January 9, 2012
The FDN Foreclosure Defense Seminar which was scheduled for January 20, 2012 is being rescheduled as Mr. Barnes will be in Oregon that day for a specially set court hearing. The new date the the location will be posted on this website.
Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com
January 9, 2012
The Circuit Court for Jackson County, Oregon has issued 6 page ruling finding that the non-judicial foreclosure remedy was not available to Fannie Mae because of a defect in the chain of title caused by the MERS system, which precluded Fannie Mae from bringing an eviction action (termed a “forcible entry and detainer” in Oregon) due to the wrongful foreclosure.
The opinion analyzed Oregon cases which both support and attack MERS, and concluded that the anti-MERS decisions were on point: that the MERS system “is an evasion of the intentions of the Oregon Trust Deed Act” (which is the statutory vehicle in Oregon for a non-judicial foreclosure), and that the MERS system confuses the beneficiary, especially in cases involving securitization, multiple investors, and the involvement of mortgage insurers.
In highlighting the infirmities with the pro-MERS decisions, the court noted that “The decisions finding MERS a valid beneficiary simplistically take the language of the deed of trust at face value heedless that the underlying reality is more complex than that envisioned by the law.” We have been making this argument for years across the country: that when the non-judicial foreclosure laws were enacted, they never envisioned a creature like MERS or the complications of securitization, and instead of making MERS and securitized “trustee” banks comply with the law, the pro-MERS decisions have simply permitted MERS and the banks to ignore the strict requirements of the law and run roughshod over it.
The Oregon decision pointed out the probable reason for this and its consequences: “Decisions finding that the recording law has been followed [by MERS] engage in an incomprehensible and illogical attempt to explain how the deed of trust follows the note…The problem with the MERS system is that it bypasses this safety check in the law. Under MERS, no one can be sure who holds the rights, and the courts and public are expected to simply trust that arrangements made in secret are fair.”
The court also stated that “Many borrowers before Oregon courts complain that they were encouraged to default by servicers or lenders as a condition of considering a loan modification and, instead of receiving help, face eviction from their homes.” Mr. Barnes just recently filed a case against a lender based on this same fraud in the inducement fact pattern: the homeowner was told that they had to be in default to be considered for a loan modification. The homeowner relied on the “bank”‘s affirmative representation and stopped payments, but the loan modification was ultimately being denied on a basis known to the “bank” to be false. When the homeowner attempted to resume regular payments, the “bank” refused the payments and accelerated the entire loan balance in connection with its threat of foreclosure.
In noting other problems with the MERS system, the Oregon court stated: “The judges upholding the MERS process are no doubt bothered by the prospect of defaulting home owners living rent free for months or years. However, the problem has been created by the lending industry with an unaccountable system that is unable or unwilling to work out an equitable resolution to the fall in home values. Instead the industry now seeks to make mostly low net worth individuals bear the bulk of the cost of their economic escapades.” (emphasis added)
The court found that “The MERS system amounts to private lawmaking which bypasses the protections of state law and creates a new scheme of governance solely for the benefit of investors.”
We could not have said it better. We just hope that more courts also see what is really going on.
Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com
Decembr 29, 2012
In view of the number of inquiries we have already received since our recent post regarding upcoming seminars, we are scheduling our next Foreclosure Defense seminar for Friday, January 20, 2012. The location will be at or near our new offices in Beverly Hills, California, with the location depending on the number of confirmed registrants.
The seminar is open to attorneys and paralegals only, and has been accredited for 7.0 General CLE hours by The Florida Bar. As always, breakfast and lunch, and refreshments, will be served. Parking and a detailed handbook, which is now upwards of 350 pages and includes sample pleadings, motions, responses to motions, discovery, case law, court rulings, and other important documents for foreclosure defense, are also provided to each registrant and included in the registration fee.
Interested attorneys and paralegals may obtain a registration form by e-mailing us using the “Contact Us” link above.
Jeff Barnes, Esq.
December 24, 2011
FDN’s and Mr. Barnes’ Firm’s new California office is scheduled to open Wednesday, December 28, 2011. The Newport Beach office closed yesterday, December 23, 2011. Monday, December 26, 2011 is a holiday, and on Tuesday, December 27, the internet technology and communications providers will be finalizing their work in the new CA office.
