June 27, 2012

A New Mexico District Judge yesterday denied BAC Home Loan Servicing’s Motion for Protective Order which it filed in an attempt to avoid producing documentary discovery to a homeowner who BAC has sued for foreclosure. The loan was originated by New Mexico Bank and Trust, was sold to Countrywide, and thereafter allegedly “assigned” first to MERS and then by MERS to BAC.

As is known to anyone who is involved in foreclosure issues, Countrywide sold off its loans for securitization purposes between 2000 and the first quarter of 2008, and what was “sold” to BOA in 2009 consisted essentially of servicing contracts from the old Countrywide Home Loans Servicing LP, which became the property of BAC Home Loans Serving LP. As we also know, the MERS Terms and Conditions preclude the use of the MERS system to either create or transfer beneficial interests in mortgage loans, and counsel for MERS in the MERS v. Nebraska Dept. of Banking and Finance decision admitted (which admission is in the published decision) that MERS does not acquire mortgage loans or have any right to collect payments thereon.

The borrower thus requested 53 categories of documents from BAC, including securitization documents. BAC filed a Motion for Protective Order which claimed that public information on the SEC website was “confidential”; that the securitization-related discovery was “irrelevant”; and that it was essentially entitled to withhold discovery because it “has the original note” and has moved for summary judgment on the “relevant” issues.

The Court disagreed, denying BAC’s Motion in its entirety and commanding full responses to the borrower’s discovery request (including production of all responsive documents) within 30 days. The Court found BAC’s Motion to be “sparse”; not in compliance with New Mexico court rules as to discovery; and against New Mexico’s case law which provides for liberal discovery in foreclosure actions so that all of the issues are fully developed and a fair trial is had.

Jeff Barnes, Esq. represents the homeowner together with local New Mexico counsel John Fox, Esq. Mr. Barnes, who was admitted pro hac vice in the case, prepared the written response to BAC’s Motion and personally argued the matter in court in New Mexico yesterday. Mr. Barnes has now obtained orders compelling securitization discovery in Oregon, New Mexico, New Jersey, Delaware, Hawai’i, Tennessee, and Florida, and has had foreclosures dismissed and attorneys’ fees assessed against foreclosing “banks” for nomcompliance with court discovery orders in several of those states.

Jeff Barnes, Esq.,


June 25, 2012

Realty/Trac reports that three Florida metropolitan areas are within the top ten in new foreclosure filings nationally. Number 3 is the Miami/Ft. Lauderdale area, with 9000 new foreclosure cases being filed in April, 2012. The Tampa/St. Petersburg area is number 8 with 4,295 new cases being filed in April and the Orlando/Kissimmee area is number 10 with 2,717 new cases being filed in April.

These are NEW foreclosure cases which have been filed, and just in the month of April. This does not count the tens of thousands of existing foreclosure cases which were previously filed, including the over 100,000 cases which the David J. Stern Firm left in limbo when it ceased doing business operations, many of which have now been taken over by other law Firms and which cases are starting to see activity again.

Jeff Barnes, Esq.,


June 22, 2012

A Florida Circuit Judge has gone on the record requiring Wells Fargo, as the claimed “trustee” of a securitized mortgage loan trust, to show that the mortgage loan which WF is attempting to enforce actually went into the PSA, and if not, the standing requirement has not been met and the case will fall on summary judgment. The homeowner is represented by Jeff Barnes, Esq.

The Judge specifically stated as follows:

     “…but what I want plaintiff’s counsesl to understand, that what you submitted to me with regards to the pooling and servicing agreement still does not have the actual mortgages that went into that pooling and servicing agreement…So at some point you’re going to have to show that this mortgage and note certainly went into that pooling and servicing agreement, which is what I have requested before. …  So I’m just asking you that before we get too far out, please make sure that’s there, or its going to be taken out on summary judgment. … In other words, if you’re a trustee for that pooling and servicing agreement, and the mortgage and note are not in that pooling and servicing agreement, you don’t have standing.”

This ruling not only directly confirms the proof requirements for standing in a securitization case, but supports the production of discovery on the issue as well.

