October 12, 2011

Today, a New Mexico court granted a homeowner’s Motion for Judgment on the Pleadings in a foreclosure case filed by BAC Home Loans Servicing LP fka Countrywide Home Loans Servicing LP, neither of which was the original lender. The ruling was as to the record version of the Complaint. The Court did grant BAC 30 days to file an Amended Complaint, but was convinced that BAC did not have a proper chain of title to either the Note or the Mortgage, and invited a summary judgment motion on the MERS issue.

BAC filed the case with one Assignment which was from the original lender to MERS. A second Assignment unnotarized Assignment, which failed to identify who the “lender” was, purported to assign the Note and Mortgage from MERS to BAC. The homeowner claimed entitlement to judgment on the pleadings pursuant to New Mexico rules of civil procedure and New Mexico case law which provides that such a remedy is available where there is a “fatal variance” between what a foreclosing party pleads in its complaint and what it has to prove to be entitled to foreclose. The homeowner also attacked the ability of MERS to do anything based on the restrictions which MERS has placed upon itself and case law restricting what MERS is and can do.

The ruling is believed to be the first of its kind in the State of New Mexico. The homeowner is represented by Jeff Barnes, Esq. and local New Mexico counsel John R. Fox, Esq. of Santa Fe. Mr. Barnes prepared the Motion and legal memoranda, with Mr. Fox arguing the Motion in court today.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

October 10, 2011

As most of you know, Deutsche Bank National Trust Company sued JPMorgan Chase and the FDIC back in 2009 over claimed breaches of contract as to WaMu initiated mortgage loans which were made part of securitized mortgage loan trusts where DB is the “trustee”. The case is pending in the United States District Court for the District of Columbia under Case No. 1:09-CV-1656 RMC. One of the issues in the case is whether the sellers of the mortgage loans (e.g. WaMu) must exercise repurchase obligations as to mortgage loans which did not comply with the “Representations and Warranties” provisions of the Trust documents as the loans were in default, in danger of being in default, etc. at the time that they were allegedly “transferred” to the hundreds of securitized mortgage loan trusts of which DB is the “trustee”.

On May 12 of this year after a battle over whether the lawsuit even stated a cause of action, the Court has ordered discovery of the documents in JPM’s possession, which include the mortgage loan files. JPM had taken the position that DB did not state a cause of action for breach of contract but simultaneously denied DB access to the very mortgage loan files which would reveal whether the loans were problematic. Although DB made the requisite demans for document inspection, JPM refused to permit access to the mortgage loan files. Recall that JPM has taken the position in this case that it is “not the successor in ingterest to WaMu”, and that it only assumed certain assets and liabilities of the failed WaMu as of September 25, 2008, yet has filed hundreds of foreclosures where it claims, in certain instances under oath, to be able to foreclose on the WaMu loan as it is “the successor in interest to WaMu.”

The Court has also ordered discovery, to be completed by May 11, 2012, “as to the meaning of the Purchase and Assumption Agreement”, which is the operative agreement by which JPM has taken the position that it has the right to institute foreclosure of WaMu originated mortgage loans, which assumption is referred to generally in the last paragraph of the “FDIC Affidavit” that JPM and Chase Home Finance routinely file in foreclosure actions. The document production is to be done pursuant to a lengthy “Confidentiality Order”.

The Court’s rulings present significant issues for individual foreclosure actions filed by DB, JPM, and Chase Home Finance (CHF).

If JPM has taken the position that it will not even allow the trustee of securitized mortgage loan trusts access to the very mortgage loan documents as to mortgages which were allegedly transferred to the securitized mortgage loan trusts of which DB is the trustee, then how does JPM legally take the position that it has owner and holder rights to the loan for purposes of foreclosure?

If the parties in the case do not even know what the Purchase and Assumption Agreement means and which liabilities remained with the FDIC, how can JPM go around the country claiming to be able to institute foreclosures pursuant to that very Agreement?

If it is unknown whether a mortgage loan was a liability at the time a foreclosure action is filed (because the loan was in default, in danger of being in default, subject to defenses, etc.) and it is thus unknown whether (a) it remained with the FDIC after WaMu’s failure or (b) it is subject to repurchase obligations by the seller, then how does JPM claim, in a foreclosure action, that is owns the loan?

