TRO Memo (Barnett)

8/7/2019 TRO Memo (Barnett)

1/14

COpyKelly L. Harpster, OSB #[email protected] Law LLC4800 SW Meadows Rd, Suite 300Lake Oswego, OR 97035Telephone: (503) 534-3686Facsimile: (503) 926-9153Attorney for Plaintiff Jeffrey D. Barnett

IN THE UNITED STATES DISTRICT COURTDISTRICT OF OREGONPORTLAND DIVISION

JEFFREY D. BARNETT,PLAINTIFF,

Case No.

v.MEMORANDUM IN SUPPORT OFPLAINTIFF'S MOTIONS FOR ATEMPORARY RESTRAINING ORDERAND A PRELIMINARY INJUNCTIONBAC HOME LOANS SERVICING, L.P.,FEDERAL NATIONAL MORTGAGEASSOCIATION aka FANNIE MAE, andRECONTRUST COMPANY, N.A.,

DEFENDANTS.

Plaintiff Jeffrey D. Barnett ("Barnettl1), by and through counsel, hereby submitsthis Memorandum in support of his Motion for Temporary Restraining Order and a PreliminaryInjunction.1. The Legal Standard for Granting Preliminary Injunctive Relief

Fed. R. Civ. P 65(b) authorizes the court to issue a temporary restraining orderwithout notice to the adverse party if specific facts in an affidavit or a verified complaint clearlyshow that immediate and irreparable injury, loss, or damage will result to the movant before theadverse party can be heard in opposition, and the movant's attorney certifies in writing anyefforts made to give notice and the reasons why notice should not be required.Page 1- MEMORANDUM IN SUPPORT OF MOTION FOR TRO AND A PRELIMINARYINJUNCTION
mailto:[email protected]:[email protected]


2/14

COpyTo obtain preliminary injunctive relief in the Ninth Circuit, plaintiff must show

that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in theabsence of preliminary relief, that the balance of equities tips in his favor, and that an injunctionis in the public interest. Am. Trucking Assocs., Inc. v. City of Los Angeles, 559 F. 3d 1046, 1052(9th Cif. 2009)(quoting Winter v. Nat. Res. Def. Council, Inc., 129 S. Ct. 365,374 (2008)). Basedon the facts and circumstances set forth in the Verified Complaint and exhibits, and thisMemorandum, and the declarations filed in support hereof, Plaintiff has met that burden.2. Plaintiff is likely to succeed on the merits of his claim for permanent injunctive

relief against all Defendants.Plaintiff Barnett commenced this action by filing a Verified Complaint seeking

specific performance of a permanent home loan modification, damages for breach of contractand state and federal statutory violations, and injunctive relief. As further described in theVerified Complaint, Barnett entered into a permanent, written loan modification with hismortgage loan servicer, Defendant BAC Home Loans Servicing, L.P. ("BAC") in January 2010.Barnett thereafter made all payments required under the modification agreement even thoughBAC repeatedly and willfully failed to credit such payments in a timely manner. DespiteBarnett's full compliance with the modification agreement, and BACs repeated assurances thatthe modification agreement had been accepted, BAC inexplicably declared a default and initiateda non-judicial foreclosure proceeding in or around August 2010. For the reasons set forth below,BAC's attempted foreclosure is wrongful and in violation of the Note, Trust Deed and Oregonlaw.

A. Defendants failed to complywith ORS 86.735(1).A trustee may foreclose a trust deed by advertisement and sale if, and only if, "the

trust deed, any assignments of the trust deed by the trustee or the beneficiary and anyappointment of a successor trustee are recorded in the mortgage record in the counties in whichthe property described in the deed is situated." ORS 86.735(1). Even if a mortgagee namesPage 2 - MEMORANDUM IN SUPPORT OF MOTION FOR TRO AND A PRELIMINARYINJUNCTION


3/14

COpyMortgage Electronic Registration Systems, Inc. C'MERS") as the nominee for the beneficiary,prior to commencing a non-judicial foreclosure, the trustee still must record all unrecorded,intervening assignments. Burgett v. MERS, 2010 WL 4282105, at *2-3 (D. Or. October 20,2010); Rinegard-Guirma v. Bank of America, No. 10-CV-1065-PK, 2010 WL 3655970, at *2 (D.Or. September 15, 2010); McCoy, III v. BNe Mortgage (In re McCoy, III). No. 10-6224-fra,__ B.R. _(Bankr. D.Or. February 7, 2011); Ekerson v. MERS. No. ll-CV-178-HU (D. Or.February 11,2011).

