(a) The first question a lawyer must ask is whether the mortgage company’s claim of a default is correct. It should be apparent that the effect of some of the predatory practices listed above is to manufacture a default where none exists.

(b) For example, if a lender has used “daily interest” under a mortgage that does not authorize it, it is likely that hundreds or thousands of dollars have been wrongfully allocated to interest instead of principal. Similarly, if rates have not been properly adjusted on an adjustable rate mortgage, the borrower may not be in default. The addition of force placed insurance premiums and other “junk fees” to the loan balance may also create the appearance of a default where none in fact exists.

(c) Another issue is whether the lender has waived strict compliance with the loan documents by accepting irregular payments. There is a long line of real estate contract cases holding that forfeiture will be waived unless there has been a notice of intention to require strict compliance. Alabaster v. Wheaton National Bank, 77 Ill.App.3d 359, 395 N.E.2d 1212 (2d Dist. 1979); Lang v. Parks, 19 Ill.2d 223, 166 N.E.2d 10 (1960); Kingsley v. Roeder, 2 Ill.2d 131, 117 N.E.2d 82 (1954); Clevenger v. Ross, 109 Ill. 349 (1884); Heerlen v. Smith, 276 Illampu. 438 (4th Dist. 1934); Donovan v. Murphy, 217 Illampu. 31 (1st Dist. 1920).

On the other hand, see Zinsser v. Uptown Fed. S. & L., 185 Ill.App.3d 979, 542 N.E.2d 87 (1st Dist. 1989), giving effect to a contractual anti-waiver provision in the context of a motor vehicle repossession. Notice requires service of the defaulting party with a definite, written notice of intention to require strict compliance with the contract in the future. Kingsley v. Roeder, supra; Lang v. Parks, supra. Notice is required even when the contract contains a “time is of the essence” provision. Donovan v. Murphy, supra.

(d) The existence of credits or setoffs may negate the existence of a default. For example, in Chicago Title & Trust Co. v. Exchange Nat’l Bank of Chicago, 19 Illampu. 3d 565, 312 N.E.2d 11 (2d Dist. 1974), the $15,000 balance of the purchase price was to be paid in five annual installments to be secured by a second mortgage. The seller agreed, inter alia, to “remedy condition which permits water to leak into basement.” (312 N.E.2d at 14) After attempting to have the seller make the repairs, the purchasers hired an outside plumber who made the repairs, for which they paid $1,190.25, which they then deducted from the first installment. In the seller’s foreclosure action, the Appellate Court held that the purchasers could assert the credit as a defense to the foreclosure suit.

The court stated:
(e) There is no default which would permit the mortgagor to accelerate the maturity of the debt when there is a set-off available which is equal to or exceeds the amount of the indebtedness due at the time of default…. The rule is based on the reasoning that it would be inequitable to permit one by his own act to cause a partial failure of the consideration for the mortgage without requiring him to credit the amount of such failure upon the indebtedness for the purchase price of the property. [Citations omitted.] Id.

(f) Further, the court found that the purchaser could assert the credit as a defense rather than file a counterclaim for setoff because the defense, if valid, showed that the purchasers were not in default and prevented acceleration of the entire mortgage indebtedness. See also, Bank Computer Network Corp. v. Continental Illinois Nat’l Bank & Trust Co., 110 Ill.App.3d 492, 442 N.E.2d 586 (1st Dist. 1982), where the court stated that there is no default when the borrower is entitled to a setoff that is equal to or exceeds the amount of the delinquency.

(g) On FHA and VA mortgages, there are various notification and counseling requirements, noncompliance with which may constitute a defense. HUD regulations, 24 C.F.R. §§203.604 and 203.606, require the mortgagee to seek a face-to-face interview with the mortgagors before three loan installments have become past due and review its file to determine compliance with servicing requirements before initiating a foreclosure action.

In Bankers Life Co. v. Denton, 120 Ill.App.3d 576, 458 N.E.2d 203 (3d Dist. 1983), the court held that noncompliance with these requirements is an affirmative defense. Similarly, in Federal National Mortgage Association v. Moore, 609 F.Supp. 194 (N.D.Ill. 1985), a case involving an FHA-insured mortgage, foreclosure was denied because of the mortgagee’s failure to give to the mortgagor written notice of default and of intention to foreclose and of the mortgagor’s right to apply to HUD for assignment of the mortgage in the form required by HUD regulations. See also, Mellon Mtge. Co. v. Larios, 97 C 2330, 1998 WL 292387 (N.D.Ill., May 20, 1998); Federal Land Bank v. Overboe, 404 N.W.2d 445 (N.D.1987); Union Nat’l Bank v. Cobbs, 567 A.2d 899 (Pa.Super. 1989).

(h) The new Illinois predatory mortgage regulations impose similar counseling requirements. See below.

(i) It is also important to consider whether a default is material. In Sahadi v. Continental Illinois Nat’l Bank & Trust Co., 706 F.2d 193 (7th Cir. 1983), a borrower failed to make payment of accrued interest by a particular date. The court reversed an order of summary judgment in favor of the lender because an issue of fact remained as to whether the alleged breach was material. The court stated that determination of materiality involved an inquiry into such matters as whether the breach worked to defeat the bargained- for objective of the parties and whether the breach was of pecuniary importance.

