Barnett v. Bac Home Loan Servicing LP, Federal National Mortgage Association Fka Fannie Mae, Rec on Trust Co

8/7/2019 Barnett v. Bac Home Loan Servicing LP, Federal National Mortgage Association Fka Fannie Mae, Rec on Trust Co

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IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF OREGON

PORTLAND DIVISION

JEFFREY D. BARNETT,Pla in t i f f ,

v .BAC HOME LOAN SERVICING,L . P . , FEDERAL NATIONALMORTGAGE ASSOCIATION fkaFANNIE MAE, and RECONTRUSTCOMPANY, N.A. ,

Defendants.

KELLY L. HARPSTERHarpster Law, LLC4800 s.w. Meadow RoadSuite 300Lake Oswego, OR 97035(503) 534-3686

Attorneys for Pla in t i f f

1 - TEMPORARY RESTRAINING ORDER

l l -CV-213-ST

TEMPORARY RESTRAININGORDER

Case 3:11-cv-00213-ST Document 9 Filed 02/23/11 Page 1 of 22 Page ID#: 145


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BROWN, Judqe.This matter comes before the Court on Pla in t i f f ' s Motion

(#2) for a Temporary Restraining Order and PreliminaryInjunct ion.

For the reasons tha t follow, the Court GRANTS Pla in t i f f ' sMotion to the extent tha t the Court TEMPORARILY RESTRAINSDefendants from proceeding with the February 28, 2011,foreclosure sale of Pla in t i f f ' s property.

BACKGROUND

The following facts are taken from Pla in t i f f ' s Complaint:On September 20, 2006, Pla in t i f f Jeffrey D. Barnett entered

into an In te res tF i r s t Adjustable Rate Note with Columbia RiverBank secured by property located a t 3769 N.W. Fi r s t Court,Hillsboro, Oregon. Pla in t i f f also entered into a Trust Deed asto tha t property with Pla in t i f f as grantor ; Firs t American Ti t leCompany as Trustee; and Mortgage Electronic Registrat ion System(MERS) solely as nominee for the beneficiary, Columbia RiverBank. The Trust Deed provided, among other things, tha t

Lender sha l l give notice to Borrower pr ior toacceleration following Borrower's breach of anycovenant or agreement in th i s Securi ty Instrument. . . . The notice sha l l specify: (a) thedefaul t ; (b) the act ion required to cure thedefaul t ; (c) a date , not less than 30 days fromthe date the notice i s given to Borrower, by whichthe defaul t must be cured; and (d) that fa i lure tocure the default on or before the date specif iedin th i s notice may resu l t in acceleration of the




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sums secured by th is Securi ty Instrument an d saleof the Property. The notice shal l fur ther informBorrower of the r ight to re insta te a f te raccelerat ion an d the r ight to bring a court actionto asser t the non-existence of a defaul t or anyother defense of Borrower to accelerat ion an dsale . I f the defaul t i s not cured on or beforethe date speci f ied in the not ice, Lender a t i t soption may require immediate payment in fu l l ofa l l sums secured by th i s Security Instrumentwithout fur ther demand and may invoke the power ofsale and any other remedies permitted byApplicable Law.Compl., Ex. A a t 12. Pursuant to the Trust Deed MERS held, a tmost, no more than "bare legal t i t l e" to Columbia River Bank'sbenefic ia l in te res t in the Trust Deed and never had any legal orbenefic ia l in te res t in the Note,

The Trust Deed was recorded in Washington County, Oregon onSeptember 25, 2006.

Pla in t i f f al leges on information and bel ie f tha t af te rSeptember 20, 2006, Columbia River Bank sold or otherwiset ransferred the Note and i t s benefic ia l in te res t in the TrustDeed to Countrywide Home Loans, Inc. Thereafter , Countrywidet ransferred i t s in te res t in the Note an d Trust Deed to DefendantFederal National Mortgage Association (Fannie Mae). None ofthese t ransfers were recorded in the rea l property records ofWashington County, Oregon.

On December 11, 2009, Defendant BAC Home Loans Servicing,L.P. , act ing as the agent for Fannie Mae sent Pla in t i f f a wri t tenagreement to permanently modify Pla in t i f f ' s Note and Deed of




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Trus t as fol lows: (1 ) Reduce th e i n t e r e s t ra t e on th e loan from6.25% to 2% fo r an i n i t i a l f ive year per iod , with th e r a teincreas ing to 3% in th e s ix th year , 4% in th e seventh year , and5% in the e igh th year through matur i ty ; (2 ) Reduce th e monthlyi n t e r e s t - o n ly payment to $661.10 fo r an i n i t i a l f ive year per iod ,with th e payment increas ing to $878.10 in th e s ix th year ,$1,143.09 in th e seventh year , and $1,398.08 in th e eighth yearthrough matur i ty , and; (3) Bring th e loan cur ren t by adding th et o t a l del inquency, $17,892.20, to th e p r in c ip a l balance . SeeCompl., Ex. B a t 1 . The Modi f i ca t ion Agreement provided a f t e rmodif ica t ion P l a i n t i f f ' s i n i t i a l monthly payment would be$1,114.23.

