NEW JERSEY CHANCERY COURTS NOW RECOGNIZE SECURITIZATION CASES AS “COMPLEX” UNDER NEW JERSEY COURT RULES; SUMMARY JUDGMENT SOUGHT BY ACQUIRING BANK DENIED IN FLORIDA

April 9, 2010

We previously posted that two of the New Jersey foreclosure mills had opposed the application of Jeff Barnes, Esq. for admission to the courts pro hac vice, and that all such “objections” were denied. This week, another New Jersey Judge has granted Mr. Barnes’ admission, this time to the Morris County Chancery court in a case where U.S. Bank is the securitization “trustee”. The Order granting the application was significant in that it made reference to the fact that the borrowers specifically stated that they wanted Mr. Barnes to represent them, and that pursuant to recent decisions by other judges, including the Chief Judge, the case in which the application was made (which is a securitization case) is deemed to be “complex” under New Jersey’s Rules of Court.

This is an important milestone development in view of the mantra repeatedly espoused by attorneys for foreclosing “trustee” banks such as Deutsche Bank, U.S. Bank, and Bank of America, who consistently argue to the courts that “this is just a routine foreclosure”. As those of you who follow this website know, there is nothing “routine” about a securitization, with more and more aspects and nuances of the complicated world of mortgage-related derivatives emerging now almost daily.

A prime example of this is a recent discovery by our loan and trust investigator of Fitch’s “upgrade”, in 2006, of a RALI series securitization which generated $9.96 billion (yes, that’s billion) which purchased mortgages from various banks, including SunTrust. The narrative states that the overwhelming majority of the mortgage pool consists of 30-year fixed rate loans on primary residences with an average borrower FICO score of 715. If this is true and the mortgage-backed securities collateralized by this trust were “upgraded” based on this information, how then does MERS or anyone else get away with assigning a toxic, non-performing loan to such a trust years after it closed for purposes of furthering a foreclosure?

Our investigator has also advised us that as of April 8, 2011, the Mortgage Bankers’ Association is demanding more information on insurances available to servicers when a mortgage loan goes into “default” status. This is the same insurance which many attorneys representing servicers have said “does not exist” or “is not relevant” to a foreclosure. Well, if the servicer which instituted the foreclosure claiming a default on the loan has in fact received insurance proceeds in connection with the claimed default, how is that information not relevant to the issue of the amount allegedly “due” on the loan as demanded by the party seeking foreclosure?

Separately, in a hearing in the Monroe County (Key West) Florida court yesterday, Mr. Barnes successfully defended a summary judgment motion filed against a Florida borrower by Iberia Bank as alleged successor to Orion Bank, which was the original lender. The borrower was approved for a loan modification by Orion and made her first 2 monthly payments on the modification, which payments were accepted by Orion Bank. However, when Iberia Bank “took over” after Orion failed and went into FDIC receivership, Iberia took the position that the approved loan modification with the original lender was “not valid”; refused to honor the modification which the borrower made payments on and which had been accepted by the original lender which approved the modification; declared a default on the pre-modification loan balance; and instituted foreclosure. The Judge denied Iberia’s Motion for summary judgment, stating that there were genuine issues of material fact present.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com