Legal decision has attorneys talking

MPR News received a tip about a complicated story involving an attorney, a judge and the state’s foreclosure laws.

U.S. District Judge Patrick J. Schiltz has taken the unusual step of sanctioning Minneapolis attorney William Butler for filing what the judge calls frivolous show-me-the-note actions. That’s where a homeowner facing foreclosure argues that because the mortgage and note are held by different entities, the home’s mortgage or foreclosure on that mortgage is invalid.

Separating the note from the mortgage contributed to the practice of mortgage securitization, one culprit in the housing bubble and crash.

Some courts in other states have ruled in favor of homeowners in cases like these. But here, Judge Schiltz says it’s been established under Minnesota law (he references Jackson v. Mortgage Electronic Registration Systems, Inc.) that the entity that holds the mortgage can foreclose on the mortgage even if that entity does not also hold the note. Showing the note is not necessary under foreclosure by advertisement, which is how most of Minnesota’s foreclosures are processed.

Butler, of Butler Liberty Law, LLC, brought nearly 30 of such cases on behalf of several hundred people and apparently never won.

Among other things, Judge Schiltz alleges Butler solicited homeowners facing foreclosure for frivolous cases and then “judge shopped” for sympathetic judges while his cases dragged on for months, allowing him to collect fees from clients and allowing those clients to continue living in their homes rent-free.

As punishment, the court ordered Butler to pay a $50,000 penalty and cover attorneys fees for some of the largest firms representing clients like GMAC Mortgage, Deutsche Bank, The Bank of New York and others. People familiar with the case expect these penalties to rise well into the six figures. Butler also risks losing his license to practice law.

Minneapolis attorney Daniel Tyson has been handling real estate and foreclosure cases for decades. He declined to comment on the specifics of Butler’s cases mentioned in the judge’s order. But he says it’s clear the judge’s ruling was intended to send a message.

“The amount of the sanction is high and the judge wanted to teach this attorney a lesson that his behavior wasn’t appropriate and if he’s going to start a lawsuit and bring it into federal court or any court it has to be based upon proper claims, and in this case the judge determined that the show-me-the-note claim was not appropriate for this particular matter before him.”

Other attorneys I spoke to about this case agreed the judge’s order is severe.

Judge Schiltz is known for being conservative but fair-minded.

Tyson says he hopes the decision won’t deter other attorneys from bringing foreclosure cases forward.

“I’d hope that the decision does not have a chilling effect on bringing claims which are properly brought by consumers and their attorneys. That would be an unfortunate result of this claim because there are many appropriate claims and appropriate situations – in particular in this foreclosure area – where bad things were done. That is what the robo-signing cases were all about, that is why there are sanctions and that is why we’ve got a nationwide settlement with the major banks, because things were not done properly,” said Tyson. “I’m hoping it doesn’t have a chilling effect on the ability to bring these. And I don’t think it will because this was a very limited situation where this individual attorney was using wrong methods and for those clients out there and those attorneys out there who have right claims and good claims to try to prevent foreclosures, that should be brought they should be able to bring them. That is our system.”

Butler didn’t provide a comment in time for this post, but says he plans to appeal the judge’s decision.

  • Jackie

    We are seeing alot of Judges like Judge Schiltz uses the law to protect the corrupt banks. States/Federal cases and admission by Banks that they bunndled mortages and no longer hold deeds and don’t know where they are. With the monopoly game used over 8 years and the housing bubble it is clear. But for the Banks to steal they need Judges and Law Makers in their back pocket and it’s clear it’s working in Minnesota. 25 billion settlement with an admission of criminal act and Judge Schiltz agrees stealing and no proof for the bank is legal. To show his support for the banks he ordered their lawyers be paid. Mitt would love this Judge as people can legally have their homes stolen with the approvel of the Court. When the Court Judges become corrupt the legal system is gone. But this isn’t first corrupt Judge we’ve seen in the Courts. To bad the citizens of Minnesota don’t have an honest Court, they should try going to a Federal Court.

  • frank

    This is just plain wrong on so many levels. I know Bill, he’s a fine man. Judge Schiltz is sending a message that he hopes will reverberate, I believe it will backfire. The corruption at work in our courts and banking system must stop now, not later.

