June 21, 2011

We have been receiving almost daily inquiries following the decision in the Hendricks case where the Michigan court granted summary judgment in favor of the Michigan borrowers represented by FDN network attorneys Jeff Barnes, Esq. and James Fraser, Esq. We have thus added additional affiliate counsel in Michigan so that representation is available to Michigan borrowers throughout the state who are seeking to defend against and challenge foreclosure.

Separately, a source published an article yesterday which was forwarded to us by one of our readers which stated that the “foreclosure mess” in New York alone will take 67 (yes, sixty-seven) years to resolve. Even assuming that estimate to be on the high side, we anticipate that foreclosures will continue into the millions per year for the coming years, especially given that certain banks and their downline foreclosure vendors (e.g. servicers, trustee sale companies, appraising brokers, etc.) have developed foreclosure into a well-entrenched business.

Remember, big-time securitization began in roughly the year 2000 and continued unabated until the last quarter of 2007, and in some cases into early 2008, thrusting into high gear after deregulation of the MBS industry. A freight train which has been running at that speed for 7 years is not going to stop in 2 or 3.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

June 20, 2011

In response to numerous recent requests, we are in the process of scheduling another of our foreclosure defense seminars for attorneys and paralegals for either Friday, July 15 or Friday, July 22, 2011. Please e-mail us at [email protected] if you have a preference for either date. We intend to publish the firm date for the July seminar, which will be held in our Newport Beach, California offices, by this Thursday, June 23, 2011. (There will be no seminar on June 24 as Mr. Barnes must travel out of town for court proceedings in Florida).

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

June 14, 2011

Today, Mr. Barnes successfully defeated a Motion for Relief From Stay filed by Wells Fargo Bank National Association as Trustee for a Morgan Stanley securitized mortgage loan trust in a case in the United States Bankruptcy Court for Western District of Washington. The Bankruptcy Court denied the stay relief request finding that the Declaration submitted by Wells Fargo was void of any facts to show that Wells Fargo was a “person entitled to enforce” and that Wells Fargo did not satisfy its burden to show delivery, proof of delivery, and purpose of delivery.

The decision is supported by the recent 46-page opinion of the 9th Circuit Bankruptcy Appellate Panel in the matter of In Re Veal, opinion issued June 10, 2011, which reversed the Arizona Bankruptcy Court’s grant of stay relief to Wells Fargo and vacated that court’s denial of the debtor’s objection to a proof of claim filed by the servicer. The decision thoroughly discussed and analyzed the requirements of constitutional and prudential standing, Rule 17 real party in interest, evidence of “holder” and “person entitled to enforce”, and the interplay between Articles 3 and 9 of the UCC in the context of stay relief requests and objections to a proof of claim.

As the Veal decision emanated from the 9th Circuit BAP, we believe that it will have significant effects on challenges to foreclosure being asserted in Bankruptcy courts in California, Washington, Oregon, Arizona, Nevada, Alaska, and Hawaii. As it is an appellate court decision, servicers and “trustees” of securitized mortgage loan trusts who move for stay relief to foreclose will now be held to their significant burdens of proof to be entitled to seek such relief, and will no longer be able to rely upon conclusory declarations such as the one submitted in the WD Washington case argued today.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

June 14, 2011

As those of you who follow this website know, Colorado has essentially a two-phase foreclosure process after a default is declared: the first being what is called a “Rule 120 proceeding” to schedule a Public Trustee’s sale, then the actual sale itself. The Rule 120 is essentially a “probable cause” hearing where the movant (the party claiming the right to foreclose) claims a default and, if applicable, that the borrower is not in the military, and requests that the Court schedule a sale date. The standard is quite low for the movant to prevail (simply establishing a “default” without going to the merits of whether the party claiming the default has the right to do so), but there is no preclusive effect on any separate proceeding the borrower may file to challenge the foreclosure; that is, the granting of a Rule 120 Motion to schedule a sale does not operate to preclude the assertion of defenses in a separately-filed action to challenge the foreclosure.

