August 3, 2012

In what we consider to be a very significfant decision, a California Federal court has issued an Order denying a Motion to Dismiss the homeowner’s Complaint against JPMorgan Chase, U.S. Bank, N.A., and SBMC Mortgage where the homeowner challenged the nonjudicial foreclosure on the basis of an improper transfer of the loan to the securitized mortgage loan trust. The homeowner alleged that the Defendants and others were involved in an attempt to securitize her loan to a WaMu securitization trust.

The homeowner alleged that the May, 2010 MERS assignment of the DOT to US Bank as Trustee for the WaMu securitization trust, which assignment was signed by known robo-signor Colleen Irby, was improper because it was not done before the closing date of the trust. The court specifically found that:

“The vital allegation in this case is the assignment of the loan into the WaMu Trust was not completed by May 30, 2006 as required by the Trust Agreement. This allegation gives rise to a plausible inference that the subsequent assignment, substitution, and notice of default and election to sell may also be improper.”

This is beyond important, as the finding shows that a challenge can be made to an entire nonjudicial foreclosure procedure (including assignment, substitution of trustee, and foreclosure sale) by alleging that the purported assignment did not comply with the timing requirements of the trust documents, and that a homeowner who sues to challenge a foreclosure has standing to raise the challenge onthe basis of attacking the assignment as not complying with the trust documents.

The Court distinguished the Gomes case upon which the Defendants relied, holding that the Plaintiff alleged that the transfer of rights to the WaMu Trust was improper and thus the Defendants consequently lack the legal right to either collect on the debt or enforce the underlying security interest.

The upshot of this case is not only that a claim of improper foreclosure due to noncompliance with the trust documents (in attempting to assign the loan to the trust well after the Closing Date of the Trust) can be made, but that there will now have to be discovery on the issues, as the Court has denied the Motion to Dismiss and thus an Answer to the homeowner’s Complaint will have to be served, which then permits the case to proceed to the discovery phase on the relevant issues.

The case is Naranjo v. SBMC Mortgtage et al., No. 11-cv-2229-L(WVG), U.S. District Court for the Southern District of California, decision issued July 24, 2012.

We thank one of our dedicated followers for providing this significant decision to us.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 30, 2012

A Hillsborough County (Tampa) Florida Circuit Judge has entered a Final Judgment in favor of a borrower, ordering that the loan and all loan documents be reinstated effective back to June 30, 2009 (pre-“default”); that the terms of the loan remain in effect as they would have been as of that date; and that BB&T credit the principal of the Note with all payments received by BB&T from the FDIC and with no payments due from the borrower until BB&T credits all such payments it has received against principal and the parties agree on a new payment schedule.

The May 18, 2012 Final Judgment found that the original lender (Colonial Bank) improperly demanded that the borrower make “curtailment” payments on the loan, basing its demand on the status of other, unrelated loans. Colonial was shut down by the Alabama State Banking Department and the FDIC was appointed as its receiver. The evidence at trial demonstrated that BB&T breached its duties of good faith and fair dealing with the borrowers, and that BB&T was motivated to behave as such due to the terms of a Purchase and Assumption Agreement with the FDIC where BB&T stood to profit by declaring a fraudulent default under the loan, collecting from the FDIC under the Agreement for such default, and then enforcing the loan against the borrowers and retaining the property until a turn around in the real estate market.

The “troubled assets” manager of BB&T (who had been a former Colonial Bank manager) testified that BB&T may have already applied to the FDIC for a loss share payment, and the borrowers’ expert testified that BB&T may have already applied for and received a payment from the FDIC as high as $1,800,000.00. The Court found that BB&T totally failed to credit this potential payment from the FDIC against amounts sought in the litigation, thereby giving the impression that BB&T might be “double dipping” and possibly “triple dipping” if market conditions favorably changed and the property increased in value. The Court concluded that BB&T “committed significant wrongdoing and breached the implied duty of good faith and fair dealing of a financial institution, such that the instant cause of action should be denied in its entirety.”

