Many homeowners seeking a loan modification in order to save their homes from foreclosure are intentionally being ignored and given constant runaround in order to enable the investor to acquire a family's home via foreclosure proceedings. This enables the investor to make even more profit from their actions with intentions of seeking surplus reimbursements by a variety of means (such as seeking government bail out money, filing mortgage insurance claims, pursuing deficiency judgments against the homeowner, requiring promissory notes, etc.) And, if you have any equity in your home and the bank forecloses, guess who gets that money as well? The link below sheds some light on this issue.

http://www.youtube.com/watch?v=ssl5yb7FewA

Please be advised that I AM NOT AN ATTORNEY. You should seek legal counsel from an attorney licensed to practice law for your particular set of circumstances. Please feel free to share and discuss this information with any attorney you wish to consult with or retain.

Unfortunately, in non-judicial states (like Massachusetts) it is up to the homeowner being foreclosed on to file a law suite against the foreclosing party in order to challenge their lender's actions. Regrettably, many unsuspecting homeowners (who are not aware of their rights) will lose their homes to a fraudulent foreclosure unless they stand up for themselves and challenge such an action! Much of a homeowner's potential success with such a claim greatly depends on how they or their counsel approach the argument with the judge.  

Our office (in conjunction with the Consumer Warning Network and other law firms and non-profit organizations across the country) has been educating homeowners about the “Produce the Note” theory/defense for the past several years. Please check out their website below:

http://www.consumerwarningnetwork.com/

Included in their web-site are step be step instructions to handle such a case on your own. However, it is highly recommended you consult with an attorney in order to achieve the very best results possible for your specific set of circumstances.Our office is only licensed to practice law in the Commonwealth of Massachusetts and we currently are not taking on any additional foreclosure litigation clients at this time.

So, what happens when a bank cannot produce the note and the court rules that the foreclosure cannot continue?

If the ruling was issued by a general court of law (vs. bankruptcy court) the homeowner would be entitled to have the foreclosure complaint dismissed. This would give the homeowner an indefinite stay of execution unless and until the lender can come back and prove their legal standing to the court. This does NOT discharge the debt against the homeowner. Only the bankruptcy court would have such authority. However, in addition to the homeowner asking the court to dismiss the foreclosure complaint, they can also ask the court to invalidate or void the mortgage lien on the property. This would in turn make the mortgage debt unsecured.

When a court dismisses a foreclosure complaint in favor of a homeowner, there is a very good possibility the lender will eventually approach the homeowner and offer some type of settlement to the issue. The homeowner could also approach the lender to offer some type of settlement. An example of such settlement offer could be:

1.)   ((If the homeowner was upside down)) Lender to re-write the note based on the current appraised value. Lender will write off any deficiency between the alleged principle balance and current appraised value and will waive all deficiency rights against the borrowers. This will also include the write off of all past due payments, outstanding interest and all late fees and penalty charges that may have accrued under all previous note terms to date.

2.)   New Note amount to reflect a 40 year term with a fixed interest rate of 3%.

3.)   Revised monthly payments are to include escrows for taxes and insurance.

4.)   Lender is to dismiss any pending foreclosure and legal actions set forth against the borrowers.

5.)   Lender is to remove all negative credit reporting statuses and report borrower’s new trade line “Account Current – Paid As Agreed” to all credit reporting agencies to which lender may subscribe.

Should a homeowner continue to pay on their existing mortgage in question?

This could actually be a stipulation that a judge could impose on the homeowner pending a final disposition to the issue. A judge could order the homeowner to place any and all subsequent payment made to be place in a separate escrow account. I have seen this on occasion. Even if such a thing is not ordered by the court, it would be a good idea for the homeowner to place any further payments in a separate escrow account (just in case the lender is able to come back and prove legal standing).  

Youmay be able to file for bankruptcy protection. To be honest, bankruptcy court could be the best forum to achieve your goal of keeping your home.

Finding an attorney who specializes in foreclosure defense and litigation can be very difficult because it is a specialized area that not many attorneys handle. The ones that do handle such cases may not be taking on new clients as they may be simply overwhelmed with homeowners seeking such representation. You could try and search the web for foreclosure defense/litigation attorneys or perhaps contactyour local Bar Association for a referral to a consumer attorney that specializes in Foreclosure Defense/Litigation or a bankruptcy attorney that specializes in Adversary Proceedings & Litigation.