The problem is that although Colorado case law permits the real party in interest issue to be raised at a Rule 120 hearing, there is no direction from the Colorado appeals courts as to what the Rule 120 court is supposed to do with such matters when raised. In 1989, the Supreme Court of Colorado issued the Goodwin v. District Court for the 16th Judicial District decision, 779 P.2d 837 (Colo. en banc 1989) which held that the real party in interest issue can be properly raised in a Rule 120 proceeding, and that a court’s refusal to consider such evidence in resolving the issue of default adversely is tantamount to the taking of propery in summary fashion without any hearing at all, which is a violation of due process.

However, the decision does not direct the courts entertaining Rule 120 proceedings as to what weight to attach to real party in interest issues or whether if the borrower’s real party in interest issues raise questions of fact as to the legality of the party claiming default sufficient to deny the Rule 120 Motion. This procedural problem came to light in a Rule 120 hearing yesterday in Logan County, Colorado where Mr. Barnes represents a borrower who opposed the Rule 120 Motion in a case involving a securitization and the lack of any evidence of an assignment of the Deed of Trust or compliance by the securitized trustee movant with the PSA of the Trust of which the movant is the claimed “trustee”.

The court stated that the matters raised by the borrower as to the lack of evidence of any compliance by the securitized trustee bank with the PSA, the lack of any assignment of the Deed of Trust, and other issues were affirmative defenses to be asserted in a separate proceeding to challenge the foreclosure in an action for declaratory and injunctive relief where the issue of the foreclosing party to overcome these defenses is to be litigated, as the scope of the Rule 120 hearing is very narrow and the standard for the movant to have a sale date set is “very low”. This was the first such pronouncement that we are aware of by a Colorado court that issues surrounding compliance with the PSA and the like are in fact affirmative defenses to a foreclosure, but by a separate action. We believe that the procedural questions left unanswered by Goodwin contributed to this pronouncement, as Goodwin was raised by both sides at the Rule 120 hearing, albeit for different purposes.

Further, as agreed to by both counsel, there is no Colorado appellate decision as to whether MERS can effect any assignment of the Note or Deed of Trust or the circumstances under which any MERS assignment may take place. Colorado thus remains one of those jurisdictions where issues surrounding MERS and securitization issues are as yet undecided on the appellate level.

Separately, a recording Clerk in Massachusetts has stated that foreclosure documents executed by known “robo-signers” will no longer be accepted for recording. This is a very positive development toward precluding the perpetration of fraudulent foreclosures. The statement comes following the Ibanez decision which was directly decided on the issue of a legally flawed recording of foreclosure documents.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

June 6, 2011

FDN attorneys Jeff Barnes, Esq. and James Fraser, Esq. have scored what appears to be the first decision in Michigan granting summary judgment to borrowers against a securitized mortgage loan trust and MERS based on the failure of the Defendants to comply with the terms and conditions of the Pooling and Servicing Agreement and New York Trust law as to the purported conveyance of the borrowers’ loan to the trust. The decision also appears to be only the second in the entire United States on this specific legal issue, the other being the recent Horace decision from Alabama.

The borrowers sued US Bank National Association as Successor Trustee to Bank of America as successor by merger to LaSalle Bank as Trustee for a First Franklin Mortgage Loan Trust, MERS, and First Franklin for Declaratory and Injunctive Relief to declare that a nonjudicial foreclosure was void. The Court, after full briefing, granted the Plaintiff borrowers’ Motion for Summary Judgment in a 7-page written opinion. The Court cited to the recent Residential Funding v. Sauerman decision from the Michigan Court of Appeals and detailed the history of MERS, rejecting the Defendants’ contention that the Defendants could grant MERS authority to take action where Michigan statute prohibits it.

