May 29, 2012

First, we hope that everyone had a happy and safe holiday weekend.

On Wednesday, May 24, 2012, Jeff Barnes, Esq. stopped a foreclosure sale in a case in Key West, Florida which was scheduled to occur the next morning. Although the foreclosing Plaintiff had, allegedly, tendered the original mortgage and Note to the court at a prior summary judgment hearing, there was no record of the actual documents being in the court file. Florida law, including recent case law, requires that the actual documents be in the court file at the time of a summary judgment hearing and foreclosure judgment. The Chief Judge cancelled the sale in view of the documents not being in the court file and thus not part of the record at the time of the foreclosure.

Separately, the United States District Court for the District of New Hampshire has denied Wells Fargo’s Motion to Dismiss a homeowner’s complaint in the matter of Drouin v. American Home Mortgage Servicing, Wells Fargo Bank, and Option One Mortgage Corporation, Case No. 11-cv-596-JL (Order issued May 18, 2012). The case involved a simlar factual situation as another being litigated by Jeff Barnes, Esq. in another state, and involving an alleged assignment by Sand Canyon (the “changed” name of Option One) at a time Option One nor Sand Canyon did not own any mortgages.

In Drouin, the court found that Option One changed its name to Sand Canyon Corporation in early 2008, and by virtue of an affidavit of Sand Canyon’s President filed in another matter in 2009, Sand Canyon did not own any residential real estate mortgages as of that time. Notwithstanding this admission under oath, there was a purported “assignment” of the homeowner’s mortgage from Sand Canyon to Wells Fargo on March 24, 2011.

The court held that the homeowners had standing to attack the alleged transfer as there was not and could not have been any assignment as a matter of fact. The court held that the challege was not an attack on the assignment itself, but that no assignment occurred, concluding that the homeowners had standing to pursue their theory that Sand Canyon did not hold their mortgage and thus could not have assigned it to Wells Fargo. The court also found that because of this, Wells Fargo’s argument that the homeowners could not assert a cause of action to enjoin a foreclosure was “easily rejected.”

If Wells Fargo in fact maintained the position that it was assigned the mortgage by Sand Canyon, this could possibly be construed as a fraud upon the court, as the affidavit of Sand Canyon’s President and the matters therein, which were sworn to under oath, are matters of public knowledge which should have been known to Wells Fargo at all times material both before and during the 2011 foreclosure case.

We thank one of our dedicated readers for bringing this important opinion to us.

Jeff Barnes, Esq.,