August 31, 2011

As those of you who have followed this website are aware, the Law Offices of David J. Stern, P.A., which was filing more than 7,000 foreclosure cases in Florida each month before it came under investigation by the Florida Attorney General, thereafter cut over 90% of its work force as its clients fired the Firm. It was just recently announced that the Stern Firm has now closed its operation in its entirety.

This has caused over 100,000 (yes, that’s over ONE HUNDRED THOUSAND) Florida foreclosure cases to be placed in “limbo” while the cases are (a) reassigned to division Judges after the “rocket docket” system ceased on June 30, 2011 due to lack of State budgetary funding, and/or (b) are being refiled after having been dismissed without prejudice in case management conferences where no one from the Stern Firm representing the Plaintiff appeared for the conference.

Just this week, we have seen a slew of former Stern cases being refiled which had been dismissed without prejudice, this time by several law Firms which have apparently been retained by the former Stern clients, including Bank of New York Mellon as Trustee for securitized mortgage loan trusts, Aurora, and other familiar plaintiffs. In view of the number of cases left hanging as a result of the Stern debacle, we thus expect Florida foreclosures to seriously ramp up in the coming months, as the “banks” and servicers rush to get these foreclosures “on the books” before year-end.

Fortunately, homeowners will now have the benefit of their cases being treated like every other civil litigation case and without being subjected to the horrific “rocket docket” process. This means that homeowners will not be subjected to short-notice summary judgment hearings and repeated, monthly “docket soundings” or 10-minute trial calendars as we saw when the “rocket docket” system was in place, and will have the benefit of full discovery and the opportunity to defend their cases like every other civil litigant.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 30, 2011

At least two states have apparently realized that the nonjudicial foreclosure process is so infected with fraud, illegal documents, and abuse that they are now leaning toward eliminating nonjudicial foreclosures altogether.

In Hawai’i, Act 48 has all but halted nonjudicial foreclosures, which have come under serious challenges involving lack of standing, lack of chain of title, lack of the real party in interest foreclosing, and irregularities in nonjudicial foreclosure documents. Although the Act does not affect nonjudicial foreclosures which were initiated prior to the Act’s effective date, all foreclosures after that date must be brought judicially.

Hawai’i previously permitted a foreclosing party to elect to proceed in either a judicial or nonjudicial manner. With that choice having been eliminated, homeowners may now get a fair opportunity to challenge a foreclosure in court without being put to the tremendous expense and risk of having to file an action to first seek a Temporary Restraining Order and thereafter a Temporary Injunction or be forced to post a crippling bond just to defend their rights and stop their home from being taken by a party which may not have the legal right to do so in the first place.

In Oregon, a press release today revealed that “hundreds of [nonjudicial foreclosure] files are being reviewed”, and that “thousands” of these foreclosures could ultimately wind up before a Judge. This is the result of various Judges blocking nonjudicial foreclosures, ruling that the foreclosing parties had failed to follow legal requirements for instituting a nonjudicial foreclosure.

This is the right path. The entire nonjudicial foreclosure process reeks of denial of due process and operates on a “guilty until proven innocent” mantra: that once the homeowner is claimed to be “in default” that the foreclosing party gets to take the house without having to prove that (a) the claimed debt is valid and (b) that the foreclosing party has the legal right to foreclose, and may do so unless the homeowner files a lawsuit challenging the alleged default and right to foreclose. Notices are simply filed in the public records (which may and oftentimes are not even complete or accurate), and are allegedly sent to the homeowner by mail without any proof of receipt. The abuses from this practice are more than obvious.

Foreclosure is a drastic remedy. It seeks to take a person’s home. In order to do that, the homeowner must be provided with due process: proof of formal notice (which is by service of process in a judicial foreclosure, which has to be proven in court), and the opportunity to defend without having to post a bond to stop a sale of the home pending the result of the litigation. The foreclosing party must prove, by admissible evidence in court, that they have the legal right to foreclose; there is no “presumption” based on documents being filed in the public records.

Judicial foreclosures also do not have a “bond” requirement to stop a sale of the home pending the termination of the litigation, and rightfully so. The entire “bond” process in nonjudicial foreclosures rewards the foreclosing party, who may not have the legal authority to foreclose, and punishes the homeowner who is forced to put up a monetary bond where the claim is disputed. The foreclosing party should only be entitled to money or property in any form if they prove their case, which is properly done in court with the burden being on the foreclosing party which is seeking the money and the property.   