In o rder to accep t th e terms o f the Modi f ica t ion AgreementBAC requ i red P l a i n t i f f to execute th e Modif ica t ion Agreement inth e presence o f a notary and t o re tu rn to BAC by January 7, 2010,th e executed Agreement with the f i r s t payment o f $1,114.23 in apreaddressed , prepa id FedEx envelope provided to P l a i n t i f f byBAC.

P l a i n t i f f a l l eges he executed th e Modif ica t ion Agreementbefore a notary and mai led the requ i red mater ia l s as wel l as ac a sh i e r ' s check fo r $1,114.23 to BAC in th e provided envelopebefore January 7, 2010.

On January 13, 2010, BAC re tu rned th e c a sh i e r ' s check, butnot th e s igned Modificat ion Agreement to P l a i n t i f f by mai l .




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According to P l a i n t i f f , he ca l l ed BAC and was informed BAC hadaccepted th e Modif ica t ion Agreement and th e c a sh i e r ' s check hadbeen re turned to P l a i n t i f f in e r r o r . BAC in s t ruc ted P l a i n t i f f toresend th e check to th e address noted in th e Modificat ionAgreement.

On January 21, 2010, MERS executed an Assignment of Trus tDeed in which it

gran t [ed] , convey[ed] , ass i g n [ed ] , andt r a n s fe r [red] ... a l l benef ic ia l i n t e r e s t [ toBAC] under t h a t ce r t a in Deed o f Trust , dated09/20/2006, executed by JEFFREY D. BARNETT,Grantor(s) to FIRST AMERICAN TITLE, Trus tee , andMORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., asBenef ic ia ry .

Compl. , Ex. D a t 1 . On t h a t same day, BAC executed anAppointment o f Successor Trus tee naming Defendant ReconTrustCompany, N.A., as Successor Trus tee o f th e Trus t Deed.

On January 26, 2010, P l a i n t i f f re sen t th e c a sh i e r ' s check toBAC by express mai l to th e address noted in the Modi f ica t ionAgreement.

On January 28, 2010, ReconTrust recorded th e Assignment o fTrus t Deed in th e r e a l proper ty records o f Washington County,Oregon.

On January 28, 2010, P l a i n t i f f rece ived a Notice o f Salefrom ReconTrust , l i s t i n g a scheduled fo rec losure sa l e date o f -June 4, 2010. P l a i n t i f f ca l led BAC and BAC confirmed it hadaccepted th e Modif ica t ion Agreement. BAC informed P l a i n t i f f t h a t




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because th e loan had been permanent ly modif ied it would cancelthe fo rec losure s a l e . BAC subsequent ly cance l l ed the June 4,2010, fo rec losure s a l e .

On January 29, 2010, P l a i n t i f f rece ived a monthly s tatementfrom BAC not ing th e p r in c ip a l balance, i n t e r e s t r a t e , and monthlypayment amount as se t out in th e Modi f i ca t ion Agreement as wel las $90 in unspec i f i ed " fees due."

P l a i n t i f f ca l led BAC to inqu i re about th e " fees due" andagain was t o ld BAC had accepted th e Modif icat ion Agreement andt h a t th e $9 0 fee was probably a modif ica t ion fee .

According to P l a i n t i f f , on February 17, 2010, without not iceto P l a i n t i f f BAC reduced th e p r in c ip a l balance to th e amount o fp r i n c i p a l owing b efo re th e Modificat ion Agreement. OnFebruary 25, 2010, BAC i ssued P l a i n t i f f a monthly s ta tementi den t i fy ing th e $1,114.23 P l a i n t i f f submi t ted with th eModi f i ca t ion Agreement as a " pa r t i a l payment." BAC f a i l ed toapply the payment to th e modif ied loan and i n s t ead placed th epayment in a "suspense account . "

A f t e r he rece ived the February 25, 2010, s ta tement P l a i n t i f fca l l ed BAC to i nqu i re about th e readjus tment o f th e p r in c ip a lbalance and des igna t ion o f h is payment as a " p a r t i a l payment."P l a i n t i f f a l leges BAC again confi rmed it had accepted th emodif ica t ion bu t because the re was a backlog o f modi f ica t ions ,"not a l l depar tments have access to modif ica t ion informat ion, and




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. . it would take t ime fo r the ' codes ' to update ." Pl a i n t i f fa l l eges BAC in s t ruc ted him to cont inue to make th e modif iedpayments and advised P l a i n t i f f it could t ake seve ra l months fo rh is monthly s ta tements to r e f l e c t th e Modif ica t ion Agreement.

