LOST NOTE AFFIDAVIT GOES DOWN IN FLAMES IN IOWA

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SUMMARY JUDGMENT DEFEATED IN IOWA; TWO SIGNIFICANT SUPREME COURT
DECISIONS IN NEVADA
July 14, 2011, 2 hours ago | Jeff Barnes
July 14, 2011

An Iowa District Court has issued a 5-page Order denying Wells Fargo’s
(second) Motion for Summary Judgment. Wells Fargo had originally been
granted summary judgment against the borrower, who was pro se at the
time, in 2005 based upon a sworn affidavit that Wells Fargo was the
holder of the note. The borrower had filed an affidavit which stated
that she had spoken to Wells Fargo and was told that the “investor” on
her loan was Lehman. The case languished in an appellate posture and
was continued for various reasons.

Jeff Barnes, Esq. began representing the borrower in early 2010 with
local Iowa counsel Christine Sand, Esq., who immediately initiated
extensive discovery. The Court ordered Wells Fargo to submit an
original of the Note by July 20, 2010. The next day (after the time
for compliance with the Court’s Order had already passed), Wells Fargo
filed a Motion for additional time to comply with the Order, and a
Motion to Substitute Plaintiff which stated that pursuant to a
servicing agreement between Wells Fargo and Lehman Brothers Bank FSB
that the holder of the note and mortgage was Lehman. The 2005 summary
judgment was thus vacated.

Wells Fargo filed a “lost note affidavit” a month later on August 20,
2010 which the Court found did not disclose the specific facts in the
“record of account” which was reviewed by the Wells Fargo affiant upon
which she based her conclusion. On February 23, 2011, Wells Fargo
filed an Amended Foreclosure Petition alleging that Wells Fargo was
the owner and holder of the note and that Lehman Brothers Bank, Lehman
Brothers Holdings, and a securitized mortgage loan trust of which US
Bank was the “trustee” were added “for the purposes of quieting title
to subject property and to comply with” Iowa statutory law. The court
noted that it was unclear what form of relief was being sought with
the addition of these parties.

Wells Fargo filed another affidavit executed by the same Wells Fargo
affiant who executed the “lost note” affidavit. This “new” affidavit
stated that the original note and mortgage were sent to Wells Fargo’s
prior counsel in November 2004 and were lost while in the custody of
said counsel. The Court again found that the affiant did not state the
facts upon which the affiant relied for her conclusions nor what parts
of the file she reviewed upon which she relied.

In its Reply to the borrower’s opposition (which is termed
“Resistance” in Iowa) to Wells Fargo’s second Motion for Summary
Judgment, Wells Fargo attached a copy of a lost note affidavit which
the Court stated was “purportedly” executed by Wells Fargo’s attorney
in 2005. Wells Fargo’s current counsel represented to the Court in its
Reply that Wells Fargo’s previous counsel filed a lost note affidavit
on March 28, 2005. The Court stated that it had reviewed both the
docket sheet and the court file and found no evidence that the
original of the alleged 2005 lost note affidavit was ever filed.

Based on these matters, the Court found that there were factual issues
as to whether or not the note has been lost and whether the note has
been “transferred”, and denied summary judgment to Wells Fargo on its
foreclosure claim.

Our question to Wells Fargo is, were you lying then or are you lying
now? Round and around and around we go, and where Wells Fargo and its
attorneys will stop, nobody knows! Note, note, who has the note?
Lehman? Lehman Holdings? The USBank securitization? None of the above?

Separately, the Supreme Court of Nevada issued two opinions on July 7,
2011 which finally compel foreclosing parties in Nevada to produce
material documentation as to chain of title to the Note and Deed of
Trust in order to be permitted to continue with a foreclosure action
when mediation is requested. in Leyva v. National Default Servicing et
al., No. 55216, 127 Nev. Advance Opinion 40, the Supreme Court held
that strict compliance is required with Nevada statutes governing the
production of certain documents including any assignment of the Deed
of Trust; that a foreclosing party’s failure to do so “is a
sanctionable offense; and the district court is prohibited from
allowing the foreclosure process to proceed”. Wells Fargo was also the
culprit in this case.