Bravo to Hawai’i and Oregon. We can only hope that the remaining 22 states which currently have nonjudicial foreclosure will soon follow suit.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 29, 2011

A Maui (Hawai’i Second Circuit) Court has denied a Motion to Dismiss filed by US Bank as Trustee of a securitized mortgage loan trust which Motion sought to dismiss, with prejudice, the homeowner’s Complaint challenging a 2008 nonjudicial foreclosure and subsequent purported conveyance of the property. The Complaint alleges that the foreclosure and purported post-sale conveyance did not comply with Hawaii Revised Statute 667-5, which pertains to nonjudicial foreclosure proceedings. The homeowner is represented by Jeff Barnes, Esq. and local Hawai’i counsel Ronald Grant, Esq. Mr. Barnes was admitted pro hac vice at the hearing and argued for the homeowner.

The mortgage was originated by the now-bankrupt New Century Mortgage Corporation, whose subsidiary Home 123 previously had its license to do business revoked by the State of California and its registered agent’s authority rescinded by the State of Hawai’i as well. MERS generated the “Notice of Mortgagee’s Foreclosure” which identified MERS “solely as nominee” for an unidentified entity and with a mailing address of “c/o HomeEq Servicing Corporation” with a post office box in a suburb of Los Angeles, California.

There were never any documents provided to the homeowner identifying who MERS was allegedly acting on behalf of; no evidence of any authority from the United States Bankruptcy Court having jurisdiction over the New Century bankruptcy proceeding permitting the mortgage loan to be divested as an asset from the estate or to permit MERS to conduct a nonjudicial foreclosure; and no documents providing MERS with any authority to either conduct the sale or convey the property post-sale.

The Complaint alleges that the Notices of Sale failed to comply with the literal terms of Haw.Rev.Stat. sec. 667-5 (which requires any nonjudicial sale scheduled pursuant to the Statute to be by a party with authority by the power to act), and that MERS failed to demonstrate any such power as required by the Statute both as to noticing the sale and also thereafter not only conducting the sale but allegedly conveying the property in late 2008 to USBank “as trustee” for the securitized mortgage loan trust which closed in 2006. The Complaint claims that the sale and subsequent “conveyance” were thus null, void, and of no legal effect.

The Court found that the Defendant (USBank as Trustee) failed to meet its burden for dismissal. Hawai’i has a particularly stringent standard for dismissal of actions: that a complaint should not be dismissed unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of his or her claim that would entitle him or her to relief. Case law from the Supreme Court of Hawai’i has held that a mortgagee who elects to proceed with a nonjudicial foreclosure under 667-5 must comply with that Statute, and that holding a nonjudicial foreclosure sale where the sale was invalid under 667-5 results in the sale sale being void. As HRS 667-5 has no “statute of limitations”, any prior foreclosure which did not comply with the Statute is potentially void regardless of when it occurred.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 23, 2011

A Tennessee Federal court has issued an Order and Memorandum denying a Motion to Dismiss filed by Bank of America which attacked the borrower’s action, brought under Tennessee’s version of the Uniform Declaratory Judgments Act, challenging B of A’s claimed “ownership” of a mortgage loan. The loan was originated by America’s Wholesale Lender, a claimed “dba” of Countrywide. B of A later claimed to have succeeded to ownership of the loan, but thereafter made inconsistent statements concerning the alleged ownership, although the transfer of the loan was purportedly made from the originating lender to B of A within 120 hours of closing.

The borrower had filed suit in state court. B of A removed the case to Federal court.

B of A claimed that there was no “actual controversy” as Countrywide was a subsidiary of B of A, and that Countrywide was “DBA” America’s Wholesale Lender. The Court found that there was nothing in the papers filed by B of A demonstrating that this was in fact the case; that there was nothing in either the Note or the DOT which even mentioned Countrywide; and the Court could thus not determine whether B of A in fact had any interest in the loan.

Jeff Barnes, Esq. (admitted pro hac vice) and local Tennessee counsel John Higgins, Esq. represent the borrower.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 15, 2011

The New Jersey courts have once again made it abundantly clear that they will not tolerate noncompliance with Management Orders, failure to provide court-ordered discovery, failure of a foreclosing Plaintiff to demonstrate that it had standing to sue at the time of the filing of a foreclosure action, and failure to meet the legal burden to be entitled to summary judgment.

Today, a New Jersey Chancery Court Judge dismissed a foreclosure action filed by Wells Fargo where Wells Fargo failed to comply with the Court’s Management Order compelling the borrower’s discovery, with all required Certifications, by a date certain. Wells Fargo only served incomplete discovery responses by the due date in the Management Order, and admitted that the responses were incomplete. Wells Fargo’s counsel admitted that there was no misunderstanding of the requirements of the Management Order. Jeff Barnes, Esq. and local NJ counsel Alan Angelo, Esq. represent the borrower.