If DB is claiming that the mortgage loans were not what they were represented to be at the time of the PSA, then how did the loan remain a part of a securitized mortgage loan trust so that DB could claim it owned the loan for purposes of having standing to foreclose?

If DB suspects that the loans did not comply with the representations and warranties (and, as we all know, DB had actual knowledge that hundreds of loans were bad when they attempted to transfer them into a trust through MERS or another entity), how did they let MERS or someone else transfer a known toxic loan into a trust and how can they now cry foul?

The bottom line is that this infighting between DB, JPM, and the FDIC is raising literally dozens of legal and factual issues which should be brought to the fore in individual foreclosure cases both in discovery and in motion practice, especially in opposing motions for summary judgment filed by DB, JPM, or CHF.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

October 4, 2011

Wells Fargo has voluntarily dismissed a foreclosure action in Iowa after the state Court Judge denied Wells Fargo’s Motion for Summary Judgment and set the case for trial. This case, which began in 2005, has been discussed several times on this website throughout its interesting history.

The homeowner, who had originally represented herself, had been told by Wells Fargo back in 2005 that Lehman Brothers was the “investor” on the loan. Notwithstanding this issue relating directly to chain of title to the note and mortgage and the ability of the servicer (WF) to foreclose, the Court granted summary judgment to WF in 2005, which it later vacated in 2010 after WF brought Lehman into the case as a party Defendant and made certain admissions as to lack of ownership of the mortgage loan. The Court was concerned as to many issues, including how WF could claim under oath in 2005 that it owned the loan but admitted in 2010 that it did not and that the Note was lost, with WF not knowing the details as to the “loss”.

WF nonetheless moved for summary judgment a second time in 2011. The homeowner asserted numerous disputed issues of material fact, including the failure of WF to file or record any Assignment pursuant to a Servicing Agreement between WF and Lehman; failure of WF to demonstrate compliance with the Seller’s Warranties in the Servicing Agreement; failure to demonstrate compliance with the Custodial Agreement; Plaintiff’s admission that it has no knowledge of the true and present owner of the Note; failure to offer any proof as to when the Note was lost; failure to identify the nature and extent of admitted interests in the Note on the part of a Lehman securitized trust; infirmities in WF’s “Affidavit” of the “Default Litigation Specialist”; and failure to satisfy Iowa Code Sec. 554.1201 (relating to proof requirements in lost note claims).

The Court issued a written opinion denying WF’s second Motion for Summary Judgment. The case was thereafter set for trial. Today, the Notice of Voluntary Dismissal was received.

The homeowner is represented by Jeff Barnes, Esq. (who was admitted pro hac vice in the case and prepared the opposition to WF’s second Motion for Summary Judgment) and local Iowa counsel Christine Sand, Esq. of the Beverly Wild Law Office.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

September 30, 2011

A Tennessee Federal Judge has issued an Order denying Defendant Bank of America’s “Motion to Reconsider” the Court’s prior Order which denied B of A’s Motion to Dismiss the homeowner’s Complaint for declaratory relief. The homeowner had originally sued B of A in state court claiming that B of A had no interest in either the Note or the Deed of Trust. B of A removed the case to Federal Court and filed a Motion to Dismiss, which the Court denied upon finding that the Court could not find, as a matter of law, whether B of A had legal or equitable rights in either the Note or the Deed of Trust, and could not do so on a Motion to Dismiss.

B of A filed a “Motion to Reconsider”, citing hearsay material about “public knowledge” of B of A’s acquisition of Countrywide, etc., and essentially re-argued the same matters in its Motion to Dismiss. The “Motion to Reconsider” was not grounded upon any of the factors cited in case law set forth by B of A within its own Motion. The Court denied the “Motion to Reconsider”, setting forth its reasoning from its prior Order. Apparently, B of A did not understand the Court the first time.

The homeowner is represented by Jeff Barnes, Esq. and local Tennessee counsel John Higgins, Esq. Mr. Barnes is admitted pro hac vice in the case and researched and prepared both the Response to the Motion to Dismiss and the Response to the “Motion to Reconsider”.

