September 19, 2012

Those who have followed recent foreclosure history in Hawai’i know of the prior enactment of what is known as “Act 48”, which mandated that foreclosures be instituted judicially. This legislation was a reaction to the rampant fraud and irregularities filed in non-judicial foreclosures. Although Act 48 technically expired in July of 2012, the present non-judicial foreclosure statute requires that before the institution of a non-judicial foreclosure, the foreclosing party must apply to the Department of Commerce and Concumer Affaird (DCCA) of the State of Hawai’i and pay a fee for permission to file a nonjudicial foreclosure. Part of this process requires proof that there was a face-to-face meeting with the homeowner in an attempt to resolve the claim, and that all alternatives to foreclosure (e.g. loan modification) were discussed during a Dispute Resolution Program.

If the meeting was held and there was no resolution, the homeowner can convert any non-judicial foreclosure to a judicial foreclosure. Given that protection, there have been almost no non-judicial foreclosure filings, with the foreclosing parties simply electing to institute judicial foreclosures.

Further, Act 182, which became effective June 28, 2012 (and is retroactive), requires a personal Affirmation from an attorney in the form of an Affidavit that the attorneys signs that he personally reviewed the documents which grant standing upon his client in any judicial foreclosure action. The Affidavit, which must be filed in all judicial foreclosures before or at the summary judgment stage, is subject to the following statutory language:

During and after August 2010, numerous and widespread insufficiencies in foreclosure filings in various courts around the nation were reported by major mortgage lenders and other authorities, including failure to review documents and files to establish standing and other foreclosure requisites; filing of notarized affidavits that falsely attest to such review and to other critical facts in the foreclosure process, and “robosignature” of documents. Based upon my communication with (employee of the bank), as well as upon my own inspection and other reasonable inquiry under the circumstances, I affirm that, to the best of my knowledge, information, and belief, the Summons, Complaint, and other papers filed or submitted to the Court in this matter contain no false statements of fact or law and that plaintiff has the legal standing to bring this foreclosure action. I understand my continuing obligation to amend this Affirmation in light of newly discovered material facts following its filing. I am aware of my obligations under the Hawaii Rules of Processional Conduct.

New Jersey enacted similar amendments to its judicial foreclosure processes last year (which were reported on this website) which require the filing of a Certification (a type of Affidavit) that the attorney personally spoke to an identified person who is a representative of the foreclosing Plaintiff as to the accuracy of the information in the foreclosure Complaint, etc. Now that Courts from NJ and HI are apparently thinking the same way, we hope this will spread to all jurisdictions between these two.

Judicial foreclosures are inherently fairer and afford the proper due process. The non-judicial procedure essentially presumes that a homeowner is guilty from the getgo, and the homeowner has to (a) file an action in court with supporting Affidavit; (b) seek as Temporary Restraining Order against a foreclosure sale; (c) obtain a Preliminary Injunction prohibiting any sale during the pendancy of the foreclosure challenge; and, in certain instances (d) post a bond in order to obtain this protection. Thus, not only does the homeowner have to undertake significant legal proceedings in order to be afforded the right to assert defenses, but has to pay significant sums of money to exercise their rights as well.

The judicial process, alternatively (and correctly) requires the foreclosing party to prove its case first, just as all other types of civil cases do, before relief can be obtained. In a judicial foreclosure, there can be no sale date until the case results in a Final Judgment in favor of the foreclosing party, and there is no bond requirement to stop any sale during the litigation, as the property cannot be sold unless and until the foreclosing party proves that it has the right to do so. During the litigation, the homeowner also has the benefit of the discovery process.

From litigating foreclosure cases across the United States since 2008, it has become abundantly clear to us that the nonjudicial foreclosure process should be abandoned and abrogated, as it is essentially unconstitutional. By forcing a homeowner to pay for the right to defend themself, and forcing them to engage in a costly and intensive legal proceeding just to halt the sale of their home when the foreclosing party does not even have to prove that it has the right to foreclose, the process denies numerous fundamental rights, and utilizes a procedure which is not used in any other type of civil litigation. There is no justifiable reason why a foreclosing party, who is seeking to take someone’s home away, should not be forced to prove their case first, and rather to have the ability to foreclosue simply by filing a few pieces of paper in the public records (a Notice of Default, Notice of Substitution of Trustee, and Notice of Sale) without any of these documents ever being tested for validity, unless of course the homeowner goes through the expense of filing a lawsuit and forcing the issues.

