October 3, 2012

Apparently, the loan mod scam continues. The most recent one we have been asked to review comes from Ocwen Loan Servicing. (this is the one which Judge Arthur Schack in NY previously found would have to have offices as big as Madison Square Garden if they actually serviced all of the loans they claim to service). The “offer” is beyond laughable. What is sad is that homeowners continue to be taken in by these “offers”.

The Ocwen “offer” states, on the second page, that “Ocwen Loan Servicing will not proceed to foreclosure sale during the trial period if you are complying with the terms of the Trial Plan”. It is important to read that carefully: Ocwen will not proceed to SALE, and that is only if they determine that the homeowner is complying with the plan. Further, “sale” is only one phase of the foreclosure process. The next paragraph shows how illusory the “offer” really is:

“During the trial period, we may accept your trial period payments and apply them to your account, but that will not affect foreclosure proceedings that have already started”. So, even though Ocwen accepts payments, the foreclosure process continues. In fact, this paragraph provides that Ocwen accepts payments, but that “this does not waive our acceleration of your loan or waive the foreclosure action and related activities.” Notice how broad that language is: “the foreclosure action” and “related activities”. So, the homeowner makes payments, all the while Ocwen presses on with the foreclosure, agreeing only to hold any SALE in abeyance. Of course, as soon as the loan mod is denied or the homeowner is told they are not “complying” with the trial agreement, the sale goes forward, and we all know that we have seen instances where servicers are sent the exact money due and proven to be received by the servicer on the due date, only to have the servicer claim it was not, resulting in a “default” with the foreclosure pressing forward.

The agreement further states that “You agree that Ocwen Loan Servicing will hold each of your trial period payments that you make in a non-interest bearing account. Once there are enough funds in that account to make your full mortgage payment, we will apply the funds to your loan account to make that payment. At the end of the trial period, there may be funds left in your account because there is not enough to make a full mortgage payment. If so, we will apply those funds to your unpaid principal balance when we permanently modify your loan.” Note the repeated vague and conditional lauguage. What is a “full mortgage payment”? If they accelerated, is this the entire balance due to the end of the loan term? Does “when we modify your loan” mean that they will? Obviously what it means is if the loan is not modified, the agreement does not say where the money goes.

We have been advised that the approval rate for permanent loan mods is roughly 2% nationally. Given that, it is more than obvious where the trial payment money goes when the loan mod is not approved: you got it: you, the homeowner, pay for the foreclosure expenses.

If you receive one of these “offers”, have an attorney who does this kind of work review it. We have yet to see a real, bona fide “offer” which stops foreclosure while the trial process progresses, and the “offers” we have seen are illusory at best.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

September 20, 2012

After our post as to the Lawrence Nardi deposition, and after reviewing the admissions therein and the admissions of JPMorgan Chase in the Deutsche Bank Federal litigation and other information recently uncovered, we have been receiving a multitude of inquiries as to how JPM can possibly succeed in any foreclosure case involving a WaMu originated loan, and where has the money which homeowners have been paying JPM (including monies paid to its former servicer Chase Home Finance), gone and under what authority. After reviewing this information with our banking and securitization experts, some realizations are crystal clear.

The WaMu mortgage loans were “off balance sheet” at the time of WaMu’s failure, and thus JPM could not have purchased something which was not on WaMu’s balance sheet. Nardi has testified that there is no schedule of particular mortgage loans which were purchased from the FDIC as Receiver for WaMu. Yet, after the alleged “acquisition” of whatever was sold to JPM by the FDIC, JPM directed the homeowners with WaMu originated loans to make payments to JPM. Although JPM admitted that it was only acting in the capacity of a “servicer”, JPM has never advised who they are the “servicer” for other than to amorphously state that they are the servicer for an “investor”.

