September 20, 2012

After our post as to the Lawrence Nardi deposition, and after reviewing the admissions therein and the admissions of JPMorgan Chase in the Deutsche Bank Federal litigation and other information recently uncovered, we have been receiving a multitude of inquiries as to how JPM can possibly succeed in any foreclosure case involving a WaMu originated loan, and where has the money which homeowners have been paying JPM (including monies paid to its former servicer Chase Home Finance), gone and under what authority. After reviewing this information with our banking and securitization experts, some realizations are crystal clear.

The WaMu mortgage loans were “off balance sheet” at the time of WaMu’s failure, and thus JPM could not have purchased something which was not on WaMu’s balance sheet. Nardi has testified that there is no schedule of particular mortgage loans which were purchased from the FDIC as Receiver for WaMu. Yet, after the alleged “acquisition” of whatever was sold to JPM by the FDIC, JPM directed the homeowners with WaMu originated loans to make payments to JPM. Although JPM admitted that it was only acting in the capacity of a “servicer”, JPM has never advised who they are the “servicer” for other than to amorphously state that they are the servicer for an “investor”.

Who is this investor? Is it JPM? If so, what did JPM invest? Surely it could not be the mere pittance that it paid the FDIC for whatever it purchased, and it cannot be for the mortgage loans which it did not buy. To date, the true owner(s) of the off-balance sheet WaMu mortgage loans remains unknown.

Thus, the conclusion is inescapable: the monies which homeowners have been paying to Chase Home Finance and JPM over the years through payments to CHF and JPM as a “servicer” have been are are being pocketed by JPM, even through JPM does not own the WaMu mortgage loans and cannot identify any person or entity who or which owns the loans for which JPM is allegedly collecting payments as the “servicer”.

Any wonder why JPM was so easily able to recently allocate $400M for attorneys’ fees to oppose foreclosure challenges and spend enormous amounts of money on marketing its various credit card promotions?

There is a lot more to this which is being uncovered every day, and it is more insidious than we ever could have thought possible. Take, for example, the conviction yesterday of ex-WaMu subprime lending unit Long Beach Mortgage’s sales executive John Blanford, who was found guilty of six counts of mail fraud for his involvement in a scheme to falsify loan documents. As reported, Blanford paid a loan coordinator in cash to falsify documents, provide false verification of borrowers’ employment or professional licensing status, and to turn a blind eye to fraudulent representations contained in loan applications and other documents submitted to Long Beach Mortgage, all in connection with his scheme for which he earned more than $1 million in commissions between 2003 and 2005.

As also reported, from 2003 to 2006, WaMu and its Long Beach mortgage unit increased mortgage securitizations from $4.6 billion to $29 billion. That’s a $25 BILLION increase in securitizations in 36 months. As also reported, in 2005, Long Beach was forced to repurchase $875 million of non-performing loans from investors, and an audit done in the same year (2005) found that 83 percent of the loans approved by Long Beach were fraudulent.

Now one asks: how could JPM “purchase” mortgage loans in 2008 which, statistically, had an 83% chance of being fraudulent as of 2005 (assuming the loans were even in WaMu’s portfolio as of September 25, 2008)? How could JPM purchase, in 2008, any mortgage loans which had been securitized and thus transferred to third parties from 2003 to 2006?

It goes on and on. Stay tuned.

Jeff Barnes, Esq.,


September 19, 2012

Those who have followed recent foreclosure history in Hawai’i know of the prior enactment of what is known as “Act 48”, which mandated that foreclosures be instituted judicially. This legislation was a reaction to the rampant fraud and irregularities filed in non-judicial foreclosures. Although Act 48 technically expired in July of 2012, the present non-judicial foreclosure statute requires that before the institution of a non-judicial foreclosure, the foreclosing party must apply to the Department of Commerce and Concumer Affaird (DCCA) of the State of Hawai’i and pay a fee for permission to file a nonjudicial foreclosure. Part of this process requires proof that there was a face-to-face meeting with the homeowner in an attempt to resolve the claim, and that all alternatives to foreclosure (e.g. loan modification) were discussed during a Dispute Resolution Program.

If the meeting was held and there was no resolution, the homeowner can convert any non-judicial foreclosure to a judicial foreclosure. Given that protection, there have been almost no non-judicial foreclosure filings, with the foreclosing parties simply electing to institute judicial foreclosures.