Most important, however, is the Court’s holding that the securitized trustee bank (US Bank) never actually received ownership of the Plaintiffs’ loan because the loan was not ever properly transferred to US Bank according to the terms of the PSA, and that the assignments did not follow the law of trusts in the State of New York. The Court found that the MERS assignment to US Bank did not comply with the chain of intervening assignments required by the PSA:

    “Defendants’ failure to strictly comply with the terms of the PSA means that the loan at issue was never properly transferred to the trust. Any transfer of mortgage loans, such as Plaintiffs, was mandated to comply with New York Trust law and the terms and conditions of the PSA governing conveyance of mortgage loans into the Trust. This the Defendants did not do. The Court finds that the [MERS] “Assignment” recorded on December 30, 2009 in the Washtenaw County Register of Deeds serves to transfer nothing. The alleged conveyance failed to comply with the terms and conditions of the PSA and New York Trust law which governs the PSA. The alleged conveyance stated that MERS assigned the Mortgage and Promissory Note to USB, however, there has been no evidence presented to support the chain of the required assignments and endorsements of the mortgage and note as required by the terms and conditions of the PSA….Therefore, the purported transfers, endorsements or assignments are void ab initio or never properly transferred to the Trust.” (emphasis added)

The Court granted summary judgment to the borrowers and declared that the nonjudicial foreclosure sale was void ab initio.

This extremely well-written decision demonstrates that the Horace decision was not isolated, and also demonstrates that millions of MERS “assignments” which did not comply with the strict requirements of a PSA governing a securitized mortgage loan trust are worthless and of no legal effect.

The drafting of the pleadings, Plaintiffs’ Motion for Summary Disposition, and briefing was a joint effort of Mr. Barnes and Mr. Fraser.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

June 3, 2011

We hope that everyone had a safe and happy Memorial Day holiday.

Today, Jeff Barnes, Esq. appeared in court hearings in three separate counties in New Jersey on Motions to Compel Discovery which were filed by him and his local counsel. An Order was entered in one case compelling IndyMac to produce trust documents relating to an admitted Fannie Mae securitization (over the objection of IndyMac’s counsel), and compelling depositions of HSBC “as Trustee” and Ocwen Loan Servicing in a separate case where HSBC, although admitting a secuitization, claims that “there is no Pooling and Servicing Agreement”. New counsel for the Plaintiff in the third case agreed to produce certain of the discovery in lieu of defending the Motion.

Separately, Mr. Barnes has been recently admitted to courts in Washington, Tennessee, and Minnesota pro hac vice where he is assisted by local counsel.

The FDN network also expanded last week, adding local counsel Michael Collins, Esq. in Maui, Hawaii in connection with Mr. Barnes recently receiving requests for representation in six cases in Maui. Mr. Collins’ Firm also practices Bankruptcy and handles ejectment (eviction) proceedings.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

May 23, 2011

FDN’s Foreclosure Defense Seminar in Edison, New Jersey last Friday was, like all of our seminars, a success. The attorneys and their paralegals who attended from New Jersey, New York, and Minnesota are now equipped to run a full-scale foreclosure defense practice for both judicial and non-judicial foreclosures from initial intake through mediation, trial, and appeal.

We have had many inquiries about the next seminar at our California office. Although no firm date has been scheduled at this time, we anticipate that the next seminar in Newport Beach will probably be sometime in early July after the July 4 holiday, as Mr. Barnes is essentially booked for the entire month of June, 2011 with numerous litigation matters around the United States. We will post the new date once it is confirmed.

Our offices will be closing for the Memorial Day holiday beginning at 12:00 noon Pacific time this Friday, May 27, 2011 and will remain closed through and including Monday, May 30, 2011, reopening Tuesday, May 31, 2011. Mr. Barnes will not be reviewing any e-mails or any telephone messages beginning Thursday, May 26, 2011 until Tuesday, May 31, 2011 as he and his wife will be out of town.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

May 18, 2011

Registration for this seminar closed this past Monday, May 16, 2011. The handbooks for those who timely registered and paid are prepared, and the facility has been provided with the number of attendees for meal and seating purposes.

