “Terms and Conditions” with its lenders and servicers, which was recently produced to us in court-ordered discovery, expressly states that the MERS system is not to be used to create or transfer interests in mortgage loans. The MERS contract goes on to state that MERS is never to be identified as the owner of the promissory Note in any foreclosure proceedings, and that MERS will monetarily fine any offenders who do so.

Notwithstanding these self-imposed limitations, MERS has and continues to act as the purported “assignor” to assign mortgages AND PROMISSORY NOTES to foreclosing parties in both judicial and non-judicial foreclosures, affirmatively representing that it is assigning the Mortgage (or Deed of Trust) “together with the Note or other indebtedness”. The overwhelming case law from the state, Federal, and Bankruptcy Courts throughout the United States which have dissected the MERS claim have come to the same universal conclusion, which MERS’ own counsel recently admitted on the record in one of our cases: that MERS does not own promissory notes, thus it cannot transfer them.

How, then, does MERS attempt to assign a Mortgage or Deed of Trust “together with the Note”? It lies, pure and simple, and hopes that the unsuspecting borrower does not catch it. Remember, MERS told the Supreme Court of Nebraska, through its attorney, that MERS does not loan money, does not own mortgage loans, does not extend credit, etc., so that MERS would not have to register as a mortgage lender and could thus avoid paying fees. However and despite these representations to a state supreme court by its own attorney, MERS goes to all of the other 49 states and says the exact opposite in the various “assignments”: by claiming ability to assign the Note, it is both creating an interest in the Note which it never had and is also transferring an interest in a mortgage loan, both of which MERS’ own Terms and Conditions say MERS cannot do.

To add insult to injury, MERS also, as the purported “beneficiary” of the Deed of Trust, also attempts to substitute the Trustee to further a foreclosure in the non-judicial states. As the case law has overwhelmingly stated (including the recent Federal decisions in California and Oregon and the prior decisions from Nevada and other states), MERS is NOT a “beneficiary” despite claiming to be so in Deeds of Trust, as the “beneficiary” is the party for whose benefit the Deed of Trust is given, that being the lender. An Oregon Federal case recently analyzed the statutory definition of “beneficiary” under the Oregon Trust Deed Act and concluded that MERS is not the “beneficiary” despite claiming to be so.

So the MERS hypocracy rolls on. It is up to us who actually read and understand the case law and go around the country teaching this to the Courts to continue to do so, especially with attorneys for “lenders”, “servicers”, and trustee banks continuing to chant their one-themed mantra: “the Deed of Trust says MERS is the beneficiary; therefore it is so”. We applaud those Courts who have analyzed the MERS facade and have said it is not so.

Jeff Barnes, Esq., www/


November 2, 2010

In an October 25, 2010 letter from Deutsche Bank to “All Holders of Residential Mortgage Backed Securities For Which Deutsche Bank National Trust Company or Deutsche Bank Trust Company Americas Acts As Securitization Trustee”, DB reports on “alleged deficiencies” in certain foreclosure proceedings and advises of the prior issuance, by the DB Trustee, of an “Urgent and Time-Sensitive Memorandum” dated October 8, 2010 to its Securitization Loan Servicers regarding servicing foreclosure procedures, demanding that the servicers “comply with all applicable laws relating to foreclosures”. The thrust of this letter, as we see it, is to shift the blame for any wrongful foreclosure practices to the servicers, saying “we told them to comply with the law”, the inference being that DB was not aware of the fraudulent foreclosure practices being engaged in by their servicers and “agents” (that being the attorneys and trustee sale companies who prosecute judicial and non-judicial foreclosures for DB as “trustee”).

Please. Foreclosures are delivered in file boxes to the servicers and attorneys and DB did not engage in any oversight to make sure their own agents (servicers and attorneys) complied with the law? Do they think the investors just fell off the back of the turnip truck?