In this case, Columbia River Bank, the original lender, named MERS solely asnominee for its beneficial interest in the trust deed. (CompI. '1 1 9; Ex. A.) Columbia River Bankthereafter sold, assigned, or otherwise transferred the Note and the beneficial interest in the TrustDeed to Countrywide Home Loans, Inc. or an affiliate or subsidiary of Countrywide HomeLoans, Inc. (collectively "Countrywide"). (Compl, '1 1 11.) Thereafter, Countrywide purported tosell, assign or transfer its interest in the Note and Trust Deed, either directly or through one ormore intervening entities, to Fannie Mae, either for itself or as trustee of a mortgage-backedsecurities trust. (Compl, '1112.)To date, ReconTrust has failed to record any of these unrecorded,intervening assignments in the real property records of Washington County as required by ORS86.735(1). (Compl.r[l L) This defect, by itself, is sufficient grounds to enjoin the pending non-judicial foreclosure sale.

B. Defendants failed to complywith ORS 86.735(2).A trustee may foreclose a trust deed non-judicially only if "there is a default by

the grantor or other person owing an obligation." ORS 86.735(2). As set forth in detail in theVerified Complaint, Barnett entered into a permanent, written modification agreement with BACin January 2010. (Compl, ~~ 16-23.) SAC repeatedly confirmed that the modification agreementhad been accepted. (Compl. 11'1122, 24, 25, 27, 30.) BAC initially performed as required by theagreement, adding the deficiency to the principal balance, reducing the interest rate, and reducingthe monthly payment (Compl. ~ ' 1 l 25, 27.) Because the loan was pennanentiy modified, BACPage 3 - MEMORANDUM IN SUPPORT OF MOTION FOR TRO AND A PRELIM INARYINJUNCTION


4/14

COpycanceled a foreclosure sale of the property set for June 2010. (Compl. ~ 24.)

For his part, Barnett fully performed the agreement. Pursuant to the modificationagreement, Barnett was brought current on his loan as of January 2010 and timely made everyrequired payment thereafter from January 2010 through August 2010, when ReconTrust servedBarnett with notice that BAC intended to foreclose on his property. (Compl. ~~ 20,23, 31-38.)Because Barnett was not in default in August 2010, neither BAC nor Fannie Mae had any rightunder the Note or Trust Deed to declare a default, and absent a default by the grantor, ORS86.735(2) prohibited ReconTrust from commencing a non-judicial foreclosure sale. This defecttoo is fatal to Defendants' attempted foreclosure.C. BAC and Fannie Mae failed to satisfy all conditions precedent todeclaring a default and accelerating the Note.

Paragraph 22 of the Trust Deed requires the lender to give a 30-day written noticeto the borrowerprior to acceleration. (Compl. Ex. A at 12.)The notice must specify the default,the action required to cure the default, a date by which the default must be cured, and that failureto cure by that date may result in acceleration and sale of the property. (Cornpl. Ex. A. at 12).Providing the 30-day notice is a condition precedent to the lender's right to accelerate the noteand commence foreclosure. BAC and Fannie Mae failed to give Barnett the required notice.(Compl, ~ 81.) Because BAC and Fannie Mae have failed to satisfy all conditions precedentunder the Note and Trust Deed, they have no authority under the Note and Trust Deed toaccelerate the debt and exercise the power of sale.

D. HAC and Fannie Mae waived the right to declare a default andcommence a foreclosure by accepting payments from Barnett after the sale was set.