  • Nathanael

    The problem is that the Minnesota Legislature passed a law legalizing the use of MERS, which is illegal in the other 49 states. So indeed, a defense which works everywhere else doesn’t work in Minnesota. Blame the legislators….

  • DANI

    ARREST THE IGNORATE JUDGE THAT DENY THE HOMEOWNER DUE PROCESS OF LAW

    HE MUST BE TROWN IN JAIL IMMD SO OTHER

    IGNORATE JUDGES THAT DONT UNDERSTAND THE LAW WILL GET WISE

  • Eugene Villarreal

    Get the rope !

  • The lawyer should have known better. While it is perfectly fine to zealously represent your client and argue for the good faith modification, extension, or reversal of the law/precedent, he should have known that filing 30 such suits was not the way to do this. Besides, he shouldn’t be filing the same counts in each suit unless the pleadings could be supported by plausible facts. Here, it’s a sure bet the facts had to differ from case to case.

  • James Powers

    The mob got wind of this and graciously took a contract out!

  • Shelley A Erickson

    Here is supporting case law for the wronged attorney, Standing is a requirement in Article III of the US. Costitution, and a defect in standing cannot be waived by the parties. Chapman V. Pier I Imports (US. ) INcl, 631 F.ed 939,954 (9th Cir. 2011). A litigant must have both constitutional standing and prudential standing for a federal court to exerscise jurisdiction over the case. Elk Grove Unitfied Sch. Dist. V. Newdow, 542 U.S. 1, 11(2004). Constitutional standing requires the planitiff to “show that the conduct of which he complains has caused him to suffer an “injury in fact” that a favorable judgment will redress. ” Id.at 12.IN comparison, “prudential standing encompassess the general prohibition on a litigants’s raising another person’s legal rights.” Id. (citiation and quotation signals ommitted) , see also Orgeon V. Legal Servs. Corp., 552 F.ed 965,971(9th Cir. 2009. Show me the note is justifiable! They dont have the note or they would not fight this so hard. Which is telling they are imposters and this judge is enabling their crime , therefore taking part in the crime in my opion. Which I am not an attorney.

  • Shelley A. Erickson

    The legistlature passed an unconstitutional law therefore this unconstitutional law needs to be challenged. The judge can not judge unconstitutionally against the constitution no matter what. Judges oat of office is to uphold the U.S. Constitution. This judge has breached his oath of office and is not immune to this breach.

  • Marie

    The important question is why is a Federal Judge considering questions about Minnesota real property and Minnesota homeowners rights? This judge’s opinion is an example of unfettered egoism and blantant big bank biases. Further, he speculates that Butler has made big money, He will find this is not true, the only big money in this game are the fees that the large firms charged their big bank clients who all could well afford them because they have taken homes from Minnesota homeowners that they were not entitled to. The sad and pathetic fact truth here is the Judge’s obvious obsequious pandering to the banks.

  • Lillian

    He should lost his license to practice law.

  • george babcock esq

    statute is the key. appeal

  • Michael

    Good chance to challenge the MN Statute as a taking, especially if the law was changed after the mortgage was originated. I probably would have filed one case, and noted it was a test case, then only filed more if the judge ignored ruling on the merits of the underlying challenge. Still, if appealed correctly sounds like the path to an interesting high-level appellate decision.

  • I guess stare decisis doesn’t exist in Minnesota. Supreme Court of the United States Carpenter v. Longan 83 US at 274 (1873) is still the law of the land regardless of what this judge says.

  • me

    the law is the law!this judge must be in the$$game of real estate?…keep on uncovering the judges due diligence with no JUSTICE! so much for this judge!

  • Robert

    If I do not pay the mortgage each month I expect to be foreclosed and put to the curb. If I do not pay the rent, I expect to be evicted.

    This attorney, if he deserves to be called that, is clearly frivolous. Why is this so difficult to understand?

    And why is nearly every post here singing in the same choir?

  • chitown

    There is nothing frivolous about show me the note. This is rule of law-v-ideology. Rule of law must always prevail. If not, that would mean that we are no longer being goverened under the U.S. CONSTITUTION and the LAWS OF THIS LAND. That would mean that America is no longer free, it is a dictatorship and therefore the people must revolt…

  • John Dunn

    The question keeps coming up; which MERS did the Minnesota Supreme Court rule on?