The October 8, 2010 “Urgent and Time Sensitive” Memorandum attached to the October 25, 2010 Memo makes things even more interesting. Here are some select quotes:

    “The Governing Documents typically require the Trustee to furnish the Servicer with powers of attorney that allow the Servicer to sign documents and institute legal actions, including foreclosure proceedings, in the name of the Trustee on behalf of the Trusts in connection with these servicing activities…. Recent media reports suggest that the Alleged Foreclosure Deficiencies may include the execution and filing by certain servicers and their agents of potentially defective documents, possibly containing alleged untrue assertions of fact, in connection with certain foreclosure proceedings. The reported scope of such alleged practices raises the possibility that such documents may have been filed in connection with foreclosure proceedings relating to mortgage loans owned by the Trusts and may have been executed under color of one or more powers of attorney granted to Servicers pursuant to the Governing Documents. Any such actions by a servicer or its agents would constitute a breach of that Servicer’s obligations under the Governing Documents and applicable law.”

Read that carefully: “raises the possibility” that deficient documents “may” have been filed under “color of” powers of attorney, and if so, this would constitute a breach of contract and violations of law. Disputed issues of material fact precluding summary judgment, anyone? Telling the servicers that any counterclaim for wrongful or illegal foreclosure is the problem of the servicer and their attorneys? We don’t think so. Agent liability generally flows upstream to the principal, sometimes even in instances where the agent committed illegal acts, and contractual disclaimers are not always a defense.

So what we have here is DB tacitly admitting that its servicers and attorneys “possibly” filed fraudulent foreclosure documents (which we all know did in fact happen, with “robo-signer” assignments, backdated notaries, etc.), which if done “under color of” required powers of attorney, is illegal on more than one front.

As those of us who defend foreclosures in the judicial states know, there is NEVER, EVER, any such power of attorney attached to a foreclosure Complaint showing that the servicer or agent had authority to file the foreclosure, and when we request documentary evidence of such authority in discovery, we get “objections” as “irrelevant”. We have also not seen any such POAs or documented compliance with these or the Governing Documents recorded in non-judicial foreclosures we defend, either.

So here’s what needs to be done: In all “Deutsche Bank as Trustee” instituted foreclosures, discovery needs to be demanded as to these alleged “powers of attorney”, all evidence of compliance therewith, all evidence of oversight/monitering to insure compliance, etc., and without such evidence, motions for summary judgment (and/or, to dismiss in judicial foreclosures) should be filed by the borrower’s attorney. If these documents start magically appearing (like post-filing “assignments” with backdated effective dates and backdated notaries started appearing), well, the attorneys know what to do.

The final thought: if DB issued such a warning to its servicers and agents, we have to believe that Wells Fargo, Bank of America, US Bank, and the other “securitized trustee banks” either have, are, or should be issuing similar warnings. If not, that is just more evidence of lack of authority and compliance with the law, leading to further defenses to foreclosure.

Jeff Barnes, Esq.,  




November 1, 2010

We previously announced the FDN foreclosure defense seminar series on this website, including topic areas and registration requirements. In view of the literal slew of recent inquiries, we are essentially re-publishing this information at this time.

Each session consists of an entire day of instruction with seven (7) hours of CLE credit available to those whose state Bars accept CLE certification from other mandatory CLE states. The Florida Bar has accredited the entire series of 12 one-hour blocks for 12 CLE hours. However, the one-day sessions cover seven (7) of these in order to provide the most beneficial information for attorneys and paralegals currently involved in foreclosure defense. The entire series was developed to give both overviews and instruction for those who had never done or had only minimal foreclosure defense experience.

Registration is limited, for each session, to fifteen (15) participants who must be either licensed attorneys or paralegals employed by an identified law Firm, and will cover topic and practice areas relating to identification of issues and defenses, MERS, discovery, motion practice, filing and defending dispositve motions, mediation, post-judgment and post-sale challenges, eviction/UD/FED actions, and bankruptcy issues, among others.

