April 16, 2012

FDN’s Jeff Barnes, Esq. is currently lead appellate counsel in appeals pending in four different states:

(a) In Oregon, a homeowner has appealed a summary judgment to the Oregon Court of Appeals on the issue of whether MERS can be a “beneficiary” under the Oregon Trust Deed Act. The Oregon Trial Lawyers’ Association has filed amicus briefs in support of the homeowner’s position. The appeal has been fully briefed and was orally argued by Mr. Barnes.

(b) In Washington, a homeowner has appealed a decision of the Bankruptcy Court on the issue of whether the claimed “secured” creditor satisfied the evidentiary prerequisites necessary to overrule the homeowner/debtor’s objection to the Proof of Claim filed by the alleged “secured” creditor per the requirements of the Ninth Circuit Bankrupty Appellate Panel’s decision in the matter of In Re Veal. Mr. Barnes will be arguing the case before the 9th Circuit Bankruptcy Appellate Panel on May 16, 2012.

(c) In Tennessee, Mr. Barnes has filed the borrower’s first Brief in an appeal of the denial of a Tennessee court to permit the borrower’s newly retained counsel to file a response to the foreclosing party’s Motion for Summary Judgment. The hearing on the Motion was unilaterally accelerated by the foreclosing party’s counsel without notice to the homeowner’s newly-retained counsel. The state court judge did not grant the summary judgment until almost a week after receiving the homeowner’s newly retained counsel’s motion to file a response to the summary judgment motion, and waited over a month to deny the homeowner’s request. The Order appealed from states, in part, that if the court were to grant the relief requested that it would be “aiding and abetting” the homeowner.

(d) In Florida, Mr. Barnes will shortly be filing the homeowner’s Initial Brief in a case where a Florida state court judge granted the foreclosing party’s motion for summary judgment despite the judge’s statements during the summary judgment hearing that there appeared to be issues of fact as to the endorsement on the Note.

Mr. Barnes has also been retained on other appellate matters which are in their initial stages.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

April 10, 2012

This post is the result of my personal observations as counsel in more non-judicial foreclosure cases than I can count over the last 4+ years around the United States. With the rampant use of robo-signers, fraudulent assignments, backdated notaries, and “public records” manner of taking someone’s house away, it has become more than evident that the entire non-judicial foreclosure system needs to be scrapped in every state where it is used. The reasons are several.

First, the system is unconstitutional. What other system permits an alleged “creditor” to take away something which is titled in your name simply by filing three documents in the public records? All a foreclosing “creditor” has to do to foreclose, in a non-judicial state, is to file (1) a Notice of Default, (2) a Notice of Substitution of Trustee, and (3) a Notice of Sale, and the house is sold at public auction. To make matters worse, there is no state which requires a foreclosing party (or trustee sale company) to generate and mail or send a new sale notice if the sale in the Notice of Sale does not take place on the date in the Notice; the onus is on the homeowner to “keep in contact with” the trustee sale company as to when the “new” sale date is.

On top of that, a homeowner in a non-judicial foreclosure state has to file a lawsuit to seek a court order to stop the sale, which is a two-phased effort: a Temporary Restraining Order to seek to stop the sale temporarily, followed by a separate Motion for Preliminary Injunction to stop any sale during the pendency of the foreclosure challenge. To make matters worse, most states have a bond requirement to effectuate an injunction, and the amount is usually so large that the homeower cannot afford it. This manner of placing the burden on the homeowner to disprove the foreclosing party’s case and being labeled as “guilty until proven innocent” reeks of unconstitutionality.

Further, the non-judicial system never contemplated a creature like MERS or a hydra like securitization. The process was essentially implemented to prevent a landowner who sold someone “40 acres and a mule” from having to personally serve that person with a lawsuit to get his land back if the payment was not made. We have advanced far from that sceanario.

Due process of law requires notice and an opportunity to be heard when there is a claim made against someone. In the judicial foreclosure states, the foreclosing party is made to prove their case, and has no right to sell someone’s house unless the case progresses to a Final Judgment. The homeowner is personally served with a lawsuit (notice), and is permitted to file papers to challenge the lawsuit and be heard at trial (opportunity to be heard). The opportunity to be heard is even present in the summary judgment context, as there is a hearing and the homeowner can challenge the summary judgment request, and has ample time to do so. During this whole process, there is no “bond” requirement in order to stop any sale: the burden is on the foreclosing party to demonstrate, under the law and evidence, that it is legally entitled to foreclose.

In marked (and unconstitutional) contrast, a homeowner has to purchase the constitutional right to an opportunity to be heard in a non-judicial foreclosure state by (a) filing a lawsuit with all of its attendant fees and attending at least two injunction hearings, and (b) posting a bond. These costs and expenses are required whether the homeowner retains counsel or not. There is no other area of the law which requires someone to buy what is guaranteed by the Constitution, and forcing a homeowner to do so is not only a form of prior restraint, but is also places a monetary condition on being permitted to exercise a constitutional right.

