MERS AND LAW OFFICES OF DAVID J. STERN SUED IN FEDERAL RICO ACTION IN FLORIDA

July 27, 2010

An Oakland Park (Ft. Lauderdale area) Florida attorney has sued MERS and the Law Offices of David J. Stern in a Federal RICO action in Florida. The lawsuit, filed yesterday, July 26, 2010 and comprising some 24 pages, is available by googling Law Offices of David J. Stern, and alleges violations of the Federal Racketeering and Corrupt Organizations Act.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

 

DEMONSTRATING ‘LIKELIHOOD OF SUCCESS ON THE MERITS” FOR REQUESTING INJUNCTIVE RELIEF PRECLUDING A FORECLOSURE SALE IN ARIZONA PENDING LITIGATION CHALLENGING FORECLOSURE

July 25, 2010

As those of you who follow this website are aware, the “nonjudicial” foreclosure states require the borrower to institute litigation in court to challenge a Trustee’s (foreclosure) sale and request both a temporary restraining order cancelling a pending sale, and for a preliminary injunction prohibiting any further attempts at foreclosure pending the duration of the borrower’s litigation challenging the foreclosure attempt. One of the elements which must be proven in order to obtain a preliminary injunction is something called “likelihood of success on the merits”. This element has consistently been mischaracterized by attorneys representing the “lenders”, servicers, and trustees of securitized mortgage loan trusts as the likelihood of success on the merits of the entire case.

Not so under Arizona law, which has explained the distinction in print. Arizona case law provides that a showing of irreparable harm if an injunction is not granted satisfies the “likelihood of success on the merits” prong of the claim for injunctive relief. As such, if a borrower can show that absent a court order to preclude the sale of the unique real property during the pendency of the borrower’s litigation that the unique property will be lost, the borrower has satisfied the “likelihood of success on the merits” prong of the claim for injunctive relief. The case stems from an insurance dispute where the particular type of insurance was unique and absent an injunction, the protections of the insurance would be lost.

What we consistently run into in the non-judicial states is this argument from counsel for the “lenders”, servicers, and trustee banks of securitized mortgage loan trusts that “the plaintiff (borrower) cannot satisfy the likelihood of success on the merits of their case because the plaintiff is in default and they are living in the house for free”. This argument is not only incorrect, but is a deliberate misrepresentation of the state of the law, at least in Arizona, as the “likelihood of success on the merits” claim relates SOLELY to the claim for injunctive relief, not the whole case, and has nothing to do with the claimed default.

Of course, the counter-argument takes its first steps at the legal right to declare a default (standing, chain of title, etc.), and follows, in securitization cases, that what the “lender”, servicer, or securitized trustee is really doing is trying to get paid twice, three times, four times, or more with the foreclosure. In fact, when the Arizona state court Judge in the case recently argued by Mr. Barnes was presented with the question of why a Wall Street securitized trustee Bank would buy a loan which is already in default (a/k/a a “toxic” loan) for purposes of placing it into a securitized mortgage loan trust, the Judge stated “because they knew they were going to get paid by insurance”. This is the question which was implicitly posed by Judge Schack in the Deutsche Bank v. Rolando Campbell case in New York back in 2008, which the Arizona Judge answered on the record last week.

BINGO!!! SHAZAM!!! This is what the Goldman Sachs litigation was all about, and why they settled so quickly with the SEC. As those of you who read the lawsuit know, Goldman pooled a series of loans which they knew would fail and took out multiple insurances on the risk of failure, and cashed in when the loans did fail. We call this “rigged gambling contracts”. For a paltry $0.55 billion, Goldman walked away with what must have been many times that. The settlement was nothing more than a “cost of doing business”.

It is up to us who defend foreclosure cases to keep bringing this to the attention of the judiciary. We are more than happy that at least one jurist has finally stated on the record what we have been arguing all along.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

FDN ANNOUNCES FUTURE ALL-DAY SEMINARS IN FORECLOSURE DEFENSE

July 20, 2010

In connection with the opening of the Newport Beach, California office last week, FDN’s Jeff Barnes, Esq. will shortly be scheduling a series of one-day seminars in foreclosure defense to take place once to twice a month at the Newport office. Seminars will be all day on Fridays from approximately 9 a.m. to 5 p.m. and will encompass 7 CLE segments from Mr. Barnes’ 12 hour foreclosure defense series which has previously been approved by The Florida Bar (CLE credits may be used by attorneys in other states. Check with your local state Bar for details).

Each seminar will be a live presentation and will be accompanied by a booklet with sample pleadings, motions, discovery, and settlement agreements, and will include a lunchtime “Q&A” session as well.

