Two New Cases Give More Help to Homeowners

Recently, two new cases have provided some extra ammo for foreclosure defense attorneys.

In a case called Glarum v. LaSalle Bank, an appellate court has ruled that the affidavits banks have used for years, are legally insufficient to support foreclosure.

WHAT IT MEANS: To get foreclosure, at some point in the process, the banks will file an Affidavit of Indebtedness--essentially a verified document where someone from the bank swears under oath that the homeowner owes X dollars and that the bank owns the loan. The catch is that the person swearing to this in the affidavit, usually doesn't have personal knowledge of the information in the affidavit. They usually provide the information based upon reviewing a computer screen with information. But they don't actually have the loan paperwork in front of them, nor have they personally reviewed the paperwork, nor are they even responsible for keeping and maintaining the paperwork, as is required to prevent the affidavit from being hearsay. The Glarum case ruled that this was insufficient to constitute "personal knowledge" and that an affidavit in such cases, was hearsay.

This is a huge blow for banks. Many affidavits filed in foreclosure cases are now invalid, and for future cases, banks are going to have to file affidavits with much more stringent standards, that they may not legally even be able to meet. It means that a good foreclosure defense attorney needs to review these affidavits with an old toothbrush (whatever that means) to point out flaws. If done properly, it's an incredible defense against foreclosures.

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In the case Feltus v US Bank, the Court ruled that a bank can't submit a different note after having filed a note attached to the Complaint.

WHAT IT MEANS: In 90% of our cases, the bank will attach a promissory note to the Complaint. Yet, after filing the Complaint, the bank will file "the same" promissory note in the court file, a second time. The problem is that the second note--which is supposed to be the same as the first--isn't the same. Many times that second note suddenly has new endorsements and signatures on it, which allows the bank to foreclose. The Felton case means that the bank can no longer do this. The note attached to the Complaint is the note in the case, period. The only option is for the bank to amend the Complaint with the new note.

This could lead to many cases getting dismissed, or otherwise, forcing the bank to amend their complaints. In the hands of a good foreclosure lawyer, the Felton case can open a huge array of new defenses.