TENNESSEE FEDERAL COURT DENIES BANK OF AMERICA’S MOTION TO DISMISS DECLARATORY JUDGMENT ACTION CHALLENGING ALLEGED OWNERSHIP OF LOAN

August 23, 2011

A Tennessee Federal court has issued an Order and Memorandum denying a Motion to Dismiss filed by Bank of America which attacked the borrower’s action, brought under Tennessee’s version of the Uniform Declaratory Judgments Act, challenging B of A’s claimed “ownership” of a mortgage loan. The loan was originated by America’s Wholesale Lender, a claimed “dba” of Countrywide. B of A later claimed to have succeeded to ownership of the loan, but thereafter made inconsistent statements concerning the alleged ownership, although the transfer of the loan was purportedly made from the originating lender to B of A within 120 hours of closing.

The borrower had filed suit in state court. B of A removed the case to Federal court.

B of A claimed that there was no “actual controversy” as Countrywide was a subsidiary of B of A, and that Countrywide was “DBA” America’s Wholesale Lender. The Court found that there was nothing in the papers filed by B of A demonstrating that this was in fact the case; that there was nothing in either the Note or the DOT which even mentioned Countrywide; and the Court could thus not determine whether B of A in fact had any interest in the loan.

Jeff Barnes, Esq. (admitted pro hac vice) and local Tennessee counsel John Higgins, Esq. represent the borrower.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

NEW JERSEY CHANCERY JUDGE DISMISSES CASE AGAINST WELLS FARGO FOR NONCOMPLIANCE WITH DISCOVERY REQUIREMENTS OF MANAGEMENT ORDER; APPELLATE DIVISION OF NEW JERSEY SUPERIOR COURT REVERSES SUMMARY JUDGMENT FINDING THAT DEUTSCHE BANK HAD NO STANDING WHEN FORECLOSURE ACTION WAS FILED; JEFF BARNES, ESQ. ADMITTED PRO HAC VICE TO THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE, NASHVILLE DIVISION

August 15, 2011

The New Jersey courts have once again made it abundantly clear that they will not tolerate noncompliance with Management Orders, failure to provide court-ordered discovery, failure of a foreclosing Plaintiff to demonstrate that it had standing to sue at the time of the filing of a foreclosure action, and failure to meet the legal burden to be entitled to summary judgment.

Today, a New Jersey Chancery Court Judge dismissed a foreclosure action filed by Wells Fargo where Wells Fargo failed to comply with the Court’s Management Order compelling the borrower’s discovery, with all required Certifications, by a date certain. Wells Fargo only served incomplete discovery responses by the due date in the Management Order, and admitted that the responses were incomplete. Wells Fargo’s counsel admitted that there was no misunderstanding of the requirements of the Management Order. Jeff Barnes, Esq. and local NJ counsel Alan Angelo, Esq. represent the borrower.

The case had been previously filed and voluntarily dismissed by Wells Fargo when it had failed to comply with discovery which had been propounded by Mr. Barnes and local counsel. This is now the 8th foreclosure case which Mr. Barnes and his local counsel have had dismissed in NJ for the foreclosing Plaintiff’s failure to comply with discovery and Court Management Orders. 

Separately, the Appellate Division of the Superior Court of New Jersey has issued a 19-page opinion in the matter of Deutsche Bank National Trust Co. as Trustee for Long Beach Mortgage Trust 2006-3 v. Mitchell and Bethea, Docket No. A-4925-09T3 which reversed the trial court’s grant of summary judgment finding that Deutsche Bank did not have standing at the time that it filed the foreclosure action, and that the trial court erred in finding that DB had “cured” the standing defect when it filed an Amended Complaint after receiving the Assignment of Mortgage (when the original Complaint had been filed without the subject Assignment having been received).

Significantly, in holding that DB did not have standing when it filed the original Complaint because it did not have possession of the Note, the NJ Appellate Court cited the “Boyko decision” from Ohio (In Re Foreclosure Cases, 521 F.Supp.2d 650 (S.D. Ohio 2007)) on the issue of the requirement of proof of standing at the time of filing a foreclosure action, and held that DB could not cure its defect by filing an Amended Complaint following the assignment.