This Final Judgment supports what we have been requesting in discovery for the past five years: documents related to third party sources of payment against the Note, which evidence goes directly to the amount claimed to be in default. Significant in this decision is the fact that the Court entered judgment for the borrower on the premise that there COULD HAVE BEEN a payment made to BB&T through the Agreement; it was not necessary that a payment actually have been made for the credit to apply.

In securitizations, the documents expressly provide for insurances and credit enhancements (including credit default swaps) to protect against and provide payment on mortgage loans which default. Discovery of these potential sources of payment and amounts is thus more than relevant, as this evidence goes directly to not only the veracity of the amount claimed to be in default, but to claims of breach of duty of good faith and fair dealing as well.

The case is Branch Banking and Trust v. Kraz LLC, Hillsborough County, Florida Circuit Couert Case No. 10-CA-000304-K. We thank one of our dedicated followers for providing this decision to us.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 24, 2012

A Mecklenburg County, North Carolina Superior Court Judge has dismissed what is known as a NCGS 45-21.16 nonjudicial foreclosure proceeding filed by Aurora Bank FSB, finding that Aurora had not presented sufficient evidence that it was the holder of the Note and Deed of Trust (DOT), and thus it could not foreclose. North Carolina’s nonjudicial foreclosure procedure starts with a filing, by the party seeking to foreclose, of a notice of hearing requesting that the Court set a foreclosure sale date.

Aurora presented what it claimed to be the “original note” with several staple holes and an “Allonge” which contained two punch holes in the top center (whereas the Note did not). The Court found that the signatures on the “Allonge” did not appear to be original (those being of one Amy Hawkins, who has “executed” Allonges in the capacity of both a Vice President of First National Bank of Arizona (FNBA) and First National Bank of Nevada (FNBN), which merged before their assets were seized by the FDIC).

The homeowner presented documents demonstrating the transfer of the loan to a Lehman securitized mortgage loan trust which named Aurora as the servicer. The Court noted that Aurora’s claim as “holder” was inconsistent with the securitization documents which showed Aurora acting as servicer for the holder.

The Court found that there was no information offered as to the dates of the alleged endorsements from FNBA to FNBN or to Aurora, nor how these dates related to the seizure of assets by the FDIC, and ultimately held that the document attached to the “Original Note” cannot constitute an allonge. The Court dismissed the proceeding, concluding that Aurora failed to provide sufficient evidence that Aurora was the holder of the Note and DOT and also failed to demonstrate that it had standing to bring the action as the real party in interest.

FDN network counsel Brian F. Chapman, Esq. represents the homeowner. He can be reached at (704) 380-2039, website address: www.chapmanlawonline.com. The decision was filed on June 28, 2012.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 18, 2012

Just moments ago, we learned that the Court of Appeals of Oregon has reversed a summary judgment entered against the homeowners and has, in a 28 page opinion, held that MERS is NOT the “beneficiary” under the Oregon Trust Deed Act, ORS 86.705(1), despite MERS claiming to be the “beneficiary” in Deeds of Trust. Jeff Barnes, Esq. represents the homeowners together with local Oregon counsel Elizabeth Lemoine, Esq. Mr. Barnes wrote the appellate Briefs and argued the case before the 3-Judge panel of the Oregon Court of Appeals.

The extremely detailed opinion traces the history of mortgage law in Oregon and the Oregon Trust Deed Act, and acknowledged that this was a “case of first impression” in the Oregon appellate courts and involved “an intersection between Oregon’s nonjudicial foreclosure laws and a creature of more modern vintage: Mortgage Electronic Registration Systems, Inc., also known as MERS.”

This decision has been awaited not only by Oregon homeowners, but homeowners in neighboring states as well which have nonjudicial foreclosure procedures and MERS issues. The Oregon Trial Lawyers’ Association also filed “amicus” briefs with the appeals Court supporting the position of the homeowners.