    Was it MERS the Trademark? Was it MERS the Company who has no employees or was it MERSCorp>?

    I do not believe any of the Justices even know and I know this as I have read their ruling a number of times. They did not say which one it was.

    Regardless of the fact, as Charles Cox has said, Supreme Court of the United States Carpenter v. Longan 83 US at 274 (1873) is still the law of the land regardless of what this judge says.

    I would believe as of today there are thousands of property who titles are clouded and the courts are doing nothing about it.

    Forensic Mortgage Audits and Foreclosure Defense

    Student Loan Audits

    Auto Loan Audits

    john

    oliver@ipa.net

  • Joe

    Just because someone has not paid their mortgage does not mean that anyone can take their home. The issue in the case, as I understand it, is that the bank that claims it holds the mortgage is not entitled to payment and therefore not entitled to the home. This is a mess of the big bank’s own making, it is difficult to have sympathy for a bank that is owed nothing fighting for its right to take a home from a homeowner when that same homeowner’s taxes helped to pay the TARP funds that paid off the mortgage debt, held by an investor.

    This particular opinion, whether one agrees with it or not is an unprofessional sarcastic, personal attack– something that has no place in a courtroom. Judge Shiltz showed very poor judgment in my opinion in the manner in which it is written. He is bound by the same rules of decorum as attorneys and he has very clearly violated those rules. I am deeply ashamed that a member of the judiciary would spew such vitriole.

  • jaclyn
  • The attorney should file the judge’s oath of office into the case.

  • It is true that some homeowners owed for a loan and did not pay it. That is not the question. The question is did the one and only true holder of the note do the foreclosing. If in fact any or all of this attorney’s clients asked for proof of who their true lender is and did not receive it, then no foreclosure can be performed. Federal regulations in RESPA are very clear on this

    My question is: How did Minnesota arrive at the conclusion that MERS has standing? The only authorization of MERS intended formation is the “Attorney’s Letter of Opinion” from a Washington DC Firm the said yep they can bypass every County Courthouse in the Country. Never mentioning the 50 states that have 50 different sets of law concerning real property and proper recording. Washington DC is not a state. How did we all fall asleep for 17 years (me included) and let the Bankers and Wall Street to counterfeit, forge, gouge home owners with fees, Let Angelo Mozilla and Countrywide teach thousands of young loan officers to commit crimes, and allow Lenders to steal homes without just cause. Judge Schlitz is complicit in this. Everyone of the litigants needs to get a copy of his bond. He has committed a crime. His insurance is exposed to claims. Danny Hammond http://www.mortgageloanfraud.com

  • To Tell The Truth

    From all the info we have gathered so far and proofs of fraud committed by the banks attorneys and some judges, it is very easy to see that this judge is one that is paid for by the banks. He either does not understand the relationship between the note and the mortgage et al…he will not be sitting much longer on that bench and he will need to recant his verdict.

    DO not despair, pray for him for the Higher Judge, God to give him wisdom to do the right thing unafraid. The attorney should appeal and win all his cases…how come no foreclosure mill attorneys like Stern and others not in jail or fined the same fines? Interesting that only these homeowners’ attorney is been used as a scapegoat…

    I agree that his oath should be filed along with all the cases. Perhaps he is one of those judges that took the two oaths instead of one…the secret oath that is…go figure…what is done in darkness will be exposed to the light.

  • To Tell The Truth

    And look at the banks that are involved!!!!! Go figure…

  • dRp

    With so much blatant fraud how can you not ask, “Who do I owe money to?”, and not expect a reasonable reply.

    The judge made reference to “allowing those clients to continue living in their homes rent-free.” That demonstrated a prejudice prior to hearing any of the cases that should get him removed. Hopefully, the defendant attorney is wise like Sun Tzu and can lay a foundation to prove such.

  • Stanley Putra

    How in heaven’s name can one discovery a “robosignor” or other inproprieties if a bank does not have to show the note. Bad decision!