Even if there had been a default by grantor, compliance with the Note and TrustDeed, and compliance with ORS 86.735, BAC and Fannie Mae knowingly waived their right todemand the entire balance of the Note and to proceed with the foreclosure by continuing toaccept regular monthly payments from Barnett. Waiver is an intentional relinquishment of aPage 4 - MEMORANDUM IN SUPPORT OF MOTION FOR TRO AND A PRELIMINARYINJUNCTION


5/14

COpyknown right. Horton v, Reely, 738 F.Supp. 1336, 1338 (D. Or., 1990). When Barnett made hisregular monthly payments to BAC for December 2010, January 2011, and February 2011, BACand Fannie Mae had the option either to require the alleged deficiency balance to be paid in fullpursuant to DRS 86.753 or to accept Barnett's alleged "partial payments." BAC and Fannie Maeknowingly accepted and have retained each of Barnett's payments and thereby intentionallywaived the right to demand the full deficiency balance and to foreclose based on the allegeddefault.

E. The Notice of Default does not comply with ORS 86.745.

A trustee may non-judicially foreclose a trust deed only if the trustee or thebeneficiary has recorded a notice of default containing the information required by ORS 86.745.ORS 86.735(3). The notice recorded by ReconTrust does not comply with DRS 86.745.

86.745(1) requires the notice to list the names of the grantor, trustee andbeneficiary. ReconTrust lists the Trustee as "First American Title," though ReconTrust claims tobe the Trustee. ReconTrust lists the beneficiary as MERS, though BAC and Fannie Mae eachclaim to be the beneficiary of the Trust Deed and even though the last recorded Assignment ofTrust Deed, recorded by ReconTrust, names BAC as the beneficiary. (Compl. Ex. F at 1.)86.745(4) and (5) require the notice to state the default and the principal balance. ReconTrustknowingly or negligently misstated the alleged default and the principal balance. (CompI. Ex. Fat 1.) Finally, 86.745(9) requires certain statutory notices to be included and addressed to alloccupants. The recorded Notice of Default does not contain the required statutory language.(Compl. Ex. F at 1.) Because the Notice of Default does not comply with ORS 86.745,ReconTrust also failed to comply with DRS 86.735(3) and is not entitled to proceed with a non-judicial foreclosure.

F. The recorded Assignment of Deed of Trust is ineffective to transferColumbia River Bank's interest in the Note and Trust Deed to BAC.

BAC's standing to foreclose depends on the sole recorded assignment fromPage 5 - MEMORANDUM IN SUPPORT OF MOTION FOR TRO AND A PRELIMINARYINJUNCTION


6/14

COpyMERS, as nominee for Columbia River Bank, to BAC .. (Compl, Ex. D.) The assignment isineffective and fails to transfer any beneficial interest or power of sale to BAC for the followingreasons.

First, upon information and belief, Christine Balandran, who signed documentsboth as "Assistant Secretary" for MERS, the assignor, and as "Assistant Secretary" for BAC, theassignee, is not an employee of MERS or an employee or agent of Columbia River Bank.Plaintiff believes that discovery w in show Balandran never had corporate authority fromColumbia River Bank to assign its beneficial interest, if any.

Second, as of the date of the assignment, January 21,2010, Columbia River Bankbad no beneficial interest to assign to anyone. Upon Information and belief, shortly after the loanwas originated in 2006, Columbia River Bank sold, assigned or otherwise transferred all right,title and interest in the Note and Trust Deed to Countrywide, and Countrywide thereafter, eitherdirectly or through intermediaries, purported to sell, assign or transfer all right, title and interestin the Note and Trust Deed to Fannie Mae, either for itself or as trustee of a mortgage-backedsecurities trust (Compl, ~~ 11-12, 14.) At the time the assignment was executed, Columbia RiverBank had no legal or equitable interest in the Trust Deed to assign to BAC and, therefore, anypurported assignment is ineffective.

Third, the assignment purports to assign not only the Trust Deed but also theNote. (Compl, Ex. D.) MERS is not named in any capacity in the Note and never had and hasnever claimed any interest in the Note. (CompI. ~ 10.) MERS is merely a nominee for theoriginal beneficiary on the Trust Deed. (Compl. Ex. A at 3 ("Borrower understands and agreesthat MERS holds only legal title to the interests granted by Borrower in this Securitylnstrument ...").) Furthermore, the Note is a negotiable instrument under the UniformCommercial Code ("UCC") and may be enforced only by a holder or a non-holder in possessionwith the right ofa holder. ORS 73.0301. Fannie Mae claims to be the holder of the Note. and, assuch, would be entitled to enforce the Note or to transfer physical possession of the Note to itsPage 6 - MEMORANDUM IN SUPPORT OF MOTION FOR TRO AND A PRELIMINARYINJUNCTION


