November 21, 2012

In a very well-reasoned opinion, a Michigan Federal Court has granted a homeowner’s Motion for Leave to Amend his Complaint to challenge a non-judicial foreclosure on the grounds that the alleged assignment of the loan by MERS as “nominee” from the bankrupt original lender to US Bank as “trustee” of a securitized mortgage loan trust violated the provisions of the PSA governing transfers of mortgage loans into the trust, thus enabling the homeowner to seek relief under Michigan Comp. Laws sec. 600.3204(1)(d) as US Bank was not the “owner of the indebtedness” at the time it submitted its credit bid at the sale. This opinion follows prior Michigan Federal opinions which permit an attack on an assignment in general, but goes much further as it expressly permits such an attack through a claimed violation of the PSA.

The homeowner claimed that because the original lender filed and was approved for a Chapter 11 bankruptcy on January 16, 2008 that it was doubtful that MERS, as the claimed “nominee” for the bankrupt original lender, could have assigned the loan to US Bank on June 30, 2011. The homeowner also claimed that the assignment of the note was improper as it violated the PSA by not including all intervening endorsements showing a complete chain of title from the original lender to the Sponsor, then to the Depositor, and then physically received by the Custodian of the Trust.

The Court held that the homeowner may seek relief under section 600.3204(d)(1) “if it is true that the PSA governs the assignments of the Property’s mortgage and note and those assignments violated the PSA’s provisions.” The case is Christopher v. Ownit Mortgage Solutions et al, U.S. District Court for the Eastern District of Michigan (Southern Division) Case No. 12-11872, opinion filed October 31, 2012. We thank one of our dedicated followers for bringing this opinion to us yesterday afternoon.

This ruling is in line with the Hendricks v. US Bank case where Jeff Barnes, Esq. obtained summary judgment in favor of the homeowner in the Washtenaw County, Michigan state court where the court found that the alleged transfers to the US Bank securitized mortgage loan trust did not comply with the mortgage loan conveyance provisions of the PSA.

The Christopher opinion reflects the rational and common-sense approach to challenges to assignments which do not comport with the PSA: if the securitized mortgage loan trust is claiming to have come into possession of and the ability to enforce a mortgage, and it agreed, by contract, that mortgage loans conveyed into the trust must be so conveyed by specific procedures, then the foreclosing securitized trustee must prove that it complied with the very documents by which it agreed to be bound in order to establish that it owns the alleged indebtedness.

Bravo to the Hon. Robert H. Cleland, the United States District Judge who authored the opinion.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

November 14, 2012

In what is the first case of its kind that we have seen, Wells Fargo, as a securitization trustee for an Option One mortgage loan trust, has filed a Verified Amended Complaint (VAC) in a Florida foreclosure case where it expressly refers to and relies on the PSA, even quoting portions of the Section 2.01 Mortgage Loan Conveyance Provisions and the directions of the PSA as to the express manner of endorsement of the Note.

What makes this case even more interesting is that WF admits, essentially under oath, that the (alleged) endorsment to the Note “does not reflect the language proposed by the PSA”, but that the transfer is purportedly manifested by a redacted portion of the mortgage loan schedule (which shows no such transfer or confirmation of compliance with Section 2.01), and an undated “Allonge” which was “executed” by Option One. It is public knowledge that Option One ceased its mortgage operations in 2008.

With this verified pleading, WF obviously will not be able to object to any securitization-related defenses or discovery, as it has expressly plead the PSA in the VAC, and thus defenses and discovery as to matters plead are deemed relevant to the facts allegedly supporting the claims of the Plaintiff itself.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

November 9, 2012

FDN attorneys have obtained positive results in foreclosures cases in three different states this week.