  • Discouraged

    The extent of ignorance shown here is depressing. “To bad the citizens of Minnesota don’t have an honest Court, they should try going to a Federal Court” says one. Really? Apart from spelling problems (“too,” not “to,” bad), there’s the little teensy weensy question: what part of “U.S. District” did “jackie” not get? That IS a federal court. In fact, Butler was trying to stay in state court and trying to avoid federal court: so there’s a bit of a disconnect between jackie’s comment and the facts. Judge Schiltz is indeed regarded as fair-minded. If I were to have any quibble with the article, it’s that the journalist doesn’t quite get the verb “to allege.” The judge didn’t allege; he found. Butler and his clients alleged things. Lots of Americans say they don’t want “frivolous” litigation? Then they should be applauding judges who call the whistle on it.

  • Brad

    You all need to read the opinion that was issued by the Court before you start blasting away at the Judge. You need to see what Butler was doing.

  • what you don’t know is that the law firm that is repersenting the banks wells fargo is Faegre Baker Daniel formlly know as faegre and benson a law firm judge schiltz used to be are might still be a partner. butler a small time minnesota lawyer is up against a law firm that has 100s of employees and millions of dollars in gross income and mers which has been quiet until now.

    a conflict of interest by the judge and why he should have recused himself i think

  • Robert

    I am a client of Mr Butler, and I can assure you I am not seeking to bail on my obligation to pay in full or continue to pay the rightfull owner of my Note and Mortgage, Nor “live in my home rent free” nor do I believe any other of his clients are in this for that purpose. I began my research into who was and or who claimed to be that Note holder six months prior to being introduced to Mr Butler, this was in January 2011, I began my research as my wife and I were anticipating future financial stress from Job loss and wanted to identify the “Note Holder” to negotiate a Loan mod.

    It was at that time I discovered “Mortgage Electronic Recording Systems” exactly as it was recorded on my Torrens Certificate.

    Until that point I had never heard of them, they were never explained to us at our closing in Dec.2005 or by our Mortgage originator and never saw the documents or allowed to read them prior to signing, you see we had alot of paperwork to get through, a first mortgage, a second mortgage, and an assignment of the first mortgage, all needed to be signed dated and notorized by 2:00 PM and closing started at 1:00pm, this was so that the documents pertaining to the assignment could be recorded at a bank in Ohio prior to business day closing. The original bank located in Wisconsin profited $45,000.00 for less than two hours of holding that original note, now if that is not extortion in the utmost degree, and after all that you can not imagine the names I was called by there Vice President when I demanded the accounting details for that transaction.

    Moving on in my research which took six months, 32 “Certified Signature Receipt” letters to various banks and institutions that may or may not have had/held the “Note” or “Mortgage” the final conclusion was and DOCUMENTED in return responses ” Minnesota is a Foreclosure by Advertisement State” and burden of proof is not required to foreclose. Yep it is just that simple our legislaters decided this to keep foreclosures out of or clogging the courts, they say it’s because it would be an embarrasment to us, I wonder, I am not embarassed at all, I just want an answer to my questions, TO WHOM DO I TRULY OWE, I know it is someone because I had to go through some very serious and I thought meaningful documents to which my signature needed to be witnessed as I signed them and I did agree to allow the note to be sold to other “lenders” I just don’t remember the part about being sold off to Wall street as a “Security” Hmmm how secure was that!

    It’s rather sad they truly believe this, and Judge Schiltz actions may have put the nail in the coffin for all those innocence trying to seek answers to a simple question, to whom do I truly owe, and is that where my payments are being directed?

    Judge Schiltz, sir if you read these blogs and I hope you do, why why why should it be so difficult to get this answer from lenders if you happen to be a Minnesotan? I can assure you we are not all freeloaders as may have been suggested.

    By the way the “Second Mortgage” a minnesota bank, they understand the importance of original documents, and were very accomadating in providing proof, they continue to be paid monthly although We are at this moment fighting for our lives to prevent eviction.

  • Jordana Lipscomb

    I barely escaped MN. What a horrible place to be a homeowner or debtor! The successful attorneys in this field need to get behind this guy, Butler.. When did our nation become so corrupt that people cannot file lawful cases in court on valid legal issues even though some may contend those issues have been addressed before? Does that mean they cannot be re-addressed? What if people stopped challenging laws on segregation in the south?. I’m pretty sure their judges thought THAT was already decided too. Don’t give up Bill but don’t try to do it alone. I will send out some info to others. We should all spread the word of this on Bill’s behalf and make sure he has top notch help.

