July 29, 2014

I have wanted to comment on this for some time, but let it go thinking that maybe the situation would change. It has somewhat, but not to the extent that one might think in view of the emerging law in foreclosure litigation.

For the past six years, I have all too often been asked this question by Judges across the US: “But, Mr. Barnes, your client did not pay the mortgage, right?” Of course, I then have to explain that we may deal with that issue if AND AFTER we get past the standing issue, which is the threshold issue which must be resolved before any claims of “defaults” or “amounts due” are approached. That is, “Your Honor, we first have to resolve whether these people on the other side even have the right to be here or request any relief.” It has been and continues to be a difficult hurdle. However, more and more Judges are getting it.

The problem is that, as one Judge told me years ago, “Mr. Barnes, I pay my mortgage and I do not know who owns it, so why should your client get away with not paying his?” My response is that maybe, Your Honor, you should question who owns your loan and whether or not you owe what the servicer claims you owe. You may be overpaying. The Judge offered to recuse himself and hire me to find out. Naturally, I declined for obvious reasons.

The law on standing is pretty clear in the 30+ states I have worked in since 2008. The problem is that the “we have the Note, therefore we win” mantra of the “bank” attorneys too often carries the day. We actually have two cases on appeal at this time where our expert (a former Wall Street national securitization manager for one of the largest investment banks and who actually put securitizations together and had the responsibility for making sure that the securitizations complied with Federal laws and regulations) testified, without any rebuttal or any cross-examination, that pursuant to public filings and documents from the involved parties that the foreclosing “bank” does not, did not, and could not own the loan. Notwithstanding that unrebutted evidence, the Judge signs the “form” boilerplate Final Judgment of Foreclosure anyway.

This results in more appeals being filed, thus causing an additional burden on the courts and expending of taxpayer dollars to show the appeals court that the trial Judge did not follow the evidence or the law. Even if the appeal does not result in a reversal, the time, expense, and labor involved drains the public coffers, all because the Judge did not follow the law in the first instance. For some reason, some Judges just cannot rule against a bank, and others never met a bank they didn’t like.

Those of you who have followed this website since 2008 know what a fight this has been. The fight is now progressing to the legislatures and the higher appellate courts. In California, for example, one division of an appeals court recently filed an opinion which essentially insulted the intelligence of the Judges who issued the Glaski opinion (which came from another division of the California appeals courts), with the rhetoric being mocking and demeaning. What will this lead to? You got it: more litigation, and thus more draining of taxpayer dollars.

Judges: don’t be afraid of the evidence. Don’t be afraid of the law. Don’t be afraid to rule against the banks. If the facts and the law do not support the bank’s claim, it is ok to rule against the bank. In fact, the 4th District Court of Appeal in Florida issued one decision where the Court essentially said to the trial court whose decision it reversed: in case you didn’t hear us the first time, we are telling you again, as we did before, that you are wrong, and thus the summary judgment is reversed because the bank did not satisfy its burden for the same reason as in the prior appeal on the same issue.

We need more appeals courts to adopt this stance of following the law, and more trial court Judges to follow those appellate rulings.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 24, 2014

A trustee’s (foreclosure) sale has been stopped in Davidson County, Tennessee with the entry of a Temporary Restraining Order on Motion filed by the homeowner against Nationstar Mortgage LLC, MERS, and the law Firm acting as the substitute trustee. The homeowner is represented by Jeff Barnes, Esq. and local Tennessee counsel John Higgins, Esq., who also recently stopped another sale in Tennessee on a case where he and Mr. Barnes were retained (see webpost of May 19, 2014)

The original lender had been sold to Discover Bank in 2012. Two years later, MERS attempted to assign the Deed of Trust (DOT) to Nationstar, which advised the homeowner in 2013 that the “servicing” of the loan had been transferred to Nationstar from Bank of America (BOA). Nationstar did not identify the owner of the loan. The MERS Assignment also purported to transfer the Note. It is well known that MERS never originates loans and does not own promissory notes, and as such it cannot transfer something it does not own.

The Complaint and Motion for Temporary Restraining Order and Preliminary Injunction filed by the homeowner (prepared by Mr. Barnes at the request of Mr. Higgins and the homeowner) set forth that the Court of Appeals of Tennessee had issued a decision in January of 2014 holding that MERS has no independent interest in real property or any protected interest in real property, and as a “nominee” only holds “bare legal title”. The homeowner thus alleged that the MERS Assignment was a legal nullity and Nationstar was thus precluded from foreclosing.