The Court also held that the proofs presented by DB in support of its Motion for Summary Judgment were inadequate, including the holding that “the trial court should not have considered an assignment that was not ‘authenticated by an affidavit or certification based on personal knowledge'” citing NJ case law and NJ procedural Rule 1:6-6. The Court found that the Certification by the attorney, which was based on “custody and review of computerized records”, did not meet the personal knowledge requirement of NJ case law and cautioned that “Attorneys in particular should not certify to ‘facts within the primary knowledge of their clients.'”

The Court further held that the Certification by the servicer, JP Morgan Chase Bank, stating the [legal conclusion] that “the plaintiff is still the holder and owner of the obligation and mortgage” did not make any mention of the assignment or how the signor knows that DB became the holder of the note.

The Court thus vacated the sheriff’s sale and the summary judgment.

This Appellate decision, which was approved for publication on August 9, 2011, is extremely important for all NJ cases, as it sets forth the specific requirements for standing, Certifications, and a foreclosing Plaintiff’s burden on summary judgment which, although having been previously set forth in the NJ Rules of Procedure including the recent amendments to the Rules dealing with foreclosure filings, had not been previously set out in a published decision.

Jeff Barnes, Esq. has also been admitted pro hac vice to the United States District Court for the Middle District of Tennessee, Nashville Division, in connection with the defense of a foreclosure initiated by Bank of America.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

JEFF BARNES, ESQ. ADMITTED PRO HAC VICE IN MICHIGAN AGAIN; FDN ADDS ADDITIONAL COUNSEL IN MAUI, HAWAII; WASHINGTON ATTORNEY GENERAL SUES RECONTRUST

August 9, 2011

Jeff Barnes, Esq. has been admitted pro hac vice in the Kent County, Michigan court in connection with a case involving a securitization. This is Mr. Barnes’ second admission in Michigan, this time through local counsel Michael Almassian, Esq. He was previously admitted in Washtenaw County, Michigan in connection with the Hendricks decision through and with local Michigan counsel James Fraser, Esq.

We are pleased to welcome Ivey Fosbinder Fosbinder LLC of Maui, Hawaii to our network. We will be working with the Firm to defend both judicial and nonjudicial foreclosures in Maui.

The Washington Attorney General has filed suit against ReconTrust, the foreclosure “substitute trustee” arm of Bank of America which formerly conducted foreclosure sales for Countrywide. The lawsuit sets forth numerous illegal and unlawful practices on the part of ReconTrust, including violating its duties as a trustee to borrowers by concealing the true owner of the mortgage loan; falsely representing that obligations are owed to MERS when they are not; falsely representing that the “creditor” to whom certain obligations are owed is BAC Home Loan Servicing when the loan is actually owned by what the AG calls a “securitization trust”; and making false representations in foreclosure documents and trustee’s deeds. The suit seeks injunctive relief and monetary sanctions for each violation as well.

For years, we have seen ReconTrust and B of A run roughshod over borrowers with false misrepresentations in foreclosure documents and a pattern of intentionally concealing the true owner of a mortgage loan, and lie to the Courts over and over again. We have and will continue to bring these issues to the Courts, and will now also make the Courts aware that the Attorney General of Washington has deemed it necessary to sue ReconTrust as its intentional and willful wrongful and illegal actions pose a significant danger to the public.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

NEW JERSEY APPEALLATE COURT ISSUES DECISION FOR PUBLICATION TODAY REVERSING FORECLOSURE JUDGMENT AND DIRECTING DISMISSAL FOR PLAINTIFF SECURITIZED TRUSTEE’S FAILURE TO COMPLY WITH PRE-SUIT NOTICE STATUTE

August 8, 2011

Today, the Appellate Division of the New Jersey Superior Court approved for publication a decision which reversed an Ocean County, New Jersey trial court foreclosure judgment and remanded with directions that the case be dismissed without prejudice due to the Plaintiff’s failure to comply with New Jersey’s pre-suit notice statute, which requires a foreclosing party to identify the name and address of the lender (who owns the obligation). The Court held that identification of the “servicer acting on behalf of the owner” is legally insufficient, and fails to comply with the statute. The case is Bank of New York as Trustee of CWALT, etc. v. Laks, No. A-4221-0593.

