July 10, 2015

Yesterday, an Oregon Circuit Court Judge issued a detailed, multi-page ruling denying BONY’s Motion for Summary Judgment in a case involving a purported transfer of a loan (allegedly) originated by America’s Wholesale Lender to a securitization trust. The ruling is of statewide significance for several reasons, including the fact that there is presently no Oregon appellate law on the issues.

Jeff Barnes, Esq. represents the homeowners together with local Oregon counsel Philip Anderson, Esq. The Motion was argued in open court by Mr. Barnes, who drafted the responsive papers, on June 25, with the ruling being issued late yesterday afternoon.

Oregon has four issues in a judicial foreclosure, the first being whether the foreclosing party is the “PETE” (person entitled to enforce). The Court denied BONY’s MSJ on this threshold requirement, and based on the arguments made by Mr. Barnes and the filing of an ORCP 47E Affidavit as to an expert witness, permitted the homeowners to present expert testimony as to the authenticity and legal relationships involved in the transaction, citing a recent (2015) Oregon appellate decision on the issue of the scope and requirements of Rule 47E Affidavits.

BONY had argued that no expert testimony was needed in what it called “a simple foreclosure case” The 2015 case sets forth that such Affidavits need only to contain certain language and are evaluated in view of the theory of the case. This case involves numerous complex issues including but not limited to the America’s Wholesale Lender issues (previously discussed on this website) and the securitization issues, including the legitimacy of any alleged transfer under the factual circumstances of the case.

The second and perhaps most important ruling was that the Court, in denying summary judgment on BONY’s claim that the homeowners did not have standing to challenge the sale, transfer, and assignment of the Note and DOT, held that the homeowners do have such standing “to challenge the legitimacy of Plaintiff’s claim that they, as the alleged assignee, possessor, and holder of the Note and Deed of Trust, are the proper party to enforce them.”

This ruling is in accord with the U.S. Court of Appeals for the 6th Circuit’s October, 2014 opinion in the Slorp v. Lerner decision (previously discussed on this website) which clarified the flawed and improperly narrow interpretation of the 6th Circuit’s prior opinion in the 2010 Livonia Properties case, which bank and servicer attorneys (erroneously) argued precluded homeowner challenges to assignments and transfers of mortgage loans. The 1st Circuit Court of Appeals is also in accord pursuant to its holding in the Cosajay decision, which held that its “decision finding standing is buttressed by Defendants’ extreme and incongruous argument that would allow Ms. Cosajay no relief because she is not a party to the assignment.”

The case now progresses to full trial on the merits, including the issues involving the alleged “loan” by America’s Wholesale Lender; whether there was any interest to transfer, etc.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 9, 2015

We hope everyone had a safe and happy July 4th holiday. Mr. Barnes recently completed a month-long “tour of duty” throughout the US involving trials and hearings in several states including Florida, Oregon, Tennessee, Illinois, and Colorado, and is preparing for another battery of court appearances in New Jersey, Colorado, Florida, and Tennessee.

The Florida 4th District Court of Appeal has reversed a Final Judgment of Foreclosure which a Ft. Lauderdale, Florida Circuit Judge had entered in favor of JPMorgan Chase Bank; dismissed the foreclosure due to lack of standing; and directed that judgment be entered in favor of the homeowner in the matter of Wright v. JPMorgan Chase Bank N.A., 4th DCA Case No. 4D14-565. We thank one of our dedicated followers for bringing this case to our attention.

The case is of particular interest as the original Note was in favor of Chase Bank USA, which JPM claimed to be its wholly-owned subsidiary. JPM argued that it obtained servicing rights over the loan and that as the parent company of the wholly owned subsidiary, it had the right to enforce a Note in favor of its subsidiary.

The 4th DCA disagreed, holding that Chase Bank was a separate legal entity and as such, the parent company could not exercise the rights of a subsidiary, citing two appellate decisions on this issue. The Court held that absent evidence that the loan was purchased by JPM, it could not enforce the Note. JPM did not introduce any purchase agreement or other evidence that it had acquired the Note.