The new office address is: 9350 Wilshire Boulevard, Suite 308, Beverly Hills, California 90212. The new phone and fax numbers, which are scheduled to be up and running as of Wednesday, December 28, 2011, are: phone: (310) 275-5150; fax: (310) 275-5157.
Mr. Barnes’ e-mail address and that of FDN will remain the same.
The new office will have its own private conference room. The next foreclosure defense seminar will be scheduled on a Friday in late January, 2012. Due to increasing demand, Mr. Barnes is planning to schedule two (2) seminars each month beginning in February, 2012.
Happy holidays!
Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com
December 20, 2011
We were recently requested to become involved with a foreclosure case concerning an entity which calls itself Kondaur Capital Corporation. Wells Fargo assigned the loan to Kondaur post-foreclosure.
Who/what is Kondaur Capital Corporation? From Bloomberg Business Week, today:
“Kondaur Capital Corporation purchases scratch and dent residential mortgage loans. It bids family residential loans, including story loans, hyper-defaulted loans, loans secured by unique properties, loans with origination fraud, loans with regulatory violations, and loans rejected for investor purchase.”
You saw that correctly; there are no typos. “Scratch and dent” residential loans. “Hyper-defaulted” loans. “Loans with origination fraud”. “Loans with regulatory violations.” “Loans rejected for investor purchase.”
Now you ask, how much did Kondaur pay for these loans? How much was paid on the loans before they were sold or assigned to Kondaur? What return on its investment is Kondaur expecting/projecting from loans with known issues and problems including fraud and regulatory violations? Is Kondaur betting that most homeowners will simply accept a statement that Kondaur “purchased” their loan and is now entitled to foreclose and evict?
Those are just the preliminary questions. However, the more obvious issue is that Kondaur cannot assume or claim status as a bona fide purchaser with no knowledge of defenses. If Kondaur knowingly accepts mortgage loans which have fraud, regulatory violations, have been rejected for investor purchase (for what reasons, pray tell), or other “scratches” and “dents”, Kondaur takes the loans subject to all legally available defenses.
Googling the principals of Kondaur reveals that its CEO was the former Director of Strategic Planning at Encore Credit Corporation before becoming a Senior Vice President of a subsidiary of the now bankrupt New Century Mortgage. He also was previously associated with Option One and Long Beach Mortgage. All of these entities, which those of you who follow this website and foreclosure litigation developments know, are at the forefront of mortgage foreclosure litigation, including massive securitization, origination of predatory loans, and problematic “assignments”.
Thus, BOLO (be on the lookout) for any Kondaur foreclosure. By revealing publicly what types of mortgage loans it purchases, it has advised the world that there are defenses to any foreclosure it is involved in, and has also let us know what type of discovery should be propounded in any Kondaur foreclosure as well.
Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com
December 8, 2011
As those of you who follow this website know, New Century, which was one of the larger California securitization origination “lenders”, filed for Bankruptcy in 2007. However, thereafter and to this day, MERS continues to execute foreclosure documents, including assignments, as “nominee” of New Century.
The big problem for MERS and those using such assignments is that they are absolutely fraudulent, as New Century repudiated its contract with MERS as part of its Bankruptcy, and there is no evidence of any grant of authority from the New Century Bankruptcy Court which would permit MERS to execute such assignments in the first place. This issue has come to the fore in several of our cases in different states.
Further, the separate company which purchased the New Century brand out of bankruptcy has made it clear on its “Legal” page that the company has no connection to or power over the old company’s loans. As such, any “new” assignments by the “new” New Century are also most likely fraudulent.
The world is finally starting to wake up to the massive, pervasive, nationwide fraud which has been engaged in with impunity by MERS, Deutsche Bank, Wells Fargo, Bank of America, US Bank, and their servicers and “trustees” in their never-ending quest to reap massive profits at the expense of homeowners and damn the consequences. It is no longer homeowners who are seeking relief. Attorneys General are also taking action: the Attorney General of Massachusetts has sued several of the “banksters” for fraudulent mortgage practices; the Attorney General of Delaware has sued MERS for fraudulent practices both in foreclosure and its attempt to avoid recording fees; and yesterday, the Attorneys General of California and Nevada formed a joint task force to pursue foreclosure fraud. It is no longer a situation of simply foreclosure defense: the new wave is grounded in affirmative claims against the banks and their agents for their outright fraudulent conduct all over the United States.