Unfortunately, most bankruptcy attorneys don’t like to litigate these types of cases because they are either not comfortable handling such cases or has experience with adversary proceedings litigation or simply can’t commit the time to litigate such a case. Many would just like to file your petition, get a discharge and move on to the next client. Sometimes, the other factor is money. Most bankruptcy attorneys just assume clients don’t have the money to pay them to take on such a case.

You may want to review this information and also forward this information to whatever attorney you may choose for their review and consideration. Finding an attorney who is familiar with the concept of foreclosure defense is important. He or she will know how to best handle your case in order to achieve your ultimate goal of trying to keep your home. If you do retain a bankruptcy attorney, keep in mind that such representation does go above and beyond the traditional Chapter 7 or 13 representation and would be an additional cost to you in terms of court costs and fees should this be the route you choose to pursue. Attorney fees for such representation can vary greatly from each attorney.

A bankruptcy attorney can file for bankruptcy protection on your behalf and could also represent you for any Adversary Proceedings that may be required to achieve your goal of keeping your home based on the original mortgage note theory/defense. Remember, the right to foreclose belongs ONLY to the person or entity that has LEGITIMATE POSSESSION OF YOUR ORIGINAL MORTGAGE NOTE (not a photo copy, not an electronic entry) but the original note itself with your original signature(s) and the original authorized agent signatures from the entity you allegedly owe the money to along with all appropriate raised corporate seals and stamps if required.

An adversary proceeding is a lawsuit filed within the bankruptcy case. It is an action commenced by a plaintiff filing a complaint against one or more defendants.  An adversary proceeding resembles a typical civil case from state court. The plaintiff is the person, partnership or corporation initiating the lawsuit. The defendant is the person, partnership or corporation being sued.

Certain types of disputes cannot be handled by motion in the bankruptcy case, but instead require the commencement of an adversary proceeding. Federal Bankruptcy Rule 7001 lists types of actions that require an adversaryproceeding. Adversary proceedings are governed, for the most part, by Part VII of the Federal Rules of Bankruptcy Procedure. These rules incorporate most of the Federal Rules of Civil Procedure and are designed to make practice before the bankruptcy and district courts as similar as possible.

You may also want to check out the following website that may better explain these arguments:

http://foreclosuredefensenationwide.com/

WILLIAM JEFF BARNES, ESQ.

Jeff is the founder of the Foreclosure Defense Nationwide (FDN) website and blog. His law practice is primarily oriented towards defense of foreclosure actions throughout the United States, with his firm currently representing victims of foreclosure and predatory lending practices (with local counsel where required) in the states of Alaska, Arizona, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Maryland, Michigan, Minnesota, Missouri, Montana, New Jersey, New York, Ohio, Oregon, South Carolina, Tennessee, Vermont, Washington, and Wisconsin.

        W. J. Barnes, P.A.                                                    

        1515 North Federal Highway                                     

        Suite 300                                                                  

        Boca Raton, Florida 33432                                       

        Telephone: (561) 864-1067                                        

        Telefax: (702) 804-8137

An example of such an affirmative defense could be something like:

AFFIRMATIVE DEFENSES TO FORECLOSING PARTY’S CLAIM OF “LOST NOTE”

A common trend which is emerging in foreclosure cases is the claim of the plaintiff (a/k/a the “foreclosing party”) that they have “lost the note and/or mortgage”. In such a case, the foreclosing party may file an Affidavit as to the lost note and mortgage in a purported attempt to cure the material defect of proof of ownership and production of the original note and mortgage. This position should be met with a vigorous challenge based on what is being discovered in case after case: that the “plaintiff” does not and never had the original note OR mortgage, which was probably sold or assigned more than once and may today be somewhere in the Cayman Islands as part of a specialized investment vehicle.

Thus, when a borrower or borrower’s attorney is met with such a position, several defenses should be considered. These “affirmative defenses” may take the form of or be asserted along the following lines, provided they are asserted in good faith:

1. Upon information and belief, the mortgage note has been paid in whole or in part by one or more undisclosed third party(ies) who, prior to or contemporaneously with the closing on the “loan”, paid the originating lender in exchange for certain unrecorded rights to the revenues arising out of the loan documents.