The pre-suit notice identified Countrywide as the alleged servicer acting on behalf of the owner, with the owner not being identified. The foreclosure which was later filed named Bank of New York as Trustee of a securitized mortgage loan trust as the foreclosing Plaintiff.

The Court held that the language of the statute is mandatory; that there is no room for anything other than strict compliance that the LENDER be identified; and that a borrower who raises the issue of noncompliance with the pre-suit notice statute prior to the entry of judgment is entitled to a dismissal without prejudice. The Court also highlighted the standard for a foreclosing Plaintiff to prove standing on summary judgment, and reversed the trial court’s striking of the borrower’s contesting answer which raised the notice issue, doing so even though the securitized trustee bank ultimately produced a second version of the note with a second blank endorsement in alleged support of its “standing” position. The Court found that this did not cure the threshold problem raised by noncompliance with a statute which concerns mandatory actions which must be undertaken prior  to suit being filed.

What is interesting about this case is that a dismissal is allowed at any time prior to judgment. That means, if we read this decision correctly and accurately, that a borrower can file a contesting answer without a motion to dismiss, raise the failure of the Plaintiff to comply with the pre-suit notice statute as a defense, and obtain a dismissal after the answer is filed.

We thank one of our dedicated readers for bringing this to our attention today.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

THE LATEST SCAM: SERVICER CHARGING A GRADUATED FEE FOR “REVIEW” OF LOAN MOD APPLICATION

August 4, 2011

These guys just keep getting more and more brazen. This latest scam comes out of American Home Mortgage Servicing, Inc. (AHMSI) who, as our readers know, was recently slammed in the In Re Veal decision as not having any standing to file a Proof of Claim in a borrower bankruptcy. AHMSI is the servicing unit of the now-bankrupt American Home Mortgage, which was sold out of the AHM Bankruptcy proceeding to a Wilbur Ross and which now is going around the country seeking to foreclose on mortgages which, we suspect, have been paid through one or more sources.

Up until now, all “loan mod” offers from servicers have come in the form of an inquiry letter as to whether the borrower is interested in pursuing a loan modification, and if so, the servicer sends a package of documents to be completed and returned to the servicer with certain documents relating to proof of income and expenses, etc. As we all also know, almost all loan mods are rejected after the borrower is subjected to multiple requests for more documents, or having to submit them time and again because the documents were “lost”, or for “updated” documents because the servicer sat on the documents submitted by the borrower for long periods of time with the servicer claiming that the submission was “stale” or “outdated”.

Yesterday, we were advised that a borrower, who is not in default, was told by AHMSI that in order for any loan mod application to be reviewed, AHMSI wants a fee of $600.00 if paid now, and if not, $900.00 later. Apparently AHMSI is trying to take money from the borrower to pay for its own ineptitude, and/or so it can get paid for going through the process of jerking borrowers around before the loan mod application is ultimately denied.

Bottom line: borrowers beware. You may have recently seen the article in the media that the major “banks” do not have sufficient cash reserves to pay their own attorneys to defend foreclosure challenges, so possibly this latest scam might also be an effort by the banks (who are the principals of the servicers) to roust up monies to pay their attorneys to beat up borrowers using the borrowers’ monies.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

JEFF BARNES RETAINED BY CHAPTER 7 TRUSTEE IN UNITED STATES BANKRUPTCY COURT FOR WESTERN DISTRICT OF WASHINGTON TO FILE ADVERSARY PROCEEDING AGAINST RESIDENTIAL CREDIT SOLUTIONS, INC; FDN ADDS LOCAL COUNSEL IN NEW MEXICO AND MINNESOTA; RICO ACTION FILED IN ARIZONA AGAINST M&I BANK

August 2, 2011

A Chapter 7 Trustee for the United States Bankruptcy Court for the Western District of Washington has retained Jeff Barnes, Esq. and local Washington BK counsel John Sterbick, Esq. to file an adversary proceeding against Residential Credit Solutions, Inc., which claims to “own and hold” a mortgage loan originally made in favor of Franklin Bank FSB, which went into FDIC Receivership. Mr. Barnes is also currently representing borrowers in other Bankruptcy proceedings in Washington BK courts opposing proofs of claim and challenging Motions for Relief From Stay filed by servicers and “banks” attempting to foreclose.