Significantly, in discussing the transfer of the Note, the Supreme
Court of Nevada cited to the recent In Re Veal decision from the 9th
Circuit Bankruptcy Appeals Panel (which was previously discussed on
this website), holding that the borrower “has the right to know the
identity of the entity that is ‘entitled to enforce’ the mortgage note
under Article 3 (of the Uniform Commercial Code).” The Court concluded
that Article 3 “clearly requires Wells Fargo to demonstrate more than
mere possession of the original note to be able to enforce a
negotiable instrument”. The court found that there was no endorsement
and no assignment, and reversed the District Court.

The opinion in Leyva cited to the Court’s opinion in Pasillas v. HSBC
Bank as Trustee, No. 56393, 127 Nev. Advance Opinion 39 (also decided
July 7, 2011), which also reversed the District Court and also cited
to Veal , setting forth the requirements for production of evidence of
chain of title to the note and Deed of Trust in a foreclosure.

The multiple citations to Veal, which is a Federal Bankruptcy
appellate court opinion, by the state Supreme Court of Nevada, is more
than important. It demonstrates that simply because a foreclosure
issue is decided by a Bankruptcy court does not mean that it is not
applicable to a non-Bankruptcy (or non-Federal) foreclosure case. Time
and again, when we argue that an issue in a state foreclosure case has
already been decided by a Bankruptcy court in the foreclosure context,
attorneys representing foreclosing “lenders” and servicers argue
“Well, Judge, that was a Bankruptcy case, and we are not in Bankruptcy
Court”. Leyva and Pasillas have now put that argument to bed. If a
Federal Bankruptcy decision is good enough for the Supreme Court of
Nevada in two separate opinions, it should be good enough for any
state court.

We thank one of our dedicated readers for alerting us to these two
highly significant Nevada decisions.

Jeff Barnes, Esq., http://www.ForeclosureDefensenationwide.com

Foundation of “Lost” Document — Wigmore on Evidence

The biggest mistake most people make is not knowing basic rules of evidence. That is why I cover it in my manuals, seminars and books. Here is Wigmore on evidence which I stumbled across while looking for something else. The basic thrust is that the burden of proof increases geometrically on a party wishing to prove up the contents of a document that is not present in court. Testimony from a “copy” is inadmissible. Testimony is inadmissible unless it comes from a witness accepted by the court — not some lawyer lathering up his mouth and using finesse to escape the rules of evidence. Every witness must be sworn, must have personal knowledge of the contents, must remember it ALL and be able to communicate it with specificity such that a court could rule without the court creating a document that had never been in existence before the evidentiary hearing.

As soon as the Lawyer starts talking you should probably be objecting since he is not sworn, not a witness and never will be.

Wigmore on Evidence
Chapter 73. Verbal Completeness
I. Must The Whole of The Utterance be First Offered by The Proponent?
B. Documents
§ 2105. (b) Document lost or destroyed: (1) Deeds, letters, contracts, abstracts, etc.; substance of the material parts suffices.

“In dealing with the general principle requiring the production of a documentary original if it is available, it has already been seen (§ 1267 supra) that testimony based on recollection is an allowable mode of proof for lost documents, though for some kinds of documents testimony by copy is preferred if it can be had (§§ 1268-1272 supra). Assuming, then, that there is no prohibition of any qualified witness to the contents of a lost or destroyed document, the question arises, under the present principle… (a) As to entirety of parts, it is clear that for documents having in themselves a legal effect — such as deeds and contracts — all the material parts must be established by the testimony to contents. It would be imprudent to act judicially upon a part of a document whose material effect must depend equally upon other and missing parts. This practice, doubtless, would sometimes leave honest rights unenforceable because their tenor is unknown; but this contingency is preferable to …”

So what this means is that an affidavit that is sworn must be the “testimony” of a witness accepted by the court who has personal knowledge and is not reporting what was told to them by someone else and not be reporting what they read in another document.

WAMU Screws UP and Tries to Sue 7 Years Later!!!