2. Upon information and belief and in connection with the matters the subject of paragraph “1” above, Plaintiff (foreclosing party) has no financial interest in the note or mortgage.

3. Upon information and belief, the original note was destroyed or was transferred to a structured investment vehicle which may be located offshore, which also has no interest in the note or mortgage or revenue thereunder.

4. Upon information and belief, the revenue stream deriving from the note and mortgage was eviscerated upon one or more assignments of the note and mortgage to third parties and parsing of obligations as part of the securitization process, some of whom were joined as co-obligors and co-obligees in connection with the closing.

5. To the extent that Plaintiff has been paid on the underlying obligation or has no legal interest therein or in the note or mortgage, or does not have lawful possession of the note or mortgage, Plaintiff’s allegations of possession and capacity to institute foreclosure constitute a fraud upon the court.

6. Based upon one or more of the affirmative defenses set forth above, Defendant (borrower’s name) is entitled to a release and satisfaction of the note and mortgage and dismissal of the foreclosure claim with prejudice.

!!Make Them Prove It!!

If the lender should allege that an original mortgage promissory note has been lost or destroyed, the law requires the lender to prove all of the following under the “Uniform Commercial Code” (which is a set of laws governing commercial transactions that many states have adopted). It contains a specific provision on this subject (Section 3-309) which states that a person or entity can enforce a promissory note without having the original, BUT only under certain limited circumstances as follows:

1. The person or entity has to swear and attest that it no longer has the original note;

2. The person or entity has to prove that it was properly in possession of the note and was entitled to enforce it WHEN it lost possession of the note;

3. The person or entity has to prove it didn’t “lose” possession simply because it transferred the note to someone else (i.e., it’s not really lost); and

4. The person or entity has to prove that it cannot produce the original note because the instrument was destroyed or its whereabouts cannot be determined or it was stolen by someone who had no right to it.

All of these matters have to be definitively proven by the person or entity trying to foreclose on the property. It is not the obligation of the borrower to prove or disprove any of this. The borrower can simply challenge the right of the person or entity trying to foreclose and demand proof. More and more judges across the country are dismissing foreclosures in their entirety due to the fact that courts are no longer accepting a lender’s dismissive “take our word for it” attitude.  

Whether or not you owe the money is not what is in question here. We all know you owe the money to “someone”. However, you have every right to definitively know who that “someone” is. It’s not like you are looking for a free ride. In fact itis probablyquite the contrary. More than likely you have been reaching out to your lender for quite some time asking for their help and assistance with no results. This is more than likely due to the fact that your loan was part of an asset backed security package that was sold on Wall Street and potentially belongs to multiple people and/or entities that technically requires each party to agree to modify any of the terms that could affect their bottom line. These people/ entities (usually big time investors and speculators from all over the world) have no clue as to what investments they own and don’t own (leaving the banks and servicing companies wondering the same thing). Trust me, it’s a BIG mess!

One of the biggest hot button questions with regards to foreclosure defense has been: “Can MERS legally foreclose on a homeowner”? The overwhelming answer in a majority of states has been: no they cannot. You may want to review the Massachusetts bankruptcy decision in regarding MERS at this link:http://www.foreclosuresinmass.com/MERS.php

MERS can only act for a valid note holder.

Here is an article highlighting a recent debacle that has been uncovered surrounding foreclosures:

http://www.cnbc.com/id/39499044

Below are a few links you may also find useful as well.

Helpful Links:

http://foreclosuredefensenationwide.com/

http://www.americansunitedforjustice.org/

https://www.uslegalproviders.com/

http://frauddigest.com/index.php

MERS Discussions:

http://www.goldsteinandclegglaw.com/bankruptcy_blog/?p=11

http://www.associatedcontent.com/article/2099067/how_mortgage_electronic_registartion.html?cat=54

If a court allows a lender (with no proven legal standing) to foreclose on a homeowner, it could enable the wrongful investor to fallaciously acquire a family's home, enabling the unlawful investor to grossly profit from their actions with intentions of seeking surplus reimbursements by a variety of potential means (such as seeking government bail out money, filing a mortgage insurance claim, pursuing a deficiency judgment, requiring a promissory note and potentially stripping homeowners from any equity remaining in their home).

