March 15, 2016

Yesterday, a Hamilton County, (Chattanooga) Tennessee Circuit Judge declined to grant summary judgment to FNMA in a post-foreclosure FED (forcible entry and detainer) case based on the homeowner’s assertion of a defense of wrongful foreclosure. The homeowner is represented by Jeff Barnes, Esq. and local Tennessee counsel Fred Clelland, Esq. Mr. Barnes prepared the opposition memorandum, client affidavit, and argued the matter in open court in Chattanooga yesterday.

The homeowner had been defending the case pro se. After losing the underlying foreclosure and the FED portion of the case in Sessions Court, she appealed the FED portion to the Circuit Court and then retained Mr. Barnes and Mr. Clelland.

Bank of America had instituted the underlying non-judicial foreclosure proceeding. FNMA was the successful bidder at the sale. FNMA moved for summary judgment in the FED case on the issue of possession. The homeowner’s affidavit set forth facts which demonstrated that BOA had manufactured a fraudulent foreclosure by failing to credit payments made; refusing to acknowledge payments actually made and retained by BOA; diverted payments to accounts which did not credit the payments to principal and interest; wrongfully increased the escrow requirements without notice as required by the loan documents; and wrongfully forced the homeowner to maintain an escrow account after PMI was removed, which is also illegal.

Mr. Barnes argued Tennessee appellate case law which was practically on point (and which also involved FNMA attempting to obtain summary judgment of possession after purchasing property at a foreclosure sale) which holds that when a homeowner raises a defense of wrongful foreclosure alleging certain facts, there is a question of fact as to whether the foreclosing party passed good title to the purchaser at the sale. Without passing clear or good title, there is no “landlord/tenant” relationship created which would permit a judgment of possession, and there are questions of fact which preclude summary judgment.

The Court thus denied FNMA’s Motion for Summary Judgment. The case now progresses into discovery.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com