The case had been previously filed and voluntarily dismissed by Wells Fargo when it had failed to comply with discovery which had been propounded by Mr. Barnes and local counsel. This is now the 8th foreclosure case which Mr. Barnes and his local counsel have had dismissed in NJ for the foreclosing Plaintiff’s failure to comply with discovery and Court Management Orders. 

Separately, the Appellate Division of the Superior Court of New Jersey has issued a 19-page opinion in the matter of Deutsche Bank National Trust Co. as Trustee for Long Beach Mortgage Trust 2006-3 v. Mitchell and Bethea, Docket No. A-4925-09T3 which reversed the trial court’s grant of summary judgment finding that Deutsche Bank did not have standing at the time that it filed the foreclosure action, and that the trial court erred in finding that DB had “cured” the standing defect when it filed an Amended Complaint after receiving the Assignment of Mortgage (when the original Complaint had been filed without the subject Assignment having been received).

Significantly, in holding that DB did not have standing when it filed the original Complaint because it did not have possession of the Note, the NJ Appellate Court cited the “Boyko decision” from Ohio (In Re Foreclosure Cases, 521 F.Supp.2d 650 (S.D. Ohio 2007)) on the issue of the requirement of proof of standing at the time of filing a foreclosure action, and held that DB could not cure its defect by filing an Amended Complaint following the assignment.

The Court also held that the proofs presented by DB in support of its Motion for Summary Judgment were inadequate, including the holding that “the trial court should not have considered an assignment that was not ‘authenticated by an affidavit or certification based on personal knowledge'” citing NJ case law and NJ procedural Rule 1:6-6. The Court found that the Certification by the attorney, which was based on “custody and review of computerized records”, did not meet the personal knowledge requirement of NJ case law and cautioned that “Attorneys in particular should not certify to ‘facts within the primary knowledge of their clients.'”

The Court further held that the Certification by the servicer, JP Morgan Chase Bank, stating the [legal conclusion] that “the plaintiff is still the holder and owner of the obligation and mortgage” did not make any mention of the assignment or how the signor knows that DB became the holder of the note.

The Court thus vacated the sheriff’s sale and the summary judgment.

This Appellate decision, which was approved for publication on August 9, 2011, is extremely important for all NJ cases, as it sets forth the specific requirements for standing, Certifications, and a foreclosing Plaintiff’s burden on summary judgment which, although having been previously set forth in the NJ Rules of Procedure including the recent amendments to the Rules dealing with foreclosure filings, had not been previously set out in a published decision.

Jeff Barnes, Esq. has also been admitted pro hac vice to the United States District Court for the Middle District of Tennessee, Nashville Division, in connection with the defense of a foreclosure initiated by Bank of America.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 9, 2011

Jeff Barnes, Esq. has been admitted pro hac vice in the Kent County, Michigan court in connection with a case involving a securitization. This is Mr. Barnes’ second admission in Michigan, this time through local counsel Michael Almassian, Esq. He was previously admitted in Washtenaw County, Michigan in connection with the Hendricks decision through and with local Michigan counsel James Fraser, Esq.

We are pleased to welcome Ivey Fosbinder Fosbinder LLC of Maui, Hawaii to our network. We will be working with the Firm to defend both judicial and nonjudicial foreclosures in Maui.

The Washington Attorney General has filed suit against ReconTrust, the foreclosure “substitute trustee” arm of Bank of America which formerly conducted foreclosure sales for Countrywide. The lawsuit sets forth numerous illegal and unlawful practices on the part of ReconTrust, including violating its duties as a trustee to borrowers by concealing the true owner of the mortgage loan; falsely representing that obligations are owed to MERS when they are not; falsely representing that the “creditor” to whom certain obligations are owed is BAC Home Loan Servicing when the loan is actually owned by what the AG calls a “securitization trust”; and making false representations in foreclosure documents and trustee’s deeds. The suit seeks injunctive relief and monetary sanctions for each violation as well.

For years, we have seen ReconTrust and B of A run roughshod over borrowers with false misrepresentations in foreclosure documents and a pattern of intentionally concealing the true owner of a mortgage loan, and lie to the Courts over and over again. We have and will continue to bring these issues to the Courts, and will now also make the Courts aware that the Attorney General of Washington has deemed it necessary to sue ReconTrust as its intentional and willful wrongful and illegal actions pose a significant danger to the public.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 8, 2011

Today, the Appellate Division of the New Jersey Superior Court approved for publication a decision which reversed an Ocean County, New Jersey trial court foreclosure judgment and remanded with directions that the case be dismissed without prejudice due to the Plaintiff’s failure to comply with New Jersey’s pre-suit notice statute, which requires a foreclosing party to identify the name and address of the lender (who owns the obligation). The Court held that identification of the “servicer acting on behalf of the owner” is legally insufficient, and fails to comply with the statute. The case is Bank of New York as Trustee of CWALT, etc. v. Laks, No. A-4221-0593.

