June 14, 2010

FDN attorneys Jeff Barnes, Esq. and Ronald Grant, Esq. have stopped a summary judgment in a judicial foreclosure in Hawaii where Deutsche Bank, as trustee for a securitized mortgage loan trust, claimed there was no genuine issue of material fact as to the foreclosure. The borrower had been proceeding pro se until the summary judgment was set for hearing.

Deutsche Bank claimed entitlement to foreclose by virtue of a MERS assignment from Home 123, which was a subsidiary of the bankrupt New Century Mortgage. The problem is that the subject “assignment” was executed by MERS “as nominee for Home 123” some 17 months after the mortgage lender’s license of Home 123’s parent New Century had been revoked in California, and where Hawai’i had revoked Home 123’s registered agent’s authority.

FDN’s Jeff Barnes, Esq. researched and prepared the borrower’s Supplemental Memorandum in Opposition to Deutsche Bank’s Motion for Summary Judgment and discovery requests for the borrower. Deutsche Bank’s counsel stipulated to cancel the summary judgment hearing upon the filing of the borrower’s Supplemental Memorandum and service of the discovery, which has been filed by local Hawai’i counsel Ronald Grant, Esq.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

Jeff Barnes, Esq.

June 9, 2010

In a stunning ruling, a California Superior Court has today entered a Restraining Order cancelling and enjoining a trustee’s sale of the borrower’s property one day before the scheduled sale, with the Order compelling Defendants US Bank National Association as Trustee for the Holders of Bear Stearns ARM Trust Mortgage Pass-Through Certificates Series 2006-2, MERS, and ReconTrust Company, N.A. to “promptly” provide to the borrower “all documents pertaining to foreclosure proceedings, trustee’s sales, assignments with respect to Plaintiff’s residence or mortgage, including a copy of the Pooling and Servicing Agreement pertaining to Plaintiff’s mortgage and any and all documents pertaining to any credit enhancements and/or credit default swaps that cover Plaintiff’s mortgage pool”.

This is the first such ruling that we are aware of that orders, at the TRO stage, full production of foreclosure authority and securitization documents from those who instituted the foreclosure. The ruling is in line with the prior foreclosure dismissal orders discussed on this website yesterday which conditioned refiling of a dismissed case on full production of the borrower’s discovery.

The significance of this ruling, especially for foreclosure cases in California, cannot be underestimated or overstated, especially as we commented yesterday that foreclosing parties are regularly reluctant to provide the borrower’s discovery during normal discovery in litigation.

The Complaint, legal Memorandum of Points and Authorities, and other documents were researched and prepared by Jeff Barnes, Esq. The TRO was obtained by local California counsel Alan Geraci, Esq., to whom we give many thanks for his efforts, literally at the last minute.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

June 8, 2010

We had previously reported in May that a Key West, Florida court had dismissed a foreclosure action filed by the Bank of New York as Trustee for a securitized mortgage loan trust due to the Plaintiff’s failure to comply with the Court’s Pretrial Order and failure to comply with discovery. The Order confirming the dismissal was received today.

The Order specifically provides that the case may not be refiled absent complete compliance with the borrower’s prior discovery including his First Request for Production, which sought numerous documents including those relating to the chain of title to the note and mortgage; authority to foreclose; formation of the securitized trust; securitization of the mortgage loan; MERS-related documents; and claims against any credit enhancements or insurances which may provide payment against the claimed default. Bank of New York failed and refused to provide the subject documentation as it and others (including Deutsche Bank, Bank of America, US Bank, and Wells Fargo) have consistently failed and refused to do in numerous cases.

This is the 4th foreclosure case in 2 separate states which FDN attorney Jeff Barnes, Esq. has had dismissed because the foreclosing party failed and refused to provide the borrower’s discovery. A 5th dismissal, taken voluntarily by the foreclosing Plaintiff which admitted it cannot provide the subject discovery as ordered by the court, is on the way, with the Voluntary Dismissal having been filed this week. Prior dismissal orders in those other cases also conditioned any refiling on full compliance with the borrower’s discovery. To date, none of the dismissed actions have been refiled, and none of the subject discovery has been produced.

