March 14, 2012

An Oregon state court Judge has denied a Motion for Summary Judgment filed by Deutsche Bank (as the claimed trustee of a securitized mortgage loan trust) in what is the second round of litigation originally filed by the homeowner challenging whether the foreclosing party has standing, chain of title, and is the real party in interest for purposes of the foreclosure. The homeowner originally filed the case in state court. The Defendants at the time removed the case to Federal court, then caused it to be dismissed by abandoning their claim for nonjudicial foreclosure after the Federal Judge asked counsel to agree to certify the question of MERS’ authority to the Oregon appeallate court. Counsel for the homeowner agreed to the certification, but counsel for the Defendants did not take a position. DB then re-filed the case in state court seeking judicial foreclosure.

The issue of whether MERS is a “beneficiary” under the Oregon Trust Deed Act is currently on appeal with the Oregon Court of Appeals in a separate case where Jeff Barnes, Esq. represents the homeowner.

There are two different versions of the Note in the DB case, and there are many issues surrounding whether the requirements of the PSA were met and whether the loan was ever effectively transferred to the trust. DB’s representative testified in deposition that there was a swap counterparty and swap agreement which provided for insurance on the loans in the trust. The homeowner sought, in discovery, all documents relating to any insurance on the loans and all swap agreements. DB objected, but its objections have been overruled.

In over four (4) years of foreclosure litigation, Mr. Barnes has consistently sought these documents in securitization cases. In each case where they have been compelled, the foreclosing party has steadfastly refused to produce the documents, resulting in a dismissal of the foreclosure or other sanction, including attorneys’ fees against the foreclosing party. It remains to be seen whether DB will comply with the Oregon court’s Order. 

The case is now scheduled for jury trial next week. Jeff Barnes, Esq. represents the homeowner together with local Oregon counsel Elizabeth Lemoine, Esq.

Separately, an article in the New York Times today discusses the resignation of Greg Smith, an Executive Director of Goldman Sachs and head of the firm’s United States equity derivatives business in Europe, the Middle East, and Africa. Mr. Smith is quoted stating the following: ” What are three quick ways to become a leader? a) Execute on the firm’s “axes”, which is Goldman-speak for pursuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants”. In English: get your clients- some of whom are sophistocated, and some of whom aren’t- to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter arconym.”

    “Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not a single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. … It makes me ill how callously people talk about ripping their clients off. … These days, the most common question I get from junior analysts about derivatives is, “How much more money did we make off the client?””

Of course, this implicates how many times a borrower’s mortgage was sold or how many traunches a borrower’s loan was assigned to in order for Goldman to have been able to sell the various derivatives to their clients, and how much money Goldman made by pooling loans which it knew would fail so that it could realize huge profits from insurance claims. This was what the SEC v. Goldman Sachs litigation, which settled VERY quickly after it was filed, was all about: pooling loans, which Goldman knew would fail, into trusts; taking out insurance on the loans; and then collecting checks when the loans failed.

Jeff Barnes, Esq.,