The Florida 4th DCA has consistently been one of the few appellate courts in the entire country to really examine the issues involved in foreclosures and hold the foreclosing party to its legal burdens. Other Florida appellate courts are recently beginning to do likewise.

We have been receiving many inquiries since our publication on the America’s Wholesale Lender issues raised by the Nash decision in Florida. Mr. Barnes currently has cases pending in two states on the issue of whether AWL ever legally existed and thus whether any alleged “successor” thereto may seek to enforce a Note in favor of a non-existent, unlicensed mortgage “Lender.”

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

May 18, 2015

Butler & Hosch, which was (according to the press) one of the largest foreclosure mills in the country, has shut down and has filed an Assignment for the benefit of creditors. The Firm was based in Orlando, Florida and had offices in numerous states and was prosecuting approximately 60,000 foreclosure cases, having admittedly picked up “many files from the defunct Law Offices of David J. Stern”.

The press has stated that its 700 employees were “stunned” at the news, which was apparently delivered at 5:00 p.m. last Thursday in a conference call with an attorney from another large law Firm which handles foreclosures in Florida.

Thus, those 60,000 cases will be in limbo until the former clients of B&H retain another law Firm, which may be difficult as many of the files are most likely infected with David Stern problems (e.g. fraudulently manufactured documents, bogus assignments, backdated notaries, fraudulent claims, etc.).

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

May 11, 2015

As our readers know, whenever a homeowner seeks to challenge an assignment of mortgage (or deed of trust), “bank” attorneys chant the mantra “the borrower has no standing to challenge an assignment as he is not a party to it”, allegedly relying on the body of case law which stemmed from the decision of the US Court of Appeals for the 6th Circuit in Livonia Properties Holdings, LLC v. 12840-12976 Farmington Road Holdings, LLC, 399 F. App’x 97 (6th Cir. 2010).  Unfortunately, many courts across the US jumped on the bandwagon, apparently having never actually read the full opinion or the 6th Circuit’s more recent decision in Slorp v. Lerner et al., No. 13-3402 (6th Cir. September 29, 2014), which clarified the erroneous application of Livonia Properties (with citation to several post-Livonia Properties decisions) and which the 6th Circuit itself stated (as to the Livonia Properties case) “has confounded some courts and litigants”.

In partially reversing the trial court, the 6th Circuit held the following:

The sweeping rule that the district court extrapolated from Livonia Properties dwarfs our actual holding in that case. The district court in Livonia Properties stated that an individual “who is not a party to an assignment lacks standing to challenge that assignment”, and our Livonia Properties opinion quoted and endorsed that general statement, perhaps inartfully. But we quickly limited the scope of that rule, clarifying that a non-party homeowner may challenge the validity of an assignment to establish the assignee’s lack of title, among other defects. See also Carmack v. Bank of N.Y. Mellon, 534 F. App’x 508-511-12 (6th Cir. 2013)(“Livonia’s statement on standing should not be read broadly to preclude all borrowers from challenging the validity of mortgage assignments under Michigan law.”) Thus, a non-party homeowner may challenge a putative assignment’s validity on the basis that it was not effective to pass legal title to the putative assignee. See Conlin v. Mortg. Elec. Registration Sys., 714 F.3d 355,361 (6th Cir. 2013); …see also Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 353-354 (1st Cir. 2013)(“the debtor may also question a plaintiff’s lack of title or right to sue”). (emphasis added)

The Slorp opinion went on to distinguish the facts in Livonia Properties to clarify that the homeowner lacked “standing” to assert that the assignment was not properly recorded or suffered from some technical defects that prevented the assignee from establishing chain of title, but that in the Slorp case, the homeowner alleged that Bank of America, the putative assignee, held neither the mortgage nor the note when it filed the foreclosure action because the parties lacked the authority to assign his mortgage to Bank of America. The court stated: “That distinction makes all the difference”.

However, “bank” attorneys have consistently taken the position that the rejected “sweeping” rule applies. Without a proper argument from the homeowner to highlight the error, courts across the US have gone along with this erroneous non-principle of law. In fact, we just reviewed a decision from a state supreme court which was recently issued (and issued well after Slorp) which still clung to the erroneous “Livonia Properties” rule, without even mentioning the later cases which clarified the error.