The good news is that the CEO of one of them, that being JPMorgan Chase CEO Jamie Dimon, has publicly announced that JPM has plenty of reserves to defend the lawsuits against it. On behalf of the Attorneys General and private litigants who are going after JPM for its nationalized pattern of fraudulent conduct, we thank you, Jamie, for affirming that JPM is a still a collectible entity.
Jeff Barnes, Esq., ForeclosureDefenseNationwide.com
December 7, 2011
A Cuyahoga County, Ohio Court has issued a 9-page opinion which ultimately held that the foreclosing bank did not have standing to foreclose and was not the real party in interest, denying the Bank’s Motion for Summary Judgment and granting the homeowners’ MSJ. The Court’s reasoning is based on exactly what we have been and continue to argue as to MERS in cases all over the United States: that MERS, not being the payee on the Note and having no ownership rights in the Note, cannot transfer it.
This decision now joins the legion of cases which have similarly held MERS to its very limited position as “nominee”, notwithstanding MERS’ inconsistent attempt to anoint itself with additional powers which are not permitted by MERS’ own Terms and Conditions. MERS’ consistent violation of its own self-imposed internal restrictions is part of the recent action filed by the Delaware Attorney General against MERS.
In the Cuyahoga County, Ohio case (Huntington National Bank v. Brown, Case No. CV-09-702894), as with literally millions of other foreclosure cases filed nationally, the original Note was made payable to a third party. Huntington purported to claim entitlement to summary judgment on the basis of a MERS assignment, in this case where there was no endorsement in blank on the Note as well. The opinion states:
It is beyond peradventure that one cannot transfer rights in property that one does not own. Since MERS was not the original payee on the note, and since the note was never endorsed to MERS or endorsed in blank, MERS had no legal rights by the tenor of the note and therefore was not legally capable of transferring the note to anyone.” The opinion also states that without the blank endorsement, Huntington could not claim status as a “holder” of the Note.
Significantly, the opinion also states that “Possession alone of a negotiable instrument does not establish that a party has the right to receive payments under it”, citing Ohio case law. This statement exemplifies the misleading nature of the argument consistently made by foreclosing banks, servicers, and securitized “trustees”: “we have possession of the Note, therefore we are entitled to enforce it and foreclose.” The question which is not answered by this position is “How did you come into possession of the Note and how did you acquire the rights to enforce it and the mortgage instrument?”. This, of course, implicates potentially numerous questions, especially in an securitization case.
A promissory note executed in connection with a mortgage instrument is not a simple “negotiable instrument” transaction. As the Court held in the recent In Re Veal case from the 9th Circuit Bankruptcy Appellate Panel, a promissory note tied to a mortgage instrument implicates Article 9 of the UCC (which governs secured transactions) in addition to Article 3 (which governs negotiable instruments). Thus, a foreclosing party should have to prove not only proper possession and ownership of the Note and the rights under it, but also intent of delivery, manner of delivery, and actual delivery of the mortgage instrument under Article 9 of the UCC. Those of you who have reviewed PSAs know that the Mortgage Loan Conveyance Provisions of the PSA set forth the requirements to prove intent of delivery, manner of delivery, and actual delivery of the mortgage instrument, and that these requirements are consistently ignored in securitization cases.
Congratulations to Ohio for getting it right as to MERS. We would hope that those jurisdictions which have not yet addressed the issue realize the true fallacy in MERS assignments and what MERS really is: that is, nothing more than a simple “nominee” without the power to transfer a Note which it did not, does not, and can never own.
Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com
December 2, 2011
A Delaware Judge ruled that Bank of New York Mellon as trustee of a First Horizon securitization has waived all objections to the homeowner’s discovery, which includes document requests as to the securitization, insurances, trust documents, etc. The Judge also awarded attorneys’ fees to the homeowner, who is represented by Jeff Barnes, Esq. and local Delaware counsel Paul G. Enterline, Esq. Mr. Enterline argued the homeowner’s Motion to Compel the discovery which was prepared by Mr. Barnes.