Who is this investor? Is it JPM? If so, what did JPM invest? Surely it could not be the mere pittance that it paid the FDIC for whatever it purchased, and it cannot be for the mortgage loans which it did not buy. To date, the true owner(s) of the off-balance sheet WaMu mortgage loans remains unknown.

Thus, the conclusion is inescapable: the monies which homeowners have been paying to Chase Home Finance and JPM over the years through payments to CHF and JPM as a “servicer” have been are are being pocketed by JPM, even through JPM does not own the WaMu mortgage loans and cannot identify any person or entity who or which owns the loans for which JPM is allegedly collecting payments as the “servicer”.

Any wonder why JPM was so easily able to recently allocate $400M for attorneys’ fees to oppose foreclosure challenges and spend enormous amounts of money on marketing its various credit card promotions?

There is a lot more to this which is being uncovered every day, and it is more insidious than we ever could have thought possible. Take, for example, the conviction yesterday of ex-WaMu subprime lending unit Long Beach Mortgage’s sales executive John Blanford, who was found guilty of six counts of mail fraud for his involvement in a scheme to falsify loan documents. As reported, Blanford paid a loan coordinator in cash to falsify documents, provide false verification of borrowers’ employment or professional licensing status, and to turn a blind eye to fraudulent representations contained in loan applications and other documents submitted to Long Beach Mortgage, all in connection with his scheme for which he earned more than $1 million in commissions between 2003 and 2005.

As also reported, from 2003 to 2006, WaMu and its Long Beach mortgage unit increased mortgage securitizations from $4.6 billion to $29 billion. That’s a $25 BILLION increase in securitizations in 36 months. As also reported, in 2005, Long Beach was forced to repurchase $875 million of non-performing loans from investors, and an audit done in the same year (2005) found that 83 percent of the loans approved by Long Beach were fraudulent.

Now one asks: how could JPM “purchase” mortgage loans in 2008 which, statistically, had an 83% chance of being fraudulent as of 2005 (assuming the loans were even in WaMu’s portfolio as of September 25, 2008)? How could JPM purchase, in 2008, any mortgage loans which had been securitized and thus transferred to third parties from 2003 to 2006?

It goes on and on. Stay tuned.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

September 19, 2012

Those who have followed recent foreclosure history in Hawai’i know of the prior enactment of what is known as “Act 48”, which mandated that foreclosures be instituted judicially. This legislation was a reaction to the rampant fraud and irregularities filed in non-judicial foreclosures. Although Act 48 technically expired in July of 2012, the present non-judicial foreclosure statute requires that before the institution of a non-judicial foreclosure, the foreclosing party must apply to the Department of Commerce and Concumer Affaird (DCCA) of the State of Hawai’i and pay a fee for permission to file a nonjudicial foreclosure. Part of this process requires proof that there was a face-to-face meeting with the homeowner in an attempt to resolve the claim, and that all alternatives to foreclosure (e.g. loan modification) were discussed during a Dispute Resolution Program.

If the meeting was held and there was no resolution, the homeowner can convert any non-judicial foreclosure to a judicial foreclosure. Given that protection, there have been almost no non-judicial foreclosure filings, with the foreclosing parties simply electing to institute judicial foreclosures.

Further, Act 182, which became effective June 28, 2012 (and is retroactive), requires a personal Affirmation from an attorney in the form of an Affidavit that the attorneys signs that he personally reviewed the documents which grant standing upon his client in any judicial foreclosure action. The Affidavit, which must be filed in all judicial foreclosures before or at the summary judgment stage, is subject to the following statutory language:

During and after August 2010, numerous and widespread insufficiencies in foreclosure filings in various courts around the nation were reported by major mortgage lenders and other authorities, including failure to review documents and files to establish standing and other foreclosure requisites; filing of notarized affidavits that falsely attest to such review and to other critical facts in the foreclosure process, and “robosignature” of documents. Based upon my communication with (employee of the bank), as well as upon my own inspection and other reasonable inquiry under the circumstances, I affirm that, to the best of my knowledge, information, and belief, the Summons, Complaint, and other papers filed or submitted to the Court in this matter contain no false statements of fact or law and that plaintiff has the legal standing to bring this foreclosure action. I understand my continuing obligation to amend this Affirmation in light of newly discovered material facts following its filing. I am aware of my obligations under the Hawaii Rules of Processional Conduct.