Pl a i n t i f f a l l eges he made th e payments requ i red under th eModif icat ion from February through August 2010, b u t BAC cont inuedto f a i l to apply any of h is payments to i n t e r e s t or escrow andins tead to post those payments to th e "suspense account . "

On August 24, 2010, ReconTrust recorded a Notice of Defaul tand Elec t ion to S e l l P l a i n t i f f ' s property in th e r e a l propertyrecords o f Washington County, Oregon. The Not ice of Defaul tl i s t e d , among othe r th ings , MERS as th e bene f i c i a ry of th e TrustDeed; P l a i n t i f f ' s monthly payments under th e Note as $2,471.38;the i n t e r e s t ra t e fo r the Note as 6.25%; and th e p r in c ip a lbalance o f th e Note as th e pr inc ipa l balance before Pl a i n t i f fexecuted the Modif ica t ion Agreement.

On December 9, 2010, P l a i n t i f f ' s sen t a l e t t e r to ReconTrustand BAC not ing th e loan modif icat ion , P l a i n t i f f ' s payments, anddefec ts in the pending fo rec losure s a l e . P l a i n t i f f reques ted BACand ReconTrust resc ind the fo rec losure s a l e . BAC and ReconTrustd id not resc ind the fo rec losure s a l e .

P l a i n t i f f ' s proper ty i s scheduled to be so ld a t publ icauct ion on February 28, 2011.

On February 18, 2011, Pl a i n t i f f f i l ed a Complaint in t h i s




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Cour t br ing ing c la ims ag a i n s t BAC fo r (1) f raud ; (2 ) v io la t ion o fth e Oregon Unfai r Trade Prac t ices Act (OUTPA), Or. Rev. S ta t . 646.605, e t seq; (3 ) v io la t ion of the Real Esta te Set t lementand Procedures Act (RESPA), 12 U.S.C. 2605; v io la t ion o f Or.Rev. S ta t - 86.205, e t seq.; and (4 ) account ing. P l a i n t i f f a l sobrings claims aga ins t BAC and Fannie Mae fo r (1) spec i f i cperformance o f th e Modi f i ca t ion Agreement, (2 ) breach of theModi f i ca t ion Agreement, and (3 ) promissory es t o p p e l . P l a i n t i f fbrings claims aga ins t ReconTrust fo r (1) v io la t ion of the Fai rDebt Col lec t ion Prac t ices Act (FDCPA), 15 U.S.C. 1692, e t seq.;(2 ) v io la t ion o f Oregon 's Unlawful Debt Col lec t ion Prac t ices Act(UDCPA), Or. Rev. S ta t . 646.639, e t seq.; and (3 ) breach o ft r u s t e e ' s duty . P l a i n t i f f seeks damages and i n junc t ive and /ordec la ra tory r e l i e f .

On February 18, 2011, P l a i n t i f f a l so f i l e d a Motion fo rTemporary Rest ra in ing Order and a Pre l iminary In junc t ion in whichP l a i n t i f f moves fo r th e en t ry o f an order p reven t ing Defendantsfrom proceeding wi th th e February 28, 2011, non- jud ic i a lfo rec losure sa le u n t i l th e Motion fo r Pre l iminary In junc t ion canbe heard and a pre l iminary in junc t ion enjoining Defendants fromse l l ing P l a i n t i f f ' s res idence in a non- jud ic i a l fo rec losure sa l epending a t r i a l on th e mer i t s .




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STANDAlUlS

A par ty seeking a temporary res t ra ining order or preliminaryin junct ion must demonstrate (1) it i s l ikely to succeed on themeri ts , (2) it i s l ikely to suffer i r reparable harm in theabsence of preliminary re l i e f , (3) the balance of equi t ies t ipsin i t s favor, and (4) an in junct ion i s in the publ ic in te res t .Winter v. Natural Res. Def. Council, 129 s. Ct. 365, 374 (2008)."The elements of [ this] t e s t are balanced, so tha t a s trongershowing of one element may offse t a weaker showing of another .For example, a stronger showing of i r reparable harm to pla in t i f fmight offse t a l esser showing of l ikel ihood of success on themerits ." All iance For The Wild Rockies v. Cottre l l ,No. 09-35756, 2011 WL 208360, a t *4 (9 th Cir. Jan. 25,2011) (ci t ing Winter, 129 S. Ct. a t 392). Accordingly, the NinthCircui t has held " 'ser ious quest ions going to the meri ts ' and abalance of hardships tha t t ips sharply towards the pla in t i f f cansupport issuance of a preliminary in junct ion, so long as thepla in t i f f also shows tha t there i s a l ikel ihood of i r reparableinjury and tha t the in junct ion i s in the public in te re s t . " Id . ,a t *7.