7/14

COpyservicer for purposes of enforcing the Note. However, for Fannie Mae to be a holder, FannieMae must show that the original note, either indorsed in blank.or specifically indorsed to FannieMae and bearing any necessary intervening indorsements, was delivered into its possession priorto commencing the foreclosure action. DRS 73.0201-0205;. ORS 73.0501;. See Kemp v.Countrywide Home Loans, 2010 Bankr. LEXIS 4085 (Bankr, D.N.]. Nov. 16, 201O). Given therecent disclosure in Kemp that it was Countrywide's policy or practice not to transfer possessionof the Note to the trustee during the securitization process, plaintiff believes that discovery willshow, at th e time foreclosure was commenced, neither BAC nor Fannie Mae were holders ornon-holders in possession with the right to enforce. In other words, Fannie Mae and BACeffectively lacked "standing" to commence a foreclosure.

For all of the reasons set forth above, this Court should find that plaintiff is likelyto prevail on the merits of his claim for injunctive relief and should enjoin the pendingforeclosure sale. Barnett was never in default under the terms of the modified Note and TrustDeed. Even if Barnett was in default, BAC and Fannie Mae failed to satisfy conditions precedentfor accelerating the Note and exercising the power of sale. ReconTrust has failed to comply withnearly every requirement in the non-judicial foreclosure statute, including failure to record allassignments and failure to comply with the notice requirements. Furthermore, plaintiff believesthat discovery will show Defendants did not even have standing to foreclose at the timeforeclosure was commenced and that Defendants or their agents knowingly prepared andrecorded unauthorized and false documents in support of the foreclosure, Allowing theforeclosure to proceed in light of these defects would work a substantial injustice.2. Plaintiff is likely to succeed on the merits of his contract claims against BAC and

Fannie Mae.In addition to Barnett's claim for injunctive relief, Barnett has asserted various

claims against Defendants for specific performance, breach of contract, promissory estoppel,accounting and violations of certain state and federal laws. Each of these claims, other thanPage 7 - MEMORANDUM IN SUPPORT OF MOTION FOR TRO AND A PRELIMINARYINJUNCTION


8/14

COpyclaims for specific performance and an accounting. would entitle Barnett to an award of actual orstatutory damages and, for some claims, punitive damages and/or attorney fees..For purposes ofdetermining whether preliminary injunctive relief should issue, the Court should also find thatBarnett is likely to prevail on the merits of his damage claims, and particularly the specificperformance and breach of contract claims.

At the very heart of this dispute is a permanent loan modification agreemententered into between Barnett and BAC in January 2010, which BAC initially performed but hassince refused to honor, In December 2009, BAC sent Barnett a written agreement to permanentlymodify the terms of his Note and Trust Deed ("Modification Agreement").. Specifically, themodification reduced the monthly interest-only payment and interest rate and added the then-existing delinquency to Barnett's principal loan balance. thereby bringing Barnett current.(Compl. ~ 10; Ex. B.) The terms of the modification were clear, definite and complete andsupported by adequate consideration. (Compl, , 10-11;Ex. B.)

After Barnett returned the executed Modification Agreement. BAC repeatedlyconfirmed in oral and written statements that the Modification Agreement had been accepted.(Compl. ' I i ' l i 22, 24, 25, 27, 30; Ex. C.) BAC's initial conduct was consistent with itsrepresentations. On January 28,2010, BAC increased the principal balance by the amount of thedelinquency, as agreed. (Compl. , 19; Ex. C.) On January 2 9, 2 01 0, BAC sent Barnett a monthlystatement confirrning the new monthly payment and interest rate, as agreed. (CompI.' 19.)At oraround the same time, and as a result of the modification, BAC canceled a foreclosure sale setfor June 4,2010. (CompI. ~24.)BAC's statements and conduct would lead any reasonable personto conclude that the Modification Agreement had been accepted and to act in reliance on BAC'srepresentations.