The dates for the currently scheduled seminars are: Friday, November 19, 2010; Friday, December 17, 2010; and Friday, January 7, 2011. The cost of each session is $695.00 and includes breakfast, lunch, snacks, beverages, and parking in the building in addition to the notebook with forms for pleadings, discovery, and memoranda of law.

Registration forms which include directions to the site are available by sending an e-mail request to or the FDN e-mail address.

Jeff Barnes, Esq.,


October 25, 2010

As those of you who follow this website know, on February 11, 2010, the Supreme Court of Florida entered an Administrative Order requiring all residential foreclosure complaints to be verified. Foreclosure mills have since been filing alleged “verified” complaints only on “knowledge and belief” and by persons who are not employees of the plaintiff or by employees of the plaintiff’s law Firm.

Judge Anthony Rondolino of the Sixth Judicial Circuit for Pinellas County, Florida says “no” to this procedure. In a 7-page written opinion, Judge Rondolino states that “any verification of a foreclosure complaint must be in conformity with F.S. 92.525 as construed by Moss v. Lennar Florida Partners, 673 So.2d 84 (Fla. 4th DCA 1996)” and that because of this he will reject verifications based on “information and belief” or using language indicating the declaration is only true and correct “to the best of my knowledge and belief”. He will also reject a “verified” foreclosure complaint if it is demonstrated that the person who verified it is counsel of record or an employee of the law firm.

Judge Rondolino’s rationale is grounded upon the Supreme Court of Florida’s directive that the Plaintiff  appropriately investigate and verify its allegations (in a foreclosure complaint), and an attorney should not become a witness substituting for these “essential client verifications”.

The case involved a series of assignments and a Deutsche Bank securitization, and facts which indicate that the 2010 post-filing assignment was from a company (New Century Mortgage) which went bankrupt years ago. The Court was concerned with the same concern we here have with assignments from bankrupt “lenders” and have previously raised to the courts in such situations: that there is no proof that the assignor had authority from either the bankruptcy court or the liquidating trustee to dispose of the specific asset of the bankrupt estate (the mortgage loan) to anyone, which would present a disputed issue of material fact precluding summary judgment.

The fact pattern in this case is all too common. What we applaud Judge Rondolino for is holding foreclosing plaintiffs to a real verification, not some phony series of conditional statements by persons unrelated to the transaction. Bravo! We hope that more Florida Judges will adopt this very sound reasoning.

Jeff Barnes, Esq.,


October 22, 2010

Finally, proof positive has emerged as to something we have been talking about and telling the courts about for now into our third year: that those involved with the securitization of mortgage loans analyzed the loans in the pool, in advance, and determined (a) that certain mortgage loans would default; (b) when they would default; and (c) knowing this, they undertook measures to cover the realized losses ahead of time. At least that is what they told the investors.

From a Prospectus Supplement and Base file number 424b, the following was taken from the SEC’s website:

     In the following yield tables for classes B-2 and B-3, we assumed that:

       – scheduled interest and principal payments on the mortgage loans are received timely, except for mortgage loans on which defaults occur in accordance with the indicated percentages of SDA,

      – defaults on the mortgage loans in each pool will at all times occur at the same rate;

      – all defaulted loans are liquidated after exactly 12 months,

        – there are realized losses of a percentage (referred to in the tables as the “loss severity” percentage) of the principal balance at liquidation of the defaulted mortgage loans,

         –all realized losses are covered by subordination.

Here are some of the preliminary questions:

   (a)  how did the securitizers know in advance, for purposes of disclosing to potential investors and when the MBS had not even been released yet, which particular loans would default? (Answer: because the borrowers were only qualified at the initial or “teaser” rate and not qualified to meet the debt service on the life of the loan, especially when an Option ARM bump kicked in which guaranteed a default at that point);

   (b)  how did they know which defaults in each pool would occur “at all times at the same rate”? (Answer: see answer to first question above, and so that they could structure, in advance, the appropriate amount of insurance and protections to cover the losses realized by these pre-programmed defaults);

   (c)  what does it mean when they say that all defaulted loans would be liquidated after “exactly” 12 months (e.g. did they have a David Stern-style foreclosure mill (judicial states) or “successor” trustee and trustee sale company (non-judicial states) in tow ready to railroad foreclosures through the system in that timeframe no matter what)?