FDN has added local counsel in the States of New Mexico and Minnesota. We are pleased to welcome John R. Fox, Esq. as local counsel in Santa Fe, New Mexico, and Marcus Jarvis, Esq. in Minneapolis, Minnesota.

We are also in the process of expanding our attorney network in Maui, Hawaii, due to the volume of cases which we are being asked to become involved with there and other of the Hawaiian Islands.

Mr. Barnes has recently filed a RICO action against M&I (Marshall & Isley) Bank in Tuscon, Arizona after discovery depositions and documents revealed that the manager of the M&I branch in Tuscon was “approving” jumbo mortgage loans knowing that the borrowers could never meet the debt service on the life of the loans, and telling borrowers that they would be approved for such loans before any loan applications were even completed. M&I has been recently purchased by another bank.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

VERMONT SUPREME COURT UPHOLDS DISMISSAL WITH PREJUDICE OF FORECLOSURE COMPLAINT AND REMANDS FOR ASSESSMENT OF BORROWER’S ATTORNEYS’ FEES IN SECURITIZATION CASE WITH ALLEGED MERS ASSIGNMENT; DEUTSCHE BANK AND ITS SERVICER GIVE COMPLETELY INCONSISTENT TESTIMONY IN SAME CASE AS TO SAME TRUST

July 26, 2011

The Vermont Supreme Court has issued an opinion dated July 22, 2011 which has upheld the trial court’s dismissal with prejudice of a foreclosure complaint filed by US Bank National Association as Trustee for a securitized mortgage loan trust, and remanded the case to the trial court for the assessment of the borrower’s attorneys’ fees which the Supeme Court held were wrongfully not considered by the trial court. USB had originally relied on a MERS assignment executed by the notorious robo-signer Jeffrey Stephan. USB later changed its position and claimed that it held the original note and owned it by virtue of a series of blank endorsements. This “position” was allegedly “supported” by the affidavit of Mr. Stephan which was filed by USB in support of its cross-motion for summary judgment. The borrower had filed an MSJ based on lack of standing.

The original loan was with the (now bankrupt) Accredited Home Lenders. USB claimed that the Note was endorsed in blank to it, thereby giving it standing to foreclose.

They key points in this opinion are that USB failed to demonstrate that it owned the loan at the time that the complaint was filed, and that there was no evidence as to the date or timing of the alleged endorsements. The Court cited cases from other jurisdictions, including the Raftoganis decision from New Jersey, in support of its ruling.

As we all know, trustee banks and servicers repeatedly rely on the alleged “open endorsement” theory to argue that they have the rights to the note and can thus foreclose. The narrow legal point on which the Vermont Supreme Court focused was evidence as to when these alleged open endorsements were made (which there was none), which was critical to a determination as to whether USB owned the note when it filed the Complaint. The Court found that Mr. Stephan’s affidavit as to the alleged endorsements could not have been made on personal knowledge as to matters which took place years before he became associated with the corporate entity with which he was employed when he executed the affidavit.

This decision is an important milestone for any challege to the “open endorsement” argument which we are all too often confronted with. Coupled with the lack of evidence as to when these alleged “open eodorsements” took place and compounded by an affidavit of a known robo-signer as to events which allegedly took place years before his employment with the “certifying entity”, this decision demonstrates that the State of Vermont is not going to permit a foreclosure to take place without the proper evidentiary proof of standing at the time that the Complaint is filed.