New Jersey enacted similar amendments to its judicial foreclosure processes last year (which were reported on this website) which require the filing of a Certification (a type of Affidavit) that the attorney personally spoke to an identified person who is a representative of the foreclosing Plaintiff as to the accuracy of the information in the foreclosure Complaint, etc. Now that Courts from NJ and HI are apparently thinking the same way, we hope this will spread to all jurisdictions between these two.

Judicial foreclosures are inherently fairer and afford the proper due process. The non-judicial procedure essentially presumes that a homeowner is guilty from the getgo, and the homeowner has to (a) file an action in court with supporting Affidavit; (b) seek as Temporary Restraining Order against a foreclosure sale; (c) obtain a Preliminary Injunction prohibiting any sale during the pendancy of the foreclosure challenge; and, in certain instances (d) post a bond in order to obtain this protection. Thus, not only does the homeowner have to undertake significant legal proceedings in order to be afforded the right to assert defenses, but has to pay significant sums of money to exercise their rights as well.

The judicial process, alternatively (and correctly) requires the foreclosing party to prove its case first, just as all other types of civil cases do, before relief can be obtained. In a judicial foreclosure, there can be no sale date until the case results in a Final Judgment in favor of the foreclosing party, and there is no bond requirement to stop any sale during the litigation, as the property cannot be sold unless and until the foreclosing party proves that it has the right to do so. During the litigation, the homeowner also has the benefit of the discovery process.

From litigating foreclosure cases across the United States since 2008, it has become abundantly clear to us that the nonjudicial foreclosure process should be abandoned and abrogated, as it is essentially unconstitutional. By forcing a homeowner to pay for the right to defend themself, and forcing them to engage in a costly and intensive legal proceeding just to halt the sale of their home when the foreclosing party does not even have to prove that it has the right to foreclose, the process denies numerous fundamental rights, and utilizes a procedure which is not used in any other type of civil litigation. There is no justifiable reason why a foreclosing party, who is seeking to take someone’s home away, should not be forced to prove their case first, and rather to have the ability to foreclosue simply by filing a few pieces of paper in the public records (a Notice of Default, Notice of Substitution of Trustee, and Notice of Sale) without any of these documents ever being tested for validity, unless of course the homeowner goes through the expense of filing a lawsuit and forcing the issues.

It is obvious that the non-judicial system had bred corruption, the perpetration of fraudulent documents, and the rampant stealing of homes without any court scrutiny. Enough is enough. The non-judicial foreclosure process has no place in the current mortgage market, which is rife with resales, multiple assignments, securitizations, and the like. The non-judicial process is a dinosaur, and should be declared extinct accordingly.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

September 5, 2012

The Florida 4th District Court of Appeal has reversed the denial of a homeowner’s motion for post-judgment relief after a summary judgment was entered in favor of HSBC Bank as the claimed “trustee” of a Deutsche Bank securitization. Although HSBC claimed that it noticed the homeowner’s attorney for the SJ hearing, the attorney did not appear, which non-appearance the appeallate court found to constitute the type of “excusable neglect” which warrants relief under Florida’s post-judgment relief rule, that being Florida Rule of Civil Procedure 1.540(b).

The homeowner was represented in the appeal by FDN network attorney Melvia Harris-Rozier, Esq. of West Palm Beach, Florida. The style of the case is Gascue v. HSBC Bank etc., 4th DCA Case No. 4D10-1379 (Decision entered August 29, 2012).

