September 20, 2013

In a stunning ruling from the Ninth Judicial Circuit Court of Common Pleas of Charleston, South Carolina, a Judge has issued a detailed, 4-page written opinion dismissing a foreclosure action filed by Deutsche Bank National Trust Company as the claimed trustee of an IndyMac securitization, holding that DB failed to show that it was the owner and holder of the original Note and Mortgage at the time the Complaint was filed. FDN South Carolina network counsel Bill Sloan, Esq. represents the homeowner and prepared and argued the homeowner’s Motion to Dismiss.

Counsel for DB made the familiar argument that it had possession of the original Note endorsed in blank, that the Note was a negotiable instrument under the UCC, that the Mortgage follows the Note, and that thus DB had established its right to foreclose. The Court disagreed, citing precedent from the United States Supreme Court’s decision in Carpenter v. Longan, 83 U.S. 271, 16 Wall. 271, 21 L.Ed. 313 (1872) which the Court found “clearly supports the notion that the Plaintiff must own the Note and the Mortgage to foreclose on the property (emphasis in the opinion).” The Court determined that “Plaintiff failed to show that it owned the Mortgage at the time the Complaint was filed”, and also noted that the Mortgage shows MERS to be the mortgagee but that “MERS is never mentioned in the Note.”

The Court stated: “It is clear that to have standing in this foreclosure case, Plaintiff must not only be the holder and owner of the original Note, but also the Mortgage as well. Plaintiff’s Complaint in this case fails to meet this criteria. Plaintiff lacks standing to initiate and prosecute the foreclosure, and dismissal pursuant to Rule 17(a) and Rule 12(b)(6) SCRCP is appropriate.”

This ruling is based on foreclosure law from the United States Supreme Court, which trumps any contrary state law which does not require the foreclosing Plaintiff to own both the Note and the Mortgage at the time that the foreclosure Complaint is filed. This ruling demonstrates the essential fallacy in the “UCC, I have the Note, mortgage follows the Note” theory espoused by every attorney for the banks and servicers. What remains to be seen is whether the judiciary handling foreclosure cases will follow the law of the U.S. Supreme Court or not.

A copy of the Order is available upon e-mail request.

Jeff Barnes, Esq.,


September 19, 2013

The following is essentially an “op-ed” piece, the matters being a product of what I have seen occurring around this country in the past 5+ years since I became a full-time foreclosure defense litigator. To my knowledge, no one has sought to advance this position in court yet, but it may be that no one else has seen it as I do.

Foreclosures are “civil” actions, meaning, in court parlance, that they are not in the criminal, family, or probate divisions of the court. In the old days (pre-MERS, pre-securitization, pre-robo-signers, etc.), all foreclosure cases came into the civil court (including what are called, in some states, “Chancery” divisions) and were governed by the same Rules of Civil Procedure and pretrial procedures as other civil cases. This applied whether the case was filed as a judicial action by the foreclosing party in a judicial state, or whether filed by a homeowner challenging a foreclosure in a non-judicial state. Parties involved in foreclosure cases were treated the same and given the same rights as any other “civil” litigant involved in non-foreclosure litigation and provided with the same litigation tools, including discovery and full hearings.

What has happened in several jurisdictions is that homeowners involved in foreclosure cases have become relegated to “special” foreclosure divisions, “special” rules of procedure, and “special” pretrial procedures which (a) rob the homeowner of the protections afforded to other civil litigants; (b) railroad a foreclosure case through the system at an accelerated rate of speed; (c) force early trials which hamstring discovery rights and permit the “banks” and servicers to avoid their discovery obligations; and (d) subject homeowner litigants in foreclosure cases to procedures which have been designed for no other purpose than to “clear the court dockets”. ¬†What is without dispute is that the dockets are crowded solely as a result of the disaster created by the investment banks and servicers from the getgo.

The United States Constitution guarantees something called “equal protection”, and precludes something called “disparate treatment” being applied to a “suspect class”. This body of law arose primarily out of the civil rights movement, and there is a wealth of case law on these issues from the Federal courts. However, all of these infirmities are present in certain jurisdictions which have chosen drastic (and, I assert, unconstitutional) measures to cram and jam foreclosure actions through the system.

Homeowners involved in foreclosure litigation are within the general class of civil litigants. All civil litigants are guaranteed certain rights, including the right to have their case governed by the Rules of Civil Procedure and pretrial and trial procedures applicable to all other civil litigants. However, a “suspect class” has been created within the general class of civil litigants (those being homeowners in foreclosure cases), whose members are being subject to “disparate treatment”, meaning that they are being treated differently than other members of the general class of civil litigants with the results being unconstitutional as applied, notwithstanding that the “special” foreclosure procedures may not be unconstitutional on their face. The difference is well-established in the case law: a rule of law may pass muster as being “facially” constitutional, but is unconstitutional when it is applied. That is what is happening in several states with the “special” foreclosure procedures.

