SOUTH CAROLINA COURT ORDERS PRODUCTION OF DOCUMENTS AS TO MERS, TARP, CHAIN OF TITLE AND MONEY TRANSFER BETWEEN ORIGINAL LENDER AND FORECLOSING PLAINTIFF, AND SERVICING RELATIONSHIP BETWEEN FREDDIE MAC AND SUNTRUST

A Walterboro (Colleton County) South Carolina Judge has ordered the production of numerous documents requested by the homeowner to which the foreclosing plaintiff (SunTrust) objected. The homeowner is represented by Jeff Barnes, Esq. and local South Carolina counsel William H. Sloan, Esq. Mr. Barnes argued the matter in Walterboro in connection with the homeowner’s Motion to Compel documentary discovery to which SunTrust objected.

The Court issued a narrative Order which compels the production of all documents as to the chain of title and money transfer between the original lender and SunTrust as to and for the life of the loan; documents showing the servicing relationship between Freddie Mac and SunTrust; documents showing the authority of MERS to act on behalf of Freddie Mac and SunTrust; documents regarding SunTrust’s application of funds from TARP or any other program regarding payments made towards and in connection with the claimed default on the loan; and documents demonstrating the authority of SunTrust to modify the loan or otherwise complete foreclosure intervention as required by South Carolina Administrative Order.

The Order explained its reasoning for compelling the particular documents. The Court found that the MERS documents were relevant as “MERS signed the assignment of Mortgage that is the basis of Plaintiff’s claimed standing to sue and bring this foreclosure action.”

The Court found that the TARP documents were relevant “as the Plaintiff [SunTrust] may have been forced to accept funds from the U.S. Government and some of these funds may have been applied as an offset to this loan by Plaintiff, Freddie Mac, or a predecessor in interest to the loan”, and, significantly, that the homeowner “may also be allowed to use TARP funds received by the Plaintiff related to this loan in connection with any loan modification or intervention required by the applicable statute.”

This is the first Court Order which we know of which compels documents related to the application and receipt of funds by a foreclosing party from TARP or other programs, and also the first Court Order we are aware of which permits the homeowner to apply received third party funds (TARP or otherwise) as a setoff to the loan or in connection with a loan mod.

A full copy of the Order is available upon e-mail request to us.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

MONTANA SUPREME COURT GRANTS ORAL ARGUMENT ON MERS ISSUES

August 15, 2013

The Supreme Court of Montana has granted and ordered oral argument on an appeal by an homeowner concerning whether MERS is a “beneficiary” under Montana’s non-judicial foreclosure statute. Jeff Barnes, Esq. represents the homeowner. He is assisted by local Montana counsel Eric Hummel, Esq. Mr. Barnes wrote the briefs and will be arguing the case before the full 7 justice panel on September 25, 2013.

We have been advised that by setting the case for oral argument, the Supreme Court of Montana considers the case to be of statewide importance, and that oral argument is very rarely set, with the Court only setting approximately twenty (20) cases per year to be argued orally. Most appeals to the Court are decided on the papers alone.

The Montana statute is almost identical to the Oregon non-judicial foreclosure statute which defines “beneficiary”, which matter was argued by Mr. Barnes before the Supreme Court of Oregon. As those who follow this website know, the homeowner prevailed in that appeal, with the Oregon Supreme Court holding that MERS is not a beneficiary under the Oregon Trust Deed Act.

MERS has take the position, in its briefs in the Montana appeal, that Montana should follow decisions in Nevada and Utah, which hold that MERS is a beneficiary. There is currently no appellate case law in Montana on the issue, so the decision will set the law for the entire state of Montana.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

GLASKI NOW PUBLISHED AS OF TODAY

August 8, 2013

The Glaski case, discussed in our post below, was published today by the California appellate court, which found that the decision met all requirements for publication under the applicable rule.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

CALIFORNIA APPELLATE COURT HOLDS THAT CHASE CANNOT FORCE BORROWER TO AGREE TO BE LIABLE FOR DEFICIENCY AS A CONDITION OF APPROVING SHORT SALE

August 8, 2013

A California appellate court has held that Chase’s attempt to condition approval of a short sale on the homeowner’s agreement to be liable for a deficiency is illegal and will not be enforced. The decision in Coker v. JPMorgan Chase Bank, N.A., California 4th Appellate District (Division One), No. D061720, has been certified for publication. The opinion also states that it answers a question of first impression in California.

Chase had threatened a non-judicial foreclosure. The borrower approached Chase about a short sale, which Chase approved, but as part of the short sale contract, Chase required the borrower to agree to be liable for any deficiency after the short sale. The sale went through, a collection agency for Chase demanded a payment of almost $117,000.00 from the borrower for the claimed deficiency, and the borrower sued, claiming that California’s anti-deficiency statutes precluded the collection effort on the deficiency.

The trial court had dismissed the borrower’s action (termed “sustaining a demurrer” in CA), but the appeals court reversed, finding that the condition imposed by Chase (that the borrower agree to be liable for any deficiency) violated the public policy and purpose behind CA’s anti-deficiency statutes, which were enacted in the time of the Great Depression to prevent an already bad situation from becoming worse.