"An in junct ion i s a matter of equi table discre t ion" an d i s"an extraordinary remedy tha t may only be awarded upon a c lea rshowing tha t the p l a i n t i f f is ent i t l ed to such r e l i e f . " Winter,129 S. Ct. a t 376, 381.




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DISCUSSIONI . Merits

Pla in t i f f seeks an order preventing Defendants fromproceeding with the proposed foreclosure sale of Pla in t i f f ' sproperty as scheduled because, among other things, Defendantsfa i led to comply with Oregon Revised Statute 86.735(1), BAC an dFannie Mae fai led to sa t i s fy "a l l conditions precedent todeclaring a defaul t and accelerat ing the Note," the Notice ofDefault does not comply with Oregon Revised Statute 86.745, an dBAC and Fannie Mae breached the Modification Agreement.

A. Pla int i f f i s l ike ly to succeed in provinq Defendantsfa i led to comply with Oreqon Revised Statute 86.735(1) .In Burgett v. Mortgage Electronic Registrat ion Systems,

Dis t r ic t Judge Michael Hogan explained the mortgage pract iceengaged in by MERS as follows:

"In 1993, the Mortgage Bankers Association, FannieMae, Freddie Mac, the Government National MortgageAssociation (Ginnie Mae), the Federal HousingAdministration, and the Department of VeteransAffai rs created MERS. MERS provides ' e lect ronicprocessing an d t racking of [mortgage] ownershipand t r ans fe r s . ' Mortgage lenders, banks,insurance companies, and t i t l e companies becomemembers of MERS and pay an annual fee. Theyappoint MERS as the i r agent to ac t on a l lmortgages tha t they reg is te r on the system. AMERS mortgage i s recorded with the par t icularcounty's off ice of the recorder with 'MortgageElectronic Registrat ion System, Inc . ' named as thelender ' s nominee or mortgagee of record ' on themortgage. The MERS member who owns the benefic ia lin te res t may assign those benefic ia l ownershipr ights or servicing r ights to another MERS member.




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These ass ignments are not p a r t of the publ icrecord , bu t are t racked e l ec t r o n i ca l l y on MERS'spr iva te records . Mortgagors are n o t i f i e d o ft r an s f e r s o f serv ic ing r i g h t s , b u t not o ft r a n s fe r s o f b e n e f i c i a l ownership ."

2010 WL 4282105, a t *2 (D. Or. Oct. 20, 2010) (quoting GeraldKorngold, Legal and Policy Choices in the Aftermath o f theSubprime and Mortgage Financing Crisis , 60 s;c. L.Rev. 727,741-42 (2009)) . In Burget t , th e p l a i n t i f f , a mortgagee, broughtan ac t i o n ag a i n s t MERS and th e se rv ice r o f th e p l a i n t i f f ' smortgage loan a l l eg ing , among other t h ings , a claim fo r breach o fcon t rac t and seeking dec la ra tory r e l i e f to preven t a fo rec losuresa l e o f h is proper ty . The p l a i n t i f f contended th e MERS prac t icese t ou t above was not permi t ted under Oregon t rus t -deed lawbecause it al lowed ass ignment o f b en e f i c i a l i n t e r e s t s withoutrecord ing . Id. The defendants moved fo r summary judgment.Judge Hogan noted th e p l a i n t i f f ' s con ten t ion d id no t "necessar i lymean t h a t th e ar rangement v io l a t e s th e Oregon Trus t Deed Act sucht h a t fo rec losure proceedings could no t be i n i t i a t e d by MERS o ri t s s u b s t i t u t e t r u s t e e . " Id. Judge Hogan, however, denied th edefendan ts ' motion fo r summary judgment as t o the p l a i n t i f f ' sreques t fo r dec la ra tory r e l i e f and claim fo r breach of con t rac ton th e ground t h a t th e defendants f a i l ed to " record ass ignmentsnecessary fo r th e forec losure ." Id . , a t *3. Judge Hoganreasoned:

Under ORS 86.705(1) a " 'Bene f i c i a ry ' means th eperson named o r otherwise des ignated in a t r u s t11 - TEMPORARY RESTRAINING ORDER