This is to advise again that THERE WILL BE NO WALK-INS PERMITTED AND NO ON-SITE REGISTRATION PERMITTED as the handbooks had to be prepared in advance and the facility required 5 days’ notice for meals and seating. There will also be no “auditing” or observation of the course permitted, as attendance is strictly limited to those attorneys and paralegals who timely registered and paid.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

May 17, 2011

For the past few years, we have been advancing to the Courts that a “trustee” bank which fails to comply with the Mortgage Loan Conveyance provisions of a Pooling & Servicing Agreement (PSA) of a securitized mortgage loan trust cannot, either directly or through a servicer, foreclose as the mortgage loan was not legally transferred to the trust. As the courts have found that the issue of whether or not the transfer is proper or legal implicates discoverable issues, we have repeatedly obtained Orders compelling discovery on these issues.

On March 21, 2011, the Circuit Court of Russel County, Alabama in the matter of Phyllis Horace v. LaSalle Bank National Association as trustee for Certificateholders of Bear Stearns Asset Backed Securities I LLC Asset Backed Certificates Series 2006-EC2, MERS, Encore Credit Corporation, EMC Mortgage Company, and Bank of America as successor in interest to LaSalle Bank National Association, Case No. CV-2008-362, hit the point home in granting a borrower’s Motion for Summary Judgment and final judgment to permanently enjoin LaSalle Bank National Association from foreclosing on the borrower’s property. The Order stated: “First, the Court is surprised to the point of astonishment that the defendant trust (LaSalle Bank National Association) did not comply with the terms of its own Pooling and Servicing Agreement and further did not comply with New York Law in attempting to obtain assignment of the plaintiff Horace’s note and mortgage. Second, plaintiff Horace is a third party beneficiary of the Pooling and Servicing Agreement created by the defendant trust (LaSalle Bank National Association). Indeed without such Pooling and Servicing Agreement, plaintiff Horace and other mortgagors similarly situated would never have been able to obtain financing”.

The Plaintiff filed an extensive Memorandum of Law in support of its Motion for Summary Judgment which cited numerous provisions and cases as to New York Trust law and also the recent Ibanez decision from Massachusetts, and was also supported by an Affidavit and testimony of an expert in the area of securitization. As a result of this decision, we will be filing similar Motions in many of our securitization cases.

We thank one of our clients for bringing this incredibly significant decision to our attention.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

May 13, 2011

The Texas First District Court of Appeals issued a decision yesterday in Case No. 01-10-00020-CV (decision dated May 12, 2011) which affirmed a summary judgment entered by the Harris County trial court in favor of the homeowners against Wells Fargo as “trustee” of a securitized mortgage loan trust. Wells Fargo had filed an application for an expedited non-judicial foreclosure. The homeowners, pursuant to the Texas Rules of Civil Procedure, timely filed a Petition challenging Wells Fargo’s application prior to the entry of an Order on the application, which filing automatically abated and dismissed the application.

Wells Fargo counterclaimed for foreclosure in the case filed by the homeowers, in which the homeowners sought a declaratory judgment that Wells Fargo did not own the Note and thus had no standing to foreclose. The borrowers prevailed. That same day, Wells Fargo filed a separate action against the homeowners which contained the same claims as it had asserted as counterclaims in the trial on the homeowers’ action.

The trial court granted summary judgment to the homeowners on Wells Fargo’s second action, which Wells Fargo appealed. The Appeals court affirmed the summary judgment, rejecting Wells Fargo’s “void judgment” and other arguments, holding that the doctrines of res adjudicata and collateral estoppel barred Wells Fargo from attempting to re-litigate the very threshold issues that it lost in the trial of the homeowners’ lawsuit (that being that it failed to prove that it owned the promissory note).

We thank one of our dedicated readers for bringing this to our attention today.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com