Separately, FDN Maui, Hawai’i counsel James Fosbinder, Esq. has successfully opposed a Motion for Summary Judgment filed by the bank against the homeowner. The same Court has jurisdiction over this case and another case where Mr. Fosbinder represents the homeowner. At a hearing last Friday, the Court cautioned the bank’s counsel in the second case that the issues “are the same issues” as in the case where the Court already denied the bank’s summary judgment motion.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

September 22, 2011

Our offices will be closed on Thursday, September 29, 2011 in observance of Rosh Hashana. We wish everyone a happy, healthy, and prosperous New Year.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

September 21, 2011

We recently predicted that the David Stern debacle, which left over 100,000 Florida foreclosure cases in limbo, would soon result in significant re-filings of these foreclosure cases by other law Firms which have and are being retained by the former Stern clients. This is exactly what has happened and is happening now.

Since our article was published, we have received a slew of inquiries from Florida homeowners whose cases, which had originally been filed by the Stern Firm and had been previously dismissed, are now being re-filed by other other law Firms. The Plaintiff in most of these re-filed cases is the alleged “trustee” of a securitized mortgage loan trust. As most of the cases were dismissed on procedural grounds (e.g. lack of record activity in the case or failure of a Stern attorney to appear for a court status conference), the dismissals were “without prejudice”, meaning that the cases can be re-filed under Florida law.

Separately, actions have been instituted in New York and Nevada alleging that Countrywide did not actually deposit mortgage loans into securitized trust pools, and thus Countrywide had no legal authority to seek foreclosure on the properties the subject of the non-placed mortgage loans. This will probably lead to massive litigation against Countrywide for fraud-based claims and punitive damage requests, which may be one of the reasons why Bank of America has recently disclosed that Countrywide may be filing bankruptcy as we reported on this website earlier this week.

Which, again, leads to the importance of the immediate establishment of a separate Borrowers’ Committee in any Countrywide Bankruptcy. Otherwise, and as we cautioned in our article on this matter, Countrywide may seek to destroy literally millions of documents upon filing bankruptcy, and borrower claims may be relegated to the general unsecured creditors’ committee.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

September 19, 2011

The Huffington Post reported on Saturday, September 17 that Countrywide Financial’s losses could compel its parent company Bank of America Corporation to “put the unit on the bankruptcy block”. Countrywide Financial, the parent company which was purchased by B of A in 2008 (before it purchased Countrywide Home Loans separately in 2009) could file BK independantly as it maintained a separate legal identity notwithstanding the 2008 sale to B of A. According to the article, B of A has lost more than $22 billion from its consumer mortgage division in the past year, in large part because of loan losses and litigation settlements linked to Countrywide.

In August, AIG sued B of A for over $10 billion, claiming B of A was liable for Countrywide’s mortgage bonds as its legal successor thereto. Previously, the Association of Financial Guaranty Insurers, which insures securitized mortgage loans, had demanded that B of A exercise its repurchase options on billions of “bad” mortgage loans. B of A took the position that each loan had to be evaluated separately, but a court ruling prevented B of A from furthering that position, which would have dragged the litigation on for years.

What effect a CTW Bankruptcy would have on active and pending foreclosures is unknown, but what we do know, from our experience in the American Home Mortgage and Accredited Home Loans Bankruptcies (both of which were filed in the U.S. Bankruptcy Court for the District of Delaware) is that a separate borrowers’ Committee should be formed ASAP after any such filing, which committee should be independant of any “unsecured creditors” Committee. One reason is that one of the first things a lender does when it files Bankruptcy is to file Motions for permission to destroy documents, claiming that maintaining voluminous amounts of documents is a “burden on the estate”. The disasterous effect on borrowers seeking discovery in foreclosure actions involving CTW with the granting of any such Motion is beyond obvious.

The second reason is that the unsecured creditors’ Committee does not have any reason or impetus to exercise remedies to protect mortgage loan borrowers, as they have their own interests which are obviously diverse from (and sometimes antagonistic to) the interests of mortgage loan borrowers. Unless borrowers set up their own separate Committee with people who understand borrowers’ interests and will take aggressive action to protect borrowers, the rights of borrowers could be negatively impacted or lost outright in any lender bankruptcy.