COME TO OUR SANTA MONICA SEMINARS 9/3-9/4

florida-regulator-resigns-after-letting-bank-robbers-and-other-felons-operate-as-mortgage-brokers

Dear Bryan:

OK. FIRST OF ALL YOU WILL BE CONTACTED BY A MEMBER OF OUR TEAM TO GET FURTHER INFORMATION SO WE MIGHT BE ABLE TO HELP YOU A LITTLE MORE. PLEASE REMEMBER THAT I AM A LICENSED ATTORNEY IN FLORIDA BUT ACTUALLY DON’T PRACTICE ANYMORE. WHATEVER I TELL YOU HERE SHOULD BE REVIEWED WITH COMPETENT LICENSED LOCAL COUNSEL BEFORE YOU MAKE ANY DECISION OR TAKE ANY ACTION. ANYTHING I SAY HERE IS BASED UPON THE LIMITED AMOUNT OF INFORMATION YOU HAVE GIVEN TO ME AND UPON A COMPLETE REVIEW OF YOUR FACTS,MY OPINION COULD CHANGE AND IN ANY EVENT MY OPINION MIGHT NOT BE RELEVANT IN YOUR LEGAL JURISDICTION.

I’ll break down your fact pattern piece piece and comment on each piece:

1. You write “I am currently dealing with an issue in court where I actually rescinded a loan within the 3 day period.”

ANSWER:

  • Whether your rescission was effective depends upon how you did it. But most cases state that ANY written intention to rescind is sufficient. The rescission, as you can see in the blog and general comments below, has the effect of canceling the note and mortgage.
  • The 3 day rescission appears to be different than other rescission remedies in that it applies automatically.
  • Other rescissions are subject to acceptance or objection by lenders.
  • This means that ALL documents should have been returned to you, canceled with an acknowledgment that the loan is null and void.
  • If the mortgage was recorded, a satisfaction of mortgage should be recorded by the “lender” and can be required in a court of law.
  • If the note was signed, then the note should be returned to you in its original form, along with some writing on it that says “rescinded or canceled.”
  • Remember that rescission under TILA is NOT  the only rescission remedy available under State and Federal Statutes and common law.
  • PLEASE NOTE THAT THE PRACTICE OF “SELLING FORWARD” MIGHT COMPLICATE ANY RESCISSION. THE “LENDER” MIGHT WELL RESIST YOUR ATTEMPT TO RESCIND EVEN THOUGH IT HAS NO RIGHT TO DO SO. ITS MOTIVATION IS THAT BY “SELLING FORWARD” IT ESSENTIALLY RECEIVED MONEY IN FULL FOR THE FULL AMOUNT OF THE PRINCIPAL STATED ON YOUR NOTE OR PROPOSED NOTE AND IT ASSIGNED YOUR NOTE AND MORTGAGE EVEN IF YOUR NOTE AND MORTGAGE NEVER EXISTED.
  • IN ADDITION, THE “LENDER” WAS ACTUALLY A STAND-IN FOR THE REAL LENDER WHO WAS NOT DISCLOSED SO YOUR RESCISSION MIGHT HAVE BEEN ADDRESSED, UNDER TILA, TECHNICALLY TO THE WRONG PARTY, BUT THE APPARENT AGENCY OF THE NOMINAL DISCLOSED LENDER WILL PROBABLY BE SUFFICIENT TO MAKE YOUR RESCISSION VALID.
  • UNDER THE POOLING AND SERVICE AGREEMENT SIGNED BETWEEN THE “LENDER” AND THE REAL LENDER THE “LENDER” MIGHT HAVE TO BUY BACK YOUR LOAN OR SUBSTITUTE WITH ANOTHER “LIKE” LOAN AND MIGHT NOT HAVE THE SOLVENCY (OR WILLINGNESS) TO DO IT.
  • IN 40% OF THE CASES, THE DOCUMENTATION HAS DISAPPEARED BECAUSE THE “SELLING FORWARD” CAN ONLY BE ACCOMPLISHED BY EXECUTING A FRAUDULENT OF ASSIGNMENT OF A NON-EXISTENT NOTE AND MORTGAGE AND EXECUTED IN BLANK WITH A SQUIGGLE OVER YOUR NAME AS THOUGH YOU HAD SIGNED IT. THIS PRACTICE HAS BEEN USED EVEN WHERE THE LOAN WAS SOLD AT OR AFTER CLOSING. Thus the REVERSAL OF THE TRANSACTION REVEALS FRAUD ON THE PART OF AGENTS, SERVANTS OR EMPLOYEES OF “LENDER” AND OTHER PARTIES. Thus the note is destroyed or missing when the subject comes up.
  • If you DID sign a note, there is the distinct possibility that it was transferred or transmitted to a Structured Investment Vehicle (SIV — see Glossary) in the Cayman Islands or to some other third party and might not be recoverable by your lender.