The Court initially set the bond to stop the sale at $90,000.00, but on request of Mr. Higgins, reduced the bond amount to just over $900.00 as there was no evidence that Nationstar would suffer damages of $90,000.00 during the time that any sale was not permitted, and as Nationstar’s standing to even seek the remedy of foreclosure is being challenged by the homeowner’s lawsuit.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 7, 2014

The Maine Supreme Judicial Court has further debunked MERS’ alleged authority, vacated a foreclosure judgment, and affirmed sanctions against the attorney for Bank of America (which filed the foreclosure action) in its July 3, 2014 opinion in the matter of Bank of America v. Greenleaf, No. 2014 ME 89. The 24 page decision explains why BOA did not have standing to foreclose on the Mortgage despite having possession of the Note endorsed in blank, which the Court found only gave BOA the right to enforce the debt evidenced by the Note.

The Court held: “The interest in the note is only part of the standing analysis, however; to be able to foreclose, a plaintiff must also show the requisite interest in the mortgage…Thus, whereas a plaintiff who merely holds or possesses – but does not necessarily own – the note satisfies the note portion of the standing analysis, the mortgage portion of the standing analysis requires the plaintiff to establish ownership of the mortgage.” (original emphasis, case citations omitted here).

The Court then analyzed the MERS language in the Mortgage in the context of the purported MERS assignment to BAC. The Court concluded that “notwithstanding its reference to MERS as the ‘mortgagee of record’, the mortgage in fact granted to MERS ‘only the right to record the mortgage’ as the lender’s nominee, and ‘having only that right, MERS did not qualify as the mortgagee pursuant to our foreclosure statute.” The Court held that MERS did not have any right to foreclose on the property, and that the Mortgage only conveyed to MERS the right to record the Mortgage as nominee for the original lender. Thus, the MERS assignment to BAC only transferred what MERS had, which was a right to record the mortgage, period. The series of assignments demonstrated “the right to record the mortgage as nominee, but no more”.

The Court concluded that BOA lacked standing to seek foreclosure, and vacated the trial court’s foreclosure judgment.

The Court also affirmed the award of sanctions against BOA’s attorney who failed to comply with Maine’s civil procedure rules governing filings on summary judgment and had “inappropriately sought to create a foundation for the admission of the Bank’s business records by submitting an affidavit of his knowledge of the Bank’s recordkeeping practices” and other matters about which he lacked personal knowledge.

The Court also concluded that that the representative of BOA (who testified that she is a bank employee who testifies at trials) did not testify as to the requirements for the admissibility of the bank’s records under the business records exception to the hearsay rule (Rule 803(6)). There was no testimony as to how long or in what capacities she worked for the bank, what type of familiarity with the records were required for her job as “litigation liason”, and that her first encounter with the “Account Information Statement” (which BOA attempted to admit into evidence) was through obtaining the document from the law firm representing BOA in the foreclosure case and not through BOA. The Court found that the requirements of Rule 803(6) were not supported by the record.

This is the second recent decision which is finally unraveling the MERS myths which have been perpetrated on the courts nationwide for far too long. Brave to the Maine Supreme Court!

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 3, 2014

The United States District Court for the Eastern District of Pennsylvania has issued a 45 page opinion in the matter of Montgomery County, Pennsylvania Recorder of Deeds v. MERSCORP and MERS, Case No. 2:11-cv-06968-JCJ. The opinion was just filed July 1, 2014.

The opinion traces the history of promissory notes and mortgage instruments in Pennsylvania and the statutory recording requirements incident to such transfers. Five questions were presented on cross-motions for summary judgment. MERS’ Motion for summary judgment was denied in its entirety, while the Plaintiff Recorder of Deeds’ Motion for summary judgment was granted in part.

The Court noted, on page 28 of the opinion, that “the most challenging issue” in the case was whether the MERS Defendants have been the transferor or transferee of unrecorded secured debt and if not, whether they are the proper parties who are subject to the mandates contained in the (Pennsylvania) recording statutes.

The Court noted that the MERS Defendants had repeatedly taken the position that MERS did not and does not negotiate or transfer promissory notes secured by mortgages. The Court then noted MERS’ inconsistent statement that “It is MERS that serves as the mortgagee of record in the public land records as the “nominee” for a lender (noteholder) and its successors and assigns.” The Court found that in contradiction to its own argument, MERS initially admits that it is in fact involved with the transfer of the note by virtue of its service as the mortgagee of record as the nominee for a lender/noteholder, and that when required to facilitate a foreclosure, MERS itself can become a note-holder.