The entire opinion is available by e-mailing us per the “Contact Us” link above.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 16, 2012

Today, a Lee County (Ft. Myers) Florida Circuit Judge denied a Motion for Protective Order which had been filed by SunTrust Mortgage, Inc. which Motion sought to block the homeowner’s request to take the deposition of Deborah Ellis, who allegedly signed the undated endorsement which SunTrust claims is on the “back” of the Note. In the original Complaint filed by SunTrust in 2008, there was no endorsement on the Note; in 2010, SunTrust filed what it claims to be the “original Note” with the alleged endorsement on the back of the Note; later in 2010, SunTrust filed a “Verified” Amended Complaint which, again, had no copy of an endorsed Note.

The Court ruled that the issues surrounding the endorsement are directly relevant to the standing defense asserted by the homeowner, and that the circumstances surrounding the endorsement are a proper subject of inquiry for the deposition of the “endorser” Deborah Ellis. Recent case law from the Florida 4th District Court of Appeal reversed summary judgments where there was no evidence offered by the foreclosing “bank” that the endorsement on the Note was present at the time that the Complaint was filed.

The homeowner is represented by Jeff Barnes, Esq., who argued the matter in person before the Court today, including the recent case law on endorsements. One of these cases provides that an evidentiary hearing is proper when there is conflicting evidence relating to an endorsement and there is an issue as to whether an undated endorsement was on the Note at the time the Complaint was filed, as this relates directly to whether the foreclosing party had standing to sue at the time it filed its foreclosure action.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 13, 2012

The recent litigation involving Barclays and other banks concerning the fraudulent manipulation of the LIBOR index rate has opened up a number of avenues for borrower actions against “lenders” and servicers claiming monies owed on a Note subject to a floating LIBOR index. We expect a significant amount of litigation to be instituted against the “lenders” and servicers for claims sounding in fraud and/or unjust enrichment and/or breach of duty of good faith and fair dealing in addition to other causes of action.

The LIBOR index is represented to the borrower as a basis for the lender’s pricing of the long-term mortgage loan, with the supposition being that the index on the loan is based on the bank’s cost to borrow the money to fund the loan. There are approximately 20 large banks (both domestic and foreign, including Deutsche Bank, Barclays, JPMorgan Chase, and Citigroup) who determine the LIBOR index.

Barclays settled their claim in this action. What the Barclays suit has reveladed is that the banks fraudulently manipulated the LIBOR index for purposes of misrepresenting the cost of the loan to the borrower so that the lenders could reap additional profits from the borrowers under false pretenses. What this means, in reality, is that any mortgage loan originated since at least the late 1990s which was based on a LIBOR index resulted in a deliberate overcharges to the borrower. We are in the process of preparing litigation against various banks for claims resulting from the fraudulent misrepresentation of the LIBOR index to borrowers.

The information revealed in the Barclays litigation could be of particular importance to borrowers in the State of Washington, which has a “use it or lose it” statute as to foreclosure challenges. Under the Statute, the borrower has 90 days from the time that a Notice of Trustee’s (or foreclosure) sale is provided to the date of the sale during which to file an action challenging the sale and to obtain a court order stopping the sale. If that is not done by the sale date, the borrower is forever barred from filing an action seeking to undo the foreclosure or placing a lien on the foreclosed property. However, the companion Statute provides that a borrower may institute an action after the sale for damages only resulting from a wrongful foreclosure.

FDN has associated with a banking expert who has over 25 years experience in this area and securitization who will be assisting us in asserting these claims. Other experts in this area are also being interviewed so that the claims are bolstered with expert testimony from all aspects and issues.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

July 10, 2012

Previously dormant Florida foreclosure cases are being revived. Many of these cases were with the Florida “foreclosure mills” and have been apparently re-assigned to other law Firms. Others are old David Stern cases which have been picked up by other Firms. Still others are those which the Courts have called up to be dismissed for lack of prosecution without some kind of filing by the foreclosing Plaintiff, which files a “Notice of Intent to Prosecute” without more.

