October 29, 2012

FDN is now into its 5th year of representing homeowners across the United States challenging foreclosures by non-lenders, servicers, securitized trustees, and alleged “successors in interest”. Through these years, the litigation nationally has gone through several phases, now evolving into what some would call “foreclosure offense” including suits for billions of dollars in damages against not only the banks but also at least one state Attorney General. As most of you know, there is a $43 trillion lawsuit which has been recently filed against the banks as well.

In the early years (2008-09), the response to a foreclosure was “OMG, what do I do now?” People had never heard of things like MERS, securitization, robo-signing, and the other infections in later foreclosures, and simply either filed bankruptcy, let a judgment be entered or a sale proceed, or attempt to give the property “back” to the foreclosing party (which never financed the transaction in the first place) through, for example, a Deed in Lieu of foreclosure. The second phase, which began in late 2008 and early 2009, was the “TILA recission” cry which, unfortunately, was not understood by most of those who attempted to advance it, and which lead to numerous claims being dismissed on Statutes of Limitations and failure of proof grounds.

The third phase came into being in 2010 where certain attorneys and homeowners really began to zero in on the MERS issues, robo-signing, fraudulent affidavits and assignments, non-existant notaries, and other infirmities in the process, leading to affirmative attacks on standing, real party in interest, and chain of title issues. Many of these cases have been discussed over the years on this website.

We have now progressed to the 4th phase: affirmative claims against the banks, servicers, etc. for money damage claims resulting from fraudulent foreclosure activity. The Levin Senate Report and other sources which have detailed the abject fraudulent conduct by the banks has provided an impetus for moving forward against the banks instead of attempting to only defend the foreclosure effort. We have formed a relationship with an expert in securitization, banking, and finance who has been involved in these areas for over 25 years and who actually wrote credit default swaps. This expert is assisting us in preparing new litigation which exposes numerous intentional acts of misconduct by the banks for the purpose of not only creating a false obligation, but also for purposes of stripping all equity from a homeowner and blocking the homeowner’s ability to refinance. There is a lot to this which will be developing over the coming months. Stay tuned.

Jeff Barnes, Esq.,


October 17, 2012

We are getting more and more inquiries regarding situations where a home has suffered damages from a natural disaster (such as a flood, fire, etc.) and the insurer issues a check for repairs which is made out to the homeowner and the alleged “lien holder” (the foreclosing party), who then refuses to sign off on the check so that the homeowner can make the repairs. The “bank” claims that they can lawfully withhold the insurance proceeds to apply them towards the alleged debt on the mortgage loan, thereby not permitting the homeowner to make the necessary repairs and placing the homeowner in an even more precarious position. We have been presented with this situation in cases in Tennessee, South Carolina, and Florida to date.

The situation has become so bad that we have had the insurer in one case file an interpleader action where the insurance proceeds are placed into escrow while the rights to the money are litigated. In fact, the insurer told us that they have had to resort to this procedure quite a bit lately due to the lack of cooperation from the “banks” in permitting the homeowner to take the insurance proceeds to pay for the necessary repairs.

This conduct by the “banks” is abhorrent, and we are aware of no decision (case law) which permits a foreclosing party in a contested foreclosure to keep insurance proceeds specifically paid for repairs and to apply same to the disputed debt. Thus, as we have had to do in so many other situations where there is no precedent, we will have to force this issue before the courts.

Separately, Mr. Barnes has recently been retained to prosecute an appeal of a denial of reconsideration of a grant of stay relief in a securitization case to the U.S. 10th Circuit Bankruptcy Appellate Panel; an appeal of a summary judgment in Hawaii; and has also been retained to appeal a summary judgment to the Federal 6th Circuit arising out of a case in Tennessee in another securitization case.

Jeff Barnes, Esq.,


October 13, 2012

For what is now going into its fifth year, FDN, through its national network of attorneys which now numbers 44 law Firms, has consistently forced significant issues in foreclosure to be brought before trial and appellate courts around the country. Three of these are coming to a head at this time.

As those of you who follow this website are aware, on July 18, 2012, the Oregon Court of Appeals issued its decision in Niday v. GMAC and MERS which held, in a 27 page opinion, that MERS is not the “beneficiary” in a Deed of Trust notwithstanding language in the DOT to that effect. Jeff Barnes, Esq. and local Oregon counsel Elizabeth Lemoine, Esq. represent the Nidays, who prevailed in that decision. MERS has taken an appeal of that decision to the Oregon Supreme Court, which has granted review. The case will be orally argued before the Oregon Supreme Court in early January, 2013.

One month after the Niday decision was issued, on August 16, 2012, the Supreme Court of Washington issued its opinion in Bain v. Metropolitan Mortgage and MERS which not only came to the same result as the Oregon Court of Appeals did in Niday, but went even further to provide that MERS can be sued for misrepresenting its claimed status as a “beneficiary”.