Furthermore, when facts arose that might cause a reasonable person to questionthe status of the modification, BAC instructed Barnett to ignore any such discrepancies andfurther instructed Barnett to continue perforrning pursuant to the terms of the ModificationPage 8 - MEMORANDUM IN SUPPORT OF MOTION FOR TRO AND A PRELIM INARYINJUNCTION


9/14

COpyAgreement. (Compl, 1 1 1 1 22, 27, 30.) SAC explained the discrepancies as the product of abacklog of modifications, a lack of access to modification information by other departments, anda normal but lengthy delay in updating "codes" in the system. (CompI.1J30.) BAC gave Barnettevery reason to.believe that the Modification Agreement had been accepted and to act in relianceon BAC's representations.

Taken together, BACs repeated written and oral statements, BAC's adjustment ofthe principal loan balance, BAC's issuance of the February Statement, and SAC's cancelation ofthe June 2010 foreclosure sale demonstrate that Barnett and BAC entered into a writtenpermanent modification of the Note and Trust Deed which SAC and Fannie Mae are obligated toperform.

If Defendants assert the Statute of Frauds as a defense. the defense will fail for atleast two. reasons. First, the statute is satisfied, despite the absence of a written agreement, where"some nate or memorandum" provides evidence of the parties' agreement. ORS 41.580(1);Mcinnis v. Lind, 198Or.App. 139, 108 P.3d 578, 583 (Or. App. 2005). The written modificationagreement, read together with the January 29, 2010 statement from BAC, satisfies therequirement of a signed writing. Second, even if the writing is not sufficient, Barnett fullyperformed the agreement from January through August 2010 in reliance an the January 29,2010statement, BAC's repeated assurances that the agreement had been accepted, BAC's conduct afterBarnett returned the executed Modification Agreement, and BAC's instructions to ignore anyevidence to the contrary. "[T]he terms of an oral agreement will be enforced (1) if there isconduct corroborating and unequivocally referable to the oral agreement sufficient to satisfy th epolicy of the statute designed to minimize perjured claims and the opportunities for fraud, and(2) if there are equitable grounds for enforcing the contract whether those grounds are found infacts establishing the basis for a true estoppel or in facts justifying the avoidance of unjustenrichment or relief from fraud." Id. at 586 (quoting Luckey et ux v. Deatsman, 217 Or. 628,633,343 P.2d 723, 725 (1959).) Finally, it is possible that, through discovery, piaintiffwill be able toPage 9 - MEMORANDUM IN SUPPORT OF MOTION FOR TRO AND A PRELIMINARYINJUNCTION


10/14

COpyshow that there exists a copy of the Modification Agreement executed by all parties. Based onthe facts alleged in the Verified Complaint, Barnett will likely succeed on his specificperformance claim.

Barnett will also succeed on his breach of contract claim. Pursuant to theModification Agreement, Barnett made timely monthly payments in the agreed amounts fromJanuary 2010 through August 2010, when Defendants wrongfully initiated the foreclosure.(Compl. ~~20,23,31-38.) Upon information and belief, BAC placed each of these payments in asuspense account, failing to apply the payments to interest and escrow as required by the Noteand Trust Deed. (Compl. ~, 29, 31-38.) BAC also assessed various fees not authorized by theNote, Trust Deed, or applicable law. (CompI. " 26-27, 31-38.) After initially increasing theprincipal balance as agreed, BAC later reduced the principal balance by the same amount tocreate an artificial delinquency (Compl.'~ 25, 28.) Thereafter, in monthly statements, BACdemanded principal and interest payments higher than what was permitted by the ModificationAgreement. BAC also increased the interest rate from 2% to 4.25%. After accepting but failingto credit eight months of modified payments from Barnett, BAC wrongfully initiated aforeclosure sale although no actual default existed. (Compl, , 41.) Furthermore, BAC failed togive thirty days prior written notice of the alleged default and BAC's intent to accelerate the lean,a condition precedent to exercising the power of sale under the Trust Deed. (Cornpl. , 81; Ex.A) Each of these acts is a breach of the Note and Trust Deed. As a direct and proximate result,Barnett has suffered damages, including interest, penalties, foreclosure-related fees, and damagetc his credit. (CompI. - a 54.) Based on these facts, Barnett is likely tD succeed on his contractclaims against BAC and Fannie Mae.