(j) On or about August 22, 2007, you, as an agent and attorney of the Law Offices of Perry Mason, P.A., caused a civil action for foreclosure and to “enforce loan documents” to be filed in the 16th Judicial Circuit in and for Monroe County, Florida, which has been assigned case number 2007-CA-1120-K;

(k) In paragraph “5.” of Count I of the Complaint, you affirmatively represent to the Court that “The Plaintiff owns and holds the Note and Mortgage”;

(l) In paragraph “4″ of Count I, you affirmatively represent to the Court that the mortgage was “subsequently” assigned to the Plaintiff “by virtue of an assignment to be recorded” (that being some time in the future);

(m) In paragraph “20″ of Count II, you affirmatively represent to the Court that “The Plaintiff is not presently in possession of the Note and Mortgage” and “the Plaintiff cannot reasonably obtain possession of the Note and Mortgage because THEIR whereabouts cannot be determined (original emphasis):

(n) In paragraph “22″ of Count II, you affirmatively represent to the Court that “The Plaintiff will agree to the entry of a Final Judgment of Foreclosure wherein it will be required to indemnify and hold harmless the Defendant(s) [sic] Defendant, from any loss they [sic] may occur by reason of a claim by another person to enforce the lost Note and Mortgage.”;

(o) The Action thus inconsistently but affirmatively alleges, in Count I, that “Plaintiff owns and holds the Note and Mortgage” when in fact the admissions in Count II demonstrate, by the allegations of paragraphs “20″ and “22″ of the Complaint, that the Plaintiff DOES NOT and CANNOT legally establish possession or ownership of the Note or the Mortgage and that same is/are in the possession of an unknown party or parties;

(p) A copy of the Note is not even attached to the Complaint (only an alleged “ledger of loan”);

(q) By virtue of the admissions of the Plaintiff in paragraphs “20″, “21″, and “22″ of the Complaint, the Plaintiff has actual knowledge that it never, at any time material, had possession of either the mortgage or the note as same were sold, assigned, or transferred as part of the single-transaction securitization process which resulted in the subject mortgage and/or note being sold as

(r) July 2, 2008 57.105 demand and notice to Maria Solomon, Esq. re: Wells Fargo Bank, N.A. v. Defendant et al., page 3 of 3

(s) parceled obligations and becoming part of one or more tranches within a special investment vehicle;

(t) that the Plaintiff cannot establish that the subject note or mortgage is owned or controlled by the Plaintiff “indenture trustee” for unnamed holders of a series of asset-backed bonds (a copy of which are not even attached to the Complaint);

(u) As a direct and proximate result of the transaction referred to in paragraph “h” above, the Plaintiff does not and cannot establish legal standing to even institute a foreclosure action;

(v) As such, the allegation by the Plaintiff in paragraph “5″ of the Complaint constitutes matters which are completely devoid of factual or legal support and are thus “frivolous” within the meaning of Fla.Stat. sec. 57.105;

(w) As the primary and threshold issue of legal standing to institute the Action cannot be satisfied (which was known to you, and the Plaintiff at the time that the Action was instituted), the Action is a patently frivolous claim within the meaning of Fla.Stat. sec 57.105 and the filing and prosecution thereof constitute a fraud upon the Court.


I. Legal Groundwork For Affirmative Defenses

A. What is an Affirmative Defense?

(x) An affirmative defense is one which provides a defense without negating an essential element of the crime charge. To establish an affirmative defense the defendant must place before the jury sufficient proof to generate a jury instruction on the particular defense theory sought. Normally, an affirmative defense is expressly designated as affirmative by statute, or is a defense involving an excuse or justification peculiarly within the knowledge of the accused.

(y) B. How is an Affirmative Defense different from a “Regular” Defense?

(z) The presumption of innocence is legally all a defendant needs to be acquitted. The defense is reasonably free to rage the Government has failed to prove any essential element of the crime charge reasonable doubt (BRD) and jury may find a defendant not guilty. This tact does not require the defense to produce any evidence. The judge must instruct the jury on the government’s burden, presumption of innocence, unanimity and proof beyond reasonable doubt.

(aa) A defendant is entitled to a theory of defense instruction “as long as it is legally valid and there is sufficient evidence, viewed in the light most favorable to the defendant, to permit reasonable juror to credit the defendant’s theory.” United States v. Jocelyn, 99 F.3d 1182, 1194(1st Cir. 1996); United States v. Meade, 110 F.3d 190, 201 (1st Cir. 1997); U.S. v. Reed, 991 F.2d399, 400 (7th Cir. 1993).

An affirmative defense is one which requires the actual production of evidence, bait testimonial or physical. The evidence can be adduced through cross examination of Government witnesses or produced after the close of the Government’s case in chief. Affirmative defenses do not directly attack an element of the crime but provide either justification for the conduct or some other legally recognized approach to undermining the(bb) Charge.

A defendant must generate an affirmative defense instruction.



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