UPDATE ON BAC LITIGATION … LOOKING GOOD

Dec 20, 2010

submitted by Bob G

An associate came to me a couple of months ago and told me that two of his income props had been foreclosed upon by Bank of America, N.A. The bank had obtained foreclosure judgments in both cases via default, and had actually held a foreclosure sale in one case. The other case had its sale scheduled for a week hence.

Put together two Orders to Show Cause allowing my bud defendant to submit a late Answer by reason of excusable default, based on the fact that he was a pro se litigant, the bank never even included a copy of the note and mortgage in its complaint, fraud, misrepresentation, lack of subject matter jurisdiction, etc. My friend’s papers also stated that he didn’t put in an Answer because he just naturally assumed that the judge would dismiss based on lack of submission of copies of the note and mortgage.

Both judges signed the OSCs. Litigation mill attys for BAC claimed they needed extensions of time to get in touch with their client, BAC. My guy said to the judges why do they need a couple more weeks (which, by the way, turned into two months) to produce the note when they’ve already had two years to do so? The extensions were granted nevertheless.

So we sent letters to the judges and copies to BAC’s attys stating that we demanded the right to have any purported original notes submitted to the Court so that our forensic expert could examine them, using yellow dot, ink and paper analytic techniques. The letters also stated that should BAC put in lost note affidavits, they would be required to double bond the value of the notes pursuant to the UCC (in NY, double bonding is mandatory).

In the meantime, I checked Fannie and Freddie’s websites and Lo’ and Behold, guess what? Fannie owns the notes and mortgages, not BAC! So off to the judges go supplemental affidavits in further support of the OSC, showing as exhibits the Fannie web pages stating that they own the notes and mortgages.

A couple of days ago we got the first opposition papers from BAC’s attys. No lost note affidavit, no copies of notes, no addressing the fact that Fannie owns the notes. Counsel claims that they are not required to submit a copy of the note or mortgage with the foreclosure complaint. Well, pursuant to NYUCC 3-505, they are required to present the original unless presentment is waived pursuant to NYUCC 3-511. Most mortgage notes contain this waiver of presentment language. This waiver, however, only holds up if the defendant does not dispute that the plaintiff is the owner/holder of the note.

Also, in NY, CPLR 4539 also allows for a photocopy to be admitted into evidence if the original is unavailable. Since the original always seems to be “unavailable” a photocopy is usually admitted because the defendant doesn’t know how to challenge the submission. [Neil’s writings and products are excellent sources of ways to challenge this.] Essentially, these proposed submissions are challenged on the basis of lack of foundation and authentication, i.e., the photocopy must be authenticated by someone who had personal knowledge of the original note creation and execution, and can attest via personal knowledge that the photocopy is an exact replica of the original. No such person will ever be found who can so authenticate.
The next thing that BAC’s attys threw into their opposition papers was an affidavit from a BAC litigation specialist, attesting to the fact that she had examined the books and records of the plaintiff and concluded that my guy was in default under the terms of the note and mortgage. Again, this is like shooting fish in a barrel. The affiant had no personal knowledge of the actual transactions between the bank and my guy. All she was competent to testify to was that she examined the books and records of BAC and that they said my guy was in default. Pure hearsay and inadmissible if challenged. She could not testify that BAC was the actual creditor and that my guy was in default to the actual creditor, because she has no personal knowledge of such matters.

So now we come to demonstrating that it is impossible for both Fannie and BAC to own the same note and mortgage at the same time. (BTW, this note was actually an original holding of BAC, not in trust.) And this brings us to NYUCC 3-603, that states that the obligation is satisfied or discharged if payment is made by a third party even if that party is a stranger to the transaction. So we put this in his Reply Affidavits, as well. If BAC unloaded the note on Fannie, and it is sitting in Fannie’s loan portfolio and on its balance sheet, it didn’t get there by accident. Fannie paid BAC for it.

I think that BAC has sealed off all the exits on this one all by itself. It cannot now come back to the court with the original note unendorsed to Fannie. If it is endorsed to Fannie, then BAC and its attys have perjured themselves by stating that BAC was the owner of the note and mortgage. (Another BTW…there are no assignments of these notes to Fannie from BAC to be found in the county clerks’ offices.) If they show up with an unendorsed note, they will have to explain how Fannie now owns the same note. Discovery will show that Fannie paid them for the note, and so the obligation no longer exists. My guess is that BAC will try and settle discreetly prior to final judgment, and stipulate to seal the records. This would be a big mistake on my guy’s part. He needs a final judgment on the merits, so as to preclude Fannie via res judicata from coming back and suing him on the notes. Clearly BAC is the servicing agent for this note, and will be found to be in privity with Fannie so as to preclude Fannie from initiating another action in its own name.

Stay tuned for more news on this one.

Also, here’s a special treat for anyone with securitized mortgages, courtesy of Brian Davies.

http://www.scribd.com/doc/44863118/POOLING-AND-SERVICING-AGREEMENT-VIOLATIONS-AFFIDAVITS-OF-EXPERTS-Affidavit-OF-IRA-BLOOM-for-US-Bank-v-Congress

http://www.scribd.com/doc/44863239/SECURITIZATION-EXPERT-AFFIDAVITS-Affidavit-of-Thomas-Adams-for-US-Bank-v-Congress

I know Prof. Bloom. He has done some estate and trust work for me. He charges $500/hour. He is a renowned expert on NY trust law, and teaches at Albany Law School.
What Bloom and Adams say in their expert witness affidavits is that it was impossible for the subject loan to have been transferred into the subject trust. Readers herein would be well advised to seek these guys out when challenging the securitization of their loans.

Posted in bubble, Corruption, Eviction, securities fraud |