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deed as th e person fo r whose b en e f i t a t r u s t deedi s given, o r th e pe rson ' s successor in i n t e r e s t ,and who s h a l l not be th e t r u s t e e unless thebene f i c i a ry i s qua l i f i ed to be a t r u s t e e under ORS86.790(1) (d)." P l a i n t i f f contends t h a t MERScannot meet t h i s d e f in i t i o n because t he re i s noevidence t h a t th e t r u s t deed was made to b e n e f i tMERS. However, th e t r u s t deed sp e c i f i c a l l ydes igna tes MERS as th e bene f i c i a ry . Judge Henryc. Brei thaup t provides a persuas ive d i scuss ionr e l a t ed to t h i s i s sue :

[T]he i n t e r e s t o f MERS, and those fo r whom itwas a nominee, in ques t ion here was recordedand known to P l a i n t i f f when it rece ived thel i t i ga t i on guarantee document p r i o r tos t a r t i ng t h i s ac t ion .The Sta tu t e s do not proh ib i t l i ens to berecorded in th e deed o f records o f count iesunder an agreement where an agen t w i l l appearas a l i enholder for the b en e f i t of thei n i t i a l l ender and subsequent ass ignees o ft h a t l ender-even where th e ass ignments o f th ebenef ic ia l i n t e r e s t in th e record l i en aren ot recorded. I t i s c l ea r t h a t suchunrecorded ass ignments o f r i g h t s arepermiss ib le under Oregon 's t r u s t deed s t a t u t ebecause ORS 86.735 provides if forec losure bysa le i s pursued a l l p r i o r unrecordedass ignments must be f i l e d in connect ion wi ththe forec losure . The t r u s t deed s t a t u t e st he re fo re c l ea r ly contempla te t h a tass ignments of the b en e f i c i a l i n t e r e s t s inob l iga t ions and secur i ty r i g h t s wi l l occurand may, in f ac t , not have been recordedp r i o r to fo rec l osure . The l e g i s l a t u re wasc lea r ly aware such assignments occurred andnowhere provided t h a t ass ignments needed tobe recorded to main ta in r i g h t s under th e l i ens t a t u t e s except where forec losure by sa le waspursued.

Le t t e r Decis ion in Parkin Elec t r i c , Inc. v.Saftencu, No. LV08040727, dated March 12, 2009(a t tached as Exhib i t C to th e second dec la ra t ionof David Weibel (# 60)) .




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The problem t h a t defendants run in to in t h i s casei s an apparen t fa i lu re to record assignmentsnecessary fo r th e fo rec losure . As JudgeBrei thaup t no tes , ORS 86.735 provides t h a t iffo rec losure by sa le i s pursued, a l l p r i o runrecorded ass ignments must be f i l e d in connect ionwi th th e fo rec losure . ORS 86.735(1)sp e c i f i c a l l y provides

The t r u s t ee may fo rec lose a t r u s t deed byadvert isement and sa l e in th e manner providedin ORS 86.740 to 86.755 i f :(1) The t r u s t deed, any assignments o f th et r u s t deed by th e t r u s t ee or the bene f i c i a ryand any appointment o f a successor t r u s t e eare recorded in th e mortgage records in th ecount ies in which the p roper ty descr ibed inth e deed i s s i t u a t ed .

Id. , a t *2-*3. Judge Hogan noted Oregon Revised Sta tu t e 86.735requ i res any ass ignments o f th e t r u s t deed by th e t r u s t ee or th ebene f i c i a ry and any appointment o f a successor t r u s t e e to berecorded. The record in Burget t , however, did no t r e f l e c t a l lt r an s f e r s to th e subsequent l ende rs / se rv ice rs had been recorded.Id.

Simi la r ly , in Rinegard-Guirma v. Bank o f America,D i s t r i c t Judge Garr M. King granted th e p l a i n t i f f , a mortgagee, atemporary r e s t r a in in g o rd e r aga ins t the defendan ts , MERS ando t h e r s , proh ib i t i ng th e defendants from conduct ing a fo rec losuresa l e of the p l a i n t i f f ' s home because th e p l a i n t i f f es t ab l i shed"nothing [was] recorded wi th Multnomah County [ tha t ] demonst ra test h a t LSI Ti t l e Company o f Oregon, LLC i s the successor t r u s t e e . "No. 10-CV-1065-PK, 2010 WL 3655970, a t *2 (D. Or. Sept . 15,




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2010). Judge King reasoned:

Id .