  • jerry

    all minnesota attorneys you must wake up and

    follow the lead of this brave attorney mr butler and suport him

    “togeter we fight or a lone we die”this shamful behaver of minnesota judges and courts that deny due process of law to home owners and rubber stemp banks fraud must stop immd. we say no to corrupt judges they must be stop

  • david turner

    ignorate minesota judges the lall usa is taking notice of your stupidity god bless this brave attorney that fight for the homeowners against the banksters fraud.anyone that says he shuld lose his

    roght to practice is as ignorate as this minnesota judge

  • Dr. James Chappell

    I am not an attorney or paralegal. For 40 years my hobby has been studying the law. When my x-wife attempted to acquire a loan modification, she was told she needed to be three months late on her payments. Once she was, her loan servicer; IndyMac, sent her a Notice of Default. I spent two years, 2,000 hours and thousands of dollars fighting her case for her. Since we did not defend the foreclosure, she lost. Although we defended her unlawful detainer (eviction), she lost. With only two days before the Sheriff removed her from her home under a Writ of Possession, we filed a motion to set-aside the judgment and a motion for reconsideration of her previous motion for summary judgment. When we finally proved the note was separated from the deed under Carpenter v. Longan, the judge void everything from that separation forward including the notice of default to foreclosure to the unlawful detainer.

    Fannie Mae (the pretend beneficiary) failed to appeal the decission. I will now file a Quiet Title action.

  • graham

    Regardless of the merits of the “show me the note” argument, if the opinion is accurate in describing how Butler judge-shopped, dismissed then refiled cases with the same plaintiffs with different names, joined unrelated plaintiffs to unnecessarily complicate cases, exploited delay tactics, etc., then the sanction was well-deserved.

    It is sad to see justice perverted by an abuse of the process, no matter which side you are on.

  • jacki

    first of all, in particular robert, you must know the details of every case before you lump everyone in with everyone. everyone looks at these cases face value. you must look below the “if you don’t pay your mortgage you must be foreclosed on” comment. there are plenty of reasons as to why people had their mortgages become unaffordable after a time. you expect every lay person out there several years ago to have the ability to walk into a mortgage company and call all the shots, including the price of the home, payment and how long the payment schedule would be. you give a lot of credit to the “average joe”, but it just didn’t work that way. has anyone thought maybe the loan officers were corrupt and lied to their clients, like me? or the classic, the banks looked the other way and “allowed” the paperwork to go through for the “big pay off”. come on, are you who are disagree with bill that stupid that you can’t research what happened in the housing bubble several years ago? ignorant, dumb people make comments about things they know nothing of. RESEARCH and you’ll find the banks, the loan officers, the mortgage companies and their circle of friends ruined a lot of people’s lives for their greed!!!

  • Gary

    SUGAR DADDY:

    THE FED LOOKS AFTER IT’S OWN

    After coming under increasing criticism for a lack of openness about its activities and its management of the economy during the “Great Recession,” a partial audit of the Federal Reserve was conducted by the Government Accountability Office (GAO) in 2011. “As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” said Senator Bernie Sanders (I-Vt.) when the first part of the audit came out in July.

    Below is a partial list of institutions that were showered with money during the height of the financial crisis of 2008:

    Citigroup received $2.5 trillion

    Morgan Stanley $2.04 trillion

    Merrill Lynch $1.9 trillion

    Bank of America $1.3 trillion

    Barclays $868 billion

    Bear Stearns $853 billion

    Goldman Sachs $814 billion

    JPMorgan Chase $391 billion

    And, just where did the Fed get the money to hand out as freely as candy?

    It created it out of nothing.

    It is money that did not exist before the Fed created it. – and there is no limit to the amount of money it can create nor any restrictions on who it may bestow its generosity upon.

    It can do so because America has adopted a fiat money system – money backed by nothing but the force of law mandating that the public use it as a medium of exchange – and a central banking system that allows the Federal Reserve to act independently of any political authority or oversight.

    The big banks and financial institutions that were the recipients of the Feds largess occupy a highly privileged position within the Federal Reserve system.

    Now many of those privileged banks are unloading their mortgages onto Fanny Mae- who is getting ready to auction off those properties in blocs of several hundred at a time.

    The price of admission?

    .A minimum of $1 billion

    Homeless Americans need not apply.