Today in Lee County, Florida, a Circuit Judge denied Deutsche Bank’s Motion for Summary Judgment. The Court Order provides that there are genuine issues of material fact and discovery remains an issue. Jeff Barnes, Esq., who had a previously summary judgment in the case vacated, represents the homeowner and argued the matter earlier today. The case involves not only a signature on an alleged “original” promissory note which signature does not match that of the homeowner on either her driver’s license or her Affidavit (and which “original note” was mysteriously “found” just before a prior summary judgment hearing and when the Complaint contained a count for “Lost Note”), and outstanding discovery compelled by a prior Order of the Court which also assessed attorneys’ fees against Deutsche Bank. There are also issues as to the validity of the alleged “endorsement”.

In Tennessee, a Judge has entered an Order staying any sale of the homeowner’s property pending the full disposition of the litigation without the requirement of a bond, and has commanded that all discovery (which the “bank”, that being Bank of New York Mellon as the securitization trustee, had opposed) be overseen by a Special Master. The “bank” had previously filed a Motion to Dismiss and Motion to Stay Discovery. The Court reserved ruling on the Motion to Dismiss pending discovery. Notwithstanding that no discovery was produced, the “bank” renewed its Motion to Dismiss, which was denied again. The homeowner is represented by Jeff Barnes, Esq. and local Tennessee counsel Andrew Farmer, Esq.

The third was the Colorado ruling in the post below. We have had over a dozen requests for copies of this decision from attorneys in several states.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

November 5, 2012

In a 3-page written opinion, a Colorado District Court Judge has denied the application of JPMorgan Chase for an order authorizing the nonjudicial sale of a homeowner’s primary residence. The ruling comes after a full evidentiary hearing requested for and argued by Jeff Barnes, Esq., who represents the homeowner.

JPM alleged that it had succeeded to the rights of the Note and Deed of Trust through two “Allonges”, neither of which was physically attached to the Note. The Allonge which was allegedly signed by the original lender did not contain any language as to “affixation” to the Note, and no evidence was presented as to the authenticity or authority of the signatures on this Allonge. The Court’s opinion cited the case law which Mr. Barnes presented to the Court at the hearing, which set forth the standard for “affixation” of an allonge to a Note.

The Court found that JPM did not meet the standard, and also found that there was no competent evidence as to authenticity or authority of the signatures on the Allonges, noting significantly that “the statutory presumption about the authenticity for signatures does not apply”. JPM’s counsel had argued at the hearing that the Allonges were “self-authenticating” under Colorado law; Mr. Barnes argued that the statutory presumption did not apply to the Allonges, which themselves are not negotiable instruments or self-authenticating documents.

The ruling is significant as it sets forth the requirement that there be competent evidence as to the authenticity and authority of the signatures on an allonge (which JPM’s counsel alternatively referred to in the hearing as an “endorsement”). This ruling is in line with recent case law from Florida and North Carolina which require evidence of authority and authenticity on claimed endorsements, rejecting the notion that an undated and unauthenticated “blank endorsement” suffices for admissibility purposes and purposes of showing that a foreclosing party has standing.

The ruling is also significant as it held that when a homeowner challenges the authority of a party to foreclose in a Rule 120 proceeding that the court must consider that defense in the Rule 120 hearing, citing the Goodwin decision from the Supreme Court of Colorado which Mr. Barnes cited in his formal opposition to JPM’s Rule 120 Motion. JPM’s counsel argued that the only issues in a Rule 120 are military status and probability of default, and that the homeowner lacked standing to raise other issues. The Court, citing Goodwin, held otherwise.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

October 29, 2012

FDN is now into its 5th year of representing homeowners across the United States challenging foreclosures by non-lenders, servicers, securitized trustees, and alleged “successors in interest”. Through these years, the litigation nationally has gone through several phases, now evolving into what some would call “foreclosure offense” including suits for billions of dollars in damages against not only the banks but also at least one state Attorney General. As most of you know, there is a $43 trillion lawsuit which has been recently filed against the banks as well.

In the early years (2008-09), the response to a foreclosure was “OMG, what do I do now?” People had never heard of things like MERS, securitization, robo-signing, and the other infections in later foreclosures, and simply either filed bankruptcy, let a judgment be entered or a sale proceed, or attempt to give the property “back” to the foreclosing party (which never financed the transaction in the first place) through, for example, a Deed in Lieu of foreclosure. The second phase, which began in late 2008 and early 2009, was the “TILA recission” cry which, unfortunately, was not understood by most of those who attempted to advance it, and which lead to numerous claims being dismissed on Statutes of Limitations and failure of proof grounds.