More and more courts across the country are now beginning to understand and realize that this issue is not merely a "technicality" and should not be satisfied with anything less than full proof of this issue. During the past few years, some courts believed lender's stories of original promissory notes being "lost or destroyed" and have moved to finalize foreclosure sales simply by taking the lender's word (only to have other people or entities later turn up with the original note (proving that they were the proper holder of the note) and not the person or entity who foreclosed on the property originally, leaving the original borrower still liable). More judges are now realizing and appreciate the fact that if they should agree that an original note has been legitimately lost (and allows a foreclosure to proceed) it is the borrower who is still at risk.

As equally important as forcing the lender to produce the original mortgage promissory note, is making them clearly prove they have the absolute legal right and authority to collect or foreclose on behalf of another person or entity!

For example, if a Notice of Intent to Foreclosure has been filed against you by the company you thought was your mortgage company (let’s say Bank of America) and the foreclosure complaint and published notices list a different mortgage company other than Bank of America, there is a very good likelihood Bank of America is acting in a “servicing” or “trustee” capacity on behalf of another person or entity. In fact, the foreclosure complaint might state something like this (pay close attention to the highlighted key words):

“By virtue and in execution of the Power of Sale contained in a certain mortgage given by Mr. and Mrs. Smith to Mortgage Electronic Registration Systems, Inc. as “Nominee” for One West Bank, of which mortgage Deutsche Bank National Trust Company, as “Trustee” of the Home Equity Mortgage Loan Asset-Backed “Trust” Series (NABS 2007-A), Home Equity Mortgage Loan Asset-Backed Certificates (Series INABS 2007-A) under the “Pooling and Servicing Agreement” dated March 1, 2007 is the present holder, by “assignment”.

Notice how Bank of America was not even mentioned? I must admit, I don’t even have a complete understanding on what the above passage means! However, it appears the mortgage (which is the actual lien against the property securing the note) is potentially being held by a person or entity that might be different than the person or entity that actually holds the original mortgage promissory note (which is the legal contract to pay someone back under specific terms). When this happens, you now have a separation of the Note & Mortgage, which can potentially invalidate a mortgage lien on a property. And (although Bank of America is not listed as the foreclosing party) it appears Bank of America is somehow making a legal claim they have such an authority to do so by certain powers granted to them by means of a “Trust”, “Servicing Agreement” or other written legal directive which lists them as a “Trustee”, “Nominee”, “Servicer” or “Administrator” on behalf of a third party who allegedly holds the original mortgage note. Under this example, there is a great likelihood no one would be able to determine who actually holds such authority in the fist place!

If this is applicable to your set of circumstances, this point should also be vigorously challenged in court of law to force the foreclosing party to produce a copy of the “Trust”, “Servicing Agreement” or other written legal directive that clearly and definitively outlines their actual legal authority to act in a specific capacity as a “Trustee”, “Nominee”, “Servicer” or “Administrator” on behalf of the third party who allegedly holds the original mortgage promissory note.

It would be very difficult for a judge to dismiss both of these arguments. For a court to be dismissive regarding such an important financial instrument and other intended written legal directives would mean such applications of law would have no further legal bearing, effect or meaning and should simply be written in the air going forward.

I have laid out many examples that can be derived from the contents contained within this post on how this issue should be approached and explained to a judge presiding over such a case. Please feel free to share and discuss this information with any attorney you wish to consult with or retain. There is also much case law that has already been laid out across the country that could also be referenced to support the argument (let alone all of the recent media coverage all over the place regarding banks and their fraudulent paperwork)!

Did you happen to catch the 60 Minutes story on mortgage fraud? I believe it aired on April 11^th. It further exposed a huge fraud on the part of lenders who are attempting to “re-create” documents. Below is the link to the story.

http://www.cbsnews.com/video/watch/?id=7361572n

I realize this is a lot of information. However, it is being given to you so you may simply have a very basic understanding into the potential merits and options of your own case. As always, you should consult with an attorney for proper legal advice specific to your own set of circumstances.

I hope this information helps a little to those who may need it!

All the Best,

Rick D. Misitano

Rick D. Misitano, Senior Paralegal

Law Offices of James M. Bosco & Associates

Methuen Executive Park

240 Pleasant Street

Methuen, Massachusetts 01844

Phone: (978) 687-8804

Fax:     (978) 687-8872

boscolaw@comcast.net