In a second example, a District Court of Appeal in Florida previously issued the same type of “sweeping” rule stating that a borrower has no standing to challenge noncompliance with the PSA, grounded on the same argument (that the borrower is not a party to the PSA contract). Although the opinion deals ONLY with PSAs, “bank” attorneys have taken the position that this “rule” applies to prospectuses, SEC 15D filings, SEC interim reports, and all manner of documents relating to securitization trusts. Thus, once again, the “bank” attorneys have perverted the actual holding of case law, and without proper opposition, the courts are again “drinking the Kool-Aid”.

Granted, many courts do not have full-time law clerks to really dig into the arguments made by the “banks” and servicers, but there should be at least a minimal inquiry. A simple WestLaw search on Livonia Properties would have revealed the subsequent decisions which clarified and limited it. The fact that this is apparently not being done is a sad commentary on the system, and leads the public to question the integrity of and distrust the judicial system.

Jeff Barnes, Esq.

May 7, 2015

Jeff Barnes, Esq. has been approached by several homeowners who were the victims of fraudulent foreclosure actions filed by the Law Offices of David J. Stern to institute litigation to vacate the foreclosures based on evidence from numerous sources including official investigations against the Stern law Firm. Mr. Barnes has been presented with depositions and other documentary evidence demonstrating the massive pattern of corporate fraud engaged in by the Stern law Firm acting as agent for numerous “banks” and servicers, who knew or should have known of the fraud but did nothing about it other than to cause it to continue.

Mr. Barnes has been requested to file an action naming the Stern law Firm, its employees who manufactured the fraudulent documents and foreclosure foreclosure papers, and the banks and servicers who used the Stern law Firm to perpetrate the fraudulent foreclosures which numbered in the tens of thousands.

Florida law provides that a judgment can be opened or vacated if it was obtained by fraud, or if it is void, and also has a “crime/fraud” exception to the attorney/client privilege which does not protect communications between a party and its attorney if those communications were made in furtherance of the perpetration of or for the purpose of committing a crime or fraud even if the crime or fraud is not consummated. Fla.Stat. sec. 90.502 as explained in First Union National Bank v. Turney, 824 So.2d 172 (Fla. 1st DCA 2001). Obviously the fraudulent Stern foreclosures were “completed”.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

April 23, 2015

A District Court Judge in Lancaster County, Nebraska has denied Motions to Dismiss filed by Bank of America which were directed toward the homeowner’s claims against BOA and the alleged substitute trustee for declaratory relief, quiet title, accounting, conversion, and injunctive relief. The homeowner is represented by Jeff Barnes, Esq. and local Nebraska counsel Doug Ruge, Esq. Mr. Barnes prepared the Complaint; Mr. Ruge prepared the Brief in opposition to the Motion to Dismiss.

The Court entered a narrative order which made a very important specific finding and legal distinction. The Order recites that the homeowner is not asserting that the holder of the Note and DOT could not assign them, but rather that she is questioning whether what was done actually accomplished that goal. The case involved an alleged MERS assignment. The Court held that the homeowner is entitled to a determination that the party to whom she pays is the party to who she owes the money, and that the other causes of action spring from the possibility of a finding that the defendants are not the proper parties to proceed with the foreclosure.

This is a very significant ruling. It distinguishes the bank and servicer mantra that borrowers do not have standing to challenge assignments (which, by the way, they do pursuant to the recent Slorp decision from the U.S. Court of Appeals for the 6th Circuit which clarified their prior opinion in Livonia Properties which the 6th Circuit held “confounded courts and litigants” across the country).

The Court’s reasoning provides a sound basis for the assertion of an action for declaratory relief and all of the other causes of action alleged while also clarifying an important legal distinction as to a challenge to an alleged transfer of a Note and DOT.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

April 8, 2015

A Monroe County (Florida Keys) Circuit Judge has today entered Final Judgment in favor of the homeowners in a securitization case where Citibank was the “indenture trustee” for a Bear Stearns securitization. Jeff Barnes, Esq. represented the homeowners and tried the case in Key West on February 10, 2015.