It is obvious that the non-judicial system had bred corruption, the perpetration of fraudulent documents, and the rampant stealing of homes without any court scrutiny. Enough is enough. The non-judicial foreclosure process has no place in the current mortgage market, which is rife with resales, multiple assignments, securitizations, and the like. The non-judicial process is a dinosaur, and should be declared extinct accordingly.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

September 5, 2012

The Florida 4th District Court of Appeal has reversed the denial of a homeowner’s motion for post-judgment relief after a summary judgment was entered in favor of HSBC Bank as the claimed “trustee” of a Deutsche Bank securitization. Although HSBC claimed that it noticed the homeowner’s attorney for the SJ hearing, the attorney did not appear, which non-appearance the appeallate court found to constitute the type of “excusable neglect” which warrants relief under Florida’s post-judgment relief rule, that being Florida Rule of Civil Procedure 1.540(b).

The homeowner was represented in the appeal by FDN network attorney Melvia Harris-Rozier, Esq. of West Palm Beach, Florida. The style of the case is Gascue v. HSBC Bank etc., 4th DCA Case No. 4D10-1379 (Decision entered August 29, 2012).

The appellate court also found that there was no evidence indicating that HSBC was the holder of the mortgage at the time that the Complaint was filed, as the only “evidence” that HSBC was the alleged owner and holder of the Note was an affidavit filed 3 years after the Complaint was filed, which did not establish WHEN HSBC became the holder of the Note. This decision is one of a recent line of Florida appellate decisions which require that a foreclosing “bank” establish, by competent evidence relating to either an endorsement or assignment or allegted transfer, that it was the owner and holder of the Note at the time that the foreclosure Complaint was filed.

The appeals court reversed the denial of post-judgment relief and remanded for an evidentiary hearing on the homeowner’s Motion, and also granted the homeowner’s Motion for Attorneys’ Fees.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 29, 2012

A Clay County, Florida Circuit Judge today denied US Bank’s Motion for Judgment on the Pleadings in a case where the homeowner, representing himself, asserted various defenses including securitization-related defenses. US Bank is the claimed “trustee” of a securitized mortgage loan trust, and attempted to argue the non-viability of certain of the homeowner’s defenses “as a matter of law”, requesting a “partial” judgment on the pleadings.

The Court denied the Motion and permitted the homeowner leave to amend his affirmative defenses. The homeowner is now represented by Jeff Barnes, Esq., who argued the Motion today in the Clay County Circuit Court.

US Bank attempted to argue the recent Third District Court of Appeal decision in Castillo v. Deutsche Bank for the proposition that any “securitization/PSA” related defenses fail “as a matter of law”. The Court declined to address this issue in view of its ruling granting leave to amend the Answer and Affirmative Defenses.

Castillo is a 6-line opinion which relies on 2 Bankruptcy cases (one from Pennsylvania and one from Massachusetts) which are distinguishable, and the Riggs opinion of the Florida 4th District Court of Appeal, which decision does not address the real issue. The line of cases which hold that a borrower is not a “third party beneficiary” to a PSA have been distinguished by numerous decisions (including one from the Hawaii Federal court which rendered the “third party beneficiary” decision initially), holding that such a “defense” is only applicable in a situation where the homeowner sues the foreclosing bank to stop a foreclosure, and that when the bank sues the homeowner, noncompliance with the PSA goes to the issue of standing. This case law, from the Federal Courts in Hawaii and California, clarify the issue.

As those of you who follow this website also know, Mr. Barnes also prevailed on the issue of noncompliance with the PSA in the Hendricks decision in Michigan, where the Court granted summary judgment to the homeowner after finding that US Bank as Trustee did not comply with the PSA. The Horace decision from Alabama further holds that a borrower is in fact a third party beneficiary to a PSA.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 28, 2012

An Osceola County (Kissimmee), Florida Circuit Judge has today denied a Motion for Summary Judgment filed by Aurora Loan Servicing. The denial was based on recent Florida decisional law which requires affidavits in support of summary judgment in foreclosure actions to have specific information from the affiant when the affidavit is based on a review of records, and where the “Allonge” was undated and there was no evidence of authority for the person who executed the Allonge to have done so on behalf of a bankrupt entity. Significantly, the signor, one “Amy Hawkins”, claimed to be a vice president of both National Bank of Arizona and National Bank of Nevada on the same document.

We have seen numerous cases where “Amy Hawkins” has claimed authority to sign on behalf of these two “banks”.

