BofA Reveals Its Fraudclosure RICO Defense Strategy
Today, Bank of America filed its first official response, and exposed how it plans on defending itself, to the recently launched RICO case by the Davis family (Southern Illinois, 10-01303), seeking monetary damages for what they now claim is a fraudulent eviction on the ground that the affidavit was signed by two Robosigners: one Keri Selman and one Melissa Viveros. In its Motion to Dismiss, defendant BofA notes "Plaintiffs assert that these affidavits were “necessarily perjured” because Ms. Selman and Ms. Viveros could not have read the allegations in the complaints, examined all of the documents or exhibits “and still read all of the accompanying documentation to all of the other affidavits [ ] signed the same day." The bulk of BofA's defense is centered around a technicality: it says Plaintiffs do not “seek to reopen or disturb the judgments in [the Foreclosure Action], and instead seek only monetary damages as a result of being prematurely evicted from their houses based on perjured affidavits." The Davises also have some choice words about MERS saying it is “widely reported” that MERS was “poorly conceived and sloppily run.” Having read the motion to dismiss, it does appear that BofA may be able to get off on a series of technicalities on this one, yet that will only enable subsequent RICO suits to emerge using the weaknesses of the Davis case. And the main thing BofA does not defend against is the underlying allegation that fraudulent affidavits were used to evict the Davis family, nor, more importantly, does it present a verifiable case that it does in fact own the underlying mortgage note. As such, once the technicalities are all resolved in the next RICO lawsuit, all the holes presented by BofA's attorneys will be filled, making a technicality-based defense that much more difficult, since if BofA/CFC indeed does not own the mortgage note, there is little it can do to defend itself against an onslaught of comparable legal claims.
Some of the disclosed weaknesses in the Davis case, as presented by BofA's Dismissal Motion:
Because Plaintiffs expressly disclaim any attempt to upset the foreclosure judgments, these judgments are valid and binding on them, regardless of whether the affidavits contained some inaccurate statements. In other words, Plaintiffs fail to plead that the allegedly improper activities of Defendants caused them any harm.
In addition, Plaintiffs plead no facts to support their claim that the result, i.e., a judgment of foreclosure, would have been any different had the alleged inaccuracies in the underlying affidavit been discovered in the state court proceeding. Indeed, Plaintiffs’ issue with the affidavits is that the affiants did not have personal knowledge and the affiants’ titles were misstated, but Plaintiffs take no issue with the facts and figures showing Plaintiffs’ default on their mortgage. Thus, Plaintiffs plead no facts to show they were injured by reason of the allegedly false affidavits, and therefore do not have standing to assert a claim under RICO.
The core of BofA's defense revolves around the following argument:
Plaintiffs plead no facts to support their claim that the result, i.e., a judgment of foreclosure, would have been any different had the alleged inaccuracies in the underlying affidavit been discovered in the state court proceeding. Indeed, Plaintiffs’ issue with the affidavits is that the affiants did not have personal knowledge and the affiants’ titles were misstated, but Plaintiffs take no issue with the facts and figures showing Plaintiffs’ default on their mortgage. Thus, Plaintiffs plead no facts to show they were injured by reason of the allegedly false affidavits, and therefore do not have standing to assert a claim under RICO.
In other words there are two very opposing processes here: on one hand the fact that the mortgage borrowers did not have money (which appears to be undisputed) and that they did in fact stop making payments, yet on the other, is the much more relevant issue of whether BofA did in fact have the right to accelerate and seek a foreclosure judgment. Which it would not if it is, as the defendant claim, not in possession of a mortgage title. Ultimately, affidavit fraud in any dimension, is a merely sideshow to the main issue here, namely that without claim to the actual mortgage, the servicer does not have legal recourse to foreclose in any capacity. And this is the one issue that is glaringly avoided by BofA. To be sure, if Bank of America as successor to Countrywide does in fact have ownership of the note, then the plaintiffs' case is weak. If on the other hand, such a note is not in possession, then the plaintiff should have challenged he vary validity of the foreclosure judgment, which means unwinding a prior state-level decision, and then proceeding with a RICO suit.
Eventually there will materialize a case where BofA is found to be note deficient. And that case will serve as the basis for the required series of steps to backtrack, to set case precedent with the unwinding of a prior foreclosure, and then, if so desired, to seek a RICO case against BofA. We are confident that is only a matter of time. Until then, BofA has decided to hide behind technicalities. This will at best buy the bank a few months, and merely embolden more foreclosure fraud victims to step up and sue the bank.
We will follow this case closely to see if the Judge grants BofA its motion to dismiss. If Judge Jane Magnus-Stinson sides with the plaintiffs, and refuses to dismiss the case, look for BofA stock to plunge by 10% the second it becomes public.
As an aside, footnote 2 on page 4 is very relevant as it seems to reference an interesting case law of "alleged MERS deficiencies":
Despite Plaintiffs’ devotion of a significant portion of their Complaint to discussion of the alleged deficiencies involved with MERS, the MERS system has recently been upheld as a valid recording system. Cervantes v. Countrywide Home Loans, Inc., 2009 U.S. Dist. LEXIS 87997, at *29-34 (D. Ariz. Sept. 23, 2009) (order granting motion to dismiss) (dismissing a claim that the MERS system was fraudulent because plaintiffs failed to plead that the MERS system had any affect on the their obligations under their mortgages or that MERS’ system fraudulently induced consumers to enter into loans); In Re MERS Litig, 2010 U.S. Dist. LEXIS 106345, at *59 (D. Ariz. Sept. 30, 2010) (order granting motion to dismiss) (dismissing plaintiffs’ claim that defendants used MERS to conspire to commit fraud because it was “an attack on the legitimacy of the MERS system itself,” which had already been resolved in Cervantes).
It appears the Cervantes v. Countrywide Home Loan will be used often in future cases where the validity of MERS is questioned. It would be useful if some of our legal readers chime in with their view on just how strong this case is and if it has any chance of being appealed.
Full filing (pdf)