“Mr. President, tear down that wall”. Abolish the unconstitutional non-judicial foreclosure system.

At least one state has recognized the inherent problems with fraudulent assignments, robo-signers, lack of notice etc. which are the infectious diseases in non-judicial foreclosures. Hawai’i’s Act 48 abolished non-judicial foreclosures for a year and presently requires all foreclosures to be instituted judicially, forcing the “bank” to prove that it has the legal right to foreclose. Bravo to the Aloha State. Alaska, Washington, Oregon, Nevada, California, Arizona, Montana, Colorado, Minnesota, Michigan, Georgia, North Carolina, Texas, Tennessee, and the other non-judicial states should follow Hawai’i’s leadership example.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

April 4, 2012

The next FDN Foreclosure Defense seminar is scheduled to be held in Beverly Hills, California on Friday, April 20, 2012. Topic areas will be initial case evaluation; identification of preliminary defenses; MERS; securitization issues; discovery; filing and defending dispositive motions; mediation; bankruptcy issues; and loan modification issues.

Registration forms are available by e-mailing us through the “Contact Us” link above. As always, seminar attendance is limited to attorneys and paralegals.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

April 4, 2012

A landmark decision was issued on March 29, 2012 by the U.S. District Court for the District of Hawai’i in the matter of Deutsche Bank National Trust Company as Trustee, etc. v. Williams, Civ. No. 11-00632 JMS/RLP, which dismissed DB’s Complaint for foreclosure after finding that the purported “Assignment of Mortgage” was fatally flawed and there was no demonstated compliance, by DB, with the PSA. The mortgage and Note were to Home 123, a subsidiary of the bankrupt New Century Mortgage. The court found that the January 13, 2009 assignment by Home 123 to DB as Trustee of the securitized mortgage loan trust was impossible in view of the Home 123 bankruptcy and liquidation effective April 1, 2008.

The court also highlighted the “inexplicable” arguments by DB’s counsel that discovery was required to determine the Note’s assignment where DB claimed that it “may have” received the mortgage and/or Note pursuant to a PSA in 2007. The court found that the PSA required the seller to deliver to DB the assignments of mortgage for each mortgage loan and for DB to certify receipt of a Note and Assignment of Mortgage for each loan. The court found that if DB was to receive the Note and mortgage through a 2007 PSA, then the 2009 Assignment was “a nullity”. The court also found that there was no evidence establishing which mortgages were included in the PSA.

Perhaps most important is the fact that the court distinguished its own prior decisions which did not permit a borrower to attack compliance with the PSA when a borrower sued, which cases were relied on by DB that the Williamses were not parties or beneficiaries to the assignment and thus cannot challenge them. The court stated: “Plaintiff’s argument confuses a borrower’s, as opposed to a lender’s, standing to raise affirmative claims…In this action the proverbial shoe is on the other foot — Deutsche Bank asserts affirmative claims against the Williamses seeking to enforce the Mortgage and Note, and therefore must establish its legal right (i.e. standing) to do so.”

Separately, the Florida Fourth District Court of Appeal reversed a summary judgment where there was outstanding court-ordered securitization discovery. In Osorto v. Deutsche Bank, No. 4D10-3631 (opinion filed March 28, 2012), the trial court had granted the homeowner’s Motion to Compel the PSA, agreements containing any obligation to repurchase the loan; documents attached to the PSA; documents concerning the reassignment or repurchase of the loan from the buyer or assignee back to the original seller or assignor or to any predecessor; and documents concerning the transfer or assignment of the the loan.

These cases highlight the fact that the courts are now permitting homeowners to raise defenses and seek discovery on securitization issues, which is something we have been pushing for over the last 4 and 1/2 years. We have previously advised of numerous cases we have had dismissed because of an abject refusal of a foreclosing party to provide these documents. These recent decisions go further to specifically discuss why such documents are relevant and that they are subject to being produced, and how they directly relate to standing issues.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

March 21, 2012

In view of recent requests, FDN is planning its next foreclosure defense seminar for April, 2012. The proposed dates are Friday, April 13 or Friday, April 20, 2012. Interested attorneys or paralegals may e-mail us with their preferred date. The seminar has been accredited for 7.0 General CLE credits by the Florida Bar, and has also been approved for CLE by the Supreme Court of Ohio.

The seminar will be held locally in Beverly Hills, California. Breakfast and lunch of international cuisine will be catered.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

March 21, 2012

During the time that the rash of Attorney General lawsuits against the banks were in litigation over the past several months, foreclosures slowed. However, now that many of these AG lawsuits have been settled, the attitude of the banks appears to be “off to the races” now that the AG’s are not watching over their shoulders. Since these settlements of late, we have been receiving significantly more inquiries concerning foreclosures which have been recently filed, and also as to cases previously filed which were dormant during the AG litigations but which have now “ramped up”. However, court backlogs remain.

