July 30, 2012

A Hillsborough County (Tampa) Florida Circuit Judge has entered a Final Judgment in favor of a borrower, ordering that the loan and all loan documents be reinstated effective back to June 30, 2009 (pre-“default”); that the terms of the loan remain in effect as they would have been as of that date; and that BB&T credit the principal of the Note with all payments received by BB&T from the FDIC and with no payments due from the borrower until BB&T credits all such payments it has received against principal and the parties agree on a new payment schedule.

The May 18, 2012 Final Judgment found that the original lender (Colonial Bank) improperly demanded that the borrower make “curtailment” payments on the loan, basing its demand on the status of other, unrelated loans. Colonial was shut down by the Alabama State Banking Department and the FDIC was appointed as its receiver. The evidence at trial demonstrated that BB&T breached its duties of good faith and fair dealing with the borrowers, and that BB&T was motivated to behave as such due to the terms of a Purchase and Assumption Agreement with the FDIC where BB&T stood to profit by declaring a fraudulent default under the loan, collecting from the FDIC under the Agreement for such default, and then enforcing the loan against the borrowers and retaining the property until a turn around in the real estate market.

The “troubled assets” manager of BB&T (who had been a former Colonial Bank manager) testified that BB&T may have already applied to the FDIC for a loss share payment, and the borrowers’ expert testified that BB&T may have already applied for and received a payment from the FDIC as high as $1,800,000.00. The Court found that BB&T totally failed to credit this potential payment from the FDIC against amounts sought in the litigation, thereby giving the impression that BB&T might be “double dipping” and possibly “triple dipping” if market conditions favorably changed and the property increased in value. The Court concluded that BB&T “committed significant wrongdoing and breached the implied duty of good faith and fair dealing of a financial institution, such that the instant cause of action should be denied in its entirety.”

This Final Judgment supports what we have been requesting in discovery for the past five years: documents related to third party sources of payment against the Note, which evidence goes directly to the amount claimed to be in default. Significant in this decision is the fact that the Court entered judgment for the borrower on the premise that there COULD HAVE BEEN a payment made to BB&T through the Agreement; it was not necessary that a payment actually have been made for the credit to apply.

In securitizations, the documents expressly provide for insurances and credit enhancements (including credit default swaps) to protect against and provide payment on mortgage loans which default. Discovery of these potential sources of payment and amounts is thus more than relevant, as this evidence goes directly to not only the veracity of the amount claimed to be in default, but to claims of breach of duty of good faith and fair dealing as well.

The case is Branch Banking and Trust v. Kraz LLC, Hillsborough County, Florida Circuit Couert Case No. 10-CA-000304-K. We thank one of our dedicated followers for providing this decision to us.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 24, 2012

A Mecklenburg County, North Carolina Superior Court Judge has dismissed what is known as a NCGS 45-21.16 nonjudicial foreclosure proceeding filed by Aurora Bank FSB, finding that Aurora had not presented sufficient evidence that it was the holder of the Note and Deed of Trust (DOT), and thus it could not foreclose. North Carolina’s nonjudicial foreclosure procedure starts with a filing, by the party seeking to foreclose, of a notice of hearing requesting that the Court set a foreclosure sale date.

Aurora presented what it claimed to be the “original note” with several staple holes and an “Allonge” which contained two punch holes in the top center (whereas the Note did not). The Court found that the signatures on the “Allonge” did not appear to be original (those being of one Amy Hawkins, who has “executed” Allonges in the capacity of both a Vice President of First National Bank of Arizona (FNBA) and First National Bank of Nevada (FNBN), which merged before their assets were seized by the FDIC).

The homeowner presented documents demonstrating the transfer of the loan to a Lehman securitized mortgage loan trust which named Aurora as the servicer. The Court noted that Aurora’s claim as “holder” was inconsistent with the securitization documents which showed Aurora acting as servicer for the holder.