Dates and costs for the seminars will be made available by the second week of August, 2010. Please contact  [email protected] for these details. The seminars are slated to be held beginning in September, 2010. Although the seminars are designed primarily for attorneys in any jurisdiction, non-attorneys such as paralegals are welcome to register and attend, but will not receive CLE credit unless any particular licensing authority recognizes Florida Bar approved CLE for credit toward any other certification or license.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

 

 

 

FORECLOSURE SALE STOPPED IN IDAHO BY FDN ATTORNEYS 30 MINUTES PRIOR TO THE SALE

July 16, 2010

FDN attorneys Jeff Barnes, Esq. and Monica Brennan, Esq. have today stopped a foreclosure sale in southern Idaho literally 30 minutes before the scheduled sale. The case came to Mr. Barnes and Ms. Brennan just days before the sale date and at a time when Mr. Barnes and Ms. Brennan were already booked with several other court matters. Mr. Barnes worked overtime late at night and early in the morning to research and prepare the papers which were filed and prosecuted by Ms. Brennan, resulting in the sale being stopped 1/2 hour before the borrower’s home was to be sold at a trustee’s sale.

The case is one of the most complicated seen in some time, involving at least three purported assignments of the mortgage loan from the (now defunct) original “lender” to the first trustee of the securitized mortgage loan trust, then to another trustee, then to another. There is also involvement of an alleged servicer.

Our thanks to Ms. Brennan for her diligent efforts.

Jeff Barnes, Esq., ForeclosureDefenseNationwide.com

FDN ATTORNEYS DEFEAT SUMMARY JUDGMENT IN SOUTH CAROLINA AND STOP SALE IN CALIFORNIA; FDN’S JEFF BARNES, ESQ. OPENS NEWPORT BEACH, CALIFORNIA OFFICE

July 14, 2010

FDN attorney Bill Sloan, Esq. has defeated a plaintiff’s Motion for Summary Judgment in a foreclosure case in South Carolina. The case thus continues to progress into discovery. This is Mr. Sloan’s second recent victory in a span of just weeks. Mr. Sloan is being assisted by FDN’s Jeff Barnes, Esq., who may seek admission PHV to the South Carolina court in the case. Mr. Sloan and Mr. Barnes have also just been retained on yet another case in South Carolina as well.

FDN’s Alan Geraci, Esq. has scored his second recent victory in California on papers drafted and prepared by Mr. Barnes. The Court entered a Temporary Restraining Order cancelling a trustee’s sale the day before the sale was to take place. The Order provides that the Defendants must produce certain discovery documents at this time, even before formal discovery has been instituted. The form of the Order is very similar to a prior Order entered by another California court which commanded the production of discovery documents relating to securitization, chain of title, and standing at the TRO stage, which Order was obtained by Mr. Geraci on papers prepared by Mr. Barnes. We previously published this significant result on this website.

As Mr. Barnes has literally been deluged with cases from California, Oregon, and Arizona recently and is receiving more and more inquiries as to cases in Hawaii, he has opened an office in Newport Beach, California which will ultimately replace the Las Vegas, Nevada office and will provide Mr. Barnes with five (5) different airports to better serve clients in numerous states. The transition is scheduled to be completed by the end of the first week of August, 2010. Mr. Barnes will continue to use the Nevada office for the remainder of the month of July. The Boca Raton, Florida office will continue to operate after the Nevada/California transition.

The California office is located at 2901 West Coast Highway, Newport Beach, California 92663. All mail to that office should be directed to Suite 350.

Jeff Barnes, Esq.

CALIFORNIA BANKRUPTCY COURT HOLDS THAT MERS CANNOT TRANSFER NOTE FOR WANT OF OWNERSHIP; CITES BOYKO, LANDMARK (KANSAS), LAMY, AND VARGAS CASES

July 9, 2010

The United States Bankruptcy Court for the Eastern District of California has issued a ruling dated May 20, 2010 in the matter of In Re: Walker, Case No. 10-21656-E-11 which found that MERS could not, as a matter of law, have transferred the note to Citibank from the original lender, Bayrock Mortgage Corp. The Court’s opinion is headlined stating that MERS and Citibank are not the real parties in interest.

The court found that MERS acted “only as a nominee” for Bayrock under the Deed of Trust and there was no evidence that the note was transferred. The opinion also provides that “several courts have acknowledged that MERS is not the owner of the underlying note and therefore could not transfer the note, the beneficial interest in the deed of trust, or foreclose on the property secured by the deed”, citing the well-known cases of In Re Vargas (California Bankruptcy Court), Landmark v. Kesler (Kansas decision as to lack of authority of MERS), LaSalle Bank v. Lamy (New York), and In Re Foreclosure Cases (the “Boyko” decision from Ohio Federal Court).

The opinion states: “Since no evidence of MERS’ ownership of the underlying note has been offered, and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank. Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another. Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law.”

Read that again: “Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note IS VOID UNDER CALIFORNIA LAW.” This conclusion was based upon California law cited in the opinion that the note and the mortgage are inseparable, with the former being essential while the latter is “an incident”, and that an assignment of the note carries the mortgage with it, “while an assignment of the latter [the mortgage] alone is a nullity.” As MERS must own the note in order to assign the incident deed of trust, MERS is legally precluded from assigning the deed of trust for want of ownership of the note, and cannot assign the note in any event as it never owned it. MERS’ lack of ownership interest in promissory note is a matter of decided case law based on a record stipulation of MERS’ own lawyers in the MERS v. Nebraska Dept. of Finance decision.