As a result, we have been receiving a flood of inquiries from Florida homeowners.

One of the more significant issues is the incomplete nature of discovery when a summary judgment motion is filed. The Florida 4th District Court of Appeal has issued several decisions in the past few months which have reversed summary judgments where discovery, including securitization discovery, was incomplete. The 4th DCA adheres to the “slightest doubt” rule in Florida; that is, if there is the slightest doubt that the outstanding discovery may give rise to a disputed issue of material fact, summary judgment is not proper.

A conflict as to securitization discovery has been created by a recent ruling from the Florida Third District Court of Appeal, which ruled (we believe incorrectly) that a borrower has no standing to challenge compliance by a foreclosing “trustee” bank with the PSA as the borrower is not a third party beneficiary to the PSA. The decision was based on a line of cases (known as the “Correia” and “Livonia Properties” line of cases) which stand for that proposition. However, the case was apparently not argued properly, as one of the courts which originally came to one of these “Correia” decisions recently expressly distinguished the “third party beneficiary” preclusion to apply ONLY to cases where the borrower sues the foreclosing “bank”. When the bank sues the borrower, compliance with the PSA is a standing issue, which the borrower is permitted to raise. The decision is the Williams case (from Hawaii) which clearly sets forth the distinction.

Florida is a “judicial” state: that is, the foreclosing party (bank) has to sue the borrower. As such, the “third party beneficiary” argument does not apply, as raising compliance with the PSA implicates standing of the plaintiff to foreclose, as per Williams. Apparently, whoever argued the case before the 3d DCA was not aware of the Williams distinction. As such, there is now a conflict between the 3d DCA decision and the recent 4th DCA decision which reversed a summary judgment where secuitization discovery, including documents attached or referred to in the PSA and documents concerning the transfer of the mortgage and note, were not produced.

Add to this the decisions in Horace (Alabama) and Hendricks (Michigan) which granted summary judgment to the homeowners where it was shown that the attempted transfer of the loan to the securitized mortgage loan trust did not comply with the PSA.

The one-paragraph 3d DCA decision is being touted by “bank” attorneys as a means to preclude securitization discovery. Borrowers attorneys need to counter this with the 4th DCA decision and Williams (and also with Horace and Hendricks) before more incomplete (and erroneous) precedent is set in Florida.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

June 27, 2012

A New Mexico District Judge yesterday denied BAC Home Loan Servicing’s Motion for Protective Order which it filed in an attempt to avoid producing documentary discovery to a homeowner who BAC has sued for foreclosure. The loan was originated by New Mexico Bank and Trust, was sold to Countrywide, and thereafter allegedly “assigned” first to MERS and then by MERS to BAC.

As is known to anyone who is involved in foreclosure issues, Countrywide sold off its loans for securitization purposes between 2000 and the first quarter of 2008, and what was “sold” to BOA in 2009 consisted essentially of servicing contracts from the old Countrywide Home Loans Servicing LP, which became the property of BAC Home Loans Serving LP. As we also know, the MERS Terms and Conditions preclude the use of the MERS system to either create or transfer beneficial interests in mortgage loans, and counsel for MERS in the MERS v. Nebraska Dept. of Banking and Finance decision admitted (which admission is in the published decision) that MERS does not acquire mortgage loans or have any right to collect payments thereon.

The borrower thus requested 53 categories of documents from BAC, including securitization documents. BAC filed a Motion for Protective Order which claimed that public information on the SEC website was “confidential”; that the securitization-related discovery was “irrelevant”; and that it was essentially entitled to withhold discovery because it “has the original note” and has moved for summary judgment on the “relevant” issues.

