DEVELOPMENTS IN SOUTH CAROLINA AND TENNESSEE: SERVICER SELLS LOAN 2X TO TWO DIFFERENT ENTITIES WITHIN ONE WEEK; BB&T STRINGS BORROWER ALONG FOR 3 YEARS ON LOAN RENEWALS AND THEN FORECLOSES

December 21, 2014

Many readers have been e-mailing us about why the last post was in late October. This is because between then and last week, Mr. Barnes was in the process of preparing seven appellate briefs (two in the United States Court of Appeals for the 10th Circuit, and one each for the Colorado Court of Appeals and the Colorado Supreme Court, and one each in the United States Court of Appeals for the 6th Circuit, the Florida 1st District Court of Appeal, and the Florida 3d District Court of Appeal); preparing for 6 trials (Atlantic City, New Jersey and various parts of Florida); and attending hearings in South Carolina and Tennessee.

In South Carolina, the homeowner (represented by Jeff Barnes, Esq. and local counsel Bill Sloan, Esq.) was granted leave to amend a Declaratory Judgment action involving a bankrupt lender, multiple assignments of mortgage, a US Bank securitization, and multiple questionable transfers of the Note based on matters in documents which were finally produced in discovery by the foreclosing party in response to a Court Order which had granted a Motion to Compel filed by Messrs. Barnes and Sloan. Although the matter was complicated enough already, in the week before the hearing, the new servicer sent two letters to the homeowner, each stating that the loan had been sold. The problem is that each letter stated that the loan had been sold to a different entity. The Court thus permitted further amendment to add the two new alleged owners of the loan over vociferous objection of counsel for the existing defendants.

In a Tennessee case involving BB&T where the borrower is represented by Jeff Barnes, Esq. and local counsel Andrew Farmer, Esq., the Court had previously dismissed the borrowers’ action against BB&T on a statute of frauds theory involving three years of negotiations between BB&T and the borrowers as to renewals of construction notes and release of certain other property. BB&T claimed that there was nothing in writing as to the agreements and thus BB&T was entitled to foreclose.

A second action was filed by BB&T involving a lien subordination claim as to certain of the properties involved in the first action. BB&T moved to dismiss the borrowers’ counterclaim on the same basis that it had advanced for dismissal of the borrowers’ earlier declaratory relief action. However, BB&T never caused an Order to be entered in the prior case, and in the months between the hearing on the borrowers’ case and the lien subordination case, the borrowers made a search through three (3) years of e-mails between them and BB&T which revealed that BB&T agreed to renew the construction notes and to release a certain parcel of land. Mr. Barnes argued that these e-mails debunked BB&T’s “statute of frauds” theory and provided the written evidence as to date, time, and identity of the BB&T loan officer who notified the borrowers that the loan renewals had been approved by BB&T and that BB&T also agreed to release the specific parcel which was under contract so that the borrowers could realize a net after paying off all liens to BB&T.

The Court granted Mr. Barnes’ request to amend the Counterclaim in the lien subordination case, and also agreed to treat the amendment as a request to reconsider the dismissal of the borrowers’ case.

At one of the trials (in Clay County, Florida), the Plaintiff’s witness (who was the alleged representative for the securitization “trustee” bank but who was actually an employee of the servicer) testified that the Note and Mortgage had been timely and properly transferred to the Trust in accordance with the provisions of the PSA. When Mr. Barnes questioned the Plaintiff’s witness as to the documentary proof of that transfer, the witness stated that the documents were not presented at trial. The Judge requested post-trial briefing.

The trial in Atlantic City remains unresolved, with post-trial briefs to be submitted in January, 2015. Two of the other Florida trials also remain unresolved, with post-trial briefing also to be done in January.

One of the other Florida trials was continued in view of what appears to be a potential fraud on the court involving manufactured “originals” of the Note and Mortgage in a case which was originally filed by the law offices of David J. Stern (who surrendered his law license and was disbarred for engaging in fraudulent manufacturing of foreclosure filings). Mr. Barnes argued that there was no evidence that the Plaintiff who filed the Complaint (Private Capital Group LLC) had standing at the time that the Complaint was filed. The attorney for the current Plaintiff (Roundpoint Mortgage) told the trial Judge that “the Complaint attached a copy of the Note with the endorsement”. Upon examining the Court file in response to this statement, the trial Judge stated that there was no copy of any Note or endorsement attached to the Complaint, and in fact that the Complaint contained a count for “Lost Note.”

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

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