In New Jersey, FDN attorneys Jeff Barnes, Esq. and local NJ counsel Daniel Schmutter, Esq. represent the homeowner in a case where there is a pending Motion to Dismiss a foreclosure with prejudice for US Bank’s refusal to produce discovery and witnesses with personal knowledge of numerous issues despite no less than five (5) court orders compelling this discovery, including one Order which was entered AFTER the case was dismissed without prejudice, as New Jersey permits a noncomplying party 60 days to remedy the discovery deficiency in connection with any request to reinstate the case. There is currently no New Jersey decisional (case) law which is “on point”, and thus if the case is dismissed with prejudice, it will be the first such case to be so dismissed on these facts in the history of the state of New Jersey. The Motion will be argued in the near future.

In Florida, Mr. Barnes represents the homeowners in an appeal of a summary judgment which was granted despite the trial court not being provided with any evidence as to when the alleged endorsement was placed on the Note. Recent Florida case law has repeatedly reversed summary judgments where there is no evidence that the endorsement was placed on the Note prior to the time that the Complaint was filed (Florida has a requirement that standing be demonstrated at the time the complaint is filed, which cannot be “cured” thereafter by a subsequent endorsement). The trial Judge actually asked the “bank’s” counsel, at the summary judgment hearing, when the endorsement was placed on the Note, which question was not answered. There are also issues with the validity of the “Affidavit” filed in support of the MSJ.

Discovery battles for securitization discovery continue in Hawaii, Tennessee, and New Mexico where Mr. Barnes represents the homeowner with local counsel in each of those states. These states should follow the example of New Jersey, where Mr. Barnes and his local in-state counsel have had no less than nine (9) cases dismissed as a result of the foreclosing party’s failure to produce discovery.

Jeff Barnes, Esq.,


October 3, 2012

FDN now has access to Bloomberg for use in its securitization audits. You may contact us via the “Contact Us” link for more information. We are also in the process of establishing local network counsel in Georgia, which will result in the 44th law Firm to be added to the network.

Jeff Barnes, Esq.,


October 3, 2012

Apparently, the loan mod scam continues. The most recent one we have been asked to review comes from Ocwen Loan Servicing. (this is the one which Judge Arthur Schack in NY previously found would have to have offices as big as Madison Square Garden if they actually serviced all of the loans they claim to service). The “offer” is beyond laughable. What is sad is that homeowners continue to be taken in by these “offers”.

The Ocwen “offer” states, on the second page, that “Ocwen Loan Servicing will not proceed to foreclosure sale during the trial period if you are complying with the terms of the Trial Plan”. It is important to read that carefully: Ocwen will not proceed to SALE, and that is only if they determine that the homeowner is complying with the plan. Further, “sale” is only one phase of the foreclosure process. The next paragraph shows how illusory the “offer” really is:

“During the trial period, we may accept your trial period payments and apply them to your account, but that will not affect foreclosure proceedings that have already started”. So, even though Ocwen accepts payments, the foreclosure process continues. In fact, this paragraph provides that Ocwen accepts payments, but that “this does not waive our acceleration of your loan or waive the foreclosure action and related activities.” Notice how broad that language is: “the foreclosure action” and “related activities”. So, the homeowner makes payments, all the while Ocwen presses on with the foreclosure, agreeing only to hold any SALE in abeyance. Of course, as soon as the loan mod is denied or the homeowner is told they are not “complying” with the trial agreement, the sale goes forward, and we all know that we have seen instances where servicers are sent the exact money due and proven to be received by the servicer on the due date, only to have the servicer claim it was not, resulting in a “default” with the foreclosure pressing forward.

The agreement further states that “You agree that Ocwen Loan Servicing will hold each of your trial period payments that you make in a non-interest bearing account. Once there are enough funds in that account to make your full mortgage payment, we will apply the funds to your loan account to make that payment. At the end of the trial period, there may be funds left in your account because there is not enough to make a full mortgage payment. If so, we will apply those funds to your unpaid principal balance when we permanently modify your loan.” Note the repeated vague and conditional lauguage. What is a “full mortgage payment”? If they accelerated, is this the entire balance due to the end of the loan term? Does “when we modify your loan” mean that they will? Obviously what it means is if the loan is not modified, the agreement does not say where the money goes.

We have been advised that the approval rate for permanent loan mods is roughly 2% nationally. Given that, it is more than obvious where the trial payment money goes when the loan mod is not approved: you got it: you, the homeowner, pay for the foreclosure expenses.

If you receive one of these “offers”, have an attorney who does this kind of work review it. We have yet to see a real, bona fide “offer” which stops foreclosure while the trial process progresses, and the “offers” we have seen are illusory at best.

Jeff Barnes, Esq.,