Bank of New York’s counsel cited its client’s nonresponsiveness to the discovery request despite said counsel’s efforts.
Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com
December 2, 2011
Today, an Orange County, Florida Circuit Judge granted the homeowner’s Motion for Attorneys’ Fees against BAC Home Loans Servicing incident to BAC’s dismissal of a Complaint to “establish lost mortgage”. BAC claims that it could not find the mortgage and thus filed suit to “re-establish” it, but later found the mortgage and dismissed its Complaint. The homeowner is represented by Jeff Barnes, Esq.
Recent decisional law from the Florida 4th District Court of Appeal, which reversed a trial court’s denial to award attorneys’ fees to a homeowner upon the granting of the homeowners’ Motion to Dismiss for attorney misconduct, was instrumental in the Orange County court’s decision. That case (Valcarcel v. Chase Bank, 54 So.3d 989 (Fla. 4th DCA 2010)) cited another case (Stout Jewelers v. Corson, 639 So.2d 82 (Fla. 2nd DCA 1994)) which expressly provides that a defendant may request an award of attorneys’ fees following a voluntary dismissal of an action by a plaintiff where there is either a statute or a prevailing party attorneys’ fee provision in a contract which is the subject of the (dismissed) action. The Orange County Circuit Judge found that because BAC’s action was based on the mortgage contract which contained an attorneys’ fee provision that the 4th DCA case was on point, and granted the homeowners’ Motion for Attorneys’ Fees.
Separately, the United States Bankruptcy Court for the Eastern District of Washington (Spokane) yesterday granted the homeowner/debtors’ Motion for Stay Pending their Appeal of the BK court’s prior decision which found that the securitized trustee (US Bank National Association as trustee of a 2006 trust), which filed an Amended Proof of Claim, was a “person entitled to enforce” the mortgage obligation. The homeowners have appealed the decision to the 9th Circuit Bankruptcy Appellate Panel asserting that the BK court’s decision was contrary to law (including the requirements to establish that a creditor is a “person entitled to enforce” pursuant to the recent In Re Veal decision of the 9th BAP), and that there was a lack of evidence to support the decision.
The Amended Proof of Claim relied in part upon what was characterized as a mortgage loan purchase agreement, but the creditor failed to produce the subject agreement either as part of its Amended POC or at the hearing on the homeowners’ objection to the Amended POC. The homeowners are represented by Jeff Barnes, Esq., who argued the Motion for Stay yesterday via telephone (as Mr. Barnes was in Florida having just come from the hearing where Citimortgage, Inc.’s Motion for Summary Judgment was defeated [see post below from November 30, 2011]).
We believe that the appeal is a case of first impression in the 9th BAP, as there are no decisions from that court to date which deal with a challenge to a POC where there is a combination of securitization issues, the failure to produce the very evidence upon which the creditor relied in its POC, and where under these facts a creditor is determined to have satisfied the Veal standard.
Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com
November 30, 2011
A Palm Beach County, Florida Circuit Court Judge denied Citimortgage, Inc. as trustee of an American Home Mortgage securitized mortgage loan trust’s motion for summary judgment yesterday. The ruling was the only one of its kind on the entire foreclosure docket yesterday afternoon; all other bank summary judgment motions were granted. The homeowners are represented by Jeff Barnes, Esq.
The original lender was American Brokers’ Conduit, a subsidiary of the bankrupt American Home Mortgage companies, which are still in Bankruptcy. There was no evidence of any permission from the Bankruptcy Court to allow the mortgage to be divested from the Bankruptcy estate; no evidence that MERS could assign the loan for the bankrupt lender 3 years after the bankruptcy was filed; no evidence that MERS could assign, in 2010, the loan to a trust which closed in 2006; and no evidence of any compliance with the PSA by the trust.
Mr. Barnes also prevailed today on a separate case where Wells Fargo moved to dismiss the homeowner’s declaratory action. The court denied the Motion as related to the Amended Complaint. Wells Fargo previously filed papers indicating that (a) the loan was owned by an unidentified “investor”; (b) that the loan was assigned to Fannie Mae; and (c) that MERS remains the mortgagee on the loan. Which of these alternatives posited by Wells Fargo is true (if any) remains to be seen.
Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com