The third phase came into being in 2010 where certain attorneys and homeowners really began to zero in on the MERS issues, robo-signing, fraudulent affidavits and assignments, non-existant notaries, and other infirmities in the process, leading to affirmative attacks on standing, real party in interest, and chain of title issues. Many of these cases have been discussed over the years on this website.

We have now progressed to the 4th phase: affirmative claims against the banks, servicers, etc. for money damage claims resulting from fraudulent foreclosure activity. The Levin Senate Report and other sources which have detailed the abject fraudulent conduct by the banks has provided an impetus for moving forward against the banks instead of attempting to only defend the foreclosure effort. We have formed a relationship with an expert in securitization, banking, and finance who has been involved in these areas for over 25 years and who actually wrote credit default swaps. This expert is assisting us in preparing new litigation which exposes numerous intentional acts of misconduct by the banks for the purpose of not only creating a false obligation, but also for purposes of stripping all equity from a homeowner and blocking the homeowner’s ability to refinance. There is a lot to this which will be developing over the coming months. Stay tuned.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

October 17, 2012

We are getting more and more inquiries regarding situations where a home has suffered damages from a natural disaster (such as a flood, fire, etc.) and the insurer issues a check for repairs which is made out to the homeowner and the alleged “lien holder” (the foreclosing party), who then refuses to sign off on the check so that the homeowner can make the repairs. The “bank” claims that they can lawfully withhold the insurance proceeds to apply them towards the alleged debt on the mortgage loan, thereby not permitting the homeowner to make the necessary repairs and placing the homeowner in an even more precarious position. We have been presented with this situation in cases in Tennessee, South Carolina, and Florida to date.

The situation has become so bad that we have had the insurer in one case file an interpleader action where the insurance proceeds are placed into escrow while the rights to the money are litigated. In fact, the insurer told us that they have had to resort to this procedure quite a bit lately due to the lack of cooperation from the “banks” in permitting the homeowner to take the insurance proceeds to pay for the necessary repairs.

This conduct by the “banks” is abhorrent, and we are aware of no decision (case law) which permits a foreclosing party in a contested foreclosure to keep insurance proceeds specifically paid for repairs and to apply same to the disputed debt. Thus, as we have had to do in so many other situations where there is no precedent, we will have to force this issue before the courts.

Separately, Mr. Barnes has recently been retained to prosecute an appeal of a denial of reconsideration of a grant of stay relief in a securitization case to the U.S. 10th Circuit Bankruptcy Appellate Panel; an appeal of a summary judgment in Hawaii; and has also been retained to appeal a summary judgment to the Federal 6th Circuit arising out of a case in Tennessee in another securitization case.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

October 13, 2012

For what is now going into its fifth year, FDN, through its national network of attorneys which now numbers 44 law Firms, has consistently forced significant issues in foreclosure to be brought before trial and appellate courts around the country. Three of these are coming to a head at this time.

As those of you who follow this website are aware, on July 18, 2012, the Oregon Court of Appeals issued its decision in Niday v. GMAC and MERS which held, in a 27 page opinion, that MERS is not the “beneficiary” in a Deed of Trust notwithstanding language in the DOT to that effect. Jeff Barnes, Esq. and local Oregon counsel Elizabeth Lemoine, Esq. represent the Nidays, who prevailed in that decision. MERS has taken an appeal of that decision to the Oregon Supreme Court, which has granted review. The case will be orally argued before the Oregon Supreme Court in early January, 2013.

One month after the Niday decision was issued, on August 16, 2012, the Supreme Court of Washington issued its opinion in Bain v. Metropolitan Mortgage and MERS which not only came to the same result as the Oregon Court of Appeals did in Niday, but went even further to provide that MERS can be sued for misrepresenting its claimed status as a “beneficiary”.