The homeowner is represented by Jeff Barnes, Esq., who argued the motion in court personally today.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 21, 2012

Confirming, under oath and in print what we already suspected: there is no schedule of mortgage loans evidencing what JPM allegedly “purchased” from the FDIC in connection with the failure of WaMu. This is from the sworn deposition testimony of Lawrence Nardi, the operations unit manager and a mortgage officer for JPM, who was previously with WaMu and was picked up by JPM after WaMu’s failure. The 330 page deposition was taken by counsel for the homeowner on May 9, 2012 in the matter of JPMorgan Chase Bank, N.A. as successor in interest to Washington Mutual Bank v. Waisome, Florida 5th Judicial Circuit Case No. 2009-CA-005717.

Here is the question and the answer:

Q: (page 57, beginning at line 19): Okay. The — are you aware of any type of schedule of loans that would have been created to represent the — either the loans that were asset loans or the loans that were serviced by WAMU? Are you — was the — do you know if there is a schedule or database of loans like that?

A: (page 58, beginning at line 1): I know that there was a schedule contemplated in certain documents related to the purchase. That schedule has never materialized in any form. We’ve looked for it in countless other cases. We’ve never been able to produce it in any previous cases. It would certainly be a wonderful thing to have, but it’s — as far as I know, it doesn’t exist, although it was — it was contemplated in the documents.

As we all know, JPM has also stated, in a Federal Court filing, that it is NOT the “successor in interest to WaMu.” However, the deposition testimony gets even better as the day went on:

Q: (beginning at page 260, line 18): Have you ever in your duties of being a loan analyst — a loan operations specialist, have you ever seen an FDIC bill of sale or a receiver’s deed or an assignment of mortgage or an allonge?

A: (page 260, beginning at line 23): For loans, I’m assuming you’re taling about the WaMu loan that was subject to the purchase here.

Q: (page 261, line 1): Right.

A: (page 261, beginning at line 2): No there is no assignments of mortgage. There’s no allonges. There’s no — in the thousands of loans that I have come into contact with that were a part of this purchase, I’ve never once seen an assignment of mortgage. There is simply not — they don’t exist. Or allonges or anything transferring ownership from WAMU to Chase, in other words. Specifically, endorsements and things like that.

So, JPM allegedly “purchased” mortgage loans from the FDIC out of the WaMu failure, but there is no schedule of what loans were purchased, no assignments, no allonges, no endorsements, nothing that transferred ownership of the loans from WaMu to Chase. However, as we all know, JPM goes around the country touting that it is the “successor in interest to WaMu” (which it has admitted in Federal Court that it is not) and relies on the amorphous “FDIC Affidavit” which, as far as what the “Affidavit” is proffered for, is directly contradicted by the sworn deposition testimony of JPM’s authorized representative WHO WAS FORMERLY WITH WAMU AND WAS PICKED UP BY JPM.

Fraud on the courts, anyone?

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 17, 2012

In a 41-page opinion, the Supreme Court of Washington has held, in answering three questions as to MERS certified to the Washington Supreme Court from the Washington Federal Courts, that MERS is not the beneficary under the Washington Deed of Trust Act, and that a homeowner may have a cause of action against MERS for violations of the Washington Consumer Protection Act (CPA), as “characterizing MERS as the beneficiary has the capacity to deceive”. This decision is in concert with the recent Niday decision from the Oregon Court of Appeals which held that MERS is not the beneficiary under the Oregon Deed of Trust Act. However, the Washington opinion, Bain v. Metropolitan Mortgage Group, IndyMac Bank, MERS et al., goes further.

The opinion goes through a detailed history of the Washington Deed of Trust Act, MERS, and MERS’ claims in connection with foreclosures. The first certified question, which asked whether MERS is the “beneficiary” under the Washington Deed of Trust Act, was answered in the negative, as the Court found that because MERS never held the promissory note (and could not) and as the only party who could be the beneficiary is the person who holds the note that MERS was not and could not be the beneficiary under RCW 61.24.005(2).

The Court answered the third certified question with a qualified “yes”: that a homeowner, with the right facts, has a cause of action against MERS for damages where MERS wrongfully claims that it is the “beneficiary”. The Court held that each such claim would have to be evaluated on a case by case basis.