Further, Act 182, which became effective June 28, 2012 (and is retroactive), requires a personal Affirmation from an attorney in the form of an Affidavit that the attorneys signs that he personally reviewed the documents which grant standing upon his client in any judicial foreclosure action. The Affidavit, which must be filed in all judicial foreclosures before or at the summary judgment stage, is subject to the following statutory language:

During and after August 2010, numerous and widespread insufficiencies in foreclosure filings in various courts around the nation were reported by major mortgage lenders and other authorities, including failure to review documents and files to establish standing and other foreclosure requisites; filing of notarized affidavits that falsely attest to such review and to other critical facts in the foreclosure process, and “robosignature” of documents. Based upon my communication with (employee of the bank), as well as upon my own inspection and other reasonable inquiry under the circumstances, I affirm that, to the best of my knowledge, information, and belief, the Summons, Complaint, and other papers filed or submitted to the Court in this matter contain no false statements of fact or law and that plaintiff has the legal standing to bring this foreclosure action. I understand my continuing obligation to amend this Affirmation in light of newly discovered material facts following its filing. I am aware of my obligations under the Hawaii Rules of Processional Conduct.

New Jersey enacted similar amendments to its judicial foreclosure processes last year (which were reported on this website) which require the filing of a Certification (a type of Affidavit) that the attorney personally spoke to an identified person who is a representative of the foreclosing Plaintiff as to the accuracy of the information in the foreclosure Complaint, etc. Now that Courts from NJ and HI are apparently thinking the same way, we hope this will spread to all jurisdictions between these two.

Judicial foreclosures are inherently fairer and afford the proper due process. The non-judicial procedure essentially presumes that a homeowner is guilty from the getgo, and the homeowner has to (a) file an action in court with supporting Affidavit; (b) seek as Temporary Restraining Order against a foreclosure sale; (c) obtain a Preliminary Injunction prohibiting any sale during the pendancy of the foreclosure challenge; and, in certain instances (d) post a bond in order to obtain this protection. Thus, not only does the homeowner have to undertake significant legal proceedings in order to be afforded the right to assert defenses, but has to pay significant sums of money to exercise their rights as well.

The judicial process, alternatively (and correctly) requires the foreclosing party to prove its case first, just as all other types of civil cases do, before relief can be obtained. In a judicial foreclosure, there can be no sale date until the case results in a Final Judgment in favor of the foreclosing party, and there is no bond requirement to stop any sale during the litigation, as the property cannot be sold unless and until the foreclosing party proves that it has the right to do so. During the litigation, the homeowner also has the benefit of the discovery process.

From litigating foreclosure cases across the United States since 2008, it has become abundantly clear to us that the nonjudicial foreclosure process should be abandoned and abrogated, as it is essentially unconstitutional. By forcing a homeowner to pay for the right to defend themself, and forcing them to engage in a costly and intensive legal proceeding just to halt the sale of their home when the foreclosing party does not even have to prove that it has the right to foreclose, the process denies numerous fundamental rights, and utilizes a procedure which is not used in any other type of civil litigation. There is no justifiable reason why a foreclosing party, who is seeking to take someone’s home away, should not be forced to prove their case first, and rather to have the ability to foreclosue simply by filing a few pieces of paper in the public records (a Notice of Default, Notice of Substitution of Trustee, and Notice of Sale) without any of these documents ever being tested for validity, unless of course the homeowner goes through the expense of filing a lawsuit and forcing the issues.

It is obvious that the non-judicial system had bred corruption, the perpetration of fraudulent documents, and the rampant stealing of homes without any court scrutiny. Enough is enough. The non-judicial foreclosure process has no place in the current mortgage market, which is rife with resales, multiple assignments, securitizations, and the like. The non-judicial process is a dinosaur, and should be declared extinct accordingly.

Jeff Barnes, Esq.,


September 5, 2012

The Florida 4th District Court of Appeal has reversed the denial of a homeowner’s motion for post-judgment relief after a summary judgment was entered in favor of HSBC Bank as the claimed “trustee” of a Deutsche Bank securitization. Although HSBC claimed that it noticed the homeowner’s attorney for the SJ hearing, the attorney did not appear, which non-appearance the appeallate court found to constitute the type of “excusable neglect” which warrants relief under Florida’s post-judgment relief rule, that being Florida Rule of Civil Procedure 1.540(b).

The homeowner was represented in the appeal by FDN network attorney Melvia Harris-Rozier, Esq. of West Palm Beach, Florida. The style of the case is Gascue v. HSBC Bank etc., 4th DCA Case No. 4D10-1379 (Decision entered August 29, 2012).

The appellate court also found that there was no evidence indicating that HSBC was the holder of the mortgage at the time that the Complaint was filed, as the only “evidence” that HSBC was the alleged owner and holder of the Note was an affidavit filed 3 years after the Complaint was filed, which did not establish WHEN HSBC became the holder of the Note. This decision is one of a recent line of Florida appellate decisions which require that a foreclosing “bank” establish, by competent evidence relating to either an endorsement or assignment or allegted transfer, that it was the owner and holder of the Note at the time that the foreclosure Complaint was filed.

The appeals court reversed the denial of post-judgment relief and remanded for an evidentiary hearing on the homeowner’s Motion, and also granted the homeowner’s Motion for Attorneys’ Fees.

Jeff Barnes, Esq.,