In New Jersey, FDN attorneys Jeff Barnes, Esq. and local NJ counsel Daniel Schmutter, Esq. represent the homeowner in a case where there is a pending Motion to Dismiss a foreclosure with prejudice for US Bank’s refusal to produce discovery and witnesses with personal knowledge of numerous issues despite no less than five (5) court orders compelling this discovery, including one Order which was entered AFTER the case was dismissed without prejudice, as New Jersey permits a noncomplying party 60 days to remedy the discovery deficiency in connection with any request to reinstate the case. There is currently no New Jersey decisional (case) law which is “on point”, and thus if the case is dismissed with prejudice, it will be the first such case to be so dismissed on these facts in the history of the state of New Jersey. The Motion will be argued in the near future.

In Florida, Mr. Barnes represents the homeowners in an appeal of a summary judgment which was granted despite the trial court not being provided with any evidence as to when the alleged endorsement was placed on the Note. Recent Florida case law has repeatedly reversed summary judgments where there is no evidence that the endorsement was placed on the Note prior to the time that the Complaint was filed (Florida has a requirement that standing be demonstrated at the time the complaint is filed, which cannot be “cured” thereafter by a subsequent endorsement). The trial Judge actually asked the “bank’s” counsel, at the summary judgment hearing, when the endorsement was placed on the Note, which question was not answered. There are also issues with the validity of the “Affidavit” filed in support of the MSJ.

Discovery battles for securitization discovery continue in Hawaii, Tennessee, and New Mexico where Mr. Barnes represents the homeowner with local counsel in each of those states. These states should follow the example of New Jersey, where Mr. Barnes and his local in-state counsel have had no less than nine (9) cases dismissed as a result of the foreclosing party’s failure to produce discovery.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

October 3, 2012

FDN now has access to Bloomberg for use in its securitization audits. You may contact us via the “Contact Us” link for more information. We are also in the process of establishing local network counsel in Georgia, which will result in the 44th law Firm to be added to the network.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

October 3, 2012

Apparently, the loan mod scam continues. The most recent one we have been asked to review comes from Ocwen Loan Servicing. (this is the one which Judge Arthur Schack in NY previously found would have to have offices as big as Madison Square Garden if they actually serviced all of the loans they claim to service). The “offer” is beyond laughable. What is sad is that homeowners continue to be taken in by these “offers”.

The Ocwen “offer” states, on the second page, that “Ocwen Loan Servicing will not proceed to foreclosure sale during the trial period if you are complying with the terms of the Trial Plan”. It is important to read that carefully: Ocwen will not proceed to SALE, and that is only if they determine that the homeowner is complying with the plan. Further, “sale” is only one phase of the foreclosure process. The next paragraph shows how illusory the “offer” really is:

“During the trial period, we may accept your trial period payments and apply them to your account, but that will not affect foreclosure proceedings that have already started”. So, even though Ocwen accepts payments, the foreclosure process continues. In fact, this paragraph provides that Ocwen accepts payments, but that “this does not waive our acceleration of your loan or waive the foreclosure action and related activities.” Notice how broad that language is: “the foreclosure action” and “related activities”. So, the homeowner makes payments, all the while Ocwen presses on with the foreclosure, agreeing only to hold any SALE in abeyance. Of course, as soon as the loan mod is denied or the homeowner is told they are not “complying” with the trial agreement, the sale goes forward, and we all know that we have seen instances where servicers are sent the exact money due and proven to be received by the servicer on the due date, only to have the servicer claim it was not, resulting in a “default” with the foreclosure pressing forward.

The agreement further states that “You agree that Ocwen Loan Servicing will hold each of your trial period payments that you make in a non-interest bearing account. Once there are enough funds in that account to make your full mortgage payment, we will apply the funds to your loan account to make that payment. At the end of the trial period, there may be funds left in your account because there is not enough to make a full mortgage payment. If so, we will apply those funds to your unpaid principal balance when we permanently modify your loan.” Note the repeated vague and conditional lauguage. What is a “full mortgage payment”? If they accelerated, is this the entire balance due to the end of the loan term? Does “when we modify your loan” mean that they will? Obviously what it means is if the loan is not modified, the agreement does not say where the money goes.