Pursuant to ORS 86.790, th e bene f i c i a ry mayappoin t a successor t r u s t e e . However, only [ilfth e appointment of the successor t r u s t e e i srecorded in th e mortgage records o f th e county orcount ies in which th e t r u s t deed i s recorded" i sth e successor t r u s t e e ves ted with a l l th e powerso f th e o r ig in a l t r u s t e e . " ORS 86.790(3) .Accordingly, unless the appointment o f LSI Ti t l eCompany o f Oregon, LLC was recorded , the purpor tedsuccessor t ru s t ee has no power o f sa le"author iz ing it to forec lose Rinegard-Guirma 'sprope r t y . See ORS 86.710 (descr ib ing t r u s t e e ' spower o f sa l e ) ; ORS 86.735 (permi t t ing forec losureby advert isement and sa le but only if anyappointment o f a successor t ru s t ee [ i s l recordedin th e mortgage records in th e count ies in whichth e proper ty descr ibed in th e deed i s s i tua ted" ) .Si mi l a r l y , she i s l i k e l y to experience i r r epa rab leharm if her home i s forec losed upon.

The Cour t f inds persuas ive the reasoning in Burgett andRinegard-Guirma as to MERS s t a tu s in th e case on t h i s record .The Cour t , t he re fo re , concludes P l a i n t i f f has es t ab l i shed he i sl i ke ly to succeed as t o h i s r eq u es t fo r i n junc t ive and/ordec l a ra t o ry r e l i e f r e l a t ed t o Defendants ' f a i l u re to comply withOregon Revised Sta tu t e 86.735. P l a i n t i f f a lso has es t ab l i shedMERS, who was th e recorded bene f i c i a ry o f th e t r u s t deed,ass igned successor t ru s t ees to th e t r u s t deed b ut f a i l ed t orecord th e appointment o f any successor t r u s t e e as requi redbefore a nonjudic ia l forec losure sa le may be conducted underOregon law.




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B. Pla in t i f f i s l ike ly to succeed in proving BAC andFannie Mae fa i l ed to sa t i s fy the condit ions precedentto declaring a defaul t and acce lerat ing the Note.As noted, th e Trus t Deed requ i red , among other t h ings ,

BAC and /or Fannie to provide 30 days not ice to P l a i n t i f f beforeacce le ra t ion o f th e Note. The Trus t Deed requ i red th e not ice toadvi se Pla in t i f f : (a) of the de fau l t ; (b) o f th e ac t ion requ i redto cure th e defau l t ; (c) o f a date by which th e d e fa u l t must becured; and (d ) t h a t f a i l u re to cure th e de fau l t on or before thedate spec i f i ed may r e s u l t in acce le ra t ion o f th e deb t . Inadd i t ion , the Trus t Deed spec i f i ca l ly provided

[ i J f th e de fau l t i s not cured on o r before th eda te spec i f i ed in th e not ice , Lender a t i t s opt ionmay requ i re immediate payment in f u l l o f a l l sumssecured by t h i s Secur i ty Inst rument withoutfu r t h e r demand and may invoke th e power o f sa l eand any other remedies p ermi t t ed by Appl icableLaw.

Compl. , Ex. A a t 12. The Trus t Deed d id not con ta in anyprov i s ion t h a t would al low Defendants t o acce le ra t e th e debtwi thout providing th e not ice se t o ut in Trus t Deed 30 days p r i o rto acce le ra t ion .

P l a i n t i f f a l l eges Defendants d id not provide P l a i n t i f fwith the no t i ce requ i red by the Trus t Deed. P l a i n t i f f contendsbecause BAC and Fannie Mae fa i l ed to provide the requ i red not ice ,they f a i l ed to s a t i s fy th e condi t ions p receden t fo r acce le ra t ingth e debt and dec lar ing P l a i n t i f f to be in de fau l t . The Cour tagrees and concludes P l a i n t i f f has es t ab l i shed fo r purposes o f




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h is Motion fo r a Temporary Restrain ing Order t ha t he i s l i ke ly tosucceed as t o h i s reques t fo r i n junc t ive and /or dec la ra to ryr e l i e f re l a t ed to Defendants ' fa i lu re to comply with condi t ionsprecedent t o acce le ra t ing h is deb t and dec lar ing Pl a i n t i f f to bein de fau l t .

c. Pla in t i f f i s l i ke l y to succeed in proving the Notice o fDefault does not comply with Oregon Revised Statute 86.745.P l a i n t i f f asse r t s th e August 24, 2010, Notice of

Defaul t recorded by ReconTrust does not comply with OregonRevised Sta tu te 86.745 and, t he re fo re , ReconTrust i s note n t i t l e d to proceed with the fo rec losure s a l e .