Several significant findings are in this opinion which serve to dispel “MERS myths” blindly accepted by other courts and argued by MERS attorneys. The first, which we believe to be the most significant, is that MERS cannot contract around statutory terms, meaning that MERS cannot, by contract, change its status to “beneficiary” in a Deed of Trust and cannot claim that it is an “agent”. The Court fouind that MERS “as nominee” for a undisclosed successor noteholder cannot thus be an “agent”. As we all know, courts in several other jurisdictions have, without explanation or distinction as to MERS’ self-claimed “nominee” status, held MERS to be an “agent.” This opinion finally explains why those conclusions are erroneous and are not supported by law.

The second point is that because MERS does not hold the note and as MERS’ counsel admitted that MERS cannot engage in efforts to reach a solution to avoid foreclosure, it could not be the “beneficiary”.

The third point is that because only the rightful beneficiary can undertake actions such as appointing a successor trustee and as MERS, which never holds the Note, cannot undertake foreclosure prevention actions, MERS is not the “beneficiary”.

The two recent rulings in Oregon and now Washington are finally exposing and debunking the MERS’ myths and misconceptions. We are hopeful that other courts will take note of these extremely detailed and well-reasoned opinions when presented with questions as to MERS, including the discrepaney as to what MERS claims it is (a “mere nominee”) and what it claims it can do (foreclose, execute assignments and substitutions of trustee, and the like).

We thank one of our network attorneys for bringing this decision to our attention last night.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 7, 2012

Per our recent posts, assignments are becoming the subject of more intense court scrutiny lately. This week, a Hawai’i Court found genuine issues of material fact in connection with an assignment made by MERS as the “nominee” of a bankrupt lender, which assignment was made without permission of the bankruptcy court. We were retained on a case today where MERS attempted an assignment in 2012 as to a lender which was shut down by court order in 2008 without any evidence of authority from the court which shut the lender down. As our readers also know, MERS repeatedly attempts to “assign” mortgage loans into securitized mortgage loan trusts years after the Closing Date of the Trust and without any authority to do so within the Trust documents.

As we also posted, on July 18, 2012, the Oregon Court of Appeals, in a 27-page decision which traced the history of the Oregon Trust Deed Act and MERS, came to the conclusion that the “creature of more modern vintage: MERS” is not the “beneficiary” under the Oregon Trust Deed Act. A Federal Court in Michigan has also issued two recent opinions which permit challenges to foreclosures by advertisement based on a flawed assignment.

We thus suspect that more and more courts are going to be taking a closer look at MERS assignments, and that more and more courts will ultimately hold that the assignments are either a legal nullity, not based in fact or law, or are patently fraudulent. High time: MERS has been getting away with this for over 10 years with impunity to the detriment of literally millions of homeowners.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 3, 2012

We were just advised moments ago that a Hawai’i Circuit Court Judge has denied Deutsche Bank’s Motion for Summary Judgment, expressly finding that there are genuine issues of material fact as to whether the Note and Mortgage were transferred to Deutsche Bank (the claimed “trustee” of a securitized mortgage loan trust) before the original lender, Home 123 Corporation, filed for Bankruptcy, and that the record did not reflect that the assignment was done with the approval of the bankruptcy court. The homeowners are represented by Jeff Barnes, Esq. and local Hawai’i counsel Ronald Grant, Esq. Mr. Barnes prepared the briefs and personally argued the matter in Honolulu last November.

This case (Deutsche Bank v. McKiernan, Case No. 09-1-000910, Hawai’i First Circuit, 21st Division) has many similarities, factually, to the Williams case from the Hawai’i Federal Court where the court permitted the homeowner to challenge Deutsche Bank’s compliance with the PSA in view of a purported assignment which was executed after the same original lender filed for bankruptcy, rejecting Deutsche Bank’s argument that the borrower did not have standing to lodge such an attack.

These two decisions thus now support, in Hawai’i, (a) a homeowner’s challenge to a foreclosure based on defective assignments, and (b) that thse defects give rise to genuine issues of material fact which preclude summary judgment. Today’s earlier post as to the Naranjo decision further supports such a borrower challenge as well.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 3, 2012

In what we consider to be a very significfant decision, a California Federal court has issued an Order denying a Motion to Dismiss the homeowner’s Complaint against JPMorgan Chase, U.S. Bank, N.A., and SBMC Mortgage where the homeowner challenged the nonjudicial foreclosure on the basis of an improper transfer of the loan to the securitized mortgage loan trust. The homeowner alleged that the Defendants and others were involved in an attempt to securitize her loan to a WaMu securitization trust.