2. You write: “(The closing atty. at the title co. seemed shady and we did not feel comfortable with the whole deal.) Well, they (WAMU) funded and paid off the other mort. co. within the 3 days which violated the “delay of performance” statute. Then they attempted to collect and I informed them that I had rescinded. (I have a copy of the form, a copy of the express mail label, a copy of the signed delivery receipt, etc.) Plenty of proof that I rescinded in a timely manner. This was 2001. I made no payment to them at all.”

ANSWER:

  • If you willl look at one of the recent blog posts, you will see that a title company sued Countrywide mortgage basically saying that they should not be on the hook for fraudulent dealing engendered by Countrywide. The title company is supposed to make sure you have clear title and it is required to perform due diligence before it issues a title policy. Once it issues the title policy it is liable for any damages resulting from ad efect in title. It is presumed, I think correctly, that the title company knows all it needs to know. In most cases, the title company was well aware of the securitization of these loans and the fact that recording, fees paid, real parties in interest and other disclosure requirements, together with other wrongful behavior, created a cloud on the title to the property, the mortgage and the note — three separate issues of ittle, each having its own legal consequences. You might have good claims against the title company and the title insuraunce company (and the title company and the title insurance company might have good claims against your “lender”).
  • The attorney for the title company is under the same obligations as the title company PLUS his obligations as a lawyer to avoid even the appearance of impropriety. You might have claims against the attorney as well. If you have a gut feeling that something is wrong, it usually is wrong, and you should not proceed unless and until you have consulted with someone who is competent, licensed and objective, with no dog in the race except to do right by you.
  • WAMU, according to its 10k annual reports filed with the Securities and Exchange Commission, which is a sworn public document, sold all of its loans and participated in the loose procedures desribed above. In all probability their problem resulted from the fact that they received the money but didn’t have the money or the willingness to reverse the transaction because all of a sudden they were at risk on what they thought was a risk free transaction. From an accounting perspective their problem was simple. They never took the loan onto their balance sheet as an asset, never set aside a reserve for rescission, default or delinquency, and therefore have no way of accounting for a rescission where all they really did was act as an unregistered mortgage broker and conduit for a loan from an undisclosed third party.

3. You write: “I made no payment to them at all. I attempted to pay my old mort. co. but they sent my payment back. Well I faxed them (WAMU) several copies of my rescission documents over the years and it wasn’t until 2005 that they canceled the mortgage with a “lost note” affidavit. Clearly beyond the 20 day requirement in paragraph (d)(2) of reg. Z. Now here in 2008 they are trying to sue for the money they paid out back in 2001.”

ANSWER:

  • This is slightly confused and the reason why we need more information. I assume you mean that you made no payment to WAMU because you had rescinded. The fact that they canceled the note with a lost note affidavit might not be sufficient if they were no longer the holder or holder in due course.
  • In any event, my guess is that applicable statutes of limitations or the rarely used common law doctrine of laches would prevent them from proceeding in litigation. There is also a possibiity of estoppel since you acted on their cancellation of the note with the lost note affidavit. Beware the affidavit however — it was probably signed by someone with absolutely no knowledge of you, your transaction, your note or your mortgage. In this case, though it would seem that a full recovery of your attorney fees and costs would be appropriate.
  • They key here is to keep the burden of proof on them. If they succeed in somehow shifting the burden of proof onto you, there is considerable expense in discovery and other investigations that are required.
  • Seems like the suit should be met with a speaking motion to dismiss, a notice of action that you will seek attorney fees for a frivolous lawsit, and/or a motio  for summary judgment.
  • If you ahve the lost note affidavit and there is paperwork showing that they were cancelling the debt, and they can’t show that you ever paid,they have a problem. They have an even greater problem if they never resolved the payoff of your old mortgage. Sounds to me that at this point you have your house free and clear of any encumbrance of mortgage or note.
  • In order to clarify the situation, it would seem appropriate to file an action to quiet title against WAMU.
  • Then I think Iw ould file a separate lawsuit to quiet title against the old mortgage company. from thier prospective they were right in returning your attmmepted payments because the loan was paid off.