The ruling is a clear signal that the courts are no longer going to tolerate noncompliance by foreclosing parties with borrower discovery requests which go to the threshold issues of standing, chain of title, authority to foreclose, and setoffs. All too often, we see the foreclosure mills asserting “form” objections to borrower discovery followed by the filing of a Motion for Summary Judgment which is obviously filed in an attempt to avoid lawful discovery obligations. This ruling, and others preceeding it based on the same grounds, demonstrate that the courts will not permit a foreclosing party to ignore its discovery obligations and simultaneously attempt to railroad a summary judgment against the borrower.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

June 7, 2010

Countrywide mortgage service companies will pay $108 Million to settle a Federal Trade Commission lawsuit alleging that Countrywide subsidiaries collected excessive and illegal fees from troubled borrowers struggling to pay their mortgage loans. According to the lawsuit, Countrywide’s loan-servicing operation deceived homeowners who were behind on their mortgage payments into paying inflated fees adding up to hundreds and in certain cases thousands of dollars for property inspections, lawn mowing, and other “services” which were the creation of Countrywide subsidiaries which hired the vendors and marked up the prices of such “services” often by 100% or more for the sole purpose of generating revenue. The lawsuit alleges that this company strategy on the part of Countrywide was to increase profits from default-related service fees in bad economic times. The overcharges occurred on loans “serviced” by Countrywide before the July, 2008 Bank of America acquisition.

The lawsuit named Countrywide Home Loans, Inc. and BAC Home Loans Servicing LP formerly doing business as Countrywide Home Loans Servicing LP. The monies will be refunded to homeowners who were overcharged before July, 2008. There are also terms permanently barring the defendants from engaging in certain illegal practices, and requiring Countrywide to advise consumers if it intends to use affiliates for default-related services and, if so, to provide a fee schedule for amounts charged by affiliates.

We wish to thank one of our devoted readers for e-mailing this important announcement to us today.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

June 7, 2010

A Utah attorney representing a borrower has obtained a statewide injunction against foreclosures concerning Bank of America and its trustee-sale arm, ReconTrust Company. The details of this significant victory are still emerging. Bank of America is attempting to remove the case to Federal Court in an effort to stave off the effect of the injunction, which the borrower intends to oppose. We will keep you advised of further developments in the case.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

May 31, 2010

On Friday afternoon, May 28, 2010, an Arizona state court entered a restraining order cancelling a June 1, 2010 Trustee’s Sale of the borrower’s home which sale had been scheduled by Defendants MERS, Aurora Loan Servicing, and Quality Loan Service. The borrower presented evidence that the Notice of Trustee’s Sale prepared by Defendant QLS was fraudulent, as it claimed that the “current beneficiary” was Defendant Aurora when in fact the purported MERS assignment to Aurora did not occur until one month after the Notice of Trustee’s Sale was generated.

The borrower also cited to the Court the recent decision of the Arizona Bankruptcy Court in the matter of In Re Weisbrod, in which the Bankruptcy Court essentially stripped MERS of its purported authority and which case cites the In Re Sheridan decision from the Idaho Bankruptcy Court and others. The Weisbrod decision has been hailed as a rejection of the Blau and Cervantes pro-MERS decisions from 2009, and is in line and consistent with the findings of the Supreme Courts of Kansas, Nebraska, and Arkansas; the states courts of Vermont, Missouri, and South Carolina; and the Bankruptcy Courts of Idaho and Nevada which have dissected the purported expansion of MERS’ alleged “authority” in mortgages and Deeds of Trust where MERS on the one hand attempts to confine itself to “only a nominee” but later attempts to anoint itself with the power to assign mortgages and notes and institute or further foreclosures. The great majority of the courts are finally starting to see though MERS’ facade and relegate MERS to what it really is: nothing more than an entity which tracks the transfer of mortgages.

The borrower is represented by Jeff Barnes, Esq., who prepared the litigation and memorandum of law, and local Arizona counsel Lynn Keeling, Esq. who obtained the restraining order.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

May 27, 2010

In an extremely significant ruling, a Florida Circuit Judge today dismissed a residential foreclosure Complaint filed by the Bank of New York as trustee for a securitized mortgage loan trust for failure to comply with the Supreme Court of Florida Order amending the Rules of Civil Procedure to require that all residential mortgage foreclosure Complaints be verified and as the Plaintiff also failed to properly allege the chain of title from the original lender to the foreclosing Plaintiff as required by recent Florida case law. The Supreme Court of Florida rule amendment and the recent case law requiring proof of chain of title in order to be able to foreclose were both previously reported on this website.