The homeowners’ expert witness Richard Kahn (www.fpg-usa.com), who was the former national product manager for Merrill Lynch’s mortgage-backed securities division on Wall Street whose responsibilities included insuring that all mortgage loans transferred to securitization trusts complied with the trust documents and applicable laws, testified that the Plaintiff did not and never came into any interest in the Note or Mortgage. Citibank offered no countervailing expert and presented no evidence to rebut the expert’s testimony.

The Court found that the homeowners’ affirmative defenses of lack of the Plaintiff acquiring any interest in the Note and Mortgage were not proven to be legally insufficient and were not rebutted by the preponderance of the evidence, and thus the homeowners prevailed on these affirmative defenses. The Court found that the Plaintiff never acquired standing to have instituted the action.

Under Florida law, the homeowners may now seek recovery of their attorneys’ fees and costs as well from Citibank.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

April 2, 2015

The Florida Fourth District Court of Appeal, which has jurisdiction over appeals from cases in Broward, Palm Beach, and Martin Counties, has consistently defended homeowner’s rights and upheld the foreclosing party’s burden to prove it case more than any of Florida’s five appellate district courts. Two recent decisions from that Court have clarified the burden even further in cases involving securitizations.

In Murray v. HSBC Bank USA as Trustee, etc., No. 4D13-4316 (Fla. 4th DCA Jan. 21, 2015), the Court reversed a final judgment of foreclosure after trial, introducing the opinion with the the following: “In this foreclosure puzzle, one of the pieces is missing.” HSBC contended that it was a nonholder in possession with the rights of a holder pursuant to an assignment from Sand Canyon Corporation to HSBC. The PSA was introduced, and the borrowers argued that Option One California never transferred its rights to HSBC as HSBC failed to connect the dots between ACE Securities Corporation (the “Depositor” identified in the PSA) and the last identifiable holder of the Note.

The Court found that HSBC did not qualify as a nonholder in possession with the right to enforce, as it failed to produce any evidence to prove its claim and admitted that it was not a holder of the note as the Note was payable to Option One California and there was no blank endorsement. The Court found that although Option One Mortgage Corporation was a party to the PSA, it was only a servicer and nothing in the PSA established the servicer conveyed rights in mortgage loans to any party, as the servicer only “services” loans. The Court reversed the trial court with directions to enter judgment in favor of the homeowners.

One important point of this decision is that the Court found no error in analyzing the chain of alleged transfers using the PSA, and that it was the PSA which established that there was no evidence of any lawful transfer of the loan to HSBC.

On March 25, 2015, the 4th DCA followed with its decision in Jelic v. LaSalle Bank, N.A., No. 4D13-4040 (March 25, 2015) which also reversed a final judgment after trial. Once again, the court examined the case by looking at the PSA which was introduced into evidence through the representative of the servicer (Select Portfolio Servicing). The original note contained two undated special endorsements; one from the original lender to Greenpoint Mortgage Funding (via MERS), and one from Greenpoint to WaMu. The second assignment was executed more than 6 months after the Complaint was filed.

The Court held that the submission of the original Note at trial did not prove standing, as the special endorsements were undated and there was no testimony establishing that these endorsements were affixed to the Note prior to the initiation of the action, citing the Court’s McLean v. JPMorgan Chase Bank decision. “Bank” and “servicer” attorneys have consistently attempted to distinguish the use of McLean for trial purposes by arguing that McLean arose out of a summary judgment decision. The 4th DCA has now kebashed that argument as it applied the principles of McLean in reversing the final judgment which was entered after trial.

The Court also found that the partial PSA failed to establish standing. There was no evidence as to what WaMu’s role in the transaction was and thus there was no proof that WaMu had any authority to enforce the Note or what control LaSalle had, as trustee under the PSA, over WaMu.

Going even further, the Court found that there was no equitable transfer of the mortgage and Note, as there was no evidence that the unidentified party which (allegedly) transferred the Note and mortgage into the Trust under the PSA before the complaint was filed had the intent to transfer its interest to LaSalle. To quote the opinion: “Thus, it is impossible to determine whether the unidentified party transferring the mortgage and note into the PSA had any intent to transfer its interest because there is no indicating assignment from that unidentified party.”  Read that portion carefully, as it establishes a burden on the foreclosing party in a securitization case to prove its intent to transfer as well.