We thank one of our dedicated readers for bringing this matter to our attention. The opinion was issued on the same day that Mr. Barnes took the deposition of a Vice President of Deutsche Bank National Association in another matter where the deponent claimed, under oath no less than 4 times, that “there is no PSA which governs this trust” (which is the securitized mortgage loan trust of which DBNA is the alleged “trustee” which is claiming the right to foreclose)

This sworn testimony is in direct contradiction to the papers filed by Deutsche Bank in the case which repeatedly reference a PSA for the trust, and is also in direct contradiction to the prior deposition testimony of the representative of DBNA’s servicer (whose deposition Mr. Barnes took several months ago) in the same case where the deponent testified, under oath, to the PSA for the trust at issue and matters therein including the fact that the “Closing Date” of the trust “is the date when all of the loans have to be in the trust”.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

 

CALIFORNIA OFFICE CLOSED WEEK OF JULY 25-29, 2011 (staff vacations, court matters out of state)

July 18, 2011

FDN’s Newport Beach, California office will be closed the week of July 25 through 29, 2011 as our staff is on vacation and as Mr. Barnes will be in court in New Jersey on Monday, July 25; in litigation meetings July 26 and 27 in his Boca Raton, Florida office; in transit on July 28; and in a Mediation in Key West, Florida on July 29.

Mr. Barnes will be monitering e-mails during next week and responding most likely during the evening hours.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com 

SUMMARY JUDGMENT DEFEATED IN IOWA; TWO SIGNIFICANT SUPREME COURT DECISIONS IN NEVADA

July 14, 2011

An Iowa District Court has issued a 5-page Order denying Wells Fargo’s (second) Motion for Summary Judgment. Wells Fargo had originally been granted summary judgment against the borrower, who was pro se at the time, in 2005 based upon a sworn affidavit that Wells Fargo was the holder of the note. The borrower had filed an affidavit which stated that she had spoken to Wells Fargo and was told that the “investor” on her loan was Lehman. The case languished in an appellate posture and was continued for various reasons.

Jeff Barnes, Esq. began representing the borrower in early 2010 with local Iowa counsel Christine Sand, Esq., who immediately initiated extensive discovery. The Court ordered Wells Fargo to submit an original of the Note by July 20, 2010. The next day (after the time for compliance with the Court’s Order had already passed), Wells Fargo filed a Motion for additional time to comply with the Order, and a Motion to Substitute Plaintiff which stated that pursuant to a servicing agreement between Wells Fargo and Lehman Brothers Bank FSB that the holder of the note and mortgage was Lehman. The 2005 summary judgment was thus vacated.

Wells Fargo filed a “lost note affidavit” a month later on August 20, 2010 which the Court found did not disclose the specific facts in the “record of account” which was reviewed by the Wells Fargo affiant upon which she based her conclusion. On February 23, 2011, Wells Fargo filed an Amended Foreclosure Petition alleging that Wells Fargo was the owner and holder of the note and that Lehman Brothers Bank, Lehman Brothers Holdings, and a securitized mortgage loan trust of which US Bank was the “trustee” were added “for the purposes of quieting title to subject property and to comply with” Iowa statutory law. The court noted that it was unclear what form of relief was being sought with the addition of these parties.

Wells Fargo filed another affidavit executed by the same Wells Fargo affiant who executed the “lost note” affidavit. This “new” affidavit stated that the original note and mortgage were sent to Wells Fargo’s prior counsel in November 2004 and were lost while in the custody of said counsel. The Court again found that the affiant did not state the facts upon which the affiant relied for her conclusions nor what parts of the file she reviewed upon which she relied.

In its Reply to the borrower’s opposition (which is termed “Resistance” in Iowa) to Wells Fargo’s second Motion for Summary Judgment, Wells Fargo attached a copy of a lost note affidavit which the Court stated was “purportedly” executed by Wells Fargo’s attorney in 2005. Wells Fargo’s current counsel represented to the Court in its Reply that Wells Fargo’s previous counsel filed a lost note affidavit on March 28, 2005. The Court stated that it had reviewed both the docket sheet and the court file and found no evidence that the original of the alleged 2005 lost note affidavit was ever filed.

Based on these matters, the Court found that there were factual issues as to whether or not the note has been lost and whether the note has been “transferred”, and denied summary judgment to Wells Fargo on its foreclosure claim.