The original lender was Taylor Bean & Whitaker, which failed and was taken over by the government for fraudulent lending practices. There was no assignment or other evidence showing how the loan went from TBW to the Bank of New York. The Complaint was filed on February 12, 2010, the day after the effective date of the Supreme Court Order requiring verification of all residential foreclosure Complaints.

The ruling is extremely significant, as it ratifies the effect of the Supreme Court Order requiring that ALL residential mortgage foreclosure complaints filed in Florida after February 11, 2010 be verified and that such Complaints also allege the proper chain of title of the note and mortgage from the original lender to the foreclosing Plaintiff, and that if the Complaint does not do both, the Complaint is subject to dismissal.

The borrower is represented by Jeff Barnes, Esq., who filed the Motion to Dismiss and argued the matter at a hearing this morning.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

The Cleveland Plain Dealer reports:

• The National Consumer Law Center [NCLC] is calling for a ban on advance fees for loan modification help and a federal rule that no one can charge homeowners fees unless the loan modification actually helps homeowners avoid foreclosure. The NCLC’s report was released [Friday], just ahead of the Federal Trade Commission’s deadline for comments on whether the agency should take steps to declare some loan modification practices unfair and deceptive.

For more, see Consumer law group urges FTC to save homeowners from foreclosure rescue scams.

For NCLC’s report, see DESPERATE HOMEOWNERS: Loan Mod Scammers Step In When Loan Servicers Refuse To Provide Help

In Worcester, Massachusetts, the Worcester Telegram & Gazette reports:

• A loan repayment demanded at gunpoint, effective interest rates exceeding 41 percent and a near decade-long litany of coercion and strong-arm tactics left two borrowers “between the proverbial rock and a hard place,” according to a federal judge’s ruling that comes down hard on a controversial Marlboro lending firm and its president.

• U.S. Bankruptcy Court Judge Joel B. Rosenthal’s decision last week in favor of two corporations controlled by area real estate developers David D. Depietri of Southboro and Robert Depietri Jr. of Worcester marked the first time complaints against LBM Financial LLC and its owner, Marcello M. Mallegni, were aired in a trial and ruled upon by a judge. In his decision, Judge Rosenthal declared that LBM and Mr. Mallegni used a variety of “unscrupulous, to say the least” tactics to ensnare the Depietri brothers’ corporations, 201 Forest Street LLC and 219 Forest Street LLC, into a cycle of ever-increasing default interest and late fees.

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• The ruling had been anxiously awaited by those who have filed more than a dozen state and federal lawsuits that accuse LBM and people associated with it of using similar tactics — including loan sharking, racketeering, extortion and fraud — in transactions they had with the firm.(1) The underlying intent of LBM and its principals, the lawsuits allege, was to wrest control of development projects through foreclosure, or, at the very least, force delays to run up the cost of those loans by piling on fees, penalties and default interest rates.(2) “This is exactly what they did to me,” said Barnstable developer Robert M. Bradley, who has a pending federal racketeering lawsuit against LBM, Mr. Mallegni and others. His experiences, he added, “absolutely mirror those made in this case, only tenfold.”

For more, see ‘Unscrupulous’ loan tactics cited (LBM Financial and owner Mallegni fined $1.1M).

For Judge Rosenthal’s recent ruling in this matter, see 219 Forest Street LLC et al v. LBM Financial, LLC et al (6-30-2009).

Go here for Judge Rosenthal’s April 8, 2009 ruling resulting in the discharge of one of the mortgages in this case pursuant to the application of Massachusetts “Obsolete Mortgages Statute” – M.G.L. ch 260, section 33.

Go here for other posts on accusations of strong arm money lending practices made against these “hard money” lenders.

(1) According to the story, many of the state and federal lawsuits filed against Mr. Mallegni and LBM also name David G. “Duddie” Massad, chairman and primary owner of Commerce Bank, as a defendant.

