“The note is often produced at some point in the litigation, but the real problem is, how did they get it? When did they get it? And did the transfer of ownership comport with federal and Florida law for the transfer of such negotiable instruments?”In cases that are dismissed based on these arguments, foreclosure defense attorneys said lenders aren’t as eager to re-file the case.
The best way to smoke out the REAL LENDER is by filing a lawsuit seeking to quiet title. This has already been done successfully in dozens of cases in many states. We are tracking what people are reporting. In almost ALL cases where this was the central focus of the attack against the pretender lender, the homeowner was awarded quiet title by DEFAULT. (The other side never answered).
TRANSLATION: The Court (Judge) entered a Final Judgment declaring that the homeowner owned his/her/their house free and clear of all encumbrances. The claims of the pretender lender were thrown out and the homeowner was left with his house as an asset, not alibaility. The homeowner was no longer subject to foreclosure or ANY claim on the note or mortgage that was signed at “closing.”
Like the NY York decisions recently reported quiet title is another way to invalidate the mortgage and extinguish the note and any right to enforce it.
CAUTION: “PRODUCE THE NOTE: It’s a valid strategy but it offends the sensibilities of many judges. If THAT is the focus of your attack or defense, then you are rolling the dice on ONE thing when there are many arrows in your quiver. Many Judges have held, contrary to the rules of evidence, that merely being unable to produce the original note is NOT a reason to stop the foreclosure. Legally it can be argued this is wrong. I think it is flawed legal reasoning. But the other side is that “just because the “lender” was sloppy in its record keeping does not mean the homeowner should get away scott free. ” Actually, legally, I think it DOES mean that and that Charney is right. But I think you need to couple your argument with why this is a matter of substance and not just procedure or legal sleight of hand.
The reason why many Judges HAVE applied the evidentiary rules regarding production of the note is that there could be someone else holding it with a greater right to enforce it than the pretender lender who is trying to foreclose. And in fact (with the help of a forensic analyst to assist as an expert) the securitization process multiple parties who COULD have the actual original note in their position and/or who COULD be parties with a superior legal right to be paid on the note —because THEY are the ones who actually advanced the money for the loan or they advanced the money to third parties who advanced the money to fund the loan.
Lawyer’s foreclosure defense of ‘quiet title’ faces testsThe house at 12920 Mt. Pleasant Road is a modest ranch-style home. The man in it is John McCampbell, a 61-year-old car mechanic who lives with his two children and fiancée.
He took out a $156,000 mortgage from the now-defunct Washington Mutual, which foreclosed on his home in 2004 after he lost his job. But when the lender was unable to produce the deed to prove it had a right to foreclose, McCampbell beat the foreclosure and remains there today.
Now McCampbell and his Fort Caroline home are poised to make history in foreclosure defense with an experimental legal approach that would wipe out his mortgage debt and hand him a clean deed. It’s called a “quiet title,” where the court establishes a party’s title to the property to remove or “quiet” any challenges or claims to it.
It sounds like an impossible endeavour. But April Charney, a Jacksonville Area Legal Aid attorney, has spent the past four years teaching lawyers across the country the legal framework of this foreclosure defense. With an average of 3,000 foreclosures filed every month in Jacksonville alone, there’s no shortage of lawyers tapping her expertise.
“It’s an exceptionally layered, nuanced practice of law, but right now a very productive one,” Charney said recently after her latest sold-out seminar in Jacksonville.
Bankers counter that Charney is taking advantage of a legal technicality.
Anthony DiMarco, executive vice president of governmental affairs for the Florida Bankers Association, said errors on assignments are not tantamount to a person not being responsible for their mortgage.
“When you are doing lots and lots of anything — and there were lots of these loans written — there are human beings involved and there were mistakes along the way just like anything else,” DiMarco said.
‘Show me the note’Before asking the court to quiet a title, a foreclosure must be dormant for five years. That brings Charney to a critical juncture in many of her early cases where the five years is at or near its expiration. She’ll be seeking multiple quiet titles in 2010, including one for McCampbell, her client.
Charney is a national authority on foreclosure defense, and a driving force behind what is often called the “show me the note” movement making its way through jurisdictions across the country. The strategy is crippling lenders’ ability to foreclose on homes when they are not able to produce the note as evidence of their right to bring a foreclosure.
At the crux of her argument is the very loan itself, securitized loans that became commonplace in the late 1990s, and quickly dominated mortgage lending practice.
Mortgage securitization is the process of bundling home loans into securities and selling them to investors. Mortgage servicers collect monthly payments and distribute them to securities investors.
But Charney said the critical error was that the originating lenders systematically pledged the loans, and didn’t actually transfer them to the trusts that are supposed to hold them and issue the securities. The result is a paper trail that goes nowhere, and a reasonably successful legal strategy.
‘A red herring’A secondary snag in lenders’ ability to obtain a foreclosure is the physical note, or lack thereof. The Florida Bankers Association testified to the Supreme Court task force on residential mortgage foreclosure that originals were “deliberately eliminated to avoid confusion” when entered into an electronic format. The problem with that is the court requires an original.
Ownership transfers after the foreclosure has been assigned, copies of notes and false signatures have been argued to amount to fraud.
“The ‘produce the note’ argument is really a red herring,” said Chip Parker, a Jacksonville foreclosure defense attorney. “The note is often produced at some point in the litigation, but the real problem is, how did they get it? When did they get it? And did the transfer of ownership comport with federal and Florida law for the transfer of such negotiable instruments?”
In cases that are dismissed based on these arguments, foreclosure defense attorneys said lenders aren’t as eager to re-file the case.
“There is some sloppiness, and what used to be tolerated by the courts is no longer being tolerated because the judges are starting to see the effect of sloppy pleading,” Parker said.
A slippery slope?Lenders bringing foreclosures and attorneys defending them both claim to be on the side of their communities. Lawyers said the best thing for neighborhood stability and property values is to keep people in their homes. Bankers have a different approach.
“The best thing is to get through the foreclosure as quickly as you can,” DiMarco said. “The faster you can get through a foreclosure process, the faster we can get it sold and in the hands of someone who can get to be a contributing member of the community.”
DiMarco maintained that lenders are doing everything they can to work with homeowners and avoid a money-losing foreclosure, but took notice of a new phenomenon in the housing market — strategic foreclosures on the part of consumers. With courts backed up, mortgages upside down and banks more timid about foreclosing, some consumers who can pay are opting not to.
Lawyers don’t advise those who can afford to make their mortgage payments to stop in hopes they can get a free house out of it, and aren’t convinced that their tactics could provide an incentive for people to intentionally enter foreclosure. They point out that these are long, hard-fought battles that destroy credit.
Lawyers recognize that there must be some end other than a country full of ownerless and free homes. Charney is fiercely advocating a federal intervention, which bankers similarly see as the only reasonable solution.
“I had the vice president of a big mortgage company ask me, ‘What you’re doing here — do you understand what’s going to happen? You’re going to destroy the country. And if you don’t stop, we’re just going to go to Congress and get the laws changed.’ ” said Max Gardner III, a Shelby, N.C.-based bankruptcy attorney who also teaches foreclosure defense. “And my response is, ‘We have some changes we’d like to make, too.’ ”
Jacksonville Business Journal – by Kimberly Morrison
April Charney of Jacksonville Area Legal Aid.
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