If Barnett is unable to prove that the Note and Trust Deed were modified, then itwill nevertheless be true that any default was substantially caused by BAC's knowingly falsestatements tD Barnett and misleading conduct, which induced him to make the modifiedpayments from January 2010 through August 2010 and to refrain from pursuing any alternativePage to - MEMORANDUM IN SUPPORT OF MOTION FOR TRO AND A PRELIMINARYINJUNCTlON


11/14

COpyfor curing the default, modifying the loan, or avoiding foreclosure. Foreclosure is an equitableremedy and equity generally requires the party seeking the remedy to have "clean. hands." Onthese facts. BACcan hardly claim that it would be equitable or just to allow the foreclosure toproceed while the merits of the specific performance and contract claims are tried.3. Plaintiff is also likely to succeed on the merits of his statutory damage claims agai.Dst

ReconTrust and BAC.Barnett is also likely to prevail on his various state and federal statutory claims for

damages against ReconTrust and BAC.As trustee of a trust deed, ReconTrust owes a limited duty of good faith and due

diligence to Barnett. Wright v. Associates Financial Services Co. of Oregon, Inc., 59 Or.App.688, 695, 651 P.2d 1368, 1373, (Or. App. 1982)(recogruzingthat trustee of a trust deed has "aduty of good faith and due diligence"); see also Blodgett v. Martsch, 590 P.2d 298, 302 (Utah,1978) ("The duty of the trustee under a trust deed is ... to treat the trustor fairly and in accordancewith a high punctilio of honor."). While not a true fiduciary duty, this limited duty of good faithand due diligence at least requires the trustee of a trust deed to comply with the requirements ofthe Oregon Trust Deed Act and the terms of the applicable Trust Deed in carrying out a non-judicial foreclosure. As set forth above. ReconTrust has failed to comply with nearly everyrequirement of DRS 86.735.

Furthermore, ReconTrust has violated the Fair Debt Collection Practices Act("FDCPA") and the Oregon Unlawful Debt Collection Practices Act ("UDCPAn) bycommencing a non-judicial foreclosure when there is no present right of possession by thebeneficiary of the Trust Deed. Although trustees foreclosing on a trust deed are generally notconsidered "debt collectors" under the FDCPA, pursuant to 15 U.S.C. 1692a(6) and 1692f(6),the definition of "debt collector" expressly includes "any person who uses any instrumentality ofinterstate commerce or the mails in any business the principal purpose of which is theenforcement of security interests." 15 U.S.c. 1692a(6). ReconTrust is principally engaged inPage 11 - MEMORANDUM IN SUPPORT OF MOTION FOR TRO AND A PRELIMINARYINJUNCTION


12/14

COpythe enforcement of security interests by conducting foreclosures of trust deeds and mortgages forlenders and servicers, (Compl. ~ 62.) As a "debt collector," ReconTrust is prohibited from:

taking or threatening to take any nonjudicial action to effect dispossession ordisablement of property if there is no present right to possession of the propertyclaimed as collateral through an enforceable security interest.15 U.S.C. 1692f(6)(A). ReconTrust has sent foreclosure notices using the mails threatening tonon-judicially foreclose on Barnett's residence when there is no present right to possessionbecause Barnett is not in default under the Note, BAC is not a "holder" or nonholder entitled toenforce the Note, and BAC has not satisfied all conditions precedent to exercising the power ofsale. (Compl. ~~ 41-43,48,63, 78, 80-82.) The same acts by ReconTrust also violate the Oregoncounterpart to the FDCPA. Therefore, Barnett is likely to prevail on his FDCP A and UDCPAclaims against ReconTrust.

Barnett is also likely to prevail on his RESPA claim against BAC. The RealEstate Settlement and Procedures Act ("RESPAII), 12 U.S.C. 2605, requires servicers offederally related mortgage loans to take certain actions in response to a Qualified WrittenRequest ("QWR") from a Borrower. Barnett, by and through his attorney, sent two QWRs toBAC in December 2010. BAC failed to provide written acknowledgement of the requests withinthe required time, failed to make appropriate corrections to Barnett's account, failed to provide awritten explanation or clarification, and failed to provide any of the information requested.(Compl. ~~ 97-100.) Furthermore, BAC has failed to administer Barnett's escrow account incompliance with RESPA. (Compl. ~ 101.) This pattern and practice of violations entitles Barnettto actual damages, statutory damages and attorney fees. 12 U.S.C. 2605(f). BAC is also liableto Barnett for mismanaging Barnett's escrow account and by failing to pay interest as required byDRS 86.245.