We have been advised that the approval rate for permanent loan mods is roughly 2% nationally. Given that, it is more than obvious where the trial payment money goes when the loan mod is not approved: you got it: you, the homeowner, pay for the foreclosure expenses.

If you receive one of these “offers”, have an attorney who does this kind of work review it. We have yet to see a real, bona fide “offer” which stops foreclosure while the trial process progresses, and the “offers” we have seen are illusory at best.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

September 20, 2012

After our post as to the Lawrence Nardi deposition, and after reviewing the admissions therein and the admissions of JPMorgan Chase in the Deutsche Bank Federal litigation and other information recently uncovered, we have been receiving a multitude of inquiries as to how JPM can possibly succeed in any foreclosure case involving a WaMu originated loan, and where has the money which homeowners have been paying JPM (including monies paid to its former servicer Chase Home Finance), gone and under what authority. After reviewing this information with our banking and securitization experts, some realizations are crystal clear.

The WaMu mortgage loans were “off balance sheet” at the time of WaMu’s failure, and thus JPM could not have purchased something which was not on WaMu’s balance sheet. Nardi has testified that there is no schedule of particular mortgage loans which were purchased from the FDIC as Receiver for WaMu. Yet, after the alleged “acquisition” of whatever was sold to JPM by the FDIC, JPM directed the homeowners with WaMu originated loans to make payments to JPM. Although JPM admitted that it was only acting in the capacity of a “servicer”, JPM has never advised who they are the “servicer” for other than to amorphously state that they are the servicer for an “investor”.

Who is this investor? Is it JPM? If so, what did JPM invest? Surely it could not be the mere pittance that it paid the FDIC for whatever it purchased, and it cannot be for the mortgage loans which it did not buy. To date, the true owner(s) of the off-balance sheet WaMu mortgage loans remains unknown.

Thus, the conclusion is inescapable: the monies which homeowners have been paying to Chase Home Finance and JPM over the years through payments to CHF and JPM as a “servicer” have been are are being pocketed by JPM, even through JPM does not own the WaMu mortgage loans and cannot identify any person or entity who or which owns the loans for which JPM is allegedly collecting payments as the “servicer”.

Any wonder why JPM was so easily able to recently allocate $400M for attorneys’ fees to oppose foreclosure challenges and spend enormous amounts of money on marketing its various credit card promotions?

There is a lot more to this which is being uncovered every day, and it is more insidious than we ever could have thought possible. Take, for example, the conviction yesterday of ex-WaMu subprime lending unit Long Beach Mortgage’s sales executive John Blanford, who was found guilty of six counts of mail fraud for his involvement in a scheme to falsify loan documents. As reported, Blanford paid a loan coordinator in cash to falsify documents, provide false verification of borrowers’ employment or professional licensing status, and to turn a blind eye to fraudulent representations contained in loan applications and other documents submitted to Long Beach Mortgage, all in connection with his scheme for which he earned more than $1 million in commissions between 2003 and 2005.

As also reported, from 2003 to 2006, WaMu and its Long Beach mortgage unit increased mortgage securitizations from $4.6 billion to $29 billion. That’s a $25 BILLION increase in securitizations in 36 months. As also reported, in 2005, Long Beach was forced to repurchase $875 million of non-performing loans from investors, and an audit done in the same year (2005) found that 83 percent of the loans approved by Long Beach were fraudulent.

Now one asks: how could JPM “purchase” mortgage loans in 2008 which, statistically, had an 83% chance of being fraudulent as of 2005 (assuming the loans were even in WaMu’s portfolio as of September 25, 2008)? How could JPM purchase, in 2008, any mortgage loans which had been securitized and thus transferred to third parties from 2003 to 2006?

It goes on and on. Stay tuned.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com