July 26, 2011

The Vermont Supreme Court has issued an opinion dated July 22, 2011 which has upheld the trial court’s dismissal with prejudice of a foreclosure complaint filed by US Bank National Association as Trustee for a securitized mortgage loan trust, and remanded the case to the trial court for the assessment of the borrower’s attorneys’ fees which the Supeme Court held were wrongfully not considered by the trial court. USB had originally relied on a MERS assignment executed by the notorious robo-signer Jeffrey Stephan. USB later changed its position and claimed that it held the original note and owned it by virtue of a series of blank endorsements. This “position” was allegedly “supported” by the affidavit of Mr. Stephan which was filed by USB in support of its cross-motion for summary judgment. The borrower had filed an MSJ based on lack of standing.

The original loan was with the (now bankrupt) Accredited Home Lenders. USB claimed that the Note was endorsed in blank to it, thereby giving it standing to foreclose.

They key points in this opinion are that USB failed to demonstrate that it owned the loan at the time that the complaint was filed, and that there was no evidence as to the date or timing of the alleged endorsements. The Court cited cases from other jurisdictions, including the Raftoganis decision from New Jersey, in support of its ruling.

As we all know, trustee banks and servicers repeatedly rely on the alleged “open endorsement” theory to argue that they have the rights to the note and can thus foreclose. The narrow legal point on which the Vermont Supreme Court focused was evidence as to when these alleged open endorsements were made (which there was none), which was critical to a determination as to whether USB owned the note when it filed the Complaint. The Court found that Mr. Stephan’s affidavit as to the alleged endorsements could not have been made on personal knowledge as to matters which took place years before he became associated with the corporate entity with which he was employed when he executed the affidavit.

This decision is an important milestone for any challege to the “open endorsement” argument which we are all too often confronted with. Coupled with the lack of evidence as to when these alleged “open eodorsements” took place and compounded by an affidavit of a known robo-signer as to events which allegedly took place years before his employment with the “certifying entity”, this decision demonstrates that the State of Vermont is not going to permit a foreclosure to take place without the proper evidentiary proof of standing at the time that the Complaint is filed.

We thank one of our dedicated readers for bringing this matter to our attention. The opinion was issued on the same day that Mr. Barnes took the deposition of a Vice President of Deutsche Bank National Association in another matter where the deponent claimed, under oath no less than 4 times, that “there is no PSA which governs this trust” (which is the securitized mortgage loan trust of which DBNA is the alleged “trustee” which is claiming the right to foreclose)

This sworn testimony is in direct contradiction to the papers filed by Deutsche Bank in the case which repeatedly reference a PSA for the trust, and is also in direct contradiction to the prior deposition testimony of the representative of DBNA’s servicer (whose deposition Mr. Barnes took several months ago) in the same case where the deponent testified, under oath, to the PSA for the trust at issue and matters therein including the fact that the “Closing Date” of the trust “is the date when all of the loans have to be in the trust”.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com