The appellate court also found that there was no evidence indicating that HSBC was the holder of the mortgage at the time that the Complaint was filed, as the only “evidence” that HSBC was the alleged owner and holder of the Note was an affidavit filed 3 years after the Complaint was filed, which did not establish WHEN HSBC became the holder of the Note. This decision is one of a recent line of Florida appellate decisions which require that a foreclosing “bank” establish, by competent evidence relating to either an endorsement or assignment or allegted transfer, that it was the owner and holder of the Note at the time that the foreclosure Complaint was filed.

The appeals court reversed the denial of post-judgment relief and remanded for an evidentiary hearing on the homeowner’s Motion, and also granted the homeowner’s Motion for Attorneys’ Fees.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 29, 2012

A Clay County, Florida Circuit Judge today denied US Bank’s Motion for Judgment on the Pleadings in a case where the homeowner, representing himself, asserted various defenses including securitization-related defenses. US Bank is the claimed “trustee” of a securitized mortgage loan trust, and attempted to argue the non-viability of certain of the homeowner’s defenses “as a matter of law”, requesting a “partial” judgment on the pleadings.

The Court denied the Motion and permitted the homeowner leave to amend his affirmative defenses. The homeowner is now represented by Jeff Barnes, Esq., who argued the Motion today in the Clay County Circuit Court.

US Bank attempted to argue the recent Third District Court of Appeal decision in Castillo v. Deutsche Bank for the proposition that any “securitization/PSA” related defenses fail “as a matter of law”. The Court declined to address this issue in view of its ruling granting leave to amend the Answer and Affirmative Defenses.

Castillo is a 6-line opinion which relies on 2 Bankruptcy cases (one from Pennsylvania and one from Massachusetts) which are distinguishable, and the Riggs opinion of the Florida 4th District Court of Appeal, which decision does not address the real issue. The line of cases which hold that a borrower is not a “third party beneficiary” to a PSA have been distinguished by numerous decisions (including one from the Hawaii Federal court which rendered the “third party beneficiary” decision initially), holding that such a “defense” is only applicable in a situation where the homeowner sues the foreclosing bank to stop a foreclosure, and that when the bank sues the homeowner, noncompliance with the PSA goes to the issue of standing. This case law, from the Federal Courts in Hawaii and California, clarify the issue.

As those of you who follow this website also know, Mr. Barnes also prevailed on the issue of noncompliance with the PSA in the Hendricks decision in Michigan, where the Court granted summary judgment to the homeowner after finding that US Bank as Trustee did not comply with the PSA. The Horace decision from Alabama further holds that a borrower is in fact a third party beneficiary to a PSA.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 28, 2012

An Osceola County (Kissimmee), Florida Circuit Judge has today denied a Motion for Summary Judgment filed by Aurora Loan Servicing. The denial was based on recent Florida decisional law which requires affidavits in support of summary judgment in foreclosure actions to have specific information from the affiant when the affidavit is based on a review of records, and where the “Allonge” was undated and there was no evidence of authority for the person who executed the Allonge to have done so on behalf of a bankrupt entity. Significantly, the signor, one “Amy Hawkins”, claimed to be a vice president of both National Bank of Arizona and National Bank of Nevada on the same document.

We have seen numerous cases where “Amy Hawkins” has claimed authority to sign on behalf of these two “banks”.

The homeowner is represented by Jeff Barnes, Esq., who argued the motion in court personally today.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 21, 2012

Confirming, under oath and in print what we already suspected: there is no schedule of mortgage loans evidencing what JPM allegedly “purchased” from the FDIC in connection with the failure of WaMu. This is from the sworn deposition testimony of Lawrence Nardi, the operations unit manager and a mortgage officer for JPM, who was previously with WaMu and was picked up by JPM after WaMu’s failure. The 330 page deposition was taken by counsel for the homeowner on May 9, 2012 in the matter of JPMorgan Chase Bank, N.A. as successor in interest to Washington Mutual Bank v. Waisome, Florida 5th Judicial Circuit Case No. 2009-CA-005717.