We saw this personally when an attempt was made in the Accredited Bankruptcy to form such a Committee. The Motion for appointment of the separate borrowers’ Committee was denied by the Court because a pro se borrower, who herself was in foreclosure, was already on the general unsecured creditor’s Committee, claiming that she was “representing” the interests of mortgage loan borrowers. The position was thus taken by the Debtor lender that “borrowers are already represented within the Unsecured Creditors’ Committee” (which obviously and in reality they were not), and that a separate borrowers’ Committee would be “redundant”.

We also know from the AHM Bankruptcy that it is possible that the servicing unit could be sold separately out of the BK, as AHMSI (American Home Mortgage Servicing Inc.) was to an individual who then initiated thousands of foreclosures nationwide in the name of AHMSI as “servicer” while the parent “lender”, which filed BK in 2007, remained (and is still) in BK.

Bottom line is that borrowers have to keep a watchful and close eye on the maneuverings of B of A as to its “Countrywide Unit”, and prepare, in advance, for any Bankruptcy filing.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

September 16, 2011

We had a vigorous response within hours of yesterday’s post as to this seminar. The chosen date is Friday, November 11, 2011. Again, the seminar is limited to attorneys and paralegals only, and is also limited to fifteen (15) registrants.

The topic areas will be somewhat similar to those in the prior seminars, but certain new areas will be added including opposing Proofs of Claim and Stay Relief Motions in Bankruptcy; particular issues as to Pooling and Servicing Agreements including discovery and dispositive motions related to compliance with the PSA; handling objections to and compelling discovery of securitization and trust documents; and damage and unjust enrichment claims against foreclosing parties.

The Registration Form is available by e-mail request to [email protected].

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

September 15, 2011

FDN will be moving its California branch offices to the greater Los Angeles area by year-end, at which time the Newport Beach office will be closed with Mr. Barnes and his staff relocating to Los Angeles. The move is in connection with recent associations with Los Angeles area law Firms, and the need for access to multiple airports in connection with Mr. Barnes’ work in the Western states.

FDN will thus be conducting its final foreclosure defense seminar in its Newport Beach offices in the month of November, 2011. The seminar, like all others before it, will be confined and limited to attorneys and paralegals only. Interested attorneys and paralegals should e-mail Mr. Barnes at [email protected] with available dates in November, as the seminar will be scheduled on a date which is the most available to all who express an interest in attending.

The seminar will feature a “fall harvest” menu for breakfast and lunch, and will be scheduled on a Friday.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com 

September 14, 2011

A Florida Judge has ordered Deutsche Bank, the claimed “trustee” of a securitized mortgage loan trust, to produce numerous securitization documents (including the PSA, Master Purchasing Agreements, Issuer Agreements, Commitment to Guarantee Agreements, Release of Document Agreements, Trustee Agreements, etc.); documents concerning insurance on the securitized mortgage loan; credit default swap documents; servicing agreements; documents as to proof of charges listed on the HUD-1; documents as to the identification of the holder of or investor in any Special Investment Vehicle, Collateralized Mortgage Obligation, Collateralized Debt Obligation, mortgage-backed security, or credit default swap which is collateralized in whole or in part by the mortgage or note; and documents which identify all persons who authorized the filing of the foreclosure action. The ruling was in response to a Motion for Ruling on Discovery Objections and to Compel Documents in a Request for Production. The Motion and discovery were filed by Jeff Barnes, Esq., who represents the homeowner.

Deutsche Bank’s counsel waited ten (10) months before filing a “Response” to the Request for Production, which consisted almost entirely of objections. The Judge also compelled Deutsche Bank’s counsel to file and serve a Privilege Log as to all documents which DB claimed to be “privileged” in any respect.

The ruling represents another milestone for homeowners seeking discovery of securitization documents. For years, we saw the “banks”, servicers, and “trustees” of securitized mortgage loan trusts objecting to these documents on the grounds of “relevance” and “lack of standing”. As those of you who follow this website are aware, recent rulings have not only compelled this discovery and awarded attorneys’ fees and/or dismissed judicial foreclosures when the discovery is not produced, but the “relevance” has been seen by the Horace and Hendricks decisions which granted summary judgment to the homeowners based on matters in the very discovery which has been ordered to be produced in this case. The Horace court also held that the homeowner is a third-party beneficiary of the PSA.

This is the 13th such Order compelling securitization discovery which Mr. Barnes has obtained from courts in different states, including Florida, New Jersey, and Oregon.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com