The Court found that there was no information offered as to the dates of the alleged endorsements from FNBA to FNBN or to Aurora, nor how these dates related to the seizure of assets by the FDIC, and ultimately held that the document attached to the “Original Note” cannot constitute an allonge. The Court dismissed the proceeding, concluding that Aurora failed to provide sufficient evidence that Aurora was the holder of the Note and DOT and also failed to demonstrate that it had standing to bring the action as the real party in interest.

FDN network counsel Brian F. Chapman, Esq. represents the homeowner. He can be reached at (704) 380-2039, website address: www.chapmanlawonline.com. The decision was filed on June 28, 2012.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 18, 2012

Just moments ago, we learned that the Court of Appeals of Oregon has reversed a summary judgment entered against the homeowners and has, in a 28 page opinion, held that MERS is NOT the “beneficiary” under the Oregon Trust Deed Act, ORS 86.705(1), despite MERS claiming to be the “beneficiary” in Deeds of Trust. Jeff Barnes, Esq. represents the homeowners together with local Oregon counsel Elizabeth Lemoine, Esq. Mr. Barnes wrote the appellate Briefs and argued the case before the 3-Judge panel of the Oregon Court of Appeals.

The extremely detailed opinion traces the history of mortgage law in Oregon and the Oregon Trust Deed Act, and acknowledged that this was a “case of first impression” in the Oregon appellate courts and involved “an intersection between Oregon’s nonjudicial foreclosure laws and a creature of more modern vintage: Mortgage Electronic Registration Systems, Inc., also known as MERS.”

This decision has been awaited not only by Oregon homeowners, but homeowners in neighboring states as well which have nonjudicial foreclosure procedures and MERS issues. The Oregon Trial Lawyers’ Association also filed “amicus” briefs with the appeals Court supporting the position of the homeowners.

The entire opinion is available by e-mailing us per the “Contact Us” link above.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 16, 2012

Today, a Lee County (Ft. Myers) Florida Circuit Judge denied a Motion for Protective Order which had been filed by SunTrust Mortgage, Inc. which Motion sought to block the homeowner’s request to take the deposition of Deborah Ellis, who allegedly signed the undated endorsement which SunTrust claims is on the “back” of the Note. In the original Complaint filed by SunTrust in 2008, there was no endorsement on the Note; in 2010, SunTrust filed what it claims to be the “original Note” with the alleged endorsement on the back of the Note; later in 2010, SunTrust filed a “Verified” Amended Complaint which, again, had no copy of an endorsed Note.

The Court ruled that the issues surrounding the endorsement are directly relevant to the standing defense asserted by the homeowner, and that the circumstances surrounding the endorsement are a proper subject of inquiry for the deposition of the “endorser” Deborah Ellis. Recent case law from the Florida 4th District Court of Appeal reversed summary judgments where there was no evidence offered by the foreclosing “bank” that the endorsement on the Note was present at the time that the Complaint was filed.

The homeowner is represented by Jeff Barnes, Esq., who argued the matter in person before the Court today, including the recent case law on endorsements. One of these cases provides that an evidentiary hearing is proper when there is conflicting evidence relating to an endorsement and there is an issue as to whether an undated endorsement was on the Note at the time the Complaint was filed, as this relates directly to whether the foreclosing party had standing to sue at the time it filed its foreclosure action.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 13, 2012

The recent litigation involving Barclays and other banks concerning the fraudulent manipulation of the LIBOR index rate has opened up a number of avenues for borrower actions against “lenders” and servicers claiming monies owed on a Note subject to a floating LIBOR index. We expect a significant amount of litigation to be instituted against the “lenders” and servicers for claims sounding in fraud and/or unjust enrichment and/or breach of duty of good faith and fair dealing in addition to other causes of action.

The LIBOR index is represented to the borrower as a basis for the lender’s pricing of the long-term mortgage loan, with the supposition being that the index on the loan is based on the bank’s cost to borrow the money to fund the loan. There are approximately 20 large banks (both domestic and foreign, including Deutsche Bank, Barclays, JPMorgan Chase, and Citigroup) who determine the LIBOR index.