Based on the foregoing, Barnett is likely to succeed on the merits of each of hisdamage claims against BAC and against ReconTrust.

Page 12 - MEMORANDUM IN SUPPORT OF MOTION FOR TRO AND A PRELIMINARYINJUNCTION


13/14

COpy4. Plaintiff is likely to suffer Irreparable harm in the absence of preliminary relief.

In the absence of preliminary injunctive relief, Barnett's home will be sold on thesteps of the Washington County courthouse at 10:00 a.m. on February 28, 2011. (Compl. ~ 1.)Barnett will not only lose his home, he win lose the benefit of the more than $12,000 inpayments he has made to BAC since January 20 10, payments which have never been credited tohis account or escrow. Barnett will lose the benefit of the modified terms of his Note and TrustDeed, including the lower interest rate and lower monthly payment. Barnett will lose theopportunity to pursue alternatives to foreclosure that he would have pursued had BAC notentered into the Modification Agreement. Barnett's credit will be irreparably tarnished by theforeclosure. None of these harms can be fully remedied by a post-foreclosure award of damages.There is no question that Barnett will suffer irreparable harm in the absence of preliminary relief.5. The balance of equities tips in Plaintiffs favor, and preliminary injunctive relief is

in the public interest.As detailed in the Verified Complaint, Barnett did everything a homeowner in his

position is supposed to do. He obtained a modification from his servicer when he fell behind onpayments. He followed BAC's instructions to the letter, signing the agreement before a notary,enclosing a cashier's check and returning the required documents in a pre-addressed envelope.(Com pl, ~ 20.) When the cashier's check was mistakenly returned, he immediately contactedBAC .. (CampI. , 22.) When he received statements that did not reflect the modification, heimmediately contacted BAC. (Compl. ~ 30.) Each time BAC confirmed that the modification hadbeen accepted and instructed Barnett to keep making the modified payments. (Compl. ,~ 22, 24,27. 30.) BAC specifically instructed Barnett to ignore any discrepancies in the monthlystatements, claiming that it would take months for the system to update. (CompI. .~30.) Everymonth Barnett timely made his modified payments, even paying an additional $90 fee that BACcould not explain and that is not authorized by the Note and Trust Deed .. (Compl. ~~ 20, 23,26-27, 3138.) Yet every month BAC failed to apply the payments and failed to comply with thePage 13 - MEMORANDUM IN SUPPORT OF MOTION FOR TRO AND A PRELIMINARYINJUNCTION


14/14

COpyagreement, until BAC finally initiated a wrongful foreclosure sale to take Barnett's home. Theequities clearly tip in Barnett's favor.

Furthermore, it is in the public interest to require servicers to comply with theterms of the loans they service. Homeowners today are at the mercy of servicers who chargeunauthorized fees, refuse to identify the owners or investors holding the notes, fail to negotiate orcomply with reasonable modifications, and who rely on non-judicial foreclosures to takeunsophisticated borrowers' homes with minimal judicial oversight The public has an interest inensuring that the few consumer protections that exist are actually enforced.6. Conclusion

Based on the foregoing, together with the Verified Complaint, exhibits thereto,and the declaration filed in support of plaintiffs motion, plaintiff respectfully requests that thiscourt enter a Temporary Restraining Order restraining defendants from selling Barnett's home at10:00 a.m, on February 28, 2011 and until the merits of plaintiffs motion for preliminaryinjunction are determined. Plaintiff further requests that, after notice and an opportunity to beheard, the court enter a Preliminary Injunction restraining defendants from selling Barnett's homepending a trial on the merits of plaintiffs claims.

DATED this/?.fl day ofPebruary, 2011.HARPSTER LAW LLC

BY~Kelly L. HarpsterOSB #063475Telephone: (503) 534-3686Attorney for Plaintiff Jeffrey D. Barnett

Page 14- MEMORANDUM IN SUPPORT OF MOTION FOR TRO AND A PRELIMINARYINJUNCTION

TRO Memo (Barnett)

Documents