Oregon Revised Sta tu te 86.753(3) provides inp e r t i n en t p a r t t ha t a t rus t ee may fo rec lose a deed of t r u s t bysa le if " [ t ]he t rus t ee ... has f i l ed ... in th e countyc l e rk ' s of f ice in each county where th e t r u s t p r o p e r t y . i ss i t u a t ed , a not i ce o f de fau l t contain ing the informat ion requ i redby ORS 86.745." Oregon Revised Sta tu t e 86.745 provides inper t inen t pa r t :

The not ice of sa le sha l l :(1 ) Lis t the names of the grantor , t rus t ee andbene f i c i a ry in the t r u s t deed, and th e mail ingaddress of th e t r u s t e e .

* * *(4) Sta te th e de fau l t fo r which the fo rec losurei s made.(5) Sta te th e sum owing on the obl iga t ion t h a t




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th e t r u s t deed secures .* * *

(9) I f th e proper ty includes one or more dwel l ingun i t s , as def ined in ORS 90.100, inc lude a not iceaddressed c lea r ly to any person who occupies theproper ty and who i s or might be a r e s i d e n t i a lt enan t . The not ice requ i red under t h i s subsect ionmust:

(a) Include con tac t informat ion fo r theOregon Sta te Bar and a person or o rgan iza t iont h a t provides l eg a l help t o ind iv idua l s a t nocharge to th e i nd iv idua l ;(b) Include informat ion concerning th e r i g h tth e person has to not ice under ORS 86.755(5) (c) and s t a t e t h a t th e person may haveadd i t iona l r igh t s under fede ra l law;(c) Be se t apa r t from other t ex t in th e

not ice of sa le .Oregon Revised Sta tu te 86.745(9) also se t s out the form inwhich not ice to r e s i d e n t i a l t enan t s must be provided .

P l a i n t i f f a l l eges ReconTrust ' s Notice does not complywith 86.745(1) because a l though ReconTrust c la ims to be th eTrus tee , the Notice l i s t s th e t rus t ee as F i r s t American Ti t l e .In addi t ion , the Notice l i s t s MERS as th e bene f i c i a ry , however,in th e Assignment of Trus t Deed t h a t ReconTrust recorded onJanuary 28, 2010, BAC i s l i s t ed as th e bene f i c i a ry .

P l a i n t i f f a l l eges the Notice does not comply with 86.745(4) and (5 ) because ReconTrust "knowingly or neg l igen t lymiss ta ted the a l leged defau l t and p r in c ip a l balance . "

Fina l ly , Pl a i n t i f f a l l eges th e Notice does not comply




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with 86.745(9) because it does not contain. the s ta tutorynotices required by that sect ion nor does it contain thes ta tutory language required by that section.

The Court concludes Pla in t i f f has es tabl ished forpurposes of his Motion for Temporary Restraining Order that he i sl ikely to succeed as to his request for declaratory and/orinjunctive r e l i e f re la ted to Defendants' fa i lure to comply withOregon Revised Statute 86.745.

D. Pla int i f f i s l ike ly to succeed in proving BAC andFannie Mae breached the MOdification Aqreement.Pla in t i f f asser ts BAC an d Fannie Mae breached the

Modification Agreement. The record ref lects BAC sent Pla in t i f fthe Modification Agreement an d Pla in t i f f ' s January 25, 2010,statement from BAC re f lec t s the higher pr incipal balance, lowerin te res t ra te , and lower monthly payment se t out in theModification Agreement, which indicates BAC had received andaccepted Pla in t i f f ' s executed copy of the Modification Agreementand cash ier ' s check. In addi t ion, Pla in t i f f al leges he spokewith representat ives from BAC numerous times and they reassuredPla in t i f f that BAC had accepted the Modification Agreement.BAC's representat ives encouraged Pla in t i f f to continue to makepayments as se t out in the Modification Agreement and advised himthat i t might take several months for his monthly statement toaccurately re f lec t the terms of the Modification Agreement.Nevertheless, BAC fa i led to cred i t Pla in t i f f ' s payments to18 - TEMPORARY RESTRAINING ORDER



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in te res t or to escrow and ult imately declared Plaint i f f to be indefaul t in breach of the Modification Agreement.

The Court concludes on th i s record and for purposes ofPla in t i f f ' s Motion for Temporary Restraining Order that Pla in t i f fi s l ikely to suCceed on his claim for breach of the ModificationAgreement.

E. Irreparable HarmThe Court concludes Pla in t i f f also has es tabl ished he

i s l ikely to experience i r reparable harm i f the scheduledforeclosure proceeds unabated. The Court, therefore , concludesthe balance of hardships t ips sharply in Pla in t i f f ' s favor, andthere are a t leas t serious questions as to the meri ts ofPla in t i f f ' s request for declaratory judgment.