Separately, fifty-one (51) originating mortgage lenders, servicers, and trustee sale companies have filed Bankruptcy in the United States District Court for the Southern District of New York, all having filed on May 14, 2012. The list of Debtor entities includes GMAC Mortgage, LLC; Executive Trustee Serevices LLC (a 3d party trustee sale company which schedules and conducts non-judicial foreclosure sales); Ditech (the one which touted that it gave loans of 125% of the value of the home); Residential Funding Company, LLC and its numerous subsidiaries and derivatives; Homecomings Financial, and others.

The 341 meeting of creditors is scheduled for June 25, 2012 at 1:00 p.m. at 80 Broad Street, Fourth Floor, New York, New York. The 341 Notice states that there is no deadline to file a proof of claim or a complaint (adversary proceeding) to determine dischargeability as of this time.

As we have previously advised with “lender bankruptcies”, two of the threshold important events are any requests to destroy documents and the formation of a “borrowers’ committee” separate and apart from the unsecured creditors’ committee, as homeowner/borrowers’ interests are not necessarily the same as those of the rest of the unsecured creditors, and may in fact be adverse to the general unsecureds, who have no interest in protecting claims of homeowners. Mr. Barnes was previously involved in requesting the formation of a borrowers’ committee in the Accredited Home Lenders bankruptcy, and was also involved with the borrowers’ committee in the American Home Mortgage bankruptcy.

Jeff Barnes, Esq.,


June 20, 2012

A Key West, Florida Circuit Judge has vacated a final judgment of foreclosure entered after a trial where the homeowner was not present and could not be present for the trial due to his religious beliefs and practices. The homeowner had filed a motion to continue the trial, supported by an affidavit, based on the fact that the trial was scheduled during one of the highest holy days in his religion (a shabbos day during Passover). The court denied the motion and conducted the trial without the homeowner being present.

The homeowner filed a Motion to Vacate the final judgment on the grounds that holding the trial on a high religious holiday where the homeowner could not be present for the trial, and where the court had express notice of this before the trial, violated Florida’s Religious Freedom Restoration Act of 1998, Fla. Stat. sec. 761.03. The statute expressly provides that the government shall not substantially burden a person’s exercise of religion even if the burden results from a rule of general applicability, and that the “exercise of religion” is an act or refusal to act that is substantially motivated by a religious belief whether or not the religious exercise is compulsory or central to a larger system of religious belief.

The Motion argued that the court is an arm of the government, and that the rule of general applicability (setting cases for trial) was applied in a manner which burdened the homeowner’s exerecise of his religion (being forced to attend a trial on a high religious holiday). The court granted the homeowner’s Motion, vacated the Final Judgment, and the sale is in the process of being voided. The homeowner is represented by Jeff Barnes, Esq.

Foreclosures in Florida are on the rise both in number and in stages of progress now that several law Firms have taken over many of the cases left in the lurch as a result of the David J. Stern debacle, which left over 100,000 Florida foreclosures “up in the air” when the Stern Firm ceased operations. Mr. Barnes’ Firm has been recently retained in more than a dozen new Florida foreclosure cases, and we are receiving inquiries from Florida homeowners daily.

Jeff Barnes, Esq.,


June 18, 2012

The past two weeks have seen positive strides in foreclosure defense, especially the compelling of securitization discovery and permitting borrower attacks on foreclosures.

A Florida Judge denied summary judgment in Duval County, Florida where the corporate borrower had been representing itself and had filed responsive pleadings late. The foreclosing party sought a court default and summary judgment, but the Court denied both Motions and granted the Motion filed by Jeff Barnes, Esq. (who represents the borrower) to vacate any default and to serve an Answer to the Complaint. Another Judge in Osceola County, Florida compelled discovery sought by Mr. Barnes in another securitization case over the objection of the foreclosing Plaintiff.

In a case pending in New Jersey where the Court had compelled the foreclosing Plaintiff to produce securitization discovery four (4) separate times, the Court dismissed the action after the subject discovery was not produced. The foreclosing Plaintiff has sought to reinstate the case, arguing with the Judge that it should not be compelled to produce the discovery that the Court has already ordered four (4) separate times. The Court has ordered that the discovery, including depositions, be completed by a date certain or the case will wind up being the first foreclosure case in New Jersey which is dismissed with prejudice for repeated discovery violations. The borrowers are represented by Jeff Barnes, Esq. and local NJ counsel Daniel Schmutter, Esq.