The homeowner alleged that the May, 2010 MERS assignment of the DOT to US Bank as Trustee for the WaMu securitization trust, which assignment was signed by known robo-signor Colleen Irby, was improper because it was not done before the closing date of the trust. The court specifically found that:

“The vital allegation in this case is the assignment of the loan into the WaMu Trust was not completed by May 30, 2006 as required by the Trust Agreement. This allegation gives rise to a plausible inference that the subsequent assignment, substitution, and notice of default and election to sell may also be improper.”

This is beyond important, as the finding shows that a challenge can be made to an entire nonjudicial foreclosure procedure (including assignment, substitution of trustee, and foreclosure sale) by alleging that the purported assignment did not comply with the timing requirements of the trust documents, and that a homeowner who sues to challenge a foreclosure has standing to raise the challenge onthe basis of attacking the assignment as not complying with the trust documents.

The Court distinguished the Gomes case upon which the Defendants relied, holding that the Plaintiff alleged that the transfer of rights to the WaMu Trust was improper and thus the Defendants consequently lack the legal right to either collect on the debt or enforce the underlying security interest.

The upshot of this case is not only that a claim of improper foreclosure due to noncompliance with the trust documents (in attempting to assign the loan to the trust well after the Closing Date of the Trust) can be made, but that there will now have to be discovery on the issues, as the Court has denied the Motion to Dismiss and thus an Answer to the homeowner’s Complaint will have to be served, which then permits the case to proceed to the discovery phase on the relevant issues.

The case is Naranjo v. SBMC Mortgtage et al., No. 11-cv-2229-L(WVG), U.S. District Court for the Southern District of California, decision issued July 24, 2012.

We thank one of our dedicated followers for providing this significant decision to us.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 30, 2012

A Hillsborough County (Tampa) Florida Circuit Judge has entered a Final Judgment in favor of a borrower, ordering that the loan and all loan documents be reinstated effective back to June 30, 2009 (pre-“default”); that the terms of the loan remain in effect as they would have been as of that date; and that BB&T credit the principal of the Note with all payments received by BB&T from the FDIC and with no payments due from the borrower until BB&T credits all such payments it has received against principal and the parties agree on a new payment schedule.

The May 18, 2012 Final Judgment found that the original lender (Colonial Bank) improperly demanded that the borrower make “curtailment” payments on the loan, basing its demand on the status of other, unrelated loans. Colonial was shut down by the Alabama State Banking Department and the FDIC was appointed as its receiver. The evidence at trial demonstrated that BB&T breached its duties of good faith and fair dealing with the borrowers, and that BB&T was motivated to behave as such due to the terms of a Purchase and Assumption Agreement with the FDIC where BB&T stood to profit by declaring a fraudulent default under the loan, collecting from the FDIC under the Agreement for such default, and then enforcing the loan against the borrowers and retaining the property until a turn around in the real estate market.

The “troubled assets” manager of BB&T (who had been a former Colonial Bank manager) testified that BB&T may have already applied to the FDIC for a loss share payment, and the borrowers’ expert testified that BB&T may have already applied for and received a payment from the FDIC as high as $1,800,000.00. The Court found that BB&T totally failed to credit this potential payment from the FDIC against amounts sought in the litigation, thereby giving the impression that BB&T might be “double dipping” and possibly “triple dipping” if market conditions favorably changed and the property increased in value. The Court concluded that BB&T “committed significant wrongdoing and breached the implied duty of good faith and fair dealing of a financial institution, such that the instant cause of action should be denied in its entirety.”

This Final Judgment supports what we have been requesting in discovery for the past five years: documents related to third party sources of payment against the Note, which evidence goes directly to the amount claimed to be in default. Significant in this decision is the fact that the Court entered judgment for the borrower on the premise that there COULD HAVE BEEN a payment made to BB&T through the Agreement; it was not necessary that a payment actually have been made for the credit to apply.

In securitizations, the documents expressly provide for insurances and credit enhancements (including credit default swaps) to protect against and provide payment on mortgage loans which default. Discovery of these potential sources of payment and amounts is thus more than relevant, as this evidence goes directly to not only the veracity of the amount claimed to be in default, but to claims of breach of duty of good faith and fair dealing as well.

The case is Branch Banking and Trust v. Kraz LLC, Hillsborough County, Florida Circuit Couert Case No. 10-CA-000304-K. We thank one of our dedicated followers for providing this decision to us.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com