This opinion thus serves as a legal basis to challenge any foreclosure in California based on a MERS assignment; to seek to void any MERS assignment of the Deed of Trust or the note to a third party for purposes of foreclosure; and should be sufficient for a borrower to not only obtain a TRO against a Trustee’s Sale, but also a Preliminary Injunction barring any sale pending any litigation filed by the borrower challenging a foreclosure based on a MERS assignment.

The Court concluded by stating: “Since the claimant, Citibank, has not established that it is the owner of the promissory note secured by the trust deed, Citibank is unable to assert a claim for payment in this case.” Thus, any foreclosing party which is not the original lender which purports to claim payment due under the note and the right to foreclose in California on the basis of a MERS assignment does not have the right to do so under the principles of this opinion.

This ruling is more than significant not only for California borrowers, but for borrowers nationwide, as this California court made it a point to cite non-bankruptcy cases as to the lack of authority of MERS in its opinion. Further, this opinion is consistent with the prior rulings of the Idaho and Nevada Bankruptcy courts on the same issue, that being the lack of authority for MERS to transfer the note as it never owned it (and cannot, per MERS’ own contract which provides that MERS agrees not to assert any rights to mortgage loans or properties mortgaged thereby).

We thank one of our dedicated readers for providing this opinion to us.

Jeff Barnes, Esq.;, www.ForeclosureDefenseNationwide.com

 

NEW JERSEY TRIAL COURT JUDGE ISSUES 53-PAGE OPINION DISMISSING FORECLOSURE COMPLAINT OF BANK OF NEW YORK AS SECURITIZED TRUSTEE: OPINION COULD PAVE THE WAY FOR AMENDMENTS TO NEW JERSEY RULES OF PROCEDURE REQUIRING FORECLOSURE COMPLAINTS TO BE CERTIFIED AND FOR FORECLOSING PARTIES TO PRODUCE SECURITIZATION DISCOVERY IN ORDER TO BE ABLE TO PURSUE FORECLOSURE

July 6, 2010

In an extremely well-reasoned and detailed written opinion, New Jersey trial court Judge William C. Todd has issued a 53-page (yes, fifty-three page) Order dismissing a foreclosure action filed by Bank of New York as Trustee for Home Mortgage Investment Trust 2004-4 Mortgage-Backed Notes Series 2004-4, Docket No. F-7356-09, Atlantic County, New Jersey. The matter was decided on June 29, 2010 and the formal opinion was approved for publication this week after the matter was tried at the end of June, 2010.

The opinion sets forth an incredible analysis of a host of issues involving foreclosure in securitization contexts and highlights why a foreclosing plaintiff must comply with its obligations to prove standing in order to be able to pursue a foreclosure action. While we do not summarize the entire holding here, we do want to point out some of the significant findings.

The court found that there was no meaningful attempt by Bank of New York (hereafter “BONY”) to comply with applicable New Jersey procedural rules requiring a recitation of all assigments in the chain of title. BONY simple alleged that it had acquired possession of the note prior to the litigation being filed. However, the evidence at trial failed to establish this allegation, with the Court noting that there were missing documents incident to the securitization of the loan including the mortgage loan schedule that should have been attached to the mortgage loan purchase agreement. The Court also found that the “MERS assignment was potentially misleading”.

The Court found that there was a failure of proof as to BONY’s legal standing, warranting dismissal of the action and conditioning any refiling on a certification that the plaintiff is in possession of the original note at the time of filing. This is in line with the recent action of the Supreme Court of Florida which, as of February 11, 2010 by Administrative Order, requires all residential mortgage foreclosure complaints to be verified. It is no secret that Florida trial courts have and continue to dismiss foreclosure actions which do not comply with the verification requirement. It is hoped that the courts of New Jersey will adopt Judge Todd’s well-reasoned analysis and dismiss foreclosure complaints which do not comply with the New Jersey procedural rules requiring proof of legal standing to foreclose at inception and time of filing a Complaint for foreclosure.

Judge Todd also stated that additional discovery is to be produced when the foreclosure involves a securitization, lost note claims, or a holder in due course challenge (which may arise in the context of the purported assignment of a toxic loan to a securitized trust prior to the trustee of that trust instituting a foreclosure action, as well as any predatory loan claims against the original lender). Judge Todd recognized that there are dozens of legal issues and inquiries where a foreclosure involves a securitization, and that a borrower has both the right to know who owns the mortgage loan and whether a foreclosing party has the legal right to foreclose.

This incredibly significant decision will hopefully become the law in the state of New Jersey, and it is hoped that the Rules Committee for the New Jersey courts will soon adopt court rules requiring that all residential foreclosure complaints filed in New Jersey be accompanied by the filing of an appropriate Certification, and further requiring that all securitization discovery be produced in all foreclosure cases involving a securitized loan. We applaud and salute Judge Todd for his amazing effort to not only streamline foreclosure litigation in New Jersey, but also insuring that borrowers’ legal rights are protected as well.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com