The clear message here is that the “banks” can no longer, in CA, insert illegal provisions in short-sale contracts such as requiring a borrower to waive statutory anti-deficiency protections. The subtle message, which is derived from the public policy reasoning which begins on page 10 of the opinion, is that the “banks” will not be permitted to take advantage of a situation which they themselves created by over-valuing real estate in the first instance and then attempting to capitalize on it, at the expense of the homeowner, when the inflated market crashes.

Andrew Stilwell, Esq. represented the homeowner. We will forward a copy of the full opinion via e-mail to anyone who requests it from us.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

BREAKTHROUGH: CALIFORNIA APPELLATE COURT PERMITS HOMEOWNER TO MAINTAIN CAUSE OF ACTION FOR WRONGFUL FORECLOSURE BASED ON FAILURE TO COMPLY WITH MORTGAGE LOAN CONVEYANCE PROVISIONS OF PSA, REJECTING DECISIONS WHICH DO NOT PERMIT SUCH ATTACKS BECAUSE BORROWER IS “NOT PARTY TO” AGREEMENTS, ETC.

August 1, 2013

The California Court of Appeal for the Fifth Appellate District has issued a 29-page opinion which reversed the trial court’s grant of Bank of America’s demurrer (Motion to Dismiss) as to certain claims made by the homeowner, including his claims for Wrongful Foreclosure, Quiet Title, Declaratory Relief, Cancellation of Instruments, and Unfair Business Practices under CA’s Business and Professions Code sec. 17200. The decision was issued yesterday (July 31, 2013), and is styled Glaski v. Bank of America et al, No. F064556.

The decision has been stamped “Not to be Published”. However, we have been advised that papers are being filed to cause the Opinion to become a published decision, and the Opinion relies on numerous published decisions in reaching its result. The law office of Richard Antognini and the law office of Catarina M. Benitez represented the homeowner.

The Complaint alleged that the mortgage loan had not been properly transferred to the WaMu securitized trust, which closed in December of 2005. The alleged transfer (by assignment) was not until June 15, 2009. The homeowner alleged that the non-judicial foreclosure was wrongful because it was initiated by a nonholder of the DOT which failed to comply with the trust documents as to when the loan had to be transferred to the trust, and thus the purported transfer by JPMorgan Chase to the WaMu securitized trust in 2009 was void, resulting in the foreclosure being void as well. The Court rejected decisions from other states which do not permit a borrower to challenge an assignment because the borrower is not a party thereto or is not a third-party beneficiary thereof.

The Court noted that the Trust was governed by NY trust law, and joined courts that have read the NY statute as to conveyances to a trust “literally”. The Court cited the recent NY decision of Wells Fargo Bank, N.A. v. Erbobo, 39 Misc.3d 120A, 2013 WL 1831799, which held that acceptance of the note and mortgage by the (securitization) trustee after the date the trust closed would be void, as any transfer to the trust in contravention of the trust documents is void. The Court further noted that a Texas Bankruptcy Court, relying on Erbobo, held that assignment of the homeowner’s note after the “start up day” (of the trust) is void ab initio, and thus none of the homeowners’ claims were dismissed. (In Re Saldivar, Bankr.S.D.Tex. June 5, 2013, No. 11-10689).

This reasoning was adopted by the United States Congress back in November of 2010 in its Congressional Oversight Report on Foreclosures, which cited NY trust law and similarly found that any purported transfer of a mortgage loan into the trust after the trust closing date in violation of the trust documents was void, resulting in no such transfer ever having occurred.

The Court concluded that the homeowner’s “factual allegations regarding post-closing date attempts to transfer his deed of trust into the WaMu Securitized Trust are sufficient to state a basis for concluding the attempted transfers were void. As a result, Glaski has stated a cognizable claim for wrongful foreclosure under the theory that the entity invoking the power of sale (i.e. Bank of America in its capacity as trustee for the WaMu Securitized Trust) was not the holder of the Glaski deed of trust.”

The Court also distinguished the Gomes decision, which the trial court relied upon in sustaining BOA’s demurrer, distinguishing Gomes through its citation to Naranjo v. SBMC Mortgage (S.D. Cal. Jul. 24, 2012, No. 11-CV-2229-L(WVG) 2012 l 3030370). The Court further held that the “tender” requirement is not applicable where the foreclosure is void, which is what the homeowner alleged.

The Court thus held, in reversing the trial court, that the homeowner stated claims for wrongful foreclosure, quiet title, declaratory relief, cancellation of instruments, and unfair business practices.

This is a monumental decision which clarifies many of the misconceptions that courts in other states are under, in addition to setting the record straight, as NY case law already has, that noncompliance with the PSA results in a void foreclosure. As our readers know, we have been arguing this for years, and now the Courts are finally listening and are apparently no longer distracted by the otherwise incorrect and inapplicable arguments being made by foreclosing attorneys.

We thank one of our clients for bringing this decision to our attention. We will e-mail a copy of the full decision to anyone who requests it.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com