Several of the “banks” are utilizing removal of state court cases to Federal court in an apparent effort to stave off discovery obligations incident to the borrower’s state court discovery. These “banks” are just delaying the inevitable, especially in light of a recent decision from the New Hampshire Federal Court which held that if a purported assignment does not comply with the PSA, there was no assignment. In distinguishing cases which do not permit an “attack” on an assignment, the Court held that if there is no assignment in compliance with the (securitized trust) documents, then no assignment occurred, and as such the argument is not that there is an attack on an assignment, but that no assignment took place at all.

A Florida appellate court has also reversed summary judgment where court-ordered securitization discovery, including all documents referred to or attached to the PSA, were not produced.

We thank our readers for providing us with these new decisions.

Jeff Barnes, Esq.,


June 5, 2012

It is common knowledge that the American Home Mortgage group of companies files for Bankruptcy in 2007. The proceeding continues to this day. During the course of the bankruptcy, certain court Orders have been entered permitting the destruction of duplicate documents and documents relating to mortgage loans which did not close or were abandoned.

The Plan Trust has now filed a Motion seeking to abandon certain original documents being held in Iron Mountain document storage facilities across the United States. Prior to filing bankruptcy, the American Home Mortgage companies contracted with Iron Mountain Information Management, Inc. for document and data storage. The account numbered 04421.0M070K (the “M070K asccount”) was used for hard copy document storage utilized by the servicing business, American Home Mortgage Servicing, Inc. (AHMSI), which servicing business was sold out of the bankruptcy early on.

Iron Mountain has now demanded the payment of $473,527.57 in expenses relating to the M070K account, and AHMSI has filed a request for payment of “alleged administrative expenses” in the AHM Bankruptcy seeking to be indemnified as to any expenses it may have to pay Iron Mountain relating to the M070K account. AHMSI has taken the position that certain of the documents stored under the M070K account belong to the AMH group of Debtors, and thus AHMSI is not responsible for Iron Mountain’s bill.

The Plan Trustee has taken the position that the documents are AHMSI’s property pursuant to the Sale Approval Order which approved the Asset Purchase Agreement whereby the AHM Debtors sold AHMSI all of the books and records that were being stored in connection with the sale of AHMSI out of the Bankruptcy Estate. The Plan Trustee has taken the position that the documents being stored under the M070K account consist of loan applications and other documents relating to the servicing business. As AHM shut down its loan origination business 5 years ago, sold AHMSI four years ago, and liquidated most of its other assets prior to the effective date of the Chapter 11 Plan, the Plan Trustee has no need for the Iron Mountain documents for the remaining Chapter 11 process. The Plan Trustee thus seeks an Order permitting it to abandon the Iron Mountain documents to the extent that the Plan Trust has any interest therein.

As we all know, AHMSI continues to pursue foreclosures throughout the United States. Until now, certain original documents relating to the mortgage loans the subject of these foreclosures have been maintained as a function of the AHM Bankruptcy. Now, however, AHMSI is trying to saddle the AHM Bankruptcy Estate with the cost of maintaining these documents, and the Chapter 11 Plan Trustee wants no part of that burden. As such, if the documents are abandoned, and no one pays Iron Mountain’s bill, the documents could very well wind up being destroyed.

Anyone who believes that their original documents may be the subject of this Motion may thus want to contact counsel for the Plan Trustee, which is the Firm of Young, Conaway, Stargett, & Taylor, LLP, 1000 North King Street, Wilmington, Delaware 19801, telephone (302) 571-6600. The three attorneys from YCST listed on the Plan Trust’s Motion are Sean Beach, Esq., Margaret Greecher, Esq., and Patrick Jackson, Esq. Co-counsel for the Plan Trustee is the Firm of Hahn & Hessen, LLP, 488 Madison Avenue, New York, New York 10022, telephone (212) 478-7200. The three attorneys from H&H listed on the Motion are Mark Indelicato, Esq., Edward Schnitzer, Esq., and Joseph Orbach, Esq.

This information is public, and was provided to Mr. Barnes as he remains on the service list for the AHM Bankruptcy due to his prior involvement in the case relating to certain homeowners/borrowers.

Jeff Barnes, Esq.,