Here is the question and the answer:

Q: (page 57, beginning at line 19): Okay. The — are you aware of any type of schedule of loans that would have been created to represent the — either the loans that were asset loans or the loans that were serviced by WAMU? Are you — was the — do you know if there is a schedule or database of loans like that?

A: (page 58, beginning at line 1): I know that there was a schedule contemplated in certain documents related to the purchase. That schedule has never materialized in any form. We’ve looked for it in countless other cases. We’ve never been able to produce it in any previous cases. It would certainly be a wonderful thing to have, but it’s — as far as I know, it doesn’t exist, although it was — it was contemplated in the documents.

As we all know, JPM has also stated, in a Federal Court filing, that it is NOT the “successor in interest to WaMu.” However, the deposition testimony gets even better as the day went on:

Q: (beginning at page 260, line 18): Have you ever in your duties of being a loan analyst — a loan operations specialist, have you ever seen an FDIC bill of sale or a receiver’s deed or an assignment of mortgage or an allonge?

A: (page 260, beginning at line 23): For loans, I’m assuming you’re taling about the WaMu loan that was subject to the purchase here.

Q: (page 261, line 1): Right.

A: (page 261, beginning at line 2): No there is no assignments of mortgage. There’s no allonges. There’s no — in the thousands of loans that I have come into contact with that were a part of this purchase, I’ve never once seen an assignment of mortgage. There is simply not — they don’t exist. Or allonges or anything transferring ownership from WAMU to Chase, in other words. Specifically, endorsements and things like that.

So, JPM allegedly “purchased” mortgage loans from the FDIC out of the WaMu failure, but there is no schedule of what loans were purchased, no assignments, no allonges, no endorsements, nothing that transferred ownership of the loans from WaMu to Chase. However, as we all know, JPM goes around the country touting that it is the “successor in interest to WaMu” (which it has admitted in Federal Court that it is not) and relies on the amorphous “FDIC Affidavit” which, as far as what the “Affidavit” is proffered for, is directly contradicted by the sworn deposition testimony of JPM’s authorized representative WHO WAS FORMERLY WITH WAMU AND WAS PICKED UP BY JPM.

Fraud on the courts, anyone?

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 17, 2012

In a 41-page opinion, the Supreme Court of Washington has held, in answering three questions as to MERS certified to the Washington Supreme Court from the Washington Federal Courts, that MERS is not the beneficary under the Washington Deed of Trust Act, and that a homeowner may have a cause of action against MERS for violations of the Washington Consumer Protection Act (CPA), as “characterizing MERS as the beneficiary has the capacity to deceive”. This decision is in concert with the recent Niday decision from the Oregon Court of Appeals which held that MERS is not the beneficiary under the Oregon Deed of Trust Act. However, the Washington opinion, Bain v. Metropolitan Mortgage Group, IndyMac Bank, MERS et al., goes further.

The opinion goes through a detailed history of the Washington Deed of Trust Act, MERS, and MERS’ claims in connection with foreclosures. The first certified question, which asked whether MERS is the “beneficiary” under the Washington Deed of Trust Act, was answered in the negative, as the Court found that because MERS never held the promissory note (and could not) and as the only party who could be the beneficiary is the person who holds the note that MERS was not and could not be the beneficiary under RCW 61.24.005(2).

The Court answered the third certified question with a qualified “yes”: that a homeowner, with the right facts, has a cause of action against MERS for damages where MERS wrongfully claims that it is the “beneficiary”. The Court held that each such claim would have to be evaluated on a case by case basis.