This case finally quashes the myth of the alleged effect of an undated blank endorsement espoused by “bank” and servicer attorneys, to wit: that they have the Note with a blank endorsement and thus they win. No longer, at least not in Florida, and the foreclosing party in a securitization case must also prove intent on the part of the party allegedly transferring the Note and mortgage to the trust to do so.

These two decision also signal the death of the Castillo mantra used on a daily basis by “Bank” and servicer attorneys that the homeowner has no standing to attack standing using the PSA. Numerous Courts have seen through this erroneous argument, including the very court (the U.S. Court of Appeals for the 6th Circuit) whose decision in the Livonia Properties case was the starting point for the erroneous argument that a homeowner has no standing to attack an assignment. As those of you who follow this website know, the 6th Circuit clarified their intent in Livonia Properties in the more recent Slorp decision, which affirmed that a homeowner has standing to attack a purported assignment as not transferring any interest.

Courts across the US who have consistently (and wrongfully) relied on an erroneous interpretation of Livonia Properties thus have to update their research and correct the mistake once and for all.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

March 17, 2015

The Palm Beach County, Florida Circuit Court has denied a Motion for Summary Judgment in a foreclosure filed by New York Community Bank. The homeowner is represented by Jeff Barnes, Esq. who prepared the formal response to the MSJ and argued the matter in court.

The case involves two separate alleged “allonges” on separate sheets of paper, which NYCB attempted to equate to “endorsements” by calling them “endorsement allonges”. There is no endorsement on the Note itself, and there are no dates on the “allonge” documents. Florida case law has specific requirements for an allonge to be effective, which requirements were not demonstrated by NYCB.

NYCB also took the position that one of the stamps on one of the “allonge” papers “was not a true endorsement” with reference to an argument that AmTrust Bank remained in possession of the original Note, which NYCB claimed to have inherited as a result of a purchase of assets from the FDIC as receiver for the failed AmTrust (which allegedly acquired the Note from Ohio Savings Bank which allegedly acquired the Note from the original lender). However, NYCB produced no evidence that the specific loan the subject of the case was purchased, with the Schedule of Certain Assets Purchased being blank.

The “Affidavits” filed by NYCB contained no personal knowledge as to the alleged transfers of the Note from the original lender (First Florida Mortgage Network, Inc.) to either Ohio Savings Bank, or AmTrust, or the FDIC, or the Federal Home Loan Bank of Cincinnati (which name appeared on one of the “allonge” documents).

Florida law provides that if there are issues as to an undated stamp which are timely and properly raised, the homeowner is entitled to an evidentiary hearing on the issues and under these circumstances summary judgment is improper and will be reversed on appeal.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

March 10, 2015

A “default” judgment of foreclosure was vacated today by a Seminole County, Florida Circuit Judge based on lack of proof that the homeowner, who resides in the United Kingdom, was served with the Summons and Complaint. Jeff Barnes, Esq. represents the homeowner, filed the Motion to Vacate the judgment with supporting affidavits, and argued the motion in court this afternoon.

The foreclosing party claimed that it had complied with the requirements for service of court papers on a British subject in England pursuant to the Hague Convention. However, the Judge, in analyzing the law presented to her by the attorney for the foreclosing party, found that service was not proper as the papers were not placed in the homeowners’ drop mailbox but instead into the mailbox of an investment property owned by the homeowner which she had not lived in for years before the Complaint was filed.

The Judge found that the burden to show proper service shifted back to the foreclosing party after the filing of the affidavits of the homeowner and the tenant of the location where the papers were left, which affidavits consistently stated that the homeowner did not live at the property where the papers were dropped off. The Judge found that there was no diligent search for the proper address of the homeowner after the foreclosing party was put on notice by the affidavits (which were filed November 14, 2014) which showed that the homeowner did not live at the address were service was allegedly made.

The foreclosing party had instituted an action on a deficiency judgment in the UK based on the judgment which the Court vacated today, rendering the deficiency action moot. The underlying foreclosure will now be properly litigated with defenses and discovery.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com