May 17, 2011

For the past few years, we have been advancing to the Courts that a “trustee” bank which fails to comply with the Mortgage Loan Conveyance provisions of a Pooling & Servicing Agreement (PSA) of a securitized mortgage loan trust cannot, either directly or through a servicer, foreclose as the mortgage loan was not legally transferred to the trust. As the courts have found that the issue of whether or not the transfer is proper or legal implicates discoverable issues, we have repeatedly obtained Orders compelling┬ádiscovery on these issues.

On March 21, 2011, the Circuit Court of Russel County, Alabama in the matter of Phyllis Horace v. LaSalle Bank National Association as trustee for Certificateholders of Bear Stearns Asset Backed Securities I LLC Asset Backed Certificates Series 2006-EC2, MERS, Encore Credit Corporation, EMC Mortgage Company, and Bank of America as successor in interest to LaSalle Bank National Association, Case No. CV-2008-362, hit the point home in granting a borrower’s Motion for Summary Judgment and final judgment to permanently enjoin LaSalle Bank National Association from foreclosing on the borrower’s property. The Order stated: “First, the Court is surprised to the point of astonishment that the defendant trust (LaSalle Bank National Association) did not comply with the terms of its own Pooling and Servicing Agreement and further did not comply with New York Law in attempting to obtain assignment of the plaintiff Horace’s note and mortgage. Second, plaintiff Horace is a third party beneficiary of the Pooling and Servicing Agreement created by the defendant trust (LaSalle Bank National Association). Indeed without such Pooling and Servicing Agreement, plaintiff Horace and other mortgagors similarly situated would never have been able to obtain financing”.

The Plaintiff filed an extensive Memorandum of Law in support of its Motion for Summary Judgment which cited numerous provisions and cases as to New York Trust law and also the recent Ibanez decision from Massachusetts, and was also supported by an Affidavit and testimony of an expert in the area of securitization. As a result of this decision, we will be filing similar Motions in many of our securitization cases.

We thank one of our clients for bringing this incredibly significant decision to our attention.

Jeff Barnes, Esq.,