The pre-suit notice identified Countrywide as the alleged servicer acting on behalf of the owner, with the owner not being identified. The foreclosure which was later filed named Bank of New York as Trustee of a securitized mortgage loan trust as the foreclosing Plaintiff.

The Court held that the language of the statute is mandatory; that there is no room for anything other than strict compliance that the LENDER be identified; and that a borrower who raises the issue of noncompliance with the pre-suit notice statute prior to the entry of judgment is entitled to a dismissal without prejudice. The Court also highlighted the standard for a foreclosing Plaintiff to prove standing on summary judgment, and reversed the trial court’s striking of the borrower’s contesting answer which raised the notice issue, doing so even though the securitized trustee bank ultimately produced a second version of the note with a second blank endorsement in alleged support of its “standing” position. The Court found that this did not cure the threshold problem raised by noncompliance with a statute which concerns mandatory actions which must be undertaken prior  to suit being filed.

What is interesting about this case is that a dismissal is allowed at any time prior to judgment. That means, if we read this decision correctly and accurately, that a borrower can file a contesting answer without a motion to dismiss, raise the failure of the Plaintiff to comply with the pre-suit notice statute as a defense, and obtain a dismissal after the answer is filed.

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

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 4, 2011

These guys just keep getting more and more brazen. This latest scam comes out of American Home Mortgage Servicing, Inc. (AHMSI) who, as our readers know, was recently slammed in the In Re Veal decision as not having any standing to file a Proof of Claim in a borrower bankruptcy. AHMSI is the servicing unit of the now-bankrupt American Home Mortgage, which was sold out of the AHM Bankruptcy proceeding to a Wilbur Ross and which now is going around the country seeking to foreclose on mortgages which, we suspect, have been paid through one or more sources.

Up until now, all “loan mod” offers from servicers have come in the form of an inquiry letter as to whether the borrower is interested in pursuing a loan modification, and if so, the servicer sends a package of documents to be completed and returned to the servicer with certain documents relating to proof of income and expenses, etc. As we all also know, almost all loan mods are rejected after the borrower is subjected to multiple requests for more documents, or having to submit them time and again because the documents were “lost”, or for “updated” documents because the servicer sat on the documents submitted by the borrower for long periods of time with the servicer claiming that the submission was “stale” or “outdated”.

Yesterday, we were advised that a borrower, who is not in default, was told by AHMSI that in order for any loan mod application to be reviewed, AHMSI wants a fee of $600.00 if paid now, and if not, $900.00 later. Apparently AHMSI is trying to take money from the borrower to pay for its own ineptitude, and/or so it can get paid for going through the process of jerking borrowers around before the loan mod application is ultimately denied.

Bottom line: borrowers beware. You may have recently seen the article in the media that the major “banks” do not have sufficient cash reserves to pay their own attorneys to defend foreclosure challenges, so possibly this latest scam might also be an effort by the banks (who are the principals of the servicers) to roust up monies to pay their attorneys to beat up borrowers using the borrowers’ monies.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 2, 2011

A Chapter 7 Trustee for the United States Bankruptcy Court for the Western District of Washington has retained Jeff Barnes, Esq. and local Washington BK counsel John Sterbick, Esq. to file an adversary proceeding against Residential Credit Solutions, Inc., which claims to “own and hold” a mortgage loan originally made in favor of Franklin Bank FSB, which went into FDIC Receivership. Mr. Barnes is also currently representing borrowers in other Bankruptcy proceedings in Washington BK courts opposing proofs of claim and challenging Motions for Relief From Stay filed by servicers and “banks” attempting to foreclose.

FDN has added local counsel in the States of New Mexico and Minnesota. We are pleased to welcome John R. Fox, Esq. as local counsel in Santa Fe, New Mexico, and Marcus Jarvis, Esq. in Minneapolis, Minnesota.

We are also in the process of expanding our attorney network in Maui, Hawaii, due to the volume of cases which we are being asked to become involved with there and other of the Hawaiian Islands.

Mr. Barnes has recently filed a RICO action against M&I (Marshall & Isley) Bank in Tuscon, Arizona after discovery depositions and documents revealed that the manager of the M&I branch in Tuscon was “approving” jumbo mortgage loans knowing that the borrowers could never meet the debt service on the life of the loans, and telling borrowers that they would be approved for such loans before any loan applications were even completed. M&I has been recently purchased by another bank.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com