Our question to Wells Fargo is, were you lying then or are you lying now? Round and around and around we go, and where Wells Fargo and its attorneys will stop, nobody knows! Note, note, who has the note? Lehman? Lehman Holdings? The USBank securitization? None of the above?

Separately, the Supreme Court of Nevada issued two opinions on July 7, 2011 which finally compel foreclosing parties in Nevada to produce material documentation as to chain of title to the Note and Deed of Trust in order to be permitted to continue with a foreclosure action when mediation is requested. in Leyva v. National Default Servicing et al., No. 55216, 127 Nev. Advance Opinion 40, the Supreme Court held that strict compliance is required with Nevada statutes governing the production of certain documents including any assignment of the Deed of Trust; that a foreclosing party’s failure to do so “is a sanctionable offense; and the district court is prohibited from allowing the foreclosure process to proceed”. Wells Fargo was also the culprit in this case.

Significantly, in discussing the transfer of the Note, the Supreme Court of Nevada cited to the recent In Re Veal decision from the 9th Circuit Bankruptcy Appeals Panel (which was previously discussed on this website), holding that the borrower “has the right to know the identity of the entity that is ‘entitled to enforce’ the mortgage note under Article 3 (of the Uniform Commercial Code).” The Court concluded that Article 3 “clearly requires Wells Fargo to demonstrate more than mere possession of the original note to be able to enforce a negotiable instrument”. The court found that there was no endorsement and no assignment, and reversed the District Court.

The opinion in Leyva cited to the Court’s opinion in Pasillas v. HSBC Bank as Trustee, No. 56393, 127 Nev. Advance Opinion 39 (also decided July 7, 2011), which also reversed the District Court and also cited to Veal , setting forth the requirements for production of evidence of chain of title to the note and Deed of Trust in a foreclosure.

The multiple citations to Veal, which is a Federal Bankruptcy appellate court opinion, by the state Supreme Court of Nevada, is more than important. It demonstrates that simply because a foreclosure issue is decided by a Bankruptcy court does not mean that it is not applicable to a non-Bankruptcy (or non-Federal) foreclosure case. Time and again, when we argue that an issue in a state foreclosure case has already been decided by a Bankruptcy court in the foreclosure context, attorneys representing foreclosing “lenders” and servicers argue “Well, Judge, that was a Bankruptcy case, and we are not in Bankruptcy Court”. Leyva and Pasillas have now put that argument to bed. If a Federal Bankruptcy decision is good enough for the Supreme Court of Nevada in two separate opinions, it should be good enough for any state court.

We thank one of our dedicated readers for alerting us to these two highly significant Nevada decisions.

Jeff Barnes, Esq., www.ForeclosureDefensenationwide.com

PROGRESS IN TENNESSEE

July 8, 2011

Today, a state court Judge in Tennessee declined to rule on a Motion to Dismiss and Motion to Stay Discovery filed by Bank of New York as trustee of a securitized mortgage loan trust, which Motions were filed against the borrowers’ Amended Complaint for Declaratory and Permanent Injunctive relief. The sale had been cancelled with the original pro se Complaint was filed. FDN attorneys Jeff Barnes, Esq. and Andrew Farmer, Esq., who filed the Amended Complaint, represent the borrowers. Mr Barnes argued the Motions in open court in Tennessee today.

The Judge has sent the case to a Special Master to oversee and coordinate discovery, including depositions and written discovery, after Mr. Barnes raised the threshold issues related to standing, real party in interest, chain of title to the mortgage loan, MERS, and issues surrounding securitization including compliance with the PSA. It is believed that this is the first case in the State of Tennessee to raise these issues, and there is no decisional law from the appellate courts in Tennessee as to any of the issues raised, including any case law as to MERS.

This represents progress for borrowers in Tennessee, and demonstrates that at least one court is not going to dismiss a borrower’s challenge to a foreclosure simply on Motion to Dismiss of the Defendant foreclosing party and its agents (here, MERS and ReconTrust as the trustee sale company).

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com