Florida is a case in point. State funding for the “rocket dockets” ran out June 30, 2011, resulting in foreclosures which had been assigned to the “rocket docket” being sent back to the presiding Judges. As such, we are now having to wait up to three (3) months to get a hearing on motion calendar in some jurisdictions. This is not a criticism of the system; just a reality. The reality has also been compounded by the over 100,000 foreclosure cases left “up in the air” when the Law Offices of David J. Stern, P.A. ceased operations. 

Another problem is that certain law Firms which are taking over some of the cases filed by the Stern Firm are not examining the court file to ascertain whether the homeowner is represented by counsel, and instead using the service list from the original Complaint for purposes of sending papers filed by the “new” law Firm. This has resulted in homeowners who are and have been represented by counsel being served with court papers, including motions for summary judgment, directly and without their counsel being copied on the papers. This practice of contacting the homeowner directly instead of contacting the homeowner’s attorney of record is a sanctionable offense in Florida with case law to support the imposition of sanctions against the offender.

Another issue concerns the substitution of counsel for the foreclosing Plaintiff. Many of the “foreclosure mills” are being replaced by other Firms, with the files being, in many instances, incomplete. We had instances lately where a “new” law Firm apparently entered an appearance for the Plaintiff, but with that law Firm only copying one Defendant (such as the HOA) and not all counsel of record. In another instance, there was no copy of the Notice of Appearance in the court file, and the “Appearance” was only brought to the attention of the Court by one Defendant’s counsel who received a copy of the Appearance.

A third problem is that certain of the “new” law Firms taking over cases from the mills are sending copies of papers to us in cases where our Firm is not even and has never been counsel of record for anyone in the case. The obvious result is that the proper attorneys for the parties named as Defendants are probably not being copied with filings by the “new” Firms.

Given the amount of pending foreclosures in Florida, we do not expect these problems to be resolved any time soon.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

March 15, 2012

The Guilford County, North Carolina Register of Deeds has filed a 47 page lawsuit against MERS and numerous banks arising out of what has been alleged to be a systematic creation of “falsified, forged and/or fraudulently executed mortgage documents filed with the Register of Deeds by what infamously has become known as ‘robo-signing'”, and that the Defendants’ scheme “was manifested in a private electronic registry many of the Defendants created called the ‘Mortgage Electronic Registration System’ (MERS).

“Through MERS, Defendants effectively privatized the public property recording system and disrupted Guilford County’s responsibility to maintain a reliable public registry of land records, as well as citizens’ fundamental right to determine through public searches who holds interests in property.” The suit goes on to state that the scheme “confused, misled, and deceived the Register of Deeds, as well as borrowers, homeowners, and other citizens who rely on the validity of publicly filed property records.” Note the use of the term “fundamental right” of a citizen to determine who owns their property.

The suit states that “Defendants’ misdeeds in connection with their securitization of billions of dollars of mortgages have been the subject of numerous investigations, state Attorneys General lawsuits, court findings of facts, and consent orders”, and that the actions of the Defendants were “criminal”. The suit takes the reader through the entire securitization process, the creation and operation of MERS, the state attorney and regulatory actions against MERS, fraudulent robo-signing, and sets forth documented examples of admissions of bank officers to signing false affidavits under oath. Examples of misconduct by JPMorgan Chase, Bank of America, Wells Fargo, and others are set forth in detail.

This is a “must-read” for any attorney who practices foreclosure defense. The style is Guilford County ex rel. Jeff L. Thigpen, Guilford County Register of Deeds v. Lender Processing Services et al., General Court of Justice, Superior Court Division, County of Guilford, State of North Carolina. The case is online.

We thank one of our North Carolina network attorneys for bringing this most important filing to our attention.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

March 14, 2012

An Oregon state court Judge has denied a Motion for Summary Judgment filed by Deutsche Bank (as the claimed trustee of a securitized mortgage loan trust) in what is the second round of litigation originally filed by the homeowner challenging whether the foreclosing party has standing, chain of title, and is the real party in interest for purposes of the foreclosure. The homeowner originally filed the case in state court. The Defendants at the time removed the case to Federal court, then caused it to be dismissed by abandoning their claim for nonjudicial foreclosure after the Federal Judge asked counsel to agree to certify the question of MERS’ authority to the Oregon appeallate court. Counsel for the homeowner agreed to the certification, but counsel for the Defendants did not take a position. DB then re-filed the case in state court seeking judicial foreclosure.

The issue of whether MERS is a “beneficiary” under the Oregon Trust Deed Act is currently on appeal with the Oregon Court of Appeals in a separate case where Jeff Barnes, Esq. represents the homeowner.