We also know that MERS assignments almost always have the phrase that the mortgage or DOT is assigned “together with the note or other evidence of indebtedness”, which is also contradictory to the position taken by MERS that it does not negotiate or transfer mortgage-related notes.

MERS filed the Declaration of William C. Hultman, who has testified in numerous MERS-related cases. The Court found, in citing to specific deposition testimony of Hultman, that MERS is both named as the mortgagee and acts as agent for the lenders, including both the original lender and any downline claimed holders of the note. The Court found that MERS is “clearly” involved with the transfer of the note and mortgage. The Court also found that MERS is an agent of the lenders.

The Court ultimately concluded that the MERS Defendants are those who may be liable for and subject to the mandates of the Pennsylvania Recording Statutes, and also found that because over the years that the number of documents recorded by MERS has steadily increased that this has caused a decrease in the amount of recording fees collected by the County Recorders of Deeds, resulting in financial injury to Community Legal Services, the Legal Aid Network, and the Housing Alliance, all of which receive much of their funding from the collection of recording fees.

The Recorder also retained two expert witnesses, one of whom found that there were missing assignments that should have been recorded, that the MERS Milestones data was incomplete AND IN CONTRADICTION TO SECURITIZATION DEAL DOCUMENTS, and that title to the property had been corrupted by MERS’ failure to record a complete chain of title.

The second expert stated in his Declaration that licensed title agents have no access to information in MERS bar codes, which means that title searchers and consumers are denied the ability to ascertain who currently owns the note secured by a MERS mortgage and that neither the borrower nor the courts can ascertain the chain of events OR EVEN THE VALIDITY OF A TRANSACTION. The result is an “erosion of Pennsylvania’s land records and THE INABILITY TO EVALUATE THE MARKETABILITY OF TITLE AND CREDIT WORTHINESS OF THE CONSUMER. (note: we have capitalized the words above for emphasis).

The Court also noted the Recorder’s testimony that over the past several years, a number of residents who were facing foreclosure didn’t know who owned their mortgage or to whom they should be making their mortgage payments, and the Recorder attributed this to the fact that MERS is not recording all of the note assignments with the results of both a loss of revenue and land title records being incomplete.

The Plaintiff’s testimony showed that as a result of a forensic audit that a MERS-affiliated mortgage was transferred on average between 4 and 12 times, resulting in a loss to the county of $15.7 million in unpaid recording fees. The Court highlighted the testimony of MERS representative R. K. Arnold in a case in Alabama and held that the testimony was tantamount to an admission that by maintaining the recording system in Pennsylvania that the county recorders confer a benefit on MERS which MERS appreciates but does not pay for.

The Court granted the Recorder’s Motion for Summary Judgment on the claim for Declaratory Judgment, and held that the assignment or transfer of a promissory note secured by a mortgage on real estate is equivalent to a mortgage assignment, and that the MERS’ Defendants’ failure to create and record documents evincing these transfers violates Pennsylvania statutory law, thus determining that MERS was liable for damages and that the amount of damages will be taken up at trial.

This is a “Milestone” opinion. MERS’ inconsistent positions, myths, and fallacies have finally been debunked by a Federal court, and MERS’ liability for damages has been proven as well by a Federal Declaratory Judgment. Our congratulations to counsel for the Recorder who filed and continues to pursue this case, and to the Pennsylvania Federal court for this landmark decision which will hopefully start to “tear down the MERS wall.”

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 2, 2014

The Florida Third District Court of Appeal has upheld the dismissal of a foreclosure action filed by Bank of New York Mellon (BNYM) which was dismissed due to BNYM’s repeated violations of court Orders. Jeff Barnes, Esq. represented and continues to represent the homeowner through his Firm. W. J. Barnes, P.A., as he does in all cases.

In June of 2010, a Key West, Florida Circuit Court Judge dismissed the foreclosure action upon finding that BNYM had violated multiple court Orders including discovery and pretrial Orders, and conditioned any re-filing of the action on compliance with the prior Orders. Three (3) years later, BNYM, using a different law Firm, re-filed the action without complying with the prior Orders including the Order which placed the conditions on any re-filing. The homeowner filed a Motion to Dismiss the re-filed case, which was granted. At that hearing, the Judge found that the conduct of BNYM was appalling.

BNYM appealed the decision.  The homeowner filed an appeal brief explaining why the dismissal was proper by the Circuit Judge, and why BNYM was incorrect in its arguments.

The Florida appeals court affirmed the decision today without opinion. The homeowner may now assess his attorneys’ fees in defending the case against BNYM.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com