The Court disagreed, denying BAC’s Motion in its entirety and commanding full responses to the borrower’s discovery request (including production of all responsive documents) within 30 days. The Court found BAC’s Motion to be “sparse”; not in compliance with New Mexico court rules as to discovery; and against New Mexico’s case law which provides for liberal discovery in foreclosure actions so that all of the issues are fully developed and a fair trial is had.

Jeff Barnes, Esq. represents the homeowner together with local New Mexico counsel John Fox, Esq. Mr. Barnes, who was admitted pro hac vice in the case, prepared the written response to BAC’s Motion and personally argued the matter in court in New Mexico yesterday. Mr. Barnes has now obtained orders compelling securitization discovery in Oregon, New Mexico, New Jersey, Delaware, Hawai’i, Tennessee, and Florida, and has had foreclosures dismissed and attorneys’ fees assessed against foreclosing “banks” for nomcompliance with court discovery orders in several of those states.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

June 25, 2012

Realty/Trac reports that three Florida metropolitan areas are within the top ten in new foreclosure filings nationally. Number 3 is the Miami/Ft. Lauderdale area, with 9000 new foreclosure cases being filed in April, 2012. The Tampa/St. Petersburg area is number 8 with 4,295 new cases being filed in April and the Orlando/Kissimmee area is number 10 with 2,717 new cases being filed in April.

These are NEW foreclosure cases which have been filed, and just in the month of April. This does not count the tens of thousands of existing foreclosure cases which were previously filed, including the over 100,000 cases which the David J. Stern Firm left in limbo when it ceased doing business operations, many of which have now been taken over by other law Firms and which cases are starting to see activity again.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

June 22, 2012

A Florida Circuit Judge has gone on the record requiring Wells Fargo, as the claimed “trustee” of a securitized mortgage loan trust, to show that the mortgage loan which WF is attempting to enforce actually went into the PSA, and if not, the standing requirement has not been met and the case will fall on summary judgment. The homeowner is represented by Jeff Barnes, Esq.

The Judge specifically stated as follows:

     “…but what I want plaintiff’s counsesl to understand, that what you submitted to me with regards to the pooling and servicing agreement still does not have the actual mortgages that went into that pooling and servicing agreement…So at some point you’re going to have to show that this mortgage and note certainly went into that pooling and servicing agreement, which is what I have requested before. …  So I’m just asking you that before we get too far out, please make sure that’s there, or its going to be taken out on summary judgment. … In other words, if you’re a trustee for that pooling and servicing agreement, and the mortgage and note are not in that pooling and servicing agreement, you don’t have standing.”

This ruling not only directly confirms the proof requirements for standing in a securitization case, but supports the production of discovery on the issue as well.

Separately, fifty-one (51) originating mortgage lenders, servicers, and trustee sale companies have filed Bankruptcy in the United States District Court for the Southern District of New York, all having filed on May 14, 2012. The list of Debtor entities includes GMAC Mortgage, LLC; Executive Trustee Serevices LLC (a 3d party trustee sale company which schedules and conducts non-judicial foreclosure sales); Ditech (the one which touted that it gave loans of 125% of the value of the home); Residential Funding Company, LLC and its numerous subsidiaries and derivatives; Homecomings Financial, and others.

The 341 meeting of creditors is scheduled for June 25, 2012 at 1:00 p.m. at 80 Broad Street, Fourth Floor, New York, New York. The 341 Notice states that there is no deadline to file a proof of claim or a complaint (adversary proceeding) to determine dischargeability as of this time.

As we have previously advised with “lender bankruptcies”, two of the threshold important events are any requests to destroy documents and the formation of a “borrowers’ committee” separate and apart from the unsecured creditors’ committee, as homeowner/borrowers’ interests are not necessarily the same as those of the rest of the unsecured creditors, and may in fact be adverse to the general unsecureds, who have no interest in protecting claims of homeowners. Mr. Barnes was previously involved in requesting the formation of a borrowers’ committee in the Accredited Home Lenders bankruptcy, and was also involved with the borrowers’ committee in the American Home Mortgage bankruptcy.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com