There are two different versions of the Note in the DB case, and there are many issues surrounding whether the requirements of the PSA were met and whether the loan was ever effectively transferred to the trust. DB’s representative testified in deposition that there was a swap counterparty and swap agreement which provided for insurance on the loans in the trust. The homeowner sought, in discovery, all documents relating to any insurance on the loans and all swap agreements. DB objected, but its objections have been overruled.

In over four (4) years of foreclosure litigation, Mr. Barnes has consistently sought these documents in securitization cases. In each case where they have been compelled, the foreclosing party has steadfastly refused to produce the documents, resulting in a dismissal of the foreclosure or other sanction, including attorneys’ fees against the foreclosing party. It remains to be seen whether DB will comply with the Oregon court’s Order. 

The case is now scheduled for jury trial next week. Jeff Barnes, Esq. represents the homeowner together with local Oregon counsel Elizabeth Lemoine, Esq.

Separately, an article in the New York Times today discusses the resignation of Greg Smith, an Executive Director of Goldman Sachs and head of the firm’s United States equity derivatives business in Europe, the Middle East, and Africa. Mr. Smith is quoted stating the following: ” What are three quick ways to become a leader? a) Execute on the firm’s “axes”, which is Goldman-speak for pursuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants”. In English: get your clients- some of whom are sophistocated, and some of whom aren’t- to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter arconym.”

    “Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not a single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. … It makes me ill how callously people talk about ripping their clients off. … These days, the most common question I get from junior analysts about derivatives is, “How much more money did we make off the client?””

Of course, this implicates how many times a borrower’s mortgage was sold or how many traunches a borrower’s loan was assigned to in order for Goldman to have been able to sell the various derivatives to their clients, and how much money Goldman made by pooling loans which it knew would fail so that it could realize huge profits from insurance claims. This was what the SEC v. Goldman Sachs litigation, which settled VERY quickly after it was filed, was all about: pooling loans, which Goldman knew would fail, into trusts; taking out insurance on the loans; and then collecting checks when the loans failed.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

March 7, 2012

The Florida 5th District Court of Appeal has reversed a summary judgment which was entered in favor of  Novastar Home Mortgage, which was a nonparty to the suit as it had previously withdrawn from the case. The entry of a judgment in favor of a non-party was found by the appeals court to be “fundamental error”. However, this was only the tip of the iceberg.

The Court also held that the judgment would have to be reversed even it had been entered in favor of BONY (as trustee of a securitized mortgage loan trust), as BONY failed to show that it was entitled to enforce the “lost” note when it was lost. BONY offered no proof of who lost the note or when it was lost, and no proof of anyone’s right to enforce the note when it was lost. This is the same set of reasons why an Iowa court has repeatedly denied summary judgment to Wells Fargo in a case where Mr. Barnes represents the homeowner, as we previously reported.

The holding also found that BONY produced no evidence of ownership due to the alleged transfer from Novastar to BONY. The footnote to this part of the opinion is perhaps the most important and significant.

The Court held that “The record contains a copy of an assignment of the note from Novastar to Mellon [BONY], but the document was never offered into “evidence” by being attached to an affidavit for purposes of authentication. As such, it is not competent evidence of the assignment and cannot be considered in ruling on Mellon’s motion.”

This is the first decision we have seen where a court has actually required an assignment to be authenticated in order to be considered on a motion for summary judgment. The recent Florida and North Carolina cases we previously reported highlighted the necessity of authenticating endorsements. The Florida courts will now be applying this same authentication requirement to assignments. As such, all of the requirements of personal knowledge, etc. will have to be met before an Assignment will be permitted to be considered in the context of a motion for summary judgment of foreclosure in Florida.

The case is Beaumont v. Bank of New York Mellon, Case No. 5D10-3471 (Opinion filed February 17, 2012). We thank one of our readers for bringing this very important decision to us.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

February 23, 2012

We have confirmed the location for our next seminar, which will be at 9701 Wilshire Boulevard, Suite 1000, Beverly Hills, California 90212. The seminar will be held on Friday, March 16, 2012.

The seminar has been approved by the Florida Bar for 7.0 hours of General CLE, and has also been approved by the Supreme Court of Ohio for CLE credit.

Seminar topics will include, as to both judicial and non-judicial foreclosures: screening and intake of foreclosure cases; identifying preliminary issues and defenses; the state of the law and issues as to MERS; securitization; pleading and motion practice; discovery; filing and defending dispositive motions; mediation (including loan modification issues); and bankruptcy issues (opposing Proofs of Claim and Stay Relief Motions).

Registration forms are available by e-mail request or via the form on the “Contact Us” link above. Seminar is expressly limited to twelve (12) participants, who must be either a licensed attorney or a paralegal associated with a law Firm.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com