(2) An earlier Worcester Telegram & Gazette story (see Strong-arm tactics are alleged – LBM Financial target of complaints) reports, in the following excerpt, how LBM Financial routinely dodges the application of the Massachusetts criminal usury statute in lending transactions by availing itself of a huge loophole in the state’s law that allows a lender to charge more than the maximum interest rate, provided that it notifies the state attorney general in writing ahead of time about it (see M.G.L. Chapter 271: Section 49(d). Criminal usury). Keep in mind that actually obtaining approval to make these loans from the state attorney general (or any other government authority, for that matter) is not necessary; you merely have to let the AG’s office know, in writing, that you’re going to do so.

The state usury law dating back to the 1970s ostensibly caps the maximum legal interest rate at 20 percent, but also allows lenders to charge higher rates if they notify the state attorney general’s office in writing. LBM filed notifications announcing its intention to charge interest rates above the usury limit on loans in 1997, 2000, 2002, 2005, 2006, 2007 and 2008, according to records on file at the attorney general’s office. The one- or two-page notification letters, signed by Mr. Mallegni, don’t say exactly how far above the usury limit the company intended to set its interest rates. “All that the statute requires is that if a business is going to lend above a certain rate, they must file with this office,” said Melissa Sherman, a spokeswoman for Attorney General Martha Coakley. “We do approve these, but serve more as a depository for such notices.”

The Wall Street Journal reports:

• In a surprise win for state regulators over the banking industry, a divided U.S. Supreme Court on Monday gave New York prosecutors the green light to investigate national banks for lending discrimination. The high court, in a 5-4 opinion by Justice Antonin Scalia, said federal banking regulations didn’t pre-empt the ability of states to enforce their own fair-lending laws.

• The ruling was a win for the New York attorney general’s office, which had been seeking to investigate the banks’ residential real-estate lending practices since 2005.(1) Scalia said New York Attorney General Andrew Cuomo couldn’t issue executive subpoenas to the banks but could bring enforcement actions against them in court. The decision was a surprise because decades of U.S. Supreme Court rulings have favored federal banking regulation at the expense of state regulation. […] Cuomo said the ruling “reaffirms the vital role state attorneys general play in protecting consumers from illegal and improper practices by our country’s biggest and most powerful banks.”

***

• The divided ruling didn’t split along the court’s normal ideological lines. Justice Clarence Thomas, whose views often align with Scalia’s, wrote the court’s dissent.(2)

***

• All of the other 49 states backed New York in the case, saying they have historically had the power to enforce consumer-protection laws against national banks. That power, the states said, was particularly important now because of the widespread mortgage abuses that contributed to the nation’s economic crisis.

For the whole story, see US High Court: States Can Probe Natl Bank Lending (subscription required; if no subscription, try here, then click link for the story).

For the court’s ruling, see Cuomo v. Clearing House Assn., L.L.C., Docket # 08-453 (June 29, 2009).

(1) According to the story, former New York Attorney General and Governor Eliot Spitzer launched the probe, saying mortgage data showed black and Hispanic borrowers received a larger percentage of high-interest home loans than white borrowers. Spitzer asked several banks, including Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc., to voluntarily produce non-public information about their mortgage-lending practices in New York. In response, the federal Office of the Comptroller of the Currency and a consortium of national banks each sued to block Spitzer’s investigation.

(2) Justice Scalia was actually the swing vote in this ruling, aligning himself with Justices Stevens, Souter, Ginzburg, and Breyer, the four justices on the court widely considered to be politically “left of center”. DiscriminationPredatoryLendingAlpha

For the whole story, see US High Court: States Can Probe Natl Bank Lending (subscription required; if no subscription, try here, then click link for the story).

For the court’s ruling, see Cuomo v. Clearing House Assn., L.L.C., Docket # 08-453 (June 29, 2009).

(1) According to the story, former New York Attorney General and Governor Eliot Spitzer launched the probe, saying mortgage data showed black and Hispanic borrowers received a larger percentage of high-interest home loans than white borrowers. Spitzer asked several banks, including Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc., to voluntarily produce non-public information about their mortgage-lending practices in New York. In response, the federal Office of the Comptroller of the Currency and a consortium of national banks each sued to block Spitzer’s investigation.

(2) Justice Scalia was actually the swing vote in this ruling, aligning himself with Justices Stevens, Souter, Ginzburg, and Breyer, the four justices on the court widely considered to be politically “left of center”.