4. You write: “Several questions because my lawyer has never faced anything like this. Wouldn’t violation of Federal Law be used as a defense against an “unjust enrichment” claim? Couldn’t a SOL defense be used because they let so much time expire and in a sense “NEVER” complied with paragraph (d)(2)?”

ANSWER: Your lawyer and every lawyer is actually facing issues like this every day — they just don’t realize it. Almost all loans from 2001-2008 fall into this category. This is only different because it highlights the chaos the players were creating. Yes SOL applies.

5. You Write: “Could it be established that I never have to comply with paragraph (d)(3) because they can never comply with (d)(2) technically because of an implied “statute of limitations” ie. the 20 days? Could my attempts to fax copies and work towards a resolution be considered an attempt to “tender” if a timely compliance with (d)(2) had occurred? Honestly, my wife and I sought a resolution years ago and instead WAMU sought on lt to force a loan on us and then tried all kinds of tactics to collect, EVEN FORECLOSURE proceedings! On a property that they had NO CLAIM to under the Right of Rescission we exercised. Their harassment has gone on to this day, and now THEY HAVE THE GALL TO SUE US! After all of this, I don’t think they deserve anything. I have done everything properly under the law, they have at every turn not followed the law and even denied that we had a rescission. Now a Judge may possibly rule in their favor, but I feel that the Right of Rescission may be the key to beating them. I know this is a lot, but do you have any advice on this situation?
>
> Thanks in advance and GOD BLESS!
>
> Bryan

ANSWER: I THINK WE HAVE COVERED IT. I AGREE WITH YOU BUT IT MIGHT BE MORE CHALLENGING WITH MORE FACTS. I WOULD PROCEED WITH MORTGAGE AUDITS ON BOTH “LOANS” AND A TITLE OPINION.

We have several who MIGHT assist you and you can of course find your own. You can also use the information on this blog to get started yourself or to get your lawyer started in the right direction.

A member of our team will contact you shortly to get information. This information will be passed on to a member of our volunteer team who will give you suggestions or options on how to proceed.

The normal procedure is as follows (although every case has some differences)

1. Information gathering — have your loan information and closing documents at your fingertips before our team member calls you. If you don’t get a call, please dial 954-494-6000.
2. File review
3. Referral to Mortgage Audit Group that will analyze your mortgage, find potential or actual violations of TILA and initiate RESPA procedures to settle your case.
4. Demand Letter to “lender” requesting documents to prove they are the holder of the note and that they have the power to enforce the mortgage and note.
5. Rescission Letter or Cancellation where appropriate: Note that this might be under TILA but it will probably include rescission or cancellation under other Federal and State statutes and common law. Rescission does NOT mean you are offering your house to the lender. Rescission is the reversal of a transaction. The transaction you reverse here is the “loan” of money in exchange for your signature on a pile of documents that you could not possible understand, and where the real lender was hidden from you, and where most of the fees generated by your loan closing was were not disclosed, which is a violation of several different Federal and State requirements. Rescission cancels the note and mortgage and gives rise to a possible claim by the lender for return of the loan — but without any claim on your house. The lender’s claim is subject to numerous defenses, affirmative defenses, set offs, and counterclaims.
6. Litigation: referral to a competent licensed legal professional in your area. Or you can find your own and our attorneys will assist. Fees vary, but a retainer is ordinarily involved since these attorneys must be paid for their time. However, most of the attorneys we work with keep their retainers low and take most of the case on contingency — a good indication that they believe a substantial recovery for you is possible. Recovery of attorneys fees and costs is deducted off the amount you owe.