   (d)  what the realized losses would be in advance so as to properly structure the subordination protections. (Answer when you read other answers above)

Now we have it. Now we can go to the courts and show why the securitization discovery, which many courts in several states have already ordered produced, is not only relevant in securitization cases, but is also material to both defenses and damage claims (e.g. known predatory lending claims).

This is just the tip of an iceberg the size of Mount Everest. We will continue to provide more of this information as our researchers uncover more details.

Jeff Barnes, Esq.,   



October 21, 2010

In an abrupt about-face, Bank of America, after publicly touting that it would halt foreclosures in all 50 states, has apparently tubed this position and is now resuming foreclosures full-bore, as it advised one of our contacts yesterday. According to the Bank of America representative, foreclosures went live in 23 states yesterday, and the rest as of today.

The announcement comes after Bank of America also publicly claimed that it had conducted an internal audit and investigation of its foreclosure actions, and that according to them, none of the foreclosures were legally infirm. We personally know this not to be true, for on the day that this pronouncement was made, Jeff Barnes, Esq. argued against a Bank of America motion filed in a case in Florida requesting a final judgment of “re-foreclosure” which had been filed because B of A (through the now infamous Law Offices of David J. Stern) had failed to name three junior mortgage lienholders in the original action. Guess B of A and Stern think that junior lienholders do not rate! Fortunately, the Judge denied B of A’s Motion.

We believe that the real reason that B of A is ramping up foreclosures is because (coincidentally, right?) that certain investors have now sued B of A, which came on the heels of the mortgage guaranty insurers’ demand that B of A repurchase some $20 billion of securitized mortgages. B of A apparently wants the investors to think that they are actually doing something. Are they? Let’s wait and see; this story seems to change by the day.

Jeff Barnes, Esq.,


October 19, 2010

FDN’s network now has the benefit of recently acquiring computerized mortgage loan investigation and securitized mortgage loan trust software and special computer terminals which can track a mortgage loan’s history including its assignment to specific tranches inside of a trust. The information being revealed by this unique research tool is both fascinating and disturbing.

A sample of what our researchers are finding: loans which were assigned to multiple tranches within one securitized mortgage loan trust; the assignment of the loan to different trusts; the divison of the loan into parts across tranches, and more. What this means to foreclosure defense discovery is nothing short of monumental.

If a loan is assigned to different tranches and/or different trusts, with each tranche or trust having its own series of credit enhancements and insurances, this means the possibility of multiple levels of insurance for the same loan, which goes to prove what we have been arguing for years: that upon securitization, the mortgage loans were insured with multiple layers of insurance so that when the loan went into default, those in the placement chain could reap untold profits by having the same risk paid over and over and over again through multiple claims or reserves. Anyone who read through the SEC v. Goldman Sachs lawsuit knows this.

As such, any foreclosure defense should now hammer, hard, on ALL available credit enhancements, insurances, tranche assignments, and all agreements relating thereto. We will make a predition here: that very soon, there are going to be a series of cases where it is revealed, in discovery, that mortgage loans were paid 2, 3, 4, or more times on default and that the foreclosing party is simply trying to get paid a 5th or more time by stealing the borrower’s house under false pretenses and with material omissions and improper objections as to discovery related to setoffs (which objections we predict will be overruled once the judiciary is educated as to these matters). Once that happens, we see a literal tsunami of fraud upon the court claims and damage claims against the current foreclosure perpetrators.

Jeff Barnes, Esq.,


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.,  



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.,


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.,