Barclays settled their claim in this action. What the Barclays suit has reveladed is that the banks fraudulently manipulated the LIBOR index for purposes of misrepresenting the cost of the loan to the borrower so that the lenders could reap additional profits from the borrowers under false pretenses. What this means, in reality, is that any mortgage loan originated since at least the late 1990s which was based on a LIBOR index resulted in a deliberate overcharges to the borrower. We are in the process of preparing litigation against various banks for claims resulting from the fraudulent misrepresentation of the LIBOR index to borrowers.

The information revealed in the Barclays litigation could be of particular importance to borrowers in the State of Washington, which has a “use it or lose it” statute as to foreclosure challenges. Under the Statute, the borrower has 90 days from the time that a Notice of Trustee’s (or foreclosure) sale is provided to the date of the sale during which to file an action challenging the sale and to obtain a court order stopping the sale. If that is not done by the sale date, the borrower is forever barred from filing an action seeking to undo the foreclosure or placing a lien on the foreclosed property. However, the companion Statute provides that a borrower may institute an action after the sale for damages only resulting from a wrongful foreclosure.

FDN has associated with a banking expert who has over 25 years experience in this area and securitization who will be assisting us in asserting these claims. Other experts in this area are also being interviewed so that the claims are bolstered with expert testimony from all aspects and issues.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 10, 2012

Previously dormant Florida foreclosure cases are being revived. Many of these cases were with the Florida “foreclosure mills” and have been apparently re-assigned to other law Firms. Others are old David Stern cases which have been picked up by other Firms. Still others are those which the Courts have called up to be dismissed for lack of prosecution without some kind of filing by the foreclosing Plaintiff, which files a “Notice of Intent to Prosecute” without more.

As a result, we have been receiving a flood of inquiries from Florida homeowners.

One of the more significant issues is the incomplete nature of discovery when a summary judgment motion is filed. The Florida 4th District Court of Appeal has issued several decisions in the past few months which have reversed summary judgments where discovery, including securitization discovery, was incomplete. The 4th DCA adheres to the “slightest doubt” rule in Florida; that is, if there is the slightest doubt that the outstanding discovery may give rise to a disputed issue of material fact, summary judgment is not proper.

A conflict as to securitization discovery has been created by a recent ruling from the Florida Third District Court of Appeal, which ruled (we believe incorrectly) that a borrower has no standing to challenge compliance by a foreclosing “trustee” bank with the PSA as the borrower is not a third party beneficiary to the PSA. The decision was based on a line of cases (known as the “Correia” and “Livonia Properties” line of cases) which stand for that proposition. However, the case was apparently not argued properly, as one of the courts which originally came to one of these “Correia” decisions recently expressly distinguished the “third party beneficiary” preclusion to apply ONLY to cases where the borrower sues the foreclosing “bank”. When the bank sues the borrower, compliance with the PSA is a standing issue, which the borrower is permitted to raise. The decision is the Williams case (from Hawaii) which clearly sets forth the distinction.

Florida is a “judicial” state: that is, the foreclosing party (bank) has to sue the borrower. As such, the “third party beneficiary” argument does not apply, as raising compliance with the PSA implicates standing of the plaintiff to foreclose, as per Williams. Apparently, whoever argued the case before the 3d DCA was not aware of the Williams distinction. As such, there is now a conflict between the 3d DCA decision and the recent 4th DCA decision which reversed a summary judgment where secuitization discovery, including documents attached or referred to in the PSA and documents concerning the transfer of the mortgage and note, were not produced.

Add to this the decisions in Horace (Alabama) and Hendricks (Michigan) which granted summary judgment to the homeowners where it was shown that the attempted transfer of the loan to the securitized mortgage loan trust did not comply with the PSA.

The one-paragraph 3d DCA decision is being touted by “bank” attorneys as a means to preclude securitization discovery. Borrowers attorneys need to counter this with the 4th DCA decision and Williams (and also with Horace and Hendricks) before more incomplete (and erroneous) precedent is set in Florida.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com