NOTE: WHILE I AM LICENSED TO PRACTICE LAW IN THE STATE OF FLORIDA AND I AM AN EXPERIENCED LITIGATOR — ESPECIALLY WITH THE ISSUES RAISED BY FORECLOSURE DEFENSE, I CONSIDER MYSELF RETIRED, AND I HAVE NO INTENTION OF ACCEPTING A RETAINER OR APPEARING IN COURT ON BEHALF OF ANY NEW CLIENTS. I AM A WRITER AND A RESOURCE. SINCE I LIVE IN ARIZONA, THE LIKELIHOOD OF MY APPEARING IN ANY CASE IN FEDERAL OR STATE COURT IN FLORIDA IS EXTREMELY LOW. THEREFORE I HAVE BEEN SEEKING AND RECRUITING ATTORNEYS WHO ‘GET IT” TO TAKE THESE CASES ON. I TEACH SEMINARS AND I MENTOR LAWYERS OVER THE PHONE. I AM ALSO AUTHORING A BOOK ON THE HOMEOWNER’S WAR, WORKBOOKS FOR LAWYERS AND WORKBOOKS FOR PRO SE LITIGANTS WHO CANNOT FIND OR AFFORD AN ATTORNEY. I DO NOT RECOMMEND PRO SE APPEARANCES ALTHOUGH I WILL CANDIDLY REPORT THAT PRO SE LITIGANTS ARE HAVING CONSIDERABLE SUCCESS AT THE MOMENT.

Neil F. Garfield, Esq.
ngarfield@msn.com

This e-mail transmission may be protected by attorney client privilege and attorney work product privilege if it contains legal advice or opinions, and it contains information that are private, trade secrets, protected by non-disclosure and non-circumvention agreements between the parties and is therefore confidential and privileged. It may also be for the sole purpose of compromise and settlement only if it contains an offer and may not be used in any judicial or quasi-judicial or administrative proceeding without the express written consent of the sender. It is intended only for the addressee(s) named above. If you receive this e-mail in error, please do not read, copy or disseminate it in any manner. If you are not the intended recipient, any disclosure, copying, distribution or use of the contents of this information is prohibited. Please reply to the message immediately by informing the sender that the message was misdirected. After replying, please erase it from your computer system. Your assistance in correcting this error is appreciated.

> Date: Mon, 18 Aug 2008 12:14:33 +0000
> To: ngarfield@msn.com
New comment on your post #165 “FORECLOSURES: TILA RIGHT OF RESCISSION and CONSEQUENCES”
> E-mail : bkfoster@bellsouth.net

> Comment:
> I am currently dealing with an issue in court where I actually rescinded a loan within the 3 day period. (The closing atty. at the title co. seemed shady and we did not feel comfortable with the whole deal.) Well, they (WAMU) funded and paid off the other mort. co. within the 3 days which violated the “delay of performance” statute. Then they attempted to collect and I informed them that I had rescinded. (I have a copy of the form, a copy of the express mail label, a copy of the signed delivery receipt, etc.) Plenty of proof that I rescinded in a timely manner. This was 2001. I made no payment to them at all. I attempted to pay my old mort. co. but they sent my payment back. Well I faxed them (WAMU) several copies of my rescission documents over the years and it wasn’t until 2005 that they canceled the mortgage with a “lost note” affidavit. Clearly beyond the 20 day requirement in paragraph (d)(2) of reg. Z. Now here in 2008 they are trying to sue for the money they paid out back
> in 2001. Several questions because my lawyer has never faced anything like this. Wouldn’t violation of Federal Law be used as a defense against an “unjust enrichment” claim? Couldn’t a SOL defense be used because they let so much time expire and in a sense “NEVER” complied with paragraph (d)(2)? Could it be established that I never have to comply with paragraph (d)(3) because they can never comply with (d)(2) technically because of an implied “statute of limitations” ie. the 20 days? Could my attempts to fax copies and work towards a resolution be considered an attempt to “tender” if a timely compliance with (d)(2) had occurred? Honestly, my wife and I sought a resolution years ago and instead WAMU sought on lt to force a loan on us and then tried all kinds of tactics to collect, EVEN FORECLOSURE proceedings! On a property that they had NO CLAIM to under the Right of Rescission we exercised. Their harassment has gone on to this day, and now THEY HAVE THE GALL TO SUE US! After all of
> this, I don’t think they deserve anything. I have done everything properly under the law, they have at every turn not followed the law and even denied that we had a rescission. Now a Judge may possibly rule in their favor, but I feel that the Right of Rescission may be the key to beating them. I know this is a lot, but do you have any advice on this situation?
>
> Thanks in advance and GOD BLESS!
>
> Bryan

>
>

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