Accordingly, the Court GRANTS Pla in t i f f ' s Motion for aTemporary Restraining Order and hereby RESTRAINS Defendants fromproceeding with the February 28, 2011, foreclosure sale ofPla in t i f f ' s property as ordered herein.I I . Notice under Federal Rule o f Civ i l Procedure 65

part :Federal Rule of Civi l Procedure 65(b) provides in per t inent

(1) Issuing Without Notice. The court may issue atemporary res t ra ining order without wri t ten ororal notice to the adverse par ty or i t s at torneyonly i f :

(A) specif ic facts in an af f idav i t or aver i f ied complaint clear ly show tha timmediate and i r reparable in jury, loss , or19 - TEMPORARY RESTRAINING ORDER



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damage wil l resu l t to the movant before theadverse party can be heard in opposit ion; and(B) the movant's at torney cer t i f i es inwrit ing any effor ts made to give notice andthe reasons why it should not be required.

Pla in t i f f ' s counsel notes in her Declaration tha t in January2011 Pla in t i f f placed BAC and Fannie Mae on writ ten notice tha tPla in t i f f intended to f i le a Complaint and to seek injunct iver e l i e f i f the part ies were not able to resolve t he i r issues byFebruary 11, 2011. Counsel notes BAC and Fannie May assignedindividuals to review and to respond to Pla in t i f f ' s al legat ions .

On February 17, 2011, Pla in t i f f ' s counsel faxed copies ofthe Complaint, Motion for Temporary Restraining Order, andMemorandum in Support of Pla in t i f f ' s Motion to the appropria teindividuals a t BAC and ReconTrust. Counsel did not receive anyresponses to the documents from BAC or ReconTrust.

Also on February 17, 2011, Counsel emailed copies of theComplaint, Motion for Temporary Restraining Order, and Memorandumin Support of Pla in t i f f ' s Motion to the appropria te individual a tFannie Mae. Counsel was informed Fannie Mae "was continuing toresearch the issues" but Fannie Mae did not respond to counsel ' sinquiry regarding Fannie Mae's in tent to appear.

Pla in t i f f asser t s there wil l not be suf f ic ien t t ime to servethe Motion and to ensure tha t the foreclosure sale wi l l behalted.

On th i s record the Court issues the order temporari ly20 - TEMPORARY RESTRAINING ORDER



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re s t ra in ing Defendants from proceeding with the proposedforec losure sa le o f P l a i n t i f f ' s proper ty without not ice toDefendants because t he re i s i n s u f f i c i e n t t ime before thescheduled foreclosure sa le to compel Defendants to appear and torespond to the Motion. In addi t ion , P l a i n t i f f ' s counsel has madereasonable e f f o r t s to no t i fy Defendants and has been unsuccessfu lin secur ing the presence of a respons ive par ty . Fina l ly , theCourt concludes th e r i sk of i r r epa rab le harm to P l a i n t i f f i ss i gn i f i c a n t when weighed aga ins t the temporary de lay author izedby t h i s Order .I I I . Securi ty

Pursuant to Rule 65(c) , the Court requi res P l a i n t i f f to pos ta $500.00 bond or to pay $500.00 in to the r eg i s t ry of the Courtfo r purposes of secur i ty by 1:00 p.m., February 25, 2011, as areasonable secu r i ty fo r any cos t s o r damages sus ta ined by anypar ty found to have been wrongful ly r e s t r a ined .

CONCLUSION

For these reasons , the Court GRANTS Pl a i n t i f f ' s Motion (#2)fo r a Temporary Rest ra in ing Order and Prel iminary In junct ion tothe ex ten t t ha t the Court hereby TEMPORARILY RESTRAINS Defendantsfrom proceeding with the February 28, 2011, foreclosure sa le ofP l a i n t i f f ' s proper ty . The Court DIRECTS P l a i n t i f f to pos t a$500.00 bond or to pay $500.00 in to the r eg i s t ry of the Court fo r21 - TEMPORARY RESTRAINING ORDER



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purposes of secur i ty by 1:00 p.m. , February 25, 2011.IT IS SO ORDERED.DATED t h i s 23 th day of February, 2011.

This order i s i s sued on February 23, 2011, a t 2:00 p.m., andexp i res on March 9, 2011, a t 2:00 p.m., unless extended by orderof the Court .

A N N A ~ United Sta tes Dis t r i c t



Documents

Barnett v. Bac Home Loan Servicing LP, Federal National Mortgage Association Fka Fannie Mae, Rec on Trust Co