In order to stop this wrongful torrent, someone has to be willing to file an action challenging the constitutionality of the “special” foreclosure procedures as applied, using the equal protection principles recognized in the law. The “bank lobby” has had its effect on certain state governments, which have caused the enactment of the “special” procedures for the sole purpose of making it easier for the “banks” and servicers to line their pockets with money and real property by causing the courts to deny homeowners the same rights as other civil litigants, which is illegal as is “robo-signing”, backdating Assignments, forging notary information, and creating fabricated promissory notes through “photoshop”, etc.

A government will get away with something illegal until someone calls them to the carpet on it. A perfect example of this occurred several years ago in Florida, where a new school was under construction and where the DOT had already, before the school was completed, placed the “School Zone” signs outside of the incomplete school which reduced the speed limit to 15 mph during certain hours of the day. Although the school was incomplete and unoccupied, the police wrote hundreds of tickets for “speeding through a school zone” until about 100 people showed up in court on the same day from tickets written by the same police officers and advised the Court of the facts. The Judge threw out all of the tickets at the same time and admonished the officers. Needless to say, the ticket writing stopped that day.

Jeff Barnes, Esq.,


September 16, 2013

In what is believed to be the first claim of its kind, an Okaloosa County, Florida Circuit Court has granted a homeowner’s Motion to file a Third-Party Complaint against the County in a foreclosure action brought by Citimortgage, Inc. The homeowner was current on his mortgage until the County breached a long-term written contract with the homeowner’s company which contract provided the primary source of income for the homeowner to pay his mortgage. The default on the mortgage was occasioned solely as a result of the County’s breach of the contract, which to date has resulted in a loss of over $400,000.00 in damages to the homeowner. Citimortgage opposed the Motion on the grounds of “delay”, etc.

However, Florida law interpreting Florida Rules of Civil Procedure’s third-party practice rule expressly provides that a defendant (here, the homeowner) is not to be “locked in” by the Plaintiff’s (here, Citimortgage’s) theory of liability, and the defendant is permitted to assert his own version of the facts demonstrating that he is only passively liable to the plaintiff due to the wrongful actions of the third-party defendant. There is no restriction in Florida case law on the type of case in which such a claim can be brought, and no case law or rule which precludes such an action in a foreclosure proceeding. However, there must be active wrongdoing on the part of the third-party defendant. Thus, a situation involving a corporate layoff or reduction in force or elimination of a job position would probably not support this type of claim.

The homeowner is represented by Jeff Barnes, Esq., who filed and argued the Motion in open court in Okaloosa County last Friday, September 13, 2013.

Jeff Barnes, Esq.,


September 11, 2013

We have been waiting on several rulings from recent hearings around the US, many of which appear to have been delayed by the Labor Day holiday and the end of the summer season. Now that these events have passed, the rulings are coming in.

A Washington County, Pennsylvania Judge has denied a Motion for Summary Judgment filed by USBank as the claimed “trustee” of a Bear Stearns securitization. The case involves a claimed MERS assignment to USBank. The homeowner is represented by Jeff Barnes, Esq. and local Washington County, PA counsel Stephen Taczak, Esq. Mr. Barnes provided the legal arguments to oppose the motion for summary judgment.

An audit obtained by the homeowner was performed by a former Director of Loan Administration for Encore Credit Corporation and New Century Mortgage. The auditor conducted an exhaustive investigation and concluded that the MERS assignment was “a valueless and faulty attempt by MERS to assign the mortgage to USBank as Trustee” in part because the claimed assignment was in excess of four years after the Closing Date of the Trust.

This conclusion is bolstered by the recent Glaski case from the California Fifth Appellate District. Pennsylvania does not currently have any appellate law on the alleged authority of MERS to assign a Note to which it was not a party to a securitized mortgage loan trust, or any authority of MERS to assign a loan which is in default to a trust. As such, the Pennsylvania court may, as in most states, look to the law of other jurisdictions which have dealt with the issues for guidance.

Summary Judgment was also denied by the Circuit Court for Santa Rosa County, Florida in a case filed by Wells Fargo Bank as the claimed “trustee” of a 2007 securitization where the original lender, New Century, had been bankrupt years before the case was filed. Wells Fargo presented no evidence of any authority from the Bankruptcy Court that MERS, as the claimed “nominee” of the bankrupt New Century, had authority to assign anything mid-July of 2010 given the Bankruptcy of New Century in 2007. The homeowner is represented by Jeff Barnes, Esq. who briefed the opposition to the summary judgment motion and personally argued the matter in the Santa Rosa County Circuit Court.

This ruling is consistent with other cases where Mr. Barnes represents the homeowner and in which there is an alleged MERS assignment years after the New Century Bankruptcy, including a case in Hawaii where Mr. Barnes caused summary judgment to be denied on the very issues in the Santa Rosa County, Florida case.

Jeff Barnes, Esq.,