Several significant findings are in this opinion which serve to dispel “MERS myths” blindly accepted by other courts and argued by MERS attorneys. The first, which we believe to be the most significant, is that MERS cannot contract around statutory terms, meaning that MERS cannot, by contract, change its status to “beneficiary” in a Deed of Trust and cannot claim that it is an “agent”. The Court fouind that MERS “as nominee” for a undisclosed successor noteholder cannot thus be an “agent”. As we all know, courts in several other jurisdictions have, without explanation or distinction as to MERS’ self-claimed “nominee” status, held MERS to be an “agent.” This opinion finally explains why those conclusions are erroneous and are not supported by law.

The second point is that because MERS does not hold the note and as MERS’ counsel admitted that MERS cannot engage in efforts to reach a solution to avoid foreclosure, it could not be the “beneficiary”.

The third point is that because only the rightful beneficiary can undertake actions such as appointing a successor trustee and as MERS, which never holds the Note, cannot undertake foreclosure prevention actions, MERS is not the “beneficiary”.

The two recent rulings in Oregon and now Washington are finally exposing and debunking the MERS’ myths and misconceptions. We are hopeful that other courts will take note of these extremely detailed and well-reasoned opinions when presented with questions as to MERS, including the discrepaney as to what MERS claims it is (a “mere nominee”) and what it claims it can do (foreclose, execute assignments and substitutions of trustee, and the like).

We thank one of our network attorneys for bringing this decision to our attention last night.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 7, 2012

Per our recent posts, assignments are becoming the subject of more intense court scrutiny lately. This week, a Hawai’i Court found genuine issues of material fact in connection with an assignment made by MERS as the “nominee” of a bankrupt lender, which assignment was made without permission of the bankruptcy court. We were retained on a case today where MERS attempted an assignment in 2012 as to a lender which was shut down by court order in 2008 without any evidence of authority from the court which shut the lender down. As our readers also know, MERS repeatedly attempts to “assign” mortgage loans into securitized mortgage loan trusts years after the Closing Date of the Trust and without any authority to do so within the Trust documents.

As we also posted, on July 18, 2012, the Oregon Court of Appeals, in a 27-page decision which traced the history of the Oregon Trust Deed Act and MERS, came to the conclusion that the “creature of more modern vintage: MERS” is not the “beneficiary” under the Oregon Trust Deed Act. A Federal Court in Michigan has also issued two recent opinions which permit challenges to foreclosures by advertisement based on a flawed assignment.

We thus suspect that more and more courts are going to be taking a closer look at MERS assignments, and that more and more courts will ultimately hold that the assignments are either a legal nullity, not based in fact or law, or are patently fraudulent. High time: MERS has been getting away with this for over 10 years with impunity to the detriment of literally millions of homeowners.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

August 3, 2012

We were just advised moments ago that a Hawai’i Circuit Court Judge has denied Deutsche Bank’s Motion for Summary Judgment, expressly finding that there are genuine issues of material fact as to whether the Note and Mortgage were transferred to Deutsche Bank (the claimed “trustee” of a securitized mortgage loan trust) before the original lender, Home 123 Corporation, filed for Bankruptcy, and that the record did not reflect that the assignment was done with the approval of the bankruptcy court. The homeowners are represented by Jeff Barnes, Esq. and local Hawai’i counsel Ronald Grant, Esq. Mr. Barnes prepared the briefs and personally argued the matter in Honolulu last November.

This case (Deutsche Bank v. McKiernan, Case No. 09-1-000910, Hawai’i First Circuit, 21st Division) has many similarities, factually, to the Williams case from the Hawai’i Federal Court where the court permitted the homeowner to challenge Deutsche Bank’s compliance with the PSA in view of a purported assignment which was executed after the same original lender filed for bankruptcy, rejecting Deutsche Bank’s argument that the borrower did not have standing to lodge such an attack.

These two decisions thus now support, in Hawai’i, (a) a homeowner’s challenge to a foreclosure based on defective assignments, and (b) that thse defects give rise to genuine issues of material fact which preclude summary judgment. Today’